PROXY STATEMENT SUMMARY
DTE Energy Aspiration
Best in the world and System of Priorities
best for the world
At DTE Energy Company (“DTE Energy,” the “Company,” “we,” “us” or “our”), we aspire to be the best-operated energy company in North America and a force for growth and prosperitybest in the communities where we liveworld and serve.best for the world. This aspiration drives everything we do, including our priorities for serving each of our stakeholders: Our Team, Customers, Communities, and has led us to develop a system of corporateInvestors. Our stakeholder priorities that guidedrive our daily, monthly and annual plans which help us to achieve this aspiration. Our Board of Directors (the “Board”) evaluates our Company’s and executives’ performance based upon goals that align with this systemto our priorities for each of priorities,our stakeholders, and we will refer to this system of prioritiesthese stakeholders as we discuss DTE Energy’sDTE’s performance and our compensation programs throughout this proxy statement.
Our Operating Model
Becoming best in the best-operated energy companyworld and best for the world means having great corporate governance, competitive compensation and excellent shareholder relations. To achieve this, we’ve developed an operating model that is memorable, sustainable, and actionable by all employees to ensure it drives the behaviors that help us reach our aspiration.
Our Purpose
We improve lives with our energy
At DTE, the word energy has two meanings – our products and our personal energy. Each employee can reflect on our purpose each day and ask themselves “How did I improve lives today with my energy?”
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Our Operating Model | |
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| Purpose | | How we serve |
| • | We improve lives with our energy | | • | Safe |
| Aspiration | | • | Caring |
| • | Best in the world and best for the world | | • | Dependable |
| Strategy | | • | Efficient |
| • | Distinctive service excellence and growth | | How we lead |
| Who we serve | | • | Inspire |
| • | Our Team, Customers, Communities, Investors | | • | Innovate |
| | | • | Deliver |
Our Strategy
Distinctive service and excellence and growth
To achieve our aspiration to be best for the world best for the world, we’ve developed a strategy based on distinctive service excellence and growth focusing on three key areas: who we serve, how we serve and how we lead.
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| DTE ENERGY 2022 PROXY STATEMENT1 |
Who we serve
Our stakeholder aspirations
At DTE, we are committed to providing each of our stakeholder groups distinctive service excellence. Although each stakeholder group is unique, they are unified by DTE’s aspiration for each of stakeholders to feel a deep emotional connection to DTE which is why we’ve included the incredibly powerful word “love” in each of our stakeholder aspirations.
Delivering service excellence to each stakeholder is integral in order to reach our aspiration – we have to achieve service excellence and growth with each other first in order to deliver to our customers and reach our aspiration.
Our teammembers love DTE because each person feels included, valued, and proud of the work we are doing. All team members are trusted and empowered to reach their full potential and make a positive difference each day, for the betterment of DTE and the world.
Our customers love us and know we love them because of our deep commitment to service excellence that is the best in any industry. We listen and continuously improve our products and services to fulfill their needs as they define them.
Our communities love partnering with DTE because we are integral to their success and prosperity. We stand out as a force for good through our passionate commitment to volunteerism, foundation support, and leading the way with critical societal and environmental solutions.
Our investors love that they can rely on DTE's distinctive growth and consistently strong financial performance to deliver top-docile returns. They are proud of DTE because of everything we do to care and deliver for our team, and communities.
Our Priorities
Our Priorities are aimed at helping us reach our stakeholder aspirations
At DTE, we use our Operating Model as a guide to develop our priorities and deliver for our stakeholders. Focusing on the priorities of each of our stakeholder groups will allow us to reach our aspirations and best serve our customers.
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| Our Team | | Our Customers | | Our Communities | | Our Investors | |
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| • | Drive best in-class culture | | • | Fundamentally improve our | | • | Solidify our position as an | | • | Meet or exceed our | |
| | of health and wellbeing and | | | relationship with customers | | | environmental, social and | | | financial objectives | |
| | achieve best-in-industry | | | | | | governance (ESG) leader | | | | |
| | safety performance | | • | Deliver Operational | | | | | • | Execute a broad growth | |
| | | | | Excellence across | | • | Continue our journey as a | | | agenda while maintaining | |
| • | Sustain top decile | | | the enterprise | | | leader and enabler of a | | | customer affordability | |
| | Employee Engagement | | | | | | low carbon future | | | | |
| | | | • | Sustain the drive toward | | | | | • | Identify and mitigate | |
| • | Embed our Culture of | | | Nuclear Excellence | | | | | | enterprise and | |
| | Service across the enterprise | | | | | | | | | operational risks | |
| | | | • | Execute the Distribution | | | | | | | |
| • | Cultivate a deep, inclusive | | | Excellence Strategy | | | | | | | |
| | and diverse workforce | | | | | | | | | | |
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| • | Transform learning, | | | | | | | | | | |
| | leadership development | | | | | | | | | | |
| | and talent planning | | | | | | | | | | |
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2DTE ENERGY2022 PROXY STATEMENT | |
Shareholder Engagement
We have continued our shareholder engagement activities this year and, as a result of those discussions, we’ve learned a lot about what is important to our shareholders. The shareholder engagement team consists of members from the Corporate Secretary's office, the Office of the General Counsel, Investor Relations, Environmental Management, and Corporate Communications. Shareholder engagement is a year-round process for us.
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Every spring we reach out to large shareholders to discuss issues related to proxy season and the proposals to be presented at our annual meeting. In the fall we conduct another round of conversations to discuss general governance issues and trends. We also discuss pressing matters on an ad hoc basis. | | Our shareholder engagement activities help us identify governance and compensation policies and practices that are most important to our shareholders. |
The shareholder engagement team reports directly to the Corporate Governance Committee and other committees as needed, conveying the feedback received from shareholders and proposing implementation of best practices. | The committees and the full Board of Directors deliberate over proposed governance changes, adopt best practices and provide guidance to the shareholder engagement team in their communications with shareholders. |
In 2021, the Company held discussions with shareholders who collectively own or exercise voting control over 46% of the Company’s outstanding shares. In addition, the Company routinely contacts shareholders who have submitted proposals for inclusion in our annual proxy statement in an effort to understand their concerns and to address, where possible, the issues behind their proposals. We will continue to look for opportunities to provide more information about the Company’s approach on topics of interest to shareholders, and to stimulate more conversations with shareholders.
Governance Highlights
The Board is committed to creating long-term value for our shareholders while operating in an ethical, legal, environmentally sensitive and socially responsible manner. The Board follows sound governance practices, some of which are highlighted below. For more detail, see the “Corporate Governance” section of this proxy statement.
•Ten of twelveeleven director nominees, 83%91%, are independent; our Executive Chairman, and our President & Chief Executive Officer ("CEO") areis the only management directors.director.
•All Board committees are composed exclusively of independent directors.
•We have implemented a proxy access provision, which makes it possible for a group of shareholders meeting certain criteria to nominate and include in the Company’s proxy materials a candidate for the Board.
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| •DTE ENERGY2020 PROXY STATEMENT 1 |
We have a Lead Independent Director, elected by the independent members of the Board. The Lead Independent Director maintains final approval authority over Board agendas, meeting materials and schedules. The Lead Independent Director is also available for consultation and direct communication with large shareholders.
•Independent directors met in executive sessions chaired by the Lead Independent Director at sixseven of the eight 2019nine 2021 Board meetings.
•All of our directors are elected annually.
•We have a majority vote requirement for uncontested director elections.
•The Board and its committees conduct annual self-assessments. In addition, each independent director who has served for one year or more undergoes an annual peer review.
•Our executive officers and directors are all subject to robust stock ownership requirements.
•We have instituted anti-hedging policies applicable to all Company directors, officers and employees.
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| DTE ENERGY 2022 PROXY STATEMENT3 |
•Our Board’s Mission and Governance Guidelines recommend that the Board consider diversity of characteristics including experience, gender, race, ethnicity and age when evaluating nominees for the Board.
•We limit our directors who are employed by public companies to a total of not more than two public company boards and all other directors to a total of not more than four public company boards.
Performance Highlights
The Company continued to deliver on its objectives to provide strong earnings per share and dividend growth in 2019, while maintaining a strong balance sheet, employee engagement and improving customer service. Some highlights of the Company’s 2019 performance include:
Increased our dividend payment to $3.85 per share in 2019, representing a 7% increase over the dividend in 2018.
Provided our shareholders with a five-year total shareholder return of 177% (indexed with 2014 as the base year = 100%).
Delivered cash from operations of $2.6 billion in 2019.
Achieved 6.5% compound operating earnings per share growth during the five years ending in 2019 (see discussion below ).
DTE Energy management believes that operating earnings provide a more meaningful representation of the Company's earnings from ongoing operations and uses operating earnings as the primary performance measurement internally and externally. Operating earnings can be reconciled to our reported earnings as set forth in the following table:
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| 2019 |
| 2014 |
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Reported Earnings per Share | $ | 6.31 |
| $ | 5.10 |
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MPSC approval of deferral for new customer billing system | (0.06 | ) | |
MPSC disallowance of power plant capital expenses | 0.05 |
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Transaction-related costs from midstream acquisition | 0.07 |
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Impairment of equity method investment | 0.03 |
| 0.03 |
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Certain mark-to-market transactions | (0.10 | ) | (0.57 | ) |
New York State tax law change | | 0.04 |
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Operating Earnings per Share | $ | 6.30 |
| $ | 4.60 |
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Executive Compensation Highlights
Our executive compensation programs are designed to be competitive with our peers, have a meaningful performance
component linked to the achievement of short-term and long-term goals that align with our shareholders’ long-term interests and encourage executives to have an ownership interest in the Company. Our President and CEO’s total compensation shows strong pay-for-performance alignment with growth in long-term shareholder value creation. Our CEO’s compensation growth trend is consistent with the growth in value of a $100 investment in DTE Energy Company stock made in 2014.2016.
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| | 2019 | 2020 | 2021 |
| CEO Total Compensation ($000s) | 8,228 (1) | 10,606 | 11,128 |
| Total Shareholder Return (Indexed, Base Period 2016=100) | 144.90 | 140.69 | 168.01 |
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2(1)The CEO assumed his role on July 1, 2019, and served as Chief Operating Officer before that date.DTE ENERGY2020 PROXY STATEMENT
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| 2017 | 2018 | 2019 |
CEO Total Compensation ($000s) | 15,836 | 10,987 | 8,228 |
Total Shareholder Return (Indexed, Base Period 2014=100) | 139.96 | 145.83 | 176.98 |
The Company’s compensation programs are also designed to clearly align performance objectives for our Named Executive Officers with the interests of shareholders and with our system of priorities. Our performance measures are designed to help move our Company toward achieving these priorities. For more details, see our priorities alignment chart in the Compensation Discussion and Analysis Summary on page 33.32.
Other highlights from our compensation program include:
•Our CEO received 59%77% of his 20192021 total compensation in contingent, performance-basedvariable, at-risk incentives. For our other Named Executive Officers, the average percentage of contingent, performance-basedvariable, at-risk compensation was 48%60%. See more details on page 34.32.
•Our short-term and long-term performance metrics all tie directly to our system of prioritiesstakeholder aspirations (see above). These are the same metrics that management uses to assess the Company’s progress toward our aspiration of becoming the best-operated energy company in North America and a force for growth and prosperityto be best in the communities where we liveworld and serve.best for the world.
•Our long-term plan awards include a mix of restricted stock and performance shares designed in part to encourage executive stock ownership. The Board’s Organization and Compensation Committee has not issued stock options since 2010.
•Our equity compensation plan forbids buyouts of “underwater” stock options. The Company has never bought or repriced “underwater” stock options.
•Our equity compensation plan requires a minimum one-year vesting period for equity awards. The Company’s typical practice is to require a three-year vesting period for equity awards and the Company has never issued equity awards with less than a one-year vesting period.
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4DTE ENERGY2022 PROXY STATEMENT | |
•Our Board has adopted a “clawback” policy that provides that, in the event of an accounting restatement due to material noncompliance with federal securities laws, the Company may recover excess performance-based compensation awarded to current or former officers during the three-year period preceding the restatement.
•Our executive Change-In-Control Severance Agreements do not include excise tax gross-ups.
•We have eliminated the automatic vesting of equity issued under our Long-Term Incentive Plan upon a change in control of the Company, unless an acquiring or surviving entity fails to replace or affirm the existing equity awards with awards by the surviving company.
Performance Highlights
The Company continued to deliver on its objectives to provide strong earnings per share and dividend growth in 2021, while maintaining a strong balance sheet, employee engagement and improving customer service. Some highlights of the Company’s 2021 performance include:
•Declared a 7.3% increase in our dividend payment. •Provided our shareholders with a five-year total shareholder return of 168% (with 2016 as the base year = 100%).
•Delivered cash from operations of $3.1 billion in 2021.
•Delivered 2021 operating earnings per share above the high end of guidance (see discussion below).
•Executed previously announced separation of natural gas pipeline, storage and gathering business segment, positioning DTE as a premier, predominantly pure-play regulated electric and natural gas utility.
DTE Energy management believes that operating earnings provide a more meaningful representation of the Company's earnings from ongoing operations and uses operating earnings as the primary performance measurement internally and externally. Operating earnings can be reconciled to our reported earnings as set forth in the following table: |
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| DTE ENERGY2020 PROXY STATEMENT 3
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Shareholder Engagement
We have continued our shareholder engagement activities this year and, as a result of those discussions, we’ve learned a lot about what is important to our shareholders. The shareholder engagement team consists of members from the Corporate Secretary's office, the General Counsel organization, Investor Relations, Environmental Management, and Corporate Communications. Shareholder engagement is a year-round process for us.
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Every spring we reach out to large shareholders to discuss issues related to proxy season and the proposals to be presented at our annual meeting. In the fall we conduct another round of conversations to discuss general governance issues and trends. We also discuss pressing matters on an ad hoc basis. | | Our shareholder engagement activities help us identify governance and compensation policies and practices that are most important to our shareholders.2021 |
The shareholder engagement team reports directly toReported Earnings per Share | $ | 4.67 | |
Impairment of long-lived assets for closure of a pulverized coal facility | 0.14 | |
Reversal of deferred revenue upon terminating a supply contract | (0.09) | |
One-time expenses resulting from the Corporate Governance Committeeseparation of DT Midstream | 0.04 | |
Premiums and other committees as needed, conveying the feedback received from shareholders and proposing implementationcosts incurred to early retire long-term debt | 1.94 | |
Discontinued operations of best practices.DT Midstream | The committees and the full Board of Directors deliberate over proposed governance changes, adopt best practices and provide guidance to the shareholder engagement team in their communications with shareholders.(0.57) | |
Certain mark-to-market transactions | 0.93 | |
Income tax-related adjustments | (1.07) | |
Operating Earnings per Share | $ | 5.99 | |
In 2019, the Company held discussions with shareholders who collectively own or exercise voting control over 43% of the Company’s outstanding shares. In addition, the Company routinely contacts shareholders who have submitted proposals for inclusion in our annual proxy statement in an effort to understand their concerns and to address, where possible, the issues behind their proposals. We will continue to look for opportunities to provide more information about the Company’s approach on topics of interest to shareholders, and to stimulate more conversations with shareholders.
Items for Shareholder Vote at this Meeting
At the 20202022 Annual Meeting shareholders will vote on the following proposals:
Proposal 1: Elect twelveeleven members of the Board of Directors for one year terms ending in 2021;2023;
Proposal 2: Ratify the appointment of PricewaterhouseCoopers LLP as our independent auditors;
Proposal 3: Provide a nonbinding vote to approve the Company’s executive compensation; and
Proposal 4: Vote on a shareholder proposal to make additional disclosure of political contributions.amend our bylaws to allow shareholders with 10% outstanding common stock in the aggregate to call a special meeting;
Proposal 5: Vote on a shareholder proposal to include Scope 3 emissions in our net zero goals.
Shareholders may vote on any other matter that properly comes before the meeting.
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| DTE ENERGY2020 2022 PROXY STATEMENT5
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Proposal No. 1 — Election of Directors
The Board of Directors has nominated twelveeleven directors for election at the 20202022 annual shareholder meeting. Directors are elected to serve annual terms which expire when their successors are elected at the next year’s annual shareholder meeting. All of the nominees are currently directors of the Company. W. Frank Fountain, Jr., whoGerard M. Anderson, the Company's Executive Chairman, has notified the Company of his decision to not stand for re-election to the Board of Directors and of his intent to retire as an employee of the Company effective June 30, 2022. Mr. Anderson has served as a director since 2007, will retire from the Board effective May 7, 2020, having reached our mandatory retirement age of 75.
Proxies cannot be voted for more than twelve persons at this meeting. If any nominee becomes unable or unwilling to serve at the time of the meeting, the persons named in the enclosed proxy card have discretionary authority to vote for a substitute nominee or nominees. It is anticipated that all nominees will be available for election.
2009.
The biography of each of the nominees below contains information regarding the person’s service as a director, business experience and director positions held currently or at any time during at least the last five years. The age provided for each director is as of March 12, 2020.15, 2022. In addition to the information presented below regarding each person’s experience, qualifications, attributes and skills that caused our Corporate Governance Committee and Board to determine that the person should serve as a director, the Board believes that all of the Company’s directors have a reputation for integrity, honesty and adherence to high ethical standards. They each have demonstrated business acumen, strategic insight, an ability to exercise sound judgment and a commitment to service and community involvement. Finally, we value their significant experience on other public company boards of directors and board committees and the diversity that they bring to our Board. The following graphs display information about the skills and experience our Board members bring to their service:
![proxyskillsmatrixforproxy202.jpg](https://capedge.com/proxy/DEF 14A/0000936340-20-000145/proxyskillsmatrixforproxy202.jpg)
![a2022_skillsexperienceproxa.jpg](https://capedge.com/proxy/DEF 14A/0000936340-22-000105/a2022_skillsexperienceproxa.jpg)
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| 6DTE ENERGY 20202022 PROXY STATEMENT5 | |
The Board's demographic makeup is set forth below:
Proxies cannot be voted for more than eleven persons at this meeting. If any nominee becomes unable or unwilling to serve at the time of the meeting, the persons named in the enclosed proxy card have discretionary authority to vote for a substitute nominee or nominees. It is anticipated that all nominees will be available for election. The biographies below disclose the committees on which each director serves. The following abbreviations are used to denote each committee: Corp Gov=Corporate Governance; O&C=Organization and Compensation; Nuc Rev=Nuclear Review; and PPRC=Public Policy & Responsibility.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES FOR ELECTION AT THIS MEETING.
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| DTE ENERGY2020 2022 PROXY STATEMENT7
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| Gerard M. Anderson | | | David A. Brandon | | | Charles G. McClure, Jr. |
| Executive Chairman, DTE Energy Company | | | Non-Executive Chairman, Domino's Pizza, Inc. | | | Managing Partner, Michigan Capital Advisors |
| (2019-present) | | | (2011-present) |
| | | | | (a private equity firm)(2014-present) |
| Not | | | | | |
| Independent | DTE Committees: | | | Independent | DTE Committees: |
| Age: 61 | | | Age: 6769 | • | O&C (Chair) | | | Age: 68 | • | Audit |
| Director since: 2009 | | | Director since: 2010 | • | Finance | | | Director since: 2012 | • | Corp Gov (Chair) |
| | | | | • | PPRC |
| | | • | Nuc Rev |
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| Previous Experience | | | Previous Experience |
| • | DTE Energy Company—Chairman (2011-2019); CEO | | | • | Toys "R" Us, Inc.—Chairman and CEO (2015-2018)* | | | • | Meritor, Inc.—Chairman of the Board, CEO and |
| | (2010-2019); President (2004-2013); COO (2005- | | | • | University of Michigan—Athletic Director (2010-2014) | | | | President (2004–2013) |
| | 2010); Executive VP (1997-2004) | | | • | Domino's Pizza, Inc.—Special Advisor (2010-2011) |
| | • | McKinsey & Co.—Senior Consultant (1988-1993)Federal-Mogul Corporation—CEO (2003–2004), |
| | | | Chairman and CEO (1999-2010) |
| | | | | President and COO (2001–2003) |
| | | | | • | Detroit Diesel Corporation—President and CEO |
| Other Public Boards | | | Other Public Boards | (1997-2000) |
| • | The Andersons, Inc. (2008-present) | | | • | Domino's Pizza, Inc. (1999-present) | | | | |
| | | | | • | Herman Miller, Inc. (2011-present) | | | Other Public Boards |
| Qualifications | | | • | Kaydon Corporation (2004-2013) |
| | • | Energy Industry Experience | | | | Crane Co. (2017–present) |
| | DTE Energy CEO for nine years and COO for five | | | • | 3D Systems Inc. (2017–present) |
| Qualifications | | | • | Remy International, Inc. (2015) |
| | years | | | • | CEO Experience |
| | • | Growth and Value CreationMeritor, Inc. (2004–2013) |
| | | | Service as chief executive of large public companies | | | | |
| | Extensive experience in strategic planning and | | | • | Customer Service and SatisfactionRelationships | | | Qualifications |
| | corporate business development | | | | Extensive experience in marketing and sales |
| | • | Operations and Continuous ImprovementCEO Experience |
| | • | Financial Planning and ReviewAnalysis | | | | CEO, president and director of several major |
| | Broad experience managing capital-intensive | | | | Strong skill sets in corporate finance and strategic | | | | domestic and international corporations |
| | industries | | | | planning | | | • | Operational Effectiveness and Productivity |
| | | | | | | • | Executive Compensation | | | | Broad knowledge of business and industry |
| | | | | | | | Experience in executive compensation and | | | • | Culture, Safety, and Talent Development |
| | | | | | | | organizational best practices | | | | Extensive proven leadership skills and service on |
| | | | | | | *In September 2017, Toys "R" Us, Inc. filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code. | | | | boards of industry organizations |
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| 8DTE ENERGY 20202022 PROXY STATEMENT7 | |
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| Gail J. McGovern | | | Mark A. Murray |
| President and CEO, American Red Cross | | | Retired Vice Chairman, Meijer, Inc. |
| (2008-present) | | | (2013-2020) |
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| Independent | DTE Committees: | | | Independent | DTE Committees: |
| Age: 70 | • | O&C | | | Age: 67 | • | Nuc Rev (Chair) |
| Director since: 2003 | • | Finance | | | Director since: 2009 | • | PPRC |
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| Previous Experience | | | Previous Experience |
| • | Harvard Business School—Professor (2002–2008) | | | • | Meijer, Inc.—President (2006–2013), Co-CEO |
| • | Fidelity Personal Investments (a unit of Fidelity | | | | (2013–2016) Executive Vice-Chair (2016-2020) |
| | Investments—President (1998–2002) | | | • | Grand Valley State University—President (2001–2006) |
| | | | | • | State of Michigan—Treasurer (1999–2001) |
| Other Public Boards | | | • | Michigan State University—VP of Finance and |
| • | PayPal Holdings, Inc. (2015–present) | | | | Administration (1998–1999) |
| • | eBay Inc. (2015) | | | | |
| | | | Other Public Boards |
| Qualifications | | | • | Fidelity Fixed Income and Asset Allocation |
| • | CEO Experience | | | | (2016–present) |
| | Top executive of major non-profit organization | | | • | Universal Forest Products, Inc. (2004–2016) |
| • | Customer Service and Relationships | | | | |
| | Extensive executive experience in marketing, sales | | | Qualifications |
| | and customer relations | | | • | CEO Experience |
| • | Growth and Value Creation | | | | President and Co-CEO of a major Michigan-based |
| | Experience in strategic planning and corporate | | | | corporation |
| | finance | | | • | Financial Planning and Analysis |
| | | | | | Strategic planning, corporate development and |
| | | | | | finance experience |
| | | | | • | Regulatory and Energy Policy |
| | | | | | University president and state government official |
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![a2020mcclure.jpg](https://capedge.com/proxy/DEF 14A/0000936340-20-000145/a2020mcclure.jpg)
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| DTE ENERGY 2022 PROXY STATEMENT9 |
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| CharlesGerardo Norcia | | | Ruth G. McClure, Jr. | | | Gail J. McGovernShaw |
| Managing Partner, Michigan Capital AdvisorsCEO (2019-present) and President (2016- | | | Retired Group Executive, Public Policy and |
| present)* | | | President, and CEO, American Red CrossDuke Nuclear, Duke Energy |
| (a private equity firm)(2014-present) | | | (2008-present) | | | (2003-2009) |
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| Not Independent | DTE Committees: | | | Independent | DTE Committees: |
| Age: 6659 | | | | | Age: 74 | • | AuditCorp Gov |
| Director since: 2019 | | Age: 68 | | | Director since: 2008 | • | Nuc Rev |
| | | | | | | | | • | O&C |
| Director since: 2012 | • | Corp Gov (Chair) | | | Director since: 2003 | • | Finance |
| | | • | Nuc Rev | | | | | |
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| Previous Experience | | | Previous Experience |
| • | Meritor, Inc.—Chairman of the Board, CEO and | | | • | Harvard Business School—Professor (2002–2008) |
| | President (2004–2013) | | | • | Fidelity Personal Investments (a unit of Fidelity |
| • | Federal-Mogul Corporation—CEO (2003–2004), | | | | Investments—President (1998–2002) |
| | DTE Electric—President and COO (2001–2003)(2013-2016) | | | | |
| • | Detroit Diesel Corporation—Duke Energy—Executive Advisor (2007–2009) |
| • | DTE Gas—President and COO (2007-2013) | | | • | Duke Nuclear—Group Executive for Public Policy |
| • | DTE Gas Storage and Pipelines—President and COO | | | | and President (2006–2007) |
| | (2002-2007) | | | • | Duke Power Company—President and CEO |
| | | | | | (2003–2006) |
| Qualifications | | | | | | |
| • | Energy Industry Experience | | | Other Public Boards |
| | (1997-2000)More than 30 years of leadership in business | | | • | PayPal Holdings, Inc.SPX Corporation (2015–present) |
| | development, engineering and operations | | | • | eBayDow, Inc. (2015)(2005–2020) |
| Other Public Boards | | | |
| • | Crane Co. (2017–present)Operational Effectiveness and Productivity | | | | |
| | Extensive experience in customer relations, strategic | | | Qualifications |
| | planning and operational efficiency | | | • | 3D Systems Inc. (2017–present)Energy Industry Experience |
| | • | CEO ExperienceCulture, Safety, and Talent Development | | | | Extensive experience in the nuclear and energy |
| | Broad experience with human capital management | | | | industries |
| | and safety leadership | | | • | Remy International, Inc. (2015) | | | | Top executive of major non-profit organizationCorporate Governance |
| | | | | | Service on corporate boards and industry |
| | | | | | associations and organizations |
| | | | | • | Meritor, Inc. (2004–2013) | | | • | Customer ServiceRegulatory and SatisfactionEnergy Policy |
| | | | | | Extensive executive experience in marketing, sales |
| Qualifications | | | | and customer relations |
| • | CEO Experience | | | • | Growth and Value Creation |
| | CEO, president and director of several major | | | | Experience in strategic planning and corporate |
| | domestic and international corporations | | | | finance |
| • | Operations and Continuous Improvement | | | | |
| | Broad knowledge of business and industry | | | | regulatory matters, public |
| • | Employee Engagement, Safety | | | | policy and Talent | | | | corporate communications |
| | Extensive proven leadership skills and service on | | | | |
| | boards*The Board has elected Gerardo Norcia to the additional role of industry organizationsChairman upon the expiration of Gerard M. Anderson’s term as a director on May 5, 2022. | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
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810 DTE ENERGY 20202022 PROXY STATEMENT
| |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | |
| Robert C. Skaggs, Jr. | | | David A. Thomas |
| Executive Chairman, DT Midstream, Inc. | | | President, Morehouse College |
| (2021-Present) | | | (2018-present) |
| | | | | | |
| Independent | DTE Committees: | | | Independent | DTE Committees: |
| Age: 67 | • | Finance | | | Age: 65 | • | Audit |
| Director since: 2017 | • | Nuc Rev | | | Director since: 2013 | • | PPRC (Chair) |
| | • | O&C | | | | | |
| | | | | | | | |
| | | | |
| Previous Experience | | | Previous Experience |
| • | NiSource, Inc.—President (2004–2015) and CEO | | | • | Harvard Business School—H. Naylor Fitzhugh |
| | (2005–2015) | | | | Professor of Business Administration |
| | | | | | (2016–2017, 1990–2011) |
| Other Public Boards | | | • | Georgetown University McDonough School of |
| • | DT Midstream, Inc. (2021-present) | | | | Business—Dean and William R. Berkeley Professor of |
| • | Team, Inc. (2019-2021) | | | | Business Administration (2011-2016) |
| • | Cloud Peak Energy, Inc. (2015–2019) | | | • | Wharton School of Finance—Assistant Professor of |
| • | Columbia Pipeline Group, Inc. (2014–2015) | | | | Management (1986–1990) |
| • | NiSource, Inc. (2005–2015) | | | | |
| | | | | Qualifications |
| Qualifications | | | • | Culture, Safety, and Talent Development |
| • | CEO Experience | | | | Leadership and research in corporate inclusion and |
| | Extensive executive leadership experience in the | | | | diversity |
| | utility sector | | | • | Corporate Governance |
| • | Energy Industry Experience | | | | Service on various civic and educational boards, |
| | Broad experience in natural gas and electric | | | | advisor to other corporate boards |
| | generation, transmission, storage and distribution | | | • | Executive Experience as senior level higher education |
| • | Regulatory and Energy Policy | | | | administrator |
| | Experience developing regulatory strategies and | | | | Expertise in executive development and strategic |
| | leading external relations | | | | human resource management |
| | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
![a2020murray.jpg](https://capedge.com/proxy/DEF 14A/0000936340-20-000145/a2020murray.jpg)
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| DTE ENERGY 2022 PROXY STATEMENT11 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | |
| Mark A. MurrayGary H. Torgow | | | Gerardo NorciaJames H. Vandenberghe |
| Chairman of the Board of Directors, | | | Retired Vice Chairman, Meijer, Inc. | | | CEO (2019-present)chairman and President (2016-former Director, |
| (2013-present)The Huntington National Bank | | | present), DTE Energy CompanyLear Corporation (1998-2008) |
| (2019-present) | | | | | |
| | | | | | |
| Independent | DTE Committees: | | | Not Independent | DTE Committees: |
| Age: 65 | • | Nuc Rev (Chair)Finance | | | Age: 57 | | |
| Director since: 200972 | • | PPRCAudit |
| | Director since: 2019 | • | PPRC | | | Director since: 2006 | • | Corp Gov |
| | | | | | | | • | Finance (Chair) |
| | | | | | | | |
| | | | |
| Previous Experience | | | Previous Experience |
| • | Meijer, Inc.—President (2006–2013), Co-CEOTCF Financial Corporation—Executive Chairman | | | • | DTE Electric—Lear Corporation—President and COO (2013-2016)(1997–1998), |
| | (2013–2016)(2019-2021) | | | | CFO (1988–1997, 2006–2007) |
| • | DTE Gas—President and COO (2007-2013)Chemical Financial Corporation—Chairman | | | | |
| | (2016-2019) | | | Other Public Boards |
| • | Grand Valley State University—President (2001–2006)Talmer Bancorp, Inc.—Chairman (2009-2016) | | | • | DTE Gas Storage and Pipelines—President and COOFederal-Mogul Corporation (2008–2013) |
| | | | | • | State of Michigan—Treasurer (1999–2001) | | | | (2002-2007)Lear Corporation (1995–2008) |
| • | Michigan State University—VP of Finance and | | | |
| | Administration (1998–1999) | | | Qualifications |
| | | | | • | Energy Industry Experience |
| Other Public Boards | | | | More than 30 years of leadership in business development, engineering and operations | | |
| • | Universal Forest Products, Inc. (2004–2016)The Huntington National Bank (2021-Present) | | | | development, engineering and operationsQualifications |
| • | Fidelity Fixed Income and Asset AllocationTCF Financial Corporation (2019-2021) | | | • | OperationsGrowth and Continuous ImprovementValue Creation |
| • | (2016–present)Chemical Financial Corporation (2016-2019) | | | | Extensive experience in customer relations, strategic planning and |
| | | | | | planning and operational efficiency |
| Qualifications | | | • | Employee Engagement, Safety and TalentTalmer Bancorp, Inc. (2009-2016) | | | | managing capital-intensive industries |
| • | CEO Experience | | | | Broad experience with human capital management |
| | President and Co-CEO of a major Michigan-based | | | | and safety leadership |
| | corporation | | | | |
| • | Financial Planning and Review | | | | Analysis |
| Qualifications | Strategic planning, corporate development | | | Broad experience with public and | | | | financial |
| | finance experience | | | | |
| • | Government, Regulatory and CommunityLeadership Experience | | | | accounting for complex organizations |
| | University presidentChairman and state government officialexecutive experience in publicly | | | | |
| | held companies | | | | | | | | |
| • | Financial Planning and Analysis | | | | | | | | |
| | Financial accounting for complex organizations | | | | | | | | |
| | and publicly held companies | | | | |
| • | Growth and Value Creation | | | | |
| | Strong skill sets in corporate finance, community | | | | |
| | relations, strategic planning and corporate/business | | | | |
| | development | | | | | | |
| | | | | | |
|
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| 12DTE ENERGY 20202022 PROXY STATEMENT9 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | |
| Valerie M. Williams | | | |
| Retired Southwest Assurance Managing | | | |
| Partner, Ernst & Young LLP (2009-2016) | | | |
| | | | | | |
| Independent | DTE Committees: | | | | |
| Age: 65 | • | Audit (Chair) | | | | | |
| Director since: 2018 | • | Corp Gov | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | |
| Previous Experience | | | |
| • | Ernst & Young, LLP—Southwest AABS Managing | | | | |
| | Partner (2006–2009) | | | | |
| • | Ernst & Young, LLP—National Office Professional | | | | |
| | Practice Partner (2005) | | | | |
| | | | | | | |
| Other Public Boards | | | |
| • | Devon Energy Corporation (2021-present) | | | | |
| • | Omnicom Group Inc. (2016-present) | | | | |
| • | Franklin family of funds of Franklin Templeton | | | | |
| | (2021-present) | | | | | | | | |
| • | WPX Energy, Inc. (2018-2021) | | | | |
| | | | | | | |
| Qualifications | | | |
| • | Financial Planning and Analysis | | | | |
| | Significant financial reporting expertise for complex | | | | |
| | organizations | | | | |
| • | Corporate Governance | | | | |
| | Leadership experience in audit practice and risk | | | | |
| | management | | | | |
| • | Growth and Value Creation | | | | |
| | Experience in oversight of operations and strategy | | | | |
| | development | | | | |
| | | | | | | | | | |
| | |
| Ruth G. Shaw | | | Robert C. Skaggs, Jr. |
| Retired Group Executive, Public Policy and | | | Retired Chairman and CEO, Columbia Pipeline |
| President, Duke Nuclear, Duke Energy | | | Group, Inc. |
| (2003-2009) | | | (2015-2016) |
| | | | | | |
| Independent | DTE Committees: | | | Independent | DTE Committees: |
| Age: 72 | • | Corp Gov | | | Age: 65 | • | Finance |
| Director since: 2008 | • | Nuc Rev | | | Director since: 2017 | • | Nuc Rev |
| | • | O&C | | | | • | O&C |
| | | | | | | | |
| | | | |
| Previous Experience | | | Previous Experience |
| • | Duke Energy—Executive Advisor (2007–2009) | | | • | NiSource, Inc.—President (2004–2015) and CEO |
| • | Duke Nuclear—Group Executive for Public Policy | | | | (2005–2015) |
| | and President (2006–2007) | | | |
| • | Duke Power Company—President and CEO (2003–2006) | | | Other Public Boards |
| | | | • | Team, Inc. (2019-present) |
| Other Public Boards | | | • | Cloud Peak Energy, Inc. (2015–2019) |
| • | Dow, Inc. (2005–present) | | | • | Columbia Pipeline Group, Inc. (2014–2015) |
| • | SPX Corporation (2015–present) | | | • | NiSource, Inc. (2005–2015) |
| | | | |
| Qualifications | | | Qualifications |
| • | Energy Industry Experience | | | • | CEO Experience |
| | Extensive experience in the nuclear and energy | | | | Extensive executive leadership experience in the |
| | industries | | | | utility sector |
| • | Corporate Governance | | | • | Energy Industry Experience |
| | Service on corporate boards and industry | | | | Broad experience in natural gas and electric |
| | associations and organizations | | | | generation, transmission, storage and distribution |
| • | Government, Regulatory and Community | | | • | Government, Regulatory and Community |
| | Broad knowledge of regulatory matters, public | | | | Experience developing regulatory strategies and leading external relations |
| | policy and corporate communications | | | | leading external relations |
| | | | | | |
| | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
|
| | |
10DTE ENERGY2020 PROXY STATEMENT
| |
|
| | | | | | | | | | |
| | |
| David A. Thomas | | | Gary H. Torgow |
| President, Morehouse College | | | Executive Chairman, TCF Financial Corporation |
| (2018-present) | | | (2019-present) |
| | | | | | |
| Independent | DTE Committees: | | | Independent | |
| Age: 63 | • | Finance | | | Age: 63 | | |
| Director since: 2013 | • | PPRC | | | Director since: 2019 | | |
| | | | | | | | |
| | | | |
| Previous Experience | | | Previous Experience |
| • | Harvard Business School—H. Naylor Fitzhugh | | | • | Chemical Financial Corporation—Chairman |
| | Professor of Business Administration (2016–2017, | | | | (2016-2019) |
| | 1990–2011) | | | • | Talmer Bancorp, Inc.—Chairman (2009-2016) |
| • | Georgetown University McDonough School of | | | | | | |
| | Business—Dean and William R. Berkeley Professor of | | | Other Public Boards |
| | Business Administration (2011-2016) | | | • | TCF Financial Corporation (2019-present) |
| • | Wharton School of Finance—Assistant Professor of | | | • | Chemical Financial Corporation (2016-2019) |
| | Management (1986–1990) | | | • | Talmer Bancorp, Inc. (2009-2016) |
| | | | | | | | | |
| Qualifications | | | Qualifications |
| • | Employee Engagement, Safety and Talent | | | • | Leadership Experience |
| | Leadership and research in corporate inclusion and | | | | Chairman and executive experience in publicly |
| | diversity | | | | held companies |
| • | Corporate Governance | | | • | Financial Planning and Review |
| | Service on various civic and educational boards, | | | | Financial accounting for complex organizations |
| | advisor to other corporate boards | | | | and publicly-held companies |
| • | Executive Experience as senior level higher education | | | • | Growth and Value Creation |
| | administrator | | | | Strong skill sets in corporate finance, community |
| | Expertise in executive development and strategic | | | | relations, strategic planning and corporate/business |
| | human resource management | | | | development |
| | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
|
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| DTE ENERGY2020 PROXY STATEMENT 11
|
|
| | | | | | | | | | |
| | |
| James H. Vandenberghe | | | Valerie M. Williams |
| Retired Vice chairman and former Director, | | | Retired Southwest Assurance Managing |
| Lear Corporation (1998-2008) | | | Partner, Ernst & Young LLP (2009-2016) |
| | | | | | |
| Independent | DTE Committees: | | | Independent | DTE Committees: |
| Age: 70 | • | Audit | | | Age: 63 | • | Audit (Chair) |
| Director since: 2006 | • | Corp Gov | | | Director since: 2018 | • | Corp Gov |
| | • | Finance (Chair) | | | | | |
| | | | | | | | |
| | | | |
| Previous Experience | | | Previous Experience |
| • | Lear Corporation—President and COO (1997–1998), | | | • | Ernst & Young, LLP—Southwest AABS Managing |
| | CFO (1988–1997, 2006–2007) | | | | Partner (2006–2009) |
| | | | | | | • | Ernst & Young, LLP—National Office Professional |
| Other Public Boards | | | | Practice Partner (2005) |
| • | Lear Corporation (1995–2008) | | | | | |
| • | Federal-Mogul Corporation (2008–2013) | | | Other Public Boards |
| | | | | | • | Omnicom Group Inc. (2016-present) |
| Qualifications | | | • | WPX Energy, Inc. (2018-present) |
| • | Growth and Value Creation | | | | | |
| | Extensive experience in strategic planning and | | | Qualifications |
| | managing capital-intensive industries | | | • | Financial Planning and Review |
| • | Financial Planning and Review | | | | Significant financial reporting expertise for complex |
| | Broad experience with public and financial | | | | organizations |
| | accounting for complex organizations | | | • | Corporate Governance |
| | | | | | Leadership experience in audit practice and risk |
| | | | | | management |
| | | | | • | Growth and Value Creation |
| | | | | | Experience in oversight of operations and strategy |
| | | | | | development |
| | | | | | |
| | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
|
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12DTE ENERGY2020 2022 PROXY STATEMENT13
| |
Corporate Governance
Governance Guidelines
At DTE Energy, we are committed to operating in an ethical, legal, environmentally sensitive and socially responsible manner, while creating long-term value for our shareholders. The foundation of our governance practices begins at the top, with the DTE Energy Board of Directors Mission and Guidelines (“Governance Guidelines”). The Governance Guidelines set forth the practices the Board follows with respect to Board composition and selection, Board meetings, the performance evaluation and succession planning for DTE Energy’s Chief Executive Officer, Board committees, Board compensation and communicating with the Board, among other things. The Governance Guidelines are also intended to align the interests of directors and management with those of our shareholders. The following is a summary of the Governance Guidelines, along with other governance practices at DTE Energy.
Election of Directors and Vacancies
The Company has a declassified board of directors. Directors are elected annually for terms which expire upon election of their successor at the next year’s annual shareholder meeting.
If a vacancy on the Board occurs between annual shareholder meetings, the vacancy may be filled by a majority vote of the directors then in office. The new director’s term will expire upon election of their successor at the next year’s annual shareholder meeting.
Under the Governance Guidelines, the Corporate Governance Committee periodically assesses the skills, characteristics and composition of the Board, along with the need for expertise and other relevant factors as it deems appropriate. In light of these assessments, and in light of the standards set forth in the Governance Guidelines, the Corporate Governance Committee may seek candidates with specific qualifications and candidates who satisfy other requirements set by the Board. We believe our Board should be comprised of directors who have had high-level executive experience, have been directors on other boards and have been tested through economic downturns and crises. Industry experience, regional relationships and broad diversity of experience and backgrounds are also factors in Board nominee selection. The Board’s Governance Guidelines confirm that we believe it is desirable for Board members to possess diverse characteristics of gender, race, ethnicity and age, and we consider these factors in Board evaluation and in the identification of candidates for Board membership. We believe this type of composition enables the Board to oversee the management of the business and affairs of the Company effectively. Information about the skills, experiences and qualifications of our directors is included in their biographies beginning on page 7.8.
The Corporate Governance Committee considers candidates who have been properly nominated by shareholders, as well as candidates who have been identified by Board members and Company personnel. In addition, the Corporate Governance Committee may use a search firm to assist in the search for candidates and nominees and to evaluate the nominees’ skills against the Board’s criteria. Based on its review of all candidates, the Corporate Governance Committee recommends a slate of director nominees for election at the annual meeting of shareholders. The slate of nominees may include both incumbent and new nominees.
Potential candidates are reviewed and evaluated by the Corporate Governance Committee, and selected candidates go on to be interviewed by one or more Corporate Governance Committee members. An invitation to join the Board is extended by the Board itself, through the Chairman and the Chair of the Corporate Governance Committee.
During 2019, the Corporate Governance Committee screened director candidates and recommended to the Board that Gary Torgow be elected as a director. Mr. Torgow was recommended as a potential candidate by Board members and Company personnel. Mr. Torgow was elected by the Board to serve for a term effective June 20, 2019 and expiring at the 2020 annual meeting. In conjunction with his appointment as President and Chief Executive Officer, Gerardo Norcia was also elected by the Board to serve for a term effective June 23, 2019 and expiring at the 2020 annual meeting.
Under our Bylaws, a group of up to 20 shareholders owning 3% or more of the Company’s outstanding common stock continuously for at least three (3) years may nominate and include in the Company’s proxy materials a candidate for the Board of Directors (a Shareholder Nominee), provided that the shareholder(s) and the nominee satisfy the requirements
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| DTE ENERGY2020 PROXY STATEMENT 13
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specified in the Bylaws. The total number of Shareholder Nominees that the Company must include in the Company’s proxy materials in a given year shall not exceed 20% of the number of directors in office at the time of the nomination.
Composition of the Board
Our Governance Guidelines and our Bylaws state that the exact size of the Board will be determined by resolution of the Board from time to time. Our Board currently has thirteentwelve members. As noted on page 5, W. Frank Fountain, Jr.'s 6, Gerard M. Anderson's
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14DTE ENERGY2022 PROXY STATEMENT | |
retirement from the Board will be effective as of May 7, 2020,5, 2022, at which time the size of the Board will be reduced to twelve.eleven.
Director Independence and Categorical Standards
As a matter of policy and in accordance with New York Stock Exchange (“NYSE”) listing standards, we believe that the Board should consist of a majority of independent directors. The Board must affirmatively determine that a director has no material relationship with the Company, either directly or indirectly, or as a partner, shareholder or officer of an organization that has a relationship with the Company. The Board has established the following categorical standards for director independence, which are more stringent than the NYSE independence standards for former Company executives:
A director for whom any of the following is true will not be considered independent:
•A director who is currently, or has been at any time in the past, an employee of the Company or a subsidiary.
•A director whose immediate family member is, or has been within the last three years, an executive officer of the Company.
•A director who has received, or whose immediate family member has received, more than $120,000 in direct compensation from the Company during any twelve-month period within the last three years, 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).
•A director who is, or whose immediate family member is, a current partner of a firm that is the Company’s internal or external auditor; the director is a current employee of such a firm; the immediate family member is a current employee of such a firm and personally works on the Company’s audit; or the director or immediate family member was, within the last three years, a partner or employee of such a firm and personally worked on the Company’s audit within that time.
•A director who is employed, or whose immediate family member is employed, or has been employed within the last three years, as an executive officer of another company where any of the Company’s present executives at the same time serves or served on that company’s compensation committee.
•A director who is a current employee, or whose immediate family member is a current executive officer, of a company that has made payments to, or received payments from, the Company for property or services in an amount which, in any of the last three fiscal years, exceeds the greater of $1 million or 2% of such other company’s consolidated gross revenues is not independent until three years after the company falls below such threshold.
Contributions by the Company to a tax-exempt organization will not be considered to be a material relationship that would impair a director’s independence if a director serves as an executive officer of a tax-exempt organization and, within the preceding three years, contributions in any single fiscal year were less than $1 million or 2% of such tax-exempt organization’s consolidated gross revenues (whichever is greater).
Applying these standards and considering all relevant facts and circumstances, the Board has affirmatively determined that all of our director nominees other than Gerard M. Anderson and Gerardo Norcia qualify as independent and have no material relationship with the Company. The independent directors are David A. Brandon, Charles G. McClure, Jr., Gail J. McGovern, Mark A. Murray, Ruth G. Shaw, Robert C. Skaggs, Jr., David A. Thomas, Gary Torgow, James H. Vandenberghe, and Valerie M. Williams. Mr. Anderson and Mr. Norcia areis not an independent directorsdirector and may be deemed to be affiliatesan affiliate of the Company under the categorical standards. Mr. Anderson is not considered independent due to his current employment as Executive Chairman, and Mr. Norcia is not considered independent due to his current employment as President and Chief Executive Officer. There were no material relationships that the Board considered when determining the independence of the directors other than Mr. Anderson and Mr. Norcia.
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14DTE ENERGY2020 PROXY STATEMENT
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Assessment of Board and Committee Performance
The Board evaluates its performance annually. In addition, each Board committee performs an annual self-assessment to determine its effectiveness. Each Board member also performs an intensive annual peer review of the other directors who have served one year or more. The results of the Board and committee self-assessments are discussed with the Board and each committee, respectively. The results of the individual peer review are reviewed by the Chair of the Corporate Governance Committee and discussed with the Corporate Governance Committee. The Chair of the Corporate Governance Committee discusses the results of the peer review with individual directors, as directed by the Corporate Governance Committee.
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| DTE ENERGY 2022 PROXY STATEMENT15 |
Terms of Office
The Board has not established term limits for directors. We assure the independence and ongoing effectiveness of each independent director through the individualized peer assessment process described above, in which each Board member annually undergoes a rigorous evaluation by the other members. In addition, the Corporate Governance Committee of the Board has established policies that independent directors should not stand for election after attaining the age of 75, unless the Board waives this provision when circumstances exist which make it prudent to continue the service of the particular independent director. Directors who are retired CEOs of the Company or its subsidiaries shall not stand for election after attaining the age of 70. Except for the CEO, who may continue to serve as a director after retirement for so long as he is serving as Chairman, any other employees who are also directors will not stand for re-election after retiring from employment with the Company.
Election of the Executive Chairman;Chairman and CEO; Lead Independent Director
Our Bylaws currently provide that the Chairman shall preside at all meetings of the Board, and that the Chairman can be either an independent or non-independent member of the Board. Our Bylaws also provide that the Chairman may simultaneously serve as the CEO of the Company and shall preside at all meetings of the Board. Our Bylaws also provide that the the independent members of the Board may elect an independent director as Lead Independent Director, which has been our practice since 2004.
The Board believes it is in the best interests of the Company and shareholders for the Board to have flexibility in determining whether to separate or combine the roles of Chairman and Chief Executive Officer based on the Company’s circumstances. The Board has strong governance structures and processes in place to ensure the independence of the Board, eliminate conflicts of interest and prevent dominance of the Board by senior management. The Governance Guidelines and various committee charters provide for independent discussion among directors and for independent evaluation of, and communication with, many members of senior management.
The Board members have considerable experience and knowledge regarding the challenges and opportunities facing the Company and shareholders. The Board believes, therefore, that it is prudent for Mr. Anderson, who previously served asseparating the Company'sroles of Chairman and Chief Executive Officer to serve as Executive Chairmanis unnecessary at this time. The Board believes that Mr. AndersonNorcia is well qualified through his experience and expertise to be the person who generally sets the agenda for, (subject to the approval of the Lead Independent Director) and leads Board discussions of strategic issues for the Company. Nevertheless, the Board will separate these functions when it considers the separation to be in the best interests of the Company and shareholders.
With the Executive Chairman positionand CEO positions held by Mr. Anderson,Norcia, the Board continues to believe a good governance practice is to elect a Lead Independent Director from the independent directors. On May 9, 2019, the Board unanimously elected Ruth G. Shaw to serve as Lead Independent Director. The Lead Independent Director has such responsibilities as required under the NYSE listing standards, as well as such other responsibilities as determined by the Board. The Lead Independent Director serves in that capacity until replaced. There is no defined term of office, and the assignment does not rotate among the directors. The Lead Independent Director’s duties include:
•Calling regularly scheduled executive sessions; presiding at Board executive sessions of non-management directors or independent directors; and providing feedback regarding such sessions, as appropriate, to the Executive Chairman and to the CEO;Chairman;
•Serving as the liaison between the Executive Chairman and the CEO and the independent directors;
•Approving the general scope and type of information to be presented at Board meetings;
•Reviewing shareholder communications addressed to the Board or to the Lead Independent Director;
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| •DTE ENERGY2020 PROXY STATEMENT 15 |
Making himself or herself available if requested by major shareholders, for direct consultation and communication with shareholders;
•Organizing Board meetings in the absence of the Executive Chairman and presiding at any session of the Board where the Executive Chairman is not present;
•Designating one or more directors as alternate members of any committee to replace an absent or disqualified member at any committee meeting, provided that, in the event an alternate member is designated for the Audit, Corporate Governance or Organization and Compensation Committee, the designate meets the Company’s categorical standards for director independence and SEC and NYSE requirements;
•Consulting with the Executive Chairman in the selection of topics to be discussed when developing the annual Board calendar;
•Retaining independent advisors in consultation with the Board, on behalf of the Board as the Board determines to be necessary or appropriate;
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16DTE ENERGY2022 PROXY STATEMENT | |
•Participating in the Organization and Compensation Committee’s annual review and approval of the CEO’s corporate goals and objectives and evaluation of the CEO’s performance;
•Approving Board meeting agendas after consulting with the Executive Chairman and the Corporate Secretary; and
•Collaborating with the Executive Chairman and the Corporate Secretary on scheduling Board and committee meetings and approving the schedule of Board and Committee meetings.
Board Meetings and Attendance
The Board met eightnine times in 2019.2021. All of the incumbent directors attended at least 90% of the Board meetings and the meetings of the committees on which they served, elevennine of whom had a 100% attendance record. The Board does not have a policy with regard to directors’ attendance at the annual meeting of shareholders. At the 20192021 annual meeting, all eleventwelve directors standing for election were in attendance.
Executive Sessions
It is the Board’s practice that the independent directors meet in executive session at most regular Board meetings and meet in executive session at other times whenever they believe it appropriate. The independent directors met in executive sessions (sessions without the Executive Chairman, the President and CEO, or any representatives of management present) at sixseven of the eightnine Board meetings in 2019.2021. The independent directors meet in executive session on an annual basis to review the Organization and Compensation Committee’s performance review of the CEO. The Lead Independent Director chairs the executive sessions of the independent directors.
Codes of Business Conduct and Ethics
The DTE Energy Board of Directors Code of Business Conduct and Ethics, the Officer Code of Business Conduct and Ethics and the DTE Energy Way are the standards of behavior for Company directors, officers and employees. Any waiver of, or amendments to, the Board of Directors Code of Business Conduct and Ethics and the Officer Code of Business Conduct and Ethics as it pertains to the CEO, the Chief Financial Officer, senior financial officers and other Executive Officers, as defined in the “Security Ownership of Directors and Officers” section on page 26,25, will be disclosed promptly by posting such waivers or amendments on the Company website, dteenergy.com. There were no waivers or amendments during 2019.2021.
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16DTE ENERGY2020 PROXY STATEMENT
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Communications with the Board
The Company has established several methods for shareholders or other non-affiliated persons to communicate their concerns to the directors. Concerns regarding auditing, accounting practices, internal controls, or other business ethics issues may be submitted to the Audit Committee through its reporting channel:
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By telephone: | By Internet: | By mail: |
877-406-9448 | ethicsinaction.dteenergy.com | For auditing, accounting, or internal control matters: | For business ethics issues: |
| | DTE Energy Company | DTE Energy Company |
| | Audit Committee | Ethics and Employee Issues |
| | One Energy Plaza | One Energy Plaza |
| | Room 2431 WCB | Room 2188 WCB |
| | Detroit, Michigan 48226-1279 | Detroit, Michigan 48226-1279 |
Any other concern may be submitted to the Corporate Secretary by mail for prompt delivery to the Lead Independent Director at:
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Lead Independent Director, |
c/o Corporate Secretary |
DTE Energy Company |
One Energy Plaza |
Room 2386 WCB |
Detroit, Michigan 48226-1279 |
Periodically, we revise our governance information in response to changing regulatory requirements and evolving corporate governance developments. Current copies of the Governance Guidelines, committee charters, categorical
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| DTE ENERGY 2022 PROXY STATEMENT17 |
standards of director independence and the codes of ethics referred to above are available on our website at dteenergy.com/governance. A copy of any or all of these documents and a copy of the Company’s Annual Report on Form 10-K may be requested, free of charge, by mailing a request to the Corporate Secretary, DTE Energy Company, One Energy Plaza, Room 2386 WCB, Detroit, Michigan 48226-1279.
The information on the Company’s website is not, and shall not be deemed to be, a part of this proxy statement or incorporated into any other filings the Company makes with the SEC.
Committees of the Board of Directors
The Board has standing committees for Audit, Corporate Governance, Finance, Nuclear Review, Organization and Compensation, and Public Policy and Responsibility. The Board committees act in an advisory capacity to the full Board, except that the Organization and Compensation Committee has direct responsibility for the CEO’s goals, performance and compensation along with compensation of other executives, and the Audit Committee has direct responsibility for appointing, replacing, compensating and overseeing the independent registered public accounting firm. Each committee has adopted a charter that clearly establishes the committee’s respective roles and responsibilities. In addition, each committee has authority to retain independent outside professional advisors or experts as it deems advisable or necessary, including the sole authority to retain and terminate any such advisors, to carry out its duties.
The Board has determined that each member of the Audit, Corporate Governance, and Organization and Compensation Committees is independent under our categorical standards and that each member is free of any relationship that would interfere with his or her individual exercise of independent judgment. The Board has determined that each member of the Audit Committee meets the independence requirements under the SEC rules and NYSE listing standards applicable to audit committee members. The Board has also determined that each member of the Organization and Compensation Committee meets the independence requirements under the SEC rules and NYSE listing standards applicable to compensation committee members.
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| DTE ENERGY2020 PROXY STATEMENT 17
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The full Board bears responsibility for oversight and risk management of plans to create long-term value for shareholders, while ensuring our company operates in an environmentally and socially responsible manner. The standing committees review and assess risks and opportunities associated with ESG issues under their purview, and report on these topics at every meeting of the full Board.
The following is a summary of the terms of each committee’s charter and the responsibilities of its members:
Audit Committee (Six(Eight meetings in 2019)2021)
•Assists the Board in its oversight of the quality and integrity of our accounting, auditing and financial reporting practices and the independence of the independent registered public accounting firm.
•Reviews scope of the annual audit and the annual audit report of the independent registered public accounting firm.
•Reviews financial reports, internal controls and financial and accounting risk exposures.
•Discusses with management (a) earnings press releases and (b) material financial information and earnings guidance.
•Reviews the policies, programs, performance and activities relating to the Company’s compliance and ethics programs.
•Reviews accounting policies and system of internal controls.
•Assumes responsibility for the appointment, replacement, compensation and oversight of the independent registered public accounting firm.
•Reviews and pre-approves permitted non-audit functions performed by the independent registered public accounting firm.
•Reviews the scope of work performed by the internal audit staff.
•Reviews legal or regulatory requirements or proposals that may affect the committee’s duties or obligations.
•Retains independent outside professional advisors, as needed.
The Board has determined that each member of the Audit Committee is financially literate and independent. The Board has reviewed the qualifications and experience of each of the Audit Committee members and determined that Ms. Williams and Mr. Vandenberghe qualify as “audit committee financial experts” as that term has been defined by the SEC.
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18DTE ENERGY2022 PROXY STATEMENT | |
Corporate Governance Committee (Four(Six meetings in 2019)2021)
•Considers the organizational structure of the Board.
•Identifies and reports to the Board risks associated with the Company’s governance practices and the interaction of the Company’s governance with enterprise risk management.
•Recommends the nominees for directors to the Board.
•Reviews recommended compensation arrangements for the Board, director and officer indemnification and insurance for the Board.
•Reviews recommendations for director nominations received from shareholders.
•Reviews shareholder proposals and makes recommendations to the Board regarding the Company’s response.
•Reviews best practices in corporate governance and recommends corporate and Board policies/practices, as appropriate.
•Retains independent outside professional advisors, as needed.
Finance Committee (Seven(Six meetings in 2019)2021)
•Reviews matters related to capital structure.
•Reviews major financing plans.
•Recommends dividend policy to the Board.
•Reviews financial planning policies and investment strategy.
•Reviews certain capital expenditures.
•Reviews insurance and business risk management.
•Receives reports on the strategy, investment policies, adequacy of funding and performance of post-retirement obligations.
•Reviews certain potential mergers, acquisitions and divestitures.
•Reviews investor relations activities.
•Retains independent outside professional advisors, as needed.
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18DTE ENERGY2020 PROXY STATEMENT
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Nuclear Review Committee (Seven(Six meetings in 2019)2021)
•Provides non-management oversight and review of the Company’s nuclear power program.
•Reviews the financial, operational, business and safety plans and performance at the Company’s nuclear facilities.
•Reviews the policies, procedures and practices related to health and safety, potential risks, resources and compliance at the Company’s nuclear facilities.
•Reviews the operating performance and key performance indicators and trends for the Company’s nuclear facilities.
•Reviews non-financial audit findings related to the Company’s nuclear facilities or personnel.
•Reviews the impact of changes in regulation on the Company’s nuclear facilities.
•Retains independent outside professional advisors, as needed.
Organization and Compensation Committee (Five(Six meetings in 2019)2021)
•Reviews the CEO’s performance and approves the CEO’s compensation.
•Approves the compensation of certain other executives.
•Administers the executive incentive plans and oversees the Company’s overall executive compensation and benefit plan philosophy, structure and practices, and the risks involved in executive compensation plans.
•Reviews and approves executive employment agreements, severance agreements and change-in-control agreements, along with any amendments to those agreements.
•Assesses and discusses with the Board the relationship between the inherent risk in executive compensation plans, executive compensation arrangements and executive performance goals and payouts, and how the level of risk corresponds to the Company’s business strategies.
•Reviews the Compensation Discussion and Analysis disclosure and recommends inclusion in the Company’s annual report or proxy statement.
•Reviews the Company’s policies and programs promoting diversity and inclusion among the Company’s employees and officers.
•Recommends to the full Board the officers to be elected by the Board.
•Reviews succession and talent planning.
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| DTE ENERGY 2022 PROXY STATEMENT19 |
•Evaluates the independence of the independent compensation consultant at least annually.
•Reviews and discusses with management any transactions with the independent compensation consultant or its affiliates.
•Retains independent outside professional advisors, as needed.
Public Policy and Responsibility Committee (Five meetings in 2019)2021)
•Reviews and advises the Board on current and emerging social, economic, political and environmental issues.
•Reviews management’s response to risk exposures related to regulatory, social, economic, political, reputational and environmental issues and advises the Board on management’s procedures for assessing, monitoring, controlling and reporting on such exposures.
•Reviews the Company's programs and strategies related to environmental sustainability.
•Reviews the Company’s policies on social responsibilities.
•Reviews the Company’s policies and programs promoting diversity and inclusion among the Company’s suppliers.
•Reviews the Company’s regulatory strategies and activities (including rate case strategies, rate competitiveness and environmental regulations) as well as its state and federal legislative and political activities and strategies.
•Reviews reports from management regarding policies and safety issues related to customers and the general public.
•Retains independent outside professional advisors, as needed.
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| DTE ENERGY2020 PROXY STATEMENT 19
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Board of Directors Risk Oversight Functions
The Board receives, reviews and assesses reports from the Board committees and from management relating to enterprise-level risks. Each Board committee is responsible for overseeing and considering risk issues relating to their respective committee and reporting their assessments to the full Board at each regularly scheduled Board meeting. When granting authority to management, approving strategies and receiving management reports, the Board and committees consider, among other things, the risks we face.
Each Board committee reviews management’s assessment of risk for that committee’s respective area of responsibility. As part of its oversight function, the Board discusses any risk conflicts that may arise between the committees or assigns to a committee risk issues that may arise which do not fall within a specific committee’s responsibilities.
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Board Committee | | Areas of Risk Oversight |
Audit Committee | | Overall review of risk issues, policies and controls associated with our overall financial reporting and disclosure process and legal compliance, and review policies on risk control assessment and accounting risk exposure, as well as cybersecurity risk. |
Finance Committee | | Review of financial, capital, credit and insurance risk. |
Organization and Compensation Committee | | Assess and discuss with the Board the relationship between the inherent risks in executive compensation plans, executive compensation arrangements and executive performance goals and payouts, and how the level of risk corresponds to the Company’s business strategies. |
Corporate Governance Committee | | Review risks associated with the Company’s governance practices and the interaction of the Company’s governance with enterprise risk-level management. |
Nuclear Review Committee | | Review risks relating to the operation of our nuclear power facilities. |
Public Policy and Responsibility Committee | | Review risks associated with regulatory, social responsibility, political activity, economic conditions, reputation, safety and the environment. |
All Board committees meet periodically with members of senior management to discuss the relevant risks and challenges facing the Company. In addition to its regularly scheduled Committee meetings, the Audit Committee meets with the Chief Financial Officer, the General Auditor and the independent registered public accounting firm in executive sessions at least semi-annually, and meets with the Chief Legal Officer and the Chief Compliance Officer at least annually in separate executive sessions. The Company’s General Auditor attends all Audit Committee meetings. The TreasurerGeneral Auditor and Chief Risk Officer meets annually with either the Audit Committee or the full Board to update the members on the Company’s enterprise-level risk management. The General Auditor and the Treasurer and Chief Risk Officer also periodically meetmeets with the other Board committees and the full Board as may be required.
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20DTE ENERGY2022 PROXY STATEMENT | |
The Company also utilizes an internal Risk Management Committee, chaired by the CEO and comprised of the Chief Financial Officer, Chief Administrative Officer, Chief Legal Officer, TreasurerGeneral Auditor and Chief Risk Officer General Auditor and other senior officers. Among other things, the internal Risk Management Committee directs the development and maintenance of comprehensive risk management policies and procedures, and sets, reviews and monitors risk limits on a regular basis for enterprise-level risks, counter-party credit and commodity-based exposures.
The Board believes that the committee structure of risk oversight is in the best interests of the Company and its shareholders. Each committee member has expertise on risks relative to the nature of the committee on which he or she sits. With each committee reporting on risk issues at full Board meetings, the entire Board is in a position to assess the overall risk implications, to evaluate how they may affect the Company and to provide oversight on appropriate actions for management to take.
With regard to risk and compensation programs and policies, the Company’s Energy Trading segment has compensation programs and policies that are structured differently from those in other units within the Company. These compensation programs and policies are designed to discourage excessive risk taking by the Energy Trading employees and are subject to specific written policies and procedures administered by members of the Company’s senior management. The Company has determined that the Energy Trading compensation programs and policies do not create risks that are reasonably likely to have a material adverse effect on the Company.
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20DTE ENERGY2020 PROXY STATEMENT
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Board of Directors Compensation
Elements of Director Compensation
Employee directors receive no payment for service as directors. Gerard M. Anderson, the Company's Executive Chairman, is an executive officer of the Company (until May 5, 2022, as disclosed above), but not a Named Executive Officer, and he does not receive any additional compensation for services provided as a director. The goal of our compensation policies for non-employee directors is to tie their compensation to your interests as shareholders. Accordingly, approximately 50% of a director’s annual compensation is in the form of equity-based compensation, including phantom shares of our common stock. Generally, the compensation program for non-employee directors is reviewed on an annual basis by the Corporate Governance Committee and the Board. This review includes a review of a comparative peer group of companies that is identical to the peer group used to review executive compensation (See “Executive Compensation—Compensation Discussion and Analysis” beginning on page 32).31. Based on its December 20192021 review, the Board votedmade no modifications to increase director compensation effective January 1, 2020, as further described below.
the existing levels of compensation. |
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Cash Compensation | | |
Cash retainer | | $120,000 annually |
Lead Independent Director retainer | | $30,000 annually |
Committee chair retainer | | $20,000 annually for Audit, Nuclear Review, and Organization and Compensation Committee Chairs; $15,000 annually for Corporate Governance, Finance, and Public Policy and Responsibility Committee Chairs |
New Member Orientation/Mentor Program | | $1,250 and $750 quarterly for the New Member and Mentor, respectively, for the duration of the orientation |
Equity Compensation | | |
Upon first election to the Board | | 1,000 shares of restricted DTE Energy common stock, subject to a 3-year vesting period |
Annual equity compensation | | A variable number of phantom shares of DTE Energy common stock valued at $145,000 annually, with the actual number of phantom shares to be granted each year determined based on the closing price of the Company’s common stock on the first business daydate of each calendar year(1)the annual meeting(1) |
(1)Phantom shares of DTE Energy common stock are credited to each non-employee director’s account the date of the annual meeting each year beginning in 2022. Phantom share accounts are also credited with dividend equivalents which are reinvested into additional phantom shares.
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(1)
| Phantom shares of DTE Energy common stock are credited to each non-employee director’s account in January of each year. Phantom share accounts are also credited with dividend equivalents which are reinvested into additional phantom shares. For phantom shares granted after 2004, payment of the cash value is made three years after the date of grant unless otherwise deferred by voluntary election of the director. For phantom shares granted before 2005, payment of the cash value occurs only after the date a director terminates his or her service on the Board.ENERGY 2022 PROXY STATEMENT21 |
Payment of Non-Employee Director Fees and Expenses
Retainers for non-employee directors are either (i) payable in cash or (ii) at the election of the director, deferred into an account pursuant to the DTE Energy Company Plan for Deferring the Payment of Directors’ Fees. Non-employee directors may defer up to 100% of their annual retainer into an unfunded deferred compensation plan. Deferred fees may accrue for future payment, with interest accrued monthly at the 5-year U.S. Treasury Bond rate as of the last business day of each month or, at the election of the director, they may be invested in phantom shares of our common stock with all dividend equivalents reinvested.
In addition to the retainers, non-employee directors are reimbursed for their travel expenses incurred in attending Board and committee meetings, along with fees and expenses incurred when attending director education seminars or special meetings requested by management. Non-employee directors of the Company, along with full-time active employees and retirees, are also eligible to participate in the DTE Energy matching gift program, whereby the DTE Energy Foundation matches certain charitable contributions.
Director Life Insurance
The Company provides each non-employee director with group term life insurance in the amount of $20,000 and travel accident insurance in the amount of $100,000.
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| DTE ENERGY2020 PROXY STATEMENT 21
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Director Stock Ownership
We have established stock ownership guidelines for non-employee directors to more closely tie their interests to those of shareholders. Under these guidelines, the Board requires that each director own shares of the Company’s common stock beginning no later than 30 days after election to the Board. In addition, directors are required to own, within five years after initial election to the Board, shares of Company stock having a value equal to two times the sum of a director’s annual cash retainer plus the value of a director’s annual phantom stock compensation. Based on the 20202022 director compensation program, a director with five years of service will be required to hold a minimum of $530,000 in stock under these guidelines. This ownership requirement is greater than four times the amount of a director’s cash retainer under the 20202021 compensation program. Common stock, time-based restricted stock and phantom shares held by a director are counted toward fulfillment of this ownership requirement. As of December 31, 2019,2021, all directors met the initial common stock ownership requirement and all those directors who have served as a director for at least five years after their initial election fulfilled the five-year requirement.
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22 DTE ENERGY 20202022 PROXY STATEMENT
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20192021 Director Compensation Table
The following table details the compensation earned in 20192021 by each of the non-employee directors: | | Name | | Fees Earned or Paid in Cash ($)(1) | | Stock Awards ($)(2) | | All Other Compensation ($)(3) | | Total ($) | Name | | Fees Earned or Paid in Cash ($)(1) | | Stock Awards ($)(2) | | All Other Compensation ($)(3) | | Total ($) |
David A. Brandon | | 135,000 |
| | 130,000 |
| | 5,305 |
| | 270,305 |
| David A. Brandon | | 140,000 | | | 145,000 | | | 5,305 | | | 290,305 | |
W. Frank Fountain, Jr. (retiring) | | 135,000 |
| | 130,000 |
| | 494 |
| | 265,494 |
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Charles G. McClure, Jr. | | 129,685 |
| | 130,000 |
| | 305 |
| | 259,990 |
| Charles G. McClure, Jr. | | 135,000 | | | 145,000 | | | 5,305 | | | 285,305 | |
Gail J. McGovern | | 120,000 |
| | 130,000 |
| | 6,305 |
| | 256,305 |
| Gail J. McGovern | | 120,000 | | | 145,000 | | | 1,305 | | | 266,305 | |
Mark A. Murray | | 135,000 |
| | 130,000 |
| | 6,305 |
| | 271,305 |
| Mark A. Murray | | 140,000 | | | 145,000 | | | 6,305 | | | 291,305 | |
James B. Nicholson (retired) | | 51,350 |
| | 130,000 |
| | 5,165 |
| | 186,515 |
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Ruth G. Shaw | | 144,465 |
| | 130,000 |
| | 5,494 |
| | 279,959 |
| Ruth G. Shaw | | 150,000 | | | 145,000 | | | 5,494 | | | 300,494 | |
Robert C. Skaggs, Jr. | | 120,000 |
| | 130,000 |
| | 5,494 |
| | 255,494 |
| Robert C. Skaggs, Jr. | | 120,000 | | | 145,000 | | | 305 | | | 265,305 | |
David A. Thomas | | 120,000 |
| | 130,000 |
| | 5,158 |
| | 255,158 |
| David A. Thomas | | 135,000 | | | 145,000 | | | 6,305 | | | 286,305 | |
Gary Torgow | | 62,500 |
| | 131,180 |
| | 79 |
| | 193,759 |
| Gary Torgow | | 120,000 | | | 145,000 | | | 305 | | | 265,305 | |
James H. Vandenberghe | | 136,500 |
| | 130,000 |
| | 5,494 |
| | 271,994 |
| James H. Vandenberghe | | 135,000 | | | 145,000 | | | 494 | | | 280,494 | |
Valerie M. Williams | | 145,000 |
| | 130,000 |
| | 158 |
| | 275,158 |
| Valerie M. Williams | | 140,000 | | | 145,000 | | | 305 | | | 285,305 | |
Messrs. Brandon, Torgow, and Vandenberghe elected to defer 100% and Mr. Nicholson elected to defer 50% of the fees detailed above into the DTE Energy Company Plan for Deferring the Payment of Directors’ Fees.
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(2) | Shares of phantom stock are acquired as follows: (a) by non-employee directors (i) as compensation under the DTE Energy Company Deferred Stock Compensation Plan for Non-Employee Directors and (ii) through participation in the DTE Energy Company Plan for Deferring the Payment of Directors’ Fees and (b) by executive officers pursuant to the (i) DTE Energy Company Supplemental Savings Plan and (ii) DTE Energy Company Executive Supplemental Retirement Plan. Shares of phantom stock may be paid out in either cash or stock. |
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Amount and Nature of Beneficial Ownership as of December 31, 2021 |
Name of Beneficial Owners | | Common Stock(1) | | | Phantom Stock(2) | | | Other Shares That May Be Acquired(3) |
Gerard M. Anderson | | 608,586 | | | | 14,797 | | | | 57,115 | |
David A. Brandon | | 1,000 | | | | 14,919 | | | | — | |
Charles G. McClure, Jr. | | 1,000 | | | | 5,203 | | | | — | |
Gail J. McGovern | | — | | | | 44,755 | | | | — | |
Mark A. Murray | | 1,000 | | | | 5,203 | | | | — | |
Gerardo Norcia | | 222,233 | | | | 1,468 | | | | 117,883 | |
Ruth G. Shaw | | 5,500 | | | | 4,414 | | | | — | |
Robert C. Skaggs, Jr. | | 1,042 | | | | 6,008 | | | | — | |
David A. Thomas | | 2,068 | | | | 4,414 | | | | — | |
Gary Torgow | | 2,713 | | | | 4,988 | | | | — | |
James H. Vandenberghe | | 2,000 | | | | 15,711 | | | | — | |
Valerie M. Williams | | 1,000 | | | | 4,414 | | | | — | |
Trevor F. Lauer | | 27,801 | | | | 1,436 | | | | 28,008 | |
David E. Meador (4) | | 193,937 | | | | — | | | | 40,355 | |
David Ruud | | 46,831 | | | | 158 | | | | 18,281 | |
Mark W. Stiers | | 29,424 | | | | 342 | | | | 19,654 | |
Directors and Executive Officers as a group — 21 | | 1,186,278 | | | | 130,552 | | | | 321,449 | |
(1)Includes directly held common stock, restricted stock and shares held pursuant to the DTE Energy Company Savings and Stock Ownership Plan (tax-qualified 401(k) plan).
(2)Shares of phantom stock are acquired as follows: (a) by non-employee directors (i) as compensation under the DTE Energy Company Deferred Stock Compensation Plan for Non-Employee Directors and (ii) through participation in the DTE Energy Company Plan for Deferring the Payment of Directors’ Fees and (b) by executive officers pursuant to the (i) DTE Energy Company Supplemental Savings Plan and (ii) DTE Energy Company Executive Supplemental Retirement Plan. Shares of phantom stock may be paid out in either cash or stock.
(3)Represents performance shares under the Long-Term Incentive Plan (as described beginning on page 40) that entitle the executive officers to receive shares or cash equivalents (or a combination thereof) in the future if certain performance measures are met. The number of performance shares reflected in the table assumes that target levels of performance are achieved and includes an increase from the original grant amount, assuming full dividend reinvestment at the fair market value on each dividend payment date. Performance shares are not currently outstanding shares of our common stock and are subject to forfeiture if the performance measures are not achieved over a designated period of time. Executive officers do not have voting or investment power over the performance shares until performance measures are achieved. See the discussion in “Long-Term Incentives - Performance Shares Granted in 2021” beginning on page 40.
(4)Mr. Meador retired effective March 14, 2022.
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires our directors, executive officers and certain 10% shareholders (if any) to file reports of ownership and changes in ownership with respect to our securities with the SEC and to furnish copies of these reports to us. We reviewed the filed reports and written representations from our directors and executive officers regarding the necessity of filing reports.
Based upon our review, all of our current executive officers’ and directors’ required Section 16 filings during 2021 were filed on a timely basis, except as follows: Trevor F. Lauer, President and Chief Operating Officer of DTE Electric Company failed to file on a timely basis one Form 4 reporting one transaction.
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26 DTE ENERGY 20202022 PROXY STATEMENT
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(3) | Represents performance shares under the Long-Term Incentive Plan (as described beginning on page 43) that entitle the executive officers to receive shares or cash equivalents (or a combination thereof) in the future if certain performance measures are met. The number of performance shares reflected in the table assumes that target levels of performance are achieved and includes an increase from the original grant amount, assuming full dividend reinvestment at the fair market value on each dividend payment date. Performance shares are not currently outstanding shares of our common stock and are subject to forfeiture if the performance measures are not achieved over a designated period of time. Executive officers do not have voting or investment power over the performance shares until performance measures are achieved. See the discussion in “Long-Term Incentives - Performance Shares Granted in 2019” beginning on page 43. |
Prohibition on Pledging and Hedging Company Securities
The Company maintains policies which expressly prohibit hedging Company securities by all employees, executive officers and directors of the Company and its subsidiaries. For purposes of these policies, hedging includes purchases and sales of derivatives or any monetization transaction involving DTE securities that has the effect of limiting or eliminating the full risks of ownership of DTE securities. Our directors and officers are also prohibited from pledging their shares of Company stock as collateral for any loan or indebtedness. This prohibition includes, but is not limited to, holding such shares in a margin account.
Security Ownership of Certain Beneficial Owners
The following table sets forth information regarding the only persons or groups known to the Company to be beneficial owners of more than 5% of our outstanding common stock. | | | | | | | | | | | | | | | | | | | | | | | |
Title of Class | | Name and Address of Beneficial Owner | | Amount and Nature of Beneficial Ownership | | | Percent of Class |
Common Stock | | The Vanguard Group, Inc. 100 Vanguard Blvd. Malvern, Pennsylvania 19355 | | 21,608,113 | (1) | | 11.2 | % |
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Common Stock | | BlackRock, Inc. 55 East 52nd Street New York, New York 10055 | | 18,153,210 | (2) | | 9.3 | % |
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Common Stock | | Capital Research Global Investors 333 South Hope Street, 55th Fl Los Angeles, California 90071 | | 15,598,877 | (3) | | 8.1 | % |
(1)Based on information contained in Schedule 13G/A filed on February 9, 2022. The Vanguard Group, Inc. has shared voting power with respect to 298,320 shares, sole dispositive power with respect to 20,833,866 shares, shared dispositive power with respect to 774,247 shares and is deemed to beneficially own 21,608,113 shares. |
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Title of Class | | Name and Address of Beneficial Owner | | Amount and Nature of Beneficial Ownership | | | Percent of Class |
Common Stock | | The Vanguard Group, Inc. 100 Vanguard Blvd. Malvern, Pennsylvania 19355 | | 22,653,743 |
| (1) | | 11.8 | % |
Common Stock | | Capital World Investors 333 South Hope Street Los Angeles, California 90071 | | 20,745,058 |
| (2) | | 10.7 | % |
Common Stock | | BlackRock, Inc. 55 East 52nd Street New York, New York 10055 | | 16,845,703 |
| (3) | | 8.8 | % |
Common Stock | | State Street Corporation One Lincoln Street Boston, Massachusetts 02111 | | 10,193,303 |
| (4) | | 5.3 | % |
(2)Based on information contained in Schedule 13G filed on February 8, 2022. BlackRock Inc. is deemed to beneficially own 18,153,210 shares.
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(1) | Based on information contained in Schedule 13G/A filed on February 12, 2020. The Vanguard Group, Inc. has sole voting power with respect to 278,503 shares, sole dispositive power with respect to 22,316,358 shares, shared dispositive power with respect to 337,385 shares and is deemed to beneficially own 22,653,743 shares. |
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(2) | Based on information contained in Schedule 13G filed on February 14, 2020. Capital World Investors has sole dispositive power with respect to 20,745,058 shares, sole voting power with respect to 20,745,058 shares, and is deemed to beneficially own 20,745,058 shares. |
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(3) | Based on information contained in Schedule 13G/A filed on February 10, 2020. BlackRock Inc. has sole dispositive power with respect to 16,845,703 shares, sole voting power with respect to 14,727,798 shares, and is deemed to beneficially own 16,845,703 shares. |
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(4) | Based on information contained in Schedule 13G filed on February 14, 2020. State Street Corporation has shared voting power with respect to 9,285,389 shares, shared dispositive power with respect to 10,160,610 shares, and is deemed to beneficially own 10,193,303 shares. |
(3)Based on information contained in Schedule 13G filed on February 14, 2022. Capital Research Global Investors has sole dispositive power with respect to 15,598,877 shares, sole voting power with respect to 15,598,877 shares, and is deemed to beneficially own 15,598,877 shares.
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| DTE ENERGY2020 PROXY STATEMENT 27
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Certain Relationships and Related Transactions
Related-person transactions have the potential to create actual or perceived conflicts of interest. The Company has policies in place to address related-party transactions. In addition, our Corporate Governance Committee and Audit Committee review potential dealings or transactions with related parties. In conducting such reviews, the committees consider various factors they deem appropriate, which may include (i) the identity of the related party and his or her relationship to the Company, (ii) the nature and size of the transaction, including whether it involved the provision of goods or services to the Company that are unavailable from unrelated third parties and whether the transaction is on terms that are comparable to the terms available from unrelated third parties, (iii) the nature and size of the related party’s interest in the transaction, (iv) the benefits to the Company of the transaction and (v) whether the transaction could involve an apparent or actual conflict of interest with the Company.
In general, employees and directors may not be involved in a business transaction where there is a conflict of interest with the Company. The DTE Energy Way requires non-officer employees to report conflicts of interest or potential conflicts of interest to their respective superiors; the Officer Code of Conduct and Ethics requires officers to report conflicts of interest or potential conflicts of interest to the Company’s General Counsel or to the Company’s Board of Directors; and the Board of Directors Code of Business Conduct and Ethics requires directors to disclose conflicts of interest or potential conflicts of interest to the Company’s Corporate Governance Committee or the Chairman of the Board. For directors and officers, any waivers of the Company’s conflict of interest policy must be approved by the Board or a Board committee, as required under the Officer Code of Conduct and Ethics or Board of Directors Code of Business Conduct and Ethics, disclosed to shareholders and posted to our website at dteenergy.com/ethics.
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| DTE ENERGY 2022 PROXY STATEMENT27 |
Proposal No. 2 — Ratification of Appointment of Independent Registered Public Accounting Firm
Subject to ratification by the shareholders, the Audit Committee has appointed PricewaterhouseCoopers LLP (“PwC”) as our independent registered public accounting firm to audit our consolidated financial statements for the fiscal year ending December 31, 20202022 and to perform other audit-related services. Following the Audit Committee’s appointment, the Board voted unanimously to recommend that our shareholders vote to ratify the Audit Committee’s selection of PwC as our independent auditors for 2020.2022.
The reports of PwC on the consolidated financial statements of DTE Energy for the year ended December 31, 20192021 and for the year ended December 31, 20182020 did not contain adverse opinions or a disclaimer of opinions and were not qualified or modified as to uncertainty, audit scope or accounting principles.
During the Company’s two most recent fiscal years ended December 31, 20192021 and 20182020 and from January 1, 20202022 through February 5, 2020,10, 2022, there were no disagreements with PwC on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to PwC’s satisfaction, would have caused PwC to make reference to the subject matter of such disagreements in connection with its reports on the Company’s consolidated financial statements for such years.
During the Company’s two most recent fiscal years ended December 31, 20192021 and 20182020 and from January 1, 20202022 through February 5, 2020,10, 2022, there were no “reportable events” as defined under Item 304(a)(1)(v) of Regulation S-K.
Representatives of PwC will be present at the annual meeting and will be afforded an opportunity to make a statement, if they desire, and to respond to appropriate questions from shareholders.
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28DTE ENERGY2020 PROXY STATEMENT
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Fees to the Independent Registered Public Accounting Firm
The following table presents fees for professional services rendered by PwC for the audit of the Company’s consolidated annual financial statements for the years ended December 31, 20192021 and December 31, 2018,2020, and fees billed for other services rendered by PwC during those periods. | | | | | | | | | | | |
| 2021 | | 2020 |
Audit fees(1) | $ | 6,847,132 | | | $ | 7,172,201 | |
Audit-related fees(2) | 2,112,000 | | | 1,192,913 | |
Tax fees(3) | 179,755 | | | 241,787 | |
All other fees(4) | 265,919 | | | 405,074 | |
Total | $ | 9,404,806 | | | $ | 9,011,975 | |
(1)Represents the aggregate fees for audits of the Company's consolidated annual financial statements included in the Company's Form 10-K, review and audit of the Company’s internal control over financial reporting, the review of consolidated financial statements included in the Company’s Form 10-Q filings, and audit services provided in connection with certain regulatory filings, debt issuances, and other engagements. Audit fees are presented on an Audit Year basis in accordance with SEC guidelines and include an estimate of fees incurred for the most recent Audit Year. |
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| 2019 | | 2018 |
Audit fees(1) | $ | 7,027,031 |
| | $ | 7,173,518 |
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Audit-related fees(2) | 220,735 |
| | 587,507 |
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Tax fees(3) | 294,747 |
| | 217,836 |
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All other fees(4) | 588,389 |
| | 2,117,297 |
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Total | $ | 8,130,902 |
| | $ | 10,096,158 |
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(2)Represents the aggregate fees billed for audit-related services and various attest services.(3)Represents fees billed for tax services, including tax reviews and planning.
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(1) | Represents fees for professional services performed by PwC for the audits of the Company’s consolidated annual financial statements included in the Company’s Form 10-K, review and audit of the Company’s internal control over financial reporting, the review of consolidated financial statements included in the Company’s Form 10-Q filings, and services that are normally provided in connection with regulatory filings or engagements. Audit fees are presented on an Audit Year basis in accordance with SEC guidelines and include an estimate of fees incurred for the most recent Audit Year. |
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(2) | Represents the aggregate fees billed for audit-related services and various attest services. |
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(3) | Represents fees billed for tax services, including tax reviews and planning. |
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(4) | Represents consulting services for the purpose of providing advice and recommendations. |
(4)Represents consulting services for the purpose of providing advice and recommendations. Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm
Consistent with SEC policies regarding the independence of the registered public accounting firm, the Audit Committee is responsible for appointing, approving professional service fees of, and overseeing the work of the independent registered public accounting firm. The Audit Committee has established a policy regarding pre-approval of all audit and permissible non-audit services provided by the independent registered public accounting firm.
Prior to engaging the independent registered public accounting firm to perform specific services, the Audit Committee pre-approves these services by category of service. The Audit Committee may delegate to the Chair of the Audit Committee, or to one or more other designated members of the Audit Committee, the authority to grant pre-approvals of all permitted services or classes of these permitted services to be provided by the independent registered public accounting firm up to, but not exceeding, a pre-defined limit.firm. The
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28DTE ENERGY2022 PROXY STATEMENT | |
decisions of the designated member to pre-approve a permitted service are reported to the Audit Committee at each scheduled meeting. At least quarterly, the Audit Committee reviews:
•A report summarizing the services, or groupings of related services, including fees, provided by the independent registered public accounting firm.
•A listing of new services requiring pre-approval, if any.
•As appropriate, an updated projection for the current fiscal year, presented in a manner consistent with the proxy disclosure requirements, of the estimated annual fees to be paid to the independent registered public accounting firm.
All audit, audit-related, tax and other services performed by PwC were pre-approved by the Audit Committee in accordance with the regulations of the SEC. The Audit Committee considered and determined that the provision of the non-audit services by PwC during 20192021 was compatible with maintaining independence of the registered public accounting firm.
Report of the Audit Committee
The purpose of the Audit Committee is to assist the Board’s oversight of the integrity of the Company’s consolidated financial statements, the Company’s compliance with legal and regulatory requirements, the Company’s independent registered public accounting firm’s qualifications and independence and the performance of the Company’s internal audit
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| DTE ENERGY2020 PROXY STATEMENT 29
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function. All members of the Audit Committee meet the criteria for independence as defined in our categorical standards and the audit committee independence requirements under the SEC rules. The Audit Committee Charter also complies with requirements of the NYSE.
Management is responsible for the financial reporting process, including the system of internal controls, and for the preparation of consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Management is also responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. The independent registered public accounting firm is responsible for auditing these consolidated financial statements and expressing an opinion as to their conformity with GAAP. The independent registered public accounting firm is also responsible for expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. The Audit Committee’s responsibility is to monitor and review these processes, acting in an oversight capacity, and the Audit Committee does not certify the consolidated financial statements or internal control over financial reporting or guarantee the independent registered public accounting firm’s reports. The Audit Committee relies, without independent verification, on the information provided to it including representations made by management and the reports of the independent registered public accounting firm.
The Audit Committee discussed with PwC the matters required to be discussed by audit standards, SEC regulations and NYSE requirements. Disclosures were received from PwC regarding its independence as required by applicable requirements of the Public Company Accounting Oversight Board and discussed with them. The Audit Committee has considered whether the services provided by PwC other than those services relating to audit services are compatible with maintaining PwC’s independence. The Audit Committee has concluded that such services have not impaired PwC’s independence. The Audit Committee reviewed and discussed the audited consolidated financial statements for the year ended December 31, 20192021 with management and PwC. Based on the review and discussions noted above, the Audit Committee recommended to the Board that the audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K filed with the SEC for the fiscal year ended December 31, 2019.2021. The Audit Committee reviewed and discussed Management’s Report on Internal Control over Financial Reporting as of December 31, 20192021 with management and PwC. Based on the review and discussions noted above, the Audit Committee recommended to the Board that Management’s Report on Internal Control over Financial Reporting as of December 31, 20192021 be included in the Company’s Annual Report on Form 10-K filed with the SEC for the fiscal year ended December 31, 2019.2021.
Audit Committee
Valerie M. Williams, Chair
W. Frank Fountain, Jr.
Charles G. McClure, Jr.
David A. Thomas
James H. Vandenberghe
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO RATIFY THE APPOINTMENT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.
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| DTE ENERGY 2022 PROXY STATEMENT29 |
Proposal No. 3 — Advisory Proposal — Nonbinding Vote to Approve Executive Compensation
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) requires the Company to provide shareholders with an opportunity to vote to approve, on an advisory basis, the compensation of our Named Executive Officers as described in the “Compensation Discussion and Analysis” (“CD&A”) section of this proxy statement and in the tabular and narrative disclosure regarding Named Executive Officer compensation, all contained under the heading “Executive Compensation” in this proxy statement.
The Company’s executive compensation program is designed to include elements of cash and equity-based compensation to motivate and reward executives who achieve short-term and long-term corporate and financial objectives leading to the success of the Company. We emphasize competitive, performance-based compensation to attract and retain talented executives and align the interests of our executives with those of our shareholders. At each of the 20192021 and 20182020 annual
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30DTE ENERGY2020 PROXY STATEMENT
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meetings, 94.8%96.7% and 94.6%96.3%, respectively, of voting shareholders approved the compensation of the Named Executive Officers.
Shareholders have in the past approved the incentive plans that we use to motivate and reward our executives, including the Annual Incentive Plan and the Long-Term Incentive Plan. In addition, the Company has enhanced our disclosures related to executive compensation to provide more detail to our shareholders about our compensation programs, including expanded disclosures relating to the plans in this proxy statement.
Our executive compensation programs have been important in driving the Company’s success in achieving its corporate and financial objectives by tying executive compensation to achieving very specific goals in each of our key priority areas. Progress against these objectives is necessary for the Company to achieve its ultimate goal of becoming the best-operated energy company in North America and a force for growth and prosperitybest in the communities where we liveworld and serve.best for the world. We explain each of our performance targets and measures in detail in our CD&A, but a few examples of Company success in areas related to our targets and measures include the following:
Achieved 6.5% compound operating earnings per share growth during the five years ending 2019 (see discussion of operating earnings on page 2).
Increased•Declared a 7.3% increase in our dividend payment to $3.85 per share in 2019, representing a 7% increase over the dividend in 2018.payment.
•Provided our shareholders with a five-year total shareholder return of 177% (indexed with 2014168% (with 2016 as the base year = 100%).
•Delivered cash from operations of $2.6$3.1 billion in 2019.2021.
•Delivered 2021 operating earnings per share above the high end of guidance (see discussion on page 5).
•Executed previously announced separation of natural gas pipeline, storage and gathering business segment, positioning DTE as a premier, predominantly pure-play regulated electric and natural gas utility.
The Organization and Compensation Committee (“O&C Committee”) employs the highest standards of corporate governance when implementing and reviewing our executive compensation programs. The O&C Committee ensures independence of committee members and compensation consultants, avoids conflicts of interest and has enhanced shareholder disclosure in accordance with SEC and NYSE requirements.
For these reasons, the Board recommends that shareholders vote in favor of the following resolution:
“RESOLVED, that the shareholders approve, on an advisory basis, the overall executive compensation paid to the Named Executive Officers of the Company, as described in the Compensation Discussion and Analysis and the tabular and narrative disclosure regarding Named Executive Officer compensation contained in this proxy statement.”
Because this vote is advisory, it will not be binding upon the Company or the Board. The O&C Committee will take into account the outcome of the vote when considering future executive compensation arrangements.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL
TO APPROVE EXECUTIVE COMPENSATION.
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| 30DTE ENERGY 20202022 PROXY STATEMENT31 | |
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
Executive Summary
The Company believes in executive compensation that is competitive with our peers, has a meaningful performance component and has equity-based elements to encourage executives to maintain an appropriate ownership interest in the Company. Our performance-based compensation programs result in a majority of the compensation of our NamedChief Executive Officers (as identified below)Officer being linked to the achievement of a combination of short-term and long-term Company and personal goals and shareholder value creation.
The following elements comprise the total compensation awarded to our Named Executive Officers (“NEOs”): |
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Elements of Compensation | | How this Element Serves the Company’s Objectives |
Base Salary | | Provides a stable, fixed source of income that reflects an executive’s job responsibilities, experience, value to the Company and demonstrated performance.
We target median base salaries for our peer group, taking into account differences in company size within the peer group.
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Annual Incentive Awards | | Intended to compensate individuals yearly based on the achievement of specific near-term, annual goals, which are established at the beginning of each year and approved by the O&C Committee.
The Board and management have identified several priority areas that management and the Board discuss regularly when reviewing Company performance. Our performance measures for annual incentive awards are the measurements that the Board uses to track progress in these key priority areas. Achievement of these performance objectives is a critical measure of the Company’s progress towards its goal of becoming the best-operated energy company in North America and a force for growth and prosperitybest in the communities where we liveworld and serve. best for the world. |
Long-term Incentive Awards | | Used to align executive actions with long-term management and shareholder objectives, providing rewards consistent with the creation of shareholder value.
Our plan is designed to help retain executives over time and ensure they have a strong sense of ownership in the Company.
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Pay for Performance Alignment
The Company’s compensation programs are designed to clearly align performance objectives for our Named Executive Officers with the interests of shareholders and with management’s system of priorities. (See image of system of priorities on page 1.) Our Company’s aspiration is to be the best-operated energy company in North America and a force for growth and prosperity in the communities where we live and serve. We follow a system of priorities to achieve this objective, and our performance measures are designed to help move our Company towards achieving these priorities. The following table demonstrates how our annual and long-term performance measures map to our system of priorities.
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32DTE ENERGY2020 PROXY STATEMENT
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Our System of Priorities | | Related Annual or Long-Term Performance Metrics |
Highly Engaged Employees
| | DTE Energy Employee Engagement - Gallup
DTE Energy OSHA Recordable Incident Rate
DTE Energy OSHA Days Away, Restricted and Transfer Rate National Safety Council Barometer Survey
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Top-Decile Customer Satisfaction | | Customer Satisfaction Index
Customer Satisfaction Improvement Program Index
MPSC Customer Complaints
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Distinctive Continuous Improvement Capability | | Customer Satisfaction Improvement Program Index
Utility Operating Excellence Index
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Strong Political & Regulatory Context | | Customer Satisfaction Improvement Program Index
Utility Operating Excellence Index
MPSC Customer Complaints
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Clear Growth & Value Creation Strategy | | DTE Energy Total Shareholder Return vs Peer Group |
Superior & Sustainable Financial Performance
| | DTE Energy Cash Flow
DTE Energy Operating Earnings Per Share
DTE Energy Ratio of Funds From Operations to Debt
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What We Do and What We Don’t Do
Our compensation programs are competitive and well-governed. We adopt best practices that make sense for our company and industry and avoid pay practices that are inconsistent with our pay-for-performance structure.
What we do:
•We use multiple performance measures in our short-term and long-term plans that link compensation to our corporate objectives to be best in the world and best operated energy company in North America and to maximize shareholder valuefor the world
•We make the majority of compensation for Namedour Chief Executive OfficersOfficer “at risk” to further tie compensation to performance and shareholder interests
•Our O&C Committee is comprised of all independent directors and our compensation consultant is independent
•We adopted a clawback mechanism to allow the Company to recover incentive compensation in the event of a material financial restatement
•We require executives and directors to meet robust stock ownership requirements
•We review and update our peer groups and benchmarking on a regular basis to make sure our compensation remains competitive and near the median of the peer group
•We engage with shareholders to seek input about our compensation practices and policies
What we don’t do:
•No single-trigger change-in-control payments
•No excessive perquisites
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| DTE ENERGY 2022 PROXY STATEMENT31 |
•No tax gross-ups on change-in-control agreements
•No guaranteed bonuses
•No pledging, hedging or short sales of Company securities for officers or directors
•No stock option grants since 2010
•No repricing of existing stock options
•No “excessive” golden parachute payments in any of our change-in-control arrangements
Pay for Performance Alignment
The Company’s compensation programs are designed to clearly align performance objectives for our NEOs with the interests of shareholders and with our operating model. (See image of operating model on page 1.) Our Company’s aspiration is to be best in the world and best for the world. We follow an operating model to achieve this objective, and our performance measures are designed to help move our Company towards achieving our priorities. The following table demonstrates how our annual and long-term performance measures map to our stakeholder aspirations. |
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Our Stakeholders | | Related Annual or Long-Term Performance Metrics |
Our Team
| | OSHA Recordable Incident Rate OSHA Days Away, Restricted and Transfer Rate Employee Engagement – Gallup |
Our Customers | | Net Promoter Score MPSC Customer Complaints Fossil Power Plant Reliability - Random Outage Factor System Average Interruption Duration Index excluding Major Event Days Nuclear On-Line Unit Capability Factor Percentage of High Consequence Area Miles Assessable by In Line Inspection |
Our Communities | | Net Promoter Score MPSC Customer Complaints Fossil Power Plant Reliability - Random Outage Factor System Average Interruption Duration Index excluding Major Event Days Nuclear On-Line Unit Capability Factor Percentage of High Consequence Area Miles Assessable by In Line Inspection |
Our Investors | | DTE ENERGY2020 PROXY STATEMENT 33Energy Earnings Per Share Cash from Operations DTE Energy Total Shareholder Return v. Peer Group DTE Energy Ratio of Funds from Operations to Debt |
CEO Total Actual Compensation for 2019:2021: Fixed vs. Variable, At-Risk
Our pay mix puts a high weight on performance-based compensation. This means that the majority of compensation is variable and will go up or down based on company performance. For 2019, 59%2021, 77% of our President and Chief Executive Officer’s compensation was performance-based or “at risk.“variable, at-risk.”
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32DTE ENERGY2022 PROXY STATEMENT | |
Overview
Your understanding of our executive compensation program is important to us. The goal of this Compensation Discussion and Analysis is to explain:
•Our compensation philosophy and objectives for executives of the Company, including our Named Executive Officers;
•The roles of our O&C Committee and management in the executive compensation process;
•The key components of the executive compensation program; and
•The decisions we make in the compensation process that align with our philosophy and objectives.
Throughout this proxy statement, the term “Named Executive Officers” means: (1) the Executive Chairman of the Board, Gerard M. Anderson; (2) the President and Chief Executive Officer, Gerardo Norcia; (3)(2) the Senior Vice President and Chief Financial Officer, Peter B. Oleksiak; (4)David Ruud; (3) the President and Chief Operating Officer—DTE Electric, Trevor F. Lauer; (5)(4) the Vice Chairman and Chief Administrative Officer, David E. Meador; and (6)(5) the Senior Vice President and General Counsel, Bruce D. Peterson. Mr. Peterson retired effective January 3, 2020.Chief Operating Officer—DTE Vantage and Energy Trading, Mark W. Stiers. In addition, the term “executive” includes the Named Executive Officers, other key employees of the Company as designated by management from time to time and Executive Officers as defined by the Exchange Act.
Philosophy and Objectives
Our executive compensation philosophy is to motivate and reward executives who achieve short-term and long-term corporate and financial objectives leading to the success of the Company. We will continue to emphasize performance-based compensation for results that are consistent with shareholder and customer interests. The main objectives underlying this philosophy are:
•Compensation must be competitive in order to attract and retain talented executives — data from peer group companies are taken into consideration when analyzing our compensation practices and levels;
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•34DTE ENERGY2020 PROXY STATEMENT
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Compensation should have a meaningful performance component — a portion of an executive’s total compensation opportunity is linked to predefined short-term and long-term corporate and financial objectives along with an executive’s individual performance; and
•Compensation must include equity-based elements to encourage executives to have an ownership interest in the Company.
Role of the Organization and Compensation Committee
The Board has a long-standing process for determining executive compensation that is performance-based, objective and transparent. The process is designed to serve the purpose of recruiting, retaining and motivating executives for the benefit of shareholders and customers. The Board delegates to the O&C Committee the responsibility to determine and approve the CEO’s compensation, and to approve the compensation of certain other executives. The O&C Committee makes all decisions regarding compensation for the Named Executive Officers. Although the responsibilities have been delegated, the entire Board maintains oversight and receives direct reports after each O&C Committee meeting.
The O&C Committee is composed entirely of independent directors, none of whom derives a personal benefit from the compensation decisions the O&C Committee makes. Generally, the O&C Committee is responsible for our executive compensation programs throughout the enterprise (including subsidiaries). The O&C Committee responsibilities are more fully detailed in its charter, which is available at dteenergy.com/governance. The O&C Committee continually monitors the executive compensation program and adopts changes to reflect the dynamic marketplace in which we compete for talent. To the extent necessary, the O&C Committee also works with other Board committees to review or approve reports, awards and other matters relating to compensation. For example, the Finance Committee reviews the financial components of performance measures and metrics, the Corporate Governance Committee assists in the review of this Compensation Discussion and Analysis and the Audit Committee reviews the internal controls over the data reported herein.
The O&C Committee uses information from several external sources to monitor and achieve an executive compensation program that supports our business goals and attracts executives whose performance will be measured against those goals. Independent outside consultants and external information enable the O&C Committee to maintain impartial decision-making regarding performance and pay. The O&C Committee annually reviews each component of the Named Executive Officers’ compensation and is advised directly by the outside compensation consulting firm, discussed in further
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| DTE ENERGY 2022 PROXY STATEMENT33 |
detail below, in connection with such review. Based on input from its consultant and from management and based on a review of competitive data from peer group companies (as discussed below), the O&C Committee believes that the current structure is appropriately balanced and competitive to accomplish the important tasks of recruiting, retaining and motivating talented executives in the energy industry in which we compete.
The O&C Committee also reviews and considers the results from the most recent shareholder advisory vote on executive compensation. At the 20192021 and 20182020 annual meetings, 94.8%96.7% and 94.6%96.3%, respectively, of voting shareholders approved the compensation of the Named Executive Officers. As part of our shareholder engagement program, we seek feedback from shareholders about our compensation practices.
Independent Review of Compensation Program
The O&C Committee directly employs an outside consulting firm, Meridian Compensation Partners LLC ("Meridian"), to advise the O&C Committee on various executive compensation matters, including current compensation trends, and provide objective recommendations as to the design of our executive compensation program. Meridian reports directly to the O&C Committee. Use of an outside consultant is an important component of the compensation setting process, as it enables the O&C Committee to make informed decisions based on market data and practices.
The representative from Meridian, who is considered a leading professional in the compensation field, attends O&C Committee meetings, meets with Committee members in executive session, consults with the members as required and provides input with regard to the CEO’s compensation and performance.
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| DTE ENERGY2020 PROXY STATEMENT 35
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Meridian has served as the O&C Committee’s outside consultant since June 2018. The O&C Committee has determined Meridian to be an independent consultant. Meridian has no affiliations with any of the Named Executive Officers or members of the Board other than in its role as an outside consultant. The lead consultant and partner in charge for Meridian, who provided executive compensation consulting services to the O&C Committee, did not provide any other services to the Company.
Management’s Role
Our management works closely with the O&C Committee in the executive compensation process. Excluding the Executive Chairman and President and CEO’s compensation, management’s responsibilities include:
•Recommending performance measures and metrics that are formulated based on our corporate strategy and priorities;
•Reporting executive performance evaluations;
•Recommending base salary levels and other compensation, including equity awards; and
•Recommending appointment of executives.
The Executive Chairman and President and CEO’s compensation is determined solely by the O&C Committee, which bases its decisions on performance and market studies along with participation and recommendations from its independent outside consultant.
Compensation and Peer Group Assessment
Each component of executive compensation (see “Key Components of Executive Compensation” below) is compared, measured and evaluated against a peer group of companies. The O&C Committee approves the peer group and periodically reviews and updates the companies included in that group.
The most recent peer group was approved by the O&C Committee in June 2018.2021. That peer group, which is applicable for 2019,2021, consists of the companies listed below. Most of these companies, along with DTE Energy, participate in the same independent compensation surveys. The surveys provide data needed for accurate compensation comparisons. The peer group consists primarily of utilities (including utility holding companies), and broad-based energy companies, and significant non-energy companies selected on the basis of revenues, financial strength, geographic location and availability of compensation information. The O&C Committee reviews the peer group data when making compensation decisions relating to the Named Executive Officers and the Company’s mix of compensation components.
Management also retains an external consulting firm to conduct a market study covering compensation practices for similar positions in the peer group. The most recent market study was completed in August 2019September 2021 by Aon, whose
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34DTE ENERGY2022 PROXY STATEMENT | |
comprehensive database included all of our desired utility/energy peer companies and also included data for most of our utility/energy-related executive positions.
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36DTE ENERGY2020 PROXY STATEMENT
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| Alliant Energy Company | | Eversource Energy |
• | Alliant | • | Cummins Inc. |
• | Ameren Corporation | • | Illinois Tool WorksFirstEnergy Corporation |
• | American Electric Power Company, Inc. | • | Kellogg CompanyNiSource, Inc. |
• | Avangrid Inc. | • | Masco Corporation |
• | CenterPoint Energy | • | Navistar InternationalPG&E Corporation |
• | CMS Energy Corporation | • | Owens CorningPinnacle West Capital Corporation |
• | Consolidated Edison | • | Parker Hannifin Corporation |
• | Duke Energy Corporation | • | The Sherwin-Williams Company |
• | Edison International | • | Whirlpool Corporation |
• | Entergy Corporation | | |
• | FirstEnergy Corp. | | |
• | NiSource, Inc. | | |
• | PG&E Corporation | | |
• | Public Service Enterprise Group | | |
• | Dominion Energy | | Sempra Energy | | |
• | Duke Energy Corporation | | Southern Company | | |
• | Edison International | | WEC Energy Group, Inc. | | |
• | Entergy Corporation | | Xcel Energy, Inc. |
| Evergy, Inc. | | |
Key Components of Executive Compensation
The key components of the compensation program include the following:
•Base Salary
•Annual and Long-Term Incentives
•Retirement and Other Benefits
•Post-Termination Agreements (Severance and Change-In-Control)
While the programs and pay levels reflect differences in job responsibilities, the structure of the compensation and benefits program is applied consistently to our Named Executive Officers, including the CEO. Differences in compensation between the CEO and the other Named Executive Officers are due, in part, to an analysis of peer group benchmark data, as well as differences in the responsibilities of each Named Executive Officer. We review each element of total compensation, both individually and on a combined basis, for each Named Executive Officer and make adjustments as appropriate based on these comparisons. The following is a more detailed discussion of the components of the Company’s executive compensation program:
Base Salary
The objective of base salary is to provide a stable, fixed source of income that reflects an executive’s job responsibilities, experience, value to the Company, and demonstrated performance. When setting individual base salary levels, we consider several factors, including (i) the market reference point for the executive’s position, (ii) the responsibilities of the executive’s position, (iii) the experience and performance of the executive, and (iv) retention issues. Market reference points target the median for most positions, adjusted to take into account differences in company size within the peer group. In addition, we establish midpoints for each executive group level for determining base salary for those executives whose jobs cannot be easily matched in the marketplace. These midpoints are consistent with the market reference points for other executives in the same executive group. We review these midpoints annually to ensure they are consistent with the market and make salary adjustments, when appropriate.
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We have two primary types of incentives that reward executives for performance. The incentives are designed to tie compensation to performance and encourage executives to align their interests with those of the shareholders and customers of the Company. Our annual incentives allow us to reward executives with annual cash bonuses for performance against pre-established objectives based on work performed in the prior year. Our long-term incentives allow us to grant executives long-term equity incentives to encourage continued employment with DTE Energy, to accomplish pre-defined long-term performance objectives and to create shareholder alignment.
We believe the current mix among base salary, annual incentives, and long-term incentives is appropriately set to provide market-competitive compensation when Company performance warrants. The mix is more heavily weighted toward
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| DTE ENERGY 2022 PROXY STATEMENT35 |
incentive compensation at higher executive levels within DTE Energy. The interplay between the annual incentives and the long-term incentives provides a balance to motivate executives to achieve our business goals and objectives and to properly reward executives for the achievement of such goals and objectives.
The Board has implemented a “clawback” policy enabling the Company to recover some or all of the performance-based compensation awarded to current or former executives. Under the policy, if the Company is required to prepare an accounting restatement due to material noncompliance with federal securities laws, and the O&C Committee determines it appropriate, the Company may recover from any current or former executive any previously awarded performance-based compensation the executive received (including awards under the Annual Incentive Plan and the Long-Term Incentive Plan) in excess of performance-based compensation that would have been awarded under the restatement. This "clawback" would apply to performance-based compensation during the three-year period preceding the date on which the Company is required to prepare an accounting restatement, in accordance with applicable law and regulations.
Annual Incentives
The objective of the annual incentives is to compensate individuals yearly based on the achievement of specific annual goals and tie compensation to near-term performance. Annual incentive awards are paid to our executives under the DTE Energy Annual Incentive Plan (“Annual Incentive Plan”). The O&C Committee sets individual performance measures, metrics and targets for the Named Executive Officers for each year using the measure, metrics, targets and procedures described below, and the Named Executive Officer’s performance against those measures, metrics and targets is considered when the O&C Committee determines the officer’s annual incentive award under the Annual Incentive Plan for that year.
Under the terms of the Annual Incentive Plan, participating executives and other select employees may receive annual cash awards based on performance compared against pre-established Company and business unit objectives. Objectives that management proposes are reviewed and approved or revised by the O&C Committee, with financial goal recommendations reviewed by the Board’s Finance Committee, usually within the first 90 days of the performance period. The objectives include performance measures in several categories that are critical to our success. When setting these objectives, management and the O&C Committee determine the elements of our business that require the focused attention of the executives. The weights, which can change from year to year, are determined based on the Company’s key priorities and areas of focus for the upcoming year. The final awards, if any, are paid after the O&C Committee approves the final results of each objective.
The amount of an executive’s Annual Incentive Plan award is determined as follows:
•The executive’s most recent year-end base salary is multiplied by an Annual Incentive Plan target percentage to arrive at the target award.
•The overall performance payout percentage, which can range from 0% to 175%, is determined based on final results compared to threshold, target and maximum levels for each objective.
•The target award is then multiplied by the performance payout percentage to arrive at the pre-adjusted calculated award.
•The pre-adjusted calculated award is then adjusted by an individual performance modifier (assessment of an individual executive’s achievements for the year), which can range from 0% to 150%, to arrive at the final award.
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38DTE ENERGY2020 PROXY STATEMENT
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Each objective has a threshold, target and maximum level. The Company or relevant business unit must attain a minimum level of achievement for an objective before any compensation is payable with respect to that objective. The minimum established level of each objective will result in a payout of 25% of target and the maximum established for each level (or better) will result in a payment of 175% of target.
The operating earnings per share and cash flowfrom operations measures were chosen as indicators of the Company’s financial strength. The customer satisfaction, employee engagement and safety performance and effectiveness measures were selected to make the Company more responsive to our customers’ needs and to make the Company a safer and better place to work. For Messrs. Anderson, Norcia, Oleksiak,Ruud, and Meador, and Peterson, the Utility Operating Excellence measures were chosen as representative of (a) electric generation, andelectric distribution, reliability and (b) gas system reliability, gas system availability and the pace of gas system improvements.reliability. For Mr. Lauer, the DTE Electric Operating Excellence measures were chosen as representative of electric generation and distribution reliability. For Mr. Stiers, the DTE Vantage Business Development measures were chosen as representative of creating value while growing the business through new project development.
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36DTE ENERGY2022 PROXY STATEMENT | |
For 2019,2021, the performance objectives and the related weightings, thresholds, targets, maximums and results for calculating the Named Executive Officers’ pre-adjusted annual incentive award amounts were as follows.
For Messrs. Anderson, Norcia, Oleksiak, Meador and Peterson: |
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Measures | | Weight | | Threshold | | Target | | Maximum | | Result | | Payout | | Weighted Average Payout |
DTE Energy Operating Earnings Per Share | | 20.0 | % | | $ | 5.97 |
| | $ | 6.15 |
| | $ | 6.33 |
| | $ | 6.30 |
| | 162.5 | % | | 32.50 | % |
DTE Energy Adjusted Cash Flow ($ millions) | | 20.0 | % | | $ | (765 | ) | | $ | (278 | ) | | $ | 209 |
| | $ | (72 | ) | | 131.7 | % | | 26.34 | % |
Customer Satisfaction Index (percentile) | | 8.0 | % | | 65 |
| | 75 |
| | 85 |
| | 72.4 |
| | 80.1 | % | | 6.41 | % |
Customer Satisfaction Improvement Program (#) | | 4.0 | % | | 69,277 | | 65,645 | | 61,665 | | 65,794 | | 96.9 | % | | 3.88 | % |
Customer Satisfaction Improvement Program Index (#) | | 4.0 | % | | 102,464 | | 107,587 | | 112,710 | | 90,452 | | 0.0 | % | | 0.00 | % |
MPSC Customer Complaints | | 4.0 | % | | 2,786 | | 2,246 | | 1,827 | | 2,703 | | 36.5 | % | | 1.46 | % |
DTE Energy Employee Engagement– Gallup | | 10.0 | % | | 4.18 |
| | 4.32 |
| | 4.45 |
| | 4.40 |
| | 146.2 | % | | 14.62 | % |
Safety Performance & Effectiveness Index: | | | | | | | | | | | | | | |
OSHA Recordable Incident Rate | | 3.34 | % | | 0.72 |
| | 0.58 |
| | 0.48 |
| | 0.81 |
| | 0.0 | % | | 0.00 | % |
OSHA DART | | 3.33 | % | | 0.45 |
| | 0.33 |
| | 0.24 |
| | 0.52 |
| | 0.0 | % | | 0.00 | % |
NSC Barometer Survey Results (percentile) | | 3.33 | % | | 90 |
| | 94 |
| | 98 |
| | 98 |
| | 175.0 | % | | 5.83 | % |
Utility Operating Excellence Index: | | | | | | | | | | | | | | |
SAIDI excluding MEDs (minutes) | | 1.66 | % | | 181 |
| | 165 |
| | 149 |
| | 202 |
| | 0.0 | % | | 0.00 | % |
Blue Sky CAIDI (minutes) | | 1.67 | % | | 129 |
| | 117 |
| | 105 |
| | 113 |
| | 125.0 | % | | 2.08 | % |
Adherence to Capital Investment Plan | | 1.67 | % | | 95 | % | | 100 | % | | 105 | % | | 110 | % | | 175.0 | % | | 2.92 | % |
Tree Trimming Mileage | | 1.67 | % | | 3,800 |
| | 4,100 |
| | 4,400 |
| | 4,187 |
| | 121.6 | % | | 2.03 | % |
Fossil Power Plant Reliability | | 3.33 | % | | 8.3 | % | | 7.3 | % | | 6.3 | % | | 5.3 | % | | 175.0 | % | | 5.83 | % |
Nuclear Generation Operating Excellence Index | | 5.0 | % | | (see definition for description) | | Below Threshold | | 0.0 | % | | 0.00 | % |
Gas Distribution System Improvement (leaks) | | 1.25 | % | | 1,373 |
| | 973 |
| | 673 |
| | 546 |
| | 175.0 | % | | 2.19 | % |
Gas Distribution Response Time (minutes) | | 0.75 | % | | 23.6 |
| | 22.5 |
| | 21.4 |
| | 23.15 |
| | 55.7 | % | | 0.42 | % |
Lost and Unaccounted for Gas (%) | | 0.75 | % | | 0.53 | % | | 0.44 | % | | 0.40 | % | | 0.89 | % | | 0.0 | % | | 0.00 | % |
Gas Compression Reliability | | 0.75 | % | | 89.5 | % | | 91.5 | % | | 92.5 | % | | 92.2 | % | | 149.5 | % | | 1.12 | % |
Gas Damage Prevention Effectiveness | | 0.75 | % | | 5.1 |
| | 4.8 |
| | 4.5 |
| | 4.0 |
| | 175.0 | % | | 1.31 | % |
Meter Assembly Check (MAC) Backlog | | 0.75 | % | | 86,061 |
| | 81,963 |
| | 77,865 |
| | 82,272 |
| | 94.3 | % | | 0.71 | % |
Total | | 100.0 | % | | | | | | | | | | | | 109.65 | % |
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For Messrs. Norcia, Ruud, and Meador: | | | | | | | | | | | | | | Weighted |
Measures | | Weight | | Threshold | | Target | | Maximum | | Result | | Payout | | Average Payout |
Financial Performance: | | | | | | | | | | | | | | |
DTE Energy Adjusted Operating Earnings Per Share | | 20 | % | | $ | 6.17 | | | $ | 6.47 | | | $ | 6.77 | | | $ | 6.90 | | | 175.0 | % | | 35.00 | % |
DTE Energy Cash from Operations ($ millions) | | 20 | % | | $ | 2,130 | | | $ | 2,367 | | | $ | 2,604 | | | $ | 2,692 | | | 175.0 | % | | 35.00 | % |
Customer Satisfaction: | | | | | | | | | | | | | | |
Net Promoter Score (NPS) | | 12 | % | | 43 | | | 45 | | | 47 | | | 40 | | | 0.0 | % | | 0.00 | % |
MPSC Customer Complaints | | 8 | % | | 1,967 | | | 1,905 | | | 1,760 | | | 2,828 | | | 0.0 | % | | 0.00 | % |
Safety & Engagement: | | | | | | | | | | | | | | |
DTE Energy OSHA Recordable Incident Rate | | 5 | % | | 0.79 | | | 0.64 | | | 0.46 | | | 0.59 | | | 120.8 | % | | 6.04 | % |
DTE Energy OSHA DART Incident Rate | | 5 | % | | 0.39 | | | 0.32 | | | 0.20 | | | 0.36 | | | 57.1 | % | | 2.86 | % |
DTE Energy Employee Engagement– Gallup | | 5 | % | | 4.18 | | | 4.32 | | | 4.43 | | | 4.36 | | | 127.3 | % | | 6.37 | % |
Utility Operating Excellence Index: | | | | | | | | | | | | | | |
Fossil Power Plant Reliability (ROF) | | 5 | % | | 7.8 | % | | 6.8 | % | | 5.8 | % | | 6.5 | % | | 122.5 | % | | 6.13 | % |
SAIDI excluding MEDs (minutes) | | 5 | % | | 149 | | | 137 | | | 123 | | | 136 | | | 105.4 | % | | 5.27 | % |
Nuclear On-Line Unit Capacity Factor (UCF) | | 10 | % | | 97.6 | % | | 98.5 | % | | 98.8 | % | | 96.2 | % | | 0.0 | % | | 0.00 | % |
% of HCA Miles Assessable by ILI | | 5 | % | | 88.9 | % | | 89.3 | % | | 92.6 | % | | 92.6 | % | | 175.0 | % | | 8.75 | % |
Total | | 100 | % | 1 | | | | | | | | | | | 105.42 | % |
The measures in the above table are defined below:
DTE Energy Adjusted Operating Earnings Per Share: DTE Energy reportedoperating earnings after operating adjustments divided by average shares outstanding. Seeper share, inclusive of earnings attributable to the gas storage and pipelines segment ("GSP") prior to its spin-off effective July 1, 2021 (see page 243 for athe discussion of operating earnings.
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| DTE ENERGYDT Midstream Spin-off Impacts). 2020 PROXY STATEMENT 39
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DTE Energy Adjusted Cash Flow:from Operations: DTE Energy net cash from operating activities adjusted by utility capital expenditures, asset sale proceedsoperations.
Net Promoter Score ("NPS"): Measurement of how likely a customer is to recommend DTE to friends and other items approved by the O&C Committee.
Customer Satisfaction Index: Measures the satisfaction of four customer segments: (1) electric residential, (2) gas residential, (3) electric business, and (4) gas business using industry standard methodology developed by JD Power Associates (“JDPA”) to determine performance percentile relative to large peers.
Customer Satisfaction Improvement Program (DPMO): The calculation for defects per million opportunities (“DPMO”) based on defects from DTE Cares Callbacks.
Customer Satisfaction Improvement Program Index: The calculation for plus ones per million opportunities based on field transactions, call center transactions, self-service transactions, home energy consultations and advocacy transactions.colleagues.
MPSC Customer Complaints: Number of complaints received by the Michigan Agency on Energy ("MAE")/Michigan Public Service Commission (“MPSC”) in the calendar year for all business units across DTE Energy.
DTE Energy Employee Engagement–Gallup: The average of the DTE Energy Company Gallup Grand Mean scores from two surveys during the year.
Safety Performance and Effectiveness Index: Includes three measures that are a representation of safety performance:
1. DTE Energy OSHA Recordable Incident Rate: Number of Occupational Safety and Health Administration (“OSHA”) defined recordable injuries in the calendar year per 100 employees divided by the actual number of hours worked.
2. DTE Energy OSHA Days Away, Restricted and TransfersDART Incident Rate: The number of OSHA defined recordable injuries that resultedresult in days awayDays Away from work, work restrictions,Restrictions, and/or job duty/position transferTransfers ("DART") due to work-related injuries (DART) in the calendar year per 100 employees divided by the actual number of hours worked.
3. NSC Barometer Survey: National Safety Council (NSC) Barometer Survey stated as a benchmark percentile as compared toDTE Energy Employee Engagement–Gallup: The DTE Energy Company Gallup Grand Mean score from the NSC database.annual survey.
Utility Operating Excellence Index: Corporate index that encompasses 12 operating excellence measures:
1. SAIDI (System Average Interruption Duration Index), excluding MEDs (Major Event Days): For all customers served, the average minutes of interruption, excluding days exceeding the "Major Event Day" threshold.
2. Blue Sky CAIDI (Customer Average Interruption Duration Index): The average minutes of interruption for all customers experiencing an outage for those days when there is no declared storm. A storm is declared when there are 15,000 outages over a 24 hour period.
3. Adherence to Capital Investment Plan: Measures the ability to complete the portfolio of planned capital work.
4. Tree Trimming Mileage: Total overhead sub-transmission and distribution circuit miles trimmed, including circuits trimmed in support of construction projects and annual maintenance plan.
5. Fossil Power Plant Reliability: The Monroe and Belle River Random Outage Factor (ROF)("ROF") which is the weighted average of the six base load coal units’ year-end ROF. A unit’s ROF is the percentage of time that a unit is not capable of reaching 100% capacity, excluding planned outages.
SAIDI (System Average Interruption Duration Index), excluding Major Event Days ("MED"): The average minutes of interruption for all customers served, excluding days exceeding the MED threshold.
6. Nuclear Generation Operating Excellence Index: An evaluationOn-Line Unit Capability Factor ("UCF"): Ratio of operating excellence based onavailable energy generation over a given time period to the following:reference energy generation over the same time period, expressed as a percentage, excluding outage or outage extension time.
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a. | Nuclear Power Plant Performance Improvement Matrix: Summation of points assigned to each of five improvement indicators based on performance. |
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b. | Nuclear Plant Performance: An evaluation of plant performance by an external agency. |
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40
| DTE ENERGY2020 2022 PROXY STATEMENT37
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c. | Nuclear On-Line Unit Capability Factor: The ratio of available energy generation over a given time period to the reference energy generation over the same time period. |
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d. | Nuclear Power Plant Reliability Matrix: Summation of points assigned to each of five reliability indicators based on performance. |
7. Gas Distribution System Improvement:% of HCA miles accessable by ILI: The numberpercent of open leaks in the system as of December 31, 2019.
8. Gas Distribution Response Time: Elapsed time in minutes from when the customer reports the condition to when the field service employee arrives at the site.
9. Lost and Unaccounted for Gas: Lost and unaccounted for gas from the source and disposition report measured as a percentage of total throughput. It is a function of multiple contributors includingour transmission losses, theft, leaks, billing inaccuracies and metering equipment condition.
10. Gas Compression Reliability: The total number of available hours less the number of hours unavailable due to planned and unplanned shutdowns, dividedhigh consequence area ("HCA") miles that are assessable by the total hours in one year.
11. Gas Damage Prevention Effectiveness: Number of second and third-party damages to main and service gas lines per 1,000 tickets. A ticket is defined as one unique ticket received from 811 (Miss Dig)In Line Inspection ("ILI").
12. Meter Assembly Check (MAC) Backlog: The number of remaining overdue MACs on December 31, 2019.
The aggregate weighted payment percentage for the pre-adjusted calculated award was 109.65%96.52% for Mr. Norcia, as the Business Unit Modifier was reduced 8.9% for zero safety payout. The aggregate weighted payment percentage for the pre-adjusted calculated award was 105.42% for Messrs. Anderson, Norcia, Oleksiak, MeadorRuud and Peterson.Meador.
For Mr. Lauer:
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Measures | | Weight | | Threshold | | Target | | Maximum | | Result | | Payout | | Weighted Average Payout |
DTE Electric Operating Earnings ($ millions) | | 15.0 | % | | $ | 670 |
| | $ | 705 |
| | $ | 740 |
| | $ | 716 |
| | 123.4 | % | | 18.51 | % |
DTE Electric Adjusted Cash Flow ($ millions) | | 15.0 | % | | $ | (913 | ) | | $ | (770 | ) | | $ | (627 | ) | | $ | (534 | ) | | 175.0 | % | | 26.25 | % |
DTE Energy Operating Earnings Per Share | | 10.0 | % | | $ | 5.97 |
| | $ | 6.15 |
| | $ | 6.33 |
| | $ | 6.30 |
| | 162.5 | % | | 16.25 | % |
Customer Satisfaction Index (percentile) | | 7.0 | % | | 65 |
| | 75 |
| | 85 |
| | 72.4 |
| | 80.1 | % | | 5.61 | % |
Customer Satisfaction Improvement Program | | 2.0 | % | | 69,277 |
| | 65,645 |
| | 61,665 |
| | 65,794 |
| | 96.9 | % | | 1.94 | % |
Customer Satisfaction Improvement Index (#) | | 2.0 | % | | 102,464 |
| | 107,587 |
| | 112,710 |
| | 90,452 |
| | 0.0 | % | | 0.00 | % |
MPSC Customer Complaints | | 4.0 | % | | 2,786 |
| | 2,246 |
| | 1,827 |
| | 2,703 |
| | 36.5 | % | | 1.46 | % |
DTE Electric Employee Engagement– Gallup | | 7.5 | % | | 4.18 |
| | 4.32 |
| | 4.45 |
| | 4.42 |
| | 157.7 | % | | 11.83 | % |
Safety Performance & Effectiveness Index: | | | | | | | | | | | | | |
|
DTE Electric OSHA Recordable Incident Rate | | 2.5 | % | | 0.77 |
| | 0.62 |
| | 0.50 |
| | 0.97 |
| | 0.0 | % | | 0.00 | % |
DTE Electric OSHA DART | | 2.5 | % | | 0.45 |
| | 0.33 |
| | 0.24 |
| | 0.68 |
| | 0.0 | % | | 0.00 | % |
NSC Barometer Survey Results (percentile) | | 2.5 | % | | 90 |
| | 94 |
| | 98 |
| | 97 |
| | 156.3 | % | | 3.91 | % |
DTE Electric Operating Excellence Index: | | | | | | | | | | | | | |
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SAIDI, excluding MEDs (minutes) | | 5.0 | % | | 181 |
| | 165 |
| | 149 |
| | 202 |
| | 0.0 | % | | 0.00 | % |
Blue Sky CAIDI (minutes) | | 5.0 | % | | 129 |
| | 117 |
| | 105 |
| | 113 |
| | 125.0 | % | | 6.25 | % |
Adherence to Capital Investment Plan | | 5.0 | % | | 95 | % | | 100 | % | | 105 | % | | 110 | % | | 175.0 | % | | 8.75 | % |
Tree Trimming Mileage | | 5.0 | % | | 3,800 |
| | 4,100 |
| | 4,400 |
| | 4,187 |
| | 121.6 | % | | 6.08 | % |
Fossil Power Plant Reliability | | 10.0 | % | | 8.3 | % | | 7.3 | % | | 6.3 | % | | 5.3 | % | | 175.0 | % | | 17.50 | % |
Total | | 100.0 | % | | | | | | | | | | | | 124.34 | % |
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For Mr. Lauer: | | | | | | | | | | | | | | Weighted |
Measures | | Weight | | Threshold | | Target | | Maximum | | Result | | Payout | | Average Payout |
Financial Performance: | | | | | | | | | | | | | | |
DTE Electric Operating Earnings ($ millions) | | 15 | % | | $ | 814 | | | $ | 840 | | | $ | 882 | | | $ | 866 | | | 146.4 | % | | 21.96 | % |
DTE Electric Cash from Operations ($ millions) | | 15 | % | | $ | 1,775 | | | $ | 1,972 | | | $ | 2,169 | | | $ | 2,232 | | | 175.0 | % | | 26.25 | % |
DTE Energy Adjusted Operating Earnings Per Share | | 10 | % | | $ | 6.17 | | | $ | 6.47 | | | $ | 6.77 | | | $ | 6.90 | | | 175.0 | % | | 17.50 | % |
Customer Satisfaction: | | | | | | | | | | | | | | |
Net Promoter Score ("NPS") | | 12 | % | | 43 | | | 45 | | | 47 | | | 40 | | | 0.0 | % | | 0.00 | % |
MPSC Customer Complaints | | 8 | % | | 1,967 | | | 1,905 | | | 1,760 | | | 2,828 | | | 0.0 | % | | 0.00 | % |
Safety & Engagement: | | | | | | | | | | | | | | |
DTE Electric OSHA Recordable Incident Rate | | 5 | % | | 0.84 | | | 0.67 | | | 0.50 | | | 0.68 | | | 95.6 | % | | 4.78 | % |
DTE Electric OSHA DART Incident Rate | | 5 | % | | 0.39 | | | 0.32 | | | 0.20 | | | 0.43 | | | 0.0 | % | | 0.00 | % |
DTE Electric Employee Engagement– Gallup | | 5 | % | | 4.18 | | | 4.32 | | | 4.43 | | | 4.37 | | | 134.1 | % | | 6.71 | % |
DTE Electric Operating Excellence Index: | | | | | | | | | | | | | | |
Fossil Power Plant Reliability ("ROF") | | 5 | % | | 7.8 | % | | 6.8 | % | | 5.8 | % | | 6.5 | % | | 122.5 | % | | 6.13 | % |
Blue Sky CAIDI (minutes) | | 5 | % | | 108 | | | 103 | | | 93 | | | 108 | | | 25.0 | % | | 1.25 | % |
SAIDI excluding MEDs (minutes) | | 10 | % | | 149 | | | 137 | | | 123 | | | 136 | | | 105.4 | % | | 10.54 | % |
Nuclear On-Line Unit Capability Factor ("UCF") | | 5 | % | | 97.6 | % | | 98.5 | % | | 98.8 | % | | 96.2 | % | | 0.0 | % | | 0.00 | % |
Total | | 100 | % | | | | | | | | | | | | 95.12 | % |
The measures in the above table are defined below:DTE Electric Operating Earnings: DTE Electric operating earnings with allowed adjustments.
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| DTE ENERGY2020 PROXY STATEMENT 41
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DTE Electric Adjusted Cash Flow:from Operations: DTE Electric net cash from operating activities adjusted by utility capital expenditures, asset sale proceeds and other items approved by the O&C Committee.operations.
DTE Energy Adjusted Operating Earnings Per Share: DTE Energy reported earnings after operating adjustments divided by average shares outstanding. DTE Energy management believes that operating earnings provideper share, inclusive of earnings attributable to GSP prior to its spin-off effective July 1, 2021 (see page 43 for the discussion of DT Midstream Spin-off Impacts).
Net Promoter Score ("NPS"): Measurement of how likely a more meaningful representation of the company's earnings from ongoing operationscustomer is to recommend DTE to friends and uses operating earnings as the primary performance measurement internally and externally. Operating earnings can be reconciled to our reported earnings as set forth in the table on page 2.
Customer Satisfaction Index: Measures the satisfaction of four customer segments: (1) electric residential, (2) gas residential, (3) electric business, and (4) gas business using industry standard methodology developed by JD Power Associates (“JDPA”) to determine performance percentile relative to large peers.
Customer Satisfaction Improvement Program (DPMO): The calculation for defects per million opportunities (“DPMO”) based on defects from DTE Cares Callbacks.
Customer Satisfaction Improvement Program Index: The calculation for plus ones per million opportunities based on field transactions, call center transactions, self-service transactions, home energy consultations and advocacy transactions.colleagues.
MPSC Customer Complaints: Number of complaints received by the Michigan Agency on Energy ("MAE")/Michigan Public Service Commission (“MPSC”) in the calendar year for all business units across DTE Energy.
DTE Electric Employee Engagement–Gallup: The average of the DTE Electric Gallup Grand Mean scores from two surveys during the year.
Safety Performance and Effectiveness Index: Includes three measures that are a representation of safety performance:
1. DTE Electric OSHA Recordable Incident Rate: Number of Occupational Safety and Health Administration (“OSHA”) defined recordable injuries in the calendar year per 100 employees divided by the actual number of hours worked.
2. DTE Electric OSHA Days Away, Restricted and TransfersDART Incident Rate: The number of OSHA defined recordable injuries that resultedresult in days awayDays Away from work, work restrictions,Restrictions, and/or job duty/position transferTransfers ("DART") due to work-related injuries (DART) in the calendar year per 100 employees divided by the actual number of hours worked.
3. NSC Barometer Survey: National Safety Council (NSC) Barometer Survey stated as a benchmark percentile as compared to the NSC database.
DTE Electric Operating Excellence Index: Index that encompasses five operating excellence measures:Employee Engagement–Gallup: The DTE Electric Gallup Grand Mean score from the annual survey.
1. All Weather SAIDI (System Average Interruption Duration Index): For all customers served, the average minutes of interruption, excluding days exceeding the "Major Event Day" threshold.2. Blue Sky CAIDI (Customer Average Interruption Duration Index): The average minutes of interruption for all customers experiencing an outage for those days when there is no declared storm. A storm is declared when there are 15,000 outages over a 24 hour period. | | | | | | | | |
38DTE ENERGY2022 PROXY STATEMENT | |
3. Adherence to Capital Investment Plan: Measures the ability to complete the portfolio of planned capital work.
4. Tree Trimming Mileage: Total overhead sub-transmission and distribution circuit miles trimmed, including circuits trimmed in support of construction projects and annual maintenance plan.
5. Fossil Power Plant Reliability: The Monroe and Belle River Random Outage Factor (ROF)("ROF") which is the weighted average of the six base load coal units’ year-end ROF. A unit’s ROF is the percentage of time that a unit is not capable of reaching 100% capacity, excluding planned outages.
Blue Sky CAIDI (Customer Average Interruptions Duration Index): The average minutes of interruption for all customers experiencing an outage for those days when there is no declared storm. A storm is declared when there are 15,000 outages over a 24-hour period.
SAIDI (System Average Interruption Duration Index), excluding Major Event Days ("MED"): The average minutes of interruption for all customers, excluding days exceeding the MED threshold. |
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42DTE ENERGY2020 PROXY STATEMENT
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Nuclear On-Line Unit Capability Factor ("UCF"): Ratio of available energy generation over a given time period to the reference energy generation over the same time period, expressed as a percentage, excluding outage or outage extension time.
The aggregate weighted payment percentage for the pre-adjusted calculated award was 124.34%90.34% for Mr. Lauer.Lauer, as the Business Unit Modifier was reduced 4.78% for zero safety payout.
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For Mr. Stiers: | | | | | | | | | | | | Weighted |
Measures | | Weight | | Threshold | | Target | | Maximum | | Result | | Payout | | Average Payout |
Financial Performance: | | | | | | | | | | | | | | |
DTE Vantage Non-REF Operating Earnings ($ millions) | | 25 | % | | $ | 50 | | | $ | 55 | | | $ | 65 | | | $ | 61 | | | 145.0 | % | | 36.25 | % |
DTE Vantage REF Operating Earnings ($ millions) | | 10 | % | | $ | 103 | | | $ | 108 | | | $ | 113 | | | $ | 115 | | | 175.0 | % | | 17.50 | % |
DTE Vantage Cash from Operations ($ millions) | | 5 | % | | $ | 138 | | | $ | 173 | | | $ | 208 | | | $ | 255 | | | 175.0 | % | | 8.75 | % |
DTE Energy Adjusted Operating Earnings Per Share | | 10 | % | | $ | 6.17 | | | $ | 6.47 | | | $ | 6.77 | | | $ | 6.90 | | | 175.0 | % | | 17.50 | % |
Safety & Engagement: | | | | | | | | | | | | | | |
DTE Vantage OSHA Recordable Incident Rate | | 5 | % | | 0.80 | | | 0.67 | | | 0.51 | | | 0.64 | | | 114.1 | % | | 5.71 | % |
DTE Vantage OSHA DART Incident Rate | | 5 | % | | 0.39 | | | 0.32 | | | 0.20 | | | 0.32 | | | 100.0 | % | | 5.00 | % |
DTE Vantage Employee Engagement– Gallup | | 5 | % | | 4.18 | | | 4.32 | | | 4.43 | | | 4.35 | | | 120.5 | % | | 6.03 | % |
Business Development: | | | | | | | | | | | | | | |
New Project Net Present Value ($ millions) | | 10 | % | | $ | 20 | | | $ | 35 | | | $ | 55 | | | $ | 56 | | | 175.0 | % | | 17.50 | % |
Long-Range Earnings Growth ($ millions) | | 25 | % | | $ | 8 | | | $ | 12 | | | $ | 15 | | | $ | 11 | | | 81.3 | % | | 20.33 | % |
Total | | 100 | % | | | | | | | | | | | | 134.57 | % |
The measures in the above table are defined below:
DTE Vantage Non-REF Operating Earnings: DTE Vantage operating earnings, excluding Reduced Emissions Fuel ("REF") earnings.
DTE Vantage REF Operating Earnings: DTE Vantage REF operating earnings.
DTE Vantage Cash from Operations: DTE Vantage cash from operations.
DTE Energy Adjusted Operating Earnings Per Share: DTE Energy operating earnings per share, inclusive of earnings attributable to GSP prior to its spin-off effective July 1, 2021 (see page 43 for the discussion of DT Midstream Spin-off Impacts).
DTE Vantage OSHA Recordable Incident Rate: Number of Occupational Safety and Health Administration (“OSHA”) defined recordable injuries in the calendar year per 100 employees divided by the actual number of hours worked.
DTE Vantage OSHA DART Incident Rate: The number of OSHA defined recordable injuries that result in Days Away from work, work Restrictions, and/or job duty/position Transfers ("DART") due to work-related injuries in the calendar year per 100 employees divided by the actual number of hours worked.
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| DTE ENERGY 2022 PROXY STATEMENT39 |
DTE Vantage Employee Engagement–Gallup: The DTE Vantage Gallup Grand Mean score from the annual survey.
New Project Net Present Value: New Project Net Present Value ("NPV"). Examples include, but are not limited to: acquisitions, new builds, expansion or major restructuring of existing projects, contract extensions beyond original term, etc.
Long-Range Earnings Growth: Progress towards growing 2025 earnings from new projects.
The aggregate weighted payment percentage for the pre-adjusted calculated award was 134.57% for Mr. Stiers.
The pre-adjusted awards are adjusted by an individual performance modifier for each of the Named Executive Officers. Individual performance criteria are set at the beginning of each calendar year for each of the Named Executive Officers. For 2019,2021, qualitative criteria include, as applicable, leadership performance, overall operational performance, employee engagement and customer performance, diversity and inclusion, continuous operational improvements and other appropriate operating measures. The O&C Committee evaluates the individual performance of each of the Named Executive Officers and approves an adjustment to the annual award based on the individual contribution and performance. The individual performance modifier adjusts a Named Executive Officer’s annual cash bonus such that the Named Executive Officer’s actual cash bonus ranges between zero and 150% of the pre-adjusted calculated award. For 2019,2021, the individual performance modifiers for the Named Executive Officers ranged from 90%115% to 125%150%.
Long-Term Incentives
Long-term incentives provide the O&C Committee the ability to align programs that focus on our long-term performance over a three-year period, with the objective of aligning executives’ interests with those of our shareholders. Our principles for ownership of stock, discussed on page 47,44, ensure that the executives and other employees have a vested interest in the long-term financial health, management and success of the Company.
The long-term incentives are awarded under the Long-Term Incentive Plan and reward executives and other employees with stock-based compensation.
Named Executive Officers are eligible to receive restricted stock, performance shares, performance units, stock options or a combination of these awards. Since the creation of the Long-Term Incentive Plan, we have granted only performance shares, time-based restricted stock and nonqualified stock options. However, the O&C Committee has not granted stock options under the Long-Term Incentive Plan since 2010. Executives receive long-term incentive grants based upon a target percentage of base salary. The targeted award levels for the Named Executive Officers for 20192021 were as follows: Mr. Anderson,Norcia, 500% of base salary; Mr. Norcia, 350% of base salary; Mr. Oleksiak, 250%Ruud, 200% of base salary; Mr. Lauer, 210%215% of base salary; Mr. Meador, 240% of base salary; and Mr. Peterson, 185%Stiers, 165% of base salary. In addition to the targeted award levels, the O&C Committee also considers previous years’ grants, career potential and retention issues in determining the final number of awards granted.
The value of each element of these long-term incentive grants for 20192021 was as follows:
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Performance Shares | | Approximately 70% |
Restricted Stock | | Approximately 30% |
This mix was designed to provide a balance of incentives to executives for creating long-term shareholder value through strong financial and operating performance and to align executive interests with shareholder interests.
•Performance Shares Granted in 2019:2021: In 2019,2021, performance shares represented approximately 70% of the overall long-term incentive grant value. Granting of performance shares allows us to tie long-term performance objectives with creating shareholder value. Performance shares entitle the executive to receive a specified number of shares, or a cash payment equal to the fair market value of the shares, or a combination of the two, in the plan administrator’s discretion, depending on the level of achievement of performance measures. The performance measurement period for the 20192021 grants is January 1, 20192021 through December 31, 2021.2023. Payments earned under the 20192021 grants and the related performance measures are described in footnote 2 to the “Grants of Plan-Based Awards” table on page 51.48. In the event a participant retires (age 65 or age 55 or older with at least 10 years of service), dies or becomes disabled, the participant or beneficiary retains the right to a pro-rated number of the performance shares that would otherwise have been payable based upon actual results for the entire performance period. In the event employment terminates for any other reason, the participant forfeits all rights to any outstanding performance shares. In June 2009, the O&C Committee decided that, beginning with the 2010 performance share grants, dividends or dividend equivalents would not be paid on unvested or unearned
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40DTE ENERGY2022 PROXY STATEMENT | |
performance shares. During the period beginning on the date the performance shares are awarded and ending on the certification date of the performance objectives, the number of performance shares awarded will be increased, assuming full dividend reinvestment at the fair market value on the dividend payment date. The cumulative number
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| DTE ENERGY2020 PROXY STATEMENT 43
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of performance shares will be adjusted to determine the final payment based on the performance objectives as certified by the Committee.
•Performance Shares Paid in 20192021: The performance shares granted in 20162018 were paid in early 2019.2021. The payout amounts were based upon performance measures, each of which was weighted to reflect its importance to the total calculation. The Company had to attain a minimum level for each measure before any compensation was payable with respect to that measure. The minimum established level of each measure would have resulted in a payout of 50% of target, and an established maximum (or better) for each level would have resulted in a payout of 200% of target. The payout amount was based upon the following performance measures (and related weighting):
Long-Term Incentive Plan (2019(2021 Payout of Awards Granted in 2016)2018)
For Messrs. Anderson, Norcia, Oleksiak, Meador and Peterson: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
For Messrs. Norcia and Meador: | | | | | | | | | | | | Weighted |
Measures | | Weight | | Threshold | | Target | | Maximum | | Result | | Payout % | | Average Payout % |
Total Shareholder Return: DTE vs. Peer Group | | 80% | | 25th percentile | | 50th percentile | | 75th percentile | | 64.00% | | 156.00% | | 124.80% |
Balance Sheet Health— FFO to Debt Ratio | | 20% | | 16.90% | | 17.90% | | 18.90% | | 18.50% | | 160.00% | | 32.00% |
Total | | 100% | | | | | | | | | | | | 156.80% |
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For Mr. Ruud: | | | | | | | | | | | | Weighted |
Measures | | Weight | | Threshold | | Target | | Maximum | | Result | | Payout % | | Average Payout % |
Total Shareholder Return: DTE vs. Peer Group | | 40% | | 25th percentile | | 50th percentile | | 75th percentile | | 64.00% | | 156.00% | | 62.40% |
Balance Sheet Health—FFO to Debt Ratio | | 10% | | 16.90% | | 17.90% | | 18.90% | | 18.50% | | 160.00% | | 16.00% |
DTE Vantage Long-Range Earnings Growth | | 50% | | $24M | | $30M | | $36M | | $41M | | 200.00% | | 100.00% |
Total | | 100% | | | | | | | | | | | | 178.40% |
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For Mr. Lauer: | | | | | | | | | | | | Weighted |
Measures | | Weight | | Threshold | | Target | | Maximum | | Result | | Payout % | | Average Payout % |
Total Shareholder Return: DTE vs. Peer Group | | 60% | | 25th percentile | | 50th percentile | | 75th percentile | | 64.00% | | 156.00% | | 93.60% |
Balance Sheet Health—FFO to Debt Ratio | | 20% | | 16.90% | | 17.90% | | 18.90% | | 18.50% | | 160.00% | | 32.00% |
DTE Electric Average Return on Equity 2018-2020 | | 20% | | 9.60% | | 10.10% | | 10.60% | | 10.50% | | 180.00% | | 36.00% |
Total | | 100% | | | | | | | | | | | | 161.60% |
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For Mr. Stiers: | | | | | | | | | | | Weighted |
Measures | | Weight | | Threshold | | Target | | Maximum | | Result | | Payout % | | Average Payout % |
Total Shareholder Return: DTE vs. Peer Group | | 60% | | 25th percentile | | 50th percentile | | 75th percentile | | 64.00% | | 156.00% | | 93.60% |
Balance Sheet Health—FFO to Debt Ratio | | 20% | | 16.90% | | 17.90% | | 18.90% | | 18.50% | | 160.00% | | 32.00% |
DTE Gas Average Return on Equity 2018-2020 | | 20% | | 9.25% | | 10.00% | | 10.75% | | 10.20% | | 113.30% | | 22.66% |
Total | | 100% | | | | | | | | | | | | 148.26% |
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| DTE ENERGY 2022 PROXY STATEMENT41 |
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Measures | | Weight | | Threshold | | Target | | Maximum | | Result | | Payout % | | Weighted Average Payout % |
Total Shareholder Return: DTE vs. Peer Group | | 80% | | 25th percentile | | 50th percentile | | 75th percentile | | 75.0% | | 200.0% | | 160.0% |
Balance Sheet Health— FFO to Debt Ratio | | 20% | | 17.3% | | 19.3% | | 21.3% | | 20.0% | | 135.0% | | 27.0% |
Total | | 100% | | | | | | | | | | | | 187.0% |
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Measures | | Weight | | Threshold | | Target | | Maximum | | Result | | Payout % | | Weighted Average Payout % |
Total Shareholder Return: DTE vs. Peer Group | | 60% | | 25th percentile | | 50th percentile | | 75th percentile | | 75.0% | | 200.0% | | 120.0% |
Balance Sheet Health—FFO to Debt Ratio | | 20% | | 17.3% | | 19.3% | | 21.3% | | 20.0% | | 135.0% | | 27.0% |
DTE Electric Average Return on Equity 2016-2018 | | 20% | | 9.7% | | 10.2% | | 10.7% | | 10.4% | | 140.0% | | 28.0% |
Total | | 100% | | | | | | | | | | | | 175.0% |
The measures in the above tables are defined below:
Total Shareholder Return: Total DTE Energy shareholder return compared to 2422 peer group companies (as defined below) based on the average share prices from December 20152017 to December 2018.2020.
Balance Sheet Health—FFO (Funds from Operations) to Debt: Measures cash flow coverage as a ratio of FFO to debt where:
•FFO is defined as the sum of: (1) operating net income, (2) deferred taxes, (3) depreciation and amortization, (4) income statement impact of capitalizing operating leases, and (5) 50% of the interest (after-tax) on DTE Energy's Junior Subordinated Debt; and
•Debt is defined as all long-term and short-term debt of DTE Energy Company, adjusted as follows: (1) exclude portion of DTE Gas’s short-term debt attributable to seasonal working capital needs; (2) exclude 50% of DTE Energy’s Junior Subordinated Debt; (3) exclude mandatory convertible notes and (3)(4) include balance sheet impact of capitalizing operating leases.
DTE Vantage Long-Range Earnings Growth: The measure of new and updated contracts completed between 2018 and 2020 that will generate earnings in 2022, as well as overhead cost reductions realized by 2020.
DTE Electric Average Return on Equity 2016-2018:2018-2020: DTE Electric’s three-year average segment return on equity, expressed as a percentage, calculated based on operating income.
DTE Gas Average Return on Equity 2018-2020: DTE Gas’s three-year average segment return on equity, expressed as a percentage, calculated based on operating income.
The peer group for the performance shares granted under the Long-Term Incentive Plan, as approved by the O&C Committee, consists of the companies set forth below. These companies were selected because of a combination of the following: (1) their operations being largely regulated; (2) their size (based on market capitalization); and (3) their business
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44DTE ENERGY2020 PROXY STATEMENT
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strategies being similar to those of DTE Energy. In creating this peer group, the Company started with national public utilities with market capitalization above $1.5 billion. The Company then focused on companies with value concentrated in regulated electric and gas with at least 50% in regulated electric, and eliminated companies with large merchant and/or other non-regulated exposure. In addition, companies that were in the process of being acquired were also eliminated. The O&C Committee reviews and approves this peer group annually.
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Alliant Energy Corporation | | NorthWestern Energy | | | |
ALLETE, Inc. | | OG&EIDACORP Inc. |
Alliant Energy Corp.Corporation | | NiSource. Inc. |
Ameren Corporation | | PG&E CorporationNorthWestern Energy |
Avista Corporation | | Pinnacle West Capital CorporationOGE Energy Corp. |
CenterPoint Energy, Inc. | | PNM Resources, Inc.PG&E Corporation |
CMS Energy Corporation | | Portland General Electric CompanyPinnacle West |
Consolidated Edison, Inc. | | SCANA CorporationPNM Resources |
Dominion Energy | | Portland General Electric Company |
Duke Energy Corporation | | Southern Company |
Eversource Energy | | Vectren Corporation |
Great Plains Energy,Evergy Inc. | | WestarWEC Energy Inc.Group |
IDACORP Inc. | | WisconsinEversource Energy Corporation |
NiSource. Inc. | | Xcel Energy, Inc. |
Total shareholder return compared to the Peer Group is the primary measure because it reflects how well our Company has performed on total return to its shareholders relative to the total shareholder returns of similar companies.
As displayed above, the 20192021 payout levels approved by the O&C Committee were 187%156.80% for Messrs. Anderson, Norcia Oleksiak,and Meador, and Peterson and 175%178.40% for Mr. Lauer.Ruud, 161.60% for Mr. Lauer, and 148.26% for Mr. Stiers. Payouts for the NEOs under the Long-Term Incentive Plan for 20172019 and 20182020 ranged from 114.4%121% to 163.2%187%. For more details of the 20192021 payouts see footnote 2 to the “Option Exercises and Stock Vested in 2019”2021” table on page 52.50.
•Restricted Stock: The restricted stock grants are time-based and generally include a three-year vesting period. The granting of restricted stock allows us to grant executives long-term equity incentives to encourage continued employment. In 2019,2021, restricted stock was granted, representing approximately 30% of the overall Long-Term Incentive Plan grant value, with the restriction period ending on January 30, 2022.27, 2024. The three-year vesting period
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42DTE ENERGY2022 PROXY STATEMENT | |
focuses on long-term value creation and executive retention. The three-year vesting periodretention, and requires continued employment throughout the restriction period. In the event a participant retires (age 65 or age 55 or older with at least 10 years of service), dies or becomes disabled, the participant or beneficiary retains the right to a pro-rated number of restricted shares. In the event employment terminates for any other reason, the participant forfeits all rights to any outstanding restricted shares.
DT Midstream Spin-off Impacts
Stock Options: The O&C Committee has not grantedEffective July 1, 2021, DTE Energy completed the spin-off of its gas storage and pipelines segment ("GSP") into DT Midstream (“DTM”) as a stand-alone public company. In connection with the spin-off, DTE Energy distributed shares of DTM common stock optionsto its shareholders, thereby reducing DTE Energy’s per share market value. At the time of the spin-off, DTE Energy employees held unvested grants of performance shares and restricted stock awarded under the Long-Term Incentive Plan since 2010.for the 2019, 2020 and 2021 grant years. DTE Energy directors held phantom shares awarded under the Deferred Stock Compensation Plan for Non-Employee Directors and/or Plan for Deferring the Payment of Directors’ Fees, and one director held an unvested grant of restricted stock under the Long-Term Incentive Plan. In 2010, nonqualifiedorder to keep these employees and directors “whole,” incremental awards were granted to holders of unvested grants of performance shares, restricted stock, options represented approximately 20%and phantom shares, as applicable, to compensate for the reduction in the value of DTE Energy stock.
Employees holding performance share and/or restricted stock grants received an incremental number of shares to preserve the overall Long-Term Incentive Plan grant value. The grantingvalue of stock options allowed us to grant executives long-term equity incentives that align long-term performance with creating shareholder value.their 2019, 2020 and 2021 grants. These stock options have a ten-year exercise period and vest one-third on each anniversaryincremental grants were made as required by the anti-dilution provisions of the grant date over a three-year period. The stock option exercise price is based on the closing price on the date the options are granted. In the event a participant retires (age 65 or age 55 or older with at least 10 years of service) or becomes disabled, the participant retains the rights to all outstanding vested and unvested stock options in accordance with the original terms of the grant. In the event a participant dies, the beneficiary has three years from the date of death to exercise the stock options. In the event employment terminates for any other reason, the participant forfeits all rights to any unvested stock options and has 90 days to exercise any vested stock options. In February 2014, the Board adopted an amendment to the Long-Term Incentive Plan that prohibits(Article X, Section 10.01 “Equitable Adjustments”). In conjunction with the cash buyoutspin-off, the O&C committee approved revisions to post-spin metrics for open performance share grant years to reflect the separation of underwaterDTM from the consolidated group. The revised performance metrics for performance share grants are of a similar nature/level of difficulty.
DTE Directors holding phantom shares and/or restricted stock options.grants received an incremental number of shares to preserve the overall value of their grants.
The O&C Committee approved the use of a Volume Weighted Average Price (VWAP) over the three trading days immediately preceding the spin-off to determine the conversion ratio for preserving the fair value of unvested awards. This policy appliedcalculation yielded a conversion factor of 1.176, and the incremental grants of performance shares, restricted stock and phantom shares were awarded based on this ratio.
For purposes of determining Annual Incentives (described more fully beginning on page 36), the O&C Committee approved the inclusion of a partial year of GSP operations through the spin-off date of July 1, 2021, in DTE Energy's Adjusted Operating Earnings Per Share. As a result of this inclusion, DTE Energy Adjusted Operating Earnings Per Share is increased from the operating earnings per share reflected on page 5 by the amount attributable to all previously issued stock options and to options issued in the future, if any.
GSP operating earnings through July 1, 2021.
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| DTE ENERGY2020 PROXY STATEMENT 45
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Pension and Deferred Compensation
Pension Benefits
Substantially all non-represented employees hired prior to 2012, including our Named Executive Officers, are eligible to participate in our tax-qualified pension plan, the DTE Energy Company Retirement Plan. Named Executive Officers are also eligible to participate in our nonqualified pension plans, the DTE Energy Company Supplemental Retirement Plan and the DTE Energy Company Executive Supplemental Retirement Plan.
Deferred Compensation
Substantially all employees, including our Named Executive Officers, are eligible to participate in one of our tax-qualified 401(k) plans. The Named Executives Officers participate in the DTE Energy Company Savings and Stock Ownership Plan. Our Named Executive Officers are also eligible to participate in our nonqualified 401(k) plan, the DTE Energy Company Supplemental Savings Plan.
Providing supplemental pension and deferred compensation benefits for our executives is in keeping with our philosophy and objectives to attract and retain talented executives. The Pension Benefits Table and related footnotes beginning on page 5351 describe both the tax-qualified and nonqualified pension benefits for which certain executives are eligible and which are commonly offered by other employers in our peer group.
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| DTE ENERGY 2022 PROXY STATEMENT43 |
For further description of the nonqualified supplemental pension and deferred compensation benefits, see “Pension Benefits” beginning on page 53.51.
Executive Benefits
We provide executives with certain benefits generally not available to our other employees as a matter of competitive practice and as a retention tool. The O&C Committee periodically reviews the level of benefits provided to executives against a peer group to ensure they are reasonable and consistent with our overall compensation objectives.
We provide a cash allowance to certain executives in lieu of executive benefits typically provided by other companies. The executive is permitted to use the allowance as he or she deems appropriate. Although the allowance is taxable for income tax purposes, it is not considered as compensation for any Company incentive or benefit program.
During 2019,2021, we provided various benefits for a limited number of officers that included the following:
•Security driver for business: Based on our executive security policies and a security risk assessment by the Company’s chief security officer, the Board requires Mr. Norcia to use a Company car and security driver while on Company business. The Company has also provided Mr. Anderson with a Company car and security driver to use while on Company business.
•Corporate aircraft for limited business travel: We lease a fractional share of an aircraft for limited business travel by executives and other employees when there is an appropriate business purpose. Personal use of the aircraft is not allowed except in unusual circumstances and requires the prior approval of the CEO or Audit Committee. During 2019 there was limited personal use of the aircraft by one Named Executive Officer, when his spouse accompanied him while he traveled on Company business. The value of his spouse's travel was included in the Named Executive Officer's 2019 taxable income in accordance with Internal Revenue Code requirements and the value of thethis benefit is reflected in the Named Executive Officer's compensation in"All Other Compensation" column of the Summary Compensation Table on page 49.Table.
•Supplemental retirement benefits: Certain executives are eligible for both tax-qualified and non-qualified retirement benefits which are commonly offered by other employers in our peer group. For further description of the supplemental retirement benefits, see "Pension Benefits" beginning on page 53.51.
•Other benefits: Executives are allowed the limited use of corporate event tickets and the corporate condominium when available. The Company also provides home security monitoring for some executives, including some of the Named Executive Officers.
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46DTE ENERGY2020 PROXY STATEMENT
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Post-Termination Agreements
We have entered into indemnification agreements and change-in-control agreements with each of the Named Executive Officers and certain other executives. The indemnification agreements require that we indemnify these individuals for certain liabilities to which they may become subject as a result of their affiliation with the Company. The change-in-control agreements are intended to provide continuity of management in the event there is a change in control of the Company and to align executive and shareholder interests in support of corporate transactions. The important terms of, and the potential payments provided under, the change-in-control agreements are described beginning on page 57.55. Additionally, the Company has entered into an employment agreement with Mr. Norcia, whereby he is eligible for benefits including severance pay, bonus payment, restricted and performance share payout, and health and welfare benefits if he resigns for good reason (including demotion, involuntary relocation, or reduction in salary) or is terminated without cause (with "cause" defined as conviction of a crime, commission of fraud, material violation of Company policy, or conduct that results in material harm to the Company).
Stock Ownership Policy
Our principles for ownership of stock ensure that the executives and other employees have a vested interest in the financial health, management and success of the Company. We expect most executives and certain other employees to own, within five years of their appointment to such position, shares of our stock having a value equal to a multiple of their annual base salary.salaries. Common stock, time-based restricted stock, phantom stock and unvested performance shares (assuming achievement of target levels of performance) are counted toward the fulfillment of this ownership requirement. The following are the requirements for the Named Executive Officers: (i) for Messrs. Anderson andMr. Norcia, five times their respectivehis base salary; (ii) for Mr. Meador, four times his respective base salary; and (iii) for Messrs. Ruud, Lauer, Oleksiak and Peterson,Stiers, three times their respective base salary.salaries. Other executives and employees may be required to hold from one to three times their base salaries as determined by their executive group level within the Company. As of December 31, 2019,2021, 100% of the Named Executive Officers and all of the other required employees who have served in their position for at least five years have met the stock ownership guidelines.
Internal Revenue Code Limits on Deductibility of Compensation
Section 162(m) of the Internal Revenue Code of 1986 places an annual limit of $1 million on the amount of compensation we can deduct as a business expense on our federal income tax return with respect to each “covered employee.” Statutory
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44DTE ENERGY2022 PROXY STATEMENT | |
changes to Section 162(m) effective for compensation paid after December 31, 2017 significantly reduced the Company's ability to deduct compensation in excess of $1 million paid to each "covered employee."
"Covered Employees" Definition
Beginning in 2018, "covered employees" for purposes of Section 162(m) are our CEO, our CFO and the three highest paid executive officers named in the "Summary Compensation Table" on page4946other than the CEO and CFO. In addition, once an individual becomes a covered employee for any taxable year beginning after December 31, 2016, that individual will remain a covered employee for all future years, including after termination of employment or even death. This change expands the group of "covered employees" whose compensation will be subject to the Section 162(m) deduction limit. As a result, post-termination and post-death payments, severance, deferred compensation and payments from nonqualified plans paid to an executive who was a "covered employee" at any time after 2016 will be subject to the Section 162(m) deduction limit; a limited exception remains for compensation paid under binding written agreements in effect on November 2, 2017 that meet certain requirements.
For the 20192021 tax year, the Company paid the Named Executive Officers and other current or former executives treated as "covered employees" under Section 162(m) a total of $39.8$35.8 million which was not deductible.
The O&C Committee continues to believe that tying the Named Executive Officers' compensation to the Company's performance is in the best interest of the Company and its shareholders. As a result, the O&C Committee does not expect these changes to Section 162(m) to significantly affect the design of the Company's compensation program, and expects to authorize compensation exceeding $1 million to the Named Executive Officers even though it will not be deductible under Section 162(m).
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| DTE ENERGY2020 PROXY STATEMENT 47
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In addition, the Company will no longer request shareholder approval that was required solely to satisfy
Section 162(m) requirements, but will continue to seek shareholder approval of compensation plans as required by other applicable law or regulation.
Nonqualified Deferred Compensation Programs
We have structured all of our nonqualified deferred compensation programs to comply with Internal Revenue Code Section 409A, as added by the American Jobs Creation Act of 2004. Internal Revenue Code Section 409A imposes additional tax penalties on our executive officers for certain types of nonqualified deferred compensation that are not in compliance with the form and timing of elections and distribution requirements of that section.
Accounting Considerations
Accounting considerations also play a role in our executive compensation program. Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“ASC Topic 718”) requires us to expense the fair value of our stock option grants over the vesting period, which reduces the amount of our reported profits. Because of this stock-based expensing and the impact of dilution to our shareholders, we closely monitor the number and the fair values of the option shares.
Report of the Organization and Compensation Committee
The O&C Committee has reviewed and discussed with management the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K. Based on that review and discussion, we recommended to the Board that the Compensation Discussion and Analysis be included in the Company’s 20202022 proxy statement.
Organization and Compensation Committee
David A. Brandon, Chair
Gail J. McGovern
Ruth G. Shaw
Gail J. McGovern
Robert C. Skaggs, Jr.
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Summary Compensation Table
The table below summarizes the total compensation earned by each of the Named Executive Officers for the fiscal years ended December 31, 2017,2019, December 31, 20182020 and December 31, 2019.2021.
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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 ($) |
Gerardo Norcia* | | 2021 | | 1,276,923 | | | 6,524,979 | | | 2,032,700 | | | 1,073,599 | | | 220,076 | | | 11,128,277 | |
President and Chief Executive Officer | | 2020 | | 1,192,500 | | | 5,614,868 | | | 2,808,216 | | | 892,005 | | | 98,033 | | | 10,605,622 | |
| 2019 | | 1,009,856 | | | 4,716,621 | | | 1,559,700 | | | 808,132 | | | 134,030 | | | 8,228,339 | |
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David Ruud | | 2021 | | 623,077 | | | 1,279,526 | | | 604,400 | | | 698,995 | | | 39,161 | | | 3,245,159 | |
Senior Vice President and Chief Financial Officer | | 2020 | | 576,808 | | | 659,750 | | | 655,300 | | | 497,184 | | | 48,596 | | | 2,437,638 | |
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Trevor F. Lauer | | 2021 | | 616,846 | | | 1,351,952 | | | 516,100 | | | 721,679 | | | 63,171 | | | 3,269,748 | |
President and Chief Operating Officer - DTE Electric | | 2020 | | 593,769 | | | 1,345,890 | | | 835,600 | | | 428,700 | | | 55,424 | | | 3,259,383 | |
| 2019 | | 558,846 | | | 1,256,661 | | | 637,000 | | | 572,302 | | | 81,362 | | | 3,106,171 | |
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David E. Meador | | 2021 | | 789,231 | | | 1,895,147 | | | 989,300 | | | 1,079,966 | | | 55,857 | | | 4,809,501 | |
Vice Chairman and Chief Administrative Officer (Retired effective March 14, 2022) | | 2020 | | 770,077 | | | 1,900,080 | | | 961,000 | | | 1,361,064 | | | 58,438 | | | 5,050,659 | |
| 2019 | | 735,385 | | | 1,867,698 | | | 746,500 | | | 908,601 | | | 89,256 | | | 4,347,440 | |
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Mark W. Stiers | | 2021 | | 573,077 | | | 965,680 | | | 706,600 | | | 244,627 | | | 40,208 | | | 2,530,192 | |
President and Chief Operating Officer - DTE Vantage and Energy Trading | | | | | | | | | | | | | | |
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*On March 10, 2022, the Company announced that effective May 5, 2022, Gerardo Norcia, the Company's current President and Chief Executive Officer, will take on the additional role of Chairman, succeeding Gerard M. Anderson.