TABLE OF CONTENTS
SECURITIES AND EXCHANGE COMMISSION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant x Filed by a Party other than the Registrant ¨
Filed by the Registrant ☒ | | | Filed by a Party other than the Registrant ☐ |
Check the appropriate box:
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| Preliminary Proxy Statement |
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¨ | | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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| Definitive Proxy Statement |
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| Definitive Additional Materials |
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| Soliciting Material under Rule 14a-12 |
NISOURCE INC.
(Name of registrant as specified in its charter)
(Name of person(s) filing proxy statement, if other than the registrant)
Payment of Filing Fee (Check the appropriate box):
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NISOURCE INC. |
(Name of registrant as specified in its charter) |
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(Name of person(s) filing proxy statement, if other than the registrant) |
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¨☐ | | | Fee paid previously with preliminary materials. |
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TABLE OF CONTENTS
801 E. 86
th Avenue • Merrillville, Indiana 46410 • (877) 647-5990To the Holders of
Our Common
Stock of NiSource Inc.:Stock:
The
2022 annual meeting of
the stockholders (the “Annual Meeting”) of NiSource Inc., a Delaware corporation,
(the “Company”), will be
held at the Hyatt Rosemont, 6350 N. River Road, Rosemont, Illinois 60018conducted in a virtual format only via live audio webcast on
Wednesday,Tuesday, May
11, 2016,24, 2022, at 10:00 a.m.
, local time, Central Time at www.virtualshareholdermeeting.com/NI2022, for the following purposes:
(1)
| (1) | To elect ninetwelve directors named in the proxy statement to hold office until the next annual stockholders’ meeting and until their respective successors have been elected or appointed and qualified; |
(2)
| (2) | To approve named executive officer compensation on an advisory basis; |
(3)
| (3) | To ratify the appointment of Deloitte & Touche LLP as the Company’sour independent registered public accountantsaccounting firm for the year 2016; 2022; |
(4)
| (4) | To act uponconsider a stockholder proposal reducing the threshold stock ownership requirement for stockholders to call a special stockholder proposals described in the proxy statement that are properly presented at the meeting;meeting from 25% to 10%; and |
(5)
| (5) | To transact such other business as may properly come before the meetingAnnual Meeting and any adjournment or postponement thereof. |
All persons
The Annual Meeting will be conducted in a virtual format only to provide access to all of our stockholders regardless of geographic location. There is no in-person meeting for you to attend. We designed the format of the Annual Meeting to ensure that our stockholders who wereattend the Annual Meeting will be afforded similar rights and opportunities to participate as they would at an in-person meeting.
All stockholders of record
atas of the close of business on March
15, 2016, will be entitled30, 2022, are eligible to vote at the Annual Meeting and any adjournment
or postponement thereof.
Your vote is very important. Whether or not you plan to attend the
meeting,virtual Annual Meeting, please vote at your earliest
convenience. You may vote your sharesconvenience by
marking, signing, datingtelephone, through the Internet or by completing and mailing the enclosed proxy card.
YouIf you later choose to revoke your proxy or change your vote, you may
also vote by telephone or through the Internetdo so by following the
instructions set forth onprocedures described in the
attached proxy
card. If you attend the Annual Meeting, you may be able to vote your shares in person, even if you have previously submitted a proxy.statement. See the section
“Voting in Person”“Attending and Voting During the Virtual Annual Meeting” for specific instructions on voting your
shares.If you plan to attendshares at the Annual Meeting, please so indicate in the space provided on the proxy card or respond when prompted on the telephone or through the Internet.
Meeting.
PLEASE VOTE YOUR SHARES
AS SOON AS POSSIBLE BY TELEPHONE, THROUGH THE INTERNET OR BY PROMPTLY MARKING, DATING, SIGNING AND RETURNING THE ENCLOSED PROXY CARD.
Samuel K. Lee
Corporate Secretary
| | | |
| | | Kimberly S. Cuccia |
| | | Senior Vice President, General Counsel and Corporate Secretary |
Important Notice Regarding the Availability of Proxy Materials
For for the Annual Meeting
of Stockholders to be Held on May
11, 201624, 2022
The Proxy Statement, Notice of Annual Meeting and
20152021 Annual Report to Stockholders
are available at
http:https://ir.nisource.com/annuals.cfmwww.nisource.com/filingsTABLE OF CONTENTS
This summary highlights information that may be expanded upon elsewhere in this proxy statement (“Proxy Statement”). This summary does not contain all of the information that you should consider, and you should read the entire Proxy Statement before voting. The accompanying proxy is solicited on behalf of the Board of Directors of NiSource Inc. (the “Board”) for the 20162022 annual meeting of the stockholders (the “Annual Meeting”).
2022 ANNUAL MEETING OF STOCKHOLDERS
| | Time and Date: | | | 10:00 a.m. Central Time
on Tuesday, May 24, 2022 | |
| | Website: | | | www.virtualshareholdermeeting.com/NI2022 | |
| | Record Date: | | | March 30, 2022 | |
| | Shares of Common Stock Outstanding on Record Date: | | | 405,734,408 | |
| | Voting: | | | Each share is entitled to one vote for each director to be elected and on each matter to be voted upon at the Annual Meeting. | |
This Proxy Statement and the accompanying proxy card are first being sent to stockholders on April 19, 2022.
VOTING MATTERS AND BOARD RECOMMENDATIONS
| | Proposal 1 | | | To elect twelve directors named in this proxy statement; | | | For All Nominees | | | | |
| | Proposal 2 | | | To approve the compensation of our named executive officers (the “Named Executive Officers”) on an advisory basis; | | | For | | | | |
| | Proposal 3 | | | To ratify Deloitte & Touche LLP (“Deloitte”) as our independent registered public accounting firm for 2022; and | | | For | | | | |
| | Proposal 4 | | | To consider a stockholder proposal reducing the threshold stock ownership requirement for stockholders to call a special stockholder meeting from 25% to 10%. | | | Against | | | | |
2022 Proxy Statement | 1
TABLE OF CONTENTS
BOARD OF DIRECTORS NOMINEES
| | Peter A. Altabef | | | 62 | | | 2017 | | | Chair & CEO,
Unisys Corporation | | | | | | | | | ✔* | | | | | | ✔ | |
| | Sondra L. Barbour | | | 59 | | | 2022 | | | Retired EVP, Lockheed Martin Corporation | | | ✔ | | | | | | ✔ | | | | | | | |
| | Theodore H. Bunting Jr. | | | 63 | | | 2018 | | | Retired Group President, Entergy Corporation | | | ✔* | | | | | | | | | | | | ✔ | |
| | Eric L. Butler | | | 61 | | | 2017 | | | President and CEO, Aswani-Butler Investment Associates | | | | | | ✔* | | | | | | | | | ✔ | |
| | Aristides S. Candris | | | 70 | | | 2012 | | | Retired President & CEO, Westinghouse | | | | | | | | | | | | ✔* | | | ✔ | |
| | Deborah A. Henretta | | | 61 | | | 2015 | | | Partner, G100 Companies; Retired Group President, Procter & Gamble Co. | | | ✔ | | | ✔ | | | | | | | | | | |
| | Deborah A. P. Hersman | | | 52 | | | 2019 | | | Retired Chief Safety Officer and Consultant at Waymo LLC | | | | | | | | | ✔ | | | ✔ | | | | |
| | Michael E. Jesanis | | | 65 | | | 2008 | | | Retired President & CEO, National Grid USA | | | | | | ✔ | | | | | | ✔ | | | | |
| | William D. Johnson | | | 68 | | | 2022 | | | Retired President & CEO, Pacific Gas & Electric Corporation | | | | | | ✔ | | | | | | ✔ | | | | |
| | Kevin T. Kabat | | | 65 | | | 2015 | | | Chair of the Board,
NiSource Inc. | | | | | | | | | | | | | | | ✔* | |
| | Cassandra S.
Lee | | | 53 | | | 2022 | | | Chief Audit Executive,
AT&T Inc. | | | ✔ | | | | | | ✔ | | | | | | | |
| | Lloyd M. Yates | | | 61 | | | 2020 | | | President & CEO,
NiSource Inc. | | | | | | | | | | | | | | | | |
(1)
| Mss. Barbour and Lee and Mr. Johnson joined the committees listed effective March 15, 2022. |
* Chair of Committee
See “Proposal 1 – Election of Directors” for more information on our director nominees.
2 | 2022 Proxy Statement TABLE OF CONTENTS
CORPORATE GOVERNANCE HIGHLIGHTS
| | ✔ | | | Annual election of directors | |
| | ✔ | | | Majority voting for all directors with resignation policy | |
| | ✔ | | | No supermajority voting provisions | |
| | ✔ | | | No stockholder rights plan (“poison pill”) | |
| | ✔ | | | Proxy access by-law (3% ownership / 3 years duration / up to 20 stockholders / 20% of board) | |
| | ✔ | | | Stockholder right to call special meetings | |
| | ✔ | | | Separate chair and CEO | |
| | ✔ | | | All directors independent except CEO | |
| | ✔ | | | Board committees comprised of all independent directors | |
| | ✔ | | | Regular executive sessions of independent directors | |
| | ✔ | | | Annual Board and committee evaluation process and ongoing evaluations of individual directors | |
| | ✔ | | | Strategic and risk oversight by Board and committees | |
| | ✔ | | | Annual “Say-on-Pay” advisory votes | ��� |
| | ✔ | | | Strong alignment between pay and performance in incentive plans | |
| | ✔ | | | Commitment to safety and customer care | |
| | ✔ | | | Political contributions disclosure | |
| | ✔ | | | Enhanced independent registered public accounting firm disclosure | |
See “Corporate Governance” for more information on our corporate governance practices.
EXECUTIVE COMPENSATION HIGHLIGHTS
We have designed our executive compensation program to meet our business objectives using various compensation elements intended to drive both long-term and short-term performance. We believe that a significant portion of total compensation should consist of at-risk performance-based compensation. Our executive compensation practices include the following, each of which the Compensation and Human Capital Committee believes reinforces our executive compensation policy and objectives.
See “Compensation Discussion and Analysis (CD&A)” and “2021 Executive Compensation” for more information on our executive compensation program.
| | ✔ | | | Incentive award metrics that are tied to key company performance measures | | | ✘ | | | Repricing of options without stockholder approval | |
| | ✔ | | | Share ownership guidelines applicable to executive officers and independent directors | | | ✘ | | | Hedging or pledging transactions or short sales by executive officers or directors | |
| | ✔ | | | Compensation recoupment policy | | | ✘ | | | Tax gross-ups for Named Executive Officers | |
| | ✔ | | | Limited perquisites | | | ✘ | | | Automatic single-trigger equity vesting upon a change-in-control | |
| | ✔ | | | Prohibition against pledging unearned shares in our long-term incentive plan | | | ✘ | | | Excise tax gross-ups under change-in-control agreements | |
| | ✔ | | | Double-trigger severance benefits upon a change-in-control | | | ✘ | | | Excessive pension benefits or defined benefit supplemental executive retirement plan | |
| | ✔ | | | One-year minimum vesting for equity awards | | | ✘ | | | Excessive use of non-performance based compensation | |
| | ✔ | | | Significant portions of the executive compensation opportunity that are entirely contingent on performance against pre- established performance goals | | | ✘ | | | Excessive severance benefits | |
| | ✔ | | | Independent compensation consultant | | | ✘ | | | Dividend equivalent rights or dividends on unvested performance shares or restricted stock units granted to executive officers | |
| | ✔ | | | Annual Say-on-Pay vote by stockholders | | | | | | | |
2022 Proxy Statement | 3 TABLE OF CONTENTS
GENERAL INFORMATION
Stock Symbol: NI
Stock Exchange: NYSE
Registrar and Transfer Agent: Computershare Investor Services
State of Incorporation: Delaware
Corporate Headquarters: 801 E. 86th Avenue, Merrillville, Indiana 46410
Corporate Website: www.nisource.com
BUSINESS AND STRATEGY
NiSource Inc. is an energy holding company under the Public Utility Holding Company Act of 2005 whose primary subsidiaries are fully regulated natural gas and electric utility companies serving approximately 3.7 million customers in six states.
We focus our business strategy on providing safe and reliable electric and natural gas service through our core, rate-regulated asset-based utilities, which generate substantially all of our operating income. Our utilities continue to move forward on core safety, infrastructure and environmental investment programs supported by complementary regulatory and customer initiatives across all states in which we operate. Our goal is to develop strategies that benefit all stakeholders as we embark on long-term infrastructure investment and safety programs to better serve our customers, align our tariff structures with our cost structure, and address changing customer conservation patterns. These strategies focus on improving safety and reliability, enhancing customer service, ensuring customer affordability and reducing emissions while generating sustainable returns.
The safety of our customers, communities and employees has been and remains our top priority. Our safety management system (SMS) is an established operating model within NiSource. With the continued support and advice from our Quality Review Board (a panel of third parties with safety operations expertise engaged by management to advise on safety matters), we are continuing to mature our SMS processes, capabilities, and talent as we collaborate within and across industries to enhance safety and reduce operational risk. Additionally, we continue to pursue regulatory and legislative initiatives that will allow residential customers not currently on our system to obtain gas service in a cost-effective manner. For more information on our safety program, see our inaugural 2021 Safety Report at www.nisource.com.
We continue to actively implement our plans to reduce Scope 1 greenhouse gas (GHG) emissions by 90% from 2005 levels by 2030, and to significantly reduce methane emissions, a component of Scope 1 GHG emissions. These plans include the retirement of coal-fired electric generation, increased sourcing of renewable energy, methane reductions from priority pipeline replacement, traditional leak detection and repair, and deployment of advanced leak detection and repair. Additionally, we are active in several efforts to accelerate the development and demonstration of lower-carbon energy technologies and resources, such as hydrogen and renewable natural gas (RNG), to enable affordable pathways to economy-wide decarbonization. For more information on environmental and related matters, see our 2021 Integrated Annual Report, our 2021 Climate Report and the “Sustainability” section of our website at www.nisource.com.
NiSource is keenly aware that in addition to being a business entity, we are also a social and community enterprise that includes our employees, partners, customers and the communities we serve. For more information about our corporate responsibility diversity and sustainability efforts, see our 2021 Integrated Annual Report and the “Sustainability” and “Diversity, Equity and Inclusion” sections of our website at www.nisource.com.
For more information on our business and strategy, see our 2021 Integrated Annual Report, located at www.nisource.com.
Our directors possess the necessary breadth and depth of skills and experience to oversee our business operations and long-term strategy as set forth in “Proposal 1 – Election of Directors – Nominee Demographics, Skills and Biographies.”
4 | 2022 Proxy Statement TABLE OF CONTENTS
The accompanying proxy is solicited on behalf of the Board for the Annual Meeting to be held
at the Hyatt Rosemont, 6350 North River Road, Rosemont, Illinois 60018 on
Wednesday,Tuesday, May
11, 2016,24, 2022 at 10:00 a.m.
, local time. Central Time, in a virtual format only via live audio webcast at www.virtualshareholdermeeting.com/NI2022. The common stock, $.01 par value per share, of the Company represented by the
accompanying proxy will be voted as directed. If you return a signed proxy card without indicating how you want to vote your shares, the shares represented by the accompanying proxy will be voted as recommended by the
Board “FOR” all of the nominees for director; “FOR” advisory approval of the compensation of the Company’s Named Executive Officers; “FOR” the ratification of the appointment of Deloitte & Touche LLP (“Deloitte”) as the Company’s independent registered public accountants for 2016; “AGAINST” the stockholder proposal regarding reports on political contributions; “AGAINST” the stockholder proposal regarding a senior executive equity retention policy; and “AGAINST” the stockholder proposal regarding accelerated vesting of equity awards of senior executives upon a change in control.Board:
| ■ | “FOR” all of the nominees for director; |
| ■ | “FOR” advisory approval of the compensation of our Named Executive Officers; |
| ■ | “FOR” the ratification of the appointment of Deloitte as our independent registered public accounting firm for 2022; and |
| ■ | “AGAINST” the stockholder proposal to reduce the threshold stock ownership requirement for stockholders to call a special stockholder meeting from 25% to 10%. |
This Proxy Statement and the accompanying proxy card are first being sent to stockholders on April
7, 2016.19, 2022. We will bear the expense of this mail solicitation, which may be supplemented by telephone, facsimile,
e-mailemail and personal solicitation by our officers, employees and agents. To aid in the solicitation of proxies, we have retained D.F. King for a fee of $9,500, plus reimbursement of expenses. We may incur additional fees if we request additional services. We will also request brokerage houses and other nominees and fiduciaries to forward proxy materials, at our expense, to the beneficial owners of stock held
as of 5:00 p.m. Eastern Time on March
15, 2016,30, 2022, the record date for voting.
We use the terms “NiSource,” the “Company,” “we,” “our” and “us” in this
proxy statementProxy Statement to refer to NiSource Inc.
Holders of shares of common stock as of the close of business on March
15, 2016,30, 2022, are entitled to notice of and to vote at the Annual Meeting and any adjournment thereof. As of March
15, 2016, 320,722,00530, 2022, 405,734,408 shares of common stock were issued and outstanding. Each share of common stock outstanding on that date is entitled to one vote on each matter presented at the Annual Meeting.
If you are a “stockholder of record” (that is, if your shares of common stock are registered directly in your name on the Company’s records), you may vote your shares by proxy
in advance of the Annual Meeting using any of the following methods:
| ■ | Telephoning the toll-free number listed on the proxy card; |
| ■ | Using the Internet website listed on the proxy card: www.proxyvote.com; or |
| ■ | Marking, dating, signing and returning the enclosed proxy card. |
Telephoning the toll-free number listed on the proxy card;
Using the Internet website listed on the proxy card; or
Marking, dating, signing and returning the enclosed proxy card.
All votes must be received by the proxy tabulator by 11:59 p.m. Eastern Time on May 10, 2016.
23, 2022.
If your shares are held in a brokerage account or by a bank,
broker, trust or other
stockholder of recordnominee (herein referred to as a “Broker”), you are considered a “beneficial owner” of shares held in “street name.” As a beneficial owner, you will receive proxy materials and voting instructions from the stockholder of record that holds your shares. You must follow the voting instructions in order to have your shares of common stock voted.
Discretionary Voting by Brokers
Banks and
Other Stockholders of Record“Broker Non-Votes”
If your shares are held in street name and you do not provide the Broker with instructions as to how to vote such shares, your Broker will only be able to vote your shares at its discretion on certain “routine” matters as permitted by New York Stock Exchange (“NYSE”) rules. The proposal to ratify the appointment of our independent registered public accountants
2022 Proxy Statement | 5 TABLE OF CONTENTS
accounting firm is the only proposal considered a routine matter and, accordingly, at the Annual Meeting, Brokers will only have discretionary authority to vote your shares
with regard toregarding Proposal No. 3, the ratification of the appointment of Deloitte as our independent registered public
accountantsaccounting firm for
2016.2022. A “broker non-vote” occurs when a Broker holding shares for a beneficial owner does not have discretionary authority to vote the shares and has not received instructions from the beneficial owner as to how the beneficial owner would like the shares to be voted. Brokers will not have discretionary authority to vote your shares with respect to the
election of directors,other proposals to be presented at the
advisory approval of executive compensation, or the stockholder proposals.Annual Meeting. Therefore, it is important that you instruct your Broker or other nominee how to vote your shares.
If Brokers exercise their discretionary voting authority on Proposal No. 3, such shares will be considered present at the Annual Meeting for quorum purposes and broker non-votes will occur as to each of the other proposals presented at the Annual Meeting, which are considered “non-routine.”
Voting Shares Held in
a 401(k) PlanOur 401(k) Plan and the
If you hold your shares of common stock in our 401(k) Plan,
of Columbia Pipeline Group, Inc. (“CPG”) each holdthose shares
of our common stock. All of these shares (collectively, “Plan Shares”) are held in the name of Fidelity Management Trust Company (“Fidelity”),
which administers eachthe administrator of
these plans.the 401(k) Plan. You will receive a proxy card that includes the number of shares of our common stock held in
yourthe 401(k)
. Plan. You should instruct Fidelity how to vote your shares by completing and returning the proxy card or by voting your shares by Internet or by telephone, as detailed above under “Voting Your Proxy.” If you do not instruct Fidelity how to vote your shares, or if you sign the proxy card with no further instructions as to how to vote your shares, Fidelity will vote your
Plan Sharesshares in the same proportion as the shares for which it receives instructions from all other participants to the extent permitted under applicable law. To allow enough time for Fidelity to vote your
Plan Sharesshares in accordance with your direction, your voting instructions must be received by Fidelity no later than 11:59 p.m. Eastern Time on May
8, 2016.19, 2022.
Attending and Voting
During the Virtual Annual Meeting Format of Meeting. The Annual Meeting will be conducted in PersonYou also may comea virtual format only to provide access to all our stockholders regardless of geographic location. There is no in-person meeting for you to attend. We designed the format of the Annual Meeting to ensure that our stockholders who attend the Annual Meeting will be afforded similar rights and voteopportunities to participate as they would at an in-person meeting.
Attending the Meeting. You are entitled to attend and participate in the Annual Meeting if you were a stockholder of record as of the close of business on March 30, 2022, the record date, or hold a legal proxy for the Annual Meeting provided by your Broker as described below. To attend and participate in the Annual Meeting, visit www.virtualshareholdermeeting.com/NI2022 and enter your 16-digit control number, which can be found on your proxy card, voting instruction form or email you received with your proxy materials. If your shares in personare held by obtaininga Broker and submittingyou do not have a ballotcontrol number, please contact your Broker as soon as possible so that willyou can be provided with a control number.
Voting During the Meeting. You may vote during the Annual Meeting by following the instructions available aton the meeting website during the meeting. However, ifIf your shares are held in street name by a Broker, then, in order to be able to vote at the meeting,Annual Meeting, you must obtain an executed legal proxy from the Broker indicating that you were the beneficial owner of the shares on March 15, 2016,30, 2022, the record date for voting, and that the Broker is giving you its proxy to vote the shares.If your shares are held in our 401(k) Plan or CPG’sthe 401(k) Plan, you will not be able to vote your shares at the meeting.
Votes cast in personAnnual Meeting. Whether or represented by proxy at the meeting will be tabulated by the inspectors of election.
Ifnot you plan to attend the Annual Meeting, please so indicate whenwe urge you to vote so that we may send you an admission ticket and make the necessary arrangements. Stockholders who plan to attendsubmit your proxy in advance of the meeting must present picture identification alongby one of the methods described above under “Voting Your Proxy.” Votes cast at the Annual Meeting or represented by proxy at the Annual Meeting will be tabulated by the inspector of election.
Technical Assistance. The Annual Meeting will begin promptly at 10:00 a.m. Central Time. We encourage you to access the Annual Meeting approximately 15 minutes in advance to allow ample time for you to log in to the meeting and test your computer audio system. We recommend that you carefully review the above procedures needed to gain admission in advance. Technicians will be ready to assist you with an admission ticketany technical difficulties you may have accessing the virtual meeting. If you encounter any difficulties accessing the virtual meeting during check-in or evidenceduring the meeting, please call the technical support number that will be posted on the meeting login page at www.virtualshareholdermeeting.com/NI2022.
6 | 2022 Proxy Statement TABLE OF CONTENTS
Submitting Questions During the Meeting. As part of beneficial ownership.the Annual Meeting, we will hold a live question and answer session during which we intend to answer questions submitted during the meeting that are relevant to the purposes of the meeting and the Company's business in accordance with the Annual Meeting procedures posted on the meeting website, as time permits. Questions may be submitted by stockholders that have used 16-digit control numbers to enter the meeting at
www.virtualshareholdermeeting.com/NI2022. Questions and answers may be grouped by topic and substantially similar questions may be grouped and answered once. You may revoke your proxy at any time before a vote is taken or the authority granted is otherwise exercised. To revoke a proxy, you may send a letter to
the Company’sour Corporate Secretary (which must be received before a vote is taken) indicating that you want to revoke your proxy, or you can supersede your initial proxy by submitting a duly executed proxy bearing a later date, voting by telephone or through the Internet on a later date, or attending the
meetingvirtual Annual Meeting and voting
in person.during the meeting. Attending the
virtual Annual Meeting will not in and of itself revoke a proxy.
A quorum of stockholders is necessary to take action at the Annual Meeting. A majority of the outstanding shares of common stock, present in personduring the virtual Annual Meeting or represented by proxy, will constitute a quorum at the Annual Meeting. The inspectors of election appointed for the Annual Meeting will determine whether or not a quorum is present. The inspectors of election will treat abstentions and broker non-votes as present and entitled to voteAbstentions are counted for purposes of determining whether a quorum is present. As explained above under “Discretionary Voting by Brokers and ‘Broker Non-Votes’,” if Brokers exercise their discretionary voting authority on Proposal No. 3, such shares will be considered present at the presence of a quorum. Ameeting for quorum purposes and broker non-vote occurs when a Broker holding shares for a beneficial owner does not have discretionary authority to vote the shares and has not received instructions from the beneficial ownernon-votes will occur as to howeach of the beneficial owner would likeother proposals presented at the shares to be voted.Annual Meeting.
2022 Proxy Statement | 7 TABLE OF CONTENTS
PROPOSAL 1 — ELECTION OF DIRECTORS
At the recommendation of the Nominating and Governance Committee, the Board has nominated the persons listed below to serve as directors, each for a one-year term, beginning at the Annual Meeting on May
11, 2016,24, 2022, and expiring at the
20172023 annual meeting of
the Company’sour stockholders (the
“2017“2023 Annual Meeting”) and until their successors are duly elected or appointed and qualified. The nominees include
eighteleven independent directors, as defined in the applicable rules of the NYSE, and our President and Chief Executive Officer (“CEO”). The Board does not anticipate that any of the nominees will be unable to serve, but if any nominee is unable to serve, the proxies will be voted in accordance with the judgment of the person or persons voting the proxies.
All of the nominees currently serve on the Board.
The following chart gives Set forth below is information aboutregarding all our nominees (each of whom has consented to being named in the proxy statementProxy Statement and to serving, if elected).
To be elected, a nominee must receive more votes cast in favor of his or her election than against election. Abstentions by those present or represented by proxy and broker non-votes will not be votedcounted as a vote cast either “for” or “against” with respect to the election of directors and, therefore, will have no effect on the outcome. Brokers will not have discretionary authority to vote on the election of directors. Accordingly, there could be broker non-votes which will have no effect on the vote.
Under our Corporate Governance Guidelines, each nominee will tender a conditional resignation prior to the Annual Meeting, effective only if both (a) the votes “against” a nominee’s election exceed the votes “for” election (a “failed re-election”) and (b) such resignation is subsequently accepted by the Board. Any failed re-election will be referred to the Nominating and Governance Committee, which will make a recommendation to the Board as to whether to accept or reject the resignation. The Board will decide and publicly disclose its decision, the rationale for the decision and the directors who participated in the process within 90 days after the election. The Board expects the director who has not been re-elected to abstain from participating in the Nominating and Governance Committee or Board discussion or vote regarding whether to accept his or her resignation offer. A director who has had a failed re-election may participate in discussions or votes with respect to other directors who have had a failed re-election.
Nominee Demographics, Skills and Biographies
Our director nominees are diverse and possess the necessary breadth and depth of skills and experience to oversee our business operations and long-term strategy as shown in the tables and biographies below.
8 | 2022 Proxy Statement
TABLE OF CONTENTS
PROPOSAL 1 — ELECTION OF DIRECTORS
| | ✔ | | | Industry Experience (58%) * | |
| | ✔ | | | Other Operations / Customer Service (100%) | |
| | ✔ | | | Government and Regulatory (100%) | |
| | ✔ | | | Public Company Board (92%) | |
| | ✔ | | | Financial or Capital Markets (75%) | |
| | ✔ | | | Risk Management (100%) | |
| | ✔ | | | Technology (67%) | |
| | ✔ | | | Safety (67%) | |
| | ✔ | | | Environmental, Sustainability, Corporate Responsibility and Ethics (100%) | |
| | ✔ | | | Non-Profit Board / Community Service (92%) | |
| | ✔ | | | CEO (Current or Prior) (67%) | |
| | ✔ | | | Strategic Planning (100%) | |
| | ✔ | | | Financial Literacy and Expertise (100%) | |
| | ✔ | | | Talent Management (Executive Compensation and Benefits, and Talent Development) (100%) | |
* Percentages shown in this table represent the portion of the Board with the indicated skill or experience.
2022 Proxy Statement | 9 TABLE OF CONTENTS
PROPOSAL 1 — ELECTION OF DIRECTORS
THE BOARD
UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE ELECTION OF EACH OF THE NOMINEES LISTED BELOW.
| | PETER A. ALTABEF | |
|  Name, AgeAge: 62Director Since: 2017Standing Board Committees:■ Finance Committee (Chair)
■ Nominating and Principal Occupationsfor Past Five Years and Directorships Held
Governance Committee | | Has Been a
Director Since |
| | |
Richard A. Abdoo, 72
| | 2008 |
| |
Since May 2004,
Executive Experience: Mr. Abdoo has been President of R.A. Abdoo & Co. LLC, Milwaukee, Wisconsin, an environmental and energy consulting firm. Prior thereto, Mr. Abdoo was ChairmanAltabef currently serves as Chair and CEO of Wisconsin EnergyUnisys Corporation, from 1991 until his retirementa global information technology company, a position he has held since January 2015 (becoming Chair in April 2004.2018). He also served as President from January 2015 through March 2020 and from December 2021 to present. Prior to his current role, he served as president and CEO of Wisconsin EnergyMICROS Systems, Inc., a provider of integrated software and hardware solutions to the hospitality and retail industries, from 2013 to 2014, when it was acquired by Oracle Corporation. Before that, he served as president and CEO of Perot Systems Corporation from 19912004 to April 2003.2009, when it was acquired by Dell Inc. Following that transaction, Mr. AbdooAltabef served as president of Dell Services, the information technology services and business process solutions unit of Dell Inc., until his departure in 2011.
Outside Board and Other Experience: Mr. Altabef is Chair of the board of directors of Unisys Corporation. He is also a member of the President’s National Security Telecommunications Advisory Committee (NSTAC), a trustee of the Committee for Economic Development (CED), a member of the advisory board of Merit Energy Company, LLC and of the board of directors of Petrus Trust Company, LTA. He has previously served as a senior advisor to 2M Companies, Inc., in 2012, and as a director of A.K. SteelMICROS Systems, Perot Systems Corporation and EnSync, Inc. | | |
| |
By virtueBelo Corporation. He is also active in community service activities, having served on the boards and committees of his former positionsseveral cultural, medical, educational and charitable organizations and events.
Skills and Qualifications: Mr. Altabef has experience leading large organizations as Chairman and CEO of a large electric and gas utility holding company, as well as his current positions as director of one other energy-related company and a steel maker that is a major userstrong background in strategic planning, financial reporting, risk management, business operations and corporate governance. He also has more than 25 years of energy, Mr. Abdoo has extraordinary expertise andsenior leadership experience withat some of the issues facing the energy industry in general and public utilities in particular.world’s leading information technology companies. As a former CEO, Mr. Abdooresult, he has a deep understanding aboutof the cybersecurity issues facing executivebusinesses today. His overall leadership experience and his cybersecurity background provide the Board with valuable perspective and insight into significant issues that we face. | |
10 | 2022 Proxy Statement TABLE OF CONTENTS
PROPOSAL 1 — ELECTION OF DIRECTORS
| | SONDRA L. BARBOUR | |
| |  Age: 59Director Since: 2022Standing Board Committees:■ Audit Committee
■ Finance Committee | | | Executive Experience: Ms. Barbour retired as Executive Vice President, Information Systems and Global Solutions, of Lockheed Martin Corporation (“Lockheed Martin”) in 2016 and served in a transition role at Leidos Holdings until her retirement in 2017. Ms. Barbour joined Lockheed Martin in 1986 and served in various leadership capacities and has extensive technology experience, notably in the design and development of large-scale information systems. From 2008 to 2013 Ms. Barbour served as Senior Vice President, Enterprise Business Services and Chief Information Officer, heading all of Lockheed Martin's internal information technology operations, including protecting the company's infrastructure and information from cyber threats. Prior to that role Ms. Barbour served as Vice President, Corporate Shared Services and Vice President, Corporate Internal Audit providing oversight of supply chain activities, internal controls, and risk management.
Outside Board and Other Experience: Ms. Barbour serves as a director of AGCO Corporation, where she chairs the Audit Committee, and was previously a director for 3M Company.
Skills and Qualifications: Ms. Barbour’s significant experience with information technology systems and cyber security is valuable in helping steer our development of technology and management of cyber risks. Ms. Barbour brings 30 years of leadership experience at Lockheed Martin, where she oversaw complex information technology systems of a major corporation. 110,000+ employee business. She brings significant risk management knowledge related to technology and supply chain oversight, which are of key importance to our success. Ms. Barbour also enhances the Board’s public company experience in the areas of internal controls, accounting, audit, risk management and cybersecurity. | |
| | THEODORE H. BUNTING, JR. | |
| |  Age: 63Director Since: 2018Standing BoardCommittees:■ Audit Committee (Chair)
■ Nominating and
Governance Committee | | | Executive Experience: Mr. Abdoo’s credentialsBunting most recently served as group president, utility operations, at Entergy Corporation (“Entergy”), an integrated energy company, from 2012 until his retirement in 2017. Before that, he was senior vice president and chief accounting officer at Entergy from 2007 to 2012, and chief financial officer (“CFO”) of several subsidiaries from 2000 to 2007. He held other management positions of increasing responsibility in accounting and operations at Entergy since joining the company in 1983.
Outside Board and Other Experience: Mr. Bunting has been a director of Unum Group since 2013 and is currently chair of its regulatory compliance committee and a member of its human capital committee. Mr. Bunting has been a director of the Hanover Group since 2020 and is a member of the Audit Committee. Mr. Bunting has been a director at IEA since 2021 and is a member of the Nominating and Governance and Compensation Committees. He previously served as a registered professional engineerdirector of Imation Corp., a global data storage and information security company. He also serves on the board of Foundation for the Mid South and previously served on the board of Hendrix College.
Skills and Qualifications: Mr. Bunting's utility industry knowledge, including his experience in several states allowcustomer service, safety and regulatory relations, are valuable to us as we continue to execute on our robust long-term utility infrastructure investment plans. He also brings additional public company experience in the areas of strategic finance, accounting, auditing, and capital and risk management to the Board. He is a certified public accountant. | |
2022 Proxy Statement | 11 TABLE OF CONTENTS
PROPOSAL 1 — ELECTION OF DIRECTORS
| | ERIC L. BUTLER | |
| |  Age: 61Director Since: 2017Standing Board Committees:■ Compensation and Human Capital Committee (Chair)
■ Nominating and
Governance Committee | | | Executive Experience: Mr. Butler currently is President and CEO of Aswani-Butler Investment Associates, a private equity investment firm. Previously he served in a number of executive leadership roles at Union Pacific Corporation (“Union Pacific”), a transportation company located in Omaha, Nebraska, until his retirement in February 2018. He began his career at Union Pacific in 1985 and held leadership roles in financial planning and analysis and in marketing, sales and commercial, including as Executive Vice President and Chief Marketing Officer from March 2012 to December 2016. He also held leadership roles in supply, procurement and purchasing, including as Vice President and General Manager – Industrial Products from April 2005 to March 2012. He was Senior Vice President of Union Pacific from December 2017, Executive Vice President and Chief Administrative Officer from December 2016 through November 2017, and Corporate Secretary from February 2017 through November 2017.
Outside Board and Other Experience: Mr. Butler was appointed to the Federal Reserve Bank of Kansas City’s Omaha Branch Board in 2015 and, in 2018, was elected chair. His term on the Federal Reserve board ended in December 2020. He currently serves on the board of the Omaha Airport Authority, which he joined in 2007.
Skills and Qualifications: Mr. Butler developed and led strategic and financial planning, marketing, sales, commercial, and supply, procurement and purchasing for one of the largest transportation companies in the world, Union Pacific. He most recently led the corporate governance, human resources, labor relations and administration functions at Union Pacific. His knowledge of the railroad transportation industry and the challenges in maintaining top-tier safety, customer service and risk management standards while providing an important part of the nation’s infrastructure provides him with unique skills and insights that are valuable to offerthe Board. In addition, he has experience in the purchase of fuel and energy materials and equipment. As a unique technicalresult, Mr. Butler has an understanding of the aging infrastructure, safety, organizational and regulatory issues facing utilities today and provides a fresh viewpoint from an industry that is similarly positioned. His overall leadership experience and his regulated public company background provides the Board with another perspective on certainsignificant issues under consideration by the Board. As a long-time champion of humanitarian and social causes, including on behalf of the Lebanese-American community, Mr. Abdoo brings expertise and understanding with respect to social issues confronting the Company. His commitment to and work on behalf of social causes earned him the Ellis Island Medal of Honor, presented to Americans of diverse origins for their outstanding contributions to their own ethnic groups and to American society.that we face. | |
12 | 2022 Proxy Statement TABLE OF CONTENTS
PROPOSAL 1 — ELECTION OF DIRECTORS
| | ARISTIDES S. CANDRIS | |
| | |
Aristides S. Candris, 64
 Age: 70Director Since: 2012Standing BoardCommittees:■ Environmental, Safety and Sustainability Committee (Chair)
■ Nominating and Governance Committee | | 2012 |
| | |
Executive Experience: Dr. Candris was President and CEO of Westinghouse Electric Company (“Westinghouse”), Pittsburgh, Pennsylvania, a nuclear engineering company, which iswas a unit of Tokyo-based Toshiba Corp., from July 2008 until his retirement onin March 31, 2012. During his 36 years of service at Westinghouse, Dr. Candris served in various positions, including as Senior Vice President, Nuclear Fuel, from September 2006 to July 2008. Dr. Candris was also2008, and continued to serve on the board of Westinghouse until October 1, 20122012.
Outside Board and Other Experience: Dr. Candris served on the advisory board of Atomos Nuclear and Space Corporation from 2018 until 2020. He is also a directormember of the advisory boards of the Carnegie Institute of Technology and the Wilton E. Scott Institute for Energy Innovation at Carnegie Mellon University. He also serves on the boards of trustees of Transylvania University and the Hellenic-American University and the board of directors of The Hellenic Initiative. He previously served on the boards of Westinghouse and Kurion Inc. | | |
| |
Skills and Qualifications: Dr. Candris is a nuclear scientist and engineer and has significant experience gained through leading a global nuclear power company. His knowledge of the electric industry gives him significant insight onto the issues impacting the electric utility industry. His experience managing highly technical engineering operations, is valuableand particularly his extensive experience and expertise in risk assessment and safety management systems, as well as process optimization methodologies (such as Lean/Six Sigma), are of great value as we build and maintain facilities to address increasing environmental regulations and make long-term strategic decisions on electric power generation.generation and gas and electric delivery. His technical and management skills are helpful as we continue to build and modernize both our transmission and distribution systems. Dr. Candris’Candris has great insight from his experience developing customer focused programs and attaining excellence in business processes and behaviors, is insightful as wewhich will assist us to better meet the increasing expectations of customers and regulators. He serves | | |
2022 Proxy Statement | 13 TABLE OF CONTENTS
PROPOSAL 1 — ELECTION OF DIRECTORS
| | DEBORAH A. HENRETTA | |
|  Name, AgeAge: 61Director Since: 2015Standing Board Committees:■ Audit Committee
■ Compensation and Principal Occupationsfor Past Five Years and Directorships Held
Human Capital Committee | | Has Been a
Director Since |
| | |
on the Boards of Carnegie Mellon University, Transylvania University and the Hellenic-American University. He also serves on the Board of Directors for The Hellenic Initiative.
| | |
| |
Wayne S. DeVeydt, 46
| | 2016 |
| |
Since May 2007, Mr. DeVeydt has served as
Executive Vice President and Chief Financial Officer (“CFO”) at Anthem, Inc., a health insurance company and an independent licensee of the Blue Cross and Blue Shield Association. Previously, he served as Senior Vice President and Chief Accounting Officer beginning in 2005 and Chief of Staff from 2006 to 2007. Prior to joining Anthem, Inc., Mr. DeVeydt served many roles from 1996 to 2005 at PricewaterhouseCoopers LLP, including lead engagement partner for a number of large companies in the national managed care and insurance industries. | | |
| |
Mr. DeVeydt’s current position as a CFO in a regulated industry at a public company and his former position as an engagement partner at a public accounting firm provides him with strong financial acumen along with a deep understanding of operating in a regulated industry and extensive leadership skills, particularly in the areas of accounting and finance. His significant experience in internal controls, capital markets, corporate governance, risk management and strategic planning from both a company and public accounting perspective makes him an asset to our Board. In addition, Mr. DeVeydt is an active leader in his community through his service as a board member of the U.S Chamber of Commerce and the Cancer Support Community, Central Indiana, and a member of the Boys & Girls Clubs of America Board of Governors.
| | |
| |
Joseph Hamrock, 52
| | 2015 |
| |
Mr. Hamrock has been our President and Chief Executive Officer since July 1, 2015, and prior to this appointment was our Executive Vice President and Group CEO for NiSource’s Gas Distribution Operations segment, comprised of local gas distribution companies in Kentucky, Maryland, Massachusetts, Ohio, Pennsylvania, and Virginia since May 2012. Prior thereto, he served in a variety of senior executive positions with American Electric Power (AEP), Columbus, Ohio, an electrical service public utility holding company, including President and Chief Operating Officer of AEP Ohio from January 2008 to May 2012, and leadership roles in engineering, transmission and distribution operations, customer service, marketing, and information technology. Mr. Hamrock received a bachelor’s degree in electrical engineering from Youngstown State University and a Master’s degree in business administration from the Massachusetts Institute of Technology, where he was a Sloan fellow.
| | |
| |
The Board believes it is important that the Company’s CEO serve on the Board. Mr. Hamrock has extensive knowledge of our industry gained through his 26 years’ experience in a variety of positions at AEP and augmented by his senior leadership experience with the Company. He began his career in the energy industry as an electrical engineer in transmission and distribution planning and went on to work in commercial and industrial customer services, earning a leadership role in commercial marketing, customer services, and strategic development among other executive roles. Consequently, he has a firm understanding of the needs of our customers and is uniquely qualified to lead a focused utility to meet customer commitments. Additionally, he has a solid understanding of our organization through his leadership of our gas distribution segment where he led financial, operational, regulatory and commercial performance for the Company’s gas distribution operations. This significant industry experience provides Mr. Hamrock with a unique perspective into the Company’s operations, our markets, our people and the strategic vision needed to meet our long-term business performance goals. In addition, he has been, and continues to be, an active supporter of educational, charitable and utility industry organizations. He is currently a board member of the American Gas Association and Mount Carmel College of Nursing, as well as several other community boards.
| | |
| | |
Experience: Name, Age and Principal Occupations for Past Five Years and Directorships Held
| | Has Been a
Director Since |
| |
Deborah A. Henretta, 54
| | 2015 |
| |
Ms. Henretta currently is a partner at Council Advisors company, where she serves as Senior Advisor tospearheading digital transformation practice for SSA & Company, an executive decision strategy consulting firm, following her retirementand is a senior advisor for G100 Companies, a C-suite learning and development company. She retired from Procter & Gamble Co. (“P&G”) in 2015, where she served as Group President of Global e-Commerce at P&G.e-Business. Prior to her appointment as Group President of Global e-Commercee-Business in January 2015, she held various senior positions throughout several P&G sectors, including as Group President of Global Beauty from 2012 to 2015 and served as Group President of P&G’s business in&G Asia from 2007 to 2012, as well as its Global Specialty Channel from 20112012. Prior to 2012. Before her appointment as a Group President in 2007,of P&G Asia, she was DivisionPresident Asia from 2005 to 2007 and President of Global Baby/Baby, Toddler &and Adult Care and Division Vice President of Fabric Conditioners and Bleach.from 2004 to 2005. She joined P&G in 1985. She
Outside Board and Other Experience: Ms. Henretta has been a director at Corning,American Eagle Outfitters, Inc. since 2013,2019, a director at Meritage Homes since 2017 and currently serves on its audit and corporate relations committees.a director at Corning Incorporated since 2013. Ms. Henretta becameserved as a director of Meritage Homes Corporation in 2016.Staples, Inc. from June 2016 until September 2017 and served on its compensation committee. Additionally, she serves on the Boardboard of Trusteestrustees for Xavier UniversitySt. Bonaventure and at Cincinnati Children’s Hospital Medical Center. | | |
| |
Syracuse Universities.
Skills and Qualifications:Ms. Henretta has over 30 years of business leadership experience with P&G in a multi-jurisdictional regulatory and competitive business environment. She has experience across many markets, that includes expertise in brand development,including P&L responsibility for multi-billion-dollar businesses at P&G and responsibility for strategic planning, sales, marketing, e-business, government relations and government relations.customer service. Ms. Henretta led a dynamic business segment and is, therefore, keenly aware of the delicate balance of keeping pace with customer expectations in a changing environment, as well as maximizing the benefits that inclusion and managing risk. During her long career at P&G she has held various leadership positions responsible for strategic planning, sales, marketing, government relations, and customer service in a multi-jurisdictional regulatory and competitive business environment.diversity can provide. Because of this experience, Ms. Henretta brings valuable insights to ourthe Board and strategic leadership to the Companyus as it operateswe operate in multiple regulatory environments and developsdevelop products and customer service programs to meet our customer commitments while providingcommitments. In her previous partner role at G100 Companies where she continues as an senior advisor, she assisted in establishing a rewarding work environment.Board Excellence Program, which provides board director education. | |
14 | 2022 Proxy Statement TABLE OF CONTENTS
PROPOSAL 1 — ELECTION OF DIRECTORS
| | DEBORAH A. P. HERSMAN | |
| |  Age: 52Director Since: 2019Standing Board Committees:■ Environmental, Safety and Sustainability Committee
■ Finance Committee | | | Executive Experience: Ms. Hersman served as Chief Safety Officer and consultant at Waymo LLC, the self-driving car technology subsidiary of Alphabet Inc., from January 2019 to December 2020. In this role, she was responsible for systems safety, field safety and safety management systems across the company’s extensive testing and development programs. From 2014 to 2019, she served as president and CEO of the National Safety Council, a nonprofit organization focused on eliminating preventable deaths at work, in homes and communities, and on the road through leadership, research, education and advocacy.
Outside Board and Other Experience: From 2004 to 2014, Ms. Hersman served as a board member and then as chair at the National Transportation Safety Board (the “NTSB”). Previously, she served in a professional staff role for the U.S. Senate Commerce, Science and Transportation Committee, where she played key roles in crafting the Pipeline Safety Improvement Act of 2002 and legislation establishing a new modal administration focused on bus and truck safety. In 2021 she served on the Board of Velodyne (VLDR), a technology company that provides lidar solutions for autonomous vehicles, driver assistance, robotics, mapping and infrastructure applications.
Skills and Qualifications: Ms. Hersman is a seasoned safety executive, having previously served as the CEO of the National Safety Council and as the chair and chief executive at the NTSB. She has a successful track record running complex safety-focused organizations with numerous stakeholders. A widely respected safety leader driven by mission and a passion for preserving human life, Ms. Hersman also has expertise in the details of navigating crises and strong experience with safety policy legislation and advocacy. Ms. Hersman's extensive safety experience is of great value to the Board as we continue to implement our safety management system and meet our safety commitments to our customers and stakeholders. | |
| | MICHAEL E. JESANIS | |
Michael E. Jesanis, 59
|  Age: 65Director Since: 2008Standing Board Committees:■ Compensation and Human Capital Committee
■ Environmental, Safety & Sustainability Committee | 2008 |
| | |
Since July 2013,
Executive Experience: Mr. Jesanis has been a co-founderco-founded and was from 2013 to 2021 Managing Director of HotZero, LLC, a firm formed to develop hot water district energy systems in New Hampshire.England. Mr. Jesanis has also, since November 2007, been a principal with Serrafix, Boston, Massachusetts, a firm providing energy efficiency consulting and implementation services, principally to municipalities. Mr. Jesanis also servesserved as an advisor to several startups in energy-related fields. From July 2004 through December 2006, Mr. Jesanis was President and CEO of National Grid USA, a natural gas and electric utility, and a subsidiary of National Grid plc, of which Mr. Jesanis was also an Executive Director. Prior to that position, Mr. Jesanis was Chief Operating OfficerCOO and CFO of National Grid USA from January 2001 to July 2004.2004 and CFO of its predecessor utility holding company from 1998 to 2000.
Outside Board and Other Experience: Mr. Jesanis also is a board member of El Paso Electric Company. He previously served as a director offor several electric and energy companies, including Ameresco, Inc. | | |
| |
Mr. Jesanis is the former chair of the board of a college and a past trustee (and past chair of the audit committee) of a university.
Skills and Qualifications: By virtue of his former positions as President and CEO, Chief Operating OfficerCOO and, prior thereto CFO, of a major electric and gas utility holding company as well as his current role with an energy efficiency consulting firm, Mr. Jesanis has extensive experience with regulated utilities. He has strong financial acumen and extensive managerial experience, having led modernization efforts in the areas of operating infrastructure improvements, customer service enhancements and management team development. Mr. Jesanis also demonstrates a commitment to education as the former chair of the board of a college and a past trustee (and past chair of the audit committee) of anothera university. As a result of his former senior managerial roles and his non-profit board service, Mr. Jesanis also has particular expertise with board governance issues. | |
2022 Proxy Statement | 15 TABLE OF CONTENTS
PROPOSAL 1 — ELECTION OF DIRECTORS
| | WILLIAM D. JOHNSON | |
| |  Age: 68Director Since: 2022Standing Board Committees:■ Compensation and Human Capital Committee
■ Environmental, Safety & Sustainability Committee | | | Executive Experience: Mr. Johnson most recently served as President and Chief Executive Officer of Pacific Gas & Electric Corporation, a utility company, from May 2019 through June 2020. Mr. Johnson also served as President and Chief Executive Officer of Tennessee Valley Authority, an electric utility company, from January 2013 to May 2019. Prior to joining Tennessee Valley Authority, Mr. Johnson held the positions of Chairman, President and CEO of Progress Energy, Inc. (“Progress”) from October 2007 to July 2012, and previously to that as President and Chief Operating Officer from 2005 to 2007. His career at Progress included leadership roles of increasing responsibility including as President, Energy Delivery from 2004 to 2005, President and Chief Executive Officer from 2002 to 2003, and Executive Vice President and General Counsel from 2000 to 2002 of Progress Energy Service Company. Mr. Johnson’s career began in 1992 at Carolina Power & Light Company (predecessor to Progress) where he held increasing senior management roles of Associate General Counsel and Manager, Legal Department; Vice President, Senior Counsel and Corporate Secretary and Senior Vice President and Corporate Secretary.
Outside Board and Other Experience: Mr. Johnson has been a director of TC Energy Corp. since June 2021, where he currently serves on the Audit Committee and Human Resources Committee. Mr. Johnson has also served on the boards of the following utility industry groups or associations: Edison Electric Institute as Vice Chair, Nuclear Energy Institute as Chair, Institute of Nuclear Power Operations, World Association of Nuclear Operators as Governor and Nuclear Electric Insurance Limited.
Skills and Qualifications: Mr. Johnson brings three decades of industry and leadership expertise to the Board. Mr. Johnson’s multiple tenures as CEO and vast experience with industry groups related to gas, electric, nuclear and other utilities provide him with extensive leadership skills in the utilities industry and a deep understanding of regulated industry operations. Mr. Johnson guided Pacific Gas & Electric Corporation through its emergence from bankruptcy and served as CEO of Progress during its merger with Duke Energy Corp., through which he gained significant experience in complex corporate restructuring, transactions, and strategy. His experience has also informed an understanding of safety and risk oversight in the utilities industry that the Board values. This extensive experience and depth of knowledge gives Mr. Johnson a strong perspective on strategic operations within the industry and makes Mr. Johnson a valuable asset to the Board. | |
16 | 2022 Proxy Statement TABLE OF CONTENTS
PROPOSAL 1 — ELECTION OF DIRECTORS
| | KEVIN T. KABAT | |
Kevin T. Kabat, 59
|  Age: 65Director Since: 2015Chair of the BoardStanding Board Committees:■ Nominating and Governance Committee (Chair) | 2015 |
| | |
Executive Experience: From April 2007 to November 2015, Mr. Kabat was CEO of Fifth Third Bancorp.Bancorp, a bank holding company. He continuescontinued to serve as vice chairmanVice Chair of itsthe board of directors.directors of Fifth Third Bancorp until his retirement in April 2016. Before becoming CEO, he served as presidentFifth Third Bancorp’s President from June 2006 to September 2012 and was executive vice president of Fifth Third Bancorpas Executive Vice President from December 2003 to June 2006. Additionally, he was previously President and CEO of Fifth Third Bank | | |
| | |
Name, Age and Principal Occupations
for Past Five Years and Directorships Held
| | Has Been a
Director Since |
| |
(Michigan). Prior to that position, he was previously vice chairmanVice Chair and presidentPresident of Old Kent Bank, which was acquired by Fifth Third Bancorp in 2001. He
Outside Board and Other Experience: Mr. Kabat has been a director atof Unum Group since 2008. | | |
| |
2008 and is currently chair of the board and chair of its governance committee. He was also previously the lead independent director of E*TRADE Financial Corporation. He has also held leadership positions on the boards and committees of local business, educational, cultural and charitable organizations and campaigns.
Skills and Qualifications:Mr. Kabat has significant leadership experience as a CEO in a regulated industry at a public company. As a result, he has a deep understanding of operating in a regulatory environment and balancing the interests of many stakeholders. In addition, hisHis extensive experience in strategic planning, risk management, financial reporting, internal controls and capital markets and corporate governance makes him an asset to ourthe Board, becauseas he providesis able to provide unique strategic insight, financial expertise and risk management skills. In addition, he has broad corporate governance skills and perspective gained from his service in leadership positions on the boards of other publicly traded companies. | |
| | CASSANDRA S. LEE | |
| | |
Richard L. Thompson, 76
 Age: 53Director Since: 2022Standing Board Committees:■ Audit Committee
■ Finance Committee | | 2004 |
| | |
Mr. Thompson has been our independent Chairman
Executive Experience: Ms. Lee is an experienced financial and operational leader with extensive knowledge of the telecommunication industry, currently serving as Chief Audit Executive for AT&T Inc. Ms. Lee joined AT&T in 1993 and has served in various leadership capacities, including Senior Vice President and Chief Financial Officer, Network, Technology and Capital Management.
Outside Board since May 2013. Prior to his retirement in 2004, Mr. Thompson was Group Presidentand Other Experience: Ms. Lee currently serves on the Board of Caterpillar Inc., Peoria, Illinois, a leading manufacturerDirectors of construction and mining equipment, diesel and natural gas engines and industrial gas turbines. In May 2015, Mr. Thompson retired as lead director of Lennox International, Inc., (“Lennox”)Andretti Acquisition Corp., a position he held since May 2012 following his service as Chairman ofspecial purpose acquisition company, where she chairs the Audit Committee. Ms. Lee serves on the Board from June 2006 to May 2012,of Directors for the Girl Scouts of Northeast Texas and Vice Chairman from February 2005 to June 2006. He began hisleads the Finance Committee.
Skills and Qualifications: In nearly three decades with AT&T, Ms. Lee has acquired a wealth of expertise in various areas including retail operations, distribution strategy, global supply chain, mergers, acquisitions, and integration, capital management, network and other capacity planning, and shared services operations. Her vast and multifaceted experience in the telecommunication industry will translate well in her service on the boardBoard. Ms. Lee also has significant public company financial oversight and leadership experience that will strengthen the Board’s depth of Lennox in 1993. Additionally, he was onfinancial acumen. Ms. Lee is a certified public accountant and veteran of the board of Gardner Denver Inc. from November 1998 to July 2013.United States Army. | |
2022 Proxy Statement | 17 TABLE OF CONTENTS
PROPOSAL 1 — ELECTION OF DIRECTORS
| | LLOYD M. YATES | |
| | |
In his prior role as Group President of a large, publicly traded manufacturing company, Mr. Thompson had responsibility for its gas turbine and reciprocating engine business, as well as research and development activities. By virtue of this and prior positions, Mr. Thompson possesses significant experience in energy issues generally, and gas turbine electric power generation and natural gas pipeline compression in particular. He is a graduate electrical engineer with experience in electrical transmission system design and generation system planning. This experience provides Mr. Thompson a valuable understanding of technical issues faced by the Company.
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| |
Carolyn Y. Woo,
 Age: 61 | | 1998 |
| |
Since January 2012, Dr. Woo has been
Director Since: 2020
President and CEO of Catholic Relief Services, the international humanitarian agency of the Catholic community in the United States. Prior thereto, Dr. Woo was Martin J. Gillen Dean and Ray and Milann Siegfried Professor of Entrepreneurial Studies, Mendoza College of Business, University of Notre Dame, Notre Dame, Indiana. Dr. Woo is also a director of AON Corporation.
since 2022
Standing Board Committees:
■ None | | |
| | |
Dr. Woo’s current position
Executive Experience: Mr. Yates has served as President and CEO of an international organization provides herNiSource since February 2022. Mr. Yates retired in 2019 from Duke Energy Corporation (“Duke Energy”), where he most recently served as Executive Vice President, Customer and Delivery Operations, and President, Carolinas Region, since 2014. In this role, he was responsible for aligning customer-focused products and services to deliver a personalized end-to-end customer experience to position Duke Energy for long-term growth, as well as for the profit/loss, strategic direction and performance of Duke Energy’s regulated utilities in North Carolina and South Carolina. Previously, he served as Executive Vice President of Regulated Utilities at Duke Energy, overseeing Duke Energy’s utility operations in six states, federal government affairs, and environmental and energy policy at the state and federal levels, as well as Executive Vice President, Customer Operations, where he led the transmission, distribution, customer services, gas operations and grid modernization functions for millions of utility customers. He held various senior leadership roles at Progress Energy, Inc., prior to its merger with knowledgeDuke Energy, from 2000 to 2012.
Outside Board and Other Experience: Mr. Yates currently serves on the board of directors of Marsh & McLennan Companies. He previously served on the board of directors of American Water Works Company Inc. until 2022 and Sonoco Products Company until 2022.
Skills and Qualifications: Mr. Yates brings significant energy and regulated utility experience to our Board. He has approximately 40 years of experience in managing a large organization. Her experience as the dean of a major business school and her experience as a professor of entrepreneurship provided her a deep understanding of business principles and extensive expertise with management and strategic planning issues. Through her current and previous service on the boards of directors, audit committees and compensation committees of a number of public companies,energy industry, including a global reinsurance and risk management consulting company, a pharmaceutical distribution company, an international automotive manufacturer and a financial institution, Dr. Woo has developed an excellent understanding of corporate governance, internal control, financial and strategic analysis and risk management issues. Dr. Woo is a leader in the areas of corporate social responsibilityprofit/loss management, customer service, nuclear and sustainability,fossil generation and energy delivery. At Duke Energy, he used his operational experience to improve safety, reliability and the overall customer experience for millions of customers. He has expertise overseeing regulated utility operations, working with state regulators, and managing consumer and community affairs. He also has experience managing gas and grid modernization functions, which adds an importantis valuable to our Board as we execute our business strategies. In addition, his experience as a director for other prominent public companies benefits our Board by bringing additional perspective to the Company. She is also a currentvariety of important areas of governance and past board member of several non-profit organizations, including an international relief organization, a global business school accreditation organization, leadership development organizations and an educational organization. This commitment to social and educational organizations provides Dr. Woo with an additional important perspective on the various community and social issues confronting the Company in the various communities that the Company serves.strategic planning. | | |
18 | 2022 Proxy Statement TABLE OF CONTENTS
CORPORATE GOVERNANCE
Separation of Columbia Pipeline Group
On July 1, 2015 (the “Separation Date”), the Company completed the previously announced separation of CPG from the Company through thepro rata distribution of one share of CPG common stock for every one share of the Company’s common stock (the “Separation”). As a result of the Separation, CPG became an independent public company trading under the symbol “CPGX” on the NYSE, and NiSource continued as a fully regulated natural gas and electric utilities company.
In connection with the Separation, the Company’s Board changed as follows:
Sigmund L. Cornelius, Marty R. Kittrell, W. Lee Nutter, Deborah S. Parker, Robert C. Skaggs, Jr., and Teresa A. Taylor resigned from the Company’s Board, effective upon the Separation Date;
Joseph Hamrock, the Company’s President and Chief Executive Officer, and Deborah A. Henretta were elected to the Company’s Board, effective upon the Separation Date; and
Kevin T. Kabat was elected to the Company’s Board, effective as of July 3, 2015.
Also in connection with the Separation, the Officer Nomination and Compensation Committee was renamed the Compensation Committee and the Corporate Governance Committee was renamed the Nominating and Governance Committee.
Director Independence
Under our Corporate Governance Guidelines, a majority of the Board must be comprised of “independent directors.” In order to assist the Board in making its determination of director independence, the Board has adopted categorical standards of independence consistent with the standards contained in Section
303A.02(b)303A.02 of the NYSE
Corporate Governance Standards. The Board also has adopted an additional independence standard providing that a director who is an executive officer or director of a company that receives payments from theListed Company
in an amount which exceeds 1% of such other company’s consolidated gross revenues is not “independent” until three years after falling below such threshold.Manual. A copy of our Corporate Governance Guidelines is posted on our website at
http:https://ir.nisource.com/governance.cfmwww.nisource.com/investors/governance.
In considering Mr. Johnson’s independence, the Board considered the ordinary course and arms-length business relationship between subsidiaries of the Company and TC Energy Corp., where Mr. Johnson serves as a member of the board of directors. The Board has affirmatively determined that, with the exception of Mr.
Hamrock,Yates, all of the members of the Board and all nominees are “independent directors” as defined in Section
303A.02(b)303A.02 of the NYSE
Listed Company Manual and our Corporate Governance
Standards and meet the additional standard for independence set by the Board.Guidelines.
Policies and Procedures with Respect to Transactions with Related Persons
We have established policies and procedures with respect to the review, approval and ratification of any transactions with related persons.
Under its
Charter,charter, the Nominating and Governance Committee reviews reports and disclosures of insider and
affiliated partyrelated person transactions. Under
theour Code of Business Conduct, the following situations
may present a conflict of interest and must be reviewed
by the Nominating and Governance Committee to determine if they involve a direct or indirect interest of any director, executive officer or employee (including immediate family members) or otherwise present a
potential conflict of interest:
| ■ | owning more than a 10% equity interest or a general partner interest in any entity that transacts business with the Company (including lending or leasing transactions, but excluding the receipt of utility service from the Company at tariff rates), if the total amount involved in such transactions may exceed $120,000; |
| ■ | selling anything to the Company or buying anything from the Company (including lending or leasing transactions, but excluding the receipt of utility service from the Company at tariff rates), if the total amount involved in such transactions may exceed $120,000; |
| ■ | consulting for or being employed by a competitor of the Company; and |
| ■ | being in the position of supervising, reviewing or having any influence on the job evaluation, pay or benefit of any immediate family member employed by the Company. |
owning more than a 10% equity interest or a general partner interest in any entity that transacts business with the Company (including lending or leasing transactions, but excluding the receipt of utility service from the Company at tariff rates), if the total amount involved in such transactions may exceed $120,000;
selling anything to the Company or buying anything from the Company (including lending or leasing transactions, but excluding the receipt of utility service from the Company at tariff rates), if the total amount involved in such transactions may exceed $120,000;
consulting for or being employed by a competitor of the Company; and
being in the position of supervising, reviewing or having any influence on the job evaluation, pay or benefit of any immediate family member employed by the Company.
Related partyperson transactions requiring review under the Code of Business Conduct are annually reviewed and, if appropriate, ratified by the Nominating and Governance Committee. Directors, individuals subject to Section 16 (“Section 16 Officer(s)”) of the Securities Exchange Act of 1934, (“Section 16 Officers”as amended (the “Exchange Act”), and senior executive officers are expected
to raise any potential transactions involving a conflict of interest that relatesrelate to them with the Nominating and Governance Committee so that they may be reviewed in a prompt manner.
The son of Jim L. Stanley, our Executive Vice President and Chief Operating Officer, is employed by the Company in a non-executive officer position and received total compensation of less than $150,000 in 2015. His compensation was established by the Company in accordance with its compensation practices applicable to employees with comparable qualifications and responsibilities and holding similar positions and without the involvement of Jim L. Stanley. In addition, Jim L. Stanley does not have direct responsibility for directing or reviewing his son’s work and does not have influence over his employment at the Company. The Nominating and Governance Committee reviewed and approved this employment relationship.
There were no
other transactions between the Company and any officer, director or nominee for director, or any affiliate of or person related to any of them, since January 1,
2015,2021, of the type or amount required to be disclosed under the applicable Securities and Exchange Commission (“SEC”) rules.
2022 Proxy Statement | 19 Executive Sessions of Non-Management DirectorsTABLE OF CONTENTS
To promote open discussion among the non-management directors, the Board schedules regular executive sessions at meetings of the Board and each of its committees. The non-management members met separately from management four times in 2015. The independent Chairman of the Board presided at all these executive sessions. All of the non-management members are “independent directors” as defined under the applicable NYSE and SEC rules.
Communications with the Board and Non-Management Directors
Stockholders and other interested persons may communicate any concerns they may have regarding the Company as follows:
| ■ | Communications to the Board may be made to the Board generally, any director individually, the non-management directors as a group, or the Chair of the Board, by writing to the following address: |
Communications to the Board may be made to the Board generally, any director individually, the non-management directors as a group, or the Chairman of the Board, by writing to the following address:
NiSource Inc.
Attention: Board of Directors, or any Board member, or non-management directors, or Chairman Chair
Merrillville, Indiana 46410
| ■ | • | | The Audit Committee has approved procedures with respect to the receipt, retention and treatment of complaints regarding accounting, internal accounting controls or audit matters. Communications regarding such matters may be made by contacting the Company’sour Ethics and Compliance Officer atethics@nisource.com, calling the business ethics hotline at 1-800-457-2814, or writing to: |
Attention: Director, Corporate Ethics
Merrillville, Indiana 46410
We are committed to engaging with our stockholders and soliciting their views and input on important governance, environmental, social, executive compensation and other matters. Our Nominating and Governance Committee is responsible for overseeing the stockholder engagement process and the periodic review and assessment of stockholder input on governance matters. In 2021, management initiated stockholder conversations on a variety of corporate governance topics, including Board composition, the Board’s annual evaluation process, executive compensation and other matters. The information obtained from stockholders was shared with our Nominating and Governance Committee and used to enhance our disclosures. We intend to continue stockholder engagement on governance each year outside of the proxy season. Our independent directors are available to engage in dialogue with stockholders on matters of significance to understand stockholders’ views. In addition, management regularly participates in investor and industry conferences throughout the year to discuss performance and share its perspective on the Company and industry developments.
Code of Business Conduct
The Company has adopted
We have a Code of Business Conduct to
promotepromote: (i) ethical behavior, including the ethical handling of conflicts of
interest,interest; (ii) full, fair, accurate, timely and understandable financial
disclosure,disclosure; (iii) compliance with applicable laws, rules and
regulations,regulations; (iv) accountability for adherence to our
code, and;code; and (v) prompt internal reporting of violations of our code. Our Code of Business Conduct satisfies applicable SEC and NYSE requirements and applies to all directors, officers (including our principal executive officer, principal financial officer, principal accounting officer and controller)
, as well as
to our employees of
the Company and
itsour affiliates. A copy of our Code of Business Conduct is available on our website at
http:https://ir.nisource.com/governance.cfmwww.nisource.com/investors/governanceand also is available to any stockholder upon written request to our Corporate
Secretary.Secretary at the address noted above under the heading “Communications with the Board and Non-Management Directors.”
Any waiver of our Code of Business Conduct for any director, executive officer or Section 16 Officer or senior executiveofficer may be made only by the Audit Committee of the Board and must be promptly disclosed to the extent and in the manner required by the SEC or the NYSE and posted on our website. No such waivers have been granted.
To instill and reinforce our values and culture, we require our employees to participate in regular training on rotating ethics and compliance topics each year, including, among others, raising concerns, treating others with respect, preventing
20 | 2022 Proxy Statement TABLE OF CONTENTS
discrimination in the workplace, anti-bribery and corruption, data protection, unconscious biases, harassment, conflicts of interest, and the anonymous ethics and compliance hotline. All employees receive training on our Code of Business Conduct biannually or more frequently if there is a material change in content. Our business ethics program, including the employee training program, is reviewed annually by our executive leadership team and the Audit Committee of the Board.
Corporate Governance Guidelines
The Nominating and Governance Committee is responsible for annually reviewing and reassessing the Corporate Governance Guidelines and
will submitsubmitting any recommended changes to the Board for its approval. A copy of the Corporate Governance Guidelines can be found on our website at
http:https://ir.nisource.com/governance.cfmwww.nisource.com/investors/governance and is also available to any stockholder upon written request to
the Company’sour Corporate Secretary.
Board Leadership Structure
and Risk OversightOur Corporate Governance Guidelines state that
the Companywe should remain free to configure leadership of the Board in the way that best serves
the Company’sour interests at the time and, accordingly, the Board has no fixed policy with respect to combining or separating the offices of
ChairmanChair and CEO. If the
ChairmanChair is not an independent director, an independent
lead directorLead Director will be chosen annually by the
Board, taking into account the recommendation of the Nominating and Governance Committee. The
ChairmanChair or, if the
ChairmanChair is not an independent director, the
lead directorLead Director will
serve as chair of the Nominating and Governance Committee and asbe the presiding director of executive sessions of the
Board. To promote open discussion among the non-management directors, the Board
for purposesschedules regular executive sessions at meetings of the
NYSE rules.Board and each of its committees.
Since late 2006, the offices of ChairmanChair and CEO of the Company have been held by different individuals, with the ChairmanChair being an independent director. At this time,
The duties of the Chair of the Board believes thatare as follows:
| ■ | providing leadership to the Board and management, and monitoring the discharge of their duties; |
| ■ | presiding at meetings of stockholders and the Board, including executive sessions of the Board and meetings of the independent directors; |
| ■ | serving as a liaison between the independent directors and management; |
| ■ | in consultation with the CEO, setting agendas for the meetings of the Board, and developing annual Board meeting schedules for approval by the Board; |
| ■ | ensuring proper flow of information to the Board; |
| ■ | having the authority to call special meetings of the Board and independent directors; |
| ■ | being available for consultation and direct communication with stockholders and other key stakeholders, as appropriate; and |
| ■ | having such other responsibilities and performing such duties as may from time to time be assigned to him or her by the Board. |
The Board periodically reviews the structure and the division of responsibilities between the role of independent Chair and CEO. The structure and division of responsibilities is intended to maintain the integrity of the oversight function of the Board by providing a separate framework of responsibilities for the independent
Chairman arrangement serves the Company well.Chair as set forth above.
The Board takes an active role in monitoring and assessing the Company’sour strategic, compliance, operational and financial risks, as well as cybersecurity risks. The Board has oversight over risks related to Environmental, Social and Governance (“ESG”) strategy and governance, including assuring that ESG risks and opportunities are directly tied to our business strategy and understanding how we are measuring progress toward goals as part of our ESG strategy. The Board administers its oversight function through utilization of its various committees, as well as through acommittees.
2022 Proxy Statement | 21
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Our Risk Management Committee, consistingwhich consists of members of our senior management, which is responsible for theoversight of our risk management process. Senior management regularly provides reports on our risks to the Board, the Audit Committee and the Board committees that oversee the applicable risks. Additionally, the Audit Committee discusses with management and the independent auditorregistered public accounting firm the effect of regulatory and accounting initiatives on the Company’sour financial statements and is responsible for review and evaluation of the Company’sour major risk exposures, including cybersecurity and supplier risks, and the steps management has taken to monitor and control such exposures.
The
AuditCompensation and Human Capital Committee,
reviews and assesses the adequacy of the Company’s Risk Management Committee Charter annually, amending it as appropriate. In addition, the Finance Committee, the Compensation Committee, the Nominating and Governance Committee and the Environmental, Safety and Sustainability (“ESS”)
Committee, the Finance Committee and the Nominating and Governance Committee are each charged with overseeing the risks associated with their respective areas of responsibility.
For example, the Compensation and Human Capital Committee oversees risks related to executive compensation and human capital management matters, including incentive compensation, succession planning, diversity, employee engagement, culture and talent management. The ESS Committee oversees risks related to the environment, safety and sustainability, and assists the Board with oversight of risks and reporting related to climate change and GHG emissions. The Finance Committee oversees risks related to capital management and allocation and investor relations. The Nominating and Governance Committee oversees risks related to public company governance, CEO succession planning, political spending and stockholder engagement. For more information regarding the oversight responsibilities of the Board Committees, see the descriptions of the Committees below.
Our management team performs succession planning quarterly for officer-level and critical roles to ensure that we develop and sustain a strong bench of talent capable of performing at the highest levels. Not only is talent identified, but potential paths of development are discussed to ensure that employees have an opportunity to build their skills and are well-prepared for future roles. We maintain formal succession plans for our Chief Executive Officer (“CEO”) and key executive officers. The succession plan for our CEO is reviewed by the Nominating and Governance Committee and the succession plans for executive officers (other than the CEO) and critical roles are reviewed by the Compensation and Human Capital Committee annually or more frequently as needed.
Meetings and Committees of the Board
The Board met
nine10 times during
2015.2021. Each incumbent director attended at least
86%87% of the total number of
meetings of the Board
meetings (held during the period for which he or she was a director) and
of the committees of the Board on which he or she served,
(duringand in each case, during the periods that he or she
served).served. Pursuant to our Corporate Governance Guidelines,
all directors are expected to attend
all Board meetings, to spend the
Annual Meeting.time needed to discharge their responsibilities as directors, and to attend the annual meeting of stockholders. All then-serving directors attended the
2015 Annual Meeting2021 annual meeting of
Stockholders.stockholders.
Pursuant to our Corporate Governance Guidelines, the Board expects that our senior officers will regularly attend Board and Committee meetings, present proposals and otherwise assist in the work of the Board. Members of the Board have direct access to all of our employees, outside advisors and independent registered public accounting firm.
The Board has established five standing committees to assist the Board in carrying out its duties: the Audit Committee, the NominatingCompensation and GovernanceHuman Capital Committee, the ESS Committee, the Finance Committee and the CompensationNominating and Governance Committee. In 2015, theThe Board also established a Chief Executive Officer (CEO) Search Committee, an ad hoc committee to assist the Nominating and Governance Committee and the Board in identifying qualified director candidates following the Separation.CEO candidates. The Board generally evaluates the structure and membership of its committees on an annual basis, appoints the independent members of the Board to serve on the committees and elects committee chairs following the Annual Meetingannual meeting of Stockholders.stockholders. The following tables showtable shows the composition of each standing Board committee as of the date of this Proxy Statement. Mr. HamrockYates does not serve on any committee but is invited to attend various committee meetings. Mr. Thompson, who is ChairmanKabat, Chair of the Board, also serves as the Chair of the Nominating and Governance Committee and is invited to attend all meetings of each of the standing committees.
22 | 2022 Proxy Statement TABLE OF CONTENTS
Board Committee Composition
Director | Peter A. Altabef | Audit | | Nominating
and
Governance | | | ESS | | | Finance | | | Compensation✔* | | | ✔ | |
Richard A. Abdoo
| Sondra L. Barbour(1) | X | | ✔ | X | | | | | | | | ✔ | | | | X* | |
| Theodore H. Bunting, Jr.(2) | | | ✔* | | | | | | | | | | | | ✔ | |
| | Eric L. Butler | | | | | | ✔* | | | | | | | | | ✔ | |
| | Aristides S. Candris | | | | | | | | | X ✔* | | | | X* | | ✔ | | X | |
Wayne S. DeVeydt(1)
| | | | | | | | | | | | | | | | | | |
Deborah A. Henretta(2)
| | | ✔ | | | ✔ | | | X | | | | | | | | X | |
| Deborah A. P. Hersman | | | | | | | | | ✔ | | | ✔ | | | | |
| | Michael E. Jesanis | | X*(F) | | | X | ✔ | | | X ✔ | | | | | | | | | |
| William D. Johnson(1) | | | | | | ✔ | | | ✔ | | | | | | | |
| | Kevin T. Kabat(2)(3) | | X | | | | | | | | | | | X | | ✔* | | | |
Richard L. Thompson(3)
| Cassandra S. Lee(1) | | | ✔ | X* | | | | | | | | ✔ | | | | | |
Carolyn Y. Woo
| Lloyd M. Yates | X | | | | | | | X* | | | | X | | | | | |
(1)
| (1) | Mr. DeVeydt was appointed to the Board on March 22, 2016. If elected by the stockholders, he will be assigned to one or more committees following the 2016 Annual Meeting of Stockholders.
|
| (2) | Ms. Henretta’s appointment to the Board became effective upon the Separation DateMss. Barbour and Lee and Mr. Kabat was appointed July 3, 2015.
Johnson joined the committees listed effective March 15, 2022. |
(2)
| (3) | Independent Chairman of the Board.
|
| (F) | Audit Committee Financial Expert, as defined by the SEC rules. |
(3)
| Independent Chair of the Board. |
The summaries below are qualified by reference to the entire charter for each of the Audit, NominatingCompensation and Governance,Human Capital, ESS, Finance, and CompensationNominating and Governance Committees; each of which can be found on our website athttp:https://ir.nisource.com/governance.cfmwww.nisource.com/investors/governanceand is also available to any stockholder upon written request to the Company’sour Corporate Secretary. Additionally, any committee may perform other duties and responsibilities, consistent with their respective charters, our Amended and Restated Bylaws (our “Bylaws”), governing law, the rules and regulations of the NYSE, the federal securities laws and such other requirements applicable to the Company,us, delegated to any committee by the Board, or in the case of the Compensation Committee, under any provision of any Companyof our benefit or compensation plan.plans.
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The Audit Committee met nine times in
2015. Among other things,2021. Our Audit Committee is responsible for the
oversight of our internal audit function and financial reporting process. The Audit Committee has the sole authority to appoint, retain or replace
theour independent
auditorsregistered public accounting firm and is responsible
for:for, among other things:| ■ | reviewing our independent registered public accounting firm’s qualifications and independence and compensating our independent registered public accounting firm; |
| ■ | overseeing the performance of our internal audit function and our independent registered public accounting firm; |
| ■ | reviewing and discussing with management and our independent registered public accounting firm our annual and quarterly financial statements before earnings announcements; |
| ■ | reviewing and discussing with management our annual and quarterly earnings press releases; |
| ■ | reviewing and discussing with management and our independent registered public accounting firm major issues regarding accounting principles and financial statement presentations, adequacy of internal controls, and any critical judgments or accounting estimates made in connection with the preparation of financial statements; |
| ■ | reviewing and evaluating our major risk exposures, including cybersecurity and supplier risks, and the steps management has taken to monitor and control such exposures, including discussion of our risk assessment and risk management policies; and |
| ■ | overseeing our compliance with legal and regulatory requirements. |
reviewing the independent auditors’ qualifications and independence;
overseeing the performance of the Company’s internal audit function and the independent auditors;
reviewing and discussing with management and the independent auditor our annual and quarterly financial statements;
reviewing and discussing with management and the independent auditor major issues regarding accounting principles, adequacy of internal controls, and critical judgments and estimates made in connection with the preparation of financial statements;
monitoring the Company’s risk assessment process and overseeing its insurance programs; and
overseeing the Company’s compliance with legal and regulatory requirements.
The Board has determined that all of the members of the Audit Committee are independent as defined under the applicable NYSE and SEC rules, including the additional independence standard for audit committee members, and meet the additional independence standard set forth in theunder our Corporate Governance Guidelines. The Audit Committee has reviewed and approved the independent registered public accountants, both for 2015 and 2016, and the fees relating to audit services and other services performed by them.
For more information regarding the Audit Committee, see “Audit Committee Report” andReport,” “Proposal 3 — Ratification of Independent Registered Public Accountants”Accounting Firm” and “Independent Registered Public Accounting Firm Fees” below.
Compensation and Human Capital Committee
The Compensation and Human Capital Committee met four times in 2021. In October 2021, the Board renamed the Compensation Committee the “Compensation and Human Capital Committee” and clarified the Committee’s responsibilities in its Charter to include reviewing our human capital management function and programs, including related procedures, programs, policies and practices, and to make recommendations to management with respect to equal employment opportunity and diversity, equity and inclusion initiatives; employee engagement and corporate culture; and talent management. The Compensation and Human Capital Committee also apprises the Board with respect to the evaluation, compensation and benefits of our executives. Its responsibilities include, among others:
| ■ | evaluating the performance of our CEO and other executive officers in light of our goals and objectives; |
| ■ | reviewing and approving the corporate goals and objectives relevant to CEO and executive officer compensation; |
| ■ | making recommendations to the independent Board members regarding CEO compensation and approving compensation of the other executive officers; |
| ■ | reviewing and approving periodically a general compensation policy for our other officers and officers of our principal subsidiaries; |
| ■ | approving, or if appropriate, making recommendations to the Board with respect to incentive compensation plans and equity-based plans; |
| ■ | reviewing our officer candidates for election by the Board; |
| ■ | reviewing and evaluating the executive officers’ development and succession plan (other than our CEO’s succession plan, which is reviewed by the Nominating and Governance Committee); |
| ■ | evaluating the risks associated with our compensation policies and practices and the steps management has taken to monitor and control such risks; and |
| ■ | overseeing equal employment opportunity and diversity, equity and inclusion initiatives; employee engagement and corporate culture; and talent management. |
24 | 2022 Proxy Statement TABLE OF CONTENTS
All of the directors serving on the Compensation and Human Capital Committee are: (i) independent as defined under the applicable NYSE and SEC rules and under our Corporate Governance Guidelines and the additional NYSE independence standard for members of compensation committees and (ii) “non-employee directors” as defined under Rule 16b-3 of the Exchange Act. For additional information regarding the Compensation Committee's principles, policies and practices, please see the discussion under “Compensation Discussion and Analysis (CD&A)”.
Environmental, Safety and Sustainability Committee
The ESS Committee met five times during 2021. The ESS Committee assists the Board in overseeing the programs, performance and risks relative to environmental, safety and sustainability matters. Its responsibilities include, among others:
| ■ | evaluating our environmental and sustainability policies, practices and performance; |
| ■ | evaluating our safety policies, practices and performance relating to our employees, contractors and the general public; |
| ■ | reviewing and assessing stockholder proposals related to the environment, safety and sustainability; |
| ■ | reviewing and evaluating our programs, policies, practices and performance with respect to health and safety compliance auditing; and |
| ■ | assessing major legislation, regulation and other external influences that pertain to the ESS Committee’s responsibilities and assessing the impact on us. |
Finance Committee
The Finance Committee met five times during 2021. Its responsibilities include the following, among others:
| ■ | reviewing and evaluating our financial plans, capital structure, equity and debt levels, dividend policy and financial policies; |
| ■ | reviewing our corporate insurance programs; |
| ■ | reviewing our investment strategy and investments; |
| ■ | reviewing and evaluating our financial, tax, third party credit and commodity risks and the steps management has taken to monitor and control such risks; |
| ■ | reviewing our annual earnings guidance and capital budgets and recommending approval to the Board; and |
| ■ | reviewing our hedging policies and exempt swap transactions. |
Nominating and Governance Committee
The Nominating and Governance Committee met sixseven times in 2015.2021. Its responsibilities include:
include, among others:| ■ | identifying individuals qualified to become Board members, consistent with criteria approved by the Board; |
| ■ | recommending to the Board director nominees for election at the next annual meeting of the stockholders; |
| ■ | developing and recommending to the Board the Corporate Governance Guidelines; |
| ■ | consulting with management to determine the appropriate response to stockholder proposals submitted pursuant to SEC rules; |
| ■ | reviewing and evaluating risks to our reputation and the steps management has taken to monitor and control such risks; |
| ■ | reviewing and evaluating our CEO succession plan and working with the Board to evaluate potential successors to our CEO; |
| ■ | reviewing and overseeing, at least annually, corporate and business unit political spending; |
| ■ | evaluating any resignation tendered by a director and making recommendations to the Board about whether to accept such resignation; and |
| ■ | overseeing the evaluation of the performance of the Board and its committees. |
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identifying individuals qualified to become Board members, consistent with criteria approved by the Board;
CORPORATE GOVERNANCE
recommending to the Board director nominees for election at the next annual meeting of the stockholders;
developing and recommending to the Board the Corporate Governance Guidelines;
consulting with management to determine the appropriate response to stockholder proposals submitted pursuant to SEC rules;
reviewing and evaluating the CEO succession plan;
reviewing and overseeing, at least annually, corporate and business unit political spending;
evaluating any resignation tendered by a director and making recommendations to the Board about whether to accept such resignation; and
overseeing the evaluation of the performance of the Board and its committees.
Pursuant to the Corporate Governance Guidelines, theThe Nominating and Governance Committee, with the assistance of the Compensation Committee and its independent compensation consultant, Exequity LLP,annually reviews the amount and composition of non-employee director compensation. Please see the discussion under the heading “2021 Director Compensation” for a description of the compensation from timewe provide to timeour non-employee directors. The Nominating and makes recommendations toGovernance Committee also leads the Board when it concludes changes are needed.
processes set forth below.
Director Selection Process.The Nominating and Governance Committee identifies and screens candidates for director and makes its recommendations for director to the Board as a whole.Board. At times the Board may establish an ad hoc Search Committeesearch committee to assist the Nominating and Governance Committee in this process. In 2015, a Search Committee was established to assistAdditionally, the Nominating and Governance Committee in identifying qualified director candidates upon the completion of the Separation. The Nominating and Governance Committee has the authority to retain a search firm to help it identify director candidates to the extent it deems necessary or appropriate. In connection with the appointments of Ms. Henretta and Mr. Kabat toDuring 2021, the Board in 2015,established a search committee to assist the Nominating and Governance Committee engagedand the search firm of Russell Reynolds and Associates, who recommended theseBoard in identifying qualified director candidates. In connection with the nomination of Mr. DeVeydt, theThe Nominating and Governance Committee has also engaged the search firm of Heidrick and& Struggles which firm recommended Mr. DeVeydt.International, Inc. In considering candidates for director, the Nominating and Governance Committee considers the natureskills, expertise, experience and qualifications that will best complement the overall mix of skills and expertise of the expertise and experience required for the performanceBoard in view of the dutiesstrategy of, a director of a company engaged in our businesses,and the risks and opportunities that we face, as well as each candidate’s relevant business, academic and industry experience, professional background, age, current employment, community service, other board service and other factors. In addition, the Nominating and Governance Committee takes into account the racial, ethnic and gender diversity of the Board.Board and actively seeks minority and female candidates.
The Nominating and Governance Committee seeks to identify and recommend candidates with a reputation for, and record of, integrity and good business judgment
who:who have experience in positions with a high degree of responsibility and are leaders in the organizations with which they are affiliated; are effective in working in complex collegial settings; are free from conflicts of interest that could interfere with a director’s duties to
the Companyus and
itsour stockholders; and are willing and able to make the necessary commitment of time and attention required for effective service on the
Board.Board, including limiting their service on other boards to a reasonable number. The Nominating and Governance Committee also takes into account the candidate’s level of financial literacy. The Nominating and Governance Committee monitors the mix of skills and experience of the directors in order to assess whether the Board has the necessary tools to perform its oversight function effectively. The Nominating and Governance Committee also assesses the diversity of the Board as a part of its annual self-assessment
process.process as described in more detail below. The Nominating and Governance Committee will consider nominees for directors recommended by stockholders and will use the same criteria to evaluate candidates proposed by
stockholders.stockholders as it uses to evaluate the candidates identified by the Board.
The Board has determined that all of the members of the Nominating and Governance Committee are independent as defined under the applicable NYSE rules and
meet the additional independence standard set forth in theour Corporate Governance Guidelines.
For information on how to nominate a person for election as a director at the
20172023 Annual Meeting, please see the discussion under the heading “Stockholder Proposals and Nominations for
20172023 Annual Meeting.”
Board Evaluation Process.Environmental, Safety & Sustainability CommitteeThe ESSNominating and Governance Committee met five times during 2015. The ESS Committee assistsoversees the self-evaluation process, which is used by the Board in overseeing the programs, performance and risks relative to environmental, safety and sustainability matters. Its responsibilities include:
evaluating the Company’s environmental and sustainability policies, practices and performance;
evaluating the Company’s safety policies, practices and performance relating to our employees, contractors, and the general public;
reviewing and assessing shareholder proposals related to the environment, safety and sustainability;
reviewing and evaluating the Company’s programs, policies, practices and performance with respect to health and safety compliance auditing; and
assessing major legislation, regulation and other external influences that pertain to the ESS Committee’s responsibilities.
Finance Committee
The Finance Committee met eight times during 2015. Its responsibilities include the following:
reviewing and evaluating the financial plansby each committee of the Company, capital structure, longBoard to determine effectiveness and short-term debt levels, dividend policy and financial policies;
reviewing the Company’s investment strategy and investments;
reviewing and evaluating the Company’s financial risks and the steps management has taken to monitor and control such risks;
reviewing the Company’s annual earnings guidance and capital budgets; and
reviewing the Company’s hedging policies and exempt swap transactions.
Compensation Committee
The Compensation Committee met seven timesidentify opportunities for improvement. Annually at its meeting in 2015. The Compensation Committee advises the Board with respect to the evaluation, compensation and benefits of our executives. Its responsibilities include:
evaluating the performance of the CEO and other executive officers in light of the Company’s goals and objectives;
making recommendations to the independent Board members regarding CEO compensation and approving compensation of the other executive officers;
reviewing and approving periodically a general compensation policy for other officers of the Company and officers of its principal subsidiaries;
approving, or if appropriate, making recommendations to the Board with respect to incentive compensation plans and equity-based plans;
reviewing Company officer candidates for election by the Board;
reviewing and evaluating the executive officers’ development and succession plan (other than the CEO’s succession plan, which is reviewed byMarch, the Nominating and Governance Committee);
evaluatingCommittee initiates the risks associated with our compensation policiesself-evaluation process and practices;approves the form of written evaluation questionnaires that are distributed to each director for completion. The written evaluation questionnaires are updated each year as necessary to reflect changes identified in the prior year, any committee charter changes and
overseeing equal employment opportunity and diversity initiatives.
In making recommendations regarding the compensation of the CEO and approving the compensation of the other executive officers, the Compensation Committee takes into consideration its evaluation of the individual performance of each. When considering changes in compensation for the Named Executive Officers, the Compensation Committee also considers input any suggestions from the Executive Vice President, Corporate Affairsdirectors. The questionnaires solicit feedback on Board composition, Board meeting mechanics including information received, core responsibilities, relationship with management, committee functioning and Human
Resources, and Exequity LLP,other relevant matters. In addition, on an executive compensation consulting firm thatongoing basis, the Compensation Committee engagedChair meets with each director individually to advise itsolicit feedback with respect to executive compensation design, comparative compensation practicesboth the full Board and compensation matters relatingany committee on which the director serves, in addition to individual director performance and Board dynamics. Our Board utilizes the results of these evaluations in making decisions on Board agendas, Board structure, committee responsibilities and agendas, information presented to the Board, and continued service of individual directors on the Board. Exequity LLP providesThis information is then shared with the Board, and appropriate actions or changes are then identified.
Retirement Age; No Term Limits. The Board periodically evaluates the performance and qualifications of individual directors in connection with the nomination process, including the appropriate time for retirement of directors. However, no other servicesdirector after having attained the age of 72 years will be nominated for re-election to the Board unless the Board determines that the nomination is in the best interests of the Company. In addition, although the Nominating and
26 | 2022 Proxy Statement TABLE OF CONTENTS
Governance Committee will consider length of service in recommending candidates for re-election, the Board does not believe that adopting a set term limit for directors serves our interests. Such limits may result in the loss of contributions from directors who have been able to develop, over a period of time, increasing insight into our operations and our strategic direction. The
CompensationNominating and Governance Committee
has determined that Exequity LLP is independent under the NYSE rules.The Compensation Committee has authorityreviews these policies as part of its annual governance review and will consider modifications to delegate its responsibilities to subcommitteesthese policies as deemed appropriate, provided the subcommittees are composed entirely of independent directors who also meet the other requirements for membership of the Compensation Committee.
All of the directors serving on the Compensation Committee are (i) independent as defined under the applicable NYSEnecessary and SEC rules and meet the additional independence standard set forth in the Corporate Governance Guidelinesour best interests and the additional NYSE independence standard for membersbest interests of compensation committees, (ii) “non-employee directors” as defined under Rule 16b-3 of the Securities Exchange Act of 1934 (“Exchange Act”), and (iii) “outside directors” as defined by Section 162(m) of the Internal Revenue Code (hereafter “Section 162(m) of the Code” or “Code Section 162(m)”).
Compensation Committee Interlocks and Insider Participation
As of the fiscal year ended December 31, 2015, Messrs. Abdoo and Candris and Ms. Henretta served on the Compensation Committee. During the fiscal year ended, there were no compensation committee interlocks or insider participation.
our stockholders.
DIRECTOR COMPENSATIONDirector Compensation. This section describes compensation for our non-employee directors. To attract and retain highly qualified candidates to serve on the Board, we provide a combination of cash and equity awards. Our non-employee director compensation is reviewed annually by our Nominating and Governance Committee with the assistance of Meridian Compensation Partners, LLC (“Meridian”), the Compensation Committee's independent compensation consultant. A full-time employee who serves as a director does not receive any additional compensation for service on the Board. Consequently, because Mr. Hamrock is alsoYates became our President and CEO he does not receive additionalin February 2022. During 2021, Mr. Yates was a non-employee director and received compensation solely for his service as a Board member.director.
Each
For 2021, each non-employee director
receivesreceived an annual retainer of
$210,000,$255,000, consisting of
$90,000$105,000 in cash and an award of restricted stock units
(“RSUs”) valued at
$120,000$150,000 at the time of
the award.grant. The cash retainer is paid in arrears in four equal installments at the end of each calendar quarter.
The restricted stock units
RSUs are awarded annually, and the number of
restricted stock unitsRSUs is determined by dividing the value of the grant by the closing price of our common stock on the grant date.
Restricted stock units areThe RSUs granted
following the Company’s 2021 and 2020 annual meetings of stockholders were granted under the NiSource Inc. 2020 Omnibus Incentive Plan (“2020 Omnibus Plan”), while RSU awards granted prior to
directorsthe 2020 annual meeting of stockholders were granted under the NiSource Inc. 2010 Omnibus Incentive Plan (“
2010 Omnibus Plan”)
. Unless the non-employee director elects to defer receipt of his or her RSU awards, the RSUs are payable in shares of our common stock on the earlier to occur of: (a) the last day of the director’s annual term for which the RSUs are awarded; or (b) the date that the director separates from the Board due to a “Change-in-Control” (as defined in the 2020 Omnibus Plan or 2010 Omnibus Plan (the “Omnibus Plan”),
which was approvedas applicable); provided, however, that any director that commences service on the Board after the start of an annual term will vest on the first anniversary of the initial grant. The RSU awards also contain pro-rata vesting provisions for a separation from the Board due to retirement, death or disability. RSUs accrue dividends prior to settlement in shares of our common stock. If a non-employee director elects to defer receipt of his or her RSUs, then such deferred stock units will be paid in shares of our common stock upon the non-employee director's separation from the Board or such other date selected by the
stockholders on May 11, 2010, and re-approved for Code Section 162(m) purposes on May 12, 2015.Additionally, eachnon-employee director.
Each non-employee director who serves as chair of a Board committee receives compensation for
this responsibility.the additional responsibilities associated with such service. The
annual2021 committee chair fees
arewere $20,000 for each of the standing committees. The
ChairmanChair of the Board
receivesreceived additional annual compensation of $160,000 for his role. These fees are paid in cash in arrears in four equal installments and are prorated in the case of partial year service.
All Other Compensation.
The other compensation included under the column “All Other Compensation” in the 2021 Director Compensation Table below consists of matching contributions made by the NiSource Charitable Foundation.Omnibus Plan. The Omnibus Plan permits equity awards to be made to non-employee directors in the form of incentive and non-qualified stock options, stock appreciation rights, restricted stock and restricted stock units, performance shares, performance units, cash-based awards and other stock-based awards. Except as provided below, terms and conditions of awards to non-employee directors are determined by the Board prior to grant. Since May 11, 2010, awards to directors have been made from the Omnibus Plan. Awards of restricted stock units associated with periods prior to June 1, 2011, vested immediately, but are not distributed in shares of common stock until after the director separates from the Board. Beginning June 1, 2011, the awards of restricted stock units vest and are payable in shares of common stock on the earlier of (a) the last day of the director’s annual term for which the restricted stock units are awarded or (b) the date that the director separates from service due to a “Change-in-Control” (as defined in the Omnibus Plan); provided, however, that in the event that the
director separates from service prior to such time as a result of “Retirement” (defined as the cessation of services after providing a minimum of five continuous years of service as a member of the Board), death or “Disability” (as defined in the Omnibus Plan), the director’s restricted stock unit awards shall pro rata vest in an amount determined by using a fraction, where the numerator is the number of full or partial calendar months elapsed between the grant date and the date of the director’s Retirement, death or Disability, and the denominator of which is the number of full or partial calendar months elapsed between the grant date and the last day of the director’s annual term for which the director is elected that corresponds to the year in which the restricted stock units are awarded. The vested restricted stock units awarded on or after June 1, 2011, are payable as soon as practicable following vesting, unless otherwise provided pursuant to any prior election the non-employee director may have made to defer distribution. With respect to restricted stock units that have not been distributed, additional restricted stock units are credited to each non-employee director to reflect dividends paid to stockholders on common stock. The restricted stock units have no voting or other stock ownership rights and are payable in shares of our common stock upon distribution.
In connection with the Separation, the Board approved equitable adjustments to all outstanding equity awards in order to preserve the intrinsic aggregate value of the awards prior to Separation. Vested but unpaid restricted stock units awards held by non-employee directors were credited with one immediately vested CPG restricted stock unit for each such NiSource restricted stock unit held. Unvested awards were not provided such credit, however, the awards of restricted stock units made to non-employee directors on May 12, 2015, were subject to a valuation adjustment based on a ratio of the price that a share of NiSource Common Stock traded for three days prior to the Separation and the NiSource share price traded on a when-issued basis for the same three-day period.
Also in connection with the Separation, the Company amended the restricted stock unit agreements for vested but unpaid restricted stock units to provide the non-employee directors with a one-time opportunity to elect to invest all or a portion of the such restricted stock units and the CPG restricted stock units in alternative investment options and to have such amounts settled in cash at the same time as the vested restricted stock units are paid under the prior award agreements, subject to the stock ownership requirements described below.
Director Stock Ownership.
The Board maintains stock ownership requirements for its directors that are included in theour Corporate Governance Guidelines. Within five years of becoming a non-employee director, each non-employee director is required to hold an amount of Companyour stock with a value equal to five times the annual cash retainer paid to directors by the Company.directors. Company stock that counts towards satisfaction of this requirement includes shares purchased on the open market, awards of restricted stock or restricted stock units through the prior Non-Employee Director Stock Incentive Plan or Omnibus Plan,RSUs, and shares beneficially owned in a trust or by a spouse or other immediate family member residing in the same household. All of the non-employee director nominees are in compliance with the stock ownership guideline or are within the five-year transition period included in the Corporate Governance Guidelines.Each director has a significant portion of his or her compensation directly aligned with long-term stockholder value. Fifty-sevenApproximately fifty-nine percent (57%(59%) of a non-employee director’s 20152021 annual retainer (valued as of the time of award)award and excluding committee retainers) consisted of restricted stock units,RSUs, which are converted into common stock when vested and distributed to the director.
2022 Proxy Statement | 27 TABLE OF CONTENTS
2021 DIRECTOR COMPENSATION
2021 Director Compensation
The table below sets forth all compensation earned by or paid to our non-employee directors in
2015.2021. Our
President and CEO
and former CEOduring 2021 did not receive any additional compensation for
theirhis service on the Board.
Their compensationCompensation for serving as
President and CEO
during 2021 is
listed underdiscussed in the Executive Compensation
section of
Executive Officers. | | | | | | | | | | | | | | | | |
| Name | | Fees Earned or Paid in Cash ($)(4) | | | Stock Awards ($)(5)(6) | | | All Other Compensation ($)(7) | | | Total ($) | |
Richard A. Abdoo | | | 110,000 | | | | 120,000 | | | | 10,000 | | | | 240,000 | |
Aristides S. Candris | | | 100,000 | | | | 120,000 | | | | 10,000 | | | | 230,000 | |
Sigmund L. Cornelius(1) | | | 45,000 | | | | 120,000 | | | | — | | | | 165,000 | |
Wayne S. DeVeydt(2) | | | — | | | | — | | | | — | | | | — | |
Deborah A. Henretta(3) | | | 45,000 | | | | 103,230 | | | | — | | | | 148,230 | |
Michael E. Jesanis | | | 110,000 | | | | 120,000 | | | | — | | | | 230,000 | |
Kevin T. Kabat(3) | | | 44,516 | | | | 102,260 | | | | — | | | | 146,776 | |
Marty R. Kittrell(1) | | | 55,000 | | | | 120,000 | | | | — | | | | 175,000 | |
W. Lee Nutter(1) | | | 45,000 | | | | 120,000 | | | | — | | | | 165,000 | |
Deborah S. Parker(1) | | | 45,000 | | | | 120,000 | | | | — | | | | 165,000 | |
Teresa A. Taylor(1) | | | 55,000 | | | | 120,000 | | | | — | | | | 175,000 | |
Richard L. Thompson | | | 270,000 | | | | 120,000 | | | | — | | | | 390,000 | |
Carolyn Y. Woo | | | 100,000 | | | | 120,000 | | | | 3,500 | | | | 223,500 | |
| | Peter A. Altabef | | | 122,016 | | | 150,000 | | | — | | | 272,016 | |
| | Theodore H. Bunting, Jr. | | | 122,016 | | | 150,000 | | | — | | | 272,016 | |
| | Eric L. Butler | | | 122,016 | | | 150,000 | | | 10,000 | | | 282,016 | |
| | Aristides S. Candris | | | 122,016 | | | 150,000 | | | 10,000 | | | 282,016 | |
| | Wayne S. DeVeydt | | | 102,016 | | | 150,000(5) | | | 10,000 | | | 262,016 | |
| | Deborah A. Henretta | | | 102,016 | | | 150,000 | | | — | | | 252,016 | |
| | Deborah A. P. Hersman | | | 102,016 | | | 150,000 | | | 10,000 | | | 262,016 | |
| | Michael E. Jesanis | | | 102,016 | | | 150,000 | | | 10,000 | | | 262,016 | |
| | Kevin T. Kabat | | | 282,016 | | | 150,000 | | | — | | | 432,016 | |
| | Carolyn Y. Woo | | | 102,016 | | | 150,000(5) | | | 20,000 | | | 272,016 | |
| | Lloyd M. Yates | | | 102,016 | | | 150,000 | | | — | | | 252,016 | |
(1)
| These directors resigned from the Board effective upon the Separation Date.
|
(2) | Mr. DeVeydt was appointed to the Board on March 22, 2016.
|
(3) | Ms. Henretta’s appointment to the Board became effective upon the Separation Date and Mr. Kabat was appointed to the Board on July 3, 2015.
|
(4) | The fees shown include the annual cash retainer and any Board and Chairchair fees paid during the year to each non-employee director. |
(5)(2)
| The amounts shown reflect the grant date fair value of awards computed in accordance with FASB ASCthe Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718. For restricted stock units,RSUs, the grant date fair value is the number of shares multiplied by the closing price of our stock on the award date. EachOn May 25, 2021, each non-employee director who was elected on May 12, 2015, received an award of restricted stock unitsRSUs valued at $120,000$150,000, which was equal to approximately 2,699 restricted stock units5,922 RSUs valued at $44.46$25.33 per unit, the closing price of our common stock on that date. In connection with the Separation, these awards were equitably adjusted to 7,424 restricted stock units to preserve the intrinsic aggregate value of the awards prior to the Separation. Ms. Henretta and Mr. Kabat each received a pro-rated award valued at $103,230 and $102,260, respectively, which was equal to approximately 6,076 and 6,072 restricted stock units each based on the closing price of our common stock on July 2, 2015, with respect to Ms. Henretta, which was $16.99 and on July 6, 2015, with respect to Mr. Kabat, which was $16.84. See “Security Ownership of Certain Beneficial Owners and Management” and footnote (4) to that table for information regarding the number of shares of stock held by each current director as of March 3, 2016. |
(6)(3)
| As of December 31, 2015,2021, the number of equity awards (in the form of restrictedRSUs or deferred stock units) that were outstanding for each non-employee director were approximatelywas as follows: Mr. Abdoo, 46,526;Altabef, 6,025; Mr. Bunting, 21,450; Mr. Butler, 6,025; Dr. Candris, 19,774;59,838; Mr. Cornelius, 4,772;DeVeydt, 30,060; Ms. Henretta, 6,178;43,268; Ms. Hersman, 17,318; Mr. Jesanis, 29,768;6,025; Mr. Kabat, 6,174;6,025; Dr. Woo, 43,284; and Mr. Kittrell, 11,268; Mr. Nutter, 0; Ms. Parker, 0; Ms. Taylor, 7,454; Mr. Thompson, 55,885; and Ms. Woo, 33,418. Yates, 13,360. |
(7)(4)
| This column includesThe amounts shown reflect matching contributions made by the NiSource Charitable Foundation (the “Foundation”) under the Director Charitable Match Program. The Foundation matches up to $10,000 annually in contributions by any
|
| non-employee director to approved tax-exempt charitable organizations. Any amount not utilized for the match in the year it is first available is carried over to the following year. |
(5)
| Dr. Woo departed from the Board effective January 27, 2022. Mr. DeVeydt departed from the Board effective March 15, 2022. In connection with each director’s departure from the Board, the RSU awards fully vested. |
28 | 2022 Proxy Statement
TABLE OF CONTENTS
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table shows as of March
3, 2016,30, 2022, the number of shares of our outstanding common stock beneficially owned
byby: (i) each of our directors; (ii) each of
ourthe Named Executive Officers; (iii) our directors and executive officers as a group; and (iv) beneficial owners of more than 5% of our outstanding common stock (based solely on the Schedule 13G filings and any amendments thereto filed with the SEC on or before March
3, 2016)30, 2022) except as noted below. None of the Named Executive Officers or directors has any outstanding stock options as of that date. The business address of each of
the Company’sour directors and executive officers is
the Company’sour address.
| | | | | | | | |
| Name and Address of Beneficial Owner | | Number of Shares of
Common Stock
Beneficially Owned | | | Percent of Class Outstanding | |
5% Owners | | | | | | | | |
| | | |
T. Rowe Price Associates, Inc.(1) | | | 31,533,011 | | | | 9.8% | |
100 East Pratt Street Baltimore, MD 21202 | | | | | | | | |
The Vanguard Group(2) | | | 28,165,168 | | | | 8.8% | |
100 Vanguard Blvd. Malvern, PA 19355 | | | | | | | | |
BlackRock, Inc.(3) | | | 18,087,261 | | | | 5.7% | |
55 East 52nd Street New York, NY 10022 | | | | | | | | |
Directors and Executive Officers | | | | | | | | |
| | | |
Richard A. Abdoo(4) | | | 15,000 | | | | * | |
Donald E. Brown(5) | | | 660 | | | | * | |
Aristides S. Candris(4) | | | 2,000 | | | | * | |
Wayne S. DeVeydt(6) | | | — | | | | * | |
Joseph Hamrock(5) | | | 155,811 | | | | * | |
Deborah A. Henretta(4) | | | — | | | | * | |
Carrie J. Hightman(5)(7) | | | 250,554 | | | | * | |
Michael E. Jesanis(4) | | | 6,644 | | | | * | |
Kevin T. Kabat(4) | | | — | | | | * | |
Glen L. Kettering(8) | | | 400 | | | | * | |
Violet Sistovaris(5) | | | 114,428 | | | | * | |
Robert C. Skaggs, Jr.(8) | | | 168,010 | | | | * | |
Stephen P. Smith(8) | | | — | | | | * | |
Jim L. Stanley(5) | | | 123,275 | | | | * | |
Richard L. Thompson(4) | | | 16,299 | | | | * | |
Carolyn Y. Woo(4) | | | 19,744 | | | | * | |
All directors and executive officers as a group (19 persons) | | | 1,029,277 | | | | * | |
| | 5% Owners
| | | | | | | |
| | T. Rowe Price Associates, Inc.(1)
100 E. Pratt Street
Baltimore, MD 21202
| | | 27,162,692 | | | 6.7% | |
| | The Vanguard Group(2)
100 Vanguard Blvd.
Malvern, PA 19355
| | | 47,459,780 | | | 12.09% | |
| | BlackRock, Inc.(3)
55 East 52nd Street
New York, NY 10055
| | | 53,642,586 | | | 13.6% | |
| | State Street Corporation(4)
State Street Financial Center
1 Lincoln Street
Boston, MA 0211
| | | 22,223,865 | | | 5.66% | |
| |
| | | | | | | |
| | Directors and Executive Officers
| | | | | | | |
| | Peter A. Altabef(5) | | | 30,175 | | | * | |
| | Sondra L. Barbour(5) | | | — | | | * | |
| | Donald E. Brown(6) | | | 105,061 | | | * | |
| | Theodore H. Bunting, Jr(5) | | | 16,117 | | | * | |
| | Eric L. Butler(5) | | | 41,252 | | | * | |
| | Aristides S. Candris(5) | | | 18,697 | | | * | |
| | Joseph Hamrock(6) | | | 586,883 | | | * | |
| | Deborah A. Henretta(5) | | | 4,541 | | | * | |
| | Deborah A. P. Hersman(5) | | | 11,902 | | | * | |
| | Michael E. Jesanis(5) | | | 41,409 | | | * | |
| | William D. Johnson(5) | | | — | | | * | |
| | Kevin K. Kabat(5) | | | 40,015 | | | * | |
| | Cassandra S. Lee(5) | | | — | | | * | |
| | Charles E. Shafer(6) | | | 19,383 | | | * | |
| | Violet G. Sistovaris(6) | | | 166,437 | | | * | |
| | Pablo A. Vegas(6) | | | 69,927 | | | * | |
| | Lloyd M. Yates(5) | | | 19,420 | | | * | |
| | All directors and executive officers as a group (21 persons) | | | | | | | |
* Less than 1%
(1)
| As reported on an amendment to statement on Schedule 13G13G/A filed with the SEC on behalf of T. Rowe Price Associates, Inc. on February 10, 2016.14, 2022. T. Rowe Price Associates, Inc. hasreported sole voting power with respect to 10,826,61511,175,756 shares and sole dispositive power with respect to 31,533,011 shares reported as beneficially owned. 27,162,692 shares. |
2022 Proxy Statement | 29 TABLE OF CONTENTS
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(2)
| As reported on an amendment to statement on Schedule 13G13G/A filed with the SEC on behalf of The Vanguard Group on February 11, 2016.9, 2022. The Vanguard Group has sole voting power with respect to 538,836 shares,reported shared voting power with respect to 19,400776,631 shares, sole dispositive power with respect to 27,651,73245,690,870 shares and shared dispositive power with respect to 513,436 shares reported as beneficially owned. 1,768,910 shares. |
(3)
| As reported on an amendment to statement on Schedule 13G13G/A filed with the SEC on behalf of BlackRock, Inc. on January 27, 2016.March 11, 2022. BlackRock, Inc. hasreported sole voting power with respect to 16,044,74947,968,814 shares and sole dispositive power with respect to 18,087,261 shares reported as beneficially owned. 53,642,586 shares. |
(4)
| As reported on an amendment to statement on Schedule 13G/A filed with the SEC on behalf of State Street Corporation on February 11, 2022. State Street Corporation reported shared voting power with respect to 19,782,962 shares and shared dispositive power with respect to 22,222,148 shares. |
(5)
| Does not include restricted stock unitsRSUs issued under the Omnibus Plan and the former Non-Employee Director Stock Incentive Plan because these restricted stock units will not vestunless the shares have been distributed or the non-employee director has the right to acquire the shares within 60 days of March 3, 2016.30, 2022. |
(5)(6)
| Includes shares held in our 401(k) Plan and shares that are distributable within 60 days. days of March 30, 2022. |
(6) | Mr. DeVeydt was appointed to the Board on March 22, 2016.
|
(7) | Includes shares owned by a trust over which Ms. Hightman maintains investment control and of which one or more of her immediate family members are the sole beneficiaries.
|
(8) | Messrs. Skaggs, Smith and Kettering each resigned in connection with the Separation. Each of their holdings appear as reported by each executive as of December 31, 2015.
|
30 | 2022 Proxy Statement EXECUTIVE COMPENSATIONTABLE OF CONTENTS
COMPENSATION DISCUSSION AND ANALYSIS (CD&A)
Introduction
As noted earlier
Our Named Executive Officers (NEOs)
| | | | | | | | | | | | | | | |
| | Joseph Hamrock
Former President and Chief Executive Officer (CEO)*
* Mr. Hamrock retired from his officer and Board positions effective February 14, 2022. Lloyd M. Yates, a member of our Board, was appointed President and CEO as of such date. | | | Donald E. Brown
Executive Vice President, Chief Financial Officer (CFO) and President, NiSource Corporate Services | | | Pablo A. Vegas
Executive Vice President, Chief Operating Officer (COO) and President, NiSource Utilities | | | Violet G. Sistovaris
Executive Vice President and Chief Experience Officer | | | Charles E. Shafer
Senior Vice President and Chief Safety Officer | |
2021 Business Developments and Accomplishments
Throughout 2021, our operating companies maintained their commitment to delivering safe and reliable utility service, while continuing to support customers through the ongoing challenges of the COVID-19 pandemic.
In 2021, we advanced our transition to renewable energy generation, drove continued investments in this Proxy Statement, on July 1, 2015,our asset modernization programs, and further drove the Company successfully completed the separationimplementation and refinement of its natural gas pipelineour safety management system (“SMS”) program across all of our operating companies. 2021 was also a year of continued progress for NiSource Next, our enterprise-wide multi-year initiative designed to enhance efficiencies and related business into a stand-alone publicly traded company, CPG. reduce overhead costs as we propel our safety and modernization strategies forward.
We believe this Separation will enhance long-term stockholder value by creating two independent, highly focused, premier entities and sets the foundation for the Companyalso continued to execute on our pure-play utility growth strategy. While we have retainedsustainability and environmental, social and governance (“ESG”) strategies, which along with NiSource Next, are designed to deliver sustained value over the samelong-term to all our stakeholders, including our customers, communities and employees.
2022 Proxy Statement | 31
TABLE OF CONTENTS
COMPENSATION DISCUSSION AND ANALYSIS (CD&A)
Highlights from 2021include the following:
| ■ | Financial Results. Our 2021 net income available to common stockholders and non-GAAP net operating earnings per share (“NOEPS”) were favorable compared to 2020, with 2021 NOEPS exceeding the top end of our guidance range. Our 2021 results reflected the strong performance of our ongoing operations, including infrastructure investments and savings resulting from the NiSource Next transformation initiative, which are described below. Non-GAAP NOEPS is a key performance measure in our executive compensation program as set forth on the following pages. |
| ■ | Electric Generation. We successfully concluded the 2021 Integrated Resource Plan process with the Indiana Utility Regulatory Commission, which outlined replacement capacity for our coal-fired generation facility in Michigan City, allowing us to eliminate coal-fired generation by 2026-2028. We also retired units 14 and 15 at Schahfer Generating Station, while helping employees transition to new roles. Further, we completed a third wind project, broke ground on two solar projects and received regulatory approval to complete another nine renewable energy projects by the end of 2023. |
| ■ | Regulatory Execution and Infrastructure Modernization. We filed base rate cases in five states and completed three cases through the end of 2021 with balanced outcomes supporting all stakeholders. We also invested $1.3 billion in infrastructure modernization to enhance safe, reliable service, including replacement of priority pipe, underground cable and electric poles. |
| ■ | Safety. Through our SMS program, we continued to make strides in reducing safety risk enterprise wide. Our safety-related accomplishments in 2021 include substantially completing the installation of automated shut-off valves on our low-pressure gas systems to protect against over-pressurization, expanding deployment of advanced natural gas leak detection technology, completing stage one of a SMS certification by Lloyd's Register with stage two planned for 2022, and expanding field quality assessment resources to strengthen our quality management system and capabilities. |
| ■ | NiSource Next. NiSource Next is a comprehensive, multi-year program designed to deliver long-term safety, sustainable capability enhancements and cost optimization improvements. For instance, in 2021, we: |
| ■ | Streamlined corporate services processes; |
| ■ | Modernized customer service with online self-service options allowing customers to transact through channels they prefer; |
| ■ | Equipped employees with mobile technology allowing real-time access to information and digital forms; and |
| ■ | Strengthened safety by continuing to develop and support front-line leaders and standardizing field work processes. |
| ■ | Sustainability. We continued to make ongoing investments in renewable generation and infrastructure replacement to further our progress toward our environmental and sustainability targets as described above. We strengthened our commitment to 90% reduction in scope 1 greenhouse gas emissions by 2030 (from 2005 base level) by joining the Low-Carbon Resources Initiative and Renewable Natural Gas Coalition. We were also named to the Dow Jones Sustainability Index for the eighth consecutive year and honored as one of America's Most Responsible Companies. |
| ■ | Financing. We significantly de-risked our financing strategy and supported our investment grade credit rating through an equity unit issuance in April 2021. |
32 | 2022 Proxy Statement TABLE OF CONTENTS
COMPENSATION DISCUSSION AND ANALYSIS (CD&A)
Principal Components of CEO 2021 Compensation
The graphic below shows that a significant portion of our CEO's total target direct compensation was both performance-based and at-risk, which is consistent with our pay for performance philosophy.
CEO Total Target Direct Compensation reflects our CEO’s annual base salary, target STI and target long-term equity awards but excludes the Special PSUs that were granted in January 2021 because such awards do not represent an annual component of our executive compensation philosophyprogram. For more information regarding these awards, see the “Special Retention Awards” section under “Executive Compensation Elements.”
| | Salary – 15% | |
| | ■ | | | Fixed level of cash compensation based on performance, expertise, experience and market practice | |
| | Short-Term Incentives – 18% | |
| | ■ | | | 100% performance-based earned based on Company’s financial performance (weighted 70%) and safety performance (weighted 30%) over a one-year performance period | |
| | ■ | | | Performance goals are directly aligned with Company’s annual financial plan and key business imperatives | |
| | Restricted Stock Units – 13% | |
| | ■ | | | At-risk compensation as value fluctuates based on our stock price performance | |
| | ■ | | | RSUs vest over a three-year period | |
| | ■ | | | Aligns interests of CEO with stockholders | |
| | ■ | | | Facilitates retention | |
| | Performance Share Units – 54% | |
| | ■ | | | 100% performance-based that is earned over a three-year performance period based on Company financial performance (weighted 50%) and relative total shareholder return (RTSR) (weighted 50%) subject to adjustment based on achievement of key ESG business imperatives | |
| | ■ | | | Drives and rewards sustained performance | |
| | ■ | | | Aligns interests of CEO with stockholders | |
| | ■ | | | Facilitates retention | |
2022 Proxy Statement | 33 TABLE OF CONTENTS
COMPENSATION DISCUSSION AND ANALYSIS (CD&A)
Business Performance Affecting 2021 Pay Outcomes
Incentive Payouts. The below table and principles post-Separation,graphics summarize, by each Compensation and Human Capital Committee approved performance measure, target performance goals, achieved results and percentage of target STI earned in 2021 and 2019 PSUs earned over the 2019-2021 performance period. Prior to the payment of any 2019 PSUs, a threshold NOEPS trigger must be met. NOEPS is a non-GAAP measure described in “Executive Compensation Elements – 2021 Short-Term Incentive (STI) Program.”
2021 STI
The 2021 results for the below performance measures resulted in 119% of target STI earned for our 2015NEOs. For more information, see “Executive Compensation Elements – 2021 Short-Term Incentive (STI) Program.”
| | FINANCIAL PERFORMANCE (70% weighting) | |
| | NOEPS | | | $1.31 - $1.33 | | | $1.37 | | | 140% | |
| | SAFETY SCORECARD (30% total weighting) | |
| | DART | | | 0.3 | | | 0.98 | | | 0% | |
| | Executive Observations | | | 100% | | | 141% | | | 125% | |
| | Process Safety Incidences | | | 0 | | | 2 | | | 0% | |
| | Standard Operating
Procedures Development | | | 35 | | | 46 | | | 160% | |
| | Records and Mapping:
GIS Service Lines Mapped | | | 93% | | | 93% | | | 100% | |
| | Records and Mapping:
GIS Drawings Complete | | | 60% | | | 93% | | | 160% | |
2019 PSUs
The three-year results for 2019-2021 for the below performance measures resulted in approximately 77% of target PSUs earned for our NEOs. For more information, see “Executive Compensation Elements – 2019 PSU Awards.”
(1)
| For the three-year period ending December 31, 2021, our adjusted cumulative NOEPS was $4.06, which exceeded the cumulative NOEPS trigger of $3.93 for the 2019-2021 performance period. While the Compensation and Human Capital Committee applied a COVID-19 adjustment of $0.05 to 2020 NOEPS results for long-term incentive (“LTI”) purposes, our adjusted cumulative NOEPS results of $4.06 still fell short of our target of $4.14. Our RTSR performance was in the third quartile resulting in no reduction in the number of PSUs earned. The COVID-19 adjustment and our RTSR performance are described later in this CD&A in the section entitled “2021 Long-Term Incentive (LTI) Program” under “Executive Compensation Elements.” |
(2)
| Three-year customer value framework goals relate to safety, customer care, cost containment, organizational culture and environmental impact. Three of the five customer value framework goals were met (customer care, cost containment and environmental impact) as described later in this CD&A in the section entitled “2021 Long-Term Incentive (LTI) Program” under “Executive Compensation Elements.” |
34 | 2022 Proxy Statement TABLE OF CONTENTS
COMPENSATION DISCUSSION AND ANALYSIS (CD&A)
Executive Compensation Decision Making Our Objectives
We believe highly qualified executive talent is an essential driver of the successful achievement of our business objectives. The key design priorities of our 2021 executive compensation program was modified as a resultwere to:
| | • | | | Attract and retain talented executives | | | • | | | Align with our strategic plan to build stockholder value and support long-term, sustainable earnings and dividend growth | |
| | • | | | Motivate and reward executives for sustaining high performance | | | • | | | Ensure that significant portions of pay opportunity remain at-risk for failure to achieve our business objectives related to financial performance and ESG | |
| | • | | | Reward executives based upon level of responsibility and individual performance | | | • | | | Create a strong correlation between pay and performance | |
The Compensation and Human Capital Committee believes that our executive compensation program is thoughtfully and effectively constructed to fulfill our compensation objectives and reward effective leadership decisions that support the creation of value for all our stakeholders: customers, employees, communities, and stockholders.
Compensation
Each year, the Compensation and Human Capital Committee is responsible for reviewing and approving (or, in the case of our CEO, recommending to the independent members of the Separation in orderBoard for approval) each element of total target direct compensation for our executive officers including our NEOs. For 2021 compensation decisions, the Compensation and Human Capital Committee consisted of Messrs. Butler, Jesanis and Yates and Ms. Henretta. With respect to addresseach executive officer and NEO, the unique challengesCompensation and Human Capital Committee’s determinations and recommendations for 2021 were based primarily on the following factors (“Pay Factors”):
| ■ | Corporate performance and attainment of our established business and financial goals |
| ■ | Competitiveness of our compensation program (and each NEO’s total target direct compensation and each element of compensation) based upon competitive market data |
| ■ | The executive officer’s/NEO’s position, experience, role, responsibilities, and performance relative to achievement of business goals |
| ■ | Mix of variable at-risk versus fixed pay |
| ■ | Mix of cash versus equity pay |
In addition, for 2021 compensation decisions, the Compensation and Human Capital Committee considered compensation recommendations from our then-CEO, Mr. Hamrock, reflecting his assessment of each NEO’s performance (other than his own performance). The Compensation and Human Capital Committee separately evaluated Mr. Hamrock’s performance to develop its compensation recommendation for review and approval by the independent members of the mid-year Separation, including for example, (1) dramatically different financial plans forBoard. Mr. Hamrock was not involved in making recommendations with respect to his compensation.
2021 Say-on-Pay Results
When making decisions about our executive compensation program, the firstCompensation and second halfHuman Capital Committee considers the stockholders’ views of such matters. In 2021, approximately 97% of the year necessitating bifurcationvotes cast by our investors were voted in favor of our say-on-pay proposal at our 2021 annual cashmeeting of stockholders. In fact, over the last five years. we have received an average of 97% of the votes cast by our investors in favor of our say-on-pay proposal. No changes were made to the design of our executive compensation program in response to the 2021 say-on-pay advisory vote. The Committee did, however, re-design both the 2021 STI and LTI programs, as described in further detail under “2021 Short-Term Incentive (STI) Program” and “2021 Long-Term Incentive (LTI) Program” below under “Executive Compensation Elements.”
2022 Proxy Statement | 35 TABLE OF CONTENTS
COMPENSATION DISCUSSION AND ANALYSIS (CD&A)
Our Executive Compensation Program Components of 2021 Executive Compensation Program
The primary components of our 2021 executive compensation program were base salary, the short-term incentive program,
(2)and the
difficulty in establishing long-term performance goals for our 2015 annual long-term equity awards necessitating the use of service-based restricted stock units in lieu of our traditional long-term incentive
vehicle of performance-based share awards, and (3) the need to adjust performance periods and goals for our unvested 2013 and 2014 performance share awards in light of the different operating and financial plans of the Company post-Separation.This CD&A describes our compensation philosophy and the material elements of our 2015 executive compensation program applicable to our Named Executive Officers.
Our Named Executive Officers who currently serve as executive officers of the Company are:
Joseph Hamrock — President and Chief Executive Officer
Donald E. Brown — Executive Vice President, Chief Financial Officer and Treasurer
Jim L. Stanley — Executive Vice President and Chief Operating Officer
Carrie J. Hightman — Executive Vice President and Chief Legal Officer
Violet Sistovaris — Executive Vice President, Northern Indiana Public Service Company (“NIPSCO”)
We also have three Named Executive Officers who are no longer executive officers of the Company following the Separation. SEC executive compensation disclosure rules require us to provide information for each individual who served as chief executive officer or chief financial officer at any time during the fiscal year.
Mr. Robert C. Skaggs, Jr. and Mr. Stephen P. Smith served as President and Chief Executive Officer and Executive Vice President and Chief Financial Officer, respectively, prior to the Separation on July 1, 2015 at which time both resigned from their positions with the Company and commenced employment with CPG.program. In addition, during 2021, the Compensation and Human Capital Committee granted special PSUs designed to strengthen motivation, increase retention, and reward strong performance resulting from the NiSource Next transformation initiative. For more information regarding these disclosure rules require us to provide information for Mr. Glen L. Kettering who served as an executive officer ofawards, see the Company during the year and would have been reported as a Named Executive Officer“Special Awards” section later in this Proxy Statement had he not left the Company.
2015 Accomplishments
In addition to the Company’s successful completion of the Separation, the Company achieved a number of significant accomplishments in 2015, including:
Another industry leading year in stock price appreciation;
Delivering total shareholder return of approximately 16.7% since the Separation;
Outperforming the major utility indices for the seventh consecutive year; and
Generating earnings growth in line with our guidance range for the ninth consecutive year.
Total Shareholder Return shown in the chart above is calculated by share price appreciation plus the annual dividend amount.
The NiSource 2015 share price appreciation and total shareholder return shown in the charts above are based on a 2014 year-end closing price calculated utilizing the Bloomberg separation formula taking into account the Separation on July 1, 2015.
Our 2015 performance was once again driven in large part by our continued disciplined execution across all facets of our established infrastructure-focused and investment-driven business strategy. Key business accomplishments during 2015 include:
Emerging as a premier pure-play natural gas and electric utility company following the Separation;
Being selected to the Dow Jones Sustainability North American Index for the second year straight;
Investing a record $1.37 billion at our Columbia Gas and Northern Indiana Public Service Company utilities across seven states to provide long-term safety and reliability benefits to customers and communities;
Replacing 361 miles of priority pipe and the last known cast iron pipe from Columbia Gas of Virginia;
Completing the deployment of automated meter reading devices across our nearly four million natural gas and electric customers;
Delivering a broad range of regulatory initiatives supporting enhanced safety, employee training and customer programs, including extension of Columbia Gas of Virginia’s modernization program, obtaining approval of Columbia Gas of Massachusetts’ gas system enhancement plan and successful rate settlements in three states that will support pipeline safety upgrades, and enhance safety and reliability;
Being selected as one of the World’s Most Ethical Companies for the fifth consecutive year; and
Continuing to strengthen our financial profile by delivering on our $30 billion of identified long-term regulated utility infrastructure investments, while maintaining an investment grade credit rating, and providing a solid and growing dividend.
TheCD&A under “Executive Compensation Committee considered these achievements while performing its oversight activities throughout the course of the year.
Elements.”
2021 Executive Compensation
HighlightsMany of thePay Mix and Total Target Direct Compensation Committee’s 2015 compensation decisions were made in anticipation of the Separation and to reflect the Company’s emergence as a pure-play utility. The following are key compensation decisions that occurred during 2015, many of which were made to address the unique circumstances related to the mid-year Separation.
In early 2015, the Compensation Committee:
Determined that no increases to base salaries of the Named Executive Officers were warranted prior to the Separation;
Approved delivery of the 2015 annual long-term equity awards to our Named Executive Officers solely in the form of service-based restricted stock units that do not vest until February 2, 2018, subject to the recipient’s continued service through such date, for the reasons explained in the section entitled “LTIP Awards;”
Approved increases in the grant date value of the 2015 annual long-term equity award for Messrs. Hamrock, Stanley, Smith, and Kettering, for the reasons explained in the section entitled “LTIP Awards;”
Approved a six-month performance period for the first half of 2015 for our annual cash short-term incentive program in the event of the Separation, for the reasons explained in the section entitled in the “Annual Performance-Based Cash Incentives;”
Awarded our new CFO, Mr. Brown, a signing bonus of $75,000, an annual long-term equity award having a grant date value of $750,000, and a special equity grant with a grant date value of $510,000 in order to compensate him for the lost compensation opportunities at his prior employer; and
Approved a valuation adjustment for outstanding unvested restricted stock units upon Separation consistent with the terms of the Omnibus Plan, in order to preserve the intrinsic aggregate value of awards prior to the Separation, based on a ratio determined by comparing the average NiSource share price for three days prior to the Separation with the NiSource share price traded on a when-issued basis for the same three day period.
In June 2015, the Compensation Committee:
Approved base salary increases for Messrs. Hamrock and Stanley and Ms. Sistovaris, each of whom assumed new roles and responsibilities after the Separation, for the reasons explained in the section entitled “2015 Base Salaries;”
Approved an incremental grant of service-based restricted stock units for Messrs. Hamrock and Stanley and Ms. Sistovaris, each of whom assumed new roles and responsibilities after the Separation, for the reasons explained in the section entitled “LTIP Awards;”
Approved an increase in the trigger,We set 2021 total target and stretch award opportunities for the annual cash short-term incentive for Messrs. Hamrock and Stanley and Ms. Sistovaris, each of whom assumed new roles and responsibilities after the Separation, for the reasons explained in the section entitled “Annual Performance-Based Cash Incentives;”
Approved performance targets for the second half of 2015 for our annual cash short-term incentive program for the reasons explained in the section entitled in the “Annual Performance-Based Cash Incentives;” and
Approved above-target performance results for the 2013 and 2014 performance share awards based on performance through the Separation and approved conversion of the performance share awards to service-based restricted stock units, which will vest on the service-based vesting date under the original terms of the performance share awards.
In addition, in October 2015, the Compensation Committee amended the Omnibus Plan, effective October 4, 2015, to provide for (i) a minimum vesting period of one year for all awards and (ii) double-trigger vesting for equity awards that are assumed or replaced by an acquiring company upon a change-in-control; meaning that there must be both a change-in-control and a qualifying termination of employment in order for the
equity awards to vest in connection with or following such change-in-control. In the event equity awards are not assumed or replaced in a change-in-control, then the outstanding equity awards will vest upon the occurrence of a change-in-control alone. Please see the section entitled “Severance and Change-in-Control Benefits” for further information regarding benefits to be received upon termination of employment or a change-in-control.
Overview of Our Executive Compensation Practices
The Compensation Committee reviews on an ongoing basis the Company’s executive compensation program to evaluate whether it supports the Company’s executive compensation philosophy and objectives and is aligned with stockholder interests. Our executive compensation practices include the following, each of which the Compensation Committee believes reinforces our executive compensation philosophy and objectives.
| | | | | | |
We DO Have This Practice | | | | | | We Do NOT Have This Practice |
ü Incentive award metrics that are objective and tied to key company performance metrics
| | | | | | X Repricing of options without stockholder approval
|
ü Share ownership guidelines
| | | | | | X Hedging or pledging transactions or short sales by executive officers or directors
|
ü Compensation recoupment policy
| | | | | | X Tax gross-ups for NEOs (other than gross-ups that are available to all employees who receive relocation benefits)
|
ü Limited perquisites
| | | | | | X Automatic single-trigger equity vesting upon a change-in-control
|
ü Pledging prohibition in our long-term incentive plan
| | | | | | X Excise tax gross-ups under change-in-control agreements
|
ü Double-trigger severance benefits upon a change-in-control
| | | | | | X Excessive pension benefits or defined benefit supplemental executive retirement plan
|
ü Three year minimum vesting for equity awards to promote retention with limited exceptions for new hires and promotions
| | | | | | X Excessive use of non-performance based compensation
|
ü Tie a significant portion of executive compensation to stockholder interests in the form of at-risk compensation
| | | | | | X Excessive severance benefits
|
ü Use an independent compensation consultant
| | | | | | X Dividend equivalent rights or dividends on executives’ unvested performance awards or restricted stock units
|
ü Annual Say-on-Pay vote
| | | | | | |
Overview of Our Executive Compensation Program
Our compensation program is intended to attract, retain and motivate highly qualified executives.
The principal elements of compensation that we have historically provided to our executives are: base salary, annual short-term performance-based cash incentives and long-term performance-based equity incentive awards. We use short and long-term compensation to motivate our executives to meet and exceed the short and long-term business objectives of the Company.
Since 2011, we have used 100% performance-based equity compensation for our annual long-term equity incentive awards as a means to further align the interests of our executives with those of our stockholders. In 2015, however, in anticipation of the Separation and the fact that the Company and the Company’s financial plans would be very different following the mid-year Separation, we used service-based restricted stock units for
our annual long-term equity awards in lieu of performance-based equity. Effective January 2016, we returned to our historical practice of awarding 100% performance-based equity compensation for our annual long-term equity incentive awards.
We generally target totaldirect compensation (base salary, annual short-term performance-based cash incentives, and long-term equity incentive awards) to be competitive with the compensation paid to similarly positioned executives at companies within our compensation peer group of companies (the “Comparative“Comparator Group”) as described in the section entitled “Our Executive Compensation Process — Competitive Market Review.”. We do not, however, manage pay to a certain targetstipulated percentile of the ComparativeComparator Group practices.
We employ leading governance practices, such as clawback policies and stock ownership guidelines, and we conduct an annual risk assessment of the Company’s compensation practices.
In addition, our executive officers are prohibited from trading in Company securities during quarterly blackout periods and they are also prohibited from engaging in hedging or short sales of the Company’s equity securities.
Finally, when making decisions about our executive compensation program,
For 2021, the Compensation
and Human Capital Committee
takes into account the stockholders’ view of such matters. In 2015, 96% of our investors voted in favor of our Say-on-Pay Proposal at our Annual Meeting. No changes were made to the design of our executive compensation program in response to the 2015 stockholder vote.Our Executive Compensation Philosophy
The key design priorities of the Company’s executive compensation program are to:
Maintainapproved a financially responsible program aligned with the Company’s strategic plan to build stockholder value and long-term, sustainable earnings and dividend growth;
Provide a total compensation package that is aligned with the standards in our industry thereby enhancing the Company’s ability to:
– Attract and retain executives with competitive compensation opportunities;
– Motivate and reward executives for achieving and exceeding our business objectives;
– Provide substantial portionsmix of pay at risk for failure to achieve our business objectives;
Align the interests of stockholders and executives by emphasizing stock-denominated compensation opportunities; and
Comply with applicable laws and regulations.
The Compensation Committee believes that the Company’s executive compensation program is thoughtfully and effectively constructed to fulfill our compensation objectives, and rewards decision making that creates value for our stockholders, customers and other key stakeholders.
Principal Elements of Our 2015 Compensation Program
We have designed our program to meet our business objectives using various compensation elements intended to drive bothbalanced short-term and long-term performance.
We believe that a large percentageincentives and focused the efforts of our NEOs on the achievement of both short-term business objectives and long-term strategic objectives. The majority of our NEOs’ total target direct compensation for our Named Executive Officers should be performance-based, and the proportion of at-risk, performance-based compensation should increase as the executive’s level of responsibility within the Company increases. The Compensation Committee believes the appropriate mix of the elements of compensation should take into account the Company’s financial and strategic objectives, the competitive environment, Company performance, individual performance and responsibilities and evolving governance practices. For example, in anticipation of the Separation, the Compensation Committee determined it appropriate to approve 2015 annual long-term equity awards to our Named Executive Officers solelywas in the form of service-based restricted stock unitsequity awards to further align the interests of our NEOs with those of our stockholders.
The following charts show the mix of 2021 total target direct compensation for our CEO, the average total target direct compensation for other NEOs and the portion that
vest in February 2018, subjectis performance based and/or at-risk. For purposes of these charts, the percentage of total target direct compensation was determined based on the annual base salary and target incentive opportunities applicable to the
executive’s continued employment.We believe that the principal elementsNEO as of ourDecember 31, 2021.
36 | 2022 Proxy Statement TABLE OF CONTENTS
COMPENSATION DISCUSSION AND ANALYSIS (CD&A)
The following table shows 2021 total
target direct compensation
packageand each component of total target direct compensation for
2015,each NEO as
more fully described below, help us achieve the objectives of
our compensation program as follows:December 31, 2021. | | Joseph Hamrock | | | 1,030,000 | | | 1,236,000 | | | 3,840,000 | | | 960,000 | | | 7,066,000 | |
| | Donald E. Brown | | | 618,000 | | | 463,500 | | | 960,000 | | | 240,000 | | | 2,281,500 | |
| | Pablo A. Vegas | | | 618,000 | | | 494,400 | | | 988,000 | | | 247,000 | | | 2,347,400 | |
| | Violet G. Sistovaris | | | 515,000 | | | 386,250 | | | 800,000 | | | 200,000 | | | 1,901,250 | |
| | Charles E. Shafer | | | 360,500 | | | 216,300 | | | 252,000 | | | 108,000 | | | 936,800 | |
| | | | | | | | | | | | | | |
| | | | | | Time Horizon | | | | |
Element of Total Compensation
| | Form of
Compensation | | Attraction | | Short-
Term | | | | Long-
Term | | Alignment with
Stockholder Interest | | Retention |
Base Salary
| | Cash | | ü | | | | | | | | | | ü |
Annual Performance-Based
Cash Incentive
| | Cash | | ü | | ü | | | | | | ü | | ü |
Long-Term
Equity Incentive
| | Shares(1)
| | ü | | | | | | ü | | ü | | üExcludes the Special Awards that were granted in January 2021 because such awards do not represent an annual component of our executive compensation program. For more information regarding these awards, see the “Special Awards” sections later in this CD&A under “Executive Compensation Elements.” |
Executive Compensation Elements Base salary
is designed to provideprovides our employees,
including the NEOs, with a level of fixed pay that is commensurate with
the employee’s role and responsibility.
We believe that by delivering base salaries that are reflective of market norms, the Company is well-positioned to attract, retain and motivate top caliber executives in an increasingly competitive labor environment. The Compensation Committee annually reviews the base salaries of the Company’s senior executives, including the Named Executive Officers, to evaluate whether they are competitive within our industry. In reviewing the base salaries,For 2021, the Compensation
and Human Capital Committee
considers the base salaries paid to similarly situated executives by the companies in the Comparative Group. See the section entitled “Our Executive Compensation Process — Competitive Market Review” listing the companies in our Comparative Group used by the Compensation Committee for the first half of 2015 (pre-Separation) and in the second half of 2015 (post-Separation). The Compensation Committee determines anyincreased base salary
changesby approximately three percent for
the Company’s senior executives based on a combination of factors that includes competitive pay standards, level of responsibility, experience, internal equity considerations, historical compensation,Messrs. Brown and
individual performanceVegas, Ms. Sistovaris and
contribution to business objectives, as well as recommendations from Mr.
Skaggs, our CEO at the time. Mr. Skaggs was evaluated separately by the CompensationShafer. The Committee
taking into account those factors reviewed for all other senior executives. The Compensation Committee then provided their recommendation regarding CEO compensation torecommended, and the independent members of the Board,
approved a three percent increase of the CEO’s base salary for
approval. See2021. In making these decisions and recommendations, the
section below entitled “Compensation Committee
Actions Related to 2015 Compensation” for more information.Annual Performance-Based Cashconsidered each of the Pay Factors discussed above. These base salary adjustments became effective on March 1, 2021.
2021 Short-Term Incentive
Plan (“Incentive Plan”)This component(STI) Program
2021 STI Objectives. The objectives of total compensationour 2021 STI program were to:
| ■ | Motivate our NEOs (and all other participants) to achieve critical financial and safety performance goals, which were directly aligned with Company’s annual financial plan and key business imperatives |
| ■ | Provide a competitive level of STI payout opportunities |
The 2021 STI provides
employeesparticipants, including the NEOs, with the opportunity to earn a cash
incentive award tied to
both the performanceachievement of
the Company and individual contributions to the organization’s success. Annual cash incentives are authorized by the Omnibus Plan which was originally approved by stockholders in May 2010 and re-approved by stockholders for Code Section 162(m) purposes in May 2015. Thefinancial performance goals
for the Incentive Plan are based on the financial plan approved by the Board at the beginning of the applicable(NOEPS weighted 70%) and safety goals (weighted 30%) over a one-year performance period.
The financial plan is designed to achieve the Company’s aim of creating sustainable stockholder value by growing earnings, effectively managing the Company’s cash and providing a strong dividend. In January 2015, in anticipation of the Separation, the Compensation Committee approved performance measures and goals for the first half of 2015 and, in June, the Compensation Committee approved the same corporate performance measures (eliminating business unit measures) but different goals for the second half of 2015 as a result of the Separation.Eligibility for participation in the Incentive Plan extends to nearly all Company employees. Every eligible employee has an incentive opportunity at trigger,threshold, target and stretch levels of performanceperformance. The Compensation and Human Capital Committee retains discretion to adjust STI awards, either on a formulaic or discretionary basis.
2021 STI Performance Measures. In January 2021, the Compensation and Human Capital Committee identifies expectationsapproved the following performance measures and goals to be used to determine the 2021 STI payouts for the NEOs and all senior executives,our other participating employees.
Financial Measure (70%): The NOEPS financial performance goals were determined based on our 2021 annual financial plan, which was approved by the Board. The Compensation and Human Capital Committee selected NOEPS as a financial measure because it is viewed by the Board as representative of our fundamental earnings strength, aligned with stockholder value creation, used internally for budgeting and reporting to the Board, and generally consistent with our external reporting of results.
The definition of NOEPS is income from continuing operations determined in accordance with GAAP, including, without limitation, the impact of incentive payouts and adjusted for certain items, such as fluctuations in weather and other significant unusual events disclosed in our earnings reports (examples of which may include transaction-related costs, debt extinguishment costs or certain income tax items).
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COMPENSATION DISCUSSION AND ANALYSIS (CD&A)
Safety Measures (30%): The safety performance goals were determined based on our 2021 annual safety plan, which was approved by the ESS Committee. The Compensation and Human Capital Committee selected safety as a performance measure to focus STI participants, including the Named Executive Officers. SeeNEOs, on the section below entitled “Compensationcriticality of establishing and maintaining practices and procedures to ensure the highest safety levels throughout Company operations.
In consultation with the ESS Committee, Actions Related to 2015 Compensation” for more information regarding the 2015 Incentive Plan, including incentive opportunities,Compensation and Human Capital Committee selected the following 2021 safety performance measures:
| | DART (Days Away, Restricted or Transferred) Rate for Employees | | | Top decile performance | | | 5% | |
| | Executive Field Safety Observations | | | Number of observations | | | 5% | |
| | Process Safety Incidents | | | Zero Significant Injuries or Fatalities (SIF) or Pipeline and Hazardous Materials Safety Administration (PHMSA) reportable incidents due to process safety failures | | | 10% | |
| | Standard Operating Procedure (SOP) Development | | | SOPs developed and field ready for 35 high consequence tasks; 13 completed by March 31, 2021; an additional 22 completed by June 30, 2021; and quality management and exception reporting in place by September 30, 2021 for developed SOPs | | | 5% | |
| | Records and Mapping | | | 93% service lines mapped in geographic information system (GIS) (2.5% weighting); 60% completion of isometric drawings for above ground assets for stations operating with greater than 125 PSIG inlet pressure (2.5% weighting) | | | 5% | |
| | Total Weight | | | | | | 30% | |
For 2021, the performance measures goalswere consistent with the 2020 STI design except in the following respects: (i) the weighting of the financial performance measure was decreased to 70% from 75%, (ii) the weighting of the safety measures was increased to 30% from 10%, (iii) four new safety measures were added and payoutsone safety measure was eliminated (i.e., National Safety Council Barometer Survey ranking), and (iv) the customer care measure was eliminated. The Compensation and Human Capital Committee made these changes to increase the emphasis on the safety performance measure.
2021 STI Target Opportunity. Based on the Compensation and Human Capital Committee’s recommendation, the independent members of the Board approved the CEO’s 2021 target incentive opportunity. The Compensation and Human Capital Committee approved 2021 target STI opportunities for each of the Named Executive Officers.other NEOs after considering the Pay Factors. The 2021 target opportunities for the NEOs remained unchanged from 2020, except for Mr. Vegas whose target opportunity increased from 75% in 2020 to 80% in 2021 to align his target opportunity with competitive market practice.
| | Joseph Hamrock | | | 120% | | | 1,236,000 | | | 120% | | | 1,200,000 | |
| | Donald E. Brown | | | 75% | | | 463,500 | | | 75% | | | 450,000 | |
| | Pablo A. Vegas | | | 80% | | | 494,400 | | | 75% | | | 450,000 | |
| | Violet G. Sistovaris | | | 75% | | | 386,250 | | | 75% | | | 375,000 | |
| | Charles E. Shafer | | | 60% | | | 216,300 | | | 60% | | | 210,000 | |
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COMPENSATION DISCUSSION AND ANALYSIS (CD&A)
2021 STI Performance Goals, Achieved Results and Percentage of Target Earned. The chart below shows each performance measure and weight, target performance goal, achieved results and percentage of target earned. Based on achieved performance against performance goals, each NEO earned 119% of his or her respective 2021 target opportunity.
| | NOEPS | | | 70% | | | $1.25 | | | $1.31-1.33 | | | $1.39 | | | $1.37 | | | 140% | | | 98% | |
| | DART | | | 5% | | | 0.71 | | | 0.30 | | | 0.15 | | | 0.98 | | | 0% | | | 0% | |
| | Executive Field Safety Observations | | | 5% | | | 75% | | | 100% | | | 200% | | | 141% | | | 125% | | | 6.23% | |
| | Process Safety Incidents | | | 10% | | | 0 | | | 0 | | | 0 | | | 2 | | | 0% | | | 0% | |
| | SOP Development | | | 5% | | | 30 | | | 35 | | | 40 | | | 46 | | | 160% | | | 8% | |
| | Records and Mapping: Service Lines Mapped | | | 2.5% | | | 90% | | | 93% | | | 96% | | | 93% | | | 100% | | | 2.5% | |
| | Records and Mapping: Completion of Isometric Drawings | | | 2.5% | | | 55% | | | 60% | | | 65% | | | 93% | | | 160% | | | 4% | |
| | Total | | | 100% | | | | | | | | | | | | | | | | | | 119% | |
(1)
| If performance results fall between two performance levels (for example, between target and stretch goals), the incentive opportunity is determined by interpolation, which is the process of estimating unknown values that fall between known values. |
(2)
| Weighted achievement is determined by multiplying the weight by the achievement percentage. The weighted achievement for all measures results in a formulaic payout of 119%. |
2021 Long-Term Equity Incentive Plan (“LTIP”)(LTI) Program
2021 LTI Mix. For 2021, the Compensation and Human Capital Committee approved the following mix of LTI awards granted to our NEOs:Our compensation program also includes a long-term equity incentive component.
| ■ | Performance Share Units (80% of 2021 target LTI award value for NEOs except for Mr. Shafer at 70%) |
| ■ | Restricted Stock Units (20% of 2021 target LTI award value for NEOs except for Mr. Shafer at 30%) |
In addition, during 2021, the Compensation and Human Capital Committee granted special PSUs designed to strengthen motivation, increase retention, and reward strong performance resulting from the NiSource Next transformation initiative. For more information regarding these awards, see the “Special Awards” section later in this CD&A under “Executive Compensation Elements.”
2021 LTI Award Target Values. In January 2021, the independent members of the Board approved the CEO’s 2021 LTI target award value based on the Compensation and Human Capital Committee’s recommendation. Also in January 2021, the Compensation and Human Capital Committee approved 2021 LTI target award values for each of the other NEOs, after considering the Pay Factors.
| | Joseph Hamrock | | | 4,800,000 | | | 173,362 | | | 43,342 | | | 4,400,000 | |
| | Donald E. Brown | | | 1,200,000 | | | 43,302 | | | 10,825 | | | 1,150,000 | |
| | Pablo A. Vegas | | | 1,235,000 | | | 44,564 | | | 11,142 | | | 1,150,000 | |
| | Violet G. Sistovaris | | | 1,000,000 | | | 36,084 | | | 9,022 | | | 850,000 | |
| | Charles E. Shafer | | | 360,000 | | | 11,366 | | | 4,872 | | | 300,000 | |
(1)
| 2021 PSU awards will vest based on Company performance, the application of the safety, environmental and Diversity, Equity and Inclusion (DE&I) magnifiers, and satisfaction of the service condition (the executive’s continued employment through February 28, 2024). |
(2)
| 2021 RSU awards will vest based on the executive’s continued employment through February 28, 2024. |
Each NEO’s LTI target value increased from 2020 levels. The Compensation and Human Capital Committee believes it important thatapproved these increases (and recommended the increase for Mr. Hamrock to the independent members of the Board), after considering the Pay Factors and each executive,NEO’s sustained strong performance in particular2020. With respect to Mr. Shafer and
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COMPENSATION DISCUSSION AND ANALYSIS (CD&A)
Ms. Sistovaris, the Compensation and Human Capital Committee approved an increase in Mr. Shafer’s and Ms. Sistovaris’ LTI target value by approximately 20% and 18% respectively, driven by an expansion of their roles and after considering the need to align their pay with the competitive market, the other NEOs, and the long-term nature of the expectations for their roles.
2021 Performance Share Units
PSU Objectives. The objectives of our 2021 PSU grants are to:
| ■ | Motivate NEOs to achieve critical long-term financial and total shareholder return goals (relative to peers) and achieve critical business imperatives related to safety, environmental and DE&I performance goals |
| ■ | Align the interests of NEOs with stockholders |
| ■ | Provide competitive LTI opportunities (when aggregated with RSU grants, which are discussed below) |
PSU Overview. In January 2021, the Compensation and Human Capital Committee approved the grant of PSUs to each of our senior executives, has personalfinancial exposureNEOs. The PSUs provide our NEOs the opportunity to earn shares of our common stock based on achieved results against three-year cumulative NOEPS (weighted 50%) and Relative Total Shareholder Return (RTSR) (weighted 50%) performance goals over a three-year performance period, subject to potential adjustment based on achieved results relating to safety, environmental and DE&I goals.
In addition, vesting of the PSUs is tied to the performanceexecutive’s continued employment through the end of the Company’s stockvesting period (February 28, 2024), subject to special vesting rules in the event of death, retirement, disability, or a qualifying termination following a change-in-control of the Company prior to the vesting date. Termination for any other reason prior to February 28, 2024 will result in forfeiture of the 2021 PSUs. The number of PSUs earned and therefore, is aligned withvested at the end of the three-year performance period will be settled in a like number of shares of our common stock.
2021 PSU Performance Measures. In January 2021, the Compensation and Human Capital Committee approved the following performance measures and goals to be used to determine each NEO’s payouts under their respective 2021 PSU grants.
Three-Year Cumulative NOEPS. The three-year cumulative NOEPS financial performance goals were determined based on our three-year financial plan. For the definition and calculation of NOEPS, see above under 2021 STI Performance Measures.
The Compensation and Human Capital Committee selected this measure because it aligns the interests of
stockholders. The Compensation Committee also believes that long-term equity incentives promote decision making that is consistent with the Company’s long-term business objectives.Since 2011, the Compensation Committee delivered annual long-term equity incentive awards solely in performance shares to further align our executives’ interestsNEOs with those of our stockholders and it supports the creation of sustainable stockholder value by growing earnings and providing a strong dividend.
The Compensation and Human Capital Committee selected an NOEPS performance measure for both the 2021 PSU grants and the 2021 STI because the Compensation and Human Capital Committee considers NOEPS to be a core driver of both our short-term and long-term financial performance and stockholder value creation for both the short-term and long-term.
The target three-year cumulative NOEPS performance goal is designed to be achievable with strong management performance over the three-year performance period.
Three-Year Relative Total Shareholder Return (RTSR). Three-year RTSR will be determined by the annualized growth in the price of a share our common stock, assuming dividends are reinvested, over the period beginning January 1, 2021 and ending on December 31, 2023, compared to a similar calculation for a group of 32 energy services companies that are within our industry or providing similar services to ours or with which we compete for the sale of equity capital, 21 of which are in the Comparator Group.
The Compensation and Human Capital Committee selected this measure because it aligns the interests of our NEOs with those of our stockholders and it supports the creation of sustainable stockholder value.
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COMPENSATION DISCUSSION AND ANALYSIS (CD&A)
Modifiers. The number of PSUs earned based on achievement of three-year cumulative NOEPS and RTSR performance goals is subject to adjustment based on achievement against safety, environmental and DE&I performance goals. The Compensation and Human Capital Committee selected these performance measures to reflect the Company’s long-term business objectives. However,broad commitment to these priorities.
2021 PSU Performance Goals. The chart below shows each performance measure and weight and threshold, target and stretch performance goal for each performance measure.
| | Three-Year Cumulative NOEPS | | | 50% | | | $4.06 | | | $4.28 | | | $4.50 | |
| | RTSR | | | 50% | | | 30th Percentile | | | 50th Percentile | | | 80th Percentile | |
| | Magnifiers | |
| | Safety: Average Annual STI Safety Scorecard Results (as % of Target) Over Three-Year Performance Period | | | +/-20% Magnifier | | | Scorecard Results: 80%
Number of Earned PSUs Reduced by 20% | | | Scorecard Results:
100%
Number of Earned PSUs Unchanged | | | Scorecard Results: 120%
Number of Earned PSUs Increased by 20% | |
| | Environmental: GHG Emission Reduction | | | +/-10% Magnifier | | | Below Target
Number of Earned
PSUs Reduced by 10% | | | Met Target(1)
Number of Earned PSUs Unchanged | | | Exceeded Target(2)
Number of Earned PSUs Increased by 10% | |
| | Diversity, Equity and Inclusion: Diversity of Workforce | | | +/-10% Magnifier | | | 8 of 12 Categories – Number of
Earned PSUs Reduced by 10%
9 of 12 Categories – Number of Earned PSUs Reduced by 5% | | | 10 of 12 Categories – PSUs Unchanged(3) | | | 11 of 12 Categories – Number of
Earned PSUs Increased by 5%
12 of 12 Categories – Number of Earned PSUs Increased by 10% | |
(1)
| Target goal means reduction in NIPSCO R.M. Schahfer Generating Station coal unit CO2 emissions by 11.9 million tonnes from a 2005 baseline and reduction in NiSource's methane emissions by 147,569 tonnes CO2e from a 2005 baseline. |
(2)
| Exceeded target goal means achievement of target goal and reduction in NiSource's methane emissions by 182,373 tonnes CO2e from a 2005 baseline (interpolate between goal and this level of achievement). |
(3)
| Target goal means eliminating the gap to availability (gender and ethnicity) in 10 of 12 categories. |
2021 Restricted Stock Units
In February 2021, the Compensation and Human Capital Committee approved the grant of RSUs to each of our NEOs. These RSUs will vest based on the executive’s continued employment through February 28, 2024, subject to special vesting rules in January 2015, in anticipationthe event of death, retirement, disability or a qualifying termination following a change-in-control of the Separation,Company prior to the vesting date. Termination for any other reason prior to February 28, 2024, will result in forfeiture of the 2021 RSUs. The number of RSUs that vest at the end of the three-year service period will be settled in a like number of shares of our common stock.
The Compensation and Human Capital Committee chose to grant RSUs to the NEOs because RSUs reward long-term service, help to retain NEOs over a multi-year service period, and align the interests of our NEOs with those of our stockholders.
Special Awards
2021 Special PSUs. In January 2021, the Compensation and Human Capital Committee, determined thatand the 2015 annual long-termindependent members of the Board with respect to Mr. Hamrock, granted special performance-based equity awards should be in the form of service-based restricted stock unitsPSUs (“Special PSUs”). The Special PSUs were granted to encourage the continued retention of the current leadership team and provide enhanced motivation to strive for the achievement of the goals required under NiSource Next. Because the performance required for payouts under these awards is exceptional, with threshold payouts for the Special PSUs equivalent to target RTSR performance under the 2021 PSU program, the awards are designed to reward the achievement of the goals related to the NiSource Next transformation initiative and align with stockholder interest.
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COMPENSATION DISCUSSION AND ANALYSIS (CD&A)
Accelerated payout of two-thirds of the target award value may occur after two years if our RTSR performance results are at or above the utility peer group median. Any earned award is further adjusted by a safety magnifier to assure alignment with our safety performance. The Committee, and the independent members of the Board with respect to Mr. Hamrock, set the award size at levels designed to provide a meaningful incremental incentive in relation to each executive’s total target direct compensation. Consequently, the NEOs received awards in the following face value amounts: Mr. Hamrock, $2,400,000; Mr. Brown, $600,000; Mr. Vegas $617,500; Ms. Sistovaris $500,000; and Mr. Shafer $180,000.
| | RTSR (over 2 and 3 year performance period (1)) | | | 100% | ��� | | Stretch 90th percentile
Target 55th percentile
Trigger 50th percentile | | | Average Annual STI Safety Scorecard Results (as % of Target) Over Three-Year Performance Period(1) | | | 2/3 of target award is eligible to vest after two years; any remaining is eligible to vest after 3 years with the entire award capped at 200%(2) | |
| | No payout unless RTSR performance is at or above the 50th percentile of our RTSR peers | |
(1)
| RTSR and safety scorecard results will generally be calculated as discussed above in the section entitled “2021 Long-Term Incentive (LTI) Program” and “2021 Short-Term Incentive (STI) Program,” respectively. If performance results fall between two performance levels (for example, between target and stretch goals), the result is determined by interpolation, which is the process of estimating unknown values that fall between known values. |
(2)
| These awards will vest based on the executive’s continued employment through February 28, 2023, and 2024. Special vesting rules apply in the event of death, retirement, disability or a qualifying termination following a change-in-control of the Company. Termination for any other reason prior to February 28, 2023, will result in forfeiture of the entire award, or the remaining portion of the award if such termination occurs after such date but prior to February 28, 2024. |
2021 Special RSU Award. Mr. Shafer received a special RSU award of $350,000 to ensure his long-term leadership of the Company’s safety initiatives. This award is scheduled to vest based on his continued employment through January 28, 2024. Special vesting rules apply in February 2018,the event of death, disability or a qualifying termination following a change-in-control of the Company.
2019 PSU Awards
In 2019, the Compensation and Human Capital Committee (and, in the case of the CEO, the independent members of the Board) approved LTI awards to the NEOs in the form of PSUs (80% of the target 2019 LTI award). All the 2019 PSUs were subject to a threshold cumulative NOEPS performance trigger. Under the 2019 PSU design, 80% of the target PSUs (65% of the target 2019 LTI award) were eligible to vest based on NOEPS performance above the trigger, with a +/- 25% RTSR performance modifier to reflect top or bottom quartile RTSR performance. The remaining 20% of the target PSUs (15% of the target 2019 LTI award) were eligible to vest based on the achievement of customer value framework goals.
The performance measures, goals and results for the 2019 PSUs as certified by the Compensation and Human Capital Committee, are shown below.
| | Three-Year
Cumulative
NOEPS: Met | | | Trigger (50% Payout): $3.93 | | | Three-year
Cumulative NOEPS
$4.06(1) | | | 81% | |
| | Target (100% Payout): $4.14 | |
| | Stretch (200% Payout): $4.35 | |
| | Threshold Goal(1) | | | Three-Year Customer Value
Framework Categories(3) | | | | | | % of Target PSU Earned | |
| | Three-Year
Cumulative
NOEPS: Met | | | Safety, Customer Care, Cost
Containment, Organizational Culture,
and Environmental Impact | | | 3 of 5 Goals
Achieved(3) | | | 60% | |
(1)
| The 2019 PSUs were eligible for vesting only if the cumulative NOEPS performance trigger of $3.93 was met over a three-year performance period. Once the NOEPS threshold was met, both the NOEPS PSUs (65% of the target LTI and 80% of the target PSUs) and customer value framework PSUs (15% of the target LTI and 20% of the target PSUs) were eligible to vest. Our cumulative NOEPS performance from January 1, 2019, through December 31, 2021, reflects the total of the amounts disclosed in our earnings reports for such years plus a COVID-19 pandemic adjustment of $0.05 in 2020. |
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COMPENSATION DISCUSSION AND ANALYSIS (CD&A)
(2)
| 81% of the target PSU (65.77% of the target LTI) was eligible to vest based on three-year cumulative NOEPS. There was no application of the 25% RTSR modifier due to the Company’s RTSR performance during the three-year performance period. |
(3)
| Achievement of customer value framework goals related to: (a) cost containment, as measured by achievement of our operating and maintenance expenses per our financial plan, (b) customer care, as measured by achievement of top quartile performance in the J.D. Power Gas Utility and Electric Residential Customer Satisfaction Studies, and (c) environmental, as measured by reduced greenhouse gas emissions of 17.5% over the performance period of 2019 to 2021. Based on performance and the Company’s achievement of three of the five customer value framework goals (cost containment, customer care and environmental as noted above), 60% of the target PSUs (11.25% of the target LTI) vested based on such goals. |
Vesting of the 2019 PSUs remained subject to the executive’s continued employment through
February 28, 2022. The following table shows the
vesting date. In January 2016,target number of shares subject to the
Compensation Committee reverted back2019 PSUs as well as the number of shares of common stock that vested pursuant to
its historical practice of delivering annual long-term equity incentive awards solely in the
form of performance shares that vest based on the achievement of multi-year performance goals and the executive’s continued employment through the vesting date.When establishing equity grants for each Named Executive Officer, the Compensation Committee considers, among other things, the executive’s base salary, the appropriate mix of cash and equity award opportunities, prior awards under the LTIP and the compensation practices for similarly situated executives at other companies in our Comparative Group. The actual value of each annual long-term equity award will vary based on the Company’s stock price at the time the award is settled.
The Compensation Committee may also approve special equity awards to attract and retain executive talent or to recognize significant contributions. See the section below entitled “Compensation Committee Actions Related to 2015 Compensation” for more information regarding the 2015 LTIP awards for eachterms of the Named Executive Officers, including the special equity grant to Mr. Brown, the performance results for the 20132019 PSUs.
| | Joseph Hamrock | | | 128,406 | | | 98,901 | |
| | Donald E. Brown | | | 32,258 | | | 24,846 | |
| | Pablo A. Vegas | | | 32,258 | | | 24,846 | |
| | Violet G. Sistovaris | | | 21,994 | | | 16,940 | |
| | Charles E. Shafer | | | 7,332 | | | 5,647 | |
Other Compensation and 2014 performance share awards, based on performance through the Separation,Benefits
Our NEOs also participate in an executive deferred compensation plan, change-in-control and
the conversion of the 2013termination agreements, and
2014 performance share awards into service-based restricted stock units at the time of the Separation.Other Compensation and Benefits
We alsoan executive severance policy. In addition, we provide other forms of compensation to our executives, including the Named Executive Officers, consisting ofNEOs a limited number of perquisites severance and change-in-control arrangements and a number of other broad-based employee benefits that are generally are extended to our entire employee population. TheseWe believe that these other forms of compensation and benefits are aligned with our compensation objectives and are generally comparable to those that are provided to similarly situated executives at other companies of our size.
Perquisites
Perquisites are not a principal element of our executive compensation program. They are intended to assist executive officers in the performance of their duties on behalf of the Company or otherwise to provide benefits that have a combined personal and business purpose. Generally, the Company does not reimburse the Named Executive Officers for the payment of personal income taxes incurred by the executives in connection with their receipt of these benefits, except for relocation expenses, consistent with Company practice for all employees who receive Company-paid relocation expenses. For more information on these perquisites, see the Summary Compensation Table and footnote (6) to that table.
comparable companies.
Severance and
Change-In-Control BenefitsWe maintain an executive severance policy,Change-in-Control Benefits. Each NEO is covered under a separate change-in-control and Change-in-Controltermination agreement (“CIC Agreement”). The CIC Agreements with each of the Named Executive Officers that we currently employ, and we previously maintained a letter agreement with Mr. Smith, our former Chief Financial Officer, regarding payments to be made in the event of termination of his employment. No severance or Change-in-Control payments were triggered by the terminations of employment of Messrs. Skaggs, Smith or Kettering in connection with the Separation.
Change-in-Control Agreements are intendedhelp to ensure that the NEOs continue to apply thoroughly objective judgments are madejudgment to appropriately safeguard stockholder value and maximize investor return in relation to any potential change in corporate ownership so that stockholder value is appropriately safeguarded and returns to investors are maximized.change-in-control. The Change-in-ControlCIC Agreements provide for cash severance benefits upon a double-trigger (meaning there must be both a qualifying change-in-control and termination of employment) and do not provide forinclude any “gross-up” payments to executives forcover an executive’s excise taxes incurred by an executive with respect to benefits
received underthe receipt of payments in connection with a Change-in-Control Agreement. Effective as of October 2015, thechange-in-control. Each NEO is subject to our executive severance policy.
Our 2020 Omnibus Plan
was amended to provide that allprovides for double-trigger vesting for equity awards
granted under the Plan that are assumed or replaced by an acquiring company
will be subject to double-trigger vesting upon a change-in-control.
Awards thatIn the event equity awards are not assumed or replaced
byin a change-in-control, then the
acquiring companyoutstanding equity awards will vest upon
the occurrence of such change-in-control.
For further discussioninformation regarding the benefits to be received upon termination of these agreements,employment or change-in-control, see the table in the section entitled “Potential“2021 Executive Compensation – Potential Payments upon Termination of Employment or a Change-in-Control of the Company”Company.”
Perquisites. Perquisites are not a principal element of our executive compensation program. We provide a limited number of perquisites to each NEO. We do not reimburse NEOs for the payment of individual income taxes they might incur in connection with their receipt of these benefits. For information regarding 2021 perquisites, see the 2021 Summary Compensation Table and footnote (5) to that table.
Deferred Compensation Plan. Eligible executives, including the NEOs, may elect to defer between 5% and 80% of their base salary and/or STI payout under our Executive Deferred Compensation Plan (the “Deferred Compensation Plan”). The Deferred Compensation Plan provides an opportunity for eligible executives to defer their cash compensation without regard to the limits imposed by the Internal Revenue Service (“IRS”) for amounts that may be deferred under our 401(k) Plan. For information regarding the Deferred Compensation Plan, see the 2021 Non-qualified Deferred Compensation table and accompanying narrative.
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COMPENSATION DISCUSSION AND ANALYSIS (CD&A)
Pension
ProgramsPrograms.During 2015,2021, we maintained a tax-qualified defined benefit pension plan for essentiallynearly all salaried exempt employees hired before January 1, 2010, all non-exempt employees (both non-union and certain union employees) hired before January 1, 2013, as well as for other union employees, regardless of hire date, and a non-qualified defined benefit pension plan (the “Pension Restoration Plan”) for all eligible employees with annual compensation or pension benefits in excess of the limits imposed by the Internal Revenue Service (“IRS”),IRS, including the Named Executive Officers.any eligible NEO. The Pension Restoration Plan provides for a pension benefit under the same formula provided under the tax-qualified plan but without regard to the IRS limits and reduced by amounts paid under the tax-qualified plan. The material terms of the pension programs are described in the narrative toaccompanying the 2021 Pension Benefits Table.
table.
Savings
ProgramsOur Named Executive OfficersPrograms. The NEOs are eligible to participate in the same tax-qualified 401(k) Plan as most employees and in a non-qualified defined contribution plan (the “Savings Restoration Plan”) maintained for eligible executive employees.executives. The 401(k) Plan includes a Company match that varies depending on the pension plan in which the employee participates and a Company profit sharing contribution for most employees of between 0.5% and 1.5% of the employee’s eligible earnings based on achievement of the overall corporate net operating earnings per shareNOEPS measure. In addition, for salaried employees hired after January 1, 2010, and non-union hourlynon-exempt employees hired after January 1, 2013, the 401(k) Plan includes a 3% Company contribution to the employee accounts. The Savings Restoration Plan provides for Company contributions in excess of IRS limits under the 401(k) Plan for eligible employees, including the Named Executive Officers. The material terms ofNEOs. For information regarding the Savings Restoration Plan, are described insee the narrative to the 20152021 Non-qualified Deferred Compensation Table.
Deferred Compensation Plan
We also maintain the Executive Deferred Compensation Plan (the “Deferred Compensation Plan”) through which eligible Company executives, including the Named Executive Officers, may elect to defer between 5%table and 80% of their base salary and annual cash incentive payout. The Company makes the Deferred Compensation Plan available to eligible executives so they have the opportunity to defer their cash compensation without regard to the limits imposed by the IRS for amounts that may be deferred under the 401(k) Plan. The material terms of the Deferred Compensation Plan are described in the narrative to the 2015 Non-qualified Deferred Compensation Table.
accompanying narrative.
Health and Welfare
BenefitsBenefits.We also provide the NEOs other broad-based benefits such as medical, dental, life insurance and long-term disability coverage on the same terms and conditions to all employees, including the Named Executive Officers. We believe that these broad-based benefits enhance the Company’s reputation as an employer of choice and thereby serve the objectives of our compensation program to attract, retain and motivate our employees.
Our
Executive Compensation Process
and Guidelines
Role of the Compensation and Human Capital Committee
The Compensation and Human Capital Committee is responsible for determining salaries, performance-based incentivesestablishing, implementing, and other matters relatedmonitoring our executive compensation program objectives and assuring alignment with our business objectives. In overseeing our executive compensation programs, the Committee identifies and approves performance measures and goals under our STI and LTI programs. Additionally, the Committee approves annual long-term equity incentive awards and periodic long-term equity incentive awards granted to the compensation of our executivesnewly hired and for overseeingpromoted executives. The Committee also oversees the administration of our equity plans, including equity award grantsplans.
The Compensation and Human Capital Committee evaluates and determines the compensation of our executive leadership team, which is composed of senior executives who directly report to our
executive officers.CEO. The
Compensation Committee takes into account various factors when making compensation decisions, including:Attainment of established business and financial goals of the Company;
Competitiveness of the Company’s compensation program based upon competitive market data; and
An executive’s position, level of responsibility and performance, as measured by the individual’s contribution to the Company’s achievement of its business objectives.
The Compensation Committee reviews the performance and compensation of our CEO and hisour executive direct reportsleadership team each year. In determiningyear with input from Meridian Compensation Partners, LLC (“Meridian”) and apprises the compensation ofBoard accordingly. For our CEO, the Committee evaluates CEO and his executive direct reports, the Compensation Committee takes into consideration the CEO’s recommendation with respect to his executive direct reportsperformance and submits its recommendation with respect to the CEO compensationrecommendations to the independent members of the Board.Board for review and approval. When considering changes in compensation for our executive leadership team, including the Named Executive Officers,NEOs, the Compensation Committee also considers input from the ExecutiveCEO and the Senior Vice President, Corporate AffairsChief Human Resources Officer and Meridian. Our CEO is not involved in making recommendations with respect to his compensation.
The Compensation and Human ResourcesCapital Committee also has continuous involvement with our human resources talent management initiatives regarding our CEO and our executive leadership team. The Committee also leads our critical role development and succession efforts by providing strategic direction as we identify key executive skills and capability talent priorities. The Committee reviews the performance of our CEO and executive leadership team against leadership skills and capability requirements designed to identify, attract and develop highly-qualified executives that promote continuous learning; foster our culture of equality, inclusion and diversity; deliver safety, reliability and environmental performance improvements; and ultimately support our long-term strategy to build value for all our stakeholders, including our customers, employees, communities and stockholders.
Independent Compensation Consultant
For 2021, the Compensation and Human Capital Committee engaged the services of Meridian as its independent compensation consultant to advise it with respect to executive compensation design, comparative compensation
44 | 2022 Proxy Statement
TABLE OF CONTENTS
COMPENSATION DISCUSSION AND ANALYSIS (CD&A)
practices and compensation matters relating to the Board. The Committee takes recommendations from Meridian into consideration along with its evaluation of the individual performance of each executive officer.
Each year, the Compensation and Human Capital Committee evaluates the independence and quality of the services provided by its independent compensation consultant. In reviewing Meridian’s engagement for 2021, the Committee considered the factors set forth in SEC Rule 10C-1(b)(4) and the
Compensation Committee’sapplicable NYSE rules and determined that Meridian was independent
executive compensation consultant, Exequity LLP.and there were no conflicts of interest with respect to Meridian’s work for the Committee.
Competitive Market Review
In connection with its compensation decision making, the Compensation
and Human Capital Committee reviews the executive compensation practices in effect at other companies in the
ComparativeComparator Group.
Prior to Separation, these companies comprised leadingThe Comparator Group consists of a mix of gas, electric, and
combination utilitymulti-line utilities that are operationally similar to us and
natural gas transmission companies that were selected by the Compensation Committeewith which we compete for
their operational comparability to the Company and because we generally compete with these companies for the samesimilar executive talent. For
purposes of considering 2015 compensation practices prior2021, no changes were made to the
Separation, the pre-Separation Comparative Group included the following companies: | | |
AGL Resources Inc.
| | Pepco Holdings, Inc.
|
Ameren Corporation
| | PPL Corporation
|
American Electric Power Company, Inc.
| | Public Service Enterprise Group Incorporated
|
CenterPoint Energy, Inc.
| | Questar Corporation
|
CMS Energy Corporation
| | SCANA Corporation
|
Dominion Resources, Inc.
| | Sempra Energy
|
DTE Energy Company
| | Spectra Energy Corp
|
EQT Corporation
| | WGL Holdings, Inc.
|
FirstEnergy Corp.
| | The Williams Companies, Inc.
|
In anticipation of the Separation, in May 2015, the Compensation Committee’s independent compensation consultant presented a revised group of comparator companies to reflect the Company’s smaller size and narrower range of operations post-Separation. This revised group was used in evaluating the compensation adjustments that were approved in June 2015 in connection with the Separation. This revised group of companies was based on the Comparative Group prior to the Separation, but updated to (i) remove the following companies: EQT Corporation, Pepco Holdings, Inc., Spectra Energy Corp, andComparator Group. The Williams Companies, Inc. and (ii) include the following companies: Atmos Energy Corporation, The Laclede Group, Inc., OGE Energy Corp., One Gas, Inc., Piedmont Natural Gas Company, Inc., and PNM Resources, Inc.
In August 2015, the Compensation Committee, with input from its independent compensation consultant, revised the ComparativeComparator Group for purposes of evaluating 2021 compensation practices in 2016. The new post-Separation Comparative Group, set forth below, removed companies in the transportation and storage sector (EQT Corporation, Pepco Holding, Inc., Spectra Energy Corp and The Williams Companies, Inc.) and added several companies (Alliant Energy Corporation, Atmos Energy Corporation, The Laclede Group, Inc., OGE Energy Corp., One Gas, Inc., Piedmont Natural Gas Company, Inc., PNM Resources, Inc., Vectren Corporation and WEC Energy Group) in order to align with companies that are operationally similar to the Company following the Separation.
is shown below.| | | |
AGL Resources Inc.
| | One Gas, Inc. |
Alliant Energy Corporation | CMS Energy Corporation | Piedmont NaturalONE Gas, Company, Inc. | |
| Ameren Corporation | Dominion Energy, Inc. | PNM Resources, Inc. | |
| American Electric Power Company, Inc. | DTE Energy Company | PPL Corporation | |
| Atmos Energy Corporation | Eversource Energy | Public Service Enterprise Group IncorporatedSempra Energy | |
| Avista Corporation | FirstEnergy Corp. | Southwest Gas Holdings, Inc. | |
| | Black Hills Corporation | New Jersey Resources Corporation | Spire, Inc. | |
| | CenterPoint Energy, Inc. | OGE Energy Corp. | Questar Corporation |
CMS Energy Corporation
| | SCANA Corporation |
Dominion Resources, Inc.
| | Sempra Energy |
DTE Energy Company
| | Vectren Corporation |
FirstEnergy Corp.
| | WEC Energy Group, Inc. |
The Laclede Group, Inc.
| | WGL Holdings, Inc. |
OGE Energy Corp.
| | |
Policies| | NiSource | | | $4,945 | | | $9,080 | |
| | NiSource Percentile Rank | | | 48th percentile | | | 38th percentile | |
(1)
| The Compensation and Human Capital Committee selected the 2021 Comparator Group in August 2020 based in part on trailing 12-month revenue and July 2020 market capitalization data compiled and provided by Meridian at the time. |
Stock Ownership and
Retention Guidelines
Our executive leadership team, which includes the NEOs, and other senior leaders are subject to stock ownership and retention guidelines. We maintain
variousthese guidelines
to ensure that our executive leadership and
policiessenior leaders maintain a significant investment in our stock, which in turn helps to
help us meet our compensation objectives including: | • | | Executive Stock Ownership and Retention Guidelines. Senior executives, including the Named Executive Officers, are generally expected to satisfy their applicable ownership guidelines within five years of becoming subject to the guidelines. The stock ownership guideline for the CEO is five times his annual base salary. The other senior executives have a stock ownership guideline of three times their respective annual base salaries. Once the senior executive satisfies the guidelines, he/she must continue to own a sufficient number of shares to remain in compliance with the guidelines. Until such time as the senior executives satisfy the stock ownership guidelines, they are required to hold at least 50% of the shares of common stock received upon the lapse of the restrictions on restricted stock units and the vesting of performance shares. At the end of 2015, all of the currently employed Named Executive Officers exceeded their ownership guidelines.
|
| • | | Trading Windows/Trading Plans/Hedging. We restrict the ability of certain employees to freely trade in the Company’s common stock because of their periodic access to material non-public information regarding the Company. Under our insider trading policy, our key executives are prohibited from trading in Company securities during quarterly blackout periods, and at such other times as the Chief Legal Officer may deem appropriate. In addition, under our Securities Transaction Compliance Policy for Certain Employees and our Securities Transaction Compliance Policy for Directors and Executive Officers, all directors and all senior executives, including our Named Executive Officers, are prohibited from engaging in short sales of the Company’s equity securities or in buying or selling puts, calls or other options on the Company’s securities or otherwise hedging against or speculating in the potential changes in the value of the Company’s common stock. None of our directors or executive officers owns Company securities that are pledged.
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| • | | Compensation Recovery for Misconduct. While we believe our executives conduct business with the highest integrity and in full compliance with our Code of Business Conduct, the Compensation Committee believes it is appropriate to ensure that the Company’s compensation plans and agreements provide for financial penalties to an executive who engages in certain fraudulent or other inappropriate conduct. Consequently, our Incentive Plan, the Omnibus Plan, contains “clawback” provisions that require
|
| reimbursement of amounts received in the event of certain acts of misconduct with respect to both the annual short-term cash incentive and long-term equity awards.
|
Tax Treatment of Executive Compensation.
Section 162(m) of the Code provides that annual compensation in excess of $1,000,000 paid to the CEO or certain of the other Named Executive Officers, other than compensation meeting the definition of “performance-based compensation,” will not be deductible by a corporation for federal income tax purposes. The Compensation Committee reviews the deductibility of compensation under Section 162(m) of the Code and related regulations published by the IRS. The Compensation Committee retains the discretion to amend any compensation arrangement to comply with Code Section 162(m)’s requirements for deductibility in accordance with the terms of such arrangements and what it believes is in the best interest of the Company.
The Compensation Committee considers the anticipated tax treatment to the Company when determining executive compensation and routinely seeks to structure its executive compensation program in a way that preserves the deductibility of compensation payments and benefits. It should be noted, however, that there are many factors which are considered by the Compensation Committee in determining executive compensation and, similarly, there are many factors which may affect the deductibility of executive compensation. To maintain the flexibility to compensate the Named Executive Officers in a manner designed to promote varying corporate goals, the Compensation Committee has not adopted a policy that all executive compensation must be deductible under Section 162(m) of the Code.
Compensation Committee Actions Related to 2015 Compensation
During 2015, the Compensation Committee reviewed and, as appropriate, took action with respect to each element of total compensation for each Named Executive Officer following the principles, practices and processes described above. In doing so, the Compensation Committee concluded that the total compensation provided for each of the Company’s senior executives in 2015, including the Named Executive Officers, was consistent with the Company’s compensation philosophy and was reasonable, competitive and appropriate.
The Compensation Committee’s compensation determinations, though subjective in part, were based primarily upon recognition of the roles and responsibilities and performance of each Named Executive Officer, and a determination that the total compensation awarded to each Named Executive Officer provided well-balanced incentives to focus on servingalign the interests of our executive leadership and senior leaders with those of our stockholders.
Our executive leadership team and senior leaders are generally expected to satisfy their applicable ownership guideline (as described below) within five years of becoming subject to the guidelines. Once applicable share ownership levels are satisfied, the senior executive must continue to own enough shares to remain in compliance. Until such time as the applicable stock ownership guideline is satisfied, the executive is required to hold at least 50% of the shares of common stock received upon the vesting of equity awards. As of the record date, the NEOs exceeded the applicable ownership guideline, except for Mr. Shafer, who is expected to meet the guideline by October 1, 2024. Shares counted toward ownership targets include common stock held and unvested RSUs.
| | CEO | | | 6x base salary | |
| | Executive Vice President | | | 3x base salary | |
| | Senior Vice President | | | 2x base salary | |
2022 Proxy Statement | 45 TABLE OF CONTENTS
COMPENSATION DISCUSSION AND ANALYSIS (CD&A)
Risk Management Policies and Guidelines
Trading Windows/Trading Plans. We restrict the ability of directors, executive officers and employees who work in designated areas to freely trade in our common stock because of their periodic access to our material non-public information. Under our insider trading policy, such persons are prohibited from trading in our securities during quarterly blackout periods, and at such other times as the General Counsel may deem appropriate.
Anti-Hedging Policy/Pledging. Under our Securities Transaction Compliance Policy for Certain Employees and our Securities Transaction Compliance Policy for Directors and Executive Officers, all directors, executive officers, and employees who work in designated areas are prohibited from engaging in short sales of our equity securities or buying or selling puts or calls or other options on our securities. We do not have such a policy for employees who work in areas other than the designated areas.
Compensation Recovery for Misconduct. Included in our 2020 Omnibus Plan is a “clawback” provision that states the employee shall reimburse the Company amounts received under STI and its stockholders.In addition, the Compensation Committee considered the stockholders’ advisory approval of the 2014 compensation of our Named Executive Officers at the 2015 Annual Meeting and determined that no changes were necessary or advisable in connection with the design of our senior executive compensation programLTI awards if we are required to prepare an accounting restatement as a result of the stockholders’ vote.employee’s misconduct.
46 | 2022 Proxy Statement TABLE OF CONTENTS
2015 Base Salaries
Historically, base salaries of senior executives, including the Named Executive Officers, have been adjusted when deemed necessary to maintain competitiveness and reflect performance.
COMPENSATION AND HUMAN CAPITAL COMMITTEE REPORT The Compensation
Committee reviewed the base salaries of the Company’s senior executives, including the Named Executive Officers, and
approved salary increases, effective upon the Separation, for Messrs. Hamrock and Stanley and Ms. Sistovaris, each of whom assumed new roles with increased responsibilities following the Separation. No other salary adjustments were made. In addition, the Compensation Committee established Mr. Brown’s initial base salary of $450,000 at the time he joined the Company in April 2015, considering the compensation he received from his prior employer, market data and the compensation practices within the Company.In reviewing the base salaries of the Named Executive Officers, the Compensation Committee considered the base salaries earned by similarly situated executives of companies in the post-Separation Comparative Group, increased responsibilities, experience, internal pay equity, historical compensation practices, individual performance and contributions to achievement of business objectives. In particular, the Compensation Committee considered Mr. Hamrock’s new role and responsibilities as President and CEO of the Company and determined that an increase in salary of $300,000 was appropriate, particularly as compared to the market data for chief executive officers at companies in the post-Separation Comparative Group. The Compensation Committee also
determined that increases of $25,000 for Mr. Stanley and $80,000 for Ms. Sistovaris were appropriate based on market data and in recognition of their new roles and increased responsibilities as Chief Operating Officer and Executive Vice President, respectively.
The 2015 base salary adjustments, effective upon the Separation, for Messrs. Hamrock and Stanley and Ms. Sistovaris are shown in the table below. As noted above, no other base salary adjustments were made in 2015 for the Named Executive Officers.
| | | | | | | | |
| Name | | 2014 Annual Salary | | | 2015
Annual Salary | |
Joseph Hamrock | | $ | 500,000 | | | $ | 800,000 | |
Jim L. Stanley | | $ | 500,000 | | | $ | 525,000 | |
Violet Sistovaris | | $ | 320,000 | | | $ | 400,000 | |
Annual Performance-Based Cash Incentives
Certain elements of our executive compensation program had to be modified in 2015 as a result of the Separation. In particular, the Incentive Plan was bifurcated into two six-month performance periods, with the same corporate performance measures for each half (but excluding business unit measures for the second half of 2015) and different performance goals for each half, reflecting the fact that the Company and its financial plans were very different pre-Separation as compared to post-Separation. Similarly, as explained below, annual performance-based cash incentive ranges and base salary amounts used to determine actual payout amounts changed post-Separation for certain Named Executive Officers.
Pre-Separation Annual Performance-Based Incentive Ranges
In January 2015, in anticipation of the Separation, the Compensation Committee established performance measures and goals for the first half of the year to determine the first half incentive payouts to the Named Executive Officers employed by the Company on December 31, 2015. In determining incentive compensation ranges for the Named Executive Officers for the first half of 2015, the Compensation Committee considered competitive information from the pre-Separation Comparative Group, input from the independent compensation consultant, historical payouts and individual performance and made no changes to the ranges for the then-serving Named Executive Officers.
The annual performance-based cash incentive ranges for each of the Named Executive Officers as of June 30, 2015, used to determine the incentive payout based on performance for the first half of the year are set forth below.
| | | | | | | | | | | | |
| Named Executive Officer | | Trigger (% of Salary) | | | Target (% of Salary) | | | Stretch (% of Salary) | |
Joseph Hamrock | | | 25% | | | | 65% | | | | 105% | |
Donald E. Brown | | | 25% | | | | 60% | | | | 95% | |
Jim L. Stanley | | | 25% | | | | 65% | | | | 105% | |
Carrie J. Hightman | | | 25% | | | | 60% | | | | 95% | |
Violet Sistovaris | | | 20% | | | | 50% | | | | 80% | |
Robert C. Skaggs, Jr.(1) | | | 50% | | | | 125% | | | | 200% | |
Stephen P. Smith(1) | | | 30% | | | | 70% | | | | 110% | |
Glen L. Kettering(1) | | | 25% | | | | 60% | | | | 95% | |
| (1) | Messrs. Skaggs, Smith and Kettering were not employed by the Company on December 31, 2015, and thus were not eligible to receive an incentive payout for 2015 under the terms of the Incentive Plan. Pursuant to the Employee Matters Agreement between the Company and CPG, the Company provided funds to CPG in the amount of $972,500 to be used by CPG to fund CPG incentive plan payouts to
|
| Messrs. Skaggs, Smith and Kettering subject to the terms and conditions of the CPG incentive plan, including the requirement that each be employed by CPG on December 31, 2015 in order to be eligible to receive a payment from CPG.
|
Post-Separation Annual Performance-Based Incentive Ranges
In June 2015, in anticipation of the Separation, the Compensation Committee established performance measures and goals for the second half of 2015 to determine the second half incentive payouts to the Named Executive Officers employed by the Company on December 31, 2015. The Compensation Committee also approved additional adjustments to the cash-based incentive compensation ranges for Messrs. Hamrock and Stanley and Ms. Sistovaris based on their new roles and responsibilities following the Separation taking into account competitive information from the modified post-Separation Comparative Group, and input from the independent compensation consultant to determine their payout based on performance for the second half of the year.
The annual performance-based cash incentive ranges for each of the Named Executive Officers employed by the Company on December 31, 2015, used to determine the incentive payout based on performance for the second half of the year are set forth below.
| | | | | | | | | | | | |
| Named Executive Officer(1) | | Trigger (% of Salary) | | | Target (% of Salary) | | | Stretch (% of Salary) | |
Joseph Hamrock | | | 40% | | | | 100% | | | | 160% | |
Donald E. Brown | | | 25% | | | | 60% | | | | 95% | |
Jim L. Stanley | | | 30% | | | | 75% | | | | 120% | |
Carrie J. Hightman | | | 25% | | | | 60% | | | | 95% | |
Violet Sistovaris | | | 25% | | | | 65% | | | | 105% | |
| (1) | Messrs. Skaggs, Smith and Kettering were not eligible to receive an incentive payout from the Company for the second half of 2015 under the terms of the Incentive Plan because they were not employed by the Company following the Separation.
|
For more information on the 2015 payout amounts for each of the Named Executive Officers, see the sections below entitled “Pre-Separation 2015 Incentive Plan Payouts to the Named Executive Officers” and “Post-Separation 2015 Incentive Plan Payouts to the Named Executive Officers.”
Pre- and Post-Separation Financial Goals
The 2015 Incentive Plan awards for senior executives, including the eligible Named Executive Officers, were subject to achievement with respect to two corporate financial goals, net operating earnings per share and corporate funds from operations, as well as an additional operational measure relating to safety. The Compensation Committee approved these measures for the performance periods for both the first and second half of 2015 because they were deemed to be important to the Company’s success in increasing stockholder value.
Earnings, cash flow and safety were measured as follows:
The measure of earnings was net operating earnings per share (after accounting for the cost of any incentive payout). Net operating earnings was defined as income from continuing operations determined in accordance with Generally Accepted Accounting Principles (“GAAP”), adjusted for certain items, such as fluctuation in weather, environmental compliance costs, gains and losses on the sale of assets, Separation-related costs and certain income tax items. The Compensation Committee uses net operating earnings, a non-GAAP financial measure, for determining financial performance for incentive compensation plans because the Board and management believe this measure better represents the fundamental earnings strength and performance of the Company. The Company uses net operating earnings internally for budgeting and for reporting to the Board.
The cash flow measure, corporate funds from operations, was calculated by taking net income from operations and adding back non-cash items such as depreciation. The Compensation Committee uses corporate funds from operations as an Incentive Plan measure because the Compensation Committee and management believe this measure fairly represents the amount of cash produced by the Company’s operations.
Safety was measured by the number of employee work days missed or restricted or the number of days an employee was transferred, known as the DART metric, which was developed by the Occupational Safety and Health Administration. Each business unit of the Company had its own safety goal and the safety goal for corporate staff was based upon the respective business unit goals, weighted by employee hours for each business unit.
The incentive opportunities for the senior executives, including the Named Executive Officers, were contingent on achievement of goals relating to these measures, subject to final discretionary adjustment by the Compensation Committee.
For the first half performance period, the 2015 Incentive Plan awards for the leaders of our business units during the first half of the year (Mr. Hamrock, who led NiSource Gas Distribution, Mr. Stanley, who led NIPSCO, and Mr. Kettering, who led Columbia Pipeline Group) also were subject to achievement with respect to business unit net operating earnings and funds from operations goals for each of the business units. The Compensation Committee extended to Mr. Skaggs the authority to establish the annual business unit targets for the year. He assigned goals that, if accomplished, would help the Company achieve its overall corporate objectives, consistent with the Compensation Committee’s belief that the inclusion of business unit goals in the annual Incentive Plan improves the line of sight between employees and the incentive measures, thereby enhancing Company performance.
Consequently, the incentive opportunities for Messrs. Hamrock, Stanley and Kettering for the first half of the 2015 performance period were subject to achievement with respect to the corporate financial measures (net operating earnings per share and corporate funds from operations), and achievement of business unit net operating earnings, business unit funds from operations and business unit safety measures for which they had responsibility. As such, each of their measures for the first half of 2015 is weighted differently than the other Named Executive Officers who were members of the corporate service group during the first half of the year, as shown in the tables below.
There are no business units remaining following the Separation since the Company is more operationally aligned following the Separation and each of the Named Executive Officers employed post-Separation was subject to the same performance goals and weighting for the second half of 2015.
Messrs. Skaggs, Smith and Kettering were not eligible to receive an incentive payout from the Company under the terms of the Incentive Plan as they were not employed on December 31, 2015 and have been excluded from the Pre-Separation Performance Results Table below. If Messrs. Skaggs and Smith had remained employed through December 31, 2015, they would have been eligible to receive annual incentive payouts based on the performance measures and weightings set forth below with respect to Ms. Hightman and Ms. Sistovaris.
Pre-Separation Performance Results
The applicable performance measures and their associated weightings and results as a percentage of the target incentive opportunity for the first half of 2015 for Ms. Hightman and Ms. Sistovaris were:
| | | | | | | | | | | | | | | | | | |
| Corporate Measures(1) | | Weight | | Trigger | | Target | | Stretch | | Result | | Carrie J. Hightman | | Violet Sistovaris |
| | | | | | | Formulaic Amounts(2) | | Formulaic Amounts(2) |
| | | | | | | Payout as a % of Target | | Weighted Adjusted
Payout as a % of Target | | Payout
as a % of Target | | Weighted Adjusted Payout as a %
of Target |
NiSource Net Operating Earnings Per Share | | 50% | | $.97 | | $1.00 | | $1.03 | | $1.03 | | 158.33% | | 79.17% | | 160.00% | | 80.00% |
NiSource Funds from Operations | | 40% | | $765M | | $847M | | $929M | | $909M | | 144.11% | | 57.64% | | 145.37% | | 58.15% |
Safety | | 10% | | .76 days | | .60 days | | — | | .92 days | | 0% | | 0% | | 0% | | 0% |
(1) | For performance between two performance levels (for example, between target and stretch goals), the incentive opportunity is determined by interpolation and is expressed as a percentage of the target incentive opportunity. Interpolation for the safety goal only applies between trigger and target. Consequently, target is the maximum available level for the safety goal.
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(2) | These amounts reflect a percentage of each executive’s target incentive opportunity. The trigger, target and stretch incentive opportunities for Ms. Hightman and Ms. Sistovaris are provided in the section entitled “Pre-Separation 2015 Incentive Plan Payouts to the Named Executive Officers.”
|
The applicable performance measures and their associated weightings for the first half of 2015 for Messrs. Hamrock, Stanley and Kettering and results as a percentage of the target incentive opportunity for Messrs. Hamrock and Stanley were:
| | | | | | | | | | | | | | |
| Corporate and Business Unit Measures(1) | | Weight | | Trigger | | Target | | Stretch | | Result | | Formulaic
Payout as a
% of Target(2) | | Weighted Adjusted Formulaic
Payout as a %
of Target(2) |
Mr. Hamrock | | | | | | | | | | | | | | |
NiSource Net Operating Earnings Per Share | | 25% | | $0.97 | | $1.00 | | $1.03 | | $1.03 | | 161.54% | | 40.38% |
NiSource Funds from Operations | | 20% | | $765M | | $847M | | $929M | | $909M | | 146.53% | | 29.31% |
NGD Safety | | 10% | | 1.03 days | | .72 days | | — | | 1.55 days | | 0% | | 0% |
NGD Net Operating Earnings | | 22.50% | | $157M | | $161M | | $169M | | $159M | | 69.23% | | 15.58% |
NGD Funds from Operations | | 22.50% | | $274M | | $316M | | $358M | | $378M | | 161.54% | | 36.35% |
Mr. Stanley | | | | | | | | | | | | | | |
NiSource Net Operating Earnings Per Share | | 25% | | $0.97 | | $1.00 | | $1.03 | | $1.03 | | 162.00% | | 40.38% |
NiSource Funds from Operations | | 20% | | $765M | | $847M | | $929M | | $909M | | 146.53% | | 29.31% |
NIPSCO Safety | | 10% | | .84 days | | .69 days | | — | | .66 days | | 100.00% | | 10.00% |
NIPSCO Net Operating Earnings | | 22.50% | | $93M | | $96M | | $102M | | $91M | | 0% | | 0% |
NIPSCO Funds from Operations | | 22.50% | | $187M | | $216M | | $245M | | $201M(3) | | 68.45% | | 15.34% |
Mr. Kettering(4) | | | | | | | | | | | | | | |
NiSource Net Operating Earnings Per Share | | 25% | | $0.97 | | $1.00 | | $1.03 | | N/A | | N/A | | N/A |
NiSource Funds from Operations | | 20% | | $765M | | $847M | | $929M | | N/A | | N/A | | N/A |
CPG Safety | | 10% | | .09 days | | .19 days | | — | | N/A | | N/A | | N/A |
CPG Net Operating Earnings | | 22.50 | | $134M | | $136M | | $141M | | N/A | | N/A | | N/A |
CPG Funds from Operations | | 22.50 | | $226M | | $261M | | $296M | | N/A | | N/A | | N/A |
(1) | For performance between two performance levels (for example, between target and stretch goals), the incentive opportunity is determined by interpolation and is expressed as a percentage of the target opportunity. Interpolation for the safety goal only applies between trigger and target. Consequently, target is the maximum available level for the safety goal.
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(2) | These amounts reflect a percentage of the executive’s target incentive opportunity. The trigger, target and stretch incentive opportunities for Messrs. Hamrock and Stanley are provided in the section entitled “Pre-Separation 2015 Incentive Plan Payouts to the Named Executive Officers.”
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(3) | In accordance with the terms of the Incentive Plan, this includes an upward adjustment to Funds from Operations for NIPSCO of $2.4 million taking into consideration the impact of non-recurring items related to deferred tax changes.
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(4) | As a result of the Separation, the Compensation Committee did not certify results with respect to CPG since Mr. Kettering was not eligible to receive an annual incentive payout pursuant to the terms of the Incentive Plan because he was not employed on December 31, 2015.
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Pre-Separation 2015 Incentive Plan Payouts to the Named Executive Officers
The annual incentive opportunities and actual payout amounts for each of the eligible Named Executive Officers as approved by the Compensation Committee for the first half of 2015 performance period were:
| | | | | | | | | | | | | | | | | | | | |
| Named Executive Officer(1) | | Trigger (% of Salary) | | | Target (% of Salary) | | | Stretch (% of Salary) | | | 2015 Award (% of Target) | | | 2015
Award(2) | |
Joseph Hamrock | | | 25% | | | | 65% | | | | 105% | | | | 122% | | | $ | 198,250 | |
Donald E. Brown | | | 25% | | | | 60% | | | | 95% | | | | 137% | | | $ | 88,271 | |
Jim L. Stanley | | | 25% | | | | 65% | | | | 105% | | | | 95% | | | $ | 154,375 | |
Carrie J. Hightman | | | 25% | | | | 60% | | | | 95% | | | | 137% | | | $ | 201,390 | |
Violet Sistovaris | | | 20% | | | | 50% | | | | 80% | | | | 138% | | | $ | 110,400 | |
(1) | Messrs. Skaggs, Smith and Kettering were not eligible to receive an incentive payout from the Company for the first half of 2015 under the terms of the Incentive Plan because they were not employed by the Company on December 31, 2015.
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(2) | The 2015 Awards for each of the eligible Named Executive Officers were calculated as follows: 50% annual base salary at the end of the applicable performance period with the exception of the use of 2015 eligible earnings on June 30, 2015, for Mr. Brown, who joined the Company in April 2015, multiplied by his/her Target (% of Salary) period multiplied by the applicable 2015 Award (% of Target).
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Post-Separation Performance Results
The applicable performance measures and their associated weightings and results as a percentage of the target incentive opportunity for the second half of 2015 for each of the currently employed Named Executive Officers were:
| | | | | | | | | | | | | | |
| Corporate Measures(1) | | Weight | | Trigger | | Target | | Stretch | | Result | | Formulaic
Payout as a
% of Target(2) | | Weighted
Adjusted
Formulaic
Payout as a % of Target(2) |
Mr. Hamrock and Mr. Stanley | | | | | | | | | | | | | | |
NiSource Net Operating Earnings Per Share | | 50% | | $0.32 | | $0.35 | | $0.38 | | $0.37 | | 140.00% | | 70.00% |
NiSource Funds from Operations | | 40% | | $328M | | $396M | | $464M | | $365M(3) | | 72.65% | | 29.06% |
Corporate Safety | | 10% | | .76 days | | .70 days | | — | | 1.03 days | | 0% | | 0% |
Ms. Hightman and Mr. Brown | | | | | | | | | | | | | | |
NiSource Net Operating Earnings Per Share | | 50% | | $0.32 | | $0.35 | | $0.38 | | $0.37 | | 138.89% | | 69.44% |
NiSource Funds from Operations | | 40% | | $328M | | $396M | | $464M | | $365M(3) | | 73.41% | | 29.36% |
Corporate Safety | | 10% | | .76 days | | .70 days | | — | | 1.03 days | | 0% | | 0% |
Ms. Sistovaris | | | | | | | | | | | | | | |
NiSource Net Operating Earnings Per Share | | 50% | | $0.32 | | $0.35 | | $0.38 | | $0.37 | | 141.03% | | 70.51% |
NiSource Funds from Operations | | 40% | | $328M | | $396M | | $464M | | $365M(3) | | 71.95% | | 28.78% |
Corporate Safety | | 10% | | .76 days | | .70 days | | — | | 1.03 days | | 0% | | 0% |
(1) | For performance between two performance levels (for example, between target and stretch goals), the incentive opportunity is determined by interpolation and is expressed as a percentage of the target opportunity. Interpolation for the safety goal only applies between trigger and target. Consequently, target is the maximum available level for the safety goal.
|
(2) | These amounts reflect a percentage of the Named Executive Officers target incentive opportunity for the second half of 2015. The trigger, target and stretch incentive opportunities for each Named Executive Officer are provided in the section entitled “Post-Separation 2015 Incentive Plan Payouts to the Named Executive Officers.”
|
(3) | In accordance with the terms of the Incentive Plan, this includes an upward adjustment to Funds from Operations for NiSource of $3.9 million taking into consideration the impact of accounting changes.
|
Post-Separation 2015 Incentive Plan Payouts to the Named Executive Officers
For 2015, the annual incentive opportunities and actual payout amounts for each of the eligible Named Executive Officers as approved by the Compensation Committee for the second half of 2015 were:
| | | | | | | | | | | | | | | | | | | | |
| Named Executive Officer | | Trigger (% of Salary) | | | Target (% of Salary) | | | Stretch (% of Salary) | | | 2015 Award (% of Target) | | | 2015
Award(1) | |
Joseph Hamrock | | | 40% | | | | 100% | | | | 160% | | | | 99% | | | $ | 396,000 | |
Donald E. Brown | | | 25% | | | | 60% | | | | 95% | | | | 99% | | | $ | 133,650 | |
Jim L. Stanley | | | 30% | | | | 75% | | | | 120% | | | | 99% | | | $ | 194,906 | |
Carrie J. Hightman | | | 25% | | | | 60% | | | | 95% | | | | 99% | | | $ | 145,530 | |
Violet Sistovaris | | | 25% | | | | 65% | | | | 105% | | | | 99% | | | $ | 128,700 | |
(1) | The 2015 Awards for each of the eligible Named Executive Officers were calculated as follows: 50% of annual base salary on December 31, 2015, multiplied by his/her Target (% of Salary) on December 31, 2015, multiplied by the applicable 2015 Award (% of Target).
|
In January 2016, the Compensation Committee certified the performance results set forth in the tables above. The Compensation Committee determined it was appropriate to recommend to the independent members of the Board that Mr. Hamrock receive an Incentive Plan payout of $594,250 based on the Company’s 2015 performance, Mr. Hamrock’s contribution to the Company’s success in 2015, and his performance in the Company’s top leadership role. The independent members of the Board approved the Incentive Plan payout recommended by the Compensation Committee.
Mr. Hamrock also made recommendations to the Compensation Committee with respect to the award of Incentive Plan payouts to the other senior executives, including the other Named Executive Officers. In making his recommendations, Mr. Hamrock considered the Company’s performance and the performance of the senior executives in delivering strong stockholder returns again in 2015, as well as the performances of the business unit and corporate functions the executive led during the first half of 2015. The Compensation Committee considered and accepted Mr. Hamrock’s recommendations and approved Incentive Plan payouts to the Named Executive Officers in accordance with the Incentive Plan formula, as set forth in the table above.
2015 Discretionary Payments to Mr. Brown and Mr. Hamrock
In March 2015, the Compensation Committee approved a sign-on bonus of $75,000 as part of Mr. Brown’s offer of employment in order to compensate him for lost compensation opportunities at his prior employer. In January 2016, the Compensation Committee approved a discretionary bonus for Mr. Brown in the amount of $28,079 at the recommendation of the CEO based on Mr. Brown’s exceptional performance as the Company’s new Chief Financial Officer. The Compensation Committee also recommended to the independent members of the Board an additional modest discretionary adjustment of $5,750 to Mr. Hamrock’s Incentive Plan payout in recognition of his contributions to the Company’s success in 2015. These discretionary bonus amounts are set forth in the Bonus column of the Summary Compensation Table.
LTIP Awards
2015 Annual Long-Term Equity Awards. In January 2015, the Compensation Committee approved a grant of restricted stock units to senior executives of the Company, including each of the Named Executive Officers. The Compensation Committee determined that the award of restricted stock units instead of performance shares was more appropriate in a year of fundamental change for the Company as a result of the Separation. In
determining the 2015 long-term incentive grant values to be awarded to the Named Executive Officers based on their positions at the beginning of 2015, the Compensation Committee considered the competitive pay practices at companies within our pre-Separation Comparative Group, input from the Compensation Committee’s independent compensation consultant, the historical mix of fixed compensation versus variable incentive compensation and individual performance for each of the Named Executive Officers’ current positions. The Compensation Committee did not take into account potential future roles of the Named Executive Officer following Separation into its consideration at such time. The Compensation Committee approved an increase in 2015 grant values for Messrs. Hamrock, Stanley, Kettering and Smith that were approximately 43%, 14%, 60% and 11% greater than their prior year’s award values, respectively.
In particular, in approving the increased long-term incentive values for Messrs. Hamrock, Stanley, Kettering and Smith, the Compensation Committee considered the consistent strong performance by Messrs. Hamrock and Stanley and the appropriateness of market adjustments for Messrs. Hamrock and Stanley based on Comparative Group information, Mr. Hamrock’s contribution in developing a strategy for the Company following the Separation, as well as consistently excellent performance of Mr. Kettering in leading CPG and of Mr. Smith who was recognized as one of the top 20 Chief Financial Officers in the Wall Street Journal.
In June 2015, the Compensation Committee approved incremental grants of the 2015 service-based restricted stock units to Messrs. Hamrock and Stanley and Ms. Sistovaris contingent on the occurrence of the Separation and based on their promotions to CEO, Chief Operating Officer and Executive Vice President, respectively. The incremental grant values for Messrs. Hamrock and Stanley and Ms. Sistovaris were approximately 100%, 25% and 70%, respectively, greater than the grant values of their equity awards granted at the beginning of 2015. These incremental grants were made based on a review of the post-Separation Comparative Group for individuals holding similar positions at companies within the post-Separation Comparative Group as well as the Company’s historical compensation practices.
Vesting of the 2015 grants of restricted stock units is dependent on the executive’s continued employment through February 2, 2018. Special vesting rules apply in the event of death, “Retirement,” “Disability” or a “Change-in-Control” (each as defined in the Omnibus Plan). Termination for any other reason will result in forfeiture of all restricted stock units.
The Compensation Committee authorized the restricted stock unit awards to the Named Executive Officers in the original and adjusted and incremental grant amounts shown below:
| | | | | | | | | | | | |
| Named Executive Officer | | Restricted Stock Units Awarded(1) | | | Restricted Stock Units Following
Valuation Adjustment(2) | | | Incremental Restricted
Stock Unit Awards(3) | |
Joseph Hamrock | | | 22,894 | | | | 62,972 | | | | 58,858 | |
Donald E. Brown | | | 16,790 | | | | 46,183 | | | | — | |
Jim L. Stanley | | | 18,315 | | | | 50,377 | | | | 11,772 | |
Carrie J. Hightman | | | 17,170 | | | | 47,228 | | | | — | |
Violet Sistovaris | | | 8,013 | | | | 22,041 | | | | 14,715 | |
Robert C. Skaggs, Jr.(4) | | | 85,852 | | | | — | | | | — | |
Stephen P. Smith(4) | | | 34,341 | | | | — | | | | — | |
Glen L. Kettering(4) | | | 18,315 | | | | — | | | | — | |
(1) | These amounts represent the number of restricted stock units awarded prior to the Separation.
|
(2) | Pursuant to the terms of the Omnibus Plan, as a result of the Separation, the Compensation Committee approved the adjustment to outstanding unvested restricted stock unit awards granted under the Omnibus Plan, in order to preserve the intrinsic aggregate value of such award prior to the Separation. The Compensation Committee approved this equitable adjustment based on a ratio determined by comparing the average pre-Separation price of a share of NiSource Common Stock for three days prior to the Separation with the NiSource share price traded on a when issued basis for the same three day period (the “Valuation Adjustment”). No Valuation Adjustment was made to the awards held by Messrs. Skaggs, Smith and Kettering which were forfeited upon their termination of employment from the Company.
|
(3) | These amounts represent the incremental number of restricted stock unit awards awarded in July 2015 (following the Separation) in connection with promotions of Messrs. Hamrock and Stanley and Ms. Sistovaris. As a result, the total number of restricted stock units awarded in 2015 to each of these executives is as follows: Mr. Hamrock 121,830; Mr. Stanley, 62,149; and Ms. Sistovaris 36,756.
|
(4) | Messrs. Skaggs, Smith and Kettering forfeited their restricted stock unit awards upon their termination of employment from the Company.
|
Special 2015 Restricted Stock Unit Award for Mr. Brown. In March 2015, the Compensation Committee approved a special award of 11,417 restricted stock units for Mr. Brown upon commencement of his employment in order to compensate him for the loss of equity compensation from his prior employer as a result of joining the Company. This award was adjusted to 31,404 restricted stock units based on the Valuation Adjustment in order to preserve the pre-Separation intrinsic value of the grant as discussed in footnote (2) to the table above. One-third of Mr. Brown’s special award will vest on the first anniversary of his employment and the two-thirds will vest on the second anniversary of this employment.
2013 and 2014 Performance Share Awards. In 2013 and 2014, the Compensation Committee awarded grants of performance shares to each of the Named Executive Officers. Under the original terms of the awards, vesting of the performance shares was dependent upon the Company meeting certain performance measures over the three-year performance period for each award and the executive’s continued employment through February 29, 2016, and February 28, 2017, for the 2013 and 2014 awards, respectively. In connection with the Separation, the Compensation Committee approved adjustments to the performance period and the performance targets for the 2013 and 2014 performance share awards through the Separation Date. The Compensation Committee used the underlying financial plan to determine the June 30, 2015 revised performance targets relative to the original net operating earnings per share and funds from operations performance targets and determined that the appropriate adjustments for the targets for the 2013 and 2014 performance share awards should equal 84.5% and 50% of the original targets, respectively. Relative Total Shareholder Return for the 2013 and 2014 performance share awards was measured as of March 31, 2015. The Compensation Committee reviewed performance results through April 2015 for the financial measures and forecasted performance for May and June and determined that the 2013 performance shares would be paid out based on above target performance of 188% through two and one-half years of the performance period and 50% of the 2014 performance shares would be paid out based on above target performance of 170% through one-half of the performance period and the remaining 50% of the 2014 performance shares would be paid out in the form of restricted stock units. The Compensation Committee determined that these adjustments were appropriate based upon performance through two and one half years of the three year performance period for the 2013 awards and performance through one and one half years of the three year performance period for the 2014 awards. The 2013 and 2014 performance share awards were then converted to restricted stock units and these restricted stock units were adjusted based on the Valuation Adjustment described above. These awards will remain subject to the service-based vesting conditions included in the original terms of the awards. The performance measures, their weightings and results for the 2013 and 2014 performance share awards, as considered by the Compensation Committee, were:
| | | | | | | | | | |
| Performance Measure(1) | | Weight | | Trigger (50% Award) | | Target
(100% Award) | | Stretch (200% Award) | | Actual Results(2) |
2013 Performance Share Awards | | | | | | | | | | |
Cumulative Net Operating Earnings Per Share | | 40% | | $4.02 | | $4.15 | | ³$4.44 | | $4.35 |
Cumulative Funds from Operations | | 40% | | $2,816M | | $3,114M | | ³$3,619M | | $3,702M |
Relative Total Shareholder Return (RTSR)(3) | | 20% | | 40-49th
Percentile | | 50th
Percentile | | 100th
Percentile | | 100th
Percentile |
Overall Attainment Level | | | | | | | | | | 188% |
| | | | | | | | | | |
| Performance Measure(1) | | Weight | | Trigger (50% Award) | | Target
(100% Award) | | Stretch (200% Award) | | Actual Results(2) |
2014 Performance Share Awards | | | | | | | | | | |
Cumulative Net Operating Earnings Per Share | | 50% | | $2.56 | | $2.64 | | ³$2.83 | | $2.77 |
Relative Total Shareholder Return (RTSR)(4) | | 50% | | 40-49th
Percentile | | 50th
Percentile | | 100th
Percentile | | 86th
Percentile |
Overall Attainment Level | | | | | | | | | | 170% |
(1) | For performance between two performance levels (for example, between target and stretch goals), the long-term incentive award opportunity is determined by interpolation and is expressed as a percentage of the target opportunity except that there is no interpolation between goals below the 50th percentile for the RTSR metric.
|
(2) | Performance results for the financial measures were based on actual performance results through April 2015 and forecasted performance for May and June 2015. The RTSR result was measured as of March 31, 2015.
|
(3) | The peer group of companies selected by the Compensation Committee for the purpose of determining RTSR for the 2013 awards was comprised of 36 energy companies, including 16 companies from the Comparative Group that the Compensation Committee looked to for purposes of 2013 compensation decision making.
|
(4) | The peer group of companies selected by the Compensation Committee for the purpose of determining RTSR for the 2014 awards was comprised of 36 energy companies, including 15 companies from the Comparative Group that the Compensation Committee looked to for purposes of 2014 compensation decision making.
|
Based on the Company’s performance, as described above, the 2013 and 2014 performance shares were converted to restricted stock units and adjusted based on the Valuation Adjustment described above, and payable one-for-one in shares of the Company’s common stock, as set forth in the table below:
| | | | | | | | |
| Named Executive Officer | | 2013 Converted Restricted Stock Units(1) | | | 2014 Converted Restricted Stock Units(2) | |
Joseph Hamrock | | | 117,085 | | | | 75,870 | |
Donald E. Brown(3) | | | — | | | | — | |
Jim L. Stanley | | | 117,085 | | | | 75,870 | |
Carrie J. Hightman | | | 146,353 | | | | 81,288 | |
Violet Sistovaris | | | 63,419 | | | | 37,935 | |
Robert C. Skaggs, Jr.(4) | | | — | | | | — | |
Stephen P. Smith(4) | | | — | | | | — | |
Glen L. Kettering(4) | | | — | | | | — | |
| (1) | These restricted stock units fully vested on February 29, 2016.
|
| (2) | These restricted stock units will vest on February 28, 2017, subject to the Named Executive Officer’s continued employment.
|
| (3) | Mr. Brown was not employed by the Company at the time of the 2013 or 2014 grants of performance share awards.
|
| (4) | Messrs. Skaggs, Smith and Kettering forfeited their 2013 and 2014 performance share awards in connection with their July 2015 terminations of employment from the Company.
|
COMPENSATION COMMITTEE REPORT
The CompensationHuman Capital Committee of the Board of Directors (the “Committee”) has furnished the following report to the stockholders of the Company in accordance with rules adopted by the Securities and Exchange Commission.
The Committee states that it reviewed and discussed with management the Company’s Compensation Discussion and Analysis contained in this Proxy Statement.
Based upon the review and discussions referred to above, the Committee recommended to the Board
of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement and the Company’s Annual Report on Form 10-K for the year ended December 31,
2015.2021.
This report is submitted on behalf of the members of the Compensation Committee:
| | | | | Eric L. Butler, Chair
Deborah A. Henretta
Michael E. Jesanis | |
2022 Proxy Statement | 47 TABLE OF CONTENTS
Compensation Committee
Richard A. Abdoo, Chair
Aristides S. Candris
Deborah A. Henretta
March 8, 2016
ASSESSMENT OF RISK
The Company annually assesses whether its incentive
We perform an annual risk assessment of our compensation programs are constructed in a manner that might induce participant behaviors that could cause the Company material harm.program. An assessment was performed in 2015,2021 and the Company2022, and we concluded that the incentive components of our program for senior executives are not reasonably likely to have a material adverse effect on the Company, for reasons that include the following:
| ■ | Our executive leadership and board regularly monitor our programs and people to ensure decisions are made with integrity and in the best long-term interests of the Company; |
| ■ | Our compensation program is evaluated annually for its effectiveness and alignment with our goals without promoting excessive risk; |
| ■ | Performance measures for incentive awards are approved by the Compensation and Human Capital Committee of the Board; |
| ■ | Senior executive compensation is weighted toward long-term incentives, thereby providing senior executives with an ongoing, multi-year focus of attention; |
| ■ | Long-term incentive equity awards for senior executives generally have three-year vesting periods and are predominately performance-based, so upside potential and downside risk are designed to be aligned with that of stockholders and promote long-term performance; |
| ■ | Executive officers are subject to stock ownership and retention guidelines set by the Compensation and Human Capital Committee so they have long-term interests aligned with stockholders; |
| ■ | Senior executive officers’ incentive compensation is partially tied to: (1) safety metrics to encourage a strong culture of safety and motivate the prioritization of safe operations, and (2) workforce diversity metrics to encourage a strong culture of diversity and motivate the prioritization of diversity-related objectives; and |
| ■ | Policies are in place to recoup compensation in the event of certain acts of misconduct and to prohibit hedging of our stock by senior executive officers. |
48 | 2022 Proxy Statement
TABLE OF CONTENTS
Our operations are highly regulated at both the federal and state levels and, therefore, are subject to continuous oversight by independent bodies.
Policies are in place to recoup compensation in the event of certain acts of misconduct and prohibit hedging by our senior executive officers.
Our compensation program is evaluated annually for its effectiveness and alignment with the Company’s goals without promoting excessive risk.
Senior executive compensation is weighted toward long-term incentives, thereby providing senior executives with an ongoing, multi-year focus of attention.
The performance measures that are the basis of incentive awards are approved each year by an independent committee of the Board.
The long-term incentive equity awards to senior executives generally have three-year vesting periods and are performance based so that their upside potential and downside risk are aligned with that of our stockholders and promote long-term performance over the vesting period.
The senior executive officers are subject to stock ownership and retention guidelines that are independently set by the Board which are designed for senior executives to assume financial risk that is coincident with our stockholders.
The senior executive officers’ performance incentive measures include safety metrics in order to encourage a strong culture of safety.
COMPENSATION OF2021 EXECUTIVE OFFICERS
Summary.COMPENSATION
The following table summarizes compensation for services to NiSourcethe Company and its affiliates earned by or paid to each of the Named Executive OfficersNEOs during 2015. Information is also provided for 2014 and 2013 if2021. In accordance with SEC disclosure rules, the Named Executive Officer was includedstock awards reported in the table below are reported based on the aggregate grant date fair value and do not represent the amounts actually realized by the NEOs, with the values realized by the NEOs, if any, impacted by the Company’s performance against the pre-established performance goals for PSUs and the Company’s stock price at settlement for all stock awards. Our realized executive pay increased for 2021 as compared to 2020. For illustrative purposes, the 2019 PSUs that vested based on performance through December 31, 2021 and continued service through February 28, 2022, vested at approximately 77% of target, as compared to a PSU vesting level at 55% of target for the PSUs that vested based on performance through December 31, 2020.
2021 Summary Compensation Table
for those years.2015 Summary Compensation Table
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
| Name and Principal Position | | Year | | | Salary ($)(1) | | | Bonus ($)(2) | | | Stock
Awards ($)(3) | | | Non-equity
Incentive Plan
Compensation ($)(4) | | Change in
Pension Value and
Non-qualified
Deferred
Compensation
Earnings ($)(5) | | All Other
Compensation ($)(6) | | Total ($) | |
Joseph Hamrock | | | 2015 | | | | 650,000 | | | | 5,750 | | | | 1,764,675 | | | 594,250 | | — | | 59,572 | | | 3,074,247 | |
President and CEO | | | 2014 | | | | 487,500 | | | | 400,000 | | | | 633,801 | | | 357,500 | | — | | 48,930 | | | 1,927,731 | |
| | | 2013 | | | | 461,667 | | | | — | | | | 532,540 | | | 418,535 | | — | | 46,529 | | | 1,459,271 | |
Donald E. Brown | | | 2015 | | | | 332,386 | | | | 103,079 | | | | 1,189,097 | | | 221,921 | | — | | 108,405 | | | 1,954,888 | |
Executive Vice President, CFO
and Treasurer | | | — | | | | — | | | | — | | | | — | | | — | | — | | — | | | — | |
| | | — | | | | — | | | | — | | | | — | | | — | | — | | — | | | — | |
Jim L. Stanley | | | 2015 | | | | 512,500 | | | | — | | | | 904,605 | | | 349,281 | | — | | 307,937 | | | 2,074,323 | |
Executive Vice President and
Chief Operating Officer | | | — | | | | — | | | | — | | | | — | | | — | | — | | — | | | — | |
| | | — | | | | — | | | | — | | | | — | | | — | | — | | — | | | — | |
Carrie J. Hightman | | | 2015 | | | | 490,000 | | | | — | | | | 690,473 | | | 346,920 | | 84,693 | | 45,540 | | | 1,657,626 | |
Executive Vice President and
Chief Legal Officer | | | 2014 | | | | 483,750 | | | | 300,000 | | | | 679,059 | | | 408,660 | | 62,395 | | 47,520 | | | 1,981,384 | |
| | | 2013 | | | | 475,000 | | | | — | | | | 665,663 | | | 384,750 | | 55,232 | | 49,274 | | | 1,629,919 | |
Violet Sistovaris | | | 2015 | | | | 360,000 | | | | — | | | | 533,252 | | | 239,100 | | 98,188 | | 36,166 | | | 1,266,706 | |
Executive Vice President,
NIPSCO | | | — | | | | — | | | | — | | | | — | | | — | | — | | — | | | — | |
| | | — | | | | — | | | | — | | | | — | | | — | | — | | — | | | — | |
Robert C. Skaggs, Jr(7) | | | 2015 | | | | 490,000 | | | | — | | | | 3,452,967 | | | —(8) | | 388,949 | | 30,728 | | | 4,362,644 | |
Former President and Chief
Executive Officer | | | 2014 | | | | 946,667 | | | | 1,785,000 | | | | 3,395,356 | | | 1,715,000 | | 357,545 | | 82,471 | | | 8,282,039 | |
| | | 2013 | | | | 900,000 | | | | — | | | | 2,662,652 | | | 1,224,000 | | 306,743 | | 85,625 | | | 5,179,020 | |
Stephen P. Smith(7) | | | 2015 | | | | 300,000 | | | | — | | | | 1,381,195 | | | —(8) | | 105,424 | | 15,500 | | | 1,802,119 | |
Former Executive Vice President
and CFO | | | 2014 | | | | 589,583 | | | | 750,000 | | | | 1,222,343 | | | 579,600 | | 80,415 | | 52,993 | | | 3,274,934 | |
| | | 2013 | | | | 575,000 | | | | — | | | | 1,109,438 | | | 539,350 | | 70,691 | | 52,436 | | | 2,346,915 | |
Glen L. Kettering(7) | | | 2015 | | | | 250,000 | | | | — | | | | 736,629 | | | —(8) | | 109,528 | | 221,213 | | | 1,317,370 | |
Former Executive Vice President
and Group CEO | | | 2014 | | | | 448,333 | | | | 600,000 | | | | 908,914 | | | 426,000 | | 109,019 | | 299,848 | | | 2,792,114 | |
| | | 2013 | | | | 340,000 | | | | 500,000 | | | | 443,775 | | | 275,400 | | 120,229 | | 68,226 | | | 1,747,630 | |
| | Joseph Hamrock
President and CEO* | | | 2021 | | | 1,025,000 | | | — | | | 6,953,903 | | | 1,470,840 | | | — | | | 86,039 | | | 9,535,782 | |
| | 2020 | | | 1,000,000 | | | — | | | 4,901,916 | | | 480,000 | | | — | | | 75,809 | | | 6,457,725 | |
| | 2019 | | | 1,000,000 | | | — | | | 4,828,893 | | | 720,000 | | | — | | | 79,797 | | | 6,628,690 | |
| | Donald E. Brown
EVP, CFO and
President, NCS | | | 2021 | | | 615,000 | | | — | | | 1,738,219 | | | 520,000 | | | — | | | 59,722 | | | 2,932,941 | |
| | 2020 | | | 600,000 | | | — | | | 3,084,923 | | | 180,000 | | | — | | | 52,003 | | | 3,916,926 | |
| | 2019 | | | 589,583 | | | — | | | 1,225,890 | | | 279,000 | | | — | | | 53,933 | | | 2,148,406 | |
| | Pablo A. Vegas
EVP, COO and
President, NiSource
Utilities | | | 2021 | | | 615,000 | | | — | | | 1,788,910 | | | 565,000 | | | — | | | 43,727 | | | 3,012,637 | |
| | 2020 | | | 600,000 | | | — | | | 3,084,923 | | | 180,000 | | | — | | | 36,000 | | | 3,900,923 | |
| | 2019 | | | 568,750 | | | — | | | 1,225,890 | | | 279,000 | | | — | | | 36,969 | | | 2,110,609 | |
| | Violet G. Sistovaris
EVP and Chief Experience Officer | | | 2021 | | | 512,500 | | | — | | | 1,448,508 | | | 475,000 | | | 34,901 | | | 48,019 | | | 2,518,928 | |
| | 2020 | | | 500,000 | | | — | | | 948,726 | | | 150,000 | | | 275,913 | | | 41,925 | | | 1,916,564 | |
| | 2019 | | | 488,670 | | | — | | | 835,838 | | | 217,000 | | | 259,309 | | | 43,843 | | | 1,844,660 | |
| | Charles E. Shafer
SVP and Chief Safety Officer** | | | 2021 | | | 358,750 | | | — | | | 821,127 | | | 240,000 | | | 54,151 | | | 25,507 | | | 1,499,535 | |
*
| Mr. Hamrock retired from his officer and Board positions effective February 14, 2022. Mr. Yates, a member of our Board, was appointed President and CEO as of such date. |
**
| Mr. Shafer was not an NEO during 2019 or 2020. |
(1)
| SalaryAny salary deferred at the election of the Named Executive OfficerNEO is reported as salary in the category and year in which such salary was earned.
|
(2)
| This column shows discretionary bonus payouts that are in addition to any amounts paid under the Incentive Plan described in footnote (4) to this table. These bonus amounts consist of a sign-on bonus of $75,000 and discretionary bonus of $28,079 to Mr. Brown and a $5,750 discretionary payment to Mr. Hamrock as described in the Compensation Discussion and Analysis — Compensation Committee Actions Related to 2015 Compensation — “2015 Discretionary Payments to Mr. Brown and Mr. Hamrock.”
|
(3) | For a discussion of stock awards granted in 2015,2021, please see the LTI section above in the CD&A under “Executive Compensation Discussion and Analysis — “LTIP Awards,” aboveElements” and the 2021 Grants of Plan-Based Awards Table. ThisAmounts reported in this column showsfor 2021 represent the aggregate grant date fair value, computed in accordance with FASB ASC Topic 718, with respect to the PSUs and RSUs granted in 2021. The grant date fair value of the restricted stock units granted in 2015RSUs is calculated based on the average market price of our common stock on the grant date, less the present value of any dividends not received during the vesting period. With respect to the PSUs subject to NOEPS goals, grant date fair value is based on the closing stock price of our common stock at grant date. With respect to the PSUs subject to the RTSR goals, grant date fair value is calculated based on a Monte Carlo valuation technique in accordance with FASB ASC Topic 718. All of the PSUs are subject to performance conditions; therefore, the value reported in this column for these awards is based upon the probable outcome of such conditions. |
2022 Proxy Statement | 49 TABLE OF CONTENTS
2021 EXECUTIVE COMPENSATION
| The following table shows the value of the 2021 PSUs reported in the 2021 Summary Compensation Table at the grant date assuming that the highest level of performance conditions will be achieved and less the present value of any dividends not received in the vesting period. For information on the valuation assumptions used in these computations, see Note 1314 to our consolidated financial statements included in our 20152021 Annual Report on Form 10-K. |
| | Joseph Hamrock | | | 15,556,247 | |
| | Donald E. Brown | | | 3,885,611 | |
| | Pablo A. Vegas | | | 3,998,867 | |
| | Violet G. Sistovaris | | | 3,237,935 | |
| | Charles E. Shafer | | | 1,075,962 | |
(3)
| For 2021, the total Incentive PlanSTI amount for each of the Named Executive Officers reflected in the column entitled Non-Equity Incentive Plan Compensation wasNEO is based upon the sum of two six-month performance periods, with the same corporate performance measures (but excluding business unit measures for the second half of 2015), but different performance goals in the second half.performance. For more information regarding 20152021 corporate performance and first half business unit performance, second half performance goals, Incentive Planthe 2021 STI payout opportunities for the Named Executive OfficersNEOs and the payout amounts, please see the “2021 Short-Term Incentive (STI) Program” section in the CD&A under “Executive Compensation Discussion and Analysis — “Compensation Committee Actions Related to 2015 Compensation — Annual Performance-Based Cash Incentives” and the discussion on the pages that follow.Elements” above. |
(5)(4)
| This column shows the change in the present value of each pension eligible Named Executive Officer’sparticipating NEO’s accumulated benefits under our tax-qualified pension plans and the non-qualified Pension Restoration Plan as a result of annual pay and interest credits to their account balance under the plans as described in the narrative to the 2021 Pension Benefits Table. Ms. Sistovaris and Mr. Shafer are the only NEOs eligible to participate in our pension plans. Messrs. Hamrock, Brown, and StanleyVegas are not eligible to participate the Company’sin our pension plans.plans due to their hire dates. For a description of these plans and the basis used to develop the present values, see the 2021 Pension Benefits Table and accompanying narrative. No earnings on deferred compensation are shown in this column since no earnings were above market or preferential. |
(6)(5)
| The table below provides a breakdown of the amounts shown in the “All Other Compensation” column for each Named Executive OfficerNEO in 2015. 2021. |
| | | | | | | | | | | | | | | | | | | | |
| | | Other Compensation | | | | |
| Name | | Perquisites & Personal Benefits(a) ($) | | | Tax Gross-Ups(b) ($) | | | Company Contributions
To 401(k) Plan(c) ($) | | | Company Contributions To Savings Restoration Plan(d) ($) | | | Total ($) | |
Joseph Hamrock | | | 14,072 | | | | — | | | | 18,550 | | | | 26,950 | | | | 59,572 | |
Donald E. Brown | | | 53,502 | | | | 34,960 | | | | 15,900 | | | | 4,043 | | | | 108,405 | |
Jim L. Stanley | | | 191,896 | | | | 80,166 | | | | 18,550 | | | | 17,325 | | | | 307,937 | |
Carrie J. Hightman | | | 11,240 | | | | — | | | | 18,550 | | | | 15,750 | | | | 45,540 | |
Violet Sistovaris | | | 10,966 | | | | — | | | | 18,550 | | | | 6,650 | | | | 36,166 | |
Robert C. Skaggs, Jr. | | | 15,178 | | | | — | | | | 15,550 | | | | (f) | | | | 30,728 | |
Stephen P. Smith | | | (e) | | | | — | | | | 15,500 | | | | (f) | | | | 15,500 | |
Glen L. Kettering | | | 206,213 | | | | — | | | | 15,000 | | | | (f) | | | | 221,213 | |
| | Joseph Hamrock | | | 13,161 | | | 20,619 | | | 52,259 | | | 86,039 | |
| | Donald E. Brown | | | 15,995 | | | 20,619 | | | 23,108 | | | 59,722 | |
| | Pablo A. Vegas | | | — | | | 20,619 | | | 23,108 | | | 43,727 | |
| | Violet G. Sistovaris | | | 11,580 | | | 20,619 | | | 15,820 | | | 48,019 | |
| | Charles E. Shafer | | | — | | | 20,619 | | | 4,888 | | | 25,507 | |
(a)
| (a) | All perquisites are valued based on the aggregate incremental cost to the Company, as required by the rules of the SEC. Please see Compensation Discussion and Analysis —the “Other Compensation and Benefits —– Perquisites” section above in the CD&A under “Executive Compensation Elements” for additional information about the perquisites provided bywe provide to the Company to its Named Executive Officers.NEOs. The perquisite amounts listed include financial planning and tax services as follows: Mr. Hamrock, $14,072; Mr. Brown, $4,942; Mr. Stanley, $11,857; Ms. Hightman, $11,240; Ms. Sistovaris, $10,858 and Mr. Skaggs $8,153; Mr. Kettering, $6,823; travel expenses as follows: Mr. Stanley, $83,940; Mr. Skaggs $7,025; and Mr. Kettering, $199,259; living expense as follows: Mr. Stanley, $6,691; relocation expenses as follows: Mr. Brown, $48,560 and Mr. Stanley, $87,303; and taxable gifts as follows: Ms. Sistovaris $108; and Mr. Kettering, $131; personal commercial flight as follows: Mr. Stanley, $2,105. The travel expense amounts provided for Mr. Stanley and Mr. Kettering were calculated by the Company based on the incremental variable operating costs associated with the usesome of the Company-leased aircraft to commute to the executive’s office, which includes an hourly use rate, fuel rate and other flight-related fees and expenses. Executives are responsible for all taxes associated with the use of the Company aircraft for this purpose. The relocation expense amounts provided are the actual amounts paid for services required to complete a household goods move. |
| (b) | Messrs.NEOs: Joseph Hamrock, Donald Brown and Stanley each received compensation of $34,960 and $80,166 respectively for taxes in connection with Company-paid relocation expenses, consistent with Company practice for all employees who receive Company-paid relocation expenses.
Violet Sistovaris. |
(b)
| (c) | This column reflects Company matching contributions and profit sharingprofit-sharing contributions made on behalf of each of the Named Executive OfficersNEOs and a Company non-elective contribution of 3% of compensation on behalf of Mr. Hamrock, Mr. Brown, and Mr. StanleyVegas to the 401(k) Plan. The 401(k) Plan is a tax-qualified defined contribution plan, as described above under Compensation Discussion and Analysis —in the “Other Compensation and Benefits —– Savings Programs.” Programs” section in the CD&A under “Executive Compensation Elements”. |
(c)
| (d) | This column reflects Company matching contributions and profit sharingprofit-sharing contributions made on behalf of all eligible Named Executive OfficersNEOs and a Company non-elective contribution of 3% of compensation on behalf of Mr.Messrs. Hamrock, Mr. Brown, and Mr. StanleyVegas in excess of IRS limits to the Savings Restoration Plan. The Savings Restoration Plan is a non-qualified defined contribution plan, as described above under Compensation Discussion and Analysis —in the “Other Compensation and Benefits —– Savings Programs,”Programs” section in the CD&A under “Executive Compensation Elements” above, and in the narrative following the 20152021 Non-qualified Deferred Compensation Table. |
50 | 2022 Proxy Statement TABLE OF CONTENTS
| (e) | Pursuant to SEC rules, perquisites and personal benefits are not reported for any Named Executive Officer for whom such amounts were less than $10,000 in aggregate for 2015.
|
| (f) | Messrs. Skaggs, Smith and Kettering were not employed by the Company on December 31, 2015, and thus were not eligible to receive Company contributions for 2015 under the terms of the Savings Restoration Plan.
|
(7) | All data shown for Messrs. Skaggs, Smith and Kettering was earned, paid or granted in the first half of 2015, prior to the Separation. In connection with their terminations of employment from the Company at the time of Separation, the 2015 equity grants to Messrs. Skaggs, Smith and Kettering were forfeited, as detailed in the Compensation Discussion and Analysis — “LTIP Awards.”
|
(8) | Messrs. Skaggs, Smith and Kettering were not eligible to receive an Incentive Plan payout for 2015, because they were not employed with the Company on December 31, 2015, as described in footnote (1) to the table included in the Compensation Discussion and Analysis — “Pre-Separation Annual Performance-Based Incentive Ranges.”
|
20152021 EXECUTIVE COMPENSATION
2021 Grants of Plan-Based Awards
The following table sets forth information concerning plan-based awards granted under the
2020 Omnibus Plan to the
Named Executive OfficersNEOs in
2015. The grants reported in the table that occurred prior to the Separation reflect the number of shares subject to the Awards on the grant date and do not reflect the adjustments to the awards in connection with the Separation. No performance shares were granted in 2015. Please see the Compensation Discussion and Analysis for further information regarding the impact of the Separation on the Company’s equity awards. | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | Estimated Future Payouts
Under Non-Equity Incentive Plan Awards(1) | | | Estimated Future Payouts
Under Equity Incentive Plan Awards | | All Other Stock
Awards Number of Shares of Stock or Units (#) | | Grant Date Fair Value
of Stock and
Option Awards ($)(2) |
| Name | | Grant Date | | Approval Date | | Threshold
($) | | | Target ($) | | | Maximum
($) | | | Threshold
(#) | | Target (#) | | Maximum
(#) | | |
Joseph Hamrock | | Pre-Separation | | Pre-Separation | | | 62,500 | | | | 162,500 | | | | 262,500 | | | — | | — | | — | | — | | — |
| | Post-Separation | | Post-Separation | | | 160,000 | | | | 400,000 | | | | 660,000 | | | — | | — | | — | | — | | — |
| | 01/29/2015 | | 01/29/2015 | | | — | | | | — | | | | — | | | — | | — | | — | | 22,894(3)(4) | | 920,651 |
| | 07/13/2015 | | 06/02/2015 | | | — | | | | — | | | | — | | | — | | — | | — | | 58,858(5) | | 844,024 |
Donald E. Brown | | Pre-Separation | | Pre-Separation | | | 26,847 | | | | 64,432 | | | | 102,017 | | | — | | — | | — | | — | | — |
| | Post-Separation | | Post-Separation | | | 56,250 | | | | 135,000 | | | | 213,750 | | | — | | — | | — | | — | | — |
| | 04/06/2015 | | 04/06/2015 | | | — | | | | — | | | | — | | | — | | — | | — | | 16,790(3)(4) | | 700,596 |
| | 04/06/2015 | | 04/06/2015 | | | — | | | | — | | | | — | | | — | | — | | — | | 11,417(6) | | 488,501 |
Jim L. Stanley | | Pre-Separation | | Pre-Separation | | | 62,500 | | | | 162,500 | | | | 262,500 | | | — | | — | | — | | — | | — |
| | Post-Separation | | Post-Separation | | | 78,750 | | | | 196,875 | | | | 315,000 | | | — | | — | | — | | — | | — |
| | 01/29/2015 | | 01/29/2015 | | | — | | | | — | | | | — | | | — | | — | | — | | 18,315(3)(4) | | 736,512 |
| | 07/13/2015 | | 06/02/2015 | | | — | | | | — | | | | — | | | — | | — | | — | | 11,772(5) | | 168,093 |
Carrie J. Hightman | | Pre-Separation | | Pre-Separation | | | 61,250 | | | | 147,000 | | | | 232,750 | | | — | | — | | — | | — | | — |
| | Post-Separation | | Post-Separation | | | 61,250 | | | | 147,000 | | | | 232,750 | | | — | | — | | — | | — | | — |
| | 01/29/2015 | | 01/29/2015 | | | — | | | | — | | | | — | | | — | | — | | — | | 17,170(3)(4) | | 690,473 |
Violet Sistovaris | | Pre-Separation | | Pre-Separation | | | 32,000 | | | | 80,000 | | | | 128,000 | | | — | | — | | — | | — | | — |
| | Post-Separation | | Post-Separation | | | 50,000 | | | | 130,000 | | | | 210,000 | | | — | | — | | — | | — | | — |
| | 01/29/2015 | | 01/29/2015 | | | — | | | | — | | | | — | | | — | | — | | — | | 8,013(3)(4) | | 322,239 |
| | 07/13/2015 | | 06/02/2015 | | | — | | | | — | | | | — | | | — | | — | | — | | 14,715(5) | | 211,013 |
Robert C. Skaggs, Jr. | | Pre-Separation | | Pre-Separation | | | 245,000 | | | | 612,500 | | | | 980,000 | | | — | | — | | — | | — | | — |
| | 01/29/2015 | | 01/29/2015 | | | — | | | | — | | | | — | | | — | | — | | — | | 85,852(3)(7) | | 3,452,967 |
Stephen P. Smith | | Pre-Separation | | Pre-Separation | | | 90,000 | | | | 210,000 | | | | 330,000 | | | — | | — | | — | | — | | — |
| | 01/29/2015 | | 01/29/2015 | | | — | | | | — | | | | — | | | — | | — | | — | | 34,341(3)(7) | | 1,381,195 |
Glen L. Kettering | | Pre-Separation | | Pre-Separation | | | 62,500 | | | | 150,000 | | | | 237,500 | | | — | | — | | — | | — | | — |
| | 01/29/2015 | | 01/29/2015 | | | — | | | | — | | | | — | | | — | | — | | — | | 18,315(3)(7) | | 736,629 |
| | Joseph Hamrock | | | — | | | 494,400 | | | 1,236,000 | | | 1,977,600 | | | — | | | — | | | — | | | — | | | — | |
| | 1/29/2021 | | | — | | | — | | | — | | | 39,006 | | | 173,362 | | | 346,724 | | | — | | | 3,898,045 | |
| | 1/29/2021 | | | — | | | — | | | — | | | 29,038 | | | 108,352 | | | 216,704 | | | — | | | 2,231,060 | |
| | 1/29/2021 | | | — | | | — | | | — | | | — | | | — | | | — | | | 43,342 | | | 824,798 | |
| | Donald E. Brown | | | — | | | 185,400 | | | 463,500 | | | 741,600 | | | — | | | — | | | — | | | — | | | — | |
| | 1/28/2021 | | | — | | | — | | | — | | | 9,743 | | | 43,302 | | | 86,604 | | | — | | | 974,078 | |
| | 1/28/2021 | | | — | | | — | | | — | | | 7,253 | | | 27,064 | | | 54,128 | | | — | | | 557,275 | |
| | 1/28/2021 | | | — | | | — | | | — | | | — | | | �� | | | — | | | 10,825 | | | 206,866 | |
| | Pablo A. Vegas | | | — | | | 197,760 | | | 494,400 | | | 791,040 | | | — | | | — | | | — | | | — | | | — | |
| | 1/28/2021 | | | — | | | — | | | — | | | 10,027 | | | 44,564 | | | 89,128 | | | — | | | 1,002,467 | |
| | 1/28/2021 | | | — | | | — | | | — | | | 7,465 | | | 27,853 | | | 55,706 | | | — | | | 573,519 | |
| | 1/28/2021 | | | | | | | | | | | | — | | | — | | | — | | | 11,142 | | | 212,924 | |
| | Violet G. Sistovaris | | | — | | | 154,500 | | | 386,250 | | | 618,000 | | | — | | | — | | | — | | | — | | | — | |
| | 1/28/2021 | | | — | | | — | | | — | | | 8,119 | | | 36,084 | | | 72,168 | | | — | | | 811,710 | |
| | 1/28/2021 | | | — | | | — | | | — | | | 6,044 | | | 22,553 | | | 45,106 | | | — | | | 464,388 | |
| | 1/28/2021 | | | — | | | — | | | — | | | — | | | — | | | — | | | 9,022 | | | 172,410 | |
| | Charles E. Shafer | | | — | | | 86,520 | | | 216,300 | | | 346,080 | | | — | | | — | | | — | | | — | | | — | |
| | 1/28/2021 | | | — | | | — | | | — | | | 2,557 | | | 11,366 | | | 22,732 | | | — | | | 255,678 | |
| | 1/28/2021 | | | — | | | — | | | — | | | 2,176 | | | 8,119 | | | 16,238 | | | — | | | 167,182 | |
| | 1/28/2021 | | | — | | | — | | | — | | | — | | | — | | | — | | | 4,872 | | | 93,104 | |
| | 1/28/2021 | | | — | | | — | | | — | | | — | | | — | | | — | | | 15,787 | | | 305,163 | |
(1)
| The information in the “Threshold,” “Target,” and “Maximum” columns reflects potential payouts based on the performance targets set under the 2015 Incentive Plan.STI. The amounts actually paid appear in the “Non-Equity Incentive Plan Compensation” column of the 20152021 Summary Compensation Table. For 2015,a description of the performance year was divided into two six-month performance periods and corresponding metrics: prior toSTI, please see the Separation, shown“2021 Short-Term Incentive (STI) Program” section above in the Pre-Separation row, and following the Separation, shownCD&A under “Executive Compensation Elements.” |
(2)
| The information in the Post-Separation row. The amounts reported“Threshold,” “Target,” and “Maximum” columns reflects the potential share payouts under the portion of the 2021 LTI award granted in the Post-Separation row reflect increases inform of PSUs (for the base salaryannual program, PSUs represented 80% of the LTI award for Hamrock, Brown, Sistovaris, and incentive rangesVegas and 70% of the award for each Named Executive Officer that assumed additional duties followingShafer; for the Separation.special grant, PSUs represented 100% of the LTI award for all). The actual number of PSUs earned is partially determined based on Company performance over a two-year performance period from 2021-2022 and partially determined over a three-year performance period from 2021 through 2023. In addition, the PSUs are subject to a service-based vesting condition until February 28, 2023 and February 28, 2024. Under the terms of the 2015 Incentive Plan, Messrs. Skaggs, SmithPSU awards, the PSUs will be earned based on achievement of goals relating to NOEPS and Kettering were each eligible for an awardrelative total shareholder return, subject to a +/-20% safety modifier, +/-10% environmental modifier, and +/-10% workforce diversity modifier. The amount reported in the “Threshold” column represents the minimum level of the PSUs that may vest based on the achievement of the threshold RTSR goal and a -20% safety modifier for the Pre-Separation performance period, but each forfeited his award because he failed to satisfy2-year program and the service conditionthreshold NOEPS goal and threshold RTSR goal, -20% safety modifier, -10% environmental modifier, and -10% workforce diversity modifier for the award since his employment ended3-year program. The amount reported in connection with the Separation. For a description“Target” column represents target achievement of the 2015 Incentive Plan,NOEPS and RTSR goals. The amount reported in the “Maximum” column represents maximum achievement of the maximum RTSR goal and a +20% safety modifier for the 2-year program and the maximum NOEPS goal and threshold RTSR goal, +20% safety modifier, +10% environmental modifier, and +10% workforce diversity modifier for the 3-year program. Please note that this maximum is capped at 200%. For further information regarding these awards, please see the “2021 Long-Term Incentive (LTI) Program” section above in the CD&A under “Executive Compensation Discussion and Analysis — “Annual Performance-Based Cash Incentive Plan” and “Compensation Committee Actions Related to 2015 Compensation — Annual Performance-Based Cash Incentives.Elements.” |
(2)(3)
| Represents the portion of the 2021 LTI award granted in the form of RSUs (20% of the LTI award for Hamrock, Brown, Sistovaris, Vegas and 30% for Shafer). These awards will vest on February 28, 2024 (with a portion of Shafer’s award |
2022 Proxy Statement | 51
TABLE OF CONTENTS
2021 EXECUTIVE COMPENSATION
vesting January 28, 2024), provided the executive continues to be employed by us through that date, as described in the “2021 Long-Term Incentive (LTI) Program” section above in the CD&A under “Executive Compensation Elements.” For more information regarding these awards, please see the “2021 Long-Term Incentive (LTI) Program” section in the CD&A under “Executive Compensation Elements.”
(4)
| Amounts reported in this column represent the aggregate grant date fair value, computed in accordance with FASB ASC Topic 718, of restricted stock unitswith respect to the PSUs and RSUs granted in 20152021. The grant date fair value of the RSUs is calculated based on the average market price of our common stock on the grant date, and less the present value of any dividends not received during the vesting period. |
(3) | Represents the 2015 annual long-term equity awards in the form of service-based restricted stock units. These awards will vest on February 2, 2018, provided the executive continues to be employed by the Company on that date, as described in the Compensation Discussion and Analysis — “LTIP Awards.” These awards were granted on January 29, 2015, except for Mr. Brown’s award, which was granted on April 6, 2015, the date he joined the Company.
|
(4) | Represents number of shares granted prior With respect to the Separation. Outstanding awardsPSUs subject to NOEPS goals, grant date fair value is based on the closing stock price of our common stock at grant date. With respect to the time of Separation were adjustedPSUs subject to preserve the intrinsic aggregateRTSR goals, grant date fair value is calculated based on a Monte Carlo valuation technique in accordance with FASB ASC Topic 718. Additionally, all of the awards priorPSUs are subject to performance conditions and the Separation. The number of shares were adjusted as follows: Mr. Hamrock 62,972; Mr. Brown 46,183; Mr. Stanley 50,377; Ms. Hightman 47,228; and Ms. Sistovaris 22,041.
|
(5) | Represents equity awardsvalues reported in the form of incremental service-based restricted stock units approved prior to the Separation and granted on July 13, 2015, in connection with the assumption of additional responsibilities following the Separation. These awards will vest on February 2, 2018, provided the executive continues to be employed by the Company on that date. For further information regarding these awards, please see the Compensation Discussion and Analysis — “LTIP Awards.”
|
(6) | Represents a special equity grant of service-based restricted stock units awarded upon joining the Company on April 6, 2015, of which 3,767 units (or, 10,362 units, as adjustedthis column for the Separation) will vest on April 6, 2016, and 7,650 units (or, 21,042 units, as adjusted forPSU awards are based upon the Separation) will vest on April 6, 2017, provided Mr. Brown continues to be employed by the Company on the applicable vesting date. For further information regarding these awards, please see the Compensation Discussion and Analysis — “LTIP Awards.”
probable outcome of such conditions. |
(7) | In connection with their terminations of employment from the Company at the time of the Separation, the 2015 equity grants to Messrs. Skaggs, Smith and Kettering were forfeited.
|
Outstanding Equity Awards at
20152021 Fiscal Year-End
As discussed in the Compensation Discussion and Analysis, the outstanding equity awards of NiSource at the time of the Separation were adjusted to preserve the intrinsic aggregate value of the awards prior to the Separation.
The following table sets forth information at fiscal year-end concerning outstanding grants of equity awards to the
Named Executive Officers, as adjusted at the timeNEOs. At fiscal year-end, none of
the Separation. None of the Named Executive Officers hasour NEOs held any outstanding
options or unvested performance shares as of December 31, 2015.option awards with respect to the Company.Name | | Number of Securities
Underlying
Unexercised
Options
Exercisable
(#)
| | Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)
| | Option
Exercise
Price
($)
| | Option
Expiration
Date
| | Number of
Shares or
Units of Stock
Stock That Have
Have (#)
| | | Market
Value of
Shares or
Units of Stock
Stock That Have
Have ($)(1)
| | | Plan Awards:
Number of
Unearned
Shares,
Units or Other
Rights that Have
Not Vested
(#)
| | | Equity Incentive
Plan Awards:
Market or Payout
Value of Unearned
Shares, Units or Other
Rights
That Have
($)(2) | | Equity
Incentive
Plan Awards
Market or
Payout Value of
Unearned
Shares,
Units or
Other Rights
That Have
Not Vested
($)
|
| Joseph Hamrock | | — | 111,235(3) | — | | —3,071,198 | | — | — | | 117,085(2) | — | | | 2,284,328 | | | — | | — |
| | 74,087(4) | — | | —2,045,542 | | — | — | — | | — | 75,870(3) | | | | 1,480,224 | | | — | | — |
| | | — | | — | | — | | — | | | 62,972(4)(5) | | | 1,738,657 | 1,228,584 | | — | — | | — | |
| | | — | | — | | — | | — | | | 58,858(5)(6) | | | 1,625,069 | 1,148,320 | | — | — | | — | |
| 32,102(7) | | | 886,336 | | | — | | | — | |
| | 30,024(8) | | | 828,963 | | | — | | | — | |
| | 43,342(9) | | | 1,196,673 | | | — | | | — | |
| | 98,901(11) | | | 2,730,657 | | | — | | | — | |
| | — | | | — | | | 120,095(12) | | | 3,315,823 | |
| | — | | | — | | | 173,362(13) | | | 4,786,525 | |
| | — | | | — | | | 108,352(14) | | | 2,991,599 | |
| | Donald E. Brown | | — | 8,065(7) | — | | —222,675 | | — | — | | 46,183(4) | — | | | 901,030 | | | — | | — |
| | 7,904(8) | — | | —218,229 | | — | — | — | | — | 31,404(6) | | | | 612,692 | | | — | | — |
Jim L. Stanley
| 10,825(9) | — | | —298,878 | | — | — | — | | — | 117,085(2) | | | | 2,284,328 | | | — | | — |
| | 34,364(10) | — | | —948,790 | | — | — | — | | — | 75,870(3) | | | | 1,480,224 | | | — | | — |
| | 24,846(11) | — | | —685,998 | | — | — | — | | — | 50,377(4) | | | | 982,855 | | | — | | — |
| | — | — | | — | | — | 31,615(12) | — | | 872,890 | 11,772(5) | | | | 229,672 | | | — | | — |
Carrie J. Hightman
| — | — | | — | | — | 43,302(13) | — | | 1,195,568 | 146,353(2) | | | | 2,855,347 | | | — | | — |
| | — | — | | — | | — | 27,064(14) | — | | 747,237 | 81,288(3) | | | | 1,585,929 | | | — | | — |
| | Pablo A. Vegas | — | | —8,065(7) | | — | 222,675 | — | | — | 47,228(4) | | — | | 921,418 | | | — | | — |
Violet Sistovaris
| 7,904(8) | — | | —218,229 | | — | — | — | | — | 63,419(2) | | | | 1,237,305 | | | — | | — |
| | 11,142(9) | — | | —307,631 | | — | — | — | | — | 37,935(3) | | | | 740,112 | | | — | | — |
| | 34,364(10) | — | | —948,790 | | — | — | — | | — | 22,041(4) | | | | 430,020 | | | — | | — |
| | 24,846(11) | | | 685,998 | | | — | | | — | 14,715(5) | | | | 287,090 | | | | | |
Robert C. Skaggs, Jr(10)
| — | — | | — | | — | 31,615(12) | — | | 872,890 | 176,157(7) | | | | 3,436,823 | | | — | | — |
| | — | — | | — | | — | 44,564(13) | — | | 1,230,412 | 128,412(8) | | | | 2,505,318 | | | — | | — |
| | — | — | | — | | — | 27,853(14) | — | | 769,021 | 80,114(9) |
52 | 2022 Proxy Statement TABLE OF CONTENTS
2021 EXECUTIVE COMPENSATION
Glen L. Kettering(10)
| Violet G. Sistovaris | — | | —14,563(4) | | — | 402,084 | — | | — | — | | — | |
| | —21,068(5) | | | —581,687 | | | — | | | — | |
| | 14,715(6) | | | 406,281 | | | — | | | — | |
| | 5,499(7) | | | 151,827 | | | — | | | — | |
| | 5,842(8) | | | 161,298 | | | — | | | — | |
| | 9,022(9) | | | 249,097 | | | — | | | — | |
| | 16,940(11) | | | 467,713 | | | — | | | — | |
| | — | | | — | | | 23,368(12) | | | 645,190 | |
| | — | | | — | | | 36,084(13) | | | 996,279 | |
| | — | | | — | | | 22,553(14) | | | 622,688 | |
| | Charles E. Shafer | | | 1,832(7) | | | 50,582 | | | — | | | — | |
| | 2,062(8) | | | 56,932 | | | — | | | — | |
| | 4,872(9) | | | 134,516 | | | — | | | — | |
| | 5,647(11) | | | 155,914 | | | — | | | — | |
| | 15,787(15) | | | 435,879 | | | — | | | — | ��� |
| | — | | | — | | | 8,247(12) | | | 227,700 | |
| | — | | | — | | | 11,366(13) | | | 313,815 | |
| | — | | | — | | | 8,119(14) | | | 224,166 | |
(1)
| Amounts shown represent the market value of the unvested restricted stock units held byRSUs calculated using the Named Executive Officers based on the closing sale price of our common stock on December 31, 2015,2021, the last trading day of fiscal 2021, which was $19.51$27.61 per share. |
(2)
| Represents restrictedAmounts shown represent the market value of the unvested PSUs calculated using the closing sale price of our common stock units receivedon December 31, 2021, the last trading day of fiscal 2021, which was $27.61 per share.
|
(3)
| The awards shown represent RSUs granted on July 13, 2015, following the conversion of the 2013 Performance Share Awards into restricted stock units. Theseperformance shares in connection with the separation of Columbia Pipeline Group, Inc. from the Company (“the Separation”). The vesting date for these awards vested onwas February 29, 2016. The amounts shown represent the portion of the award the vesting of which has been delayed in accordance with the terms of the award agreements due to the limitations on deductibility under Section 162(m) of the Internal Revenue Code (“Section 162(m) of the Code”). These units are payable in shares of our common stock on the earlier to occur of: the executive’s termination of employment; the date the executive is no longer subject to Section 162(m) of the Code; or the date the RSUs can be paid to the executive and be deductible under Section 162(m) of the Code. |
(3)(4)
| Represents restricted stock units receivedThe awards shown represent RSUs granted on July 13, 2015, following the conversion of the 2014 Performance Share Awards into restricted stock units. Theseperformance shares in connection with the Separation. The vesting date for these awards vest onwas February 28, 2017, provided2017. The amounts shown represent the portion of the award the vesting of which has been delayed in accordance with the terms of the award agreements due to the limitations on deductibility under Section 162(m) of the Code. These units are payable in shares of our common stock on the earlier to occur of: the executive’s termination of employment; the date the executive continuesis no longer subject to Section 162(m) of the Code; or the date the RSUs can be employed bypaid to the Company on that date.
executive and be deductible under Section 162(m) of the Code. |
(4)(5)
| RepresentsThe awards shown represent the 2015 annual long-term equity awards granted in the form of service-based restricted stock units.RSUs in connection with the Separation. These awards vest on February 2, 2018, provided the executive continues to be employed by the Company on that date, as described in the Compensation Discussion and Analysis — “LTIP Awards.” These awardsunits were granted on January 29, 2015, except2015. The vesting date for Mr. Brown’sthese awards was February 2, 2018. The amounts shown represent the portion of the award the vesting of which was grantedhas been delayed in accordance with the terms of the award agreements due to the limitations on April 6, 2015,deductibility under Section 162(m) of the Code. These units are payable in shares of our common stock on the earlier to occur of: the executive's termination of employment; the date he joined the Company.
executive is no longer subject to Section 162(m) of the Code; or the date the RSUs can be paid to the executive and be deductible under Section 162(m) of the Code. |
(5)(6)
| Represents equityThese awards in the form of service-based restricted stock unitsshown represent RSUs granted on July 13, 2015, in connection with the assumption of additional responsibilities followingin connection with the Separation. The vesting date for these awards was February 2, 2018. The amounts shown represent the portion of the award the vesting of which has been delayed in accordance with the terms of the award agreements due to the limitation on deductibility under Section 162(m) of the Code. These units are payable in shares of our common stock on the earlier to occur of: the executive's termination of employment; the date the executive is not subject to Section 162(m) of the Code; or the date the RSUs can be paid to the executive and be deductible under Section162(m) of the Code.
|
2022 Proxy Statement | 53 TABLE OF CONTENTS
2021 EXECUTIVE COMPENSATION
(7)
| The awards shown represent RSUs granted on January 31, 2019, except for Mr. Hamrock's award, which was granted on February 1, 2019. These RSUs vested on February 28, 2022. |
(8)
| The awards shown represent RSUs granted on January 30, 2020, except for Mr. Hamrock's award, which was granted on January 31, 2020. These shares will vest on February 2, 2018,28, 2023, provided the executive continues to be employed by the Companyus on that date, as described in the Compensation Discussion and Analysis — “LTIP Awards.”date. |
(6)(9)
| Represents a special equityThe awards shown represent RSUs granted on January 28, 2021, except for Mr. Hamrock's award, of service-based restricted stock unitswhich was granted upon joining the Company on April 6, 2015, of which 10,362 unitsJanuary 29, 2021. These shares will vest on April 6, 2016, and 21,042 units will vest on April 6, 2017,February 28, 2024, provided Mr. Brownthe executive continues to be employed by the Companyus on the applicable vesting date, for the reasons explained in the Compensation Discussion and Analysis — “LTIP Awards.”
that date. |
(7)(10)
| AwardThe awards shown represents restricted stock units granted on March 24, 2009, the vestingrepresent special retention awards of which was delayed under the terms of Mr. Skaggs’ award agreement due to the limitations on deductibility under Section 162(m) of the Code. Because he is no longer an employee and the award is deductible as compensation in 2016, the award was paid in shares of common stock on January 4, 2016.
|
(8) | Award shown represents restricted stock unitsservice based RSUs granted on January 22, 2010,30, 2020. The awards vest on January 30, 2024, provided the vesting ofexecutive continues to be employed by us on that date. For more information regarding these awards, please see the “Special Awards” section in the CD&A under “Executive Compensation Elements.”
|
(11)
| The awards shown represent 2019 PSUs granted on January 31, 2019, except for Mr. Hamrock's award, which was delayed undergranted on February 1, 2019. These shares vested after the termscertification of results for the performance period beginning January 1, 2019 through December 31, 2021 for LTI purposes and continued employment through February 28, 2022. |
(12)
| The awards shown represent 2020 PSUs granted on January 30, 2020, except for Mr. Skaggs’Hamrock's award, agreement duewhich was granted on January 31, 2020. The number of shares that will actually vest is dependent upon our performance relative to limitations on deductibility under Section 162(m) ofthree-year performance goals over the Code. Because he is no longer an employee2020-2022 performance period and the award is deductible as compensation in 2016, the award was paid in shares of common stockexecutive's continued employment through February 28, 2023. |
(13)
| The awards shown represent 2021 PSUs granted on January 4, 2016. |
(9) | Award shown represents restricted stock units28, 2021, except for Mr. Hamrock's award, which was granted on March 23, 2010,January 29, 2021. The number of shares that will vest is dependent upon our performance relative to three-year performance goals over the vesting of2021-2023 performance period and the executive's continued employment through February 28, 2024.
|
(14)
| The awards shown represent 2021 PSUs granted on January 28, 2021, except for Mr. Hamrock's award, which was delayed undergranted on January 29, 2021. The number of shares that will vest is dependent upon our performance relative to two-year and three-year performance goals over the terms of Mr. Skaggs’ award agreement due to limitations on deductibility under Section 162(m) of the Code. Because he is no longer an employee2021-2022 performance period and the award is deductible as compensation in 2016,2021-2023 performance period and the award was paid in sharesexecutive's continued employment through February 28, 2024. |
(15)
| The awards shown represent special retention awards of common stockservice based RSUs granted on January 4, 2016. |
(10) | All other equity28, 2021. The awards were forfeited in connection with Messrs. Skaggs, Smith and Kettering’s termination of employment atvest on January 28, 2024, provided the time ofexecutive continues to be employed by us on that date. For more information regarding these awards, please see the Separation, with the exception of Mr. Skaggs’ restricted stock units for which vesting was delayed as noted in above footnotes (7), (8), and (9), as described“Special Awards” section in the CD&A under “Executive Compensation Discussion and Analysis — “LTIP Awards.Elements.”
|
20152021 Option Exercises and Stock Vested
The following table sets forth information
onregarding the
numbervesting of
shares vested and the value received upon vestingstock awards during
20152021. During 2021, none of our NEOs exercised or held option awards with respect to
our Named Executive Officers. None of the
Named Executive Officers exercised any stock options during 2015. | | | | | | | | |
| | | Option Awards | | Stock Awards |
| Name | | Number of Shares
Acquired on Exercise (#) | | Value Realized on
Exercise ($) | | Number of Shares
Acquired on Vesting (#)(1) | | Value Realized on Vesting ($)(2) |
Joseph Hamrock | | — | | — | | 43,710 | | 1,919,306 |
Donald E. Brown | | — | | — | | — | | — |
Jim L. Stanley | | — | | — | | 28,784 | | 1,263,905 |
Carrie J. Hightman | | — | | — | | 58,728 | | 2,578,746 |
Violet Sistovaris | | — | | — | | 25,450 | | 1,117,510 |
Robert C. Skaggs, Jr. | | — | | — | | 234,917 | | 10,315,205 |
Stephen P. Smith | | — | | — | | 97,881 | | 4,297,955 |
Glen L. Kettering | | — | | — | | 39,153 | | 1,719,208 |
| | Joseph Hamrock | | | 77,268 | | | 1,668,989 | |
| | Donald E. Brown | | | 17,127 | | | 369,943 | |
| | Pablo A. Vegas | | | 17,127 | | | 369,943 | |
| | Violet G. Sistovaris | | | 12,620 | | | 272,592 | |
| | Charles E. Shafer | | | 2,885 | | | 62,316 | |
(1)
| RepresentsThe stock awards ofrepresent 2018 performance shares granted on January 26, 2012,share awards, which vested on February 18, 2015, immediately following the certification of Company performance after satisfaction of the service condition on January 30, 2015, except for awards to Messrs. Hamrock and Stanley, which were granted on May 14, 2012, and October 1, 2012, respectively.
28, 2021. |
(2)
| Amounts shown reflect the value realized by the Named Executive Officer upon the vesting of stock which isawards during 2021, computed by multiplying the number of shares that vested by the market value of our common stock on the vesting date. |
54 | 2022 Proxy Statement 2015TABLE OF CONTENTS
2021 EXECUTIVE COMPENSATION
2021 Pension Benefits
| | | | | | |
| Name | | Plan Name | | Number of Years
Credited Service
(#) | | Present Value of
Accumulated Benefit
($) |
Joseph Hamrock(1) | | NiSource Inc. Pension Plan | | — | | — |
| | | Pension Restoration Plan | | — | | — |
Donald E. Brown(1) | | NiSource Inc. Pension Plan | | — | | — |
| | | Pension Restoration Plan | | — | | — |
Jim L. Stanley(1) | | NiSource Inc. Pension Plan | | — | | — |
| | | Pension Restoration Plan | | — | | — |
Carrie J. Hightman | | NiSource Inc. Pension Plan | | 8.1 | | 134,750 |
| | | Pension Restoration Plan | | 8.1 | | 284,087 |
Violet Sistovaris | | NiSource Inc. Pension Plan | | 21.0 | | 832,306 |
| | | Pension Restoration Plan | | 21.0 | | 275,899 |
Robert C. Skaggs, Jr. | | Columbia Energy Group Pension Plan(2) | | 34.0 | | 1,518,496 |
| | | Pension Restoration Plan(3) | | 34.0 | | 4,382,561 |
Stephen P. Smith | | Columbia Energy Group Pension Plan(2) | | 7.1 | | 127,207 |
| | | Pension Restoration Plan(3) | | 7.1 | | 390,233 |
Glen L. Kettering | | Columbia Energy Group Pension Plan(2) | | 36.0 | | 873,663 |
| | | Pension Restoration Plan(3) | | 36.0 | | 625,932 |
The following table provides information regarding pension benefits with respect to our NEOs under the NiSource Inc. Pension Plan and the Pension Restoration Plan.
| | Joseph Hamrock(1) | | | NiSource Inc Pension Plan | | | — | | | — | |
| | Pension Restoration Plan | | | — | | | — | |
| | Donald E. Brown(1) | | | NiSource Inc Pension Plan | | | — | | | — | |
| | Pension Restoration Plan | | | — | | | — | |
| | Pablo A. Vegas(1) | | | NiSource Inc Pension Plan | | | — | | | — | |
| | Pension Restoration Plan | | | — | | | — | |
| | Violet G. Sistovaris | | | NiSource Inc Pension Plan | | | 27.0 | | | 1,420,143 | |
| | Pension Restoration Plan | | | 27.0 | | | 602,060 | |
| | Charles E. Shafer | | | Columbia Energy Group Pension Plan | | | 32.7 | | | 536,311 | |
| | Pension Restoration Plan | | | 32.7 | | | 114,659 | |
(1)
| Because Messrs. Hamrock, Brown and StanleyVegas were hired after January 1, 2010, they are not eligible to participate in any of our defined benefit pension plan sponsored by the Company or its affiliates. plans. |
(2) | Amounts shown are as of June 30, 2015. As a result of the Separation and pursuant to the Employee Matters Agreement entered into by the Company and CPG in connection with the Separation (the “EMA”), on the Separation Date, the Company ceased to have any qualified defined benefit plan benefit liabilities under the NiSource-sponsored qualified defined benefit plans (the “NiSource Plans”) related to any employees whose employment transferred to CPG (including Messrs. Skaggs, Smith and Kettering).
|
(3) | Amounts shown are as of June 30, 2015. As a result of the Separation and pursuant to the EMA, on the Separation Date, the Company ceased to have any Pension Restoration Plan benefit liabilities related to any employees whose employment transferred to CPG (including Messrs. Skaggs, Smith and Kettering).
|
Tax Qualified Pension
Plans The NiSource PlansPlans. Our pension plans consist of several qualifiedmultiple tax-qualified defined benefit pension plans sponsored by the Company and its affiliates for their respective exempt salariedeligible employees hired before January 1, 2010, including certaintwo of the Named Executive Officers.NEOs. Benefits under these plans are funded through and are payable from a trust fund, which consists of contributions we made by the Company and the earnings of the fund. Over a period of years, the contributions are intended to result in overall actuarial solvency of the trust.The specific defined benefit
Ms. Sistovaris and Mr. Shafer are the only NEOs eligible to participate in our pension planplans because they were hired as exempt employees prior to January 1, 2010 (exempt employees hired on or after such date are not eligible to participate in which an employeethese plans).
Ms. Sistovaris participates
generally depends upon the affiliate into which the employee was hired. Mses. Hightman and Sistovaris participate in the NiSource Inc. Pension Plan (the “NiSource
Pension Plan”)
, while Messrs. Skaggs, Smith and
Kettering participatedMr. Shafer participates in
the Columbia Energy Group Pension
Plan (the “CEG“Columbia Plan”). Both the NiSource PensionColumbia Plan and the CEGNiSource Plan previously provided for a “final average pay” benefit (“FAP benefit”) for exempt employees and, alternatively, a cash balance benefit feature (described below). All active exempt employees participating in the NiSource Plans, including the CEGColumbia Plan and the NiSource Pension Plan, who had accrued a benefit under a FAP benefit formula or, alternatively, under the prior cash balance formula, were converted to each plan’s respectivethe current cash balance formula as of January 1, 2011. Mr. SkaggsShafer was participating in the applicable current cash balance benefit formula under the Columbia Plan and Ms. Sistovaris were the only Named Executive Officerswas participating in the FAP benefit formula under the NiSource Plan at the time of the 2011 conversion. Mr. Kettering also previously participated in the FAP benefit formula but was converted to the prior cash balance formula during an earlier choice program. Therefore, Messrs. Skaggs and Kettering’s accrued benefits under the CEG plan as of June 30, 2015, and Ms. Sistovaris’A participant's accrued benefit under the NiSource Plan, wereapplicable plan is equal to theirhis or her cash balance accounts,account, calculated as described below, or, if greater, at the time of retirement, theirhis or her “protected benefit” which is a calculation taking into consideration the accrued benefit under the FAP benefit formula as of the day immediately preceding conversion of the participant’sparticipant's benefit to the cash balance formula (using only service and compensation earned prior to the benefit conversion). Ms. Hightman and Mr. Smith were participating in the applicable current cash balance benefit formula at the time of the 2011 conversion.
Pursuant to the 2011 conversion to the applicable current cash balance feature, each eligible exempt employee who transitioned to the current cash balance feature has a benefit consisting of: (1) an “opening account balance” equal to either (a) in the case of an employee transitioning from a FAP benefit formula, the lump sum actuarial equivalent of histhe participant’s accrued FAP benefit as of the conversion date,date; or (b) in the case of an employee transitioning from the prior cash balance formula, equal to the account balance in such prior cash balance formula as of the conversion date; plus (2) annual pay
2022 Proxy Statement | 55 TABLE OF CONTENTS
2021 EXECUTIVE COMPENSATION
and interest credits to the cash balance account from and after the conversion date. Annual pay credits to a participant’s account under the current cash balance formula equal a percentage of compensation,
taking into accountconsidering the Social Security Taxable Wage Base, based on the participant’s combined age and service for the plan year. The applicable pay credits are listed in the following table:
| | | | | | | | |
Sum of Age Plus Years of Service | | Percentage of Total
Compensation | | | Percentage of Compensation Above 1/2
of the Taxable Wage Base | |
Less than 50 | | | 4.0% | | | | 1.0% | |
50-69 | | | 5.0% | | | | 1.0% | |
70 or more | | | 6.0% | | | | 1.0% | |
| | Less than 50 | | | 4.0% | | | 1.0% | |
| | 50-69 | | | 5.0% | | | 1.0% | |
| | 70 or more | | | 6.0% | | | 1.0% | |
Compensation for purposes of annual pay credits means base pay, any performance-based pay, any “banked” vacation (in the year of vacation payout) and any salary reduction contributions made
for the employee pursuant to a plan maintained by the Company or an affiliate under Sections 125 or 401(k) of the Code, but excluding any amounts deferred to a non-qualified plan
maintained by the Company.we maintain. In accordance with Code limits, the maximum compensation taken into account in determining benefits under the plans with respect to all participants, including
the Named Executive Officers,eligible NEOs, in
20152021 was limited to
$265,000.$290,000. Interest is credited each year to the account based on the interest rate on 30-year Treasury securities, as determined by the IRS, for the September immediately preceding the first day of each year, subject to a minimum interest credit of 4%.
The automatic form of benefit under the cash balance features of both the CEG Plan and the NiSource Pension Plan is a single life annuity in the case of an unmarried participant and a 50% joint and survivor pop-up annuity in the case of a married participant (unreduced for the value of the pop-up feature). Optional forms of payment are available under the pension plans, depending on the plan and the participant’s marital status. Each optional form of benefit is defined in the applicable plan to be the actuarial equivalent of the normal form of benefit defined in the plan.
Under the cash balance
featuresfeature of the
applicable plans,both the NiSource Plan and the Columbia Plan, any participant may take a distribution of his or her vested cash balance account benefit upon termination of employment, without any reduction. Alternatively, if the participant’s accrued benefit is determined by the protected benefit calculation referenced above (
i.e., the protected benefit calculation is greater than the participant’s cash balance account), the participant would receive the protected benefit amount (which may reflect an actuarial or early retirement reduction if the participant elects to
receive ita distribution prior to the normal retirement date as provided in the applicable plan)NiSource and Columbia Plans). Because each of the participating Named Executive Officers now participatesMs. Sistovaris and Mr. Shafer participate in the current cash balance feature of the applicable plan,Columbia Plan and the NiSource Plan, respectively, each such Named Executive Officer is eligible to take an unreduced distribution of his or her cash balance account upon termination of employment regardless of age and service, or, if greater, the Named Executive Officer could take a distribution of the accrued benefit using the protected benefit calculation.service. As of December 31, 2015, none of our continuing Named Executive Officers were2021, Ms. Sistovaris was eligible for early retirement (which impacts the protected benefit calculation and is generally defined as attainment of age 55 with 10 years of eligible service) under the applicable plans.
NiSource Plan.
Assumptions.Assumptions. The present value of the accumulated benefit for each eligible Named Executive OfficerMr. Shafer consists of the account balance payable under the applicable plan. UnderColumbia Plan. The present value of the accumulated benefit for Ms. Sistovaris consists of the present value of the protected benefit under the NiSource Plan (i.e., the present value of the FAP benefit payable as of the conversion date) plus annual pay and interest credits to the cash balance account after the conversion date. The assumptions used in calculating the present value of the accumulated benefit for Ms. Sistovaris are set forth in Note 10 —12 - Pension and Other Postretirement Benefits in the footnotes to the consolidated financial statements contained in our 2015the Company’s 2021 Annual Report on Form 10-K, this value was greater than the present value of the protected benefit for Messrs. Skaggs and Kettering and Ms. Sistovaris. As noted above, in connection with the Separation, the pension benefits accrued by Messrs. Skaggs, Smith and Kettering were transferred to CPG.10-K. The Company has not granted any extra years of credited service under the plansNiSource Plan identified above.
Non-qualified Pension Benefit Plan. The CompanyPlan. We also sponsors thesponsor a Pension Restoration Plan (the “Pension Restoration Plan”). The Pension Restoration Plan is a non-qualified, unfunded defined benefit plan. The plan includes employees of the Company and its affiliates whose benefits under the applicable tax-qualified pension plan are limited by Sections 415 (a limitation on annual accruals and payments under a defined benefit plan of $230,000 for 2021) and 401(a)(17) (a limitation on annual compensation of $290,000 for 2021) of the Code, including each of the Named Executive Officers.any eligible NEO. The Pension Restoration Plan provides for a supplemental retirement benefit equal to the difference between (i) the benefit a participant would have received under the qualified pension plan had such benefit not been limited by Sections 415 and 401(a)(17) of the Code, or any other applicable section, and reduced by deferrals into our Deferred Compensation Plan, minus (ii) the actual benefit received under the qualified pension plan after applying any limits and considering deferrals into our Deferred Compensation Plan. Participants have the opportunity to elect any form of payment available under the qualified pension plan prior to accruing a benefit under the plan. If no election is made, the benefit is payable as a lump sum. The timing of payment under the Pension Restoration Plan generally is 45 days after one of the following: (1) if the participant qualifies for early retirement under the applicable qualified pension plan, following separation from service; or (2) if the participant does not qualify for early retirement at the time of separation from service, the later of separation from
56 | 2022 Proxy Statement TABLE OF CONTENTS
2021 EXECUTIVE COMPENSATION
service or age 65, subject to a six-month delay for key employees under Section 409A of the Code for payments triggered by separation from service. No plan benefits were paid to
any Named Executive OfficerMs. Sistovaris or Mr. Shafer under the
CEGColumbia Plan, the NiSource Pension Plan or the Pension Restoration Plan in
2015.2015 Non-qualified2021.
2021 Non-Qualified Deferred Compensation
| | | | | | | | | | | | | | | | | | | | |
| Name | | Plan Name | | Executive
Contributions
in Last FY ($)(1) | | | Registrant
Contributions
in Last FY ($)(2) | | | Aggregate
Earnings in
Last FY ($)(3) | | | Aggregate
Withdrawals/
Distributions
($) | | | Aggregate
Balance
at Last
FYE ($)(4) |
Joseph Hamrock | | Deferred Compensation Plan(5) | | | — | | | | — | | | | (1,376) | | | | — | | | 266,160 |
| | | Savings Restoration Plan(6) | | | — | | | | 26,950 | | | | 746 | | | | — | | | 63,605 |
Donald E. Brown | | Deferred Compensation Plan(5) | | | — | | | | — | | | | — | | | | — | | | — |
| | | Savings Restoration Plan(6) | | | — | | | | 4,043 | | | | — | | | | — | | | 4,043 |
Jim L. Stanley | | Deferred Compensation Plan(5) | | | — | | | | — | | | | — | | | | — | | | — |
| | | Savings Restoration Plan(6) | | | — | | | | 17,325 | | | | 944 | | | | — | | | 49,158 |
Carrie J. Hightman | | Deferred Compensation Plan(5) | | | — | | | | — | | | | — | | | | — | | | — |
| | | Savings Restoration Plan(6) | | | — | | | | 15,750 | | | | 5,573 | | | | — | | | 194,617 |
Violet Sistovaris | | Deferred Compensation Plan(5) | | | 112,000 | | | | — | | | | (6,849) | | | | — | | | 260,490 |
| | | Savings Restoration Plan(6) | | | — | | | | 6,650 | | | | 1,213 | | | | — | | | 45,555 |
Robert C. Skaggs, Jr. | | Deferred Compensation Plan(5)(7) | | | — | | | | — | | | | 156,291 | | | | — | | | — |
| | | Savings Restoration Plan(6)(8) | | | — | | | | — | | | | 30,411 | | | | — | | | — |
| | | Phantom Stock Units(9) | | | — | | | | — | | | | 608,084 | | | | — | | | — |
Stephen P. Smith | | Savings Restoration
Plan(6)(8) | | | — | | | | — | | | | 5,027 | | | | — | | | — |
Glen L. Kettering | | Savings Restoration
Plan(6)(8) | | | — | | | | — | | | | 30,571 | | | | — | | | — |
| | | Phantom
Stock(9) | | | — | | | | — | | | | 163,257 | | | | — | | | — |
The following table provides information regarding deferred compensation with respect to our NEOs under the Deferred Compensation Plan and the Savings Restoration Plan.
| | Joseph Hamrock | | | Deferred Compensation Plan(5) | | | — | | | — | | | 77,401 | | | — | | | 542,256 | |
| | Savings Restoration Plan(6) | | | — | | | 52,259 | | | 100,728 | | | — | | | 576,136 | |
| | Donald E. Brown | | | Deferred Compensation Plan(5) | | | 18,000 | | | — | | | 41,983 | | | — | | | 230,007 | |
| | Savings Restoration Plan(6) | | | — | | | 23,108 | | | 31,701 | | | — | | | 178,936 | |
| | Pablo A. Vegas | | | Deferred Compensation Plan(5) | | | — | | | — | | | — | | | — | | | — | |
| | Savings Restoration Plan(6) | | | — | | | 23,108 | | | 5,596 | | | — | | | 83,138 | |
| | Violet G. Sistovaris | | | Deferred Compensation Plan(5) | | | — | | | — | | | 175,723 | | | — | | | 1,104,429 | |
| | Savings Restoration Plan(6) | | | — | | | 15,820 | | | 3,942 | | | — | | | 126,222 | |
| | Charles E. Shafer | | | Deferred Compensation Plan(5) | | | — | | | — | | | — | | | — | | | — | |
| | Savings Restoration Plan(6) | | | — | | | 4,888 | | | 177 | | | — | | | 5,905 | |
(1)
| Amounts shown as “Executive Contributions in Last FY,” if any, were deferred under our Deferred Compensation Plan. The Named Executive OfficersNEOs may elect to defer and invest between 5% and 80% of their base compensation and between 5% and 80% of their bonus on a pre-tax basis. These contributionsParticipant deferrals are fully vested. |
(2)
| The amount of Company contributions for each Named Executive OfficerNEO in this column is included in each Named Executive Officer’sNEO’s compensation reported in the 20152021 Summary Compensation Table —under the column “All Other Compensation.” Messrs. Skaggs, Smith and Kettering were not employed by the Company on December 31, 2015, and thus were not eligible to receive Company contributions for 2015 under the terms of the Savings Restoration Plan. |
(3)
| The aggregate earnings in this column are not reported in the 2021 Summary Compensation Table. For a discussion of investment options under these plans, see the narrative accompanying this table. Earnings for Messrs. Skaggs, Smith and Kettering are as of June 30, 2015. |
(4)
| The aggregate balance reflectsincludes amounts for each Named Executive OfficerNEO that would have been previously reported as compensation in the Summary Compensation Table for prior years had he or she been a Named Executive OfficerNEO in those prior years with the exception of any amounts shown for phantom stock units and the aggregate earnings on deferred compensation. |
(5)
| For a description of the Deferred Compensation Plan, please see the Compensation Discussion and Analysis — “Other Compensation and Benefits —– Deferred Compensation Plan” section in the CD&A under “Executive Compensation Elements” and the narrative accompanying this table. |
(6)
| For a description of the Savings Restoration Plan, please see the Compensation Discussion and Analysis — “Other Compensation and Benefits —– Savings Programs” section in the CD&A under “Executive Compensation Elements” and the narrative accompanying this table. These contributions are fully vested. |
(7) | As a result of the Separation and pursuant to the EMA, on the Separation Date the Company ceased to have any Deferred Compensation Plan benefit plan liabilities related to any employees whose employment transferred to CPG (including Mr. Skaggs). Messrs. Smith and Kettering did not participate in the Deferred Compensation Plan. Effective on the Separation Date, the Company ceased to have any liability for Mr. Skaggs’ aggregate balance of $3,696,315 in the Deferred Compensation Plan as of June 30, 2015.
|
(8) | As a result of the Separation and pursuant to the EMA, on the Separation Date the Company ceased to have any Savings Restoration Plan benefit liabilities related to any employees whose employment transferred to CPG (including Messrs. Skaggs, Smith and Kettering). Effective on the Separation Date, the Company ceased to have any liability for the following aggregate balances as of June 30, 2015: $1,927,925 for Mr. Skaggs, $368,072 for Mr. Smith and $1,128,418 for Mr. Kettering.
|
(9) | For more details regarding the phantom stock units, see the narrative accompanying this table. Dividend equivalent rights for dividends paid prior to the Separation Date are shown in the aggregate earnings in last fiscal year column. As a result of the Separation and pursuant to the EMA, on the Separation Date, the Company ceased to have any liabilities with respect to the aggregate balance of approximately 165,405 and 44,243 phantom stock units for Messrs. Skaggs and Kettering, respectively, as of June 30, 2015.
|
The Company sponsors
We sponsor the Savings Restoration Plan and the Deferred Compensation Plan, two non-qualified defined contribution plans, neither of which credits above-market or preferential earnings.
Participants in both plans have an unsecured contractual right to be paid the amountsAmounts due under the plans
are unsecured contractual obligations that are paid from
the Company’sour general assets.
Savings Restoration
Plan.Plan. The Company sponsors the Savings Restoration Plan to provideprovides a supplemental benefit to eligible employees, including the Named Executive Officers,NEOs, equal to the difference between: (i) the employer contributions (including matching and profit sharing contributions) an employee would have received under our Retirement Savings Plan had such benefit not been limited by Sections 415 (a limitation on annual contributions under a defined contribution plan of $53,000$58,000 for 2015)2021) and 401(a)(17) (a limitation on annual compensation of $265,000$290,000 for 2015)2021) of the Code, and the Retirement Savings Plan’s definition of compensation, which excludes deferrals into our Deferred Compensation Plan for purposes of calculating certain employer contributions, minus (ii) the actual employer contributions the employee received under the Retirement Savings Plan. Amounts credited under the Savings Restoration Plan are deferred on a pre-tax basis. Participants’ accounts under the Savings Restoration Plan are 100% vested. Employees designate how these contributions will be invested;invested, with the investment options generally are the same as those available under our Retirement Savings Plan.The timing of payment under the Savings Restoration Plan differs depending on whether the amounts were earned and vested before January 1, 2005 (“Pre-409A Amounts”) or after December 31, 2004 (“Post-409A Amounts”). Pre-409A
2022 Proxy Statement | 57 TABLE OF CONTENTS
2021 EXECUTIVE COMPENSATION
Amounts generally are payable at the time when amounts under the Retirement Savings
Plan are paid. Participants may elect in any year to withdraw Pre-409A Amounts, but that withdrawal is subject to a 10% reduction to the extent the payment is before the amount was otherwise payable under the Retirement Savings Plan. Post-409A Amounts generally are paid within 45 days after separation from service, although key employees (within the meaning of Section 409A of the Code) are subject to a six-month payment delay in accordance with Section 409A of the Code. Participants may not elect to receive early in-service distributions of Post-409A Amounts. Both Pre-409A Amounts and Post-409A Amounts may be distributed upon an unforeseeable emergency, as determined in accordance with the terms of the plan.Savings Restoration Plan. The form of payment for both amounts is the form elected by the participant among the choices available under the Retirement Savings Plan.
Deferred Compensation Plan.
The Company sponsors the Deferred Compensation Plan in whichprovides employees at certain job levels and other key employees designated by the Compensation Committee, including the Named Executive Officers, are eligibleNEOs, the ability to participate to allow deferraldefer compensation on a pre-tax basis, of compensation, including compensation that would otherwise be limited by the Code. Participants may elect to defer and invest between 5% and 80% of their base compensation and between 5% and 80% of their non-equity incentive paymentannual bonus on a pre-tax basis. Employees designate how their contributions will be invested;invested, with the investment options generally are the same as those available under our Retirement Savings Plan. Employee contributions and any earnings thereon are 100% vested. The timing of payment under the Deferred Compensation Plan generally is the March 31st after the date of the participant’s separation from service. This timing applies both to the Pre-409A Amounts and Post-409A Amounts. In the case of Post-409A Amounts payable to key employees within the meaning of Code Section 409A of the Code, payments generally will not be payable until six months after the date of separation from service. Participants also may elect to receive in-service distributions of both Pre-409A Amounts and Post-409A Amounts. If a participant requests an in-service distribution of a Pre-409A Amount with less than 12 months’ advance notice, however, the distribution is subject to a 10% reduction. Participants may delay the commencement of distributions for five years after their originally scheduled payment date, in accordance with the subsequent deferral procedures under Section 409A of the Code. Both Pre-409A Amounts and Post-409A Amounts also may be paid upon an unforeseeable emergency, as determined in accordance with the terms of the plan. The form of payment for both amounts may be either a lump sum or annual installments of up to 15 years, as elected by the participant.Phantom Units. As part of an agreement entered into as of February 1, 2001, Messrs. Skaggs and Kettering were granted fully vested phantom stock units. Under this agreement, Messrs. Skaggs and Kettering agreed to terminate their rights under a Columbia Energy Group Change-in-Control Agreement and to be bound by certain non-competition and non-solicitation provisions and, in exchange, they accepted employment with the Company and the fully vested phantom stock units. These phantom stock units were recorded as a bookkeeping entry in our books and records and represented an unsecured contractual right to receive cash in the future. They were unfunded and subject to the rights of the Company’s general creditors. One phantom stock unit was equal in value to one share of our common stock. The phantom stock units also were credited with dividend equivalents, which were equal in value to dividends declared on shares of our common stock and payable, at Mr. Skaggs’ and Mr. Kettering’s election, in cash or credited to his account as additional phantom stock units. These phantom stock units were payable in cash upon termination of employment from the Company, subject to the executive’s execution of a general release of claims.
In connection with the Separation and pursuant to the EMA, the Company no longer has an obligation to Messrs. Skaggs and Kettering with respect to these phantom stock units and the Company no longer has phantom stock unit agreements with any of its Named Executive Officers.
Potential Payments upon Termination of Employment or a Change-in-Control
of the Company
The Company provides
All of the NEOs are eligible for certain benefits,
to eligible employees, including the Named Executive Officers, upon certain types of
terminationterminations of employment, including a termination of employment involving a
Change-in-Controlchange-in-control of the
Company.Company (“Change-in Control”). These benefits are in addition to the benefits to which
the employeesthey would be entitled upon a termination of employment generally
(i.e.(i.e., (i) vested retirement benefits accrued as of the date of termination, (ii) stock-based awards that are vested as of the date of termination, and (iii) the right to continue medical coverage pursuant to COBRA). The
incrementaladditional benefits
that pertain to the Named Executive Officers are described below.
Messrs. Skaggs, Smith and Kettering voluntarily terminated from the Company and were not eligible for any incremental benefits described below.NiSource
Executive Severance Policy.
The NiSource Our Executive Severance Policy was established to provideprovides severance pay and other benefits to terminated executive-level employees whoat a certain job level, including our NEOs, provided they satisfy the terms of the policy. No severance pay or other benefits are paid under this policy if the termination of employment occurs in connection with a Change-in-Control. Under the Executive Severance Policy, an employee isbecomes eligible to receive benefits under the policy if termination of employment results in the employee being eligible for a payment under a Change-in-Control and Termination Agreement or employment agreement.A participant becomes entitled to receive benefits under the policy only if he or she is terminated forunder any of the following reasons:scenarios: (a) the employee’sa position is eliminatedelimination due to a reduction in force or other restructuring; (b) the employee’sa position is required by the Company to relocaterelocation of more than 50 miles from its current location andthat results in the employee having a longer commute of at leastmore than 20 miles and the employee chooses not to relocate; or (c) the employee is constructively terminated.constructive termination. Constructive termination means a material reduction with respect to: (1) the scope of the participant’s position is changed materially,employee’s position; (2) the participant’semployee’s base pay is reduced by a material amountpay; or (3) the participant’s opportunity to earnemployee’s annual incentive opportunity; and as a bonus under a corporate incentive planresult of the Company is materially reduced or is eliminated, and, in any such event, the participantemployee chooses not to remain employed in such position.
terminate employment. Under the NiSourceour Executive Severance Policy, an eligible employee receives severance pay in the amount of 52 weeks of base salary at the rate in effect on the date of termination. The employee also receives:receives a lump sum paymentamount equivalent to 130% of 52-weeks52 weeks of COBRA (as defined in the Code and the Employee Retirement Income Security Act of 1974) continuation coverage premiums and outplacement services.
Each of the Named Executive Officers who are currently employed by the Company are eligible to receive benefits under the NiSource Executive Severance Policy.
Change-in-Control and Termination Agreements. As of December 31, 2015, the Company2021, we had Change-in-Control and Termination Agreements with each of the Named Executive Officers. The CompanyNEOs except Mr. Shafer. We entered into these agreements based upon itsour belief that they are in the best interests of the stockholders, theystockholders. They are designed to help ensure that in the event of extraordinary events, a thoroughly objective judgment is made on any potential corporate transaction, so that stockholder value is appropriately safeguarded and maximized. The Change-in-Control and Termination Agreements
58 | 2022 Proxy Statement TABLE OF CONTENTS
2021 EXECUTIVE COMPENSATION
provide for cash severance benefits if the executive terminates employment for “Good Reason” (as defined below) or is terminated by
the Companyus for any reason other than “Good Cause” (as defined below) within 24 months following certain Change-in-Control events (referred to as a
“double trigger”). In addition, pursuant to the terms of the 2020 Omnibus Plan and 2010 Omnibus Plan, the executives’ equity awards are subject to double
trigger).trigger accelerated vesting in the event of a Change-in-Control unless an acquiring company does not assume or replace such awards upon the Change-in-Control. None of the agreements contain a “gross-up” provision to reimburse executives for excise taxes incurred with respect to benefits received under a Change-in-Control
and Termination Agreement. The Change-in-Control
and Termination Agreements can be terminated on twelve months’
notice.notice to the participant. For purposes of the Change-in-Control and Termination Agreements:
“Change-in-Control” shall be deemed to take place on the occurrence of any of the following events: (1) the acquisition by an entity, person or group (including all affiliates or associates of such entity, person or group) of beneficial ownership, as that term is defined in Rule 13d-3 under the Exchange Act, of capital stock of the Company entitled to exercise more than 30% of the outstanding voting power of all capital stock of the Company entitled to vote in elections of directors (“Voting Power”); (2) the effective time of: (i) a merger or consolidation of the Company with one or more other corporations unless the holders of the outstanding Voting Power of the Company immediately prior to such merger or consolidation (other than the surviving or resulting corporation or any affiliate or associate thereof) hold at least 50% of the Voting Power of the surviving or resulting corporation (in substantially the same proportion as the Voting Power of the Company immediately prior to such merger or consolidation), or (ii) a transfer of a substantial portion of the property of the Company, other than to an entity of which the Company owns at least 50% of the Voting Power; or (3) the election to the Board of candidates who were not recommended for election by the Board, if such candidates constitute a majority of those elected in that particular election (for this purpose, recommended directors will not include any candidate who becomes a member of the Board as a result of an actual or threatened election contest or proxy or consent solicitation on behalf of anyone other than the Board or as a result of any appointment, nomination, or other agreement intended to avoid or settle a contest or solicitation). Notwithstanding the foregoing, a Change-in-Control shall not be deemed to take place by virtue of any transaction in which the executive is a participant in a group effecting an acquisition of the Company and, after such acquisition, the executive holds an equity interest in the acquiring entity.
“Good Cause”
shall be deemed to exist if, and only if, the Company notifieswe notify the executive, in writing, within 60 days of itsour knowledge that one of the following events occurred: (1) the executive has engaged in acts or omissions constituting dishonesty, intentional breach of fiduciary obligation or intentional wrongdoing or malfeasance, in each case that results in substantial harm to the Company; or (2) the executive has been convicted of a criminal violation involving fraud or dishonesty.
“Good Reason”
shall be deemed to exist if, and only if: (1) there is a significant diminution in the nature or the scope of the executive’s authorities or duties; (2) there is a significant reduction in the executive’s monthly rate of base salary and the executive’s opportunity to earn a bonus under an incentive bonus compensation plan maintained by the Companywe maintain or the executive’s benefits; (3) the Company changeswe change by 50 miles or more the principal location at which the executive is required to perform services as of the date of a Change-in-Control; or (4) there is a material breach of the Change-in-Control and Termination Agreement.The Change-in-Control and Termination Agreements provide for a lump sum payment of two (three in the case of Mr. Hamrock) times the executive’s current annual base salary and target annual incentive bonus compensation. The executive will also receive a pro rata portion of the executive’s targeted annual incentive bonus for the year of termination. The Change-in-Control and Termination Agreements also provide that in the event of a Change-in-Control, the executive’s total Change-in-Control related payments will be equal to the best “net benefit” which is equal to the greater ofof: (i) the after-tax value of the executive’s total severance amountChange-in-Control related payments reduced by the 20% excise tax and other federal, state, local and other taxestaxes; and (ii) the after-tax value of the executive’s severance amountChange-in-Control related payments that has been reduced to the extent necessary so that isit would not trigger an excise tax, reduced for federal, state, local and other taxes (in each case, without a gross-up).
In addition, the Change-in-Control
and Termination Agreements provide for the executives to receive
a lump sum amount equivalent to 130% of the COBRA continuation premiums due for the two-year period (three in the case of Mr. Hamrock) following termination. In the event of a Change-in-Control, all
outstanding equity awards
which have been granted to each of the
Named Executive OfficersNEOs under the
applicable Omnibus Plan
and are outstanding as of December 31,
2015,2021, will vest only upon a termination of employment in connection with a Change-in-Control.
Potential Payments Upon Termination
For the NEOs, we have quantified the potential payments upon termination under various termination scenarios as of Employment. The table below represents amounts payable at, following, or in connection with the events described below, assuming that such events occurred on December 31, 2015, for each of the Named Executive Officers except for Messrs. Skaggs, Smith and Kettering. In accordance with SEC proxy disclosure rules, the only triggering event described below for Messrs. Skaggs, Smith and Kettering is voluntarily termination from the Company as of the Separation Date.2021.
2022 Proxy Statement | 59 TABLE OF CONTENTS
| | | | | | | | | | | | | | | | | | | | | | |
| | | Severance
($) | | | Pro Rata Target Bonus Payment
($) | | | Equity Grants
($) | | | Welfare Benefits
($) | | | Outplacement
($) | | Total Payment
($) | |
Joseph Hamrock | | | | | | | | | | | | | | | | | | | | | | |
Voluntary Termination(1) | | | — | | | | — | | | | — | | | | — | | | — | | | — | |
Retirement(2) | | | — | | | | — | | | | — | | | | — | | | — | | | — | |
Disability(2) | | | — | | | | — | | | | 3,702,276 | | | | — | | | — | | | 3,702,276 | |
Death(2) | | | — | | | | — | | | | 3,702,276 | | | | — | | | — | | | 3,702,276 | |
Involuntary Termination(3) | | | 800,000 | | | | — | | | | — | | | | 21,740 | | | 25,000 | | | 846,740 | |
Change-in-Control(4)(5) | | | 4,800,000 | | | | 800,000 | | | | 6,141,455 | | | | 71,376 | | | 25,000 | | | 11,837,831 | |
Donald E. Brown | | | | | | | | | | | | | | | | | | | | | | |
Voluntary Termination(1) | | | — | | | | — | | | | — | | | | — | | | — | | | — | |
Retirement(2) | | | — | | | | — | | | | — | | | | — | | | — | | | — | |
Disability(2) | | | — | | | | — | | | | 519,454 | | | | — | | | — | | | 519,454 | |
Death(2) | | | — | | | | — | | | | 519,454 | | | | — | | | — | | | 519,454 | |
Involuntary Termination(3) | | | 450,000 | | | | — | | | | — | | | | 19,505 | | | 25,000 | | | 494,505 | |
Change-in-Control(4)(5) | | | 1,440,000 | | | | 270,000 | | | | 1,513,722 | | | | 41,473 | | | 25,000 | | | 3,290,195 | |
Jim L. Stanley | | | | | | | | | | | | | | | | | | | | | | |
Voluntary Termination(1) | | | — | | | | — | | | | — | | | | — | | | — | | | — | |
Retirement(2) | | | — | | | | — | | | | — | | | | — | | | — | | | — | |
Disability(2) | | | — | | | | — | | | | 3,452,431 | | | | — | | | — | | | 3,452,431 | |
Death(2) | | | — | | | | — | | | | 3,452,431 | | | | — | | | — | | | 3,452,431 | |
Involuntary Termination(3) | | | 525,000 | | | | — | | | | — | | | | 13,171 | | | 25,000 | | | 563,171 | |
Change-in-Control(4)(5) | | | 1,837,500 | | | | 393,750 | | | | 4,977,079 | | | | 29,214 | | | 25,000 | | | 7,262,543 | |
Carrie J. Hightman | | | | | | | | | | | | | | | | | | | | | | |
Voluntary Termination(1) | | | — | | | | — | | | | — | | | | — | | | — | | | — | |
Retirement(2) | | | — | | | | — | | | | — | | | | — | | | — | | | — | |
Disability(2) | | | — | | | | — | | | | 3,997,677 | | | | — | | | — | | | 3,997,677 | |
Death(2) | | | — | | | | — | | | | 3,997,677 | | | | — | | | — | | | 3,997,677 | |
Involuntary Termination(3) | | | 490,000 | | | | — | | | | — | | | | 13,616 | | | 25,000 | | | 528,616 | |
Change-in-Control(4)(5) | | | 1,568,000 | | | | 294,000 | | | | 5,362,694 | | | | 29,912 | | | 25,000 | | | 7,279,606 | |
Violet Sistovaris | | | | | | | | | | | | | | | | | | | | | | |
Voluntary Termination(1) | | | — | | | | — | | | | — | | | | — | | | — | | | — | |
Retirement(2) | | | — | | | | — | | | | — | | | | — | | | — | | | — | |
Disability(2) | | | — | | | | — | | | | 1,829,238 | | | | — | | | — | | | 1,829,238 | |
Death(2) | | | — | | | | — | | | | 1,829,238 | | | | — | | | — | | | 1,829,238 | |
Involuntary Termination(3) | | | 400,000 | | | | — | | | | — | | | | 13,408 | | | 25,000 | | | 438,408 | |
Change-in-Control(4)(5) | | | 1,320,000 | | | | 260,000 | | | | 2,694,526 | | | | 29,005 | | | 25,000 | | | 4,328,531 | |
Robert C. Skaggs, Jr. | | | | | | | | | | | | | | | | | | | | | | |
Voluntary Termination(1) | | | — | | | | — | | | | 7,497,472 | | | | — | | | — | | | 7,497,472 | |
Retirement(2) | | | — | | | | — | | | | — | | | | — | | | — | | | — | |
Disability(2) | | | — | | | | — | | | | — | | | | — | | | — | | | — | |
Death(2) | | | — | | | | — | | | | — | | | | — | | | — | | | — | |
Involuntary Termination(3) | | | — | | | | — | | | | — | | | | — | | | — | | | — | |
Change-in-Control(4) | | | — | | | | — | | | | — | | | | — | | | — | | | — | |
| | | | | | | | | | | | |
| | Severance
($) | | Pro Rata
Target
Bonus
Payment
($)
| | Equity
Grants
($)
| | Welfare
Benefits
($)
| | Outplacement
($) | | Total
Payment
($)
|
Stephen P. Smith
| | | | | | | | | | | | |
Voluntary Termination(1)
| | — | | — | | — | | — | | — | | — |
Retirement(2)
| | — | | — | | — | | — | | — | | — |
Disability(2)
| | — | | — | | — | | — | | — | | — |
Death(2)
| | — | | — | | — | | — | | — | | — |
Involuntary Termination(3)
| | — | | — | | — | | — | | — | | — |
Change-in-Control(4)
| | — | | — | | — | | — | | — | | — |
Glen L. Kettering
| | | | | | | | | | | | |
Voluntary Termination(1)
| | — | | — | | — | | — | | — | | — |
Retirement(2)
| | — | | — | | — | | — | | — | | — |
Disability(2)
| | — | | — | | — | | — | | — | | — |
Death(2)
| | — | | — | | — | | — | | — | | — |
Involuntary Termination(3)
| | — | | — | | — | | — | | — | | — |
Change-in-Control(4)
| | — | | — | | — | | — | | — | | — |
2021 EXECUTIVE COMPENSATION
| | Joseph Hamrock
| | | | | | | | | | | | | | | | | | | | | | |
| | Voluntary Termination(1) | | | — | | | — | | | 8,480,467 | | | — | | | — | | | — | | | 8,480,467 | |
| | Retirement(2) | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| | Disability(2) | | | — | | | — | | | 9,644,009 | | | — | | | — | | | — | | | 9,644,009 | |
| | Death(2) | | | — | | | — | | | 9,644,009 | | | — | | | — | | | — | | | 9,644,009 | |
| | Involuntary Termination(3) | | | 1,030,000 | | | — | | | — | | | — | | | 33,460 | | | 25,000 | | | 1,088,460 | |
| | Change-in-Control(4) | | | 6,798,000 | | | 1,236,000 | | | 17,551,208 | | | — | | | 108,804 | | | 25,000 | | | 25,719,012 | |
| | Donald E. Brown
| | | | | | | | | | | | | | | | | | | | | | |
| | Voluntary Termination(1) | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| | Retirement(2) | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| | Disability(2) | | | — | | | — | | | 2,916,501 | | | 798,611 | | | — | | | — | | | 3,715,112 | |
| | Death(2) | | | — | | | — | | | 2,916,501 | | | 798,611 | | | — | | | — | | | 3,715,112 | |
| | Involuntary Termination(3) | | | 618,000 | | | — | | | — | | | — | | | 30,342 | | | 25,000 | | | 673,342 | |
| | Change-in-Control(4) | | | 2,163,000 | | | 463,500 | | | 5,394,911 | | | 1,000,000 | | | 65,311 | | | 25,000 | | | 9,111,722 | |
| | Pablo A. Vegas
| | | | | | | | | | | | | | | | | | | | | | |
| | Voluntary Termination(1) | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| | Retirement(2) | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| | Disability(2) | | | — | | | — | | | 2,937,153 | | | 798,611 | | | — | | | — | | | 3,735,764 | |
| | Death(2) | | | — | | | — | | | 2,937,153 | | | 798,611 | | | — | | | — | | | 3,735,764 | |
| | Involuntary Termination(3) | | | 618,000 | | | — | | | — | | | — | | | 33,814 | | | 25,000 | | | 676,814 | |
| | Change-in-Control(4) | | | 2,224,800 | | | 494,400 | | | 5,460,292 | | | 1,000,000 | | | 72,255 | | | 25,000 | | | 9,276,747 | |
| | Violet G. Sistovaris
| | | | | | | | | | | | | | | | | | | | | | |
| | Voluntary Termination(1) | | | — | | | — | | | 1,390,053 | | | — | | | — | | | — | | | 1,390,053 | |
| | Retirement(2) | | | — | | | — | | | 1,818,394 | | | — | | | — | | | — | | | 1,818,394 | |
| | Disability(2) | | | — | | | — | | | 1,818,394 | | | — | | | — | | | — | | | 1,818,394 | |
| | Death(2) | | | — | | | — | | | 1,818,394 | | | — | | | — | | | — | | | 1,818,394 | |
| | Involuntary Termination(3) | | | 515,000 | | | — | | | — | | | — | | | 22,526 | | | 25,000 | | | 562,526 | |
| | Change-in-Control(4) | | | 1,802,500 | | | 386,250 | | | 3,433,635 | | | — | | | 48,908 | | | 25,000 | | | 5,696,293 | |
| | Charles E. Shafer
| | | | | | | | | | | | | | | | | | | | | | |
| | Voluntary Termination(1) | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| | Retirement(2) | | | — | | | — | | | 769,491 | | | — | | | — | | | — | | | 769,491 | |
| | Disability(2) | | | — | | | — | | | 769,491 | | | — | | | — | | | — | | | 769,491 | |
| | Death(2) | | | — | | | — | | | 769,491 | | | — | | | — | | | — | | | 769,491 | |
| | Involuntary Termination(3) | | | 360,500 | | | — | | | — | | | — | | | 33,460 | | | 25,000 | | | 418,960 | |
| | Change-in-Control(4) | | | 1,153,600 | | | 216,300 | | | 1,646,025 | | | — | | | 69,620 | | | 25,000 | | | 3,110,545 | |
(1)
| Amounts payable to each of the Named Executive OfficersNEOs as shown in the Pension Benefits Table and the Non-qualified Deferred Compensation Table and under the tax-qualified, nondiscriminatory 401(k) Plan are not included.included in the table. Upon voluntary termination on December 31, 2021, Mr. Skaggs wasHamrock would be eligible to receive 176,157111,235 shares under his 2009 Restricted Stock Unit Award, 80,114the RSUs granted on July 13, 2015, due to conversion of the 2013 performance shares in connection with the Separation, 74,087 shares under his special 2010 Restricted Stock Unit Award, and 128,412the RSUs granted on July 13, 2015, due to the conversion of the 2014 performance shares in connection with the Separation, 62,972 shares under his 2010 annual Restricted Stock Unit Award.the RSUs granted on January 29, 2015 and 58,858 shares under the RSUs granted on July 13, 2015. Ms. Sistovaris would be eligible to receive 14,563 shares under the RSUs granted on July 13, 2015, due to the conversion of the 2014 performance shares in connection with the Separation, 21,068 shares under the RSUs granted on January 29, 2015 and 14,715 shares under the RSUs granted on July 13, 2015. These shares were subject to delayed vesting in accordance with the terms of the award agreements due to limitations on deductibility under Section 162(m) of the Code. Since he wasThese shares are payable on the earlier to occur of the NEO's termination of employment, the date the NEO is no longer subject to Code Section 162(m), of the Code, or the date the shares could be paid and be deductible under Section 162(m) of the Code. The value of these shares were paid to Mr. Skaggs on January 4, 2016, in accordance with the terms of the governing award agreements. Amount shown for Mr. Skaggs is the actual value of the shares paid to Mr. Skaggs based onwas determined by multiplying the closing price of the Company’sour common stock on January 4, 2016,December 31, 2021, which was $19.49$27.61 per share. share, by the number of shares that were subject to delayed payout. |
(2)
| Special vesting rules apply in the event of Retirement, Disability or death pursuant to the terms and conditions of our equity award agreements as discussed above in the Compensation Discussion and Analysis — “LTIP Awards.” None of the Named Executive Officers employed by the Company on December 31, 2015, were eligible for Retirement asagreements. As of December 31, 2015. For each of these Named Executive Officers,2021, Ms. Sistovaris and Mr. Shafer were the number of shares that would have vested in the event of the executive’sonly NEOs eligible for Retirement. Upon Retirement, Disability or death, is as follows: Mr. Hamrock, 189,763 shares; Mr. Brown, 26,625 shares; Mr. Stanley, 176,957 shares; Ms. Hightman, 204,904 shares; and Ms. Sistovaris 93,759 shares. The value of the equity grants was determined by multiplying the closing price of the Company’s common stock on December 31, 2015, which was $19.51 per share, by the number ofwould receive 65,860 shares thatand Mr. Shafer would have vested upon the Disability or death, as applicable, of the Named Executive Officer. receive 27,870. |
60 | 2022 Proxy Statement TABLE OF CONTENTS
| Equity awards held by Messrs. Skaggs, Smith and Kettering were forfeited in accordance with the terms of the governing award agreement with the exception of certain awards granted to Mr. Skaggs in 2009 and 2010 as described above in footnote (1) that were subject to delayed vesting solely due to limitations on deductibility under Section 162(m) of the Code, in accordance with the terms of the original award agreements. Additionally, to preserve their intrinsic aggregate value prior to Separation, these awards were subject to the Valuation Adjustment as described in the Compensation Discussion and Analysis — “LTIP Awards.”
|
2021 EXECUTIVE COMPENSATION
For the balance of the NEOs, the number of shares that would have vested in the event of the executive’s Disability or death is as follows: Mr. Hamrock, 349,294 shares; Mr. Brown, 105,632 shares; and Mr. Vegas, 106,380 shares. The value of the equity grants was determined by multiplying the closing price of our common stock on December 31, 2021, which was $27.61 per share, by the number of shares that would have vested upon the Retirement, Disability or death, as applicable, of the NEO. These amounts do not include the value of shares subject to delayed distribution due to limitations on deductibility under Section 162(m) of the Code referred to in footnote (1) above. For Messrs. Brown and Vegas, special vesting rules also apply in the event of Disability or death under their cash-based Special Retention Award agreements. The amounts shown represent the pro-rata portion of their cash-based awards based on service months from their respective grant dates to December 31, 2021.
(3)
| Amounts shown reflect payments to be made upon the involuntary termination of each Named Executive OfficerNEO eligible under the Company’sour Executive Severance Policy described above. These amounts do not include the value of shares subject to delayed distribution due to limitations on deductibility under Section 162(m) of the Code described in footnote (1) above. |
(4)
| Amounts shown reflect payments to be made upon termination of employment in the event of a Change-in-Control of the Company under the Change-in-Control and Termination Agreements described above which have been reduced by excise tax payments if applicable.above. These amounts do not include the value of shares subject to delayed distribution due to limitations on deductibility under Section 162(m) of the Code described in footnote (1) above. As described above, the Change-in-Control and Termination Agreements do not provide for any “gross-up” payments to executives for excise taxes incurred with respect to benefits received under a Change-in-Control and Termination Agreement. The Change-in-Control and Termination Agree- |
| mentsAgreements provide that in the event of a Change-in-Control, the executive’s total Change-in-Control will be equal to the best “net benefit” which is equal to the greater ofof: (i) the after-tax value of the executive’s total severance amountChange-in-Control related payments (reduced by the 20% excise tax and other federal, state, local and other taxes); and (ii) the after-tax value of the executive’s severance amountChange-in-Control related payments that has been reduced to the extent necessary so that it would not trigger an excise tax, reduced for federal, state, local and other taxes (in each case, without a gross-up).
|
(5) | Amounts shown for The amounts reflected in this table do not reflect the Named Executive Officers that we currently employ have not been reduced underapplication of the best “net benefit” provisionprovision.
|
2022 Proxy Statement | 61 TABLE OF CONTENTS
2021 EXECUTIVE COMPENSATION
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, we are providing the following disclosure about the relationship of the annual total compensation of our employees to the annual total compensation of our CEO.
For 2021, our last completed fiscal year:
| ■ | The median annual total compensation of all employees (other than our CEO) was $124,663; and |
| ■ | The annual total compensation of our CEO, as reported in the Change-in-Control2021 Summary Compensation Table, was $9,535,781. |
Based on this information, for 2021, the ratio of the annual total compensation of Mr. Hamrock, our CEO during 2021, to the annual total compensation of the median employee is estimated to be 76 to 1.
To identify the median of the annual total compensation of all our employees (other than our CEO), as well as to determine the annual total compensation of our median employee and our CEO, we took the following steps consistent with Item 402(u) of Regulation S-K:
1.
| We determined that, as of December 31, 2021, our employee population consisted of approximately 7,375 employees, with all of our employees located in the United States. This population consisted of our full-time, part-time and Termination Agreementstemporary employees, as described above because nonedetermined for employment law purposes. |
2.
| To identify the “median employee” from our employee population, we prepared a full census of all our employees (except our CEO) using our existing centralized payroll database of base cash compensation (base salary plus overtime and shift premiums, calculated based on the hours worked during the relevant period) that is used internally to calculate annual cash incentive compensation and profit-sharing eligibility. We used base cash compensation as our compensation measure as it is the principal form of compensation delivered to all of our employees. |
| ■ | Additionally, we adjusted as of December 31, 2021, the compensation of 638 full-time employees and 19 part-time employees hired during 2021 to annualize compensation for any portion of the Named Executive Officersmeasurement period that they were not with the Company. |
| ■ | Although all of our employees are eligible for an annual cash incentive (paid in 2022 for 2021 individual and Company performance) we excluded this for all employees because we determined its inclusion would not have been in a better after-tax position as a resultmeaningful effect on the determination of a benefit reduction.the median employee. |
| ■ | Since we do not widely distribute annual equity awards to our employees, such awards were excluded from our compensation measure. |
3.
| We identified our median employee from a full census report compiled using base cash compensation as our consistently applied compensation measure. Since all our employees are located in the United States, as is our CEO, we did not make any cost-of-living adjustments identifying the “median employee.” |
4.
| Once we identified our median employee, we combined all of the elements of such employee’s compensation for 2021 in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, resulting in annual total compensation of $124,663. |
5.
| With respect to the annual total compensation of our CEO, we used the amount reported in the “Total” column (column (j) of our 2021 Summary Compensation Table) included in this Proxy Statement. |
62 | 2022 Proxy Statement TABLE OF CONTENTS
EQUITY COMPENSATION PLAN INFORMATION
The following table
sets forth certainprovides information
for all equity compensation plans and individual compensation arrangements (whether with employees or non-employees, such as directors), in effect as of December 31,
2015. | | | | | | | | | | | | |
| Plan Category | | Number of Securities to
be Issued Upon Exercise of Outstanding Options, Warrants and Rights (#)(a) | | | Weighted-
Average Exercise
Price of Outstanding Options, Warrants
and Rights ($)(2)(b) | | | Number of Securities
Remaining Available
for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a) (#)(c) | |
Equity compensation plans approved by security holders(1) | | | 3,726,156 | | | | — | | | | 6,627,869 | |
Equity compensation plans not approved by security holders | | | — | | | | — | | | | — | |
Total | | | 3,726,156 | | | | — | | | | 6,627,869 | |
| | Equity compensation plans
approved by security holders(1) | | | 2,939,104 | | | — | | | 9,728,546 | |
| | Equity compensation plans not approved by security holders | | | — | | | — | | | — | |
| | Total | | | 2,939,104 | | | — | | | 9,728,546 | |
(1)
| The Plans approved by security holders includeconsist of the following plans: the 1994 Long Term Incentive Plan, approved by the stockholders on May 10, 2005 (no shares remain available for future issuance under the plan),following: the Non-Employee Director Stock Incentive Plan, approved by the stockholders on May 20, 2003 (no shares remain available for future issuancegrants under the plan),; the 2020 Omnibus Plan approved by the stockholders on May 11, 2010 (and re-approved for Code Section 162(m) purposes on May 12, 2015),19, 2020; and the Company’s Employee Stock Purchase Plan, approved by the stockholders on May 12, 2015. As of December 31, 2015, 5,704,139 remained available for issuance under the Omnibus Plan and 923,730 shares remained available for purchase under the Employee Stock Purchase Plan.
7, 2019. |
(2)
| In calculating the weighted-average exercise price of outstanding options, shown in column (b), restricted stock units and performance stock units (if applicable) which can convert into shares of common stock upon vesting are excluded. Restricted stock units and performance stock unitsshare awards are payable at no cost to the grantee on a one-for-one basis.
As of December 31, 2021, there were no outstanding stock options under the Non-Employee Director Stock Incentive Plan, the 2010 Omnibus Plan or the 2020 Omnibus Plan. |
(3)
| As of December 31, 2021, 9,081,947 shares remained available for issuance under the 2020 Omnibus Plan and 646,599 shares remained available for purchase under the Employee Stock Purchase Plan. The Employee Stock Purchase Plan provides the opportunity for eligible employees to acquire shares of our common stock at a 10% discount. For purposes of this table, we have included the number of shares issuable under outstanding performance share awards assuming performance targets are achieved at the maximum achievement level. |
2022 Proxy Statement | 63 TABLE OF CONTENTS
PROPOSAL 2 — ADVISORY APPROVAL OF
EXECUTIVENEO COMPENSATION
Pursuant to Section 14A of the Exchange Act, we are asking stockholders to approve, in
ana non-binding advisory vote, the compensation paid to
the Company’s Named Executive Officers,our NEOs, as disclosed under the
heading “Executiveheadings “2021 Executive Compensation”
above, including theand “Compensation Discussion and Analysis
(CD&A)”
above, commonly known as a “Say-on-Pay” proposal.
At
the 2017 annual meeting of stockholders, we provided our
2011 Annual Meeting, stockholders
were asked to cast a non-bindingwith an advisory vote
on whetherregarding how frequently the
Say-on-Pay vote should be held every year, every two years or every three years (the “Frequency Vote”). A majority of stockholders voting on the matter indicated a preference for holding the Say-on-Pay vote on an annual basis. Accordingly, the Board resolved that the non-bindingCompany will conduct future stockholder advisory
votevotes to approve the compensation
paid to our NEOs. More than a majority of
our named executive officers will be held onthe shares present or represented at the meeting were voted in favor of an annual
basis at least untilvote, consistent with the
next Frequency Vote is held.Board’s recommendation. Based on these results, the Board has determined to hold an annual advisory vote on the compensation paid to our NEOs.
The Board encourages stockholders to carefully review the
2021 Executive Compensation
sectionand Compensation Discussion and Analysis (CD&A) sections of this Proxy Statement,
including the Compensation Discussion and Analysis, for a thorough discussion of our executive compensation program and philosophy. Our compensation program is designed to be significantly performance-based and to attract and retain highly qualified individuals who enhance long-term stockholder value by contributing to
the Company’sour ongoing success. All facets of our compensation program are regularly monitored by the Compensation
and Human Capital Committee to ensure that the program is well-tailored to fulfill
the Company’sour compensation philosophy and objectives.
In considering this proposal, stockholders may wish to consider the following factors that
we believe demonstrate our commitment to maintaining a robust compensation program:
| ■ | Compensation is closely tied to both corporate and individual performance; |
| ■ | Annual and long-term incentive compensation opportunities are contingent on the Company achieving pre-established goals; |
| ■ | Total compensation packages are competitive with those offered by members of our Comparator Group; |
| ■ | Perquisites are appropriately limited in number and modest in dollar value; and |
| ■ | We believe our compensation program does not create incentives for behaviors that create material risk to the Company. |
Compensation is closely tied to both corporate and individual performance;
Annual and long-term incentive compensation opportunities are contingent on the Company achieving pre-established goals;
Total compensation packages are competitive with those offered by members of the Company’s Comparative Group;
Perquisites are appropriately limited in number and modest in dollar value; and
Our compensation program does not create incentives for behaviors that create material risk to the Company.
As discussed in the Compensation Discussion and Analysis (CD&A) and 2021 Executive Compensation sectionsections of this Proxy Statement, the Compensation and Human Capital Committee and the Board believe that the Company’sour executive compensation program fulfills the objectives of itsour compensation philosophy in a prudent and effective manner.
Accordingly, the following resolution is submitted for an advisory stockholder vote at the Annual Meeting:
RESOLVEDRESOLVED, that the compensation paid to the Company’s Named Executive Officers,our NEOs, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby approved on an advisory basis. As this is an advisory vote, the result will not be binding on the Company, the Board or the Compensation
and Human Capital Committee, although the
Compensation and Human Capital Committee and the Board will carefully consider the outcome of the vote when evaluating our compensation program and philosophy.
The affirmative vote of a majority of the shares present
in personat the virtual Annual Meeting or represented by proxy at the meeting and entitled to vote is needed to approve the advisory vote on the compensation of the
Named Executive Officers.NEOs. Proxies submitted without direction pursuant to this solicitation will be voted “FOR” the advisory approval of executive compensation of
the Company’s Named Executive Officers.our NEOs. Abstentions by those present or represented by proxy will have the same effect as a vote against the Say-on-Pay proposal. Brokers will not have discretionary authority to vote on the Say-on-Pay proposal. Accordingly, there could be broker non-votes, which will have no effect on the vote.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE ADVISORY APPROVAL OF EXECUTIVENEO COMPENSATION PAID TO THE NAMED EXECUTIVE OFFICERS.ON AN ADVISORY BASIS.
64 | 2022 Proxy Statement TABLE OF CONTENTS
PROPOSAL 3 — RATIFICATION OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTANTSACCOUNTING FIRM
The Audit Committee of the Board is directly responsible for the appointment, compensation, retention and oversight of the independent registered public
accountantsaccounting firm retained to audit
the Company’sour financial statements. The Audit Committee appointed Deloitte
& Touche LLP (“Deloitte”), 111 South Wacker Drive, Chicago, IL 60606, as
the Company’sour independent registered public
accountantsaccounting firm for
the year 2016.2022. As part of its oversight of
the Company’sour relationship with
itsour independent registered public
accountants,accounting firm and to assure continuing independence of such firm, the Audit Committee considers whether it is appropriate to adopt a policy of rotating its independent registered public
accountantsaccounting firm on a regular basis. Further, in conjunction with ensuring the rotation of such firm’s lead engagement partner, the Audit Committee and its Chair are directly involved with the selection of Deloitte’s lead engagement partner. The Audit Committee also reviews proposals for all auditing services (including fees and terms thereof) of
the Company’sour independent registered public
accountants,accounting firm and approves all such proposals prior to the commencement or performance of such services, subject to the pre-approval policies and procedures described under “Independent
AuditorRegistered Public Accounting Firm Fees.”
The
Deloitte has served as our independent registered public accounting firm since 2002 and has the requisite understanding of our business, accounting policies and practices, and internal control over financial reporting to drive audit quality and efficient fee structures. As a result of this expertise, and, as noted above, the Audit Committee’s oversight designed to assure continuing independence, the Board and its Audit Committee consider Deloitte well qualified to serve as our independent registered public
accountants, and believeaccounting firm. Further, the Board believes that the continued retention of Deloitte is in
our best interest and the best interest of
the Company and itsour stockholders. Although action by stockholders for this matter is not required, the Board and the Audit Committee believe that it is appropriate to seek stockholder ratification of this appointment in order to provide stockholders a means of communicating the stockholders’ level of satisfaction with the performance of the independent registered public
accountantsaccounting firm and their level of independence from management. If the proposal is not approved and the appointment of Deloitte is not ratified by the stockholders, the Audit Committee will take this into consideration and will reconsider the appointment. A representative of Deloitte will be
presentrepresented at the
meeting,virtual Annual Meeting, will be given an opportunity to make a statement if he or she so desires and will be available to respond to appropriate questions.
The affirmative vote of a majority of the shares present
in personduring the virtual Annual Meeting or represented by proxy
at the meeting and entitled to vote is needed to ratify the appointment of
Deloitte.Deloitte as our independent registered public accounting firm for 2022. Proxies submitted without direction pursuant to this solicitation will be voted “FOR” the ratification of the appointment of Deloitte. Abstentions by those present or represented by proxy will have the same effect as a vote against the proposal. Brokers will have discretionary authority to vote on this proposal, and, accordingly, there will not be any broker non-votes.
THE BOARD AND ITS AUDIT COMMITTEE UNANIMOUSLY RECOMMEND A VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF DELOITTE AS THE COMPANY’SOUR INDEPENDENT REGISTERED PUBLIC ACCOUNTANTSACCOUNTING FIRM FOR FISCAL YEAR 2016.2022.
2022 Proxy Statement | 65
AUDIT COMMITTEE REPORTTABLE OF CONTENTS
Our Audit Committee consists of Messrs. Abdoo, Jesanis, Kabat and Ms. Woo. Each of the members of the Audit Committee is independent as defined by the applicable NYSE and SEC rules and meets the additional independence standard set forth by the Board of Directors in the Corporate Governance Guidelines. Each of the members of the Audit Committee also is “financially literate” for purposes of applicable NYSE rules. The Board of Directors has designated Michael E. Jesanis, the Chair of the Audit Committee, as the “audit committee financial expert.”
The Audit Committee has reviewed and discussed the audited consolidated financial statements with management and has discussed with Deloitte, the Company’s independent registered public accountants, the matters required to be discussed by Public Company Accounting Oversight Board (“PCAOB”), Auditing Standard No. 16, “Communications with Audit Committees”; SEC regulation S-X Rule 2-07; PCAOB Auditing Standard No. 5 and the NYSE Corporate Governance Rules. The Audit Committee also has received the written disclosures and the letter from Deloitte required by PCAOB Ethics and Independence Rule 3526, “Communication with Audit Committees Concerning Independence,” and has discussed with Deloitte its independence. The Audit Committee has considered whether Deloitte’s provision of non-audit services to the Company is compatible with maintaining Deloitte’s independence.
In reliance on the review and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.
The Audit Committee has appointed Deloitte to serve as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2016.
Audit Committee
Michael E. Jesanis, Chair
Richard A. Abdoo
Kevin T. Kabat
Carolyn Y. Woo
February 17, 2016
INDEPENDENT AUDITOR FEES
The following table represents the aggregate fees for professional services billed by Deloitte for the fiscal years ended December 31, 2014 and 2015.
| | | | | | | | |
| | | 2014 | | | 2015 | |
Audit Fees(1) | | $ | 6,279,000 | | | $ | 4,433,500 | |
Audit-Related Fees(2) | | | 2,566,582 | | | | 2,139,156 | |
Tax Compliance(3) | | | 84,750 | | | | 110,000 | |
Tax Advice and Tax Planning(4) | | | 448,382 | | | | 197,232 | |
All Other Fees(5) | | | 14,140 | | | | 222,300 | |
(1) | Audit Fees — These are fees for professional services performed by Deloitte for the audit of the Company’s annual financial statements in the Company’s Annual Report on Form 10-K and review of financial statements included in the Company’s Form 10-Q filings, and services that are normally provided in connection with statutory and regulatory filings or engagements.
|
(2) | Audit-Related Fees— These are fees for the assurance and related services performed by Deloitte that are reasonably related to the performance of the audit or review of the Company’s financial statements. These fees included services provided by Deloitte in connection with the Separation and Columbia Pipeline Partners LP’s initial public offering of its outstanding limited partnership interests.
|
(3) | Tax Compliance — These are fees for professional services performed by Deloitte with respect to tax compliance.
|
(4) | Tax Advice and Tax Planning — These fees are for professional services performed by Deloitte with respect to tax advice and tax planning.
|
(5) | All Other Fees— These are fees for permissible work performed by Deloitte that does not meet the above categories.
|
Pre-Approval Policies and Procedures. During fiscal year 2015, the Audit Committee approved all audit, audit related and non-audit services provided to the Company by Deloitte prior to management engaging the auditor for those purposes. The Audit Committee’s current practice is to consider for pre-approval annually all audit, audit related and non-audit services proposed to be provided by our independent auditors for the fiscal year. Additional fees for other proposed audit-related or non-audit services (not within the scope of the approved audit engagement) which have been properly presented to the Pre-Approval Subcommittee of the Audit Committee (consisting of Michael E. Jesanis) by the Vice President, Controller and Chief Accounting Officer of the Company may be considered and, if appropriate, approved by the Pre-Approval Subcommittee of the Audit Committee, subject to later ratification by the full Audit Committee. In no event, however, will any non-audit related service be approved by the Pre-Approval Subcommittee that would result in the independent auditor no longer being considered independent under the applicable SEC rules. In appointing Deloitte as our independent auditor, the Audit Committee has considered whether the provision of the non-audit services rendered by Deloitte is compatible with maintaining that firm’s independence.
PROPOSAL 4
—– STOCKHOLDER PROPOSAL
REGARDING REPORTS ON POLITICAL CONTRIBUTIONSThe ComptrollerREDUCING THE THRESHOLD STOCK OWNERSHIP REQUIREMENT FOR STOCKHOLDERS TO CALL A SPECIAL STOCKHOLDER MEETING FROM 25% to 10%
Mr. John Chevedden of
the State2215 Nelson Avenue, No. 205, Redondo Beach, California 90278, who beneficially owns a requisite number of
New York, as the sole Trustee of the New York State Common Retirement Fund, which beneficially held at least $2,000 in market valueshares of common stock, has informed the Company that
ithe plans to present the following proposal at the
meeting:Resolved,meeting.
Proposal 4 - Special Shareholder Meeting Improvement
Shareholders ask our board to take the steps necessary to amend the appropriate company governing documents to give the owners of a combined 10% of our outstanding common stock the power to call a special shareholder meeting.
Although it now theoretically takes 25% of all shares to call for a special shareholder meeting, this translates into 30% of the NiSource shares that typically vote at the annual meeting. It would be hopeless to think that the shares that do not have the time to vote at the annual meeting would have the time to take the special procedural steps to call for a special shareholder meeting.
It is important to vote for this Special Shareholder Meeting Improvement proposal because we have no right to act by written consent.
Many companies provide for both a shareholder right to call a special shareholder meeting and a shareholder right to act by written consent. Southwest Airlines and Target are companies that do not provide for shareholder written consent and yet provide for 10% of shares to call for a special shareholder meeting.
Plus NiSource shareholders
of NiSource Inc., (“Company”) hereby request that the Company provide a report, updated semiannually, disclosing the Company’s:1. Policies and procedures for making, with corporate funds or assets, contributions and expenditures (direct or indirect) to (a) participate or intervene in any political campaign on behalf of (or in opposition to) any candidate for public office, or (b) influence the general public, or any segment thereof, with respect to an election or referendum.
2. Monetary and non-monetary contributions and expenditures (direct and indirect) used in the manner described in section 1 above, including:
| a. | The identity of the recipient as well as the amount paid to each; and
|
| b. | The title(s) of the person(s) in the Company responsible for decision-making.
|
The report shall be presentedgave 37% support to the board of directors or relevant board committee2021 shareholder proposal calling for a shareholder right to act by written consent. This 37% support may have represented over 40% support form the shares that have access to independent proxy voting advice and postedare left with no alternative but to rely on biased management voting recommendations.
The biased 2021 NiSource management voting recommendations failed to recognize the
Company’s website.STOCKHOLDER SUPPORTING STATEMENT
As long-termelementary fact that written consent protects shareholder rights because written consent can be structured so that all shareholders of NiSource, we support transparency and accountability in corporate spending on political activities. These includereceive ample notice.
When reading the management statement next to this 2022 proposal please remember that there is a formal process to root out any
activities considered intervention in any political campaign under the Internal Revenue Code, such as direct and indirect contributions to political candidates, parties, or organizations; independent expenditures; or electioneering communications on behalf of federal, state or local candidates.Disclosure is in the best interest of the company and its shareholders and critical for compliance with federal ethics laws. Moreover, the Supreme Court’s Citizens United decision recognized the importance of political spending disclosure for shareholders when it said, “[D]isclosure permits citizens and shareholders to react to the speech of corporate entitiessupposedly misleading shareholder text in a proper way. This transparency enablesshareholder proposal but there is no formal process to root out misleading management text.
To help make up for our lack of a right to act by written consent we need the electorateright of a reasonable 10% of shares to make informed decisions and give proper weightcall for a special shareholder meeting.
66 | 2022 Proxy Statement
TABLE OF CONTENTS
PROPOSAL 4 – STOCKHOLDER PROPOSAL REDUCING THE THRESHOLD STOCK OWNERSHIP REQUIREMENT FOR STOCKHOLDERS TO CALL A SPECIAL STOCKHOLDER MEETING FROM 25% to
different speakers and messages.” Gaps in transparency and accountability may expose the company to reputational and business risks that could threaten long-term shareholder value.NiSource contributed at least $1,751,079 in corporate funds since the 2003 election cycle. (CQ: http://moneyline.cq.com and National Institute on Money in State Politics: http://www.followthemoney.org)
However, relying on publicly available data does not provide a complete picture of the Company’s political spending. For example, the Company’s payments to trade associations used for political activities are undisclosed and unknown. In some cases, even management does not know how trade associations use their company’s money politically. The proposal asks the Company to disclose all of its political spending, including payments to trade associations and other tax exempt organizations used for political purposes. This would bring our Company in line with a growing number of leading companies, including Exelon, Merck and Microsoft that support political disclosure and accountability and present this information on their websites.
The Company’s Board and its shareholders need comprehensive disclosure to be able to fully evaluate the political use of corporate assets. We urge your support for this critical governance reform.
10%
Please vote yes:
Special Shareholder Meeting Improvement - Proposal 4
Board of Directors’ Statement in Opposition
Your Board of Directors unanimously recommends a vote AGAINST this proposal.
The Board hasof Directors and its Nominating and Governance Committee have considered this proposal and as discussed below, concluded that it is unnecessary and undesirable,not in the best interests of our stockholders.
Our Certificate of Incorporation and Bylaws include a stockholder right to call special meetings that the Board believes strikes the appropriate balance between enhancing stockholder rights and adequately protecting the best interests of all of our stockholders.
Under our Certificate of Incorporation and Bylaws, stockholders holding at least 25% of the shares of common stock issued and outstanding may call a special meeting, which is consistent with the majority practice of S&P 500 companies that provide stockholders with this right. According to a recent survey, approximately 64% of S&P 500 companies provide stockholders with the right to call a special meeting. Of those companies that have this right, approximately 55% have an ownership threshold equal to or greater than 25%, while only approximately 18% of S&P 500 companies with such right have a 10% or less ownership threshold.
In its consideration of this proposal, the Board evaluated a number of factors, including the interests of our stockholders, the resources required to convene a special meeting, the existing opportunities for stockholders to engage with the Board and management between annual meetings, and the characteristics and composition of our stockholder base. The Board continues to believe that the current 25% ownership threshold provides an appropriate balance between providing accountability to stockholders and enabling the Board and management to focus on meeting our business objectives and enhancing stockholder value.
The Board believes that special meetings should only be called to consider extraordinary events that are of interest to a broad base of stockholders and that cannot be delayed until the next annual meeting. Implementation of the 10% ownership threshold could significantly disrupt our operations and increase our costs. For every special meeting, we are required to provide each stockholder a notice of meeting and proxy materials, which results in significant legal, printing and mailing and administrative expenses, as well as other costs normally associated with holding a stockholder meeting. Additionally, preparing for stockholder meetings requires significant attention of our directors, officers and employees, diverting their attention away from performing their primary function, which is to operate our business in the best interests of our stockholders. The current 25% threshold prevents a small group of stockholders that may have special interests from calling a special meeting that may not be of interest to all of our stockholders. Accordingly, the current 25% ownership threshold is a more appropriate standard to ensure that special meetings are held only for matters important to a larger group of stockholders.
We have strong corporate governance practices that provide Board accountability to stockholder concerns.
The Board further believes that our strong corporate governance framework makes the adoption of this proposal unnecessary. In addition to giving stockholders a meaningful right to call a special meeting in our bylaws, our corporate governance practices and policies ensure the Board remains accountable to stockholders. These extensive strong governance practices include:
| ■ | Annual election of directors; |
| ■ | Majority voting for all directors with resignation policy; |
| ■ | Stockholder right to call special meetings; |
| ■ | No supermajority voting provisions; |
| ■ | Proxy access bylaw (3% ownership / 3 years / up to 20 stockholders / 20% of Board); |
2022 Proxy Statement | 67 TABLE OF CONTENTS
PROPOSAL 4 – STOCKHOLDER PROPOSAL REDUCING THE THRESHOLD STOCK OWNERSHIP REQUIREMENT FOR STOCKHOLDERS TO CALL A SPECIAL STOCKHOLDER MEETING FROM 25% to 10%
| ■ | Separate independent chairman and CEO; |
| ■ | All directors independent except CEO; and |
| ■ | Annual “Say-on-Pay” advisory votes. |
We believe that this comprehensive package of governance practices and policies, including our existing special meeting bylaw, protects stockholder rights without the expense and risk associated with lowering the ownership threshold necessary to call a special meeting.
In addition, stockholders may communicate directly with the Board at any time. We are committed to engaging with our stockholders and soliciting their views and input on important governance, environmental, social, executive compensation and other matters. For further information on our engagement efforts and how our stockholders may communicate with any director, any Board committee or the full Board, see the sections titled “Corporate Governance―Stockholder Engagement” and “Corporate Governance―Communications with the Board and Non-Management Directors” on page 20. For the reasons set forth above, the Board believes that the implementation of this proposal is not in the best interests of the Company
or ourand its stockholders.
This view was shared by more than a majority of our stockholders who rejected a similar proposal from the proponent last year and also in 2014.We are committed to being a good corporate citizen in the communities in which we conduct our business. Consistent with this commitment, we support and encourage our employees to actively engage in community and
civic activities. We also encourage employees to participate in the political process as private citizens should they desire to do so. Our commitment to corporate citizenship is set forth in our Code of Business Ethics under a section entitled “Our Commitment to Fair and Ethical Dealings with Others,” and is available on our website at:www.nisource.com/ethics. Our Political Spending Policy, which describes our approach and governance process related to political spending, is also available on our website at:http://ir.nisource.com/governance.cfm.
We do not — and under federal law we cannot — use corporate funds for direct contributions to federal candidates. Such contributions may be made only by NiSource Inc. PAC (NiPAC), a non-profit entity that solicits voluntary contributions from eligible administrative and management employees in compliance with federal election laws. NiPAC contributes to the campaigns of federal and state candidates, where permissible, and files required reports with the Federal Election Commission and various state and local election commissions. These reports are publicly available. Reports filed with the Federal Election Commission are available atwww.fec.gov.Our corporate political activities are conducted under the oversight of the Nominating and Governance Committee of the Board.
We also do not make independent expenditures, as authorized by theCitizens United decision, and do not currently have any plans to do so.
We participate in trade and industry associations to benchmark best practices and share knowledge. While some of these trade organizations may engage in legislative or other political activity, we do not necessarily support all of their political goals. Because these associations operate independently of their members, disclosure of our dues paid to them would not provide our stockholders with greater understanding of our business strategies, sustainability initiatives or values. Furthermore, compiling information regarding every trade association to which any of our business units may have paid dues would be unreasonably burdensome and an inefficient use of Company resources.
The Board believes that the Company’s existing oversight and review procedures are sufficient to ensure accountability. We also believe that much of what the proposal advocates is already publicly available, and that adopting a policy as set forth in the proposal is unnecessary and would result in an unproductive use of Company resources.
If this proposal is properly presented at the meeting, approval requires the affirmative vote of a majority of the shares present at the
meeting, in personvirtual Annual Meeting or represented by proxy, and entitled to vote. Proxies submitted without direction pursuant to this solicitation will be voted AGAINST the stockholder proposal. Abstentions will have the same effect as a vote against the proposal.
BrokersWe believe brokers will not have discretionary authority to vote on this
proposal. Accordingly,proposal, so there could be broker
non-votes, which will have no effect on the vote.non-votes.
THE BOARD BELIEVES THAT THETHIS PROPOSAL IS NOT IN YOURTHE BEST INTERESTS OF STOCKHOLDERS AND RECOMMENDS THAT YOUA VOTE “AGAINST” THIS PROPOSAL.
68 | 2022 Proxy Statement
PROPOSAL 5 — STOCKHOLDER PROPOSAL REGARDING A SENIOR EXECUTIVE EQUITY RETENTION POLICYTABLE OF CONTENTS
The American Federation
For 2021, our Audit Committee consisted of
LaborMessrs. Bunting and
CongressDeVeydt and Ms. Henretta. Currently, our Audit Committee consists of
Industrial Organizations Reserve Fund, which beneficially held at least $2,000 in market value of common stock, has informed the Company that it or its agent plans to present the following proposal at the meeting:RESOLVED:Shareholders of NiSource Inc. (the “Company”) urge the Compensation CommitteeMr. Bunting, and Mss. Barbour, Henretta and Lee. Each member of the Board of Directors (the “Committee”) to adopt a policy requiring that senior executives retain a significant percentage of shares acquired through equity compensation programs until reaching normal retirement age. For the purpose of this policy, normal retirement age shall beAudit Committee is independent as defined by the Company’s qualified retirement plan that hasapplicable NYSE and SEC rules and meets the largest number of plan participants.
The shareholders recommend that the Committee adopt a share retention percentage requirement of at least 75 percent of net after-tax shares. The policy should prohibit hedging transactions for shares subject to this policy which are not sales but reduce the risk of loss to the executive. This policy shall supplement any other share ownership requirements that have been established for senior executives, and should be
implemented so as not to violate the Company’s existing contractual obligations or the terms of any compensation or benefit plan currently in effect.
SUPPORTING STATEMENT:
Equity-based compensation is an important component of senior executive compensation at our Company. While we encourage the use of equity-based compensation for senior executives, we are concerned that our Company’s senior executives are generally free to sell shares received from our Company’s equity compensation plans. Our proposal seeks to better link executive compensation with long-term performance by requiring a meaningful share retention ratio for shares received by senior executives from the Company’s equity compensation plans.
Requiring senior executives to hold a significant percentage of shares obtained through equity compensation plans until they reach retirement age will better align the interests of executives with the interests of shareholders and the Company. A 2009 reportadditional independence standard set forth by the Conference Board Task Force on Executive Compensation observed that suchhold-through-retirement requirements give executives “an ever growing incentive to focus on long-term stock price performance asin the equity subject toCorporate Governance Guidelines. Each member of the policy increases.” (http://www.conference-board.org/pdf_free/ExecCompensation2009.pdf).
In our opinion, the Company’s current share ownership guidelinesAudit Committee also is “financially literate” for its senior executives do not go far enough to ensure that the Company’s equity compensation plans continue to build stock ownership by senior executives over the long-term. We believe that requiring senior executives to only hold shares equal to a set target loses effectiveness over time. After satisfying these target holding requirements, senior executives are free to sell all the additional shares they receive in equity compensation.
For example, our Company’s share ownership guidelines require its CEO to hold shares equal to five times base salary, equal to $4.7 million in 2014. In comparison, our Company granted its former CEO Robert C. Skaggs Jr. equity awards with total grant date fair valuepurposes of $3.4 million in 2014 and $2.7 million in 2013, enabling him to satisfy the ownership requirement in just two years.
We urge shareholders to vote FOR this proposal.
Board of Directors’ Statement in Opposition
Your Board of Directors unanimously recommends a vote AGAINST this proposal.
applicable NYSE rules. The Board has considered this proposaldetermined that Mr. Bunting, the Chair of the Audit Committee, is an “audit committee financial expert” as defined by SEC rules.
The Audit Committee is responsible for, among other things, assisting the Board in monitoring the integrity of our financial statements; reviewing the qualifications and
as discussed below, concluded that it is unnecessaryindependence of our independent registered public accounting firm; overseeing the performance of our internal audit function and
undesirable,independent registered public accounting firm; and reviewing our risk assessment process. The Audit Committee has the sole authority to appoint, retain or replace the independent registered public accounting firm and is
not indirectly responsible for the
best interestscompensation and oversight of the
Company or our stockholders.The Board agrees with the proponent that equity-based compensation is an important component of our executive compensation program that aligns management and stockholder interests. We believe, however, that our current stock ownership requirements and executive compensation program, when taken together, reasonably align the interests of stockholders and executives while encouraging executives to make prudent business decisions that benefit stockholders over the long-term. Accordingly, the adoptionwork of the current proposal is unnecessary. Moreover, the proposal could have undesirable effects, including a competitive disadvantage in our efforts to recruit and retain executive officers.
We already maintain stock ownership requirements for our senior executives and Named Executive Officers’ stock ownership currently exceeds these requirements.
Our senior executives are already subject to stock ownership and retention requirements and we believe that our existing requirements already accomplish the proponent’s expressed purpose of aligning executive and stockholder interests through meaningful long-term equity ownership. Our executive stock ownership and retention guidelines (which are discussed further in the Compensation Discussion and Analysis section under the caption “Our Executive Compensation Process — Policies and Guidelines”) require significant stock ownership for all of our senior executives. As of the date of this proxy statement, all the Named Executive Officers that we currently employ own Company stock at levels in excess of these requirements.
We already have prohibitions on insider trading, hedging and “clawback” provisions applicable to our equity-based compensation that complement our stock ownership requirements.
In addition to stock ownership requirements, our executive officers are prohibited from engaging in short sales of the Company’s stock or buying or selling puts, calls or other options on the Company’s stock or otherwise hedging or speculating in the potential changes in the value of the Company’s stock. Our prohibitions on hedging transactions and “clawback” provisions are also discussed in the Compensation Discussion and Analysis section under the caption “Our Executive Compensation Process — Policies and Guidelines.” Therefore, the adoption of the proposalindependent registered public accounting firm for the purpose of implementing restrictions on hedging is not necessary as this restriction is already in place and applicablepreparing or issuing an audit report or performing other audit, review or attest services for us. The independent registered public accounting firm reports directly to all shares owned by our executives whether obtained through equity compensation plans or otherwise. Further, our compensation plans and agreements already contain “clawback” provisions that allow us to recoup compensation from any executive who engages in certain fraudulent or other inappropriate conduct.
Our compensation program aligns long-term interestthe Audit Committee.
In the performance of
executives and stockholders.As discussed in detail in this Proxy Statement, our compensation plans and policies are designed to further alignits responsibilities, the long-term interestsAudit Committee met regularly with the members of our executivesinternal audit function and stockholders. The compensationDeloitte, our independent registered public accounting firm, with and without management present, to discuss the results of its examinations, evaluations of our executive officersinternal controls, and the overall quality of our financial reporting. In addition, the Audit Committee Chair met with Deloitte on a recurring basis to discuss the audit process, accounting and internal control matters, among other things. The Audit Committee also met regularly with management to discuss accounting, auditing, internal control, financial reporting, earnings and risk management matters. During these meetings, the Audit Committee reviewed and discussed, among other items, the audited consolidated financial statements, the unaudited interim financial statements, significant accounting policies applied by us in our financial statements and non-GAAP financial measures, with management and Deloitte. The Audit Committee also discussed with, and received regular status reports from, our internal audit function and Deloitte on the overall scope and plans for their audits, including the scope and plans for evaluating the effectiveness of internal controls over financial reporting.
The Audit Committee has discussed with Deloitte the matters required to be discussed by the applicable requirements of the PCAOB and the SEC. The Audit Committee also has received the written disclosures and the letter from Deloitte required by the applicable requirements of the PCAOB regarding the independent registered public accounting firm’s communications with audit committees concerning independence and has discussed with Deloitte its independence. The Audit Committee has considered whether Deloitte’s provision of non-audit services to us is tiedcompatible with maintaining Deloitte’s independence. In reliance on the review and discussions referred to above, the Audit Committee recommended to the attainmentBoard that the audited consolidated financial statements be included in our Annual Report on Form 10-K for the year ended December 31, 2021.
The Audit Committee has appointed Deloitte to serve as our independent registered public accounting firm for the year ending December 31, 2021. In determining whether to reappoint Deloitte, the Audit Committee took into consideration various factors, including the historical and recent performance of
financialDeloitte on the audit; the professional qualifications of the firm and
other performance measuresthe lead audit partner; the quality of ongoing discussions with Deloitte; the results of an internal survey of Deloitte’s service and quality; the appropriateness of fees; and evidence supporting the firm’s independence, objectivity and professional skepticism. Although the Audit Committee has sole authority to appoint the independent registered public accounting firm, the Audit Committee has recommended that the Board
believes, promoteseek stockholder ratification of the
creation of long-term stockholder value. Additionally, we take into account the stockholders’ view of our executive compensation practices, noting that not less than 96% of our investors have voted in favor of our Say-on-Pay Proposal at each annual meeting since 2013. As described more fully in the Compensation Discussion and Analysis section, the mix of fixed and performance based compensation and the terms of annual and long-term incentive awards are all designed to enable the Company to attract, retain and motivate highly qualified executive talent while,appointment at the
same time, creating a close relationship between performance and compensation. Also, the proportion of at-risk performance-based compensation increases as the executive’s level of responsibility within the Company increases, further aligning the relationship between performance and compensation for our most senior executives.The proposal fails to strike a balance between incentivizing performance-based management behavior and permitting executives to manage their own financial affairs, causing a potential misalignment between the interests of stockholders and executives, as well as putting the Company at a competitive disadvantage.
The proposal suggests that executive officers should hold at least 75% of net after-tax shares acquired through our equity compensation programs until each such executive reaches retirement age. Because equity compensation is the most significant element of compensation for our executive officers, this requirement would likely result in our executive officers holding a disproportionate concentration of their assets in Company common stock relative to their total personal net worth. If the proposal is adopted, an ever increasing portion of each executive’s personal net worth would consist of Company shares, causing a lack of portfolio diversification. While we believe all our executives conduct business with the highest integrity and in full compliance with our Code of Conduct, this proposal could potentially influence the decisions the executive makes concerning the Company’s business operations, and in certain circumstances, potentially encourage executives to cause the Company to assume excessive risk or to be excessively risk averse to the detriment of the Company and its stockholders.
While recognizing that our executive officers should have a meaningful equity stake in our Company, the Board believes that it is important that we do not hinder our executive officers’ ability to responsibly manage their personal financial affairs by adopting an inappropriately high stock retention requirement.
Finally, the type of retention policy described in this proposal is uncommon in the broader market in which we compete for executive talent and we believe that the adoption of this proposal would put us at a competitive disadvantage relative to our peers who do not have such restrictions.
For all these reasons, the Board believes this proposal is unnecessary and undesirable, and contrary to your best interests.
Vote Required
If this proposal is properly presented at the meeting, approval requires the affirmative vote of a majority of the shares present at the meeting, in person or represented by proxy, and entitled to vote. Proxies submitted with-
out direction pursuant to this solicitation will be voted AGAINST the stockholder proposal. Abstentions will have the same effectAnnual Meeting as a vote againstmatter of good corporate governance.
| | | | | Audit Committee | |
| | | | | | |
| | | | | Theodore H. Bunting, Jr., Chair | |
| | | | | Deborah A. Henretta | |
2022 Proxy Statement | 69 TABLE OF CONTENTS
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FEES The following table represents the
proposal. Brokers will not have discretionary authority to vote on this proposal. Accordingly, there could be broker non-votes, which will have no effect on the vote.THE BOARD BELIEVES THAT THE PROPOSAL IS NOT IN YOUR BEST INTERESTS, AND RECOMMENDS THAT YOU VOTE “AGAINST” THIS PROPOSAL.
PROPOSAL 6 — STOCKHOLDER PROPOSAL REGARDING ACCELERATED VESTING OF EQUITY AWARDS OF SENIOR EXECUTIVES UPON A CHANGE IN CONTROL
The Utility Workers Union of America, which beneficially held at least $2,000 in market value of common stock, has informed the Company that it or its designated representative plans to present the following proposal at the meeting:
RESOLVED, that the shareholders of NiSource (the “Company”) urge the Board of Directors to adopt a policy that in the event of a change in control (as defined under any applicable employment agreement, equity incentive plan, or other plan), there shall be no acceleration of vesting of any equity award granted to any named executive officer, provided, however, that the Board’s Officer Nomination and Compensation Committee may provide in an applicable grant or purchase agreement that any unvested award will vest on a partial, pro rata basis up to the time of the named executive officer’s termination, with such qualificationsaggregate fees for an award as the Committee may determine.
For purposes of this policy, “equity award” means any grant of compensation that is valued in whole or in partprofessional services billed by reference to, or is otherwise based upon and/or payable in shares of Company stock. This resolution should be implemented so as not to affect any contractual rights in existence on the date this proposal is adopted, and should apply only to equity awards made under equity incentive plans or plan amendments that shareholders approve after the date of the 2016 annual meeting.
SUPPORTING STATEMENT
NiSource allows senior executives to receive accelerated awards of unearned equity under certain conditions after a change in control of the Company. Indeed, NiSource allows for accelerated vesting of certain equity awards, even if the executive is not terminated following a change in control but continues workingDeloitte for the Company.
According to NiSource’s 2015 proxy statement, for example, all performance shares granted to the named executive officers under the Company’s Omnibus Incentive Planfiscal years ended December 31, 2021 and outstanding as of the end of 2014 would immediately vest in the event of a change of control, whether or not the executive’s employment was terminated.
In our view, accelerated vesting of unearned equity is inconsistent with any notion of pay for performance, and can permit windfall awards that have nothing to do with executive performance. We accept, however, that an affected executive should be eligible to receive vesting of equity awards on a pro rata basis as of his or her termination date, with the details of any pro rata award to be determined by the Compensation Committee.
Leading proxy advisory firm Institutional Shareholder Services has stated that acceleration of performance-based awards is especially problematic, since this “effectively waives both time and performance requirements, further divorcing pay from actual performance.” ISS therefore recommends that “best practice for unvested performance-based equity awards is pro rata vesting, adjusted for actual performance and the fractional performance period, which would appropriately reward for performance actually achieved.” (2015 U.S. Compensation Policies, Frequently Asked Questions, ISS, February 9, 2015)
Other leading companies, including Apple, Chevron, ExxonMobil, IBM, Intel, and Microsoft, have limitations on accelerated vesting of unearned equity, such as providingpro rata awards or simply forfeiting unearned awards.
We believe that NiSource should also observe best practices in its executive compensation policies and therefore urge shareholders to voteFOR this proposal.
Board of Directors’ Statement in Opposition
Your Board of Directors unanimously recommends a vote AGAINST this proposal.
The Board has considered this proposal and, as discussed below, concluded that it is unnecessary and undesirable, and is not in the best interests of the Company or our stockholders.
The Board believes that our current “double-trigger limited” accelerated vesting of equity awards in the event of a change-in-control accomplishes the following benefits: (i) effectively aligns executives with stockholder interests; (ii) motivates executives to remain engaged with the Company to successfully complete any potential change-in-control transaction; and (iii) allows us to offer competitive executive compensation and attract and retain talented leadership.
Our double-trigger limited vesting provision.
In October 2015, the Compensation Committee approved an amendment to the 2010 Omnibus Incentive Plan to provide for accelerated vesting of equity awards only in the following two limited circumstances:
2020. | | Audit Fees(1) | | | $4,794,095 | | | $4,853,000 | |
| | Audit-Related Fees(2) | | | 516,041 | | | 565,436 | |
| | Tax Compliance(3) | | | — | | | — | |
| | Tax Advice and Tax Planning(4) | | | 43,437 | | | 187,878 | |
| | All Other Fees(5) | | | 101,649 | | | 21,238 | |
(1)
| (1) | if
Audit Fees — Fees for professional services performed by Deloitte for the acquiring company does not agree to assume the awardsaudit of our annual financial statements in the transaction; or |
| (2) | if the executive is terminated without cause or resigns for good reasonour Annual Report on Form 10-K and review of financial statements included in our Quarterly Report on Form 10-Q filings and services that are normally provided in connection with a qualifying change-in-controlstatutory and regulatory filings or engagements.
|
(2)
| Audit-Related Fees — Fees for the assurance and related services performed by Deloitte that are reasonably related to the performance of the audit or review of our financial statements. These fees included services provided by Deloitte in connection with the audit of our benefit plans. |
(3)
| Tax Compliance — Fees for professional services performed by Deloitte with respect to tax compliance. |
(4)
| Tax Advice and Tax Planning — Fees for professional services performed by Deloitte with respect to tax advice and tax planning. |
(5)
| All Other Fees — Fees for permissible work performed by Deloitte that does not fit within two years following or one year prior to such change-in-control.the above categories. |
Pre-Approval Policies and Procedures.Double-trigger limited vesting aligns executives’ interests with During 2021, the Audit Committee approved all audit, audit-related and non-audit services provided to us by Deloitte prior to management engaging the independent registered public accounting firm for those purposes. The Audit Committee’s current practice is to consider for pre-approval annually all audit, audit-related and non-audit services proposed to be provided by our independent registered public accounting firm for the year. Additional fees for other proposed audit-related or non-audit services (not within the scope of stockholders, encourages stabilitythe approved audit engagement) which have been properly presented to the Pre-Approval Subcommittee of the Audit Committee (consisting of Theodore H. Bunting, Jr.) by our Vice President and rewards executives for their performance.We provide long-term incentive awards to our executive officers to align their interests with those of our stockholders. By preventing the loss of an award through unilateral actionChief Accounting Officer may be considered and, if appropriate, approved by the Company,Pre-Approval Subcommittee of the existing double-trigger limited vesting terms encourage executivesAudit Committee, subject to remain objective when a potential change-in-control transaction arises, to avoid conflicts of interest and to focus on executing strategic changeslater ratification by the full Audit Committee. In no event, however, will any non-audit service be approved by the Pre-Approval Subcommittee that would result in the best interests of stockholders. Further, double-trigger limited vesting terms encourageindependent registered public accounting firm no longer being considered independent under the applicable SEC rules. In appointing Deloitte as our executive officers to remain withindependent registered public accounting firm, the Company duringAudit Committee has considered whether the process of a change-in-control transaction, which could be critical to the success of any such transaction. Finally, by providing executives the opportunity to realize their long-term incentive awards, our existing double-trigger limited vesting motivates executives to achieve Board and stockholder-approved performance goals.
Implementing the proposal would significantly limit our ability to attract, retain and properly incentivize talented executives.
We believe that it is critical to offer competitive compensation and benefits to our executives and that such policies increase stockholder value. Implementing the pro-rata vesting policy as outlined in the proposal would significantly disadvantage our recruiting and retention efforts, which are key to our success. Our existing double-trigger limited vesting provision is consistent with the vast majority of our peer group companies and the broader market in which we compete for executive talent. As noted in a 2014 study by Meridian Compensation Partners on Executive Change-in-Control Arrangements, over 90% of the 160 largest U.S. public companies vest long-term incentive awards in connectionnon-audit services rendered by Deloitte is compatible with a change-in-control. The pro-rata vesting requested bymaintaining the proposal is a declining minority practice according to the Meridian study and is not used by more than two-thirds of our peer companies.
Stockholders have shown strong support for our executive compensation program.firm’s independence.
Our executive compensation is designed to align executive pay with the interests of our stockholders. We have consistently received strong support for our executive compensation program in the annual “Say-on-Pay” vote with at least 96% approval at each annual meeting since 2013.
Long-term incentive awards are a significant component of our executive compensation program and encourage executive officers to focus on long-term value creation for our stockholders. We believe that the double-trigger limited vesting provisions provided in our 2010 Omnibus Incentive Plan are appropriate, effective and consistent with prevailing market practices.
For the reasons set forth above, the Board believes that our current double-trigger limited vesting provisions provide a balanced approach to the circumstance under which equity awards would vest following a change-in-control. We believe this approach is in the best interests of the Company and our stockholders.
Vote Required
If this proposal is properly presented at the meeting, approval requires the affirmative vote of a majority of the shares present at the meeting, in person or represented by proxy, and entitled to vote. Proxies submitted without direction pursuant to this solicitation will be voted AGAINST the stockholder proposal. Abstentions will have the same effect as a vote against the proposal. Brokers will not have discretionary authority to vote on this proposal. Accordingly, there could be broker non-votes, which will have no effect on the vote.
THE BOARD BELIEVES THAT THE PROPOSAL IS NOT IN YOUR BEST INTERESTS, AND RECOMMENDS THAT YOU VOTE “AGAINST” THIS PROPOSAL.
STOCKHOLDER PROPOSALS AND NOMINATIONS FOR
20172023 ANNUAL MEETING
Stockholders may submit proposals appropriate for stockholder action
at the
20172023 Annual Meeting consistent with the requirements of Rule 14a-8 under the Exchange Act, all other rules of the SEC relating to stockholder proposals and our Bylaws. Written notice containing the required information should be addressed to the attention of
the Company’sour Corporate Secretary
at NiSource Inc., 801 E. 86
th Avenue, Merrillville, Indiana 46410. For your proposal to be considered for inclusion in the Company’sour proxy statement in connection with the 20172023 Annual Meeting, we must receive your written proposal no later than December 8, 2016.20, 2022.
Stockholder proposals not intended to be included in
the Company’sour proxy statement (including director nominations) may be brought before the
20172023 Annual Meeting by filing a notice of stockholder’s intent to do so no earlier than January
11, 2017,24, 2023, and no later than February
10, 2017.23, 2023. The notice must include all of the information required to be set forth in any such notice by our Bylaws.
Stockholders who intend to submit director nominees for inclusion in the Company’sour proxy materials for the 20172023 Annual Meeting must comply with the requirements of proxy access as set forth in our Bylaws. The stockholder or group of stockholders
70 | 2022 Proxy Statement TABLE OF CONTENTS
who wish to submit director nominees pursuant to proxy access must deliver the required materials to
the Companyus no earlier than November
8, 2016,20, 2022, and no later than December
8, 2016.20, 2022.
In addition to satisfying the foregoing requirements under our Bylaws, to comply with the universal proxy rules (once effective), stockholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act no later than March 27, 2023.
If you would like a copy of our Bylaws, please contact
the Company’sour Corporate Secretary at the above address or access
the Company’sour Bylaws filed with the SEC as
an exhibitExhibit 3.1 to
the Company’sour Current Report on Form 8-K filed on
February 1, 2016.January 26, 2018. Failure to comply with
the Company’sour Bylaw procedure and deadlines may preclude presentation and consideration of the matter or of the proposed nominee for election at the
20172023 Annual Meeting.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely upon our review of the Forms 3, 4 and 5 furnished to the Company pursuant to Section 16(a) of the Exchange Act, we believe that all of our directors, officers and beneficial owners of more than 10% of the Company’s common stock filed all such reports on a timely basis during 2015.
ANNUAL REPORT AND FINANCIAL STATEMENTS
Attention is directed to the financial statements contained in
the Company’sour Annual Report for the year ended December 31,
2015.2021. As of the mail date of this
proxy statement,Proxy Statement, a copy of the Annual Report has been sent, or is concurrently being sent, to stockholders of record as of March
15, 2016.30, 2022. These statements and other reports filed with the SEC are available through our website at
http:https://ir.nisource.com/financials.cfmwww.nisource.com/filings.
AVAILABILITY OF FORM 10-K
A copy of our Annual Report on Form 10-K for the fiscal year ended December 31,
2015,2021, including the financial statements and the financial statement schedules, but without exhibits, is contained within
the Company’sour Annual Report which has been sent, or is concurrently being sent, to you and is available free of charge to any stockholder upon written request to
the Company’sNiSource Inc., c/o Corporate Secretary,
NiSource Inc., 801
E. 86thEast 86th Avenue, Merrillville, Indiana 46410 and is also available on our website athttp:https://ir.nisource.com/annuals.cfmwww.nisource.com/filings.
MULTIPLE STOCKHOLDERS SHARING THE SAME ADDRESS — “HOUSEHOLDING”
The SEC has adopted rules that permit companies and intermediaries (e.g., brokers) to satisfy the delivery requirements for proxy statements with respect to two or more stockholders sharing the same address by
deliver-ingdelivering a single set of proxy materials addressed to those stockholders. This process, which is commonly referred to as “householding,” may potentially provide extra convenience for stockholders and cost savings for companies or the intermediary.
You may receive proxy materials through an intermediary who uses householding to deliver proxy materials. If so, a single copy of the proxy materials may be delivered to multiple stockholders sharing an address unless the affected stockholder provides contrary instructions. Once you have received notice from your broker that they will be householding communications to your address, householding will continue until you are notified otherwise or until you revoke your consent. If this applies to you and you would prefer to receive separate copies of the proxy materials, please notify your broker that you no longer wish to participate in householding. Additionally, you may direct your written request for a copy of the proxy materials to NiSource Inc., c/o Corporate Secretary, 801 East 86th Avenue, Merrillville, Indiana 46410, or you may request a copy by telephone at (877) 647-5990. If your broker is not currently householding (i.e., you received multiple copies of our Proxy Statement)proxy statement), and you would like to request delivery of a single copy, you should contact your broker and find out if this option is available to you.
2022 Proxy Statement | 71 TABLE OF CONTENTS
The Board does not intend to bring any other matters before the Annual Meeting
and does not know of any matters that will be brought before the meeting by others.other than those described in this Proxy Statement. If any
other matters
do properly come before the meeting, it is the intention of the persons named in the enclosed form of proxy to vote the proxy in accordance with their judgment on such matters.
Whether or not you plan to attend the
virtual Annual Meeting, you can be sure your shares are represented at the meeting by submitting your completed proxy by telephone, through the Internet or by promptly marking, dating, signing and returning the enclosed proxy card.
BY ORDER OF THE BOARD OF DIRECTORS
Samuel K. Lee
Corporate Secretary
Dated: April 7, 2016
| | | | | BY ORDER OF THE BOARD OF DIRECTORS | | | | | | | | | | | | |
 | | | | | | | | | | | | | | Electronic Voting Instructions |
| | | | | Kimberly S. Cuccia | | | | | | | | | Available 24 hours a day, 7 days a week!
|
| | | | | Senior Vice President, General Counsel and | | | | | | | | | Instead of mailing your proxy, you may choose one of the voting methods outlined below to vote your proxy.
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| | | | | Corporate Secretary | | | | | | | | | VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR.
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| | Dated: April 19, 2022 | | | | | | | | | | | | Proxies submitted by the Internet or telephone must be received by 11:59 PM, Eastern Time, on May 10, 2016 (for registered shares) and 11:59 PM, Eastern Time, on May 8, 2016 (for Plan Shares, as defined in the Proxy Statement).
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| | | | | | | | | | | | | | | Vote by Internet |
| | | | | | | | | | | | | | • Go towww.investorvote.com/NI
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| | | | | | | | | | | | | | • Or scan the QR code with your smartphone
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| | | | | | | | | | | | | | • Follow the steps outlined on the secure website
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| | | | | | | | | | | | | Vote by telephone
• Call toll free 1-800-652-VOTE (8683) within the USA, US territories & Canada on a touch tone telephone
• Follow the instructions provided by the recorded message
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| | | | | | | | | | | | | | | | |
Using ablack inkpen, mark your votes with anXas shown in this example. Please do not write outside the designated areas.
| | x | | | | | | |
72 | 2022 Proxy Statement
q IF YOU HAVE NOT VOTED VIA THE INTERNETOR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q
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A
| | Proposals — The Board of Directors recommends a vote “FOR” Proposals 1, 2 and 3. | |  |
Proposal 1 –To elect nine directors to hold office until the next annual stockholders’ meeting and until their respective successors have been elected or appointed and qualified.
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| | For | | Against | | Abstain | | | | For | | Against | | Abstain | | | | For | | Against | | Abstain | |
| | | | | | | | | | | | |
1.1 - Richard A. Abdoo | | ¨ | | ¨ | | ¨ | | 1.2 - Aristides S. Candris | | ¨ | | ¨ | | ¨ | | 1.3 - Wayne S. DeVeydt | | ¨ | | ¨ | | ¨ | | |
| | | | | | | | | | | | |
1.4 - Joseph Hamrock | | ¨ | | ¨ | | ¨ | | 1.5 - Deborah A. Henretta | | ¨ | | ¨ | | ¨ | | 1.6 - Michael E. Jesanis | | ¨ | | ¨ | | ¨ | | |
| | | | | | | | | | | | |
1.7 - Kevin T. Kabat | | ¨ | | ¨ | | ¨ | | 1.8 - Richard L. Thompson | | ¨ | | ¨ | | ¨ | | 1.9 - Carolyn Y. Woo | | ¨ | | ¨ | | ¨ | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | For
| | Against
| | Abstain
| | | | | | | | For
| | Against
| | Abstain
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Proposal 2 – | | To approve executive compensation on an advisory basis.
| | ¨ | | ¨ | | ¨ | | | | Proposal 3– | | To ratify the appointment of Deloitte & Touche LLP as the Company’s independent registered public accountants. | | ¨ | | ¨ | | ¨ |
The Board of Directors recommends a vote “AGAINST” Proposals 4, 5 and 6.
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| | | | For
| | Against
| | Abstain
| | | | | | | | For
| | Against
| | Abstain
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Proposal 4 – | | To consider a stockholder proposal regarding reports on political contributions.
| | ¨ | | ¨ | | ¨ | | | | Proposal 5 – | | To consider a stockholder proposal regarding a senior executive equity retention policy. | | ¨ | | ¨ | | ¨ |
Proposal 6 – | | To consider a stockholder proposal regarding accelerated vesting of equity awards of senior executives upon a change in control.
| | ¨ | | ¨ | | ¨ | | | | | | | | | | | | |
IF VOTING BY MAIL, YOUMUST COMPLETE SECTIONS A - C ON BOTH SIDESTABLE OF THIS CARD.CONTENTS
TABLE OF CONTENTS
| | | | | | | | |
| | Important notice regarding the Internet availability of proxy materials for the Annual Meeting of Stockholders.
The Proxy Statement and the 2015 Annual Report to Stockholders are available at:http://ir.nisource.com/annuals.cfm
| | |
q IF YOU HAVE NOT VOTED VIA THE INTERNETOR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q
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Proxy — NiSource Inc. | |
|
| |
This Proxy is Solicited on Behalf of the Board of Directors of NiSource Inc.
for its Annual Meeting of Stockholders, to be held on May 11, 2016.
The undersigned hereby appoints Joseph Hamrock and Donald E. Brown, or either of them, the proxies of the undersigned, with all power of substitution, for and in the name of the undersigned to represent and vote the shares of common stock of the undersigned at the Annual Meeting of Stockholders of the Company, to be held at the Hyatt Rosemont, 6350 N. River Road, Rosemont, IL 60018, on Wednesday, May 11, 2016, at 10:00 a.m., local time, and at the adjournment or adjournments thereof.
Unless otherwise marked, this proxy will be voted: “FOR” all of the nominees listed in Proposal 1, “FOR” advisory approval of executive compensation in Proposal 2, “FOR” ratification of the independent registered public accountants in Proposal 3, “AGAINST” the stockholder proposal regarding reports on political contributions in Proposal 4, “AGAINST” the stockholder proposal regarding a senior executive equity retention policy in Proposal 5 and “AGAINST” the stockholder proposal regarding accelerated vesting of equity awards of senior executives upon a change in control in Proposal 6.
The undersigned stockholder hereby acknowledges receipt of the Notice of Annual Meeting of Stockholders and Proxy Statement relating to the Annual Meeting and hereby revokes any proxy or proxies previously given. The undersigned stockholder may revoke this proxy at any time before it is voted by filing with the Corporate Secretary of the Company a written notice of revocation or a duly executed proxy bearing a later date, by voting by telephone or through the Internet, or by attending the Annual Meeting and voting in person.
PLEASE VOTE YOUR SHARES BY TELEPHONE, THROUGH THE INTERNET, OR BY MARKING, SIGNING, DATING AND MAILING THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
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Change of Address — Please print your new address below. | | | | Comments — Please print your comments below. | | | | Meeting Attendance |
| | | | | | | | | | |
| | | | | | | | Mark the box to the right if you plan to attend the Annual Meeting. | | ¨ |
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C
| | Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below |
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NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such.
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Date (mm/dd/yyyy) — Please print date below. | | | | Signature 1 — Please keep signature within the box. | | | | Signature 2 — Please keep signature within the box. |
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¢ | | IF VOTING BY MAIL, YOUMUST COMPLETE SECTIONS A - C ON BOTH SIDES OF THIS CARD.
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