| ☒ | Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
| ☐ | Definitive Proxy Statement | |
| ☐ | Definitive Additional Materials | |
| ☐ | Soliciting Material under §240.14a-12 |
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PRELIMINARY PROXY STATEMENT – SUBJECT TO COMPLETION
Leading toward a sustainable future 2021PSEG
2022 Proxy Statement
for 120 years and counting.
POWERING
PROGRESS
Notice of Annual Meeting
April 20, 202118, 2023 – 1 p.m.P.M. ET
Virtual Only PSEG > Powering Progress PSEGLeading toward a sustainable future 2021 Proxy Statement Notice of Annual Meeting April 20, 2021-1 p.m. ET Virtual Only PSEG > Powering Progress PSEG
energy
One of Americas Best Employers for DiversityForbes2020 Public Company Board of the YearNational Association of Corporate Directors, New Jersey ChapterEnergy Star Partner of the Year Award (PSEG LI)U.S. Environmental Protection AgencyMost Trusted Combined Gas & Electric Utility in the East, Most Trusted BrandCogent Syndicated Brand Trust IndexFramatome Top Innovative Practice Award (PSEG Nuclear)Nuclear Energy InstituteCorporate Citizenship Award (Large Business)Long Island Business NewsReliabilityOneTM Award for Outstanding Reliability Performance in Mid-Atlantic Metropolitan Region, 19th consecutive yearPA Consulting2020 Outstanding Customer Engagement AwardPA ConsultingDow Jones Sustainability North America Index, 13th consecutive yearDow JonesTop Utilities Company, 2020 Reader RankingNJBIZAmericas Most Responsible Companies 2021NewsweekRECENTAW A R D S & R E C O G N I T I O NJan.2020 Jan.Jun. Jun. Jul. Sept. Nov. Nov. Nov. Nov. Dec. Best Employers for Diversity 2020 Forbes2020 Public Company Board of the YearNational Association of Corporate Directors, New Jersey ChapterEnergy Star Partner of the Year Award (PSEG LI)U.S. Environmental Protection AgencyMost Trusted Combined Gas & Electric Utility in the East, Most Trusted BrandCogent Syndicated Brand Trust IndexFramatome Top Innovative Practice Award (PSEG Nuclear)Nuclear Energy InstituteCorporate Citizenship Award (Large Business)Long Island Business NewsReliabilityOneTM Award for Outstanding Reliability Performance in Mid-Atlantic Metropolitan Region, 19th consecutive yearPA Consulting2020 Outstanding Customer Engagement AwardPA ConsultingDow Jones Sustainability North America Index, 13th consecutive yearDow JonesTop Utilities Company, 2020 Reader RankingNJBIZAmericas Most Responsible Companies 2021NewsweekRECENTAW A R D S & R E C O G N I T I O NJan.2020 Jan.Jun. Jun. Jun. Jul. Nov. Nov. Nov. Nov. Dec.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
AND PROXY STATEMENT OF PSEG
The Annual Meeting of Stockholders of Public Service Enterprise Group Incorporated (the “Company”)(PSEG or Company) will be held on Tuesday, April 20, 2021,18, 2023, at 1:00 p.m. Eastern Time. Due to the public health impact of the coronavirus outbreak (COVID-19) and to support the health and well-being of our stockholders and other meeting participants, the Annual Meeting will be heldTime in a virtual only format via live webcast on the internet. You will not be able to attend the Annual Meeting in person. However, stockholders of record as of the close of business on February 19, 2021 17, 2023 will be able to attend, vote, and submit questions during the virtual meeting by registering at: register.proxypush.com/peg
DATE
April at 1:00 P.M., Eastern Time
VIRTUAL MEETING
To attend the meeting register at: register.proxypush.com/peg
Scan this QR code to access the
RECORD DATE
Stockholders entitled to vote at the Annual Meeting are the holders of common stock of record at the close of business on February | You are encouraged to vote your shares in advance of the Annual Meeting for the following items:
1. Elect ten members of the Board of Directors (Board) to hold office until the Annual Meeting of Stockholders in
2. Approve on an advisory basis, our executive compensation;
3. Approve on an advisory basis, the frequency of holding future advisory votes on executive compensation; 4. Consider and act upon three management proposals to approve amendments to our Certificate of Incorporation and By-Laws to eliminate supermajority voting requirements; 5. Ratify the appointment of Deloitte & Touche LLP (Deloitte) as independent auditor for
6. Transact any other business that is properly presented at the meeting.
By order of the Board of Directors,
Secretary
March
YOUR VOTE IS IMPORTANT,REGARDLESS OF THE NUMBER OF SHARES YOU OWN. PLEASE
IF YOU HAVE MULTIPLE ACCOUNTS, YOU MAY RECEIVE MORE THAN ONE
Voting Methods for Stockholders | |||||||
MAIL PROXY CARD EQ Shareowner Services P.O. Box 64945 St. Paul, MN 55164-0945
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PHONE 1-866-883-3382 (toll-free)
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Please vote on these items:
PLEASE VOTE ON THESE ITEMS
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| 1 | Election of Directors | 2 | Advisory Vote on the Approval of Executive Compensation | 3 | Ratification of the Appointment of Independent Auditor
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| 4 | Approval of the 2021 Equity Compensation Plan for Outside Directors | 5 | Approval of the 2021 Long-Term Incentive Plan
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To Submit Proposals for the 20222024 Annual Meeting
FINAL DATE
November (last day for receipt by us) |
CONTACT
Office of the Corporate Secretary, PSEG 80 Park Plaza, T4B, Newark, NJ 07102
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ForThis year we are pleased to save costs and help protect the environment by using the “Notice and Access” method of delivery of proxy materials. Instead of receiving paper copies of our proxy materials in the mail, many shareholders this year will receive a Notice of Internet Availability of Proxy Materials (“Notice”), which provides an Internet website address where shareholders can access electronic copies of the proxy materials and vote. The website also has instructions for voting by phone and for requesting paper or e-mail copies of the proxy materials and proxy card.
If your shares are held by a bank, broker or broker,other holder of record (sometimes referred to as holding shares “in street name”), including those in the various stockholder and employee plans that we offer, please follow the voting instructions from your bank, broker or plan administrator. For more information, see pages 84-88.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be held on April 20, 2021 (Annual Meeting).
The Proxy Statement and Annual Report to Stockholders are available at www.pseg.com/annualmeeting.page 82.
The approximate date on which a Notice, this Proxy Statement and the accompanying proxy card were first sent or given to security holders and made available electronically via the Internet was March 15, 2021.X, 2023.
Public Service Enterprise Group Incorporated (we, us, our, PSEG or the Company) is distributing thisThe Proxy Statement and Annual Report to solicit proxies in connection with our 2021Stockholders are available at www.pseg.com/annualmeeting
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders.Stockholders to be held on April 18, 2023.
 | Future Electronic Delivery
You can help us and the environment by choosing to receive future proxy statements and related documents such as the Annual Report and Form 10-K by electronic delivery. You may sign up for future electronic delivery at the website below, depending on the nature of your ownership. Please note that these are not the same sites to use for voting. For further information about how to vote, see the Notice of Annual Meeting of Stockholders and page | |
• If you are a stockholder of record, please go to www.proxyconsent.com/peg
• For shares held in Employee Benefit Plans, please go to www.proxyconsent.com/peg
• If your shares are held by a bank or broker, please go to https://enroll.icsdelivery.com/peg |
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| OVERVIEW OF BOARD NOMINEES | ||||
| NOMINEES FOR DIRECTOR | ||||
| CORPORATE GOVERNANCE | ||||
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| SECURITY OWNERSHIP OF DIRECTORS, MANAGEMENT AND CERTAIN BENEFICIAL OWNERS | ||||
| Proposal 2: ADVISORY VOTE ON THE APPROVAL OF EXECUTIVE COMPENSATION | 37 | |||
| EXECUTIVE COMPENSATION SUMMARY | 38 | |||
| EXECUTIVE COMPENSATION | 42 | |||
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PSEG 2023 Proxy Statement i
Forward Looking Statements
Forward-Looking Statements
The statements contained in this Proxy Statement that are not purely historical are “forward-looking statements” within the meaning of The Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ materially from those anticipated. Such statements are based on management’s beliefs as well as assumptions made by and information currently available to management. When used herein, the words “anticipate,” “intend,” “estimate,” “believe,” “expect,” “plan,” “should,” “hypothetical,” “potential,” “forecast,” “project,” variations of such words and similar expressions are intended to identify forward-looking statements. Such statements are based on management’s beliefs as well as assumptions made by and information currently available to management. Factors that couldmay cause actual results to differ materially from those contemplated in any forward-looking statements made by us herein are discussed in our Annual Report on Form 10-K and subsequent reports on Form 10-Q and Form 8-K filed with the Securities and Exchange Commission (SEC), and available on our website: https://investor.pseg.com/financial-information/sec-filingsinvestor.pseg.com. All of the forward-looking statements made in this Proxy Statement are qualified by these cautionary statements and we cannot assure you that the results or developments anticipated by management will be realized or even if realized, will have the expected consequences to, or effects on, us or our business, prospects, financial condition, results of operations or cash flows. Readers are cautioned not to place undue reliance on these forward-looking statements in making any investment decision. Forward-looking statements made in this Proxy Statement apply only as of the date hereof. WeWhile we may elect to update forward-looking statements from time to time, we specifically disclaim any obligation to update these forward-looking statementsdo so, even in light of new information or future events, unless otherwise required by applicable securities laws. Information on our website should not be deemed incorporated into, or as a part of, this report.
ii PSEG 2023 Proxy Statement
Proxy Statement Summary
This summary highlights information that is contained elsewhere in this Proxy Statement. It does not contain all the information that you should consider. We encourage you to read the entire Proxy Statement carefully before voting.
ANNUAL MEETING AGENDA AND VOTING RECOMMENDATIONS
At the Annual Meeting, you will be asked to vote on the following five proposals. It is our recommendation that you vote in favor of all five.of the following proposals.
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1. | Election of Directors | FOR | 7 | |||||
2. | Advisory Vote on the Approval of Executive Compensation | FOR | 37 | |||||
3. | Advisory Vote on the Frequency of Future Advisory Votes on Executive Compensation | 1-Year | 73 | |||||
4(a). | Approval of Amendments to our Certificate of Incorporation – to eliminate supermajority voting requirements for certain business combinations. | FOR | 74 | |||||
4(b). | Approval of Amendments to our Certificate of Incorporation and By-Laws – to eliminate supermajority voting requirements to remove a director without cause. | FOR | 74 | |||||
4(c). | Approval of Amendments to our Certificate of Incorporation – to eliminate supermajority voting requirement to make certain amendments to our By-Laws. | FOR | 75 | |||||
5. | Ratification of the Appointment of Deloitte as Independent Auditor for 2023 | FOR | 76 | |||||
Ensuring that our Board has the optimal balance of skills, viewpoints, perspectives and experiences is a top priority of the Board and the Corporate Governance, Committee.Nominating and Sustainability Committee (GNS). The nominees for whom you are being asked to vote for are a diverse group of highly qualified leaders with a broad range of business, industry, environmental, academic and public service experience. Our Board nominees also reflect our commitment to diversity.
For additional information about the diversity, experience, skills and qualifications of each individual nominee, please see the charts on page 23 andpages 6-87-9 and biographical data on pages 10-14.11-15.
The Board of Directors note with respect and admiration the retirement of Dr. Ralph Izzo, Executive Chair of the Board and past Chair of the Board, President and Chief Executive Officer of PSEG, effective January 1, 2023. Throughout his 30 years with the company and 15 years as Chair, President and CEO, Mr. Izzo served PSEG with integrity and vision, elevating the corporation’s position as a player in the national energy public policy arena and fostering an inclusive environment where employees felt welcomed and valued.
Following the 2023 Annual Meeting, David Lilley will also be concluding his distinguished service on our Board. Since joining the board over 14 years ago, Mr. Lilley has become known for his commitment to safety and ensuring that PSEG meets its environmental requirements and regulations. It is because of his experience—coupled with the experience of other Board members and executive leadership—that PSEG has been able to adapt and become a company where a diversity of ideas, thoughts, perspectives and experiences are appreciated. The Board wishes to thank Mr. Lilley for his many years of dedicated service.
PSEG 2023 Proxy Statement 1
Proxy Statement Summary
WHAT’S NEW?
This year we have expanded our discussion of the following sections:
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• Board Oversight of Cybersecurity,Our Environmental Priorities – transition to a predominantly regulated utility with strong ESG focus, see page 22.25.• Our Social Priorities – including PSEG Foundation & Corporate Responsibility, see page 26. • Human Capital Management including Diversity, Equity– Health & Safety, DE&I, Employee Engagement, and Inclusion,Talent Attraction and Development, see pages 27-30.• Oversight of Political Contributions and Engagement Activities, see page 31.• COVID-19 Response:• Oversight of COVID-19 Risk Management, see page 23;• COVID-19 Response (Community, Customers, Employees), see page 24; and• No COVID-19 Adjustments to Compensation, see page 41.ESG Highlights (p.24-31) Announced exploration of strategic alternatives for non-nuclear assets. Gained NJBPU approval for the Clean Energy Future proposal to invest $1 billion in Energy Efficiency programs, approximately $700 million for Energy Cloud/Smart Meters (AMI) and $166 million for Electric Vehicle charging infrastructure. Entered into an agreement to acquire a 25% interest in Orsteds 1,100MW Ocean Wind project, located off the coast of New Jersey, (subject to regulatory approval). Added Equity to our Diversity & Inclusion strategy for a renewed focus on fair and equitable workplace processes. Enhanced transparency on workforce diversity. Enhanced oversight and transparency of political contributions and engagement.
| • | 2023 Executive Compensation – disclosure on pay versus performance, and implementation of ESG metrics in both MICP and LTIP as previewed in last year’s proxy statement, see pages 49 and 69-72. |
Proxy Statement Summary
OUR DIRECTOR NOMINEES
Name | Age | Director Since | Primary Occupation | Independent | Committee Memberships | Age | Director Since | Primary Occupation | Independent | Committee Memberships* | ||||||||||||||
Ralph Izzo | 63 | 2006 | Chairman of the Board, President and Chief Executive Officer (CEO) of PSEG | E (Chair) | ||||||||||||||||||||
Ralph A. LaRossa | 59 | 2022 | Chair of the Board, President and Chief Executive Officer (CEO) of PSEG | E | ||||||||||||||||||||
Shirley Ann Jackson Lead Director | 74 | 2001 | President of Rensselaer Polytechnic Institute | ● | CG, E, IO, O | |||||||||||||||||||
Susan Tomasky Lead Director | 70 | 2012 | Retired President – AEP Transmission of American Electric Power Corporation | ● | GNS, E, O | |||||||||||||||||||
Willie A. Deese | 65 | 2016 | Retired Executive Vice President (EVP) of Merck & Co. Inc. | ● | A, CG (Chair), O | 67 | 2016 | Retired Executive Vice President (EVP) of Merck & Co. Inc. | ● | A, GNS (Chair), O | ||||||||||||||
David Lilley | 74 | 2009 | Retired Chairman of the Board, President and CEO of Cytec Industries, Inc. | ● | A, E, F, O (Chair) | |||||||||||||||||||
Jamie M. Gentoso | 46 | 2022 | Global Head of Solutions & Products Business Unit, Holcim | ● | F, IO | |||||||||||||||||||
Barry H. Ostrowsky | 70 | 2018 | President and CEO of RWJBarnabas Health, Inc. | ● | A, F, O | 72 | 2018 | Retired President and CEO of RWJBarnabas Health, Inc. | ● | A (Chair), F, O | ||||||||||||||
Valerie A. Smith | 67 | 2022 | President of Swarthmore College | ● | GNS, O | |||||||||||||||||||
Scott G. Stephenson | 63 | 2020 | Chairman of the Board, President and CEO, Verisk Analytics, Inc. | ● | F, IO | 65 | 2020 | Retired Chair of the Board, President and CEO, Verisk Analytics, Inc. | ● | F (Chair), IO | ||||||||||||||
Laura A. Sugg | 60 | 2019 | Retired President – Australasia Division of ConocoPhillips Corporation | ● | A, IO (Chair) | 62 | 2019 | Retired President – Australasia Division of ConocoPhillips Corporation | ● | A, GNS, IO (Chair) | ||||||||||||||
John P. Surma | 66 | 2019 | Retired Chairman and CEO, United States Steel Corporation | ● | CG, IO, O | 68 | 2019 | Retired Chair of the Board and CEO, United States Steel Corporation | ● | GNS, IO, O (Chair) | ||||||||||||||
Susan Tomasky | 68 | 2012 | Retired President – AEP Transmission of American Electric Power Corporation | ● | A (Chair), CG, E, O | |||||||||||||||||||
Alfred W. Zollar | 66 | 2012 | Retired General Manager – Tivoli Software Division of IBM Corporation | ● | A, F (Chair), IO | 68 | 2012 | Executive Advisor, Siris Capital Group, LLC and Retired General Manager – Tivoli Software Division of IBM Corporation | ● | A, E, F, IO | ||||||||||||||
A=Audit CG=GNS= Governance, Nominating and Sustainability (formerly Corporate Governance Committee) E=Executive F=Finance IO=Industrial Operations O=Organization and Compensation
| * | Committee Chair and member positions are indicated as of the date of this Proxy Statement. If elected, the nominees’ positions will change as follows: |
Mr. LaRossa will also serve as Chair of the Executive Committee.
Mr. Deese will also serve as a member of the Executive Committee.
Mr. Stephenson will also serve as a member of the Audit Committee and will be considered an “audit committee financial expert,” see page 19.
2 PSEG 2023 Proxy Statement
Proxy Statement Summary
GOVERNANCE HIGHLIGHTS
PSEG is committed to strong corporate governance practices, as we recognize that they contribute to long-term stockholder value. For additional information on our corporate governance, see the section under Proposal 1: Election of Directors beginning on page 6. FOR DIRECTOR NOMINEES
Board Tenure Gender, Racial and Ethnic Diversity Board Independence 4 new directors added in the last 4 years bringing fresh perspectives to the BoardBoard Tenure Gender, Racial and Ethnic Diversity Board Independence 3 Directors 10+ years Average Tenure 7.8 years 4 Directors 04 years 3 Directors 59 years 50% Diversity 3 Directors Racially/Ethnically Diverse Lead Director 3 Directors Women 9 of 10 Are independent (all but CEO) 4 new directors added in the last 4 years bringing fresh perspectives to the Board
Governance Best Practices
• Annual election of all directors • Majority voting for directors with a director resignation policy • Stockholders’ right to call special meetings requires the vote of 25% of shares cast thereat • Proxy access • No poison pill • Independent board (all but CEO) • Strong independent Lead Director with clear duties • Regular executive sessions of • Regular engagement with investors | • Annual disclosure of political engagement activities • Board oversight of sustainability, climate change, cybersecurity, and human capital management (including diversity, equity, and inclusion) • Diverse directors’ skills, qualifications, gender, race and ethnicity • Governance, Nominating and Sustainability Committee is • Robust stock ownership requirements for directors and executives • Succession planning for CEO and key executives
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Proxy Statement SummaryWe are an energy company with a diversified business mix, primarily consisting of a regulated utility and nuclear generation. Over the past few years, our investments have simplified our business mix to reflect a higher percentage of earnings contribution by PSE&G. The sale of the fossil generating portfolio further simplified our business mix, resulting in an even higher percentage of earnings contribution by PSE&G going forward and provides more financial flexibility.
PSEG 2023 Proxy Statement 3
Proxy Statement Summary
2020
2022 PERFORMANCE SNAPSHOT
The charts below compare the relative contributions to earnings of Public Service Electric and Gas Company (PSE&G), and PSEG Power LLC (PSEG Power or Power) & Other over the past five years and show our earnings growth in those years. Our financial highlights are presented below.
Over the past few years, our investments resulted in a higher percentage of earnings contribution by PSE&G. The sale of the fossil generating portfolio further simplified our business mix, resulting in an even higher percentage of earnings contribution by PSE&G going forward and provides more financial flexibility. You can find a more comprehensive discussion of our 20202022 business and financial performance in our 20202022 Form 10-K.
See Appendix A for a complete list of items excluded from Net Income in the determination of non-GAAP Operating Earnings.
$3.76$3.33 $3.43$3.28$3.10 $2.93 $3.12$2.83 $2.90 7 594 13122 468 20 4306 72 502 409 479 365 505 514$1.75 181,067 1,250 1,327 1,250 1,327 973 963 1,067 889 889(20) (25) (16) (16)2016 2017 2018 2019 2020 2016 2017 2018 2019 2020PSEG Enterprise/Other PSEG Enterprise/Other PSEG Power PSEG Power PSE&G PSE&GNet Income
Dollars in Millions, except per share amounts | 2022 | 2021 | ||||||
Operating Revenues | 9,800 | 9,722 | ||||||
Net Income (Loss) | 1,031 | (648 | ) | |||||
Operating Earnings (non-GAAP) | 1,739 | 1,853 | ||||||
Total Assets | 48,718 | 48,999 | ||||||
Earnings Per Share (EPS) – Diluted | ||||||||
Net Income (Loss)* | 2.06 | (1.29 | ) | |||||
Operating Earnings (non-GAAP) | 3.47 | 3.65 | ||||||
Dividends Paid per Share | 2.16 | 2.04 | ||||||
Market Price per Share – Year-end | 61.27 | 66.73 | ||||||
*Approximately 3 million potentially dilutive shares were excluded from total shares used to calculate the diluted loss per share (GAAP) Opera ng Earnings per share (non-GAAP)GAAP: Contribution to PSEG Net Income ($ Millions)and Net Income per share ($/Share)Non-GAAP: Contribution to PSEG Operating Earnings ($ Millions)and Operating Earnings per share ($/Share)
Financial Highlights
Dollars in Millions, except per share amounts | 2020 ($) | 2019 ($) | ||||||
Operating Revenues | 9,603 | 10,076 | ||||||
Net Income | 1,905 | 1,693 | ||||||
Total Assets | 50,050 | 47,730 | ||||||
Earnings Per Share (EPS) – Diluted | 3.76 | 3.33 | ||||||
Dividends Paid per Share | 1.96 | 1.88 | ||||||
Market Price per Share – Year-end | 58.30 | 59.05 | ||||||
PSEG Value Proposition
We conduct our business through two direct wholly owned subsidiaries, PSE&G and PSEG Power. We are an energy company with a diversified business mix with operations primarily infor the Northeastern and Mid-Atlantic United States. Our business approach focuses on operational excellence, financial strength and disciplined investment.year ended December 31, 2021 as their impact was antidilutive.
Operational Excellence Safe, Reliable Operations with Commitment to Continuous Improvement Financial Strength Sound Credit Quality, Balance Sheet and Cash Flow Disciplined Investment Aligned with NJ Energy and Environmental Goals4 PSEG 2023 Proxy Statement
Proxy Statement Summary
EXECUTIVE COMPENSATION HIGHLIGHTS
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Proxy Statement Summary
EXECUTIVE COMPENSATION HIGHLIGHTS
SAY ON PAY
Stockholders continued to show strong support for our executive compensation programs, with 91.8% of the votes cast for the approval of the “say on pay” proposal at our |
Approval in
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The following are some highlights of our executive compensation program. Our executive compensation program is benchmarked against our peers and helps us recruit and retain top talent. Our executive compensation programIt closely links pay to performance in order to align our leadership team’s interests with stockholders’ interests. Our incentives put a significant portion of our executives’ pay at risk based on performance.
Our independent compensation consultant, Compensation Advisory Partners LLC (CAP), provides executive compensation services to the Board.
Key Components | Type | Rationale | ||
Base salary | Fixed | Experience, performance and competitive market. | ||
Annual cash incentive award under our | Variable performance-based | Emphasis on Operating EPS (non-GAAP) as the corporate financial objective and business unit financial performance, as well as additional operational and strategic metrics. Payment opportunity from zero to 200% of target percentage of salary. | ||
Equity-based incentive awards under our Long-Term Incentive Plan (LTIP), consisting of performance share units (PSUs) and restricted stock units (RSUs) | Variable performance-based | PSUs (70% for the Named Executive Officers (NEOs)) are measured over a three-year period based RSUs (30% for the NEOs) cliff vest at the end of three years, unless retirement eligible, when RSUs vest one-twelfth per month over one year. All of our NEOs, with the exception of Mr. Carr, are retirement eligible. | ||
Retirement and post-employment benefits | Assist in attracting and retaining our executives and provide a competitive benefits package to our employees. | |||
Proxy Statement Summary*Prior to 2022, our Senior Vice Presidents and above, including the NEOs, participated in the Senior Management Incentive Compensation Plan (SMICP), which was a 162m approved plan, and Vice Presidents participated in the MICP. Given the elimination of the 162m performance-based exemption, effective January 1, 2022, the Board determined to discontinue the SMICP and transferred the existing active plan participants to the MICP.
PSEG 2023 Proxy Statement 5
Proxy Statement Summary
Executive Pay Mix
For 2020,2022, the target annual and long-term incentive pay for our CEO and other NEOs as a group was 89%88% and 77%74%, respectively, of target Total Direct Compensation.
CEO Pay Mix Average Other NEO Pay Mix 11% 16% 73% 23% 58% 19% Salary SMICP LTIP Value at Risk
20202022 TARGET COMPENSATION SUMMARY
Executive | Base Salary ($) | Annual Incentive | Target Total Cash ($) |
Long-Term Incentive ($) | Target Total Compensation ($) | |||||||||||||||||||
| PSUs | RSUs | |||||||||||||||||||||||
Ralph Izzo |
| 1,421,400 |
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| 140 | % |
| 3,411,360 |
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| 6,370,046 |
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| 2,730,029 |
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| 12,511,435 |
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Daniel J. Cregg |
| 680,000 |
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| 75 | % |
| 1,190,000 |
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| 1,134,027 |
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| 486,030 |
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| 2,810,057 |
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Ralph A. LaRossa |
| 787,000 |
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| 90 | % |
| 1,495,300 |
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| 1,680,020 |
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| 720,044 |
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| 3,895,364 |
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Tamara L. Linde |
| 638,600 |
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| 75 | % |
| 1,117,550 |
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| 910,021 |
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| 390,004 |
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| 2,417,575 |
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David M. Daly |
| 600,000 |
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| 75 | % |
| 1,050,000 |
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| 952,013 |
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| 408,005 |
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| 2,410,018 |
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Executive | Base Salary ($) | Annual Incentive | Target Total Cash ($) |
Long-Term Incentive ($) | Target Total Compensation ($) | |||||||||||||||
| PSUs | RSUs | |||||||||||||||||||
Ralph Izzo | 1,464,000 | 140% | 3,513,600 | 6,370,016 | 2,730,028 | 12,613,644 | ||||||||||||||
Ralph A. LaRossa(1) | 1,250,000 | 130% | 2,875,000 | 5,145,026 | 2,205,074 | 10,225,100 | ||||||||||||||
Daniel J. Cregg | 735,700 | 80% | 1,324,260 | 1,295,015 | 555,000 | 3,174,275 | ||||||||||||||
Tamara L. Linde | 685,000 | 80% | 1,233,000 | 980,057 | 420,019 | 2,633,076 | ||||||||||||||
Kim C. Hanemann | 648,900 | 75% | 1,135,575 | 910,043 | 390,059 | 2,435,677 | ||||||||||||||
Eric Carr | 616,300 | 70% | 1,047,710 | 840,029 | 360,035 | 2,247,774 | ||||||||||||||
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Mr. LaRossa was promoted September 1, 2022 from Chief Operating Officer (COO) of the Company to President and CEO. The target salary and annual incentive noted in the table above represent Mr. LaRossa’s year-end 2022 salary post his promotion to President and CEO. Mr. LaRossa’s salary and annual incentive prior to the promotion while in the position of COO was $835,000 and 90%, respectively. For the prorated actual salary pay for Mr. LaRossa, please see the Summary Compensation Table on page 55. |
6 PSEG 2023 Proxy Statement
Overview of Board Nominees – Diversity of Skills, Qualifications and Experience
PROPOSAL 1 ELECTION OF DIRECTORS
You are being asked to vote on the election of ten directors.
Our Corporate Governance Principles (Governance Principles) place great emphasis on diversity that utilizes a broad meaning to include a balance of factors such as race, ethnicity, gender, background, experience, leadership positions, skills, accomplishments, financial expertise, professional interests, personal qualities and other traits desirable for achieving an appropriate group of qualified individuals.
Our Board is composed of the right mix of skillsGovernance, Nominating and backgrounds to enable us to achieve our strategic goals. Each director elected at the Annual Meeting is elected to serve a one-year term. Our Corporate GovernanceSustainability Committee evaluated the nominees and recommended them to the full Board, which approved their nomination. All nominees were elected at the 2020 Annual Meeting.
Vote required: A director will be elected if the number of shares voted FOR that director exceeds the number of shares voted AGAINST that director, not counting abstentions and votes withheld or for which no instructions are given. See Majority Voting for Election of Directors on page 86.81.
Diversity of Skills, Qualifications and Experience
Skills* See page 19 for “audit committee financial expert” information as defined under the Sarbanes-Oxley Act of 2002 and QualificationsAccounting/Finance*Construction/Engineering/ManufacturingCorporate GovernanceCustomer Satisfaction & SalesEnvironment/ScienceGovernment/Policy/RegulatoryHuman Capital ManagementIndustrial OperationsRisk ManagementTechnology/CybersecurityIzzoJacksonDeeseLilleyOstrowsky SuggSurmaTomaskyZollarthe rules of the SEC.
PSEG 2023 Proxy Statement 7
Overview of Board Nominees – Gender, Racial and Ethnic Diversity
Gender, Racial and Ethnic Diversity
We value diversity of gender, race and ethnicity in our multifaceted Board selection process. Our Board Ø four women and three racially/ethnically diverse Ø our independent Lead Director is a woman Ø
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8 PSEG 2023 Proxy Statement
Overview of Board Nominees – Board Independence
| The Board has determined that all of the current directors and nominees for election are independent except Ralph |
Independence of our
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Board Refreshment and Tenure |
Overview of Board Nominees – Board Refreshment and Tenure
Refreshing our Board is important to provide new perspectives and ideas while ensuring sufficient experience and institutional
Mandatory Retirement at 75
Our |
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PSEG 2023 Proxy Statement 9
Overview of Board Nominees – Board Membership Selection
The selection of qualified, engaged directors with diverse skills and viewpoints is critical to our success and to the long-term interests of our stockholders. The Corporate Governance, Nominating and Sustainability Committee considers the mix of qualifications of Board members, evaluates prospective nominees and recommends candidates to the Board. The Board’s evaluation is focused on the strategic needs of the Company and the composition of the Board. Our current director(s) search process includes emphasis on the candidates’ diversity characteristics.
Board Composition Evaluated identify skills and experience desirablefor new directors in light of our strategy,current Board skills composition, andsuccession planning.Diverse Pool of Candidates IdentifiedMultiple sources used,including inputfrom directors andindependent research.ElectionBoard elects a newmember, who thenstands for election bystockholders at theAnnual Meeting.Potential Directors RecommendedCorporate GovernanceCommittee recommendspotential directors tothe Board.Potential Candidates AssessedAssess candidates qualifications,conflicts, independenceand background. Board membersmeet with qualifiedcandidates.
Board Selection Criteria and Qualifications
DIVERSITY OF SKILLS, EXPERIENCE, GENDER, RACE AND ETHNICITY.The Corporate Governance, Nominating and Sustainability Committee considers the need for diversity in background, experience, leadership positions, skills, accomplishments, financial expertise, professional interests, personal qualities, gender, race and ethnicity as well as other traits desirable for an optimal combination of qualified individuals.
TIME TO DEVOTE TO BOARD SERVICE. The Corporate Governance, Nominating and Sustainability Committee also considers the amount of time that a candidate will likely have to devote to the duties required of a director.
REVIEW OF POTENTIAL CONFLICTS. Prior to a director accepting an invitation to serve as a director of another company, the Corporate Governance, Nominating and Sustainability Committee reviews potential conflicts. The Corporate Governance, Nominating and Sustainability Committee also reviews the relevant details of any new position of a director and determines the continued appropriateness of Board membership.
INDEPENDENCE. A majority of the Board must consist of independent directorsIndependent Directors in accordance with our Corporate Governance Principles and NYSE requirements.
Set forth on the following pages is important information about our director nominees.
 | THE BOARD RECOMMENDS A VOTE FOR EACH OF THE NOMINEES BELOW. |
10 PSEG 2023 Proxy Statement |
Biographical Information
RALPH
President and CEO, PSEG
Age: 59 Director since: • |
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None Prior Public Company Directorships
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Experience Chair of the Board since January 2023 and President and CEO of PSEG since
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Reasons for Nomination
• In-depth knowledge of PSEG business management, strategic planning and regulatory matters gained through his many years in leadership positions at PSEG. Starting in our gas division, he led operations of all of our business segments throughout his career. • Extensive senior leadership experience in operations and human capital management gained through numerous executive and operational • Highly valuable experience in risk management and safety as
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Biographical Information
Independent Lead Director, PSEG and Retired American Electric Power Corporation
Age: 70 Director since:
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Biographical Information
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Marathon Petroleum Corporation; Fidelity Equity and High Income Mutual Funds
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Prior Public Company Directorships Andeavor Corporation; Summit Midstream Partners, LP.
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Experience
Director of PSE&G since April 2020.
Member of the Advisory Board of certain Fidelity funds from February 2020 to June 2020. President, AEP Transmission of American Electric Power Corporation (AEP), Columbus, Ohio, an electric utility holding company with generation, transmission and distribution businesses, from May 2008 to July 2011, and held
Education JD, George Washington University; BA – Liberal Arts, University of Kentucky Reasons for Nomination • Broad electric industry executive experience from key leadership positions involving transmission operations, services and governance at one of the largest utility holding companies in the United States. • In-depth knowledge of industry financial and legal matters acquired as CFO and General Counsel at AEP. • Highly valuable experience in oversight of regulated business, science and environmental matters gained as General Counsel of FERC. • Deep knowledge of and valuable perspective on utility management, finance, law, risk management and governmental regulation. |
PSEG 2023 Proxy Statement 11
Biographical Information
WILLIE A. DEESE Retired EVP, Merck & Co. Inc. and President, Merck Manufacturing Division Age: 67 Director since: 2016 |
Committees
Audit; Governance, Nominating and Sustainability (Chair); Organization and Compensation Current Public Company Directorships Dentsply Sirona USA Prior Public Company Directorships CDK Global, Inc.; G1 Therapeutics, Inc. Experience EVP of Merck & Co. Inc., Kenilworth, New Jersey, which develops, manufactures and distributes pharmaceuticals, from January 2008 until June 2016, President of Merck Manufacturing Division from 2005 until 2008, and Senior Vice President of Global Procurement at Merck from 2004 to 2005. Prior to that, Senior Vice President of Global Procurement and Logistics at GlaxoSmithKline, a pharmaceutical company. Education MBA, Western New England College; BA – Business Administration, North Carolina A&T State University Reasons for Nomination • Significant regulatory, manufacturing and procurement experience gained through his service as EVP of Merck & Co., President of Merck Manufacturing Division and Senior Vice President of Global Procurement and Logistics at GlaxoSmithKline. • Thorough understanding of the many regulatory requirements our Company faces gained through extensive leadership experience in a highly regulated industry. • In-depth knowledge of human capital management and diversity, equity and inclusion. • Deep knowledge of manufacturing and technology contributes to strong oversight of our operations and overall cost effectiveness. |
JAMIE M. GENTOSO, P.E. President of Holcim Building Envelope, Global Head of Solutions & Products Business Unit, Holcim Age: 46 Director since: 2022 | Committees Finance; Industrial Operations Current Public Company Directorships None Prior Public Company Directorships None Experience President of Holcim Building Envelope, Global Head of Solutions & Products Business Unit, and Executive Committee member at Holcim, a Swiss multinational company that manufactures building materials, since March 2021. Previously, Chief Executive Officer of the US Cement Operations for Holcim, from May 2018 to February 2021. Vice President of Sales and Marketing, Construction Specialties, from September 2017 to May 2018, and various leadership positions at Sika Corporation US, from March 2007 to August 2017. Ms. Gentoso is a registered Professional Engineer. Education MBA, University of Michigan; BS – Civil Engineering, University of Michigan Reasons for Nomination • Extensive experience in engineering, science and operations, including responsibility for full supply chain, capital programs and manufacture of roofing, insulation, waterproofing, adhesives and cement product lines. • Valuable managerial experience and oversight of operational excellence, customer satisfaction, and human capital management. • Broad knowledge of sales and marketing and product management acquired during her 20+ year career in construction and construction materials. • Valuable experience gained in executive positions in industry addressing climate and sustainability, as well as from advocacy for climate and sustainability through various advisory positions at industry organizations. Leading business unit sustainability roadmap, in order to meet Holcim’s 2050 Net Zero commitment where 2030 & 2050 targets have been validated by SBTi. • Leader of multi-billion-dollar international business unit with extensive strategic acquisition and transaction experience. |
12 PSEG 2023 Proxy Statement
Biographical Information
BARRY H. OSTROWSKY Retired President and CEO, RWJBarnabas Health Age: 72 Director since: 2018 • | Committees Audit (Chair); Finance; Organization and Compensation Current Public Company Directorships None Prior Public Company Directorships None Experience President and CEO of RWJBarnabas Health, West Orange, New Jersey, a comprehensive integrated health care delivery system of hospitals, programs and services from April 2016 to December 2022. President and CEO of Barnabas Health from January 2012 until April 2016; President and COO from July 2011 until January 2012 and EVP and General Counsel from December 1996 until July 2011. Education JD, University of Tennessee School of Law; BA, Rutgers University Reasons for Nomination • Extensive experience in dealing with regulatory and public policy matters for an organization serving a diverse population gained through his experience as President and CEO of RWJBarnabas Health and Barnabas Health. • Valuable legal background as well as strong experience in financial matters and management of a large, comprehensive business enterprise. • Significant human capital management, operations management, strategic planning and implementation skills that contribute to the changing landscape of our industry. • Broad knowledge of consumers, customer service and health care of great benefit for matters relating to our large customer and employee base. |
VALERIE A. SMITH President, Swarthmore College Age: 67 Director since: 2022 • | Committees Governance, Nominating and Sustainability; Organization and Compensation Current Public Company Directorships None Prior Public Company Directorships None Experience President of Swarthmore College since July 2015, a private liberal arts college. Dean of the College, Princeton University, from 2011 until 2015, served as Founding Director of Princeton University’s Center for African American Studies from 2006 to 2009, and Director of Princeton University’s Program in African American Studies, from 2002 until 2006. Served as Woodrow Wilson Professor of Literature, Professor of English and African-American studies, Princeton University, from 2001 until 2015. Education PhD University of Virginia; MA, University of Virginia; BA, Bates College Reasons for Nomination • In-depth knowledge of human capital management and diversity, equity and inclusion including from leadership positions at Swarthmore College and Princeton University and being a scholar of African American studies. • Significant experience in management and strategic planning acquired as President of Swarthmore College and Dean of the College, Princeton University. • Valuable background knowledge in climate risk management and sustainability gained as President of Swarthmore College. • Strong track record in varied leadership roles. |
PSEG 2023 Proxy Statement 13
Biographical Information
SCOTT G. STEPHENSON Retired Chair of the Board, President and CEO, Verisk Analytics, Inc. Age: 65 Director since: 2020 | Committees Finance (Chair); Industrial Operations Current Public Company Directorships None Prior Public Company Directorships Verisk Analytics, Inc. Experience Chair of the Board and CEO of Verisk Analytics, Jersey City, New Jersey, a data analytics and risk assessment company from April 2013 to May 2022 and President from March 2011 to May 2022. Between 2001 and 2011, held various leadership positions at Verisk Analytics, including COO, head of the Decision Analytics segment, EVP and President of its Intego Solutions segment. Partner with the Boston Consulting Group from 1989 to 1999. Education MBA – Business Administration, Harvard Business School; BS – Mechanical Engineering, University of Virginia Reasons for Nomination • Significant strategic leadership, financial management and human capital management experience as Chair and CEO of Verisk Analytics. • Valuable innovation, technology, data analytics, customer service and risk assessment experience from his various senior management and operational positions at Verisk Analytics. • In-depth operations and value creation experience gained from his positions at the Boston Consulting Group. |
LAURA A. SUGG Retired President, Australasia Division of ConocoPhillips Corporation Age: 62 Director since: 2019 | Committees Audit; Governance, Nominating and Sustainability; Industrial Operations (Chair) Current Public Company Directorships Kinetik Holdings Inc.; Murphy Oil Corporation Prior Public Company Directorships The Williams Companies, Inc.; Denbury Resources, Inc. Experience President, Australasia Division of ConocoPhillips Corporation, Houston, Texas, a leading worldwide oil and gas exploration and development company, from July 2005 to February 2007. General Manager-Human Resources, exploration and production of ConocoPhillips from October 2003 to June 2005. From 2001 to 2003, Vice-President of Worldwide Gas of Phillips Petroleum, and later became General Manager of Midstream of ConocoPhillips. Education BS – Chemical Engineering, Oklahoma State University Reasons for Nomination • Extensive experience in engineering, science and operations, including responsibility for major exploration and production operations. • Valuable background in corporate planning, business development and regulatory matters acquired through executive roles at ConocoPhillips. • In-depth knowledge of human capital management matters from leadership experience in human resources management. • Strong track record across disciplines gained through her success in varied roles at ConocoPhillips. |
14 PSEG 2023 Proxy Statement
Biographical Information
JOHN P. SURMA Retired Chair and CEO, United States Steel Corporation Age: 68 Director since: 2019 • | Committees Governance, Nominating and Sustainability; Industrial Operations; Organization and Compensation (Chair) Current Public Company Directorships Trane Technologies plc; Marathon Petroleum Corporation (and its consolidated subsidiary, MPLX GP LLC)* Prior Public Company Directorships Concho Resources, Inc.; Bank of New York Mellon Corporation; Mellon Bank Corporation; Calgon Carbon Corporation Experience Chair and CEO, United States Steel Corporation, a leading global integrated steel producer, from October 2004 through September 2013 and Executive Chair until December 2013. President and COO of United States Steel from February 2003 to October 2004; CFO from January 2002 to February 2003. Chair of the Board of the Federal Reserve Bank of Cleveland from 2017 to 2018; Chair of the National Safety Council from September 2015 to September 2017. Education BS – Accounting, Pennsylvania State University Reasons for Nomination • Experienced leader with a strong financial, management, manufacturing and regulatory matters background as Chair and CEO of United States Steel Corporation. • Deep knowledge of enhancing shareholder value in a complex enterprise. • Significant financial and accounting expertise as the CFO of United States Steel Corporation. • Extensive experience on strategic, operational and financial oversight gained as a director of large public company boards. * MPLX GP LLC, a wholly owned subsidiary of Marathon Petroleum Corporation, is the general partner of master limited partnership MPLX LP. We view Mr. Surma’s service on the MPLX GP LLC board as an extension of his service on the Marathon Petroleum Corporation board for purposes of assessing the level of outside public board commitments. |
ALFRED W. ZOLLAR Executive Advisor, Siris Capital Group, LLC and Retired General Manager, Tivoli Software Division Of IBM Age: 68 Director since: 2012 • | Committees Audit; Executive; Finance; Industrial Operations Current Public Company Directorships Bank of New York Mellon; International Business Machines Corporation (IBM); Nasdaq, Inc. Prior Public Company Directorships Red Hat, Inc.; Chubb Corporation Experience Executive Advisor, Siris Capital Group, LLC, New York, New York, a private equity firm, since March 2021 and served as Executive Partner from February 2014 to March 2021. General Manager, Tivoli Software division of IBM, Armonk, New York, a worldwide information technology and consulting company, from July 2004 to January 2011. General Manager-eServer iSeries from January 2003 to July 2004. President and CEO, Lotus Software division, from January 2000 to 2003, and Division General Manager, Network Computer Software division, from 1996 to 2000. | |
Education MA – Applied Mathematics, University of California at San Diego Reasons for Nomination
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• Deep executive and managerial experience in oversight of operational excellence and customer satisfaction and cybersecurity.
• In-depth knowledge of finance and risk management through private equity leadership roles. |
PSEG 2023 Proxy Statement 15
Corporate Governance – Role of the Board of Directors
Role of the Board of Directors
PSEG is governed by our Board and its committees that meet throughout the year. The Board is elected by our stockholders and is the ultimate decision-making body of the Company except for the items reserved to stockholders.
The Board provides direction and oversight by:
Actively engaging in developing corporate strategy and approving major initiatives and significant investments;
| • | Actively engaging in developing corporate strategy, approving major initiatives and significant investments, and capital allocation decisions; |
Monitoring financial and business integrity and performance, including risk management;
| • | Monitoring financial and business integrity and performance, including risk management; |
Monitoring sound corporate citizenship grounded in the principles of diversity, equity and inclusion;
| • | Monitoring sound corporate citizenship grounded in the principles of diversity, equity and inclusion; |
Evaluating the performance of the CEO and approving succession plans for the CEO and other senior executives;
| • | Evaluating the performance of the CEO and approving succession plans for the CEO and other senior executives; |
Selecting a diverse group of nominees for election to the Board; and
| • | Selecting a diverse group of nominees for election to the Board; and |
Evaluating Board and committee performance.
| • | Evaluating Board and committee performance. |
The Board holds an annual strategy session in addition to its regular meetings, receives regular updates and actively engages in dialogue with our senior management. The Board has full and free access to all members of management and corporate records and may hire its own consultants and advisors as it deems necessary.
The Board has determined that, at the present time, it is in the best interests of the Company and stockholders for all three positions of ChairmanChair of the Board, President and CEO to be combined under the leadership of Ralph Izzo and that independent board member Shirley Ann Jackson serve as Lead Director.A. LaRossa. The Board believes that Mr. IzzoLaRossa possesses the attributes of experience, judgment, vision, managerial skill and overall leadership ability essential for our continued success. The Board also believes that a strong, Independent Lead Director complements the role of the CEO, enhances the significant contributions of our Independent Directors and promotes confidence in our governance structure.
Shirley Ann Jackson has served as our Lead Director since April 2019. Our Lead Director is an independent directorIndependent Director designated annually by the independent directorsIndependent Directors and typically serves in that capacity for four years. The Lead Director’s duties include:
| • Presiding over executive sessions of the
• Providing the
• Coordinating with the
• Reviewing quality and timeliness of information provided to the directors; and
• Ensuring a robust Board self-evaluation. |
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Our Lead Director complements the talents and contributions of Mr. Izzo and promotes confidence in our governance structure by providing an additional perspective to that of management.
Our Corporate Governance Principles
The Board has adopted and operates under our By-Laws and Corporate Governance Principles. The Corporate Governance Principles provide guidelines for directors and management to effectively pursue and support our business objectives. The Corporate Governance Principles govern our board structure, requirements of our directors, board operations and functioning of our Board committees and are reviewed periodicallyannually by the Corporate Governance, Nominating and Sustainability Committee, which recommends any changes to the Board. Our By-Laws and Corporate Governance Principles can be found on our website at https://investor.pseg.com/governance/governance-overview.
16 PSEG 2023 Proxy Statement
Corporate Governance – Board and Committee Self-Assessment Process
Board and Committee Self-Assessment Process
Our Board and committees each have a robust annual process for self-assessment, as shown below.
The Corporate Governance Committee leads the committee evaluation process. Directors provide written assessments of board and committee performance, identifying areas for improvement. The lead Director, Chair and committee members analyze the responses and report on the results to the full board. The board and each committee discuss the responses, decide on action items and execute plans to address them.The Corporate Governance Committee leads the committee evaluation process. Directors provide written assessments of board and committee performance, identifying areas for improvement. The Lead Director, Chairs and committee members analyze the responses and report on the results to the full board. The board and each committee discuss the responses, decide on action items and execute plans to address them.
Governance Enhancements from the 2020 Self-Assessment Process:
2022Process Enhancements: The Board decided to conduct an independent third-party assessment of Board effectiveness at least every five years starting in 2023. Also, the Board has two executive sessions at each meeting
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Director Education and Orientation
To assist the Board in understanding the Company and to maintain the necessary knowledge to perform their responsibilities, members of our Board are offered and participate inprovided a variety of learning opportunities throughout the year.
Educational Presentations on Relevant Topics | ||||
External Programs | Directors | |||
Outside Speakers | The Board regularly hears from outside experts on such topics as investor perspectives, strategy, cybersecurity, | |||
Orientations | New directors and new committee chairs and members receive comprehensive materials and in-house orientation sessions featuring presentations by key members of |
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PSEG 2023 Proxy Statement 17
Corporate Governance – Board and Committee Meetings and Attendance
Board and Committee Meetings and Attendance
In 2020,2022, the Board met seven times, including five regular meetings, one strategy session and one special meeting. The PSE&G Board met sixseven times, including five regular meetings, one strategy session and one strategy session.special meeting. During 2020,2022, each director attended at least 75% of the aggregate number of meetings of the Board and the committees on which the director served. All of the directors who were elected in 20202022 attended the 20202022 Annual Meeting of Stockholders.
Our Corporate Governance Principles provide that each director is expected to attend all Board meetings, all meetings of committees of which the director is a member and the Annual Meeting of Stockholders.
The experience gained through other directorships provides our Board with a breadth of valuable knowledge and insight. Advance approval by the Corporate Governance, Nominating and Sustainability Committee is required for service on any public company board. All of our nominees have successfully balanced other demands on their time and attention in meeting their obligations to PSEG.
Our Board has six standing Committees: Audit, CorporateAudit; Governance, Executive, Finance,Nominating and Sustainability; Executive; Finance; Industrial Operations (IOC); and Organization and Compensation (O&CC).Compensation. A description of each Committee follows.
Committee assignments and Chairs are regularly reviewed and periodically changed to optimize the talents of our directors and meet the Company’s evolving needs.
Each Committee has open and free access to all Company information, may require any of our officers or employees to furnish it with information, documents or reports, may investigate any matter involving us and has discretion to hire outside resources. Each Committee, other than the Executive Committee, has a charter that defines its roles and responsibilities and annually conducts a performance evaluation of its activities and a review of its charter.
The Executive Committee consists of the ChairmanChair of the Board, the Lead Director and at least one additional independent director.Independent Director. In 2020,2022, the members of the Executive Committee were Ralph Izzo (retired effective January 1, 2023), Shirley Ann Jackson (retired effective April 19, 2022), David Lilley, Susan Tomasky and Susan Tomasky.Alfred W. Zollar. Effective January 1, 2023, by operation of our Corporate Governance Principles, Mr. LaRossa became a member of the Executive Committee pursuant to his appointment as Chair of the Board. The authority of the Executive Committee is set forth in our By-Laws. Except as otherwise provided by law, the Executive Committee has and may exercise all the authority of the Board of Directors when the Board is not in session. This Committee meets only if it is impracticable to convene the full Board. The Committee charters and our By-Laws are posted on our website, website: https://corporate.pseg.com/aboutpseg/leadershipandgovernance/boardofdirectors/committeedescriptions.committeedescriptions.
18 PSEG 2023 Proxy Statement
Corporate Governance – Board Committees
Audit Committee |
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Members: | Willie A. Deese, David Lilley, Laura A. Sugg, | |
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Key Responsibilities
| Ø | Oversees the quality and integrity of our accounting, auditing and financial reporting practices and financial statements; |
| Ø | Selects and evaluates the work of the independent auditor; |
| Ø | Oversees our internal audit functions and our legal and business compliance program; |
| Ø | Reviews the status of material litigation matters, and the guidelines, policies and processes of our risk management program; |
| Ø | Reviews disclosure controls and procedures and cybersecurity relating to financial controls; |
| Ø | Reviews earnings press releases, financial information and earnings guidance; and |
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The Board has determined that: All members of the Audit Committee meet heightened independence and qualification criteria and are financially literate; All members of the Audit Committee possess accounting or financial management expertise, as defined in the NYSE rules and Governance Principles; and Each of David Lilley, Barry H. Ostrowsky, and Susan Tomasky is an audit committee financial expert under the Sarbanes-Oxley Act of 2002 and the rules of the SEC. No member of the Audit Committee serves on the Audit Committee of more than three public companies, including ours.
The Audit Committee Report appears under Proposal 3:5: Ratification of the Appointment of Independent Auditor on page 73.78.
Organization and Compensation Committee |
Chair: |
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Members: | Willie A. Deese, Barry H. Ostrowsky, Susan Tomasky | |
Meetings held in | ||
Key Responsibilities
| Ø | Oversees our executive compensation policies, practices and plans; |
| Ø | Reviews the stockholder advisory vote on say-on-pay and considers action in light of that vote; |
| Ø | Approves executive compensation targets and awards (with the exception of the CEO, whose compensation is approved by the Board); |
| Ø | Monitors the risks associated with our compensation policies and practices and other risks related to human capital management matters (including periodic review of diversity, equity and inclusion, and other workforce initiatives); |
| Ø | Selects and oversees the Board’s independent compensation consultant; |
| Ø | Evaluates the CEO’s performance and recommends approval of the CEO’s compensation to the Board; |
| Ø | Reviews the performance of certain other key members of management as well as the CEO and other key management succession and development plans; and |
| Ø | Reviews the Compensation Discussion and Analysis section of, and provides its report in, the annual Proxy Statement. |
The Board has determined that: All O&CC members meet heightened independence and qualification criteria in accordance with the NYSE listing standards and SEC rules; and The current composition of the O&CC provides the committee with the requisite expertise and experience to oversee our executive compensation program and assess the alignment of pay for performance.
The O&CC Report on Executive Compensation appears under Proposal 2: Advisory Vote on the Approval of Executive Compensation on page 55.54.
PSEG 2023 Proxy Statement 19
Corporate Governance – Board Committees
Finance Committee | Governance, Nominating and Sustainability Committee | |||
Chair: Scott G. Stephenson
Barry H. Ostrowsky, Alfred W. Zollar
Meetings held in 2022: 4 |
Members: Valerie A. Smith, Laura A. Sugg, John P. Surma, Susan Tomasky Meetings held in 2022: 4 | |||
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Ø Oversees corporate financial policies and processes and significant financial decisions;
Ø Reviews annually our financial plan, dividend policy, capital structure and cash management policies and practices;
Ø Discusses with management our risk assessment and risk management policies;
Ø Oversees the investment guidelines for, and investment performance of, the Company’s pension plan trust funds and nuclear decommissioning trust funds; and
Ø Reviews with management credit agency ratings and analyses. |
Ø Oversees the Company’s corporate governance practices;
Ø Evaluates the composition and qualifications of the Board, its committees and prospective nominees, assesses the independence of each nominee and makes recommendations to the Board;
Ø Oversees the self-evaluation process of the Board and its committees and reviews the Corporate Governance Principles and committee charters and makes recommendations to the Board in order to improve effectiveness of the Board and its committees;
Ø Oversees sustainability efforts and initiatives, activities and disclosures related to climate change and our political participation activities and expenses;
Ø Oversees risk management guidelines, policies, processes and mapping and identifies risks to the Board and its committees;
Ø Reviews and approves transactions with related persons;
Ø Reviews and makes recommendations to the Board regarding compensation of directors; and
Ø Provides input to the O&CC regarding the performance of the CEO as | |||
The nomination process and criteria used are described under Board Membership | ||||
20 PSEG 2023 Proxy Statement
Corporate Governance – Board Committees
Industrial Operations Committee |
Chair: Laura A. Sugg
Members: Stephenson, John P. Surma, Alfred W. Zollar
Meetings held in |
Key Responsibilities
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PSEG 2023 Proxy Statement 21
Corporate Governance – Integrated Approach to Shareholder Engagement
Integrated Approach to Shareholder Engagement
The Board and management believe in ongoing shareholder engagement and conduct engagement efforts throughout the year in an integrated approach, including through investor conferences, analyst meetings, and one-on-one discussions. Understanding the issues that are important to our shareholders is critical for our accountability. We have robust conversations on topics such as business strategy, corporate governance, executive compensation, business strategy, risk management, human capital management and ESG matters.
Our Board routinely reviews and improves our practices and disclosures in a manner that best supports our business and our culture taking into account feedback from shareholder engagement. For this year, we enhanced our disclosure of Board diversity and refreshment, added an education credentials section in each of our directors’ biographies, and updated the Governance, Nominating and Sustainability Committee name to clarify its oversight of risks related to ESG matters.
In response to increased shareholder interest, the Board reviewed and adopted an amendment to the By-Laws to reduce the threshold required to call a special meeting upon the written request of the shareholders of capital stock entitled to cast at least 25% of the votes. Also, in response to increased shareholder interest, this year’s proxy includes a management proposal for the removal of supermajority requirements from our governing documents (see Proposal 4 on page 74).
Shareholder Outreach and Engagement
Engaged Through:Annual Shareholder Outreach Investor Conferences Quarterly Earnings Calls Annual Meeting Invitation to Speak to BoardAnnual Shareholder Outreach:We extended engagement invitations to over 30 of our largest shareholders representing >50% of our outstanding shares. Approximately onefourth of them accepted and engaged in one-on-one discussions with us.Information Shared Through:SEC Fillings, Press Releases & Company Website ESG Performance Report Annual Sustainability/Climate Change Report Annual Investor Fact Book & IR Fact Sheets Investor Conference MaterialsDiscussion Topics - Annual Shareholder Outreach:Board Diversity, Refreshment & Tenure ESG-related Business Strategy COVID-19 Response Sustainability & Climate ChangeHuman Capital Management, including Diversity, Equity & Inclusion
22 PSEG 2023 Proxy Statement
Corporate Governance – Board and Committee Oversight of Risk Management
Board and Committee Oversight of Risk Management
The objective of PSEG’s risk management program is to support the achievement of growth and business objectives within acceptable risk levels. An important aspect of the program is promoting a risk-aware culture where all employees have a responsibility for identifying and communicating risks, and where there is clear accountability for risk mitigation.
The Board has ultimate responsibility for the oversight of risk management at PSEG, overseeing the Company’s risk management program and reviewing the most significant risks facing the Company.
The Board interacts with senior management regarding assessment and mitigation of the most significant risks facing the Company, across a range of categories that includes strategic, financial, operational, climate and environmental, human capital management, health and safety, legal and compliance and reputational risks.
The Corporate Governance, Nominating and Sustainability Committee reviews key enterprise risks and recommends to the Board the mapping of each risk to an appropriate committee or the full Board, in accordance with the allocation of risk categories reflected in the charter of each committee.
Board of Directors Strategic risks Risks not mapped to specific CommitteesCorporate Governance Committee Risk policies and practices Mapping of risks to Board and Committees Reputation and political activity risks ESG and climate change risksAudit Committee Risk-related processes and assessments Financial and other reporting risks Compliance and legal risksFinance Committee Finance and investment risk Commodity, credit, liquidity, tax event, pension fund and trust riskIndustrial Operations CommitteeOperating risks (including Health & Safety) Project risks Cybersecurity risksOrganization and Compensation Committee Executive compensation, succession planning and other talent risks Senior officer interaction Reporting on risks by Chief Risk Officer, Chief InformationERM Programs annual risk assessment, deep & Digital Officer, Chief Compliance Officer and Vice dive reviews and regular risk updates President of Internal Auditing Services, among othersSenior Management / Risk Management CommitteeLines of Business / Functional Areas
The Board’s oversight of risk management is supported by the Risk Management Committee, which consists of senior executives, and by the Enterprise Risk Management (ERM) team, led by PSEG’s ChiefSenior Vice President – Audit, Enterprise Risk Officerand Compliance in collaboration with other assurance functions and management committees and councils, such as the Cybersecurity Council, and the CEOB.Council. (For more information on cybersecurity risk management, see the next section.) At least annually, the Chief Risk Officer briefs the Corporate Governance, Nominating and Sustainability Committee and the Audit Committee are briefed on enterprise-level risks and emerging risks. Throughout the year, the Board and each committee provide ongoing oversight of key enterprise risks through deep-dive risk reviews and updates presented by representatives of the relevant line of business and functional areas. The risk reviews include analyses of underlying risk causes, as well as reviews of current risk mitigation and response activities. The committees report out to the Board regarding their risk reviews and elevate risk issues to the Board as appropriate. Management integrates risk evaluationassessment and mitigation into business decisions and planning and escalates issues to the committees and Board as appropriate.
Board Oversight of Cybersecurity
Cybersecurity isIn an effort to reduce the likelihood and severity of cybersecurity incidents, we have established a critical componentcomprehensive cybersecurity program designed to protect and preserve the confidentiality, integrity and availability of our risk management program.technology systems. The Board, the Audit Committee,its Industrial Operations Committee and Audit Committee, and senior management receive frequent reports on such topics as personnel and resources to monitor and address cybersecurity threats, technological advances in cybersecurity protection, rapidly evolving cybersecurity threats that may affect us and our Company and industry, cybersecurity incident response and applicable cybersecurity laws, regulations and standards, as well as collaboration mechanisms with intelligence and enforcement agencies and industry groups, to assure timely threat awareness and response coordination.
PSEG 2023 Proxy Statement 23
Corporate Governance – Board Oversight of Cybersecurity
Our cybersecurity program is focused on the following areas:
Governance:
Cybersecurity Council
| • | Board Oversight – The Board’s IOC holds the primary responsibility, as enumerated in its charter, of overseeing the Company’s cybersecurity program. Cybersecurity is a standing agenda item at each IOC meeting, which includes discussion on operational technology cyber risk, a cybersecurity update from the CISO, and review of a corporate cybersecurity scorecard. In addition, the IOC meets with the CISO in executive session at each meeting with no other members of management present. |
| • | Cybersecurity Council—which is comprised of members of senior management, meets regularly to discuss emerging cybersecurity issues and maintenance of the cybersecurity scorecard to measure performance of key risk indicators. The Cybersecurity Council ensures that senior management, and ultimately, the Board, is given the information required to exercise proper oversight over cybersecurity risks and that escalation procedures are followed. |
| • | The Senior Vice President, Chief Information and Digital Officer has the overall responsibility for cybersecurity. |
| • | Documented corporate practice to ensure delineated cybersecurity incidents, or potential incidents, are escalated promptly to senior management. |
Training and maintenance of a corporate cybersecurity scorecard to measure performance of key risk indicators (KRIs). The Cybersecurity Council ensures that senior management and ultimately, the Board, is informed of information required to exercise proper oversight over cybersecurity risks and that escalation procedures are followed.
CEOB – provides the COO with periodic cybersecurity assessments of the Company. The CEOB is comprised of employee and non-employee members who have expertise in technology security, compliance and controls, or in management practices.
Cybersecurity Awareness: Identifying and assessing cyber risks through partnerships with public and private entities and industry groups and disseminating electronic notices to, and conducting presentations for, company personnel.
Training: Providing annual cybersecurity training for all personnel with network access, as well as additional education for personnel with access to industrial control systems or customer information systems; and conducting phishing exercises. Regularexercises with progressive consequences for failures. Employees also receive periodic cybersecurity education is also providedawareness messages and each October, are invited to our Board through management reportspresentations throughout the month from internal and presentations by external subject matter experts.cyber experts covering diverse cyber topics.
Technical Safeguards: Deploying measures Managing controls to protect our network perimeter, and internal Information Technology platforms,(IT) and Operational Technology (OT) environments, such as internal and external firewalls, network intrusion detection and prevention, penetration testing, vulnerability assessments, threat intelligence, anti-malware and access controls.
Vendor Management: Maintaining a risk-based vendor management program, including the development of robust security contractual provisions. Notably, in 2020, the Company implemented additional measures to ensure compliance with new requirements promulgated by the North American Electric Reliability Corporation applicable to cyber systems involved in the operation of the Bulk Electric System (BES). These new or enhanced measures require PSEG to identify and assess cybersecurity risks to the BES from vendor products or services.
Incident Response Plans:Plan: Maintaining and updating a cyber incident response plansplan that addressaddresses the life cycle of a cybercybersecurity incident from a technical perspective (i.e., detection, response, and recovery), as well as data breach response (with a focus on external communication and legal compliance); and testing those plansconducting regular table top exercises to test plan effectiveness (both internally and through external exercises).
Mobile Security: DeployingMaintaining controls to prevent loss of data through mobile device channels.
PSEG also maintains physical security measures to protect its OT systems, consistent with a defense in depth and risk-tiered approach. Such physical security measures may include access control systems, video surveillance, around-the-clock command center monitoring, and physical barriers (such as fencing, walls, and bollards). Additional features of PSEG’s physical security program include threat intelligence, insider threat mitigation, background checks, a threat level advisory system, a business interruption management model, and active coordination with federal, state, and local law enforcement officials.
Response to COVID-19 Pandemic
A pandemic has the potential to influence risks across the enterprise with the capacity to impact operations, health & safety, and financial results. Throughout the COVID-19 pandemic, PSEG has relied on a well-established crisis management structure to quickly coordinate responses across the organization and ensure the continued delivery of our essential services to our customers in a safe manner. The Executive Crisis Management Team, led by the COO and with representation from all operating companies and functional areas, met as often as seven days a week in the early months of the crisis and continues to meet regularly to monitor evolving conditions and adapt the Company’s response. Frequent updates and testimonials on pandemic safety are provided to employees, including on personal mobile devices.
PSEG’s ERM program provided the framework by which the potential impacts of the pandemic on the enterprise were proactively assessed and planned for, beyond the immediate response horizon. These assessments were discussed with the Risk Management Committee and the Executive Crisis Management Team at multiple times throughout the year and presented to the Board. PSEG is documenting lessons learned to strengthen business continuity plans and improve resilience to the uncertainty of the ongoing pandemic or a future event.
Corporate Governance – Response to COVID-19 Pandemic
COVID-19 Response (Community, Customers and Employees)
By providingprovides essential electric and natural gas service to over 3.5 million customers in New Jersey and Long Island, New York – two states that saw the highest earlyCOVID-19 positivity and morbidity rates –in early 2020. During this challenging time, PSEG deliveredwas able to deliver more than just heating and lightingpower to homes, businesses, and essential emergency services. These essential services have proven to be more critical than ever in poweringIt powered the communicationcommunications infrastructure, enablingenabled the work-from-home economy, keeping us connected to our loved ones and maintainingmaintained the critical energy infrastructure that supports economic activity inthroughout our service territories. Furthermore,
While COVID-19 continues to impact society and our response efforts have contributedbusiness on a daily basis, it does so in a far different way than it did in the initial years and we continue to employeeremain agile in our response. The majority of our workforce continues to work onsite to provide safe and customer safety protocols,reliable power to our customers and expanded community outreach as follows:
Community:to further our clean energy future. Recognizing that remote and hybrid work can be successful with the right tools in place, we introduced a flexible work model – Work, Live, Hire Responsibly – in 2021. In 2022, steps were taken to operationalize this model by providing a remote work allowance and tools and training to support remote and hybrid work.
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24 PSEG 2023 Proxy Statement
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Corporate Governance – Our Approach to Sustainability
Our Approach to Sustainability
We continueSustainability and ESG are critical to implement sound ESG practices throughout our business. PSEG’s agile approachmission and vision. The Board’s Governance, Nominating and Sustainability Committee has the mandated responsibility for continuous integration of ESG practices reflectsoverseeing sustainability, climate strategy, and our goal of beingnet-zero transition. The full Board plays a leader in building an economically strong, environmentally responsible energy future. Our Board takes an activeproactive role in overseeingunderstanding how each business area incorporates ESG and corporate citizenship issues including our climateinto the company’s strategy. As specified in its charter, the Corporate Governance Committee holds the primary responsibility for overseeing sustainability matters for our Company and will oversee our transition to a future of net-zero carbon emissions.
ENVIRONMENTAL CEF: EE, EC/Smart Meters, EV Charging Infrastructure Coal Free by Mid-2021 Orsteds Ocean Wind Farm Strategic Alternatives for Fossil Fleet Net-Zero Vision PROGRESS TOWARD OUR ESG GOALS IN 2020-2021 GOVERNANCE Board/Committee Oversight Board Diversity/Refreshment Sustainability/Climate reports (follows SASB and TCFD), ESG Performance report Executive Compensation linked to ESG goals Member of CEO Climate Dialogue Political Contributions/ Engagement Oversight SOCIAL Company/Foundation giving of $13M in 2020 Committed $1M to Social Justice Initiative Committed to Just Transition principles Expanded D&I commitment to include Equity Continuous Employee Engagement & Development Sustainability yearbook member 2021 s&p global Ceres Dow jones sustainability indices In collaboration with sam CECPENVIRONMENTAL CEF: EE, EC/Smart Meters, EV Charging Infrastructure Coal Free by Mid-2021 Orsteds Ocean Wind Farm Strategic Alternatives for Fossil Fleet Net-Zero Vision PROGRESS TOWARD OUR ESG GOALS IN 2020-2021 GOVERNANCE Board/Committee Oversight Board Diversity/Refreshment Sustainability/Climate reports (follows SASB and TCFD), ESG Performance report Executive Compensation linked to ESG goals Member of CEO Climate Dialogue Political Contributions/ Engagement Oversight SOCIAL Committed $4M to Pandemic Relief Efforts Committed $1M to Social Justice Initiative Committed to Just Transition principles Expanded D&I commitment to include Equity Continuous Employee Engagement & Development Sustainability yearbook member 2021 s&p global Ceres Dow jones sustainability indices In collaboration with sam CECP
Corporate Governance – Our Environmental Priorities
PSEG’s Powering Progress vision is a future in which we help all customers use less energy, ensure the energy they use is cleaner, and deliver that energy more reliably than ever before.
In 2020, we continued to successfully executeWe are progressing on our Powering Progress vision through our Clean Energy Future programs, renewable energy investment strategy and enhanced ESG disclosures that follow the Task Force on Climate-related Financial Disclosures framework (TCFD).
Clean Energy Future Programs: In 2020, New Jersey Board of Public Utilities (NJBPU) approved $1 billion of investments through our Energy Efficiency (EE) program. This is the largest commitment to energy efficiency ever in NJ.
In 2021, NJBPU also approved AMI (Smart Meters)/Energy Cloud program, which provides investments of approximately $700 million for smart meter programs over the next four years, andbecome a proposal for PSE&G to provide investments of approximately $166 million for electric vehicle (EV) charging infrastructure programs.
Furthermore, PSEG has filed for NJBPU review of its electric storage (ES) proposal for utility-scale investments to supplement solar generation and enhance grid resiliency.
Progress in Offshore Wind Renewable Energy: In 2020, PSEG entered into an agreement to acquire a 25% ownership interest in Ørsted’s 1,100-megawatt Ocean Wind project, NJ’s first offshore wind farm (subject to regulatory approval).
Strategic Review of Non-Nuclear Generation Assets: In 2020, PSEG announced a strategic review of PSEG Power’s non-nuclear generation assets to accelerate transformation into a primarilypredominantly regulated electric and gas utility and contractedcarbon-free generation company, powered by its diverse, dedicated and highly skilled workforce. Our business which will, among other benefits, enhancestrategy has evolved to reflect not only how the effects of climate change might impact PSEG and its ESG position.
PSEG’s Emissions Goalsstakeholders, but also how our business operations can positively impact the communities where we operate and Net-Zero Vision: As partthe world where we live. In the last decade especially, we have strengthened our governance, proactively decarbonized our operations and embraced new opportunities, allowing us to adapt to the increasing social and environmental needs of our Powering Progress Initiative, PSEG is working towards reducing greenhouse gas emissions from PSEG Power’s fleetbusiness.
Our Environmental Priorities
We remain guided by 80% from 2005 levels by 2046.our vision to power a future where people use less energy, and it’s cleaner, safer and delivered more reliably than ever. Our investments remain focused on carbon-free energy and in building the infrastructure needed to help New Jersey meet its long-term clean energy goals.
PSEG’s vision of net-zero emissions by 2050 assumes necessary advances in technology, public policy and consumer behavior, including preservation of existing nuclear fleet, continued investment in renewable energy sources, retirement or sale of coal assets and no plans to acquire or build new fossil units.
Sustainability/Climate Reports: PSEG is committed to reporting annually on sustainability and climate using the TCFD framework. PSEG’s Sustainability/Climate reports are compliant with the Sustainability Accounting Standards Board and incorporates a comprehensive analysis of contributions to the United Nations Sustainable Development Goals. PSEG’s Sustainability/Climate reports are featured on our website.
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Progress on our climate vision for Net Zero emissions by 2030 – PSEG |
| Ø | Our nuclear plants provide over 85% of New |
| Ø | In the last two years, PSE&G has received approval for ~$2 billion |
| Ø | Initiated a four-year investment in |
| Ø | In 2022, PSE&G sold $500 million in green bonds for the first |
| Ø | $35 million committed to funds managed by Energy Impact Partners |
PSEG 2023 Proxy Statement 25
Corporate Governance – Our Social Priorities
Our Corporate Citizenship priorities of environmental sustainability, social justice and equity focus on citizenship is grounded increating a positive impact on the belief that we can do well as a company by doing good for the diverse people and communities we serve. The Board, through its Corporate Governance Committee, oversees our corporate citizenship that is grounded in the principles of diversity, equityThrough strategic partnerships and social priorities.
PSEG Foundation & Corporate Citizenship: Throughactivities, charitable giving and in-kind donations, and a robust employee giving program, the PSEG Foundation the Company makes approximately $8 million annually in corporate contributions toand Corporate Social Responsibility are building broader connections that support our communities.
Employee Volunteerism: We alsoPSEG Foundation & Corporate Responsibility: In 2022, the PSEG Foundation announced its new strategic pillars of environmental sustainability, social justice, and equity and economic empowerment. Over the past five years, the PSEG Foundation awarded more than $40 million in grants through various programs including strategic partnerships, the Neighborhood Partners Program and a robust employee-matching gift and volunteer grant program to help organizations that support our communities through employee volunteerism that includes paid time offthousands of individuals and grants to nonprofits.families across the region.
NJ CEO Council: Our CEO is a member of theAlso in 2022, New Jersey CEO Council, a coalitionInstitute of CEOs that has pledged to hire or train more than 30,000 residents by 2030 and spend an additional $250 million on procurement with state-based, diverse companies by 2025. Both efforts focus on underrepresented and underserved communities.
Environmental Stewardship: Community investment in environmental stewardship is another strategic pillar of PSEG’s Foundation and we aim to increase support to 20% of annual giving by 2023.
Clean Energy Workforce: PSEG is developing New Jersey’s clean energy workforce through innovative training and pipeline development programs, emphasizing low- to moderate-income and underserved communities. PSE&G’s $1 billion energy efficiency program is expected to create more than 4,000 direct and indirect clean energy jobs.
Powering Progress / Social Justice: In a joined effort,Technology (NJIT) awarded PSEG and the PSEG Foundation launchedwith the Powering Equity and Social Justice Initiative with a $1 million commitment to fight racial injustice and inequity.
COVID-19 Community Efforts: Our community efforts through theOutstanding Corporate Award. The PSEG Foundation expanded this yearhas supported NJIT’s Summer Energy and include additional supportSustainability Program since 2015 for pandemic response and relief efforts andrising 8th grade students from urban schools to combat food insecurity, for which we pledged $4 million. To further assist customers and communities during the pandemic, PSEG also voluntarily suspended shutoffs of service due to non-payment and worked cooperatively with customers needing payment flexibility. For more information see pages 23-24.
Supplier Diversity: PSEG is also committed to diversity that spans across the value chain, including supplier diversity with a goal of achieving 30% of applicable supplier spend allocated to diverse suppliers by 2023.
Customer focus: PSEG provides essential electric service to over 2.3 million customers and gas to over 1.9 million customers. Through disciplined cost management, sound investment practices and reliable energy delivery, PSEG strives to keep customer cost as low as possible. NJ customers benefit fromprovide access to low cost natural gas which has also resultedhigh quality instruction in lower electricity prices.STEM and college readiness skills.
Human Capital Management: Our People
At PSEG, we know that our people are our most valuable resource. Therefore, ourOur Human Capital Management strategy is integrated with our overall ESG goals and is designed to ensure we have the best talentsupport our ability to attract, develop and retain a high performing diverse workforce and to continue building on our strong culture of inclusion to sustain our business both today and in the future as we lead transformation in our industry.
Board Oversight of Human Capital Management
Our Board has a key role in the oversight of our talent management programs and culture initiatives with particular focus on diversity, equity and inclusion, organization and succession planning, talent and workforce development, total rewards, and culture. At least semi-annually the Board is engaged in a review of our human capital management focusing on our organizational and leadership priorities, executive leadership succession and development plans, and executive performance and potential. In addition, the Board reviews workforce and talent diversity metrics, employee engagement and culture survey data and findings, and talent and culture plans and programmatic developments. The Board actively engages not only with our executive leadership teams but also our rising senior leaders through formal presentations and talent engagement meetings.
As specified in its charter, the O&CC holds the primary responsibility for overseeing our organizational, talent and total rewards strategy. The Organizational and Compensation Committee oversees our annual incentive plan, which includes specific metrics holding our leaders accountable to meet human capital related goals to drive key talent, culture, diversity, equity and inclusion priorities. Specifically, annual employee incentive awards are tied to a People Strong Goal, which measures employee growth and development, engagement, and inclusion, and a Diversity, Equity and Inclusion (DEI) index, which measures DEI progress, among other business performance goals. PSEG’s pay-for-performance philosophy aligns employee compensation with individual performance as well as business unit and Enterprise performance results, driving employee accountability and ownership of overall results and progress on key strategic objectives.future.
* Employees classified as Vice President and above
26 PSEG 2023 Proxy Statement
Corporate Governance – Our Social Priorities
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OUR CORE COMMITMENTS
SAFETY We put safety first.
INTEGRITY We do what’s right.
CONTINUOUS IMPROVEMENT We aspire to achieve excellence.
DIVERSITY, EQUITY & INCLUSION We treat all individuals fairly, equitably, and with dignity and respect.
CUSTOMER SERVICE We keep customers at the heart of everything we do. |
Pay Equity Reviews: We set compensation levels for new and existing employee candidates based on role qualification and market data. We calibrate our performance ratings and perform semi-annual equity reviews across the Enterprise to ensure our pay is fair and equitable for all employees.
Policy, Practice and Equity Reviews: We performed a comprehensive equity review of our policies and practices, resulting in specific updates to our programs to better support equity (e.g., expanded access to our parental leave program). We enhanced our year-end performance management process for all non-represented employees to control for bias. We continue to review and modify job requirements to focus on Day 1 job requirements to maximize opportunity and allow for on-the-job training.
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Corporate Governance – Our Social Priorities
Talent Attraction and Retention
PSEG has maintained an unwavering focus on attracting, developing and retaining a robust talent pipeline for the future, from our frontline to our leadership levels. To remain competitive and continue to provide our customers with the best service, we must ensure our employees are engaged and have the right skills and environment to drive innovation, productivity, safety and excellence.
To PSEG, developing the talent of the future is about:
Deployment of the right people in the right roles;
Continuous skill building to meet current operational needs and stay ahead of market and industry trends;
Leveraging people, technology, and processes to create high quality, timely and effective outcomes for our customers; and
Evaluation of both internal and contracted talent options to optimize efficiency.
Diversity, Equity & Inclusion Highlights
Forbes 2020 list of Americas Best Employers for Diversity 3rd year in a row Military Friendly Employer 2021 Bronze medallion Forbes 2020 list of best employers for veterans $1 Million Commitment to fight racial injustice and inequity CEO is part of NJ CEO Council supporting the training and placement of 30,000 NJ residents by 2030 Our CEO is a signatory to CEO Action for Diversity & Inclusion commitment
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Our Culture PSEG aspires for a culture of inclusion and operational excellence to support its employees, customers and the many diverse communities we serve. Through our Core Commitments, we reinforce our culture and expectations for “how” we work. We solicit feedback from employees through focus groups, listening sessions and employee experience surveys. In the latest survey, we saw improvements in many areas including comfort speaking up, belonging, and manager relationship, with an overall engagement score of 82%. Health, Safety and Well-Being Protecting the health, safety and well-being of our employees, contractors and the communities that we serve is one of our Core Commitments. We empower employees to question, stop and correct any unsafe act or condition. To hold ourselves accountable, we have annual performance goals related to compliance with health and safety policies, practices and procedures. Diversity, Equity and Inclusion We work to foster a culture of belonging and equity, where diversity is celebrated and inclusion is the norm. Our DEI program combines individual and site-specific efforts with company-wide leadership development and training programs. Since publishing our first Diversity, Equity and Inclusion (DEI) Report in 2021, |  |
Our Employee Business Resource Groups (EBRGs) aim to build meaningful connections through community outreach and volunteerism, mentorship, and professionaldevelopment; elevate diverse perspectives; support key business goals and priorities; and create safe spaces for employees to learn from each other. Along with EBRGs, our Local Inclusion Teams (LIT) support culture change at the local level through diversity programs, engagement, recognition and volunteerism. In the past year, PSEG has been able to build on existing programs as well as provide new opportunities for employees to grow including: PSEG’s LGBTQ+ employee awareness campaign “Acceptance for All. Respect for All. Inclusion for All” was launched to create empathy and psychological safety for the LGBTQ+ community. The key components of the campaign include PSEG’s LGBTQ+ Inclusion Pledge; a Transgender Resource Guide; and a voluntary self-serve option for employees to select their gender identity, sexual orientation, and pronouns as a part of their employee profile. The Men Advocating Real Change (MARC) Program continues to engage men and women in candid dialogue with the goal of allowing all to gain insight, empathy and personal motivation to take action to improve gender equity in the workplace. | 2022 DEl Recognitions • America’s Best Employers for Diversity • America’s Best Large Employers • America’s Best Employers for Women • America’s Best Employer by State • America’s Most Just Companies • Bloomberg Gender-Equality Index • Bronze Military Friendly Employers • Campus Forward Award • Corporate Equality Index • Disability Equality Index • Leading Disability Employer • No. 1 Utility in 100 Best Corporate Citizens |
PSEG 2023 Proxy Statement 27
Corporate Governance – Our Social Priorities
PSEG’s Women in Skilled Trades Initiative and Inclusive Workspace for Women Program supports the women hired into skilled trades roles by providing regular interaction with leadership and each other to create internal support and exposure to help them succeed.
Our initiatives to advance DEI includes doing business with certified minority, women, veteran & LGBT- owned businesses and maintains a supplier diversity process that is integrated into our company culture. PSEG achieved its goal to spend 30% with diverse suppliers by 2023 in 2021, two years ahead of schedule.
Talent Attraction Our Talent Acquisition strategy is focused on hiring a diverse, high-performing workforce to meet our business objectives, including the critical skilled trade roles needed to provide energy that is cleaner, safer and delivered more reliably than ever. As part of these efforts, we work to attract employees who reflect broad dimensions of diversity including race, gender, disability, generation, education, and other traits and characteristics that make each person who they are. Talent Development We continue to provide a variety of ongoing training and development opportunities for our employees. On average, PSEG provides approximately 40-50 hours of professional development per employee each year. Talent development efforts include: Talent Process: Enhanced talent and succession process identifying diverse talent pools and next level leaders, creating development plans and developing workforce planning solutions. |
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Leadership Development Offerings: Developed leadership programs for front-line people leaders, hi-potential talent as well as targeted development for new college hires.
Mentoring and Professional Coaching: Provided formal and informal mentoring opportunities through EBRG-sponsored programs, reverse mentoring and mentoring circles. In addition, confidential coaching was offered to help employees navigate personal and professional growth and development.
Technical Training: Provided technical classroom and on-the-job training in the core curriculums for craft employee apprentice programs. Classroom training consists of computer based, instructor lead virtual training, and self-guided e-learning, as well as hands-on skill instruction, exercises and evaluations.
Total Rewards Program
In addition to our competitive pay, incentives and benefits programs, our Total Rewards offerings take into account the safety, health and overall well-being of our employees. We offer an array of programs designed to support physical, emotional, social, and financial wellness, the foundation of employee engagement and productivity.
28 PSEG 2023 Proxy Statement
Corporate Governance – Our Social Priorities
Labor Relations
We are proud of the partnership we have with union leadership across our six unions and the 7,786 employees represented by unions inthey represent. We believe our workforce.
Our strong relationship with our unions allowed for swift and effective implementationnegotiation of COVID-19 protocols, with over 45 negotiatedpermanent agreements on terms such as sequestration,that support PSEG’s flexible work hoursmodel and paid time off, telecommuting, use of personal vehicles,other midterm agreements that support strategic objectives and training.
In 2020, we extended several of our labor contracts through 2023, providing labor stability during the pendency of key business initiatives.goals.
Just Transition: As we accelerate our business to a primarily regulated utility and contracted energy business with zero-carbon nuclear assets, PSEG is committed tostrives for a fair, equitable and transparent approach to human capital management, one that is grounded in treating people with dignity and respect. This was illustrated during the sale of the fossil generating portfolio when employees working at the fossil facilities transferred with the business and all collective bargaining agreements applicable to the union-represented workforce were assumed. Others impacted by the sale were provided time to prepare and consider other job opportunities within the company if they desired. With evolving technologies in energy and digital advancements, we look for training, upskilling and redeployment opportunities forwithin our existing workforce.
PSEG Workforce at a Glance
Total Headcount 12,788 Voluntary Turnover (excluding retirement 1.4% Avg. employee tenure 15 years 61% Represented Employees PSEG Benchmark Results (Utilities) Racially/Ethnically Diverse Women 26% 21% 18% 24% Race/ Ethnicity White or Caucasian (73%) Black or African American (12%) Hispanic or Latino (9%) Asian (5%) Others* (1%) *includes Native Hawaiian or Other Pacific Islander or Two or More Races 14% Racially/Ethnically Diverse Executives 28% Women in Executive positionsTotal Headcount 12,788 Voluntary Turnover (excluding retirement) 1.4% Avg. employee tenure 15 years 61% Represented Employees PSEG Benchmark Results (Utilities) Racially/Ethnically Diverse Women 26% 21% 18% 24% Race/ Ethnicity White or Caucasian (73%) Black or African American (12%) Hispanic or Latino (9%) Asian (5%) Others* (1%) *includes Native Hawaiian or Other Pacific Islander or Two or More Races 14% Racially/Ethnically Diverse Executives 28% Women in Executive positions
Sound corporate governance is integral to the results and progress we achieve. We are guided by a code of conduct and integrity that emphasizes high ethical standards, accountability and transparency. Governance is a top priority and includes a focus on enterprise risk management (see p. 22)23), cybersecurity (see p. 22)23), political contributions (see p. 31)29) and executive compensation (see p. 39)40). Our Board exercises oversight, supported by each committee, as reflected in their charters.
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| Ø | Audit Committee – ethics and compliance, |
| Ø | Industrial Operations Committee – cybersecurity, environmental, and health and safety |
| Ø | Finance Committee – finance and investment risk, commodity/credit/liquidity, tax and pension risks |
| Ø | Organization and Compensation Committee – executive compensation and human capital management |
Sound corporate governance starts from the top where we strive to balance the right mix of Board diversity characteristics (including skills, backgrounds, gender, racial and ethnic diversity) that will enable us to achieve our strategic goals. Our Board is continuously refreshed and we had sevenfive new independent directors join our Board in the last ten years (includingpast four new directors since 2018) and four of the seven directors were women or racially/ethnically diverse.years. For more information, see pages 6-8.7-10.
Our ESG goals are also linked to executive compensation. Compensation scorecards reflect key ESG goals including diversity, equity and inclusion, climate and sustainability. For more information, see pages 47-48.page 49.
Corporate Governance – Our Governance Priorities
Oversight of Political Contributions and Engagement Activities
The Company is committed to maintaining orderly, stable and productive relationships with its stakeholders in government. The nature of our business requires that we are a trusted corporate citizen with an unwavering commitment to integrity. The Corporate Governance, Nominating and Sustainability Committee oversees our political engagement activities in accordance with our Corporate Political Participation Practice, which may be found here: https://investor.pseg.com/governance/esg/governance-overview/default.aspx
In 2020, we revised ourOur Corporate Political Participation Practice to implement additionalincludes various controls on the Company’s political engagement activities. These controls expand internalinclude requirements applicable to the Company’s interactions with prominent political figures and its contributions to political organizations and social welfare organizations (i.e., 501(c)(4) organizations). For example, any contribution to a social welfare organization willmust undergo a robust review to confirm the contribution will not result in unreasonably adverse reputational or business risk and must be approved by both the Senior Vice President—President – Corporate Citizenship andas well as the EVP and General Counsel. These additional controls also expandinclude the review and approval process applicable to interactionsengaging firms or suppliers with connections to prominent political figures and others close to them. Also, vendorsfigures; incorporated in this process is a requirement that firms or suppliers whothat perform lobbying activities or political consulting may not subcontract work without our prior review and approval.
PSEG 2023 Proxy Statement 29
Corporate Governance – Our Governance Priorities
Annually, we publish a report that includes our corporate contributions to candidates, trade associations and other political and social welfare organizations. With regard to trade associations, we request that trade associations to which we paid total annual payments of $50,000 or more identify the portion of dues or payments received from PSEG that were used for expenditures or contributions that, if made directly by PSEG, would not have been deductible under Section 162(e)(1)(B) of the Internal Revenue Code (IRC).
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The report is available here: https://investor.pseg.com/esg/ governance-overview/default.aspx
What We Expect of Our Employees, Officers and Directors
We have a long-established corporate culture of emphasizing integrity, honesty and the highest ethical standards and require all to remain in compliance with our Standards of Conduct. Our ChiefSenior Vice President, Audit, Enterprise Risk and Compliance Officer has overall responsibility for administering the Standards of Conduct under the oversight of the Audit Committee.
The Standards of Conduct are posted on our website at:
https://corporate.pseg.com/aboutpseg/leadershipandgovernance/standardsofconduct
Our Standards of Conduct:
Form an integral part of our business conduct compliance program and apply to all of our directors, employees and contractors, who are each responsible for understanding and complying with the Standards of Conduct;
| • | Form an integral part of our business conduct compliance program and apply to all of our directors, employees and contractors, who are each responsible for understanding and complying with the Standards of Conduct; |
Establish a set of written common expectations for dealings with investors, customers, fellow employees, competitors, vendors, government officials and the media; and
| • | Establish a set of written common expectations for dealings with investors, customers, fellow employees, competitors, vendors, government officials and the media; and |
Provide procedures for seeking ethical guidance and reporting concerns, including a hotline.
| • | Provide procedures for seeking ethical guidance and reporting concerns, including a helpline. |
We require every available employee to complete annual training on the Standards of Conduct.
We commit to post on our website:
Any amendment to the Standards of Conduct; and
Any waiver from the Standards of Conduct that applies to any director, executive officer or person performing similar functions and that relates to any applicable SEC requirement. Waivers may be granted in exceptional circumstances only and must be made by the Board.
| • | Any amendment to the Standards of Conduct; and |
Any waiver from the Standards of Conduct that applies to any director, executive officer or person performing similar functions and that relates to any applicable SEC requirement. Waivers may be granted in exceptional circumstances only and must be made by the Board. |
Corporate Governance – Our Governance Priorities
In 2020,2022, we did not grant any waivers to the Standards of Conduct.
Our Standards of Conduct, Compliance Program, Related Person Transactions Practice and Conflicts of Interest Practice described below, establish clear policies and procedures regarding personal and business conduct. Our written management practices provide that any capital investment with a non-PSEG entity or its affiliate, for which one of our directors or officers serves as a director or executive officer, must be approved by our Board. These are our only written policies and procedures regarding the review, approval or ratification of transactions with related persons.
30 PSEG 2023 Proxy Statement
Corporate Governance – Certain Relationships and Related Person Transactions
Certain Relationships and Related Person Transactions
Under our Related Person Transactions Practice, which is administered by the Corporate Governance, Nominating and Sustainability Committee, directors and executive officers must report any potential related person transactions.
For purposes of our Related Person Transactions Practice, a related person transaction includes transactions in which PSEG is a participant, the amount involved exceeds $120,000 and a “related person” has or will have a direct or indirect interest. Related persons of PSEG consist of directors (including director nominees), executive officers, stockholders beneficially owning more than 5% of PSEG’s voting securities and the immediate family members of these individuals.
The Corporate Governance, Nominating and Sustainability Committee reviews the facts and circumstances of each transaction and approves or ratifies related person transactions that it determines are in the best interests of PSEG and its stockholders. The Corporate Governance, Nominating and Sustainability Committee’s consideration include:includes:
| • | Whether the transaction was in the ordinary course of business and at arm’s length, in accordance with the Company’s internal policies and procedures |
| • | Whether the transaction involved any special treatment of the related person |
| • | The purpose of the transaction and its potential benefits to PSEG |
| • | The approximate dollar value of the transaction |
| • | The related person’s interest in the transaction |
| • | Any other information regarding the transaction or the related person that the Committee deems relevant |
PSEG Director Barry H. Ostrowsky iswas the President and CEO of RWJBarnabas Health (RWJBarnabas), a non-profit corporation incorporated in New Jersey.Jersey until his retirement from RWJBarnabas Health in December 2022.
In 2020, as part of the Company’s philanthropic activities and commitment to invest in the communities in which we do business, the Company, directly or through a subsidiary, donated approximately $43,800 to facilities affiliated with RWJBarnabas and the PSEG Foundation, a separate, 501(c)(3) organization that is funded by the Company but whose donations are not determined or influenced by the PSEG Board, donated approximately $135,000. It is expected that PSEG and the PSEG Foundation each will make future contributions to facilities affiliated with RWJBarnabas.
| • | In 2022, as part of the Company’s philanthropic activities and commitment to invest in the communities in which we do business, the Company, directly or through a subsidiary, donated approximately $54,150 to facilities affiliated with RWJBarnabas and the PSEG Foundation, a separate, 501(c)(3) organization that is funded by the Company but whose donations are not determined or influenced by the PSEG Board, donated approximately $7,500. It is expected that PSEG and the PSEG Foundation each will make future contributions to facilities affiliated with RWJBarnabas. |
Since 2013, the Company’s subsidiary, PSEG Services Corporation (Services), has had a contractual arrangement with an RWJBarnabas affiliate, Robert Wood Johnson University Hospital Hamilton (RWJ Hamilton), pursuant to which RWJ Hamilton provides medical care, medical testing and related services to the Company and its subsidiaries. In 2020, the Company paid a total of approximately $376,000 for services provided pursuant to this arrangement. The Company expects to pay a similar amount in 2021.
| • | Since 2013, the Company’s subsidiary, PSEG Services Corporation, has had a contractual arrangement with an RWJBarnabas affiliate, Robert Wood Johnson University Hospital Hamilton (RWJ Hamilton), pursuant to which RWJ Hamilton provides medical care, medical testing and related services to the Company and its subsidiaries. In 2022, the Company paid a total of approximately $299,958 for services provided pursuant to this arrangement. The Company expects to pay a similar amount in 2023. |
Since 2008, the Company’s subsidiary, PSE&G, has engaged in an ongoing Hospital Energy Efficiency Program (HEE Program), through which PSE&G provides funds for energy efficiency upgrades to hospitals throughout the PSE&G service territory. The HEE Program was approved, and is overseen, by the NJBPU. PSE&G has committed to invest approximately $271.8 million through the HEE Program to a variety of hospitals over the course of several years. PSEG had made commitments of approximately $64.7 million to RWJBarnabas facilities. These projects are in various stages of completion, with several fully completed and others in progress or in the planning stage. The aggregate portion that RWJBarnabas facilities have committed to repay to PSE&G through utility bills in accordance with the NJBPU-approved terms of the program is equal to approximately $24.1 million. Because the HEE Program is ongoing, the investment and repayment figures are subject to change in the coming years.
| • | Since 2008, the Company’s subsidiary, PSE&G, has engaged in an ongoing Hospital Energy Efficiency Program (HEE Program), through which PSE&G provides funds for energy efficiency upgrades to hospitals throughout the PSE&G service territory. The HEE Program was approved, and is overseen, by the New Jersey Board of Public Utilities (NJBPU). PSE&G has committed to invest approximately $271.8 million through the HEE Program to a variety of hospitals over the course of several years. PSE&G had made commitments of approximately $95.7 million to RWJBarnabas facilities (audit, engineering, construction combined).These projects are in various stages of completion, with several fully completed and others in progress or in the planning stage. The aggregate portion that RWJBarnabas facilities have committed to repay to PSE&G through utility bills in accordance with the NJBPU-approved terms of the program is equal to approximately $38.6 million. Because the HEE Program is ongoing, the investment and repayment figures are subject to change in the coming years. |
Christopher LaRossa, brother of Ralph A. LaRossa, COO of PSEG and oneChair of the Company’s NEOs,Board, President and CEO of PSEG, is an employee of, and receives compensation from, PSE&G. During 2020,2022, Christopher LaRossa served and currently serves as District Manager – Regulatory Policy and Procedure. The approximate total compensation paid to Christopher LaRossa during 20202022 was within the range set for employees with comparable qualifications and responsibilities who held similar positions at the Company (salary of $114,000-118,300-$228,000236,600 plus incentive compensation targeted at 20% of salary). He also received health insurance and otherwelfare benefits
Corporate Governance – Certain Relationships and Related Person Transactions
available to all other employees in a similar position. His compensation was determined in accordance with our compensation practices applicable to employees who hold similar positions. Ralph A. LaRossa did not and does not have any direct responsibility for directing or reviewing his brother’s work or any influence over his brother’s compensation or the other terms of his employment.
The Corporate Governance, Nominating and Sustainability Committee reviewed all of the transactions referenced above and determined that they are in the best interests of PSEG and its stockholders. We do not have any other related person transactions that meet the requirements for disclosure in this Proxy Statement.
PSEG 2023 Proxy Statement 31
Corporate Governance – Conflicts of Interest
Conflicts of Interest
The Corporate Governance Principles provide that a director must notify the Chair of the Corporate Governance, Nominating and Sustainability Committee if the director encounters a conflict of interest or proposes to accept a position with a new entity so that potential conflicts of interest may be reviewed. Our Conflicts of Interest Practice applies to all employees contractors, suppliers and any third party working on behalf of PSEGdirectors and covers situations where individual interests are or could be at odds or in conflict with PSEG’s interests. These situations are required to be reported to our Office of Ethics and Compliance, which may conduct an investigation or take actions it deems appropriate. Similarly, PSEG’s Supplier Code of Conduct applies to all suppliers performing work for the Company, and requires that suppliers recognize and disclose any conflicts of interest to PSEG’s Office of Ethics and Compliance.
32 PSEG 2023 Proxy Statement
Security Ownership Table
SECURITY OWNERSHIP OF DIRECTORS, MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table shows, as of February 19, 2021,sets forth information with respect to the beneficial ownership of our common stock as of February 17, 2023 by theour named executive officers, our current directors and nominees, and the currently servingall of our executive officers named in the 2020 Summary Compensation Table. None of these amounts exceeds one percent of our common stock outstanding.and directors as a group. The table also shows as of February 19, 2021,17, 2023, beneficial ownership in shares by any person or group known to us to be the beneficial owner of more than five percent of our common stock. According to the Schedule 13G filed by each owner with the SEC, these securities were acquired and are held in the ordinary course of business and not for the purpose of changing or influencing the control of the Company.
Name | Owned Shares (#)(1) | Restricted Stock (#)(2) | Stock Units/ RSUs (#)(3) | Phantom Shares (#)(4) | Deferred Equity Shares (#)(5) | Amount of Beneficial Ownership of Common Stock (#) | Percent of Class (%) | |||||||||||||||||||||
Directors: | ||||||||||||||||||||||||||||
Willie A. Deese | - | - | 15,096 | - | - | 15,096 | <1 | |||||||||||||||||||||
Shirley Ann Jackson | 5,604 | 9,600 | 53,082 | 4,338 | - | 72,624 | <1 | |||||||||||||||||||||
David Lilley | - | - | 45,465 | 32,659 | - | 78,124 | <1 | |||||||||||||||||||||
Barry H. Ostrowsky(6) | - | - | 8,114 | - | - | 8,114 | <1 | |||||||||||||||||||||
Scott G. Stephenson(6) | - | - | 2,808 | - | - | 2,808 | <1 | |||||||||||||||||||||
Laura A. Sugg(6) | 210 | - | 5,251 | - | - | 5,461 | <1 | |||||||||||||||||||||
John P. Surma(6) | 1,736 | - | 2,808 | - | - | 4,544 | <1 | |||||||||||||||||||||
Susan Tomasky | - | - | 31,261 | - | - | 31,261 | <1 | |||||||||||||||||||||
Alfred W. Zollar | - | - | 31,042 | - | 31,042 | <1 | ||||||||||||||||||||||
NEOs: | ||||||||||||||||||||||||||||
Ralph Izzo(7) | 50,817 | - | 137,464 | - | 1,676,483 | 1,864,764 | <1 | |||||||||||||||||||||
Daniel J. Cregg(7) | 62,780 | - | 25,623 | - | 8,781 | 97,184 | <1 | |||||||||||||||||||||
Ralph A. LaRossa(7) | 26,324 | - | 33,107 | - | 149,288 | 208,719 | <1 | |||||||||||||||||||||
Tamara L. Linde(7) | 51,249 | - | 21,032 | - | - | 72,281 | <1 | |||||||||||||||||||||
David M. Daly(7) | 35,580 | - | 20,515 | - | - | 56,095 | <1 | |||||||||||||||||||||
All Directors, NEOs and Executive Officers of the Company as a Group (16 Persons): |
| |||||||||||||||||||||||||||
| 316,412 | 9,600 | 443,615 | 36,997 | 1,834,552 | 2,641,176 | <1 | ||||||||||||||||||||||
Certain Beneficial Owners: |
| |||||||||||||||||||||||||||
Blackrock, Inc.(8) | 51,015,043 | 10.10 | ||||||||||||||||||||||||||
State Street Corporation(9) | 26,360,568 | 5.21 | ||||||||||||||||||||||||||
T. Rowe Price Associates, Inc.(10) | 26,136,648 | 5.10 | ||||||||||||||||||||||||||
Vanguard Group, Inc.(11) | 42,222,685 | 8.35 | ||||||||||||||||||||||||||
Name | Owned Shares (#)(1) | Stock Units/ RSUs (#)(2) | Phantom Shares (#)(3) | Deferred Equity Shares (#)(4) | Amount of Beneficial Ownership of Common Stock (#) | Percent of Class (%) | ||||||||||||||||||
Directors: | ||||||||||||||||||||||||
Willie A. Deese | - | 21,085 | - | - | 21,085 | <1 | ||||||||||||||||||
Jamie M. Gentoso(5) | - | 2,686 | - | - | 2,686 | <1 | ||||||||||||||||||
David Lilley | 2,190 | 51,321 | 34,937 | - | 88,448 | <1 | ||||||||||||||||||
Barry H. Ostrowsky | - | 13,615 | - | - | 13,615 | <1 | ||||||||||||||||||
Valerie A. Smith(5) | - | 2,686 | - | - | 2,686 | <1 | ||||||||||||||||||
Scott G. Stephenson(5) | - | 7,940 | - | - | 7,940 | <1 | ||||||||||||||||||
Laura A. Sugg(5) | 210 | 10,553 | - | - | 10,763 | <1 | ||||||||||||||||||
John P. Surma(5) | 1,736 | 7,940 | - | - | 9,676 | <1 | ||||||||||||||||||
Susan Tomasky | - | 38,376 | - | - | 38,376 | <1 | ||||||||||||||||||
Alfred W. Zollar | 2,832 | 35,138 | - | - | 37,970 | <1 | ||||||||||||||||||
NEOs: | ||||||||||||||||||||||||
Ralph Izzo(6) | 95,560 | 94,249 | - | 1,793,338 | 1,983,147 | <1 | ||||||||||||||||||
Ralph A. LaRossa(6) | 18,920 | 87,439 | - | 159,694 | 266,053 | <1 | ||||||||||||||||||
Daniel J. Cregg(6) | 98,411 | 28,173 | - | - | 126,584 | <1 | ||||||||||||||||||
Tamara L. Linde(6) | 49,474 | 21,304 | - | - | 70,778 | <1 | ||||||||||||||||||
Kim C. Hanemann(6) | 38,065 | 18,451 | - | - | 56,516 | <1 | ||||||||||||||||||
Eric Carr(6) | 7,672 | 17,454 | - | - | 25,126 | <1 | ||||||||||||||||||
All Directors, NEOs and Executive Officers of the Company as a Group (19 Persons): |
| |||||||||||||||||||||||
| 388,850 | 481,090 | 34,937 | 1,953,032 | 2,857,909 | <1 | |||||||||||||||||||
Certain Beneficial Owners: |
| |||||||||||||||||||||||
Blackrock, Inc.(7) | 57,383,190 | 11.50 | ||||||||||||||||||||||
State Street Corporation(8) | 31,051,365 | 6.22 | ||||||||||||||||||||||
Vanguard Group, Inc.(9) | 44,809,872 | 8.98 | ||||||||||||||||||||||
| (1) | Includes all shares, if any, held directly, in brokerage accounts, under the Thrift and Tax-Deferred Savings Plan (401(k) Plan), Enterprise Direct, Employee Stock Purchase Plan, shares owned jointly by or with a spouse and shares held in a trust or a custodial account. |
| (2) |
|
Includes vested and unvested RSUs granted to executive officers under the LTIP and stock units granted to directors under the Equity Compensation Plan for Outside Directors (Directors Equity Plan), with no voting rights. |
Includes phantom shares accrued under the Directors’ Deferred Compensation Plan for those individuals who have elected to have the earnings on their deferred payments calculated based upon the performance of our common stock, with no voting rights and all payouts in cash. |
Includes shares deferred under the Equity Deferral Plan, with no voting rights. |
Board member has not yet met their ownership requirement. |
Address: 80 Park Plaza, Newark, NJ 07102 |
| (7) | As reported on Schedule 13G filed on January 23, 2023. Address: 55 East 52nd Street, New York, NY 10055. |
| (8) | As reported on Schedule 13G filed on January |
| (9) | As reported on Schedule 13G filed on February |
|
|
PSEG 2023 Proxy Statement 33
Security Ownership Table – Delinquent Section 16(a) ReportsDirector Compensation
Delinquent Section 16(a) Reports
The following information is based upon our review of Forms 3 and 4 filed in 2020 and Forms 5 filed with respect to 2020 with the SEC under Section 16(a) of the Securities Exchange Act of 1934, as amended, regarding transactions involving our common stock. During 2020, none of our NEOs were late in filing a Form 3, 4 or 5 in accordance with the applicable requirements of the SEC. For our directors, due to administrative error, one Form 4 was filed late for Shirley Ann Jackson reflecting the notional first quarterly investment in the PSEG Stock Fund as part of the Deferred Compensation Plan.
The table below reports 20202022 compensation to directors except Mr. Izzo and Mr. LaRossa, as explained below, under How Our Directors Are Compensated.
| Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(2) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($) | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(2) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($)(4) | Total ($) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Willie A. Deese | 158,333 | 135,038 | - | - | - | 150 | 293,521 | 170,000 | 180,043 | - | - | - | 7,650 | 357,693 | |||||||||||||||||||||||||||||||||||||||||||||||||||
William V. Hickey(3) | 53,333 | - | - | - | - | - | 53,333 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Jamie M. Gentoso | 80,000 | 180,043 | - | - | - | - | 260,043 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shirley Ann Jackson | 215,000 | 135,038 | - | - | - | 150 | 350,188 | 76,667 | - | - | - | - | 10,150 | 86,817 | |||||||||||||||||||||||||||||||||||||||||||||||||||
David Lilley | 178,333 | 135,038 | - | - | - | 150 | 313,521 | 141,667 | 180,043 | - | - | - | 150 | 321,860 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Barry H. Ostrowsky | 155,000 | 135,038 | - | - | - | 150 | 290,188 | 151,667 | 180,043 | - | - | - | 150 | 331,860 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Valerie A. Smith | 80,000 | 180,043 | - | - | - | 4,030 | 264,073 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Scott G. Stephenson | 109,167 | 135,038 | - | - | - | 150 | 244,355 | 141,667 | 180,043 | - | - | - | 150 | 321,860 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Laura A. Sugg | 138,333 | 135,038 | - | - | - | 150 | 273,521 | 150,000 | 180,043 | - | - | - | 150 | 330,193 | |||||||||||||||||||||||||||||||||||||||||||||||||||
John P. Surma | 155,000 | 135,038 | - | - | - | 150 | 290,188 | 151,667 | 180,043 | - | - | - | 150 | 331,860 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Richard J. Swift(3) | 60,000 | - | - | - | - | - | 60,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Susan Tomasky | 178,333 | 135,038 | - | - | - | 150 | 313,521 | 168,333 | 180,043 | - | - | - | 150 | 348,526 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Alfred W. Zollar | 160,000 | 135,038 | - | - | - | 150 | 295,188 | 133,333 | 180,043 | - | - | - | 150 | 313,526 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| (1) | Includes |
Deese
| Hickey(3) ($)
| Jackson ($)
| Lilley ($)
| Ostrowsky ($)
| Stephenson ($)
| Sugg ($)
| Surma ($)
| Swift(3) ($)
| Tomasky ($)
| Zollar ($)
| Gentoso ($) | Jackson ($) | Lilley ($) | Ostrowsky ($) | Smith ($) | Stephenson ($) | Sugg ($) | Surma ($) | Tomasky ($) | Zollar ($) | ||||||||||||||||||||
- | 53,333 | 215,000 | - | - | - | - | - | - | - | - | - | 53,750 | - | - | 80,000 | - | - | - | - | - | ||||||||||||||||||||
| (2) | For each, the grant date fair value of the award on May |
Deese (#)
| Jackson (#)
| Lilley (#)
| Ostrowsky (#)
| Stephenson (#)
| Sugg (#)
| Surma (#)
| Tomasky (#)
| Zollar (#)
| Deese (#) | Gentoso (#) | Lilley (#) | Ostrowsky (#) | Smith (#) | Stephenson (#) | Sugg (#) | Surma (#) | Tomasky (#) | Zollar (#) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Units | 15,096 | 53,082 | 45,465 | 8,114 | 2,808 | 5,251 | 2,808 | 31,261 | 31,042 | 21,085 | 2,686 | 51,321 | 13,615 | 2,686 | 7,940 | 10,553 | 7,940 | 38,376 | 35,138 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted Stock | - | 9,600 | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (3) | Service on our Board ended in April |
| (4) | ||
Consists of charitable contributions made by us on behalf of each individual, including through our matching gift program available to all employees and directors. |
34 PSEG 2023 Proxy Statement
Director Compensation – How Our Directors Are Compensated
How Our Directors Are Compensated
As provided in our Corporate Governance Principles, director compensation is reviewed periodically by the Corporate Governance, Nominating and Sustainability Committee, which recommends approval to the Board. Our compensation to non-management directors is comparable to median director compensation among our peer companies, in order to be able to attract and retain high quality Board members. This compensation includes a cash retainer, RSUs and reimbursement for expenses for attending Board and committee meetings and related functions. Ralph Izzo, who was compensated as Executive Chair and previously as CEO and Ralph A. LaRossa, who is compensated as our new CEO doesdo not receive any additional compensation for Board membership. HisTheir compensation as an employee is shown in this Proxy Statement in the executive compensation tables and in the Executive Compensation section. In accordance with PSEG’s Certificate of Incorporation, the Company provides indemnity and reimbursement of expenses to the full extent permitted by law and provides directors’ and officers’ insurance.
Every two years, our independent compensation consultant, CAP, advises the Corporate Governance Committee on the competitiveness of our director compensation.
The independent directorsIndependent Directors are compensated according to the schedule shown below. All amounts are paid in cash, except the equity grant, which is paid in common stock units equal to the amount shown. All payments to the Chairs, and committee members, as indicated, are per assignment and are in addition to the annual retainer and equity grant.
Every two years, the O&CC independent compensation consultant, CAP, advises the Governance, Nominating and Sustainability Committee on the competitiveness of our director compensation. Following a review of peer company market data conducted by CAP, the fee schedule was last revised effective May 1, 2016. The fee schedule, among other things, was last reviewed by CAP in 2019 and no changes were made to the fee schedule at that time.2022.
Current Fee
($) | |||||
Annual Retainer | 120,000 | ||||
Annual Equity Grant | 180,000 | ||||
Lead Director | 40,000 | ||||
Committee Chair: Audit; O&CC | 30,000 | ||||
Committee Chair: | |||||
| 25,000 | ||||
| |||||
| |||||
| |||||
Directors’ Stock Ownership Requirement
Our Corporate Governance Principles require that our directors own shares of our common stock (including any restricted stock, whether or not vested, any stock units under the Directors’ Equity Plan and any phantom stock under the Directors’ Deferred Compensation Plan) equal to six times the annual retainer (which is currently $95,000$120,000 for a total required ownership level of $570,000)$720,000) before they may sell any PSEG stock. The Board raisedfollowing newest directors do not yet meet the minimum ownership requirement in 2019 from five to six times the annual retainer to be aligned with market practice. All incumbent directors currently meet this stock ownership level except for our four newest directors: Barry H. Ostrowsky, who joined the Board in February 2018;level: Laura A. Sugg, who joined the Board in January 2019; John P. Surma, who joined the Board in November 2019, and Scott G. Stephenson who joined the Board in February 2020.2020, and Jamie M. Gentoso and Valerie A. Smith, who both joined the Board in April 2022. Additional details can be found in the table under Security Ownership of Directors, Management and Certain Beneficial Owners on page 34.33.
Directors’ Equity Plan
The Directors’ Equity Plan is a deferred compensation plan and, under its terms, each of our outside directors is granted an award of stock unit equivalents each May 1st (in an amount determined from time-to-time by the Board) which is recorded in a bookkeeping account in the director’s name and accrues credits equivalent to the dividends on shares of our common stock. If a director does not remain a member of the Board (other than on account of disability or death) until the earlier of the succeeding April 30th or the next Annual Meeting of Stockholders, the award for that year will be prorated to reflect actual service. Directors are fully vested in their annual equity grants by April 30th of the year following the grant. Distributions of all deferred equity under the Directors’ Equity Plan are made in shares of our common stock after the director terminates service on the Board in accordance with elected distributions, which may be either in a lump-sum payment or, with respect to grants made prior to 2012, in annual payments over a period of up to ten years.
Under the Directors’ Equity Plan, beginning with grants made in 2012, directors may elect to receive distribution of a particular year’s deferrals either upon termination of service or after a specified number of years or, effective in 2020, directors who have met the stock ownership requirement may elect to receive distribution of shares upon vesting. A director may elect to receive distribution of such deferrals in the form of a lump-sum payment or annual installments over a period of three to fifteen years. Distribution elections must be made prior to the date of the award.
Director Compensation – How Our Directors Are Compensated
Directors may make a distribution election for each year’s deferred compensation and may make changes regarding the timing of distribution elections with respect to prior deferred compensation as long as any new distribution election is made at least one year
PSEG 2023 Proxy Statement 35
Director Compensation – How Our Directors Are Compensated
prior to the date that the distribution would otherwise have begun and the revised commencement date is at least five years later than the date that the distribution would otherwise have begun.
Directors’ Deferred Compensation Plan
Under the Directors’ Deferred Compensation Plan, directors may elect to defer any portion of their cash fees. Elections must be made in the calendar year prior to the year of payment. When deferral is elected, the director must make an election as to the timing of the distribution from the Directors’ Deferred Compensation Plan account. Distributions are made in cash.
For amounts deferred prior to 2012, distributions may begin (a) on the thirtieth day after the date of termination of service as a director or, in the alternative, (b) on January 15th of any calendar year following termination of service, but in any event no later than the later of (i) January of the year following the year of the director’s 71st birthday or (ii) January following termination of service. Directors may elect to receive the distribution of their Directors’ Deferred Compensation Plan account in the form of one lump-sum payment or annual distributions over a period of up to ten years.
For compensation deferred beginning in 2012, directors may elect to begin distribution of a particular year’s deferrals, either (a) within 30 days of termination of service or (b) a specified number of years following termination of service. They may elect to receive distribution of such deferrals in the form of a lump-sum payment or annual installments over a period of three to fifteen years.
Directors may make a distribution election for each year’s deferred compensation and may make changes regarding the timing of distribution elections with respect to prior deferred compensation as long as any new distribution election is made at least one year prior to the date that the distribution would otherwise have begun and the revised commencement date is at least five years later than the date that the distribution would otherwise have begun.
36 PSEG 2023 Proxy Statement
Executive Compensation Discussion and Analysis
PROPOSAL 2 ADVISORY VOTE ON THE APPROVAL OF EXECUTIVE COMPENSATION
We recognize that executive compensation is an important matter for our stockholders. As required by Section 14A of the Exchange Act, we provide you with an opportunity to cast an advisory vote on our executive compensation programs as described in this Proxy Statement. This is commonly referred to as say-on-pay.“say-on-pay”.
This vote is held annually and is non-binding, but the Board, the O&CC and management carefully review the voting results and take them into consideration when making future decisions regarding our executive compensation. We also regularly engage in dialogue with our shareholders to offer the opportunity to provide feedback on our executive compensation programs.
The next say-on-payAs required, this year we also are asking you to vote will occur at our 2022 Annual Meeting(see Proposal 3) on the frequency of Stockholders. The next say-on-frequencythe say-on-pay vote. We believe that the advisory say-on-pay vote which determines how often the say-on-pay vote isshould be submitted to be held, will occur at our 2023 Annual Meeting of Stockholders.you annually.
The O&CC has approved the compensation arrangements discussed in the Report of our O&CC, the Executive Compensation section and the compensation tables. We encourage you to read our Executive Compensation section, in which we explain the reasons supporting our executive pay decisions. We have summarized the highlights in our Executive Compensation Summary.
We believe our executive compensation is reasonable and appropriate, reflecting market conditions and performance. We are asking you to indicate your support of our executive compensation program as described in this Proxy Statement. This vote is not intended to address any specific item of compensation or any specific individual. Rather, it is an indication of your agreement with the overall philosophy, policies, practices and compensation of our NEOs as described in this Proxy Statement. Accordingly, as recommended by the Board, we ask for you to vote in favor of the following resolution:
Resolved, that the stockholders hereby approve, on an advisory basis, the compensation of
the NEOs, as disclosed in the Company’s Proxy Statement for the 20212023 Annual Meeting of
Stockholders pursuant to the applicable rules of the SEC, including the Compensation
Discussion and Analysis, compensation tables and narrative discussion.
Vote required: We will tally the votes cast, excluding abstentions and shares withheld or for which no instructions are given.
THE BOARD RECOMMENDS A VOTE FORTHE RESOLUTION IN THIS PROPOSAL.
PSEG 2023 Proxy Statement 37
Compensation Discussion and Analysis – 2022 Named Executive Officers
EXECUTIVE COMPENSATION SUMMARY
TABLE OF CONTENTS
Compensation Discussion and Analysis – Executive Compensation Summary
EXECUTIVE COMPENSATION SUMMARY
TABLE OF CONTENTS
| 39 | |||||
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| Executive Compensation Philosophy and Pay for Performance | ||||
| 40 | ||||
| 42 | ||||
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| 45 | |||
| 46 | |||
| 51 | |||
| 53 | |||
| 54 | |||
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2022 Named Executive Officers
  | Ralph Izzo, Retired Executive Chair of the Board(1) | |
Ralph
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Daniel J. Cregg, Executive Vice President (EVP) & Chief Financial Officer (CFO)
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Tamara L. Linde, Executive Vice President (EVP) & General Counsel
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Eric Carr, President and Chief Nuclear Officer (CNO)
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| (1) | Mr. LaRossa |
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38 PSEG 2023 Proxy Statement
Compensation Discussion and Analysis – 20202022 Company Performance Overview
20202022 Company Performance Overview
The charts below compare the relative contributions of PSE&G and PSEG Power & Other to our consolidated Net Income (Loss) and Non-GAAP Operating Earnings over the past five years and show our steady earnings and consistent dividend growth inover those years. ThisThe impact is reflected in the realized pay of our NEOs, since our executive compensation program links incentive payouts to measures of Non-GAAP Operating Earnings over multiple time frames. We show below the annual TSR and ROIC in the last three years compared to our 20202022 peer group. You can find a more comprehensive discussion of our 20202022 business and financial performance in our 20202022 Form 10-K.
See Appendix A for a complete list of items excluded from Net Income (Loss) in the determination of non-GAAP Operating Earnings.
GAAP: Contribution to PSEG Net Income ($ Millions) and Net Income per share ($/Share) Non-GAAP: Contribution to PSEG Operating Earnings ($ Millions) and Operating Earnings per share($/Share) PSEG Enterprise/Other PSEG Power PSE&G Net Income per share (GAAP) PSEG Enterprise/Other PSEG Power PSE&G Opera_ng Earnings per share (non-GAAP) Annual Total Shareholder Return (TSR) Annual Return on Invested Capital (ROIC) 3-Year TSR PSEG: 25.5% PSEG Peers: 28.9% 3-Year ROIC PSEG: 6.8% PSEG Peers: 7.2% PSEG Peer Group PSEG Dividend Payout ($/Share) 2020 5.1%
PSEG 2023 Proxy Statement 39
Compensation Discussion and Analysis – Executive Compensation Philosophy and Pay for Performance
Executive Compensation Philosophy and Pay for Performance
Our program aligns executive compensation to the successful execution of our strategic plans, meeting our financial and operational goals and delivering strong returns to our shareholders while balancing the interests of our multiple stakeholders. These include our stockholders, the customers we serve, our employees, our suppliers and the communities in which we operate. We attract and retain exceptional executive talent needed for long-term success by ensuring our compensation is market competitive with our peers.
Our incentive plans focus on financial and operational performance as well as Human Capital Management. Ourhuman capital management. As previewed last year, for 2022, we made additional changes to our MICP and LTIP also focusesto focus on our ESG commitments and priorities, and a portion of our LTIP continues to focus on performance versus peers over a multi-year time horizon. The goals of individual NEOs, including our CEO, place a high value on critical strategic initiatives, long-range planning, disciplined investments, ESG priorities and operational excellence that enhance value and recognize our responsibilities as a public utility. The actual value of compensation, especially equity grants, reflect our Company’s performance over time.
 | The O&CC annually reviews and evaluates our compensation program and maintains the flexibility to make decisions about actual compensation levels and awards based on achievement of our business objectives and relevant circumstances affecting our Company. |
| (1) | Reflects Mr. Izzo as CEO |
| (2) | Reflects Mr. LaRossa as CEO |
Note: No COVID-19 Related Adjustmentsadjustments were made to Compensationindicative payout factor.
The O&CC determined not to make any adjustments toCEO Transition
On April 19, 2022, we announced that Mr. Izzo, our President and CEO and the targets or results for the 2020 compensation program for our NEOs despite our 2020 financial results being impacted by the COVID-19 pandemic. All metrics were unchanged from what was established at the beginningChair of the fiscal year,Board would retire from the Company, with his last day as President and incentive programs were assessed includingCEO being August 31, 2022, and his last day as a director being December 31, 2022. Mr. Izzo served as Executive Chair of the impactsBoard through his retirement from the Board. An ad hoc Succession Planning Committee of COVID-19. Annual incentive targets were established versus business plan or internal/external benchmarks, priorthe Board assisted with the CEO transition process, and on April 18, 2022, the Board elected Mr. LaRossa, PSEG’s COO, to COVID-19. Both PSU metrics (TSRsucceed Mr. Izzo as President and ROIC) are measured relative to peer performance, with all peers impacted to various degrees by this event.CEO effective September 1, 2022. He assumed the additional responsibilities of Chair of the Board on January 1, 2023. For more information on CEO Compensation, see page 46.
2020
40 PSEG 2023 Proxy Statement
Compensation Discussion and Analysis – Executive Compensation Philosophy and Pay for Performance
2022 Target Compensation Summary
Overall target compensation should be competitive compared to individualscomparable executives in our peer group so that we can attract, motivate and retain exceptional talent. The 20202022 compensation decisions are reflective of each executive’s role, responsibilities, performance and time in position. Our 20202022 target compensation is as follows:
2022 TARGET COMPENSATION SUMMARY
Executive | Base Salary | Annual | Target Total | Long-Term Incentive($) | Target Total | |||||||||||||||||||||||||
| PSUs | RSUs | |||||||||||||||||||||||||||||
Ralph Izzo |
| 1,421,400 |
| 140 | % |
| 3,411,360 |
| 6,370,046 |
| 2,730,029 |
| 12,511,435 | |||||||||||||||||
Daniel J. Cregg |
| 680,000 |
| 75 | % |
| 1,190,000 |
| 1,134,027 |
| 486,030 |
| 2,810,057 | |||||||||||||||||
Ralph A. LaRossa |
| 787,000 |
| 90 | % |
| 1,495,300 |
| 1,680,020 |
| 720,044 |
| 3,895,364 | |||||||||||||||||
Tamara L. Linde |
| 638,600 |
| 75 | % |
| 1,117,550 |
| 910,021 |
| 390,004 |
| 2,417,575 | |||||||||||||||||
David M. Daly |
| 600,000 |
| 75 | % |
| 1,050,000 |
| 952,013 |
| 408,005 |
| 2,410,018 | |||||||||||||||||
| Base Salary ($) | Annual Incentive | Target Total Cash ($) |
Long-Term Incentive ($) | Target Total Compensation ($) | ||||||||||||||||||||
Executive | PSUs | RSUs | ||||||||||||||||||||||
Ralph Izzo | 1,464,000 | 140 | % | 3,513,600 | 6,370,016 | 2,730,028 | 12,613,644 | |||||||||||||||||
Ralph A. LaRossa(1) | 1,250,000 | 130 | % | 2,875,000 | 5,145,026 | 2,205,074 | 10,225,100 | |||||||||||||||||
Daniel J. Cregg | 735,700 | 80 | % | 1,324,260 | 1,295,015 | 555,000 | 3,174,275 | |||||||||||||||||
Tamara L. Linde | 685,000 | 80 | % | 1,233,000 | 980,057 | 420,019 | 2,633,076 | |||||||||||||||||
Kim C. Hanemann | 648,900 | 75 | % | 1,135,575 | 910,043 | 390,059 | 2,435,677 | |||||||||||||||||
Eric Carr | 616,300 | 70 | % | 1,047,710 | 840,029 | 360,035 | 2,247,774 | |||||||||||||||||
| (1) | Mr. LaRossa was promoted September 1, 2022 from Chief Operating Officer (COO) of the Company to President and CEO. The target salary and annual incentive noted in the table above represent Mr. LaRossa’s year-end 2022 salary post his promotion to President and CEO. Mr. LaRossa’s salary and annual incentive prior to the promotion while in the position of COO was $835,000 and 90%, respectively. For the prorated actual salary pay for Mr. LaRossa, please see the Summary Compensation Table on page 55. |
The above values reflect target compensation opportunities, which may not match the Summary Compensation Table.
PSEG 2023 Proxy Statement 41
Compensation Discussion and Analysis – Say-on-Pay and Shareholder Engagement
Say-on-Payand Shareholder Engagement
At the 20202022 Annual Meeting, our stockholders voted approximately 94.1%91.8% in favor of our say-on-pay proposal, demonstrating their concurrence that our programs reflect our strong pay-for-performance philosophy. We continuously review our executive compensation program in recognition of investor feedback and adjust, as appropriate, the compensation of our executives in light of their performance, our business results, our financial condition and the competitive market for the role.
of stockholders voted in favor of say-on-pay proposal |
We strongly encourage investor feedback and will continue to review and make changes to our executive compensation program in recognition of investor interests, evolving trends and best practices. |
In particular, the O&CC, with input from our independent compensation consultant, CAP, considered the 2020 2022 say-on-pay vote result and current market practices as it evaluated our executive compensation program. During the past year, we actively reached out to many of our largest investors to advise them of recent compensation and governance actions we have taken and to listen to any concerns they may have. We always welcome stockholders’ comments and suggestions and continue to consider the outcome of the say-on-pay vote on our program design.
Executive Compensation Best Practices
What We Do
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What We Don’t Do
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Pay for performance, with a significant portion of target compensation at risk
No guaranteed incentive compensation
42 PSEG 2023 Proxy Statement
Compensation Discussion and Analysis – Peer Comparison and Benchmarking
Peer Comparison and Benchmarking
How We Choose Peers for Benchmarking
We evaluate and set executive compensation to be competitive within a peer group comprised of similarly sized energy companies, with a significant focus on regulated utilities given our strategy.similarly-sized utilities. We consider our peers’ earnings, market capitalization, operational characteristics, price-to-earnings ratio and revenue. Because our revenue is driven by energy demand and prices that are outside the control of management, we emphasize earnings over revenue. We believe this approach is more reflective of the complexities of our business when comparing across companies.
Each year, we re-evaluate the peer group to assess its appropriateness. Our peer companies for 20202022 are listed below.
Peer Companies | ||||||
Ameren Corporation | American Electric Power Co., Inc. | CenterPoint Energy, Inc. | ||||
| Consolidated Edison, Inc. | Dominion Resources, Inc. | ||||
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| Xcel Energy Inc. | |||||
For 2021,2023, we removed NextEra Energy and NRG Energy and added CMS Energy and WEC Energy. NextEra Energy and NRG Energy were removed duedid not make changes to their business mix and profile. CMS Energy and WEC Energy were added due to their comparability to us in business mix, profile, and size.the peer group.
How We Use Peer Data
Reference point for setting 2020 pay levels Target the median (50th percentile) of the peer group for Total Direct Compensation Assess our performance under our LTIP and the alignment between pay and performance Review incentive plan design, equity usage and governance practices
Pay Governance LLC assists in analyzing the annual Willis Towers Watson Energy Services Executive Compensation Survey–U.S. assessment of the market data using the peer companies. We use the peer group data to the extent each position is reported in the survey data. The O&CC’s independent consultant, CAP, reviews the outcome of the competitive assessment and provides supplemental data on the peer group as required.
PSEG 2023 Proxy Statement 43
Compensation Discussion and Analysis – Peer Comparison and Benchmarking
Compensation Benchmark
Market positioning varies based on benchmark match (comparability), and an executives’ experience, performance, and time in role. Executives who have been in their roles a significant amount of time may exceed the median of peers due to experience and performance.
Base Salary, target Total Cash Compensation and target Total Direct Compensation of each of the active NEOs as a percentage of the comparative median benchmark levels of the peer group are noted below, along with each individual’s time in position. Mr. Izzo’s and Mr. LaRossa’s compensation decisions are discussed further in the CEO Compensation section.
Percent of Comparative Median Benchmark Levels (2020)(2022)*
Chart reflects executive compensation decisions made in December 2019.2021 and April 2022.
50% 75% 100% 125% 150%*For our retired CEO, R. Izzo, 12 years, 9 months D. Cregg 4 years, 3 months R. LaRossa(1) 2 years, 3 months T. Linde 5 years, 6 months D. Daly 2 years, 3 months (1) Compensation decisionsthe percentage of comparative median benchmark levels for Mr. LaRossa above reflects his new role as COO - PSEG effective January 1, 2020. Time in position as of Dec 31, 2019 Base Salary Note: Shading reflects competitive range (+/- 20% of median) Time in position as of Dec 31, 2019 Total Cash Total Direct2022 were 109% base salary, 116% total cash, 111% total direct payment.
44 PSEG 2023 Proxy Statement
Compensation Discussion and Analysis – How We Compensate Our Executives
How We Compensate Our Executives
Element Link to Business and Talent Strategy Link to Performance Form Base Salary Fixed Pay Recognizes executives competencies, experience, job responsibilities, skills, internal equity and the competitive market for the position Cash Annual Cash Incentive-SMICP At Risk Pay Incentivizes the achievement of key financial, operational, and strategic goals Cash Multiple performance measures, with a strong emphasis on non-GAAP EPS, measured over a one year period with a payout ranging from 0% 200% Equity-Based Incentive Awards-LTIP At Risk Pay Aligns NEOs interests with long-term interests of shareholders and the Company by rewarding for strong stock price performance and capital efficiency Common Stock 70% PSUs and 30% RSUs Payout of PSUs (if any) based equally on our ROIC vs. peers and TSR vs. peers and ranges from 0% - 200%Awards vest at the end of three years Retirement and Post-Employment Benefits Fixed Pay Facilitates attraction and retention and provides participants with the opportunity to effectively manage the timing of income and tax liability Cash
See the section on Our Compensation Elements Explained below for more detail.
The O&CC believes that the majority of a senior executive’s compensation should be performance-based, and the more senior an executive’s position is in the organization, the more that executive’s pay should be oriented toward long-term compensation. On average, 77%74% of pay is at risk for our NEOs, (excluding Messrs. Izzo and LaRossa) with 89%88% of pay at risk for our new CEO.
Note: CEO Pay Mix 23% 19% 58% Averagemix reflects Mr. LaRossa and Other NEO Pay Mix 11% 16% 73% Salary SMICP LTIP Value at Riskreflects Messrs. Cregg and Carr and Mses. Linde and Hanemann.
Executive Performance and Goals
We have provided detailed calculations of the payouts under our SMICPMICP and LTIP, including a discussion of the pre-established goals for these incentive plans and the performance achieved by our NEOs.
We do not disclose forward-looking targets for our annual incentive plan,plans, where the disclosure could result in competitive harm. On an annual basis, the O&CC and CAP, the Committee’s independent consultant, review the degree of difficulty of the targets to ensure that the goals are driving performance. For our long-term plan, however, we use relative metrics only and the goal and corresponding payout percent are noted in the 2020 Grants section.
Targets are set based on the proposed business plan and a rigorous process is undertaken at the start of each year to determine the range of performance for each measure. The corporate and business unit performance goals are set at levels that require strong performance for a target payout and superior performance for a greater than target payout.
PSEG 2023 Proxy Statement 45
Compensation Discussion and Analysis – How We Compensate Our Executives
For 2020, we set SMICP targets that were higher than actual 2019 results forCEO Compensation
In December 2021, the PSEGCommittee increased Mr. Izzo’s 2022 base salary 3.0% and PSE&G earnings components. Recognizing that our business is highly sensitivemade no changes to factors outside our control, including energy prices and weather, in some years our goals in the SMICP may be below the prior year’s results, which is common among our peers. Accordingly, PSEG Power’s 2020 SMICP earnings componenthis MICP target or LTI awards. CEO compensation was set slightly below 2019 actual results.approved by all Independent Directors.
CEO Compensation
2020 compensation decisions recognize the long-tenure and seasoned experience of Mr. Izzo and the Board’s confidence in his ability to successfully lead the Company as CEO. Acknowledging Mr. Izzo’s experience, including his deep understanding of our strategy, operations, risk profile, regulatory and environmental circumstances, supports the above market median compensation philosophy in light of continued strong financial performance over time. Compensation increases are primarily in the form of at-risk, incentive compensation. The changes to the key terms of Mr. Izzo’s compensation in 2020 were as follows:
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2020 vs 2019 Target Compensation for CEO (in thousands) 2020 $1,421 $1,990 $9,100 $12,511 19% 2019 $1,380 $1,725 $7,395 $10,500 Salary SMICP LTIP
SMICPMICP and LTIP amounts in the graph above reflect the target values. Actual payouts are reported in the Executive Compensation section following the applicable performance period.
After meetingOn April 18, 2022, we entered into a letter agreement with Mr. LaRossa to memorialize his appointment as President and CEO, effective September 1, 2022 and the agreement specifies certain new compensation terms for Mr. LaRossa, including a base salary of $1,250,000, a target annual incentive equal to 130% of base salary and 2022 supplemental long-term incentive awards with a total value of $4,850,000. In conjunction with his grant made in executive session withoutFebruary as COO, the long-term incentive award was to bring his total compensation in line with peer CEO present,market levels. Additionally, we entered into a letter of agreement with Mr. Izzo for the O&CC recommended the CEO’s compensation to allperiod of the independent directors, who approved the compensation. In recognition ofSeptember 1, 2022 through December 31, 2022 as Executive Chair. Mr. Izzo’s contributions to the Company, long-term management development, and succession planning, the Board believes Mr. Izzo’s 2020 compensation and positioning is appropriate.was unchanged during this period.
In December 2020, at the request of the CEO, the Committee made no changes to Mr. Izzo’s 2021 target compensation due to macroeconomic challenges and the impact the global pandemic had on businesses, communities, our customers, our employees, and individuals.
Compensation Discussion and Analysis – Our Compensation Elements Explained
Our Compensation Elements Explained
Executive Base Salary
Each NEO’s base salary level is reviewed annually by the O&CC. The O&CC considers base salary adjustments for individual NEOs other than the CEO based on market data, CEO recommendations, performance and additional factors including leadership, time in position and other personal contributions. Mr. Izzo received a base salary increase of 3% in 2020. OtherAll NEOs’ increases ranged from 3% to 7%.4% effective January 1, 2022. Mr. LaRossa’s salary increased 50% upon his promotion to CEO on September 1, 2022.
Executive Annual Cash Incentive
Our NEOs are eligible for an annual cash incentive under our SMICP.MICP. The O&CC evaluates each NEO’s incentive compensation based on achievement of specific performance goals relating to the Company’s and the applicable business unit’sunit earnings (where applicable), a business unit scorecard critical and strategic goals. The business unit scorecard metrics are comprised of goals based on financial, operational and strategic performance of the respective business unit. The focus is on performance measured against benchmarked targets and continuous improvement from prior year. The O&CC approves the incentive compensation for all NEOs except the CEO. The O&CC recommends the CEO’s incentive compensation to the Board, which approves it.
As noted in our 2022 proxy statement, the MICP was revised to better align with the future state of our utility and other businesses of Nuclear and Long Island. Notable changes included:
| Ø | Corporate EPS: Reduced EPS weighting to 65% (from 75% for corporate roles) for all NEOs. |
| Ø | PSEG Power: Changed Adjusted EBITDA to Operating Earnings due to the Fossil divestiture and eliminated the PSEG Power scorecard. |
| Ø | Corporate Scorecard: Simplified enterprise-wide scorecard to focus on metrics and strategic initiatives measured across areas of importance: People, Safety, Operations/Reliability, Finance and Environment. |
| Ø | People Strong: Goals emphasize our commitment to diversity, equity, and inclusion both internally and externally. |
46 PSEG 2023 Proxy Statement
Compensation Discussion and Analysis – Our Compensation Elements Explained
All executive officers have strategic “People Strong” goals, including leadership, continuous improvementgoals. The People Strong goal emphasizes fostering a culture of inclusion both internally and leading practices in support of Company-wide strategic initiatives, enhancing the employee experience with a focus on culture,externally and PSEG’s Core Commitment to diversity, equity and inclusion. Through our commitment to diversity, equity and inclusion, we will more effectively serve customers, shareholders and talent development. The goals foster a culture of inclusion inside the Company, where every employee is valued for their unique perspectives, backgrounds, skills and experiences and can contribute to the success of PSEG, as well as in the communities we serve.communities. The business unit scorecard and other strategic goals focus on the following categories: People, Safe and Reliable Economic and Greener Energy,Economic, which are benchmarked, when possible, against the broader utility industry, setting our targets at the top quartile (or the top decile for safety-related measures). People-related goals include OSHA benchmarks, talent slate diversity, and diversity, equity and inclusion measures. benchmarks.
Safe and Reliable includes System Average Interruption Duration Index and other reliability measures, JD Power measures, renewable energy generation, energy efficiency, performance indicators and cybersecurity measures. Economic focuses on financial measures including cash generation, EPScontrollable O&M and ROIC. Greener Energy focuses on renewable energycash generation.
Strategic Enterprise-wide scorecard categories include Critical Initiatives, PSE&G filings,investment programs, long-term nuclear ZECs,solution, long-term strategic business plan market policy rules, ESG – climate and sustainability matters, cost managementvaluation and continuous improvement, and New Jersey hiring. Mr. Izzo has a larger percentage tied to additional strategic objectives focused more broadly on Operational Excellence, Financial Strength and Disciplined Investments.PSE&G customer collections.
Compensation Discussion and Analysis – Our Compensation Elements Explained
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Each NEO’s performance under each applicable factor —– corporate EPS, business unit earnings, business unit scorecard and strategic goals —– could range from zero to 2.0 (200%) based on the achievement of pre-determined goals.
Target and Actual Performance Levels for 2020 Financial Metrics Threshold (50%) Target (100%) Stretch (150%) Maximum (200%) Payout Factor Corporate Operating EPS (non-GAAP) ($) 3.43 1.15 3.30 3.40 3.50 3.55 PSE&G Adjusted Operating Earning (non-GAAP) ($Millions) 1,328.5 0.84 1,310.0 1,337.0 1,370.0 1,382.7 Power Adjusted EBITDA (non-GAAP) ($Millions) 1,026.1 1.14 944.0 1,008.0 1,072.0 1,090.0
Operating EPS (non-GAAP) excludes mark-to-market activity, Nuclear Decommissioning Trust (NDT) related activity and material one-time items. In order to provide a consistent comparison of earnings, PSE&G’s &G, PSEG Power and PSEG Long Island’s non-GAAP Operating Earnings results are adjusted for interest rate variances between actual interest expense andversus the business plan. PSEG Power’s non-GAAP Adjusted EBITDA excludes the same items as non-GAAP Operating Earnings, as well as income tax expense, interest expense and depreciation and amortization. We further adjusted PSEG Power’s non-GAAP Adjusted EBITDA to exclude tax credit purchase costs, which directly impact income tax expense. We used these non-GAAP measures because we believe they better reflect operating performance and more directly relate to ongoing operations of the businesses. See Appendix A for reconciliation to GAAP of non-GAAP Operating Earnings and non-GAAP Adjusted EBITDA.Earnings.
PSEG 2023 Proxy Statement 47
Compensation Discussion and Analysis – Our Compensation Elements Explained
Percentage of Comparative Median Benchmark Levels (2020)
Chart reflects executive compensation decisions made in December 2019
Performance Factor Overall Achievement Factor Modification (if applicable) (000s) Payout Earned (000s) Ralph Izzo Daniel J. Cregg Ralph A. LaRossa Tamara L. Linde David M. Daly Corporate EPS Business Unit Earnings Business Unit Scorecard Corporate Strategic Goals
The finalNote: MICP weightings and payout for Mr. Daly was modified downward by the Organizational and Compensation Committee toLaRossa reflect the identification of needed improvements to processes and systems in connection with PSEG LI’s performance during Tropical Storm Isaiastargets as reported in Note 15 to the Consolidated Financial Statements in our 2020 Form 10-K.President & COO
Executive Long-Term Incentive
GrantsEquity grants are typically made each February. In September 2022, we granted a supplemental LTI award to Mr. LaRossa upon his promotion to CEO. Factors that are considered in the determination of award amounts are the competitive market and the individual’s role, responsibilities, and contribution, CEO recommendationcontributions, as well as talent retention needs. With respect to the CEO, the O&CC develops a recommended award opportunity in consultation with CAP and submitspresents the proposal for approval by the Board.
2020 Equity Program 70% PSUs " Rewards strong financial and stock price performance over a longer time frame than annual rewards " Facilitates retention as recipient generally must remain an employee through vesting dates to earn payout, unless retirement eligible " Aligns the interest of officers with long term stockholder value 30% RSUs " Facilitates retention as recipient generally must remain an employee through vesting dates to earn payout, unless retirement eligible " Aligns the interests of officers with long term stockholder value2020 Equity Program 70% PSUs " Rewards strong financial and stock price performance over a longer time frame than annual rewards " Facilitates retention as recipient generally must remain an employee through vesting dates to earn payout, unless retirement eligible " Aligns the interest of officers with long-term stockholder value 30% RSUs " Facilitates retention as recipient generally must remain an employee through vesting dates to earn payout, unless retirement eligible " Aligns the interests of officers with long-term stockholder value
RSUs are denominated in units of common stock and cliff vest at the end of three years, payable in shares of our common stock. PSUs are denominated in units of common stock and are subject to achievement of certain performance goals over a three-year period, vesting at the end of the performance period.
20182020 PSU Grant PSU Result: LTIP awards of PSUs made for the three-year performance period ended December 31, 20202022 were reported in our Proxy Statement at fair value at the time of the grants. These PSU grants were subject to the achievement of goals related to relative TSR and relative ROIC vs. peers.
50% Relative TSR Rewards management when we deliver value to shareholders in excess of our peers 50% Relative ROIC Rewards management for managing our business and capital better than our peers
We determine ROIC by dividing Net Income (adjusted for interest expense, excluding amounts related to securitized debt)expense) by debt and equity (adjusted for securitized debt).
Compensation Discussion and Analysis – Our Compensation Elements Explained
equity.
The performance schedule for relative TSR and ROIC is determined by ranking within the peer group. Shown below are the ranks and payout factors at threshold, target and maximum levels and our actual rank for this period:
For 20182020 grants, the peer group consisted of 1918 companies plus PSEG.
Performance vs. Peers Payout Rank 5 200% Rank 10 100% Rank 15 20% Rank 16
Compensation Discussion and Higher 0% Actual TSR Result Rank 10 100% Payout Actual ROIC Result Rank XX XX% Payout Final Overall PSU Payout XXX%Analysis – Our Compensation Elements Explained
| (1) | Our ROIC result for the 2020 PSU grant was significantly impacted by the sale of our fossil generating portfolio. See Appendix A for reconciliation to GAAP of non-GAAP Operating Earnings. |
Based on the performance results for that period, as approved by the O&CC, Mr. Cregg, Mr. LaRossa, Ms. Linde and Ms. Hanemann, and Mr. Daly,Carr, and as recommended by the O&CC and approved by the Board, Mr. Izzo and Mr. LaRossa, will receive payment in 20212023 of shares of our common stock equal to 140%40%* (see table below) of the grant target.
Determination of Individual Payouts for Executives: Executives: Based on these results, participants earned a PSU payout of 140%40%*. The dollar amount of each payout, made in shares of our common stock, is shown below, calculated using the average of the high and low price of our common stock on March 2, 2021, $54.69.X, 2023, $62.00*. These amounts are reported in the Option Exercises and Stock Vested during 20202022 Table.
NEO | PSUs Granted (#) | PSUs Earned (#) (1) | PSUs Payout ($) (1) | ||||||||||||
Ralph Izzo | 89,062 | 138,354 | 7,566,603 | ||||||||||||
Daniel J. Cregg | 15,301 | 23,770 | 1,299,955 | ||||||||||||
Ralph A. LaRossa | 45,174 | 70,176 | 3,837,930 | ||||||||||||
Tamara L. Linde | 15,301 | 23,770 | 1,299,955 | ||||||||||||
David M. Daly | 10,838 | 16,836 | 920,784 | ||||||||||||
| * | These figures are estimates based on information available to the Company as of the filing of the preliminary proxy statement and will be updated with final figures in the definitive proxy statement. |
NEO | PSUs Granted (#) | PSUs Earned (#) (1) | PSUs Payout ($) (1) | |||||||||
Ralph Izzo | 123,331 | 54,819 | 3,398,760 | |||||||||
Ralph A. LaRossa | 32,527 | 14,458 | 896,380 | |||||||||
Daniel J. Cregg | 21,956 | 9,759 | 605,064 | |||||||||
Tamara L. Linde | 17,619 | 7,831 | 485,545 | |||||||||
Kim C. Hanemann | 8,810 | 3,916 | 242,786 | |||||||||
Eric Carr | 10,843 | 4,820 | 298,812 | |||||||||
| (1) | Reflects rounding and includes accrued dividend equivalents earned. |
20202022 Grants:As noted in our 2022 proxy statement, the PSU components were changed to recognize that we are predominately a regulated company and are reflective of our commitment to long-term growth, our ESG leadership position and carbon-free generation. The structuremetrics for our 2022 – 2024 PSU award are as follows:
| Ø | 40% relative TSR vs. the peer panel; |
| Ø | 20% relative ROIC vs. the peer panel; |
| Ø | 20% EPS growth; and |
| Ø | 20% ESG Priorities: |
| • | Methane reduction target |
| • | Carbon-free generation target |
| • | Energy efficiency target - electric |
| • | Energy efficiency target - gas |
| • | Sustainalytics ESG Risk Ratings Score |
We believe these changes will drive long-term shareholder value through a sustainable, predictable, growth platform.
The mix of the long-term incentive awards is consistent with the prior grants as described in the Executive Long-Term Incentive section above, in the form of 70% PSUs and 30% RSUs vesting at the end of three years. Payouts,For 2022, we changed the payout scale from a company rank approach to calculating the percentiles in order to mitigate volatility in payouts, particularly if any, will be based onthere is a narrow range between peer results. In order to calculate the payouts for relative TSR vs. peers and ROIC vs. peers, onat the scale below.conclusion of the performance period, we will calculate the peer 25th, 50th and 75th percentiles (including PSEG) and use linear interpolation to calculate the payout result.
PSEG 2023 Proxy Statement 49 Compensation Discussion and Analysis – Our Compensation Elements Explained
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Note: Chart reports payout scale for 19 peers plus PSEG for a total of 20. This scale could be adjusted if a peer undergoes a change such as being acquired.
The grants included in our Summary Compensation Table were approved in February 20202022 for the NEOs. These grants are for the three-year performance period ending December 31, 20222024 and are shown in the 20202022 Grants of Plan-Based Awards Table. These awards are also reported in the Summary Compensation Table at the grant date fair value.
Compensation Discussion and Analysis – Our Compensation Elements Explained
Retirement and Post-Retirement Benefits
Deferred Compensation Plans:We offer a deferred compensation plan to our officers so they can more effectively manage their personal tax obligations. Participants may elect to defer all or any portion of their cash compensation and may choose from among several different investment options based upon the choices available in our 401(k) Plan (except the Company Stock Fund and the Fidelity Brokerage Link Account), as well as a market-based rate of Prime plus 1/2%, capped at 120% of the applicable federal long-term rate.
We also have a plan that provides officers with the opportunity to defer equity compensation. The election to defer shares underlying an equity award must be made before the services giving rise to the equity award are performed. Deferred shares are held in a Rabbi Trust.
Additional details about these deferred compensation plans are provided in the descriptions following the Non-Qualified Deferred Compensation Table.
Retirement Benefits for Executives:Substantially all employees, including the NEOs, receive certain qualified retirement benefits under one of the Pension Plans, which provides either a Final Average Pay Component or a Cash Balance Component. The nature of the individual’s Pension Plan benefit depends upon the date of hire. Mr. Izzo, Mr. Cregg,LaRossa, Mr. LaRossa,Cregg, Ms. Linde and Mr. DalyMs. Hanemann participate in the Final Average Pay Component as they each began employment before January 1, 1996. Mr. Carr participates in the cash balance component as he began employment after January 1, 1996.
In addition to the qualified plan, we provide certain nonqualified retirement benefits under the Reinstatement Plan and the Supplemental Executive Retirement Income Plan (Supplemental Plan). All of our NEOs participate in the Reinstatement Plan and Mr. Izzo and Mr. LaRossa participate in the additional limited benefit provisions of the Supplemental Plan. As described in the Pension Benefits Table, Mr. Izzo is eligible to receive additional years of credited service.
Additional information is provided in the Pension Benefits Table and the accompanying narrative, below. Amounts reported for 20202022 reflect changes in the discount rate as well as actuarial changes, which impacted the benefit calculations.
We also maintain a defined contribution 401(k) Plan and provide a partial employer matching contribution for 401(k) Plan participants. We provide retirees with the opportunity to receive medical benefits with a subsidy available to participants in the Final Average Pay Component of the Pension Plan who meet the eligibility requirements.
Severance and Change-In-Control Benefits for Executives:We provide severance benefits in the event of certain employment terminations to all officers, including the NEOs. All of our NEOs participate in our Key Executive Severance Plan. Mr. Izzo isand Mr. LaRossa are also eligible for certain other severance benefits, as described under Potential Payments Upon Termination of Employment or Change-In-Control.
We provide severance benefits upon a change-in-control to officers. A change-in-control is by its nature disruptive to an organization and its executives. Executives are frequently key players in the success of organizational change. To assure the continuing performance of these executives and maintain stability and continuity in the face of a possible termination of employment in the event of a change-in-control, we provide a competitive severance package.
Neither our Key Executive Severance Plan nor Mr. Izzo’s severance agreement provide for gross-up payments from us in the event that any NEO or other participant is subject to an excise tax related to receipt of a change-in-control payment. Both the Key Executive Severance Plan and Mr. Izzo’s severance agreement include a “double-trigger” provision on benefits, which are paid only in the event of termination of employment following a change-in-control. PSU payments, if any, are prorated. No benefits are paid in the event of a termination for cause.
Severance and change-in-control benefits are described under Potential Payments Upon Termination of Employment or Change-in-Control.
Limited Perquisites for Executives
We provide certain perquisites that are reasonably aligned with those of our peers or provide benefit to us, such as providing personal security to executives with a high public profile and allowing executives to be productive while commuting. These include an automobile stipend (and for the CEO, a driver), parking, reimbursement of relocation expenses, annual physical examinations, limited personal and spousal travel including use of aircraft (in accordance with the policy we have established and with CEO approval), home security, limited personal technology, charitable contributions on behalf of the individual, limited club memberships, limited reimbursement of credit card annual fees and limited personal entertainment. These perquisites are described in the 20202022 Summary Compensation Table, as applicable.
We do not provide a tax gross-up of personal benefit amounts deemed to be taxable income under federal or state income tax laws and regulations, except for certain relocation expenses, primarily in the case of newly hired executives.
50 PSEG 2023 Proxy Statement
Compensation Discussion and Analysis – Executive Compensation Governance Features and Controls
Executive Compensation Governance Features and Controls
Role of the Compensation Consultant
The O&CC has retained CAP as its independent compensation consultant to provide information, analyses and advice regarding executive and director compensation. CAP reports directly to the O&CC. Select responsibilities include:
Review compensation program and levels | Analyze pay and performance alignment | |
Provide comparative industry trends and peer data | Ad hoc support on executive compensation matters | |
CAP reports directly to the O&CC and is prohibited from sharing certain information with management. CAP also periodically meetsmay meet with the O&CC in executive session without the presence of management and provides only executive compensation consulting services. In 2020,2022, CAP attended foursix meetings of the O&CC.
Management also retains a compensation consultant, Pay Governance, to provide market compensation data for our officers, including the NEOs. This data is made available to CAP.
In July 2020,2022, the O&CC reviewed CAP’s independence relative to the following factors:
CAPs provision of other services to the Company The amount of fees CAP receives from the Company as a percentage of CAPs total revenue The policies and procedures of CAP that are designed to prevent conflicts of interest Any business or personal relationship between Organization and Compensation Committee members and CAP or its compensation consultants Any PSEG stock owned by CAP or its compensation consultants Any business or personal relationship between our executive officers and CAP or any of its compensation consultants Other factors that would be relevant to CAPs independence from management
The O&CC concluded that CAP is independent and no conflicts of interest exist.
Executive Compensation Risk Assessment
In 2020,2022, CAP reviewed our compensation program to assess whether they could encourage excessive risk-taking. The risk assessment included a full inventory of all incentive compensation plans, in the organization, including their design, metrics, goals and operation and a review of business and operational risks as well as governance and oversight practices and internal controls. Our Senior Vice President, Audit, Enterprise Risk and Chief Risk Officer,Compliance, as well as our internal compensation professionals under the supervision of our Senior Vice President -– Human Resources & Chief Human Resources Officer & Chief Diversity Officer, provided input into this process as appropriate. Management and CAP reviewed this assessment with the O&CC. Based on this review, the O&CC determined that the programs are appropriately structured and do not encourage excessive risk-taking.
PSEG 2023 Proxy Statement 51
Compensation Discussion and Analysis – Executive Compensation Governance Features and Controls
Our compensation programs include the following risk mitigation features:
• Strong governance processes and controls in place
• Multi-year vesting for long-term incentives
• Multiple dimensions of performance, including: a balanced scorecard that includes, among other factors, ESG goals; EPS (non-GAAP) for corporate financial performance; earnings (non-GAAP) for business unit performance; and key strategic and operational metrics that balance risks
• Equity compensation and our stock ownership and retention policy discourage a short-term focus | • A balanced total compensation package that includes a mix of base salary, benefits and annual and long-term incentive
• Caps on the total amount of incentive compensation that can be earned and paid out annually
• O&CC oversight of incentive plan formulas, performance measures/goals and corresponding payment scales
• A robust Clawback policy |
Strong Clawback Practice
We have a Clawback Practice that has a three-year look-back and:
Applies to all incentive compensation for all non-represented employees
| • | Applies to all incentive compensation for all non-represented employees |
Applies in the event of (i) a restatement of financial statements, (ii) recalculation of incentive compensation, in each case resulting from the employee’s misconduct or (iii) an employee’s act or omission that constitutes a material violation of our Standards of Conduct and that results or would have resulted in termination of employment
| • | Applies in the event of (i) a restatement of financial statements, (ii) recalculation of incentive compensation, in each case resulting from the employee’s misconduct or (iii) an employee’s act or omission that constitutes a material violation of our Standards of Conduct and that results or would have resulted in termination of employment |
Is administered by the O&CC for officer compensation
| • | Is administered by the O&CC for officer compensation |
Actual LTIP grants may contain additional provisions, such as recoupment for violations of non-compete, non-solicitation or confidentiality agreements.
In October 2022, the SEC adopted final rules requiring the stock exchanges to implement listing standards requiring compensation recovery and disclosure rules to comply with the Dodd Frank Act. We will adjust the terms of our Clawback Practice as may be needed to comply with appropriate regulations and best practices.regulations.
Role of the CEO in Executive Compensation
The CEO attends O&CC meetings, other than executive sessions. The CEO recommends changes to the salaries of his direct reports, (who, in 2020, included the NEOs)and any NEO, and recommends LTI award levels. The CEO develops and the O&CC considers these recommendations in the context of each executive’s individual performance, experience in role and competitiveness of salary as well as internal equity among executives. The O&CC believes that the role played by the CEO in this process is appropriate because the CEO is uniquely suited to evaluate the performance of his direct reports.
In April 2022, the O&CC and CAP had a special O&CC meeting to recommend for Board approval Mr. LaRossa’s compensation as CEO.
No Hedging and Pledging
We have a policy that prohibits all employees, including NEOs, other officers and directors, from hedging, short-selling or pledging our common stock. All employees are prohibited from trading in options, puts, calls or other derivative instruments related to PSEG equity or debt securities. They also are prohibited from purchasing our common stock on margin, borrowing against our common stock held in a margin account and or pledging our common stock as collateral for a loan. A direction to exercise and hold, or to exercise and sell, PSEG equity in compliance with an approved Rule 10b5-1 Plan is exempt from the requirement.
Trading Pre-clearance is Required for Directors and Officers
Under our Insider Trading Practice, all of our directors and officers, including the NEOs, are required to obtain pre-clearance from the Office of the General Counsel prior to engaging in any transaction involving our common stock and may only engage in transactions during “open window” periods or pursuant to pre-established plans.
52 PSEG 2023 Proxy Statement
Compensation Discussion and Analysis – Executive Compensation Governance Features and Controls
Stock Ownership and Retention Policy for Executives
Our Stock Ownership and Retention Policy applies to our officers (as shown on the table). The required amount, including vested and unvested RSUs and 401(k) shares, but not unearned PSUs, must be acquired within five years.
| Each officer must retain 100%, of all shares, net of taxes, acquired through equity grants, including the vesting of restricted stock or RSU grants, payout of PSU awards and exercise of option grants, until the ownership requirement is met.
All NEOs have met their respective ownership requirement. |
Accounting and Tax Implications
The O&CC has considered the effect of Financial Accounting Standards Board Accounting Standards Codification Topic 718 (see Note 20 to the Consolidated Financial Statements included in our 20202022 Form 10-K) regarding the expensing of equity awards in determining the nature of the grants under the LTIP.
The O&CC considers the tax-deductibility of our compensation payments as one factor in determining executive compensation. In addition, the O&CC considers other factors in making decisions, as noted in this Executive Compensation section, and retains the flexibility to award compensation consistent with our compensation philosophy and program in the best interests of the Company and our stockholders even if it is not deductible. IRC Section 162(m) generally denies a deduction for federal and state income tax purposes for compensation in excess of $1 million for certain current and former executive officers (“covered employees”) of publicly held corporations including the CEO and certain other persons named in the Proxy Statement. At the time that the O&CC made its decisions as to the 2017 incentive awards, an exemption existed for PSUs granted under the LTIP, as qualifying performance-based compensation pursuant to stockholder-approved plans. In December 2020, the Internal Revenue Service (IRS) issued final regulations under IRC 162(m). PSEG recordedrecords taxes based on our interpretation of the relevant statute.
Effective for 2018, the Section 162(m) exemption applicable for qualifying plans was repealed in the federal tax legislation enacted in December 2017, except for certain arrangements in place on November 2, 2017.
PSEG 2023 Proxy Statement 53
Compensation Discussion and Analysis – Compensation Committee Interlocks and Insider Participation
Compensation Committee Interlocks and Insider Participation
During 2020,2022, each of the following individuals served as a member of the O&CC for all or a portion of the year: Willie A. Deese, Shirley Ann Jackson, David Lilley, (Chair), Barry H. Ostrowsky, Valerie A. Smith, John P. Surma (Chair) and Susan Tomasky. No member of the O&CC was an officer or employee or a former officer or employee of any PSEG company. None of our executive officers werewas “interlocks” meaning none served as a director of or on the compensation committee of any of the companies for which any of these individuals served as an executive officer. No member of the O&CC had a direct or indirect material interest in any transaction with us, other than as described on page 3231 under Certain Relationships and Related Person Transactions with respect to Barry H. Ostrowsky.
COMPENSATION COMMITTEE REPORT The Organization and Compensation Committee of the Board of Directors has reviewed and discussed the Compensation Discussion and Analysis included in this54 PSEG 2023 Proxy Statement with management and with Compensation Advisory Partners LLC, the Committees compensation consultant. Based on this review and these discussions, the Organization and Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement. Members of the Organization and Compensation Committee: David Lilley Chair Barry H. Ostrowsky Willie A. Deese Shirley Ann John P. Surma Susan Tomasky February 15, 2021
Executive Compensation Tables – 20202022 Summary Compensation Table
20202022 Summary Compensation Table
The following table summarizes the compensation of our NEOs for the years shown. The NEOs are our retired CEO, current CEO, CFO and three most highly compensated executive officers in 2020.2022.
Name and Principal Position(1) | Year | Salary ($)(2) | Stock Awards ($)(3) | Non-Equity Incentive Plan Compensation ($)(4) | Change in ($)(5) | All Other Compensation ($)(6&7) | Total ($) | Year | Salary ($)(1) | Stock Awards ($)(2) | Non-Equity Incentive Plan Compensation ($)(3) | Change in Pension Value and Non-Qualified Deferred Compensation Earnings ($)(4) | All Other Compensation ($)(5 & 6) | Total ($) | |||||||||||||||||||||||||||||||||||||||||||||||||
Ralph Izzo | 2022 | 1,464,000 | 9,100,044 | 2,254,600 | - | 50,566 | 12,869,210 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Former Executive Chair | 2021 | 1,421,400 | 9,100,065 | 3,621,700 | - | 65,509 | 14,208,674 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| 2020
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| 1,421,400
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| 9,100,075
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| 2,348,200
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| 1,335,000
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| 103,579
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| 14,308,254
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Ralph Izzo | 2020 | 1,421,400 | 9,100,075 | 2,348,200 | 1,335,000 | 103,579 | 14,308,254 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Chairman of the Board,
| 2019 | 1,380,000 | 7,395,089 | 2,052,800 | 2,186,000 | 60,338 | 13,074,227 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| 2018
|
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| 1,340,000
|
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| 6,985,019
|
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| 2,036,800
|
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| -
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| 57,472
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| 10,419,291
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Ralph A. LaRossa | 2022 | 971,950 | 7,350,100 | 1,143,800 | - | 44,692 | 9,510,542 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Chair of the Board, | 2021 | 810,700 | 2,400,087 | 1,327,900 | - | 34,458 | 4,573,145 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| 2020
|
|
| 787,000
|
|
| 2,400,064
|
|
| 835,800
|
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| 928,000
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| 29,400
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| 4,980,264
|
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Daniel J. Cregg | 2020 | 680,000 | 1,620,057 | 601,800 | 657,000 | 29,609 | 3,588,466 | 2022 | 735,700 | 1,850,015 | 647,500 | - | 33,592 | 3,266,807 | |||||||||||||||||||||||||||||||||||||||||||||||||
EVP & CFO | 2019 | 660,200 | 1,400,063 | 599,200 | 712,000 | 31,057 | 3,402,520 | 2021 | 714,300 | 1,750,045 | 975,000 | 236,000 | 33,593 | 3,708,938 | |||||||||||||||||||||||||||||||||||||||||||||||||
|
| 2018
|
|
| 628,700
|
|
| 1,200,039
|
|
| 594,100
|
|
| 95,000
|
|
| 28,929
|
|
| 2,546,768
|
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Ralph A. LaRossa | 2020 | 787,000 | 2,400,064 | 835,800 | 928,000 | 29,400 | 4,980,264 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
COO | 2019 | 737,700 | 1,400,063 | 608,600 | 1,281,000 | 28,559 | 4,055,922 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| 2018
|
|
| 719,700
|
|
| 4,400,095
|
|
| 597,500
|
|
| 1,770,000
|
|
| 27,292
|
|
| 7,514,587
|
| |||||||||||||||||||||||||||||||||||||||||||
|
| 2020
|
|
| 680,000
|
|
| 1,620,057
|
|
| 601,800
|
|
| 657,000
|
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| 29,609
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| 3,588,466
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Tamara L. Linde | 2020 | 638,600 | 1,300,025 | 565,200 | 686,000 | 30,416 | 3,220,241 | 2022 | 685,000 | 1,400,076 | 602,800 | - | 32,479 | 2,720,355 | |||||||||||||||||||||||||||||||||||||||||||||||||
EVP & | 2019 | 620,000 | 1,300,054 | 562,700 | 883,000 | 29,974 | 3,395,728 | 2021 | 657,800 | 1,300,019 | 897,900 | 179,000 | 29,660 | 3,064,379 | |||||||||||||||||||||||||||||||||||||||||||||||||
General Counsel
|
| 2018
|
|
| 595,600
|
|
| 1,200,039
|
|
| 571,800
|
|
| 54,000
|
|
| 29,079
|
|
| 2,450,518
|
|
| 2020
|
|
| 638,600
|
|
| 1,300,025
|
|
| 565,200
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| 686,000
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| 30,416
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| 3,220,241
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David M. Daly | 2020 | 600,000 | 1,360,018 | 424,600 | 511,000 | 26,744 | 2,922,362 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
President
| 2019 | 569,300 | 1,100,050 | 576,500 | 550,000 | 26,464 | 2,822,314 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| 2018
|
|
| 522,200
|
|
| 850,033
|
|
| 514,600
|
|
| -
|
|
| 25,929
|
|
| 1,912,762
|
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Kim C. Hanemann | 2022 | 648,900 | 1,300,102 | 588,900 | - | 82,965 | 2,620,867 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
President & COO | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Eric Carr | 2022 | 616,300 | 1,200,064 | 483,200 | - | 27,280 | 2,326,843 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
President & CNO | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (1) |
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Amounts shown are based on annualized |
The amounts shown reflect the grant date fair value of the awards. For a discussion of the assumptions made in valuation, see Note 20 to the Consolidated Financial Statements included in our Form 10-K. |
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| 2020 |
| 2019 |
| 2018 | 2022 |
| 2021 |
| 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Value at ($) | Value at ($) |
| Value at ($) | Value at ($) |
| Value at ($) | Value at ($) | Value at Target (100%) ($) | Value at Maximum (200%) ($) |
| Value at Target (100%) ($) | Value at Maximum (200%) ($) |
| Value at Target (100%) ($) | Value at Maximum (200%) ($) | ||||||||||||||||||||||||||||||||||||||||||||||||
Ralph Izzo | 6,370,046 | 12,740,092 |
| 5,176,535 | 10,353,070 |
| 4,889,504 | 9,779,008 | 6,370,016 | 12,740,032 |
| 6,370,040 | 12,740,080 |
| 6,370,046 | 12,740,092 | ||||||||||||||||||||||||||||||||||||||||||||||||
Ralph A. LaRossa | 5,145,026 | 10,290,052 |
| 1,680,058 | 3,360,116 |
| 1,680,020 | 3,360,040 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Daniel J. Cregg | 1,134,027 | 2,268,054 |
| 980,043 | 1,960,086 |
| 840,025 | 1,680,050 | 1,295,015 | 2,590,029 |
| 1,225,018 | 2,450,036 |
| 1,134,027 | 2,268,054 | ||||||||||||||||||||||||||||||||||||||||||||||||
Ralph A. LaRossa | 1,680,020 | 3,360,040 |
| 980,043 | 1,960,086 |
| 2,480,053 | 4,960,105 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Tamara L. Linde | 910,021 | 1,820,042 |
| 910,000 | 1,820,000 |
| 840,025 | 1,680,050 | 980,057 | 1,960,114 |
| 910,015 | 1,820,030 |
| 910,021 | 1,820,042 | ||||||||||||||||||||||||||||||||||||||||||||||||
David M. Daly | 952,013 | 1,904,026 |
| 770,039 | 1,540,078 |
| 595,006 | 1,190,012 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Kim C. Hanemann | 910,043 | 1,820,085 |
| - | - |
| - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Eric Carr | 840,029 | 1,680,057 |
| - | - |
| - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
As discussed in the Executive Compensation section, amounts awarded were earned under the |
Executive Compensation Tables – 2020 Summary Compensation Table
Includes the change in the actuarial present value of accumulated benefit under Defined Benefit Pension Plans and Supplemental Executive Retirement Plans between calendar years 2022 and 2021, 2021 and 2020, and 2020 and 2019, |
PSEG 2023 Proxy Statement 55
Executive Compensation Tables – 2022 Summary Compensation Table
| benefit under the applicable plan benefit formula for each of the plans, measured at December 31 of each year, based on years of credited service, earnings in effect at the respective measurement dates, applicable interest rates and other assumptions as discussed in Note 14 to the Consolidated Financial Statements included in our |
Izzo ($) | Cregg ($) | LaRossa ($) | Linde ($) | Daly ($) | |||||||||||||||||||||||||
2020 | 1,335,000 | 657,000 | 928,000 | 686,000 | 511,000 | ||||||||||||||||||||||||
2019 | 2,186,000 | 712,000 | 1,281,000 | 883,000 | 550,000 | ||||||||||||||||||||||||
2018 | - | 95,000 | 1,770,000 | 54,000 | - | ||||||||||||||||||||||||
|
| Izzo ($) | LaRossa ($) | Cregg ($) | Linde ($) | Hanemann ($) | Carr ($) | ||||||||||||||||
2022 | (3,474,000 | ) | (1,986,000 | ) | (677,000 | ) | (935,000 | ) | (454,000 | ) | (87,000) | |||||||||||
2021 | (388,000 | ) | (220,000 | ) | 236,000 | 179,000 |
|
|
|
| ||||||||||||
2020 | 1,335,000 | 928,000 | 657,000 | 686,000 |
|
|
|
| ||||||||||||||
Any interest earned under the Deferred Compensation Plan at the prime rate plus 1/2% did not exceed 120% of the applicable long-term rate for any of the NEOs in |
For |
Includes the employer matching contribution to our 401(k) Plan at the same percentage generally available to all non-represented employees. For |
Izzo ($)
|
Cregg ($)
|
LaRossa ($)
|
Linde ($)
|
Daly ($)
| |||||||||||||||||||||
401(k) Company Match | 11,400 | 11,400 | 11,400 | 11,400 | 11,400 | ||||||||||||||||||||
Izzo ($) | LaRossa ($) | Cregg ($) | Linde ($) | Hanemann ($) | Carr ($) | |||||||||||||||||||
401(k) Company Match | 12,200 | 12,200 | 12,200 | 12,200 | 12,200 | 12,200 | ||||||||||||||||||
56 PSEG 2023 Proxy Statement
Executive Compensation Tables – 20202022 Grants of Plan-Based Awards Table
20202022 Grants of Plan-Based Awards Table
The following table provides information on plan-based awards made to our NEOs for 2020.2022.
| Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(2) | Estimated Future Payouts Under Equity Incentive Plan Awards(3) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Estimated Possible Payouts | Estimated Future Payouts | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Name and Type of Award(1) | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | All Other Stock Awards; Number of Shares of Stock or Units (#)(4) | Grant Date Fair Value of Stock and Option Awards ($)(5) | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | All Other Stock Awards; Number of Shares of Stock or Units (#)(4) | Grant Date Fair Value of Stock and Option Awards ($)(5) | ||||||||||||||||||||||||||||||||||||
Ralph Izzo |
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||
SMICP | 995,000 | 1,990,000 | 3,980,000 | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
MICP |
| 1,024,800 | 2,049,600 | 4,099,200 | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||
PSUs | 2/18/2020 | - | - | - | 12,333 | 123,331 | 246,662 | - | 6,370,046 | 02/15/2022 |
| - | - | 902 | 90,163 | 180,326 | - | 6,370,016 | ||||||||||||||||||||||||||||||||||||
RSUs | 2/18/2020 | - | - | - | - | - | - | 46,256 | 2,730,029 | 02/15/2022 | - | - | - | - | - | - | 42,372 | 2,730,028 | ||||||||||||||||||||||||||||||||||||
Ralph A. LaRossa | Ralph A. LaRossa |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||
MICP |
| 519,900 | 1,039,800 | 2,079,600 | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||
PSUs | 09/01/2022 | - | - | - | 578 | 57,768 | 115,536 | - | 3,395,025 | |||||||||||||||||||||||||||||||||||||||||||||
PSUs | 02/15/2022 | - | - | - | 248 | 24,770 | 49,540 | - | 1,750,001 | |||||||||||||||||||||||||||||||||||||||||||||
RSUs | 09/01/2022 | - | - | - | - | - | - | 22,444 | 1,455,044 | |||||||||||||||||||||||||||||||||||||||||||||
RSUs | 02/15/2022 | - | - | - | - | - | - | 11,641 | 750,030 | |||||||||||||||||||||||||||||||||||||||||||||
Daniel J. Cregg |
Daniel J. Cregg | Daniel J. Cregg |
| |||||||||||||||||||||||||||||||||||||||||||||||||||
SMICP | 255,000 | 510,000 | 1,020,000 | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
MICP |
| 294,300 | 588,600 | 1,177,200 | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||
PSUs | 2/18/2020 | - | - | - | 2,196 | 21,956 | 43,912 | - | 1,134,027 | 02/15/2022 | - | - | - | 183 | 18,330 | 36,660 | - | 1,295,015 | ||||||||||||||||||||||||||||||||||||
RSUs | 2/18/2020 | - | - | - | - | - | - | 8,235 | 486,030 | 02/15/2022 | - | - | - | - | - | - | 8,614 | 555,000 | ||||||||||||||||||||||||||||||||||||
Ralph A. LaRossa | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
SMICP | 354,200 | 708,300 | 1,416,600 | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
Tamara L. Linde | Tamara L. Linde |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||
MICP |
| 274,000 | 548,000 | 1,096,000 | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||
PSUs | 2/18/2020 | - | - | - | 3,253 | 32,527 | 65,054 | - | 1,680,020 | 02/15/2022 | - | - | - | 139 | 13,872 | 27,744 | - | 980,057 | ||||||||||||||||||||||||||||||||||||
RSUs | 2/18/2020 | - | - | - | - | - | - | 12,200 | 720,044 | 02/15/2022 | - | - | - | - | - | - | 6,519 | 420,019 | ||||||||||||||||||||||||||||||||||||
Tamara L. Linde | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
SMICP | 239,500 | 479,000 | 958,000 | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
Kim C. Hanemann | Kim C. Hanemann |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||
MICP |
| 243,350 | 486,700 | 973,400 | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||
PSUs | 2/18/2020 | - | - | - | 1,762 | 17,619 | 35,238 | - | 910,021 | 02/15/2022 | - | - | - | 129 | 12,881 | 25,762 | - | 910,043 | ||||||||||||||||||||||||||||||||||||
RSUs | 2/18/2020 | - | - | - | - | - | - | 6,608 | 390,004 | 02/15/2022 | - | - | - | - | - | - | 6,054 | 390,059 | ||||||||||||||||||||||||||||||||||||
David M. Daly | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
SMICP | 225,000 | 450,000 | 900,000 | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
Eric Carr | Eric Carr |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||
MICP |
| 215,700 | 431,400 | 862,800 | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||
PSUs | 2/18/2020 | - | - | - | 1,843 | 18,432 | 36,864 | - | 952,013 | 02/15/2022 | - | - | - | 119 | 11,890 | 23,780 | - | 840,029 | ||||||||||||||||||||||||||||||||||||
RSUs | 2/18/2020 | - | - | - | - | - | - | 6,913 | 408,005 | 02/15/2022 | - | - | - | - | - | - | 5,588 | 360,035 | ||||||||||||||||||||||||||||||||||||
| (1) | Relates to cash awards under the |
| (2) | Represents possible payouts under |
| (3) | Represents LTIP award of PSUs described below. Threshold represents minimum amount payable, if earned. For additional information, see the Executive Compensation section. |
| (4) | Represents LTIP award of RSUs described below. For additional information, see the Executive Compensation section. |
| (5) | Represents the grant date fair value of the equity award. For a discussion of the assumptions made in valuation, see Note 20 to the Consolidated Financial Statements included in our |
PSEG 2023 Proxy Statement 57
Executive Compensation Tables – Material Factors Concerning Awards Shown
Material Factors Concerning Awards Shown in Summary Compensation Table, Grants of Plan-Based Awards Table and Employment Agreements
SMICPMICP
The plan-based awards for annual cash incentive compensation included in the 20202022 Summary Compensation Table were paid in 20212023 with respect to 20202022 performance under the terms of the SMICP.MICP. The range of possible awards for each NEO in relation to the NEO’s target award is set forth in the Grants of Plan-Based Awards Table. An explanation of the SMICPMICP and performance goals, measures and performance factors achieved are described under Executive Annual Cash Incentive in the Executive Compensation section.
LTIP
LTIP awards were made to NEOs in February 20202022 in the form of RSUs and PSUs. The RSUs cliff vest after three years. The three-year performance period for the PSUs ends December 31, 2022,2024, with payment, if any, made the following year. As explained in the Executive Compensation section, for retirement eligible employees, RSUs vest 1/12th per month in the year awarded and PSUs vest 1/36th per month over the three-year performance period. All of our NEOs, except for Mr. Carr, are retirement eligible. The range of possible payouts for each NEO in relation to the NEO’s target award is set forth in the table above. Payments of awards granted in February 20182020 will be made based on performance for the three-year period that ended on December 31, 2020.2022. Further explanation of PSU payment determination is set forth under Executive Long-Term Incentive in the Executive Compensation section. For additional information about vesting, see Potential Payments Upon Termination of Employment or Change-In-Control.
No stock options have been granted since 2009 and as of December 31, 20202022 no stock options are outstanding. No discounted options may be granted and no repricings may be done without stockholder approval.
Employment Agreements
The CEO and each NEO receive an annual salary review and participate in the SMICP,MICP, LTIP, Reinstatement Plan and Key Executive Severance Plan. Mr. Izzo has entered into a severance agreement, the terms of which are discussed below under Potential Payments Upon Termination of Employment or Change-in-Control. Mr. Izzo and Mr. LaRossa participate in the Supplemental Plan.
For additional information regarding severance benefit provisions, see Potential Payments Upon Termination of Employment or Change-in-Control.
58 PSEG 2023 Proxy Statement
Executive Compensation Tables – Outstanding Equity Awards at Year-End December 31, 20202022 Table
Outstanding Equity Awards at Year-End December 31, 20202022 Table
The following table lists all outstanding awards, consisting of PSUs and RSUs, as of December 31, 20202022 for our NEOs.
Name | Number of Shares or Units of Stock that have Not Vested (#)(1) | Market Value of Shares or Units of Stock that have Not Vested ($)(2) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that have Not Vested (#)(3) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units, or Other Rights that have Not Vested ($)(4) | Number of Shares or Units of Stock that have Not Vested (#)(1) | Market Value of Shares or Units of Stock that have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that have Not Vested (#)(2) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units, or Other Rights that have Not Vested ($)(3) | ||||||||||||||||||||||||
Ralph Izzo | 115,176 | 6,714,761 | - | - | 96,876 | 5,935,577 | ||||||||||||||||||||||||||
Ralph A. LaRossa | - | - | 65,455 | 4,010,401 | ||||||||||||||||||||||||||||
Daniel J. Cregg | - | - | 20,841 | 1,215,030 | - | - | 19,313 | 1,183,357 | ||||||||||||||||||||||||
Ralph A. LaRossa | 33,769 | 1,968,733 | 28,162 | 1,641,845 | ||||||||||||||||||||||||||||
Tamara L. Linde | - | - | 17,434 | 1,016,402 | - | - | 14,523 | 889,865 | ||||||||||||||||||||||||
David M. Daly | - | - | 17,192 | 1,002,294 | ||||||||||||||||||||||||||||
Kim C. Hanemann | - | - | 12,578 | 770,690 | ||||||||||||||||||||||||||||
Eric Carr | 15,841 | 970,567 | 23,734 | 1,454,182 | ||||||||||||||||||||||||||||
| (1) | The vesting schedule for unvested RSUs is shown below. Dividend equivalents accrue on RSUs at the regular dividend rate and are paid in shares of common stock upon distribution. |
RSU Vesting Schedule | ||||||||||
| Grant Date | 2020 (#) | 2021 (#) | 2022 (#) | Total (#) | ||||||
Ralph A. LaRossa | 2/20/2018 | - | 33,769 | - | 33,769 | |||||
| RSU Vesting Schedule | ||||||||||
| Grant Date | 2023 (#) | 2024 (#) | 2025 (#) | Total (#) | ||||||
| - | - | - | - | ||||||
Eric Carr | 02/18/2020 | 4,519 |
|
| 4,519 | |||||
| 02/16/2021 |
| 5,538 |
| 5,538 | |||||
|
| 02/15/2022 |
|
| 5,784 | 5,784 | |||||
|
PSEG 2023 Proxy Statement 59
Executive Compensation Tables – Outstanding Equity Awards at Year-End December 31, 20202022 Table
PSUs in the table above are shown at target. PSUs awarded under the LTIP are earned based on a three-year performance period. Payment, if any, is made in the first quarter of the year following the end of the performance period. The vesting schedule below shows the number of unvested PSUs at target and maximum and includes accrued dividend equivalents. Each of the NEOs, |
| PSU Vesting Schedule | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PSU Vesting Schedule | Grant Date | Target 2023 (#) | Maximum 2023 (#) | Target 2024 (#) | Maximum 2024 (#) | Target Total (#) | Maximum Total (#) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Grant Date | Target 2021 (#) | Maximum 2021 (#) | Target 2022 (#) | Maximum 2022 (#) | Target Total (#) | Maximum Total (#) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ralph Izzo |
|
2/19/2019 |
|
|
29,761 |
|
|
59,522 |
|
|
- |
|
|
- |
|
|
29,761 |
|
|
59,522 |
| 2/16/2021 | 34,660 | 69,319 | - | - | 34,660 | 69,319 | |||||||||||||||||||||||||||||||||||
| 2/15/2022 | 31,108 | 62,216 | 31,108 | 62,216 | 62,216 | 124,432 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 96,876 | 193,751 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ralph A. LaRossa | 2/16/2021 | 9,141 | 18,283 | - | - | 9,141 | 18,283 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2/15/2022 | 8,546 | 17,092 | 8,546 | 17,092 | 17,092 | 34,184 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2/18/2020 | 42,707 | 85,414 | 42,708 | 85,416 | 85,415 | 170,830 | 9/1/2022 | 19,611 | 39,221 | 19,611 | 39,221 | 39,222 | 78,442 | ||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 65,455 | 130,909 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
| 115,176 | 230,352 |
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Daniel J. Cregg | 2/19/2019 | 5,635 | 11,270 | - | - | 5,635 | 11,270 | 2/16/2021 | 6,665 | 13,331 | - | - | 6,665 | 13,331 | |||||||||||||||||||||||||||||||||||||||||||||||||
| 2/18/2020 | 7,603 | 15,206 | 7,603 | 15,206 | 15,206 | 30,412 | 2/15/2022 | 6,324 | 12,648 | 6,324 | 12,648 | 12,648 | 25,296 | ||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 19,313 | 38,627 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
| 20,841 | 41,682 |
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Tamara L. Linde | 2/16/2021 | 4,951 | 9,903 | - | - | 4,951 | 9,903 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2/15/2022 | 4,786 | 9,572 | 4,786 | 9,572 | 9,572 | 19,144 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ralph A. LaRossa | 2/19/2019 | 5,635 | 11,270 | - | - | 5,635 | 11,270 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 14,523 | 29,047 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Kim C. Hanneman | 2/16/2021 | 2,476 | 4,952 | - | - | 2,476 | 4,952 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2/18/2020 | 11,264 | 22,528 | 11,263 | 22,526 | 22,527 | 45,054 | 6/30/2021 | 1,214 | 2,428 | - | - | 1,214 | 2,428 | ||||||||||||||||||||||||||||||||||||||||||||||||||
|
| 2/15/2022 | 4,444 | 8,888 | 4,444 | 8,888 | 8,888 | 17,776 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
| 28,162 | 56,324 | 12,578 | 25,156 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Tamara L. Linde | 2/19/2019 | 5,232 | 10,464 | - | - | 5,232 | 10,464 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Eric Carr | 2/16/2021 | 11,427 | 22,854 | - | - | 11,427 | 22,854 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2/18/2020 | 6,101 | 12,202 | 6,101 | 12,202 | 12,202 | 24,404 | 2/15/2022 | - | - | 12,307 | 24,614 | 12,307 | 24,614 | ||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 23,734 | 47,468 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
| 17,434 | 34,868 |
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
David M. Daly | 2/19/2019 | 4,427 | 8,854 | - | - | 4,427 | 8,854 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2/18/2020 | 6,383 | 12,766 | 6,382 | 12,764 | 12,765 | 25,530 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
| 17,192 | 34,384 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Value of PSUs is shown at target, multiplied by the closing price on the NYSE on December 31, |
60 PSEG 2023 Proxy Statement
Executive Compensation Tables – Option Exercises and Stock Vested During 20202022 Table
Option Exercises and Stock Vested During 2020 Table2022 Table*
The following table provides information, as noted, regarding the exercise of stock options by the NEOs in 20202022 and the vesting during 20202022 of RSUs and PSUs previously granted to the NEOs, under our LTIP.
| Stock Awards | Stock Awards | |||||||||||
Name | Award | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | Award | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | ||||||
Ralph Izzo | PSU(1)(2) | 138,354 | 7,566,603 | PSU(1)(2) | 54,819 | 3,398,760 | ||||||
RSU(3)(4)
| 48,053
| 2,801,490
| RSU(3)(4) | 43,858 | 2,687,152 | |||||||
Ralph A. LaRossa | PSU(1)(2) | 14,458 | 896,380 | |||||||||
| RSU(3)(4) | 34,906 | 2,138,710 | |||||||||
Daniel J. Cregg | PSU(1)(2) | 23,770 | 1,299,955 | PSU(1)(2) | 9,759 | 605,064 | ||||||
RSU(3)(4)
| 8,555
| 498,752
| ||||||||||
Ralph A. LaRossa | PSU(1)(2) | 70,176 | 3,837,930 | |||||||||
RSU(3)(4)
| 12,674
| 738,892
| RSU(3)(4)
| 8,916
| 546,284
| |||||||
Tamara L. Linde | PSU(1)(2) | 23,770 | 1,299,955 | PSU(1)(2) | 7,831 | 485,545 | ||||||
RSU(3)(4)
| 6,865
| 400,213
| RSU(3)(4) | 6,748 | 413,423 | |||||||
David M. Daly | PSU(1)(2) | 16,836 | 920,784 | |||||||||
Kim C. Hanemann | PSU(1)(2) | 3,916 | 242,786 | |||||||||
RSU(3)(4)
| 7,182
| 418,685
| RSU(3)(4)
| 6,266
| 383,933
| |||||||
Eric Carr | PSU(1)(2) | 4,820 | 298,812 | |||||||||
|
| RSU(3)(4) | 1,971 | 131,507 | |||||||||
| (1) | The table above shows the total payout value distributed for each of the NEOs for the |
PSU Grant Date | Granted | Target Vested (#) | Maximum Vested (#) | PSU Grant Date | Granted | Target Vested (#) | Maximum Vested (#) | |||||||||||||||||
Ralph Izzo | 2/19/2019 | 83,291 |
| 29,761 |
| 59,522 | 2/16/2021 | 97,208 | 34,660 | 69,319 | ||||||||||||||
2/18/2020 | 123,331 |
| 42,707 |
| 85,414 | 2/15/2022 | 90,163 | 31,108 | 62,216 | |||||||||||||||
Ralph A. LaRossa | 2/16/2021 | 25,638 | 9,141 | 18,283 | ||||||||||||||||||||
| 2/15/2022 | 24,770 | 8,546 | 17,092 | |||||||||||||||||||||
| 9/01/2022 | 57,768 | 19,611 | 39,221 | |||||||||||||||||||||
Daniel J. Cregg | 2/19/2019 | 15,769 |
| 5,635 |
| 11,270 | 2/16/2021 | 18,694 | 6,665 | 13,331 | ||||||||||||||
2/18/2020 | 21,956 |
| 7,603 |
| 15,206 | 2/15/2022 | 18,330 | 6,324 | 12,648 | |||||||||||||||
Tamara L. Linde | 2/16/2021 | 13,887 | 4,951 | 9,903 | ||||||||||||||||||||
| 2/15/2022 | 13,872 | 4,786 | 9,572 | |||||||||||||||||||||
Ralph A. LaRossa | 2/20/2018 | 27,323 |
| 30,318 |
| 60,636 | ||||||||||||||||||
Kim C. Hanemann | 2/16/2021 | 6,944 | 2,476 | 4,952 | ||||||||||||||||||||
2/19/2019 | 15,769 |
| 5,635 |
| 11,270 | 6/30/2021 | 3,464 | 1,214 | 2,428 | |||||||||||||||
2/18/2020 | 32,527 |
| 11,264 |
| 22,528 | 2/15/2022 | 12,881 | 4,444 | 8,888 | |||||||||||||||
Eric Carr | 2/16/2021 | 10,683 | - | - | ||||||||||||||||||||
| 2/15/2022 | 11,890 | - | - | |||||||||||||||||||||
Tamara L. Linde | 2/19/2019 | 14,642 |
| 5,232 |
| 10,464 | ||||||||||||||||||
2/18/2020 | 17,619 |
| 6,101 |
| 12,202 | |||||||||||||||||||
David M. Daly | 2/19/2019 | 12,390 |
| 4,427 |
| 8,854 | ||||||||||||||||||
|
| 2/18/2020 | 18,432 |
| 6,383 |
| 12,766 | ||||||||||||||||||
| (2) | Each of the NEOs had PSUs which vested on December 31, |
| * | These figures are estimates based on information available to the Company as of the filing of the preliminary proxy statement and will be updated with final figures in the definitive proxy statement. |
PSEG 2023 Proxy Statement 61
Executive Compensation Tables – Option Exercises and Stock Vested During 2022 Table
| (3) | Represents RSUs that vested for NEOs, each of whom is retirement eligible, with the exception of Mr. Carr, at the NYSE closing price of |
| (4) | RSUs that vested in |
Executive Compensation Tables – 20202022 Pension Benefits Table
The following table provides information on the actuarial present value of the NEOs accumulated benefit under each of our pension and retirement plans.
Name
| Plan Name
|
Number of Years Credited Service (#)
|
Present Value of Accumulated Benefit ($)(4)
| Plan Name
|
Number of Years Credited Service (#)
|
Present Value of Accumulated Benefit ($)(4)
| ||||||||||||||
Ralph Izzo |
Qualified Pension Plan(1) |
|
28.69 |
|
|
2,956,000 |
|
Qualified Pension Plan(1) |
|
30.69 |
|
|
2,160,000 |
| ||||||
| Retirement Income Reinstatement Plan(2) | 30.69 | 6,885,000 | ||||||||||||||||||
| Supplemental Executive Retirement Plan(3) | 35.69 | 3,709,000 | ||||||||||||||||||
| ||||||||||||||||||||
| 12,754,000 | ||||||||||||||||||||
| ||||||||||||||||||||
Ralph A. LaRossa | Qualified Pension Plan(1) | 37.50 | 1,874,000 | |||||||||||||||||
Retirement Income Reinstatement Plan(2) |
| 28.69 |
|
| 8,318,000 |
| Retirement Income Reinstatement Plan(2) | 37.50 | 4,261,000 | |||||||||||
Supplemental Executive Retirement Plan(3) |
| 33.69 |
|
| 5,342,000 |
| Supplemental Executive Retirement Plan | 37.50 | 713,000 | |||||||||||
|
| |||||||||||||||||||
| 16,616,000 |
| 6,848,000 | |||||||||||||||||
|
| |||||||||||||||||||
Daniel J. Cregg | Qualified Pension Plan(1) |
| 29.17 |
|
| 2,006,000 |
| Qualified Pension Plan(1) | 31.17 | 1,563,000 | ||||||||||
Retirement Income Reinstatement Plan(2) |
| 29.17 |
|
| 2,024,000 |
| Retirement Income Reinstatement Plan(2) | 31.17 | 2,026,000 | |||||||||||
|
| |||||||||||||||||||
| 4,030,000 |
| 3,589,000 | |||||||||||||||||
|
| |||||||||||||||||||
Ralph A. LaRossa | Qualified Pension Plan(1) |
| 35.50 |
|
| 2,437,000 |
| |||||||||||||
Tamara L. Linde | Qualified Pension Plan(1) | 32.46 | 1,727,000 | |||||||||||||||||
| Retirement Income Reinstatement Plan(2) | 32.46 | 2,089,000 | ||||||||||||||||||
| ||||||||||||||||||||
| 3,816,000 | ||||||||||||||||||||
| ||||||||||||||||||||
Kim C. Hanemann | Qualified Pension Plan(1) | 36.51 | 1,768,000 | |||||||||||||||||
| Retirement Income Reinstatement Plan(2) | 36.51 | 768,000 | ||||||||||||||||||
| ||||||||||||||||||||
| 2,536,000 | ||||||||||||||||||||
| ||||||||||||||||||||
Eric Carr | Qualified Pension Plan(1) | 14.93 | 218,000 | |||||||||||||||||
Retirement Income Reinstatement Plan(2) |
| 35.50 |
|
| 5,447,000 |
| Retirement Income Reinstatement Plan(2) | 14.93 | 163,000 | |||||||||||
Supplemental Executive Retirement Plan |
| 35.50 |
|
| 1,170,000 |
|
| |||||||||||||
| 381,000 | |||||||||||||||||||
| 9,054,000 |
|
| |||||||||||||||||
| ||||||||||||||||||||
Tamara L. Linde | Qualified Pension Plan(1) |
| 30.46 |
|
| 2,240,000 |
| |||||||||||||
Retirement Income Reinstatement Plan(2) |
| 30.46 |
|
| 2,332,000 |
| ||||||||||||||
| ||||||||||||||||||||
| 4,572,000 |
| ||||||||||||||||||
| ||||||||||||||||||||
David M. Daly | Qualified Pension Plan(1) |
| 33.86 |
|
| 2,055,000 |
| |||||||||||||
Retirement Income Reinstatement Plan(2) |
| 33.86 |
|
| 1,169,000 |
| ||||||||||||||
| ||||||||||||||||||||
| 3,224,000 |
| ||||||||||||||||||
| ||||||||||||||||||||
| (1) | All NEOs, except Mr. Carr, participate in the Final Average Pay Component of the Pension Plan, described below. Years shown reflect actual years of service. Mr. Carr participates in the Cash Balance Pension Plan. Each NEO, except Mr. Carr, is retirement eligible. |
62 PSEG 2023 Proxy Statement
Executive Compensation Tables – 2022 Pension Benefits Table
| (2) | Years shown reflect actual years of service. |
| (3) | Mr. Izzo receives five additional years of credited service, for the purpose of retirement benefit calculations under the Supplemental Plan in recognition of prior work experience. Years shown reflect the sum of actual years of service and years credited under the Supplemental Plan. The actuarial present value of accumulated benefits based on actual years of service for Mr. Izzo is |
| (4) | Amounts shown represent the actuarial present value of accumulated benefit computed as of the same Pension Plan measurement date used for our financial statements for the year ended December 31, |
Executive Compensation Tables – Qualified and Non-Qualified Pension Plans
Qualified and Non-Qualified Pension Plans
Substantially all employees are eligible to participate in the Pension Plans in either the (i) Final Average Pay Component, (ii) Cash Balance Component, or (iii) Represented Cash Balance Component.
Effective July 1, 2019, certain assets and liabilities were transferred from the Pension Plan to a new pension plan, the Pension Plan of Public Service Enterprise Group Incorporated II (Pension Plan II).
The current Pension Plan is the plan predominantly for inactive participants (i.e., retired participants and terminated vested participants).
| • | The Pension Plan is predominantly for inactive participants (i.e., retired participants and terminated vested participants) as of July 1, 2019. |
The new plan, Pension Plan II, is the plan predominantly for active participants.
| • | The Pension Plan II is predominantly for active participants as of July 1, 2019. |
The Pension Plan and Pension Plan II each have three components: (i) Final Average Pay Component, (ii) Cash Balance Component and (iii) Represented Cash Balance Component.
The purpose of the split was to reduce the variability of pension expense while leaving the underlying benefits unchanged.
There are no changes to the benefits provided to employees under the Pension Plan or Pension Plan II.
New hires and rehires, willon or after July 1, 2019, participate in the Cash Balance Component or Represented Cash Balance Component, as applicable, of Pension Plan II.
The assets of the Pension Plan and Pension Plan II are held under a Master Trust. The assets will beare tracked separately for each of the two plans. Post-split, both plans arecontinue to be well funded.
Final Average Pay Component
The Final Average Pay Component covers non-represented employees hired prior to January 1, 1996 and represented employees hired prior to January 1, 1997 and provides participants with a life annuity benefit at normal retirement (age 65) pursuant to a formula based upon (a) the participant’s number of years of service and (b) the average of the participant’s five or seven highest years of compensation up to the limit imposed by the IRC. We amended the Final Average Pay Component effective January 1, 2012, to change the benefit formula for non-represented participants. The effect of the change is to reduce projected pension payments. Under the new formula, the average of the participant’s seven highest years of compensation up to the limit imposed by the IRC will be used rather than the average of the participant’s five highest years of compensation.
For representednon-represented participants, the benefit is based on the 5-year final average formula.
Under the Final Average Pay Component a participant’s accrued benefit is calculated under the 5-year final average formula as of December 31, 2011 and added to the 7-year final average pay formula beginning on January 1, 2012. The final average pay formula is as follows:
(i) 1.3% of the lesser of 5 or 7 year final average earnings or $24,600 times years of credited service not exceeding 35 years;
(ii) 1.5% of the amount by which 5 or 7 year final average earnings exceeds $24,600 times years of credited service not exceeding 35 years; and
(iii) 1.5% of 5 or 7 year final average earnings times years of credited service in excess of 35 years.
For represented participants, the benefit is based on the 5-year final average formula.
An additional benefit equal to $4.00 per month (effective January 1, 2018, $5.00 per month for represented employees) for each year of credited service is payable until the retiree reaches age 65.
All active participants are fully vested in their Final Average Pay Component benefit. Benefits are payable on an unreduced basis (i) at age 65, (ii) at age 60, if the participant’s age, plus years of service, equals or exceeds 80 or (iii) at age 55, if the participant has 25 or more years of service. Participants whose age, plus years of service, equals or exceeds 80, but who have not yet met the criteria in (ii) or (iii) may commence their Final Average Pay Component benefits on a reduced basis.
PSEG 2023 Proxy Statement 63
Executive Compensation Tables – Qualified and Non-Qualified Pension Plans
Cash Balance Component
|
| |
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
The Cash Balance Component covers non-represented employees hired or rehired after December 31, 1995 and provides each participant with a life annuity benefit at normal retirement (age 65) equal to the actuarial equivalent of a notional amount maintained for him/her. Participants are eligible for retirement under the Cash Balance Component upon the attainment of age 55 with five or more years of service. Participants’ accounts are credited each year with a percentage of compensation, which is determined based on the participant’s age plus years of service measured at year-end.
| Sum of Age and Service | Percentage of Compensation Credited (%) | |
<30 | 2.00 | |
30-39 | 2.50 | |
40-49 | 3.25 | |
50-59 | 4.25 | |
60-69 | 5.50 | |
70-79 | 7.00 | |
80-89 | 9.00 | |
90+ | 12.00 |
Each participant’s notional amount grows each year with interest credits based on a 6.0% annual rate of interest. Participants are immediately fully vested in their Cash Balance Component benefit upon hire. Represented employees hired after December 31, 1996 are covered by the Represented Cash Balance Component and the benefits provided are the same as the benefits under the Cash Balance Component.
Reinstatement Plan
Certain management and highly compensated employees participate in a nonqualified excess benefit retirement plan, the Reinstatement Plan, designed to replace earned pension benefits as determined under the Pension Plan formula, but which cannot be paid from the Pension Plan as a result of the IRC mandated limits for qualified plans or the terms of the Pension Plan. The benefits payable under this plan mirror those of the Pension Plan described above except that the compensation considered in computing the benefit (i) will not be limited by qualified plan limits, (ii) will include amounts deferred under the deferred compensation plan, (iii) will include amounts earned under the SMICP and the Management Incentive Compensation PlanMICP (which areis not considered under the Pension Plan), (iv) will be limited to 150% of average base salary for the applicable five or seven years for Final Average Pay Component participants and will be limited to 150% of base salary each year for Cash Balance Component participants and (v) will be offset by any benefits received by the participant under the Pension Plan.
Supplemental Executive Retirement Income Plan (Supplemental Plan)
Certain employees receive supplemental limited retirement and death benefits in a nonqualified plan, the Supplemental Plan. In addition, prior to January 1, 2011 certain employees receive additional years of service for the purpose of retirement benefit calculations in recognition of prior allied work experience. The benefit formula mirrors the Reinstatement Plan, except that additional years of service are used. Any benefit payable under the Supplemental Plan is offset by benefits payable under the Pension Plan and the Reinstatement Plan.
Certain participants in the Supplemental Plan receive an additional limited benefit, which is a total target replacement income percentage equal to credited service for qualified pension plan calculation purposes, plus any applicable additional credited service, plus 30, to a maximum of 75%, of an average of covered compensation. Covered compensation used for determining limited benefits under the Supplemental Plan is the same as the covered compensation used under the Reinstatement Plan. The limited benefit provides that the last five or seven years are used to determine final average earnings used in the calculation. The target replacement amount under the limited benefit portion of the Supplemental Plan is reduced by any pension benefits from any previous employers accrued and vested at the time of hire, by the participant’s Social Security benefit at normal retirement age and by the pension benefits provided by each other PSEG retirement benefit plan (qualified plans and non-qualified plans). There is also a death benefit equal to 150% of base compensation if death occurs while the participant is actively employed. Participants are entitled to this benefit only upon (a) retirement under the terms of the component of the Pension Plan in which they participate or (b) death.
The change in the benefit formula under the qualified Final Average Pay Component from a five year final average pay formula to a seven year final average pay formula impacts the limited benefits under the Supplemental Plan. Accordingly, we amended the Supplemental Plan as of January 1, 2012 to reflect this change.
64 PSEG 2023 Proxy Statement
Executive Compensation Tables – 20202022 Non-Qualified Deferred Compensation Table
2020 2022 Non-Qualified Deferred Compensation Table
The following table provides information regarding compensation deferred by the NEOs under our Deferred Compensation Plans.
Name | Executive Contributions in Last Fiscal Year (2020) ($)(1) | Registrant Contributions in Last Fiscal Year (2020) ($) | Aggregate Earnings in Last Fiscal Year (2020) ($)(2) | Aggregate Withdrawals/ Distributions (2020) ($) | Aggregate Balance at Last Fiscal Year End (2020) ($)(1)(3) | Executive Contributions in Last Fiscal Year (2022) ($)(1) | Registrant Contributions in Last Fiscal Year (2022) ($) | Aggregate Earnings in Last Fiscal Year (2022) ($)(2) | Aggregate Withdrawals/ Distributions (2022) ($) | Aggregate Balance at Last Fiscal Year End (2022) ($)(1) | ||||||||||||||||||||||||||||||
Ralph Izzo | Deferred Compensation Plan |
| - |
| - |
| 172,102 |
|
| - |
|
| 10,940,849 |
| Deferred Compensation Plan | - | - | 402,636 | - | 11,585,206 | ||||||||||||||||||||
Equity Deferral Plan |
| 2,876,585 |
| - |
| 3,017,005 |
|
| - |
|
| 97,286,954 |
| Equity Deferral Plan | - | - | (5,733,047 | ) | - | 109,877,815 | ||||||||||||||||||||
Ralph A. LaRossa | Deferred Compensation Plan | - | - | - | - | - | ||||||||||||||||||||||||||||||||||
| Equity Deferral Plan | - | - | (510,518 | ) | - | 9,784,431 | ||||||||||||||||||||||||||||||||||
Daniel J. Cregg | Deferred Compensation Plan |
| 9,141 |
| - |
| 201,975 |
|
| - |
|
| 1,728,810 |
| Deferred Compensation Plan | 345,801 | - | (277,015 | ) | 344,750 | 1,953,480 | |||||||||||||||||||
Equity Deferral Plan |
| - |
| - |
| 13,392 |
|
| 468,134 |
|
| 659,633 |
| Equity Deferral Plan | - | - | (9,968 | ) | 592,084 | - | ||||||||||||||||||||
Ralph A. LaRossa | Deferred Compensation Plan |
| - |
| - |
| - |
|
| - |
|
| - |
| ||||||||||||||||||||||||||
Equity Deferral Plan |
| - |
| - |
| 175,886 |
|
| - |
|
| 8,663,180 |
| |||||||||||||||||||||||||||
Tamara L. Linde | Deferred Compensation Plan |
| - |
| - |
| - |
|
| - |
|
| - |
| Deferred Compensation Plan | - | - | - | - | - | ||||||||||||||||||||
Equity Deferral Plan |
| - |
| - |
| - |
|
| - |
|
| - |
| Equity Deferral Plan | - | - | - | - | - | |||||||||||||||||||||
Kim C. Hanemann | Deferred Compensation Plan | - | - | - | - | - | ||||||||||||||||||||||||||||||||||
| Equity Deferral Plan | - | - | - | - | - | |||||||||||||||||||||||||||||||||||
David M. Daly | Deferred Compensation Plan |
| - |
| - |
| - |
|
| - |
|
| - |
| ||||||||||||||||||||||||||
Eric Carr | Deferred Compensation Plan | - | - | - | - | - | ||||||||||||||||||||||||||||||||||
Equity Deferral Plan |
| - |
| - |
| - |
|
| - |
|
| - |
| Equity Deferral Plan | - | - | - | - | - | |||||||||||||||||||||
| (1) | Amounts shown include, pursuant to the Deferred Compensation Plan, |
| (2) | Reflects earnings and change in value |
|
Deferred Compensation Plan
Under the Deferred Compensation Plan, participants, including the NEOs, may elect to defer any portion of their cash compensation by making appropriate elections in the calendar year prior to the year in which the services giving rise to the compensation being deferred are rendered. A participant may change an election to defer compensation not later than the date that is the last date that an election to defer may be made.
At the same time a participant elects to defer compensation, the participant must make an election as to the timing and the form of distribution of that year’s deferrals from the Deferred Compensation Plan account. For compensation deferred in 2011 and earlier years distribution may commence (a) on the thirtieth day after the date employment is terminated or, in the alternative, (b) on January 15th of any calendar year following termination of employment elected by him/her, but in any event no later than the later of (i) the January of the year following the year of the participant’s 70th birthday or (ii) the January following termination of employment. For NEOs and other specified employees, distribution of their accounts may not occur earlier than six months following the date of their termination of service. Participants may elect to receive the distribution of their Deferred Compensation account in the form of one lump-sum payment, annual distributions over a five year period or annual distributions over a ten year period.
With respect to compensation deferred in 2012 and future years, participants may elect to commence distribution of a particular year’s deferrals (a) six months following termination of employment or (b) a specified number of years following termination of employment. Participants may elect to receive distribution of their deferrals under the Deferred Compensation Plan in the form of a lump-sum payment or annual distributions over a period of three to fifteen years.
Under the scheduled future date distribution feature, participants may elect to receive a specific plan year’s deferral balance on a specified date as early as three years after the beginning of the year in which the deferrals are made. Distributions are paid in a lump sum within 90 days from the date elected regardless of whether the participant is employed by us on the payment date.
Participants may change their distribution elections as to future years’ deferrals. Participants may also make changes of their distribution elections with respect to prior years’ deferrals provided that (a) any such new distribution election is made at least one year prior to the previously selected commencement date or (b) the new commencement date is at least five years later than the previously selected commencement date.
PSEG 2023 Proxy Statement 65
Executive Compensation Tables – Deferred Compensation
Amounts deferred under the Deferred Compensation Plan are credited with earnings based on (a) the performance of one or more of the investment portfolio funds available to employees under our 401(k) plans (except the Company Stock Fund and the Fidelity Brokerage Link Account) or (b) at the rate of Prime plus 1/2%, capped at 120% of the applicable federal long-term rate, in the percentages selected by the participant. Participants who fail to provide a designation of investment funds will accrue earnings on their accounts at the rate of Prime plus 1/2%, capped at 120% of the applicable federal long-term rate. Participants may change their investment elections on a daily basis.
For 2020,2022, the one-year rates of returns as of December 31, 20202022 for the funds offered as computed by the recordkeeperrecord-keeper of the Deferred Compensation Plan were as follows:
Rates of Return | Rates of Return | Rates of Return | ||||||||||||||||||
Funds | Target Retirement Funds |
|
| Target Retirement Funds |
| |||||||||||||||
Stable Value |
| 2.25% |
| Target Retirement Income |
| 10.04 | % | 1.81% | Target Retirement Income | (12.73 | )% | |||||||||
Diversified Bond |
| 8.57% |
| Target Retirement 2015 |
| 10.39 | % | (13.39)% | Target Retirement 2020 | (14.16 | )% | |||||||||
Intermediate Duration Bond |
| 7.19% |
| Target Retirement 2020 |
| 12.06 | % | (8.75)% | Target Retirement 2025 | (15.46 | )% | |||||||||
Large Company Stock Index |
| 18.38% |
| Target Retirement 2025 |
| 13.36 | % | (18.15)% | Target Retirement 2030 | (16.17 | )% | |||||||||
Mid-Cap Index |
| 18.23% |
| Target Retirement 2030 |
| 14.16 | % | (18.71)% | Target Retirement 2035 | (16.55 | )% | |||||||||
International Developed Markets Index |
| 10.24% |
| Target Retirement 2035 |
| 14.88 | % | (15.32)% | Target Retirement 2040 | (16.97 | )% | |||||||||
Small-Cap Index |
| 19.10% |
| Target Retirement 2040 |
| 15.54 | % | (17.62)% | Target Retirement 2045 | (17.35 | )% | |||||||||
Money Market |
| 0.43% |
| Target Retirement 2045 |
| 16.24 | % | 1.52% | Target Retirement 2050 | (17.46 | )% | |||||||||
Other | Target Retirement 2050 |
| 16.39 | % |
|
| Target Retirement 2055 | (17.45 | )% | |||||||||||
Prime Plus 1/2% |
| 1.68% |
| Target Retirement 2055 |
| 16.39 | % | 3.6% | Target Retirement 2060 | (17.41 | )% | |||||||||
Target Retirement 2060 |
| 16.47 | % | |||||||||||||||||
Target Retirement 2065 |
| 16.43 | % |
|
| Target Retirement 2065 | (17.41 | )% | ||||||||||||
|
|
|
| Target Retirement 2070 | N/A | * | |||||||||||||||
* Fund was established in July 2022
Equity Deferral Plan
Participants in our Equity Deferral Plan may defer receipt of all or a portion of the shares of our common stock underlying future equity awards under the LTIP. Deferral elections must be made during an annual enrollment period prior to the date that services giving rise to the awards are performed. Deferral elections under the Equity Deferral Plan are irrevocable.
Individuals may make changes to their distribution elections provided that (a) any such new distribution election is made at least one year prior to the previously selected commencement date or (b) the new commencement date is at least five years later than the previously selected commencement date.
Generally, at the time a participant elects to defer, the participant must make an election as to the timing of payment of the deferred shares. Distributions will be made in a lump sum. Distributions may commence (a) on a specified date occurring between the third anniversary and the fifteenth anniversary of the date that the shares otherwise would have been distributed to the participant (b) upon termination of employment or (c) the earlier of (a) and (b). For NEOs and other specified employees, distribution may not occur earlier than six months following the date of termination of employment. Participants will receive shares on the applicable distribution date. We hold the deferred shares in a Rabbi Trust. The dividends attributable to the deferred shares are reinvested in common stock and distributed at the same time that the deferred shares are distributed to the participants. Participants are not permitted to direct the trustee of the Rabbi Trust to vote the deferred shares.
Potential Payments Upon Termination of Employment or Change-in-Control – Termination without Cause
POTENTIAL PAYMENTS UPON TERMINATION OF EMPLOYMENT OR CHANGE-IN-CONTROL
Mr. Izzo’s severance agreement provides for certain benefits if he is terminated without cause (a willful failure to perform his duties) or resigns for good reason (a reduction in pay, position or authority) during the term of this agreement. He would be paid a benefit of two times base salary and target bonus, as well as a prorated payment of the SMICP target incentive award for the year of termination. His welfare benefits would be continued for two years, unless he is sooner employed. Any unvested equity awards would be forfeited. The agreement provides that Mr. Izzo will be prohibited from competing with, and from recruiting employees from, us or our subsidiaries or affiliates, for certain periods after termination of employment. Violations of these provisions require a forfeiture of certain benefits.
Our Key Executive Severance Plan provides severance benefits to Mr. Izzo,LaRossa, Mr. Cregg, Mr. LaRossa, Ms. Linde, Ms. Hanemann and Mr. DalyCarr and to certain of our other key executive-level employees whose employment is terminated without cause. Participants must agree to restrictive covenants including confidentiality, non-competition and non-solicitation. Termination for cause includes certain violations of our performance, behavioral and value expectations for executives.
66 PSEG 2023 Proxy Statement
Potential Payments Upon Termination of Employment or Change-in-Control – Termination without Cause
Also under the Key Executive Severance Plan, Mr. Cregg,LaRossa, Mr. LaRossa,Cregg, Ms. Linde, Ms. Hanemann and Mr. DalyCarr are entitled to certain severance benefits in the event that their employment was terminated without cause other than in a change-in-control situation. In such event, they would be entitled to 1.0 times (2.0 times for Mr. LaRossa) their annual base salary plus their target bonus, as well as a prorated payment of their SMICPMICP target incentive award for the year of termination and certain outplacement services, educational assistance, health care and life insurance coverage. The Key Executive Severance Plan further provides that any unvested equity awards would be accelerated or forfeited in accordance with the terms of the individual’s grants under the LTIP and/or employment agreement.
In accordance with Mr. LaRossa’s retention award, upon termination, voluntary or involuntary, following a change in leadership, Mr. LaRossa would become fully vested in his retention award.
Assuming a termination without cause or for a reduction in force or reorganization had occurred on December 31, 2020,2022, each of the NEOs would have received the following additional benefits:
Termination without Cause | Izzo ($) | Cregg ($) | LaRossa | Linde ($) | Daly ($) | |||||||||||||||
Severance |
| 6,822,720 |
|
| 1,190,000 |
|
| 1,495,300 |
|
| 1,117,550 |
|
| 1,050,000 |
| |||||
Pro Rata Bonus (SMICP) |
| 1,989,960 |
|
| 510,000 |
|
| 708,300 |
|
| 478,950 |
|
| 450,000 |
| |||||
Unvested Restricted Stock Units(1) |
| - |
|
| - |
|
| 1,968,733 |
|
| - |
|
| - |
| |||||
Performance Share Unit Payout |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
| |||||
Health/Welfare Benefits |
| 58,017 |
|
| 10,872 |
|
| 26,275 |
|
| 25,274 |
|
| 17,855 |
| |||||
Outplacement |
| 25,000 |
|
| 25,000 |
|
| 25,000 |
|
| 25,000 |
|
| 25,000 |
| |||||
Education Assistance |
| 3,000 |
|
| 3,000 |
|
| 3,000 |
|
| 3,000 |
|
| 3,000 |
| |||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Aggregate Payments |
| 8,898,697 |
|
| 1,738,872 |
|
| 4,226,608 |
|
| 1,649,774 |
|
| 1,545,855 |
| |||||
|
Termination without Cause | LaRossa ($) | Cregg ($) | Linde ($) | Hanemann ($) | Carr ($) | |||||||||||||||
Severance | 5,750,000 | 1,324,260 | 1,233,000 | 1,135,575 | 1,047,710 | |||||||||||||||
Pro Rata Bonus (MICP) | 1,625,000 | 588,560 | 548,000 | 486,675 | 431,410 | |||||||||||||||
Unvested Restricted Stock Units | - | - | - | - | - | |||||||||||||||
Performance Share Unit Payout | - | - | - | - | - | |||||||||||||||
Health/Welfare Benefits | 25,424 | 10,034 | 22,406 | 26,000 | 21,627 | |||||||||||||||
Outplacement | 25,000 | 25,000 | 25,000 | 25,000 | 25,000 | |||||||||||||||
Education Assistance | 3,000 | 3,000 | 3,000 | 3,000 | 3,000 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Aggregate Payments | 7,428,424 | 1,950,854 | 1,831,406 | 1,676,250 | 1,528,747 | |||||||||||||||
Assuming a termination due to death or disability had occurred on December 31, 2020,2022, each of the NEOs would have received the following additional benefits:
Termination Upon Death or Disability | Izzo ($) | Cregg ($) | LaRossa ($) | Linde ($) | Daly ($) |
LaRossa | Cregg ($) | Linde ($) | Hanemann ($) | Carr ($) | ||||||||||||||||||||||||||||||
Unvested and Vested Restricted Stock Units(1)(2) |
| 14,521 |
|
| 2,635 |
|
| 1,972,231 |
|
| 2,221 |
|
| 2,166 |
| |||||||||||||||||||||||||
Unvested and Vested Restricted Stock Units(1) | 259,193 | 86,321 | 64,900 | 55,874 | 970,639 | |||||||||||||||||||||||||||||||||||
Performance Share Unit Payout |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
| - | - | - | - | 718,146 | ||||||||||||||||||||
Death Benefit Under Supplemental Plan(3) |
| 2,132,100 |
|
| - |
|
| 1,180,500 |
|
| - |
|
| - |
| |||||||||||||||||||||||||
Death Benefit Under Supplemental Plan(2) | 1,875,000 | - | - | - | - | |||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Aggregate Payments |
| 2,146,621 |
|
| 2,635 |
|
| 3,152,731 |
|
| 2,221 |
|
| 2,166 |
| 2,134,193 | 86,321 | 64,900 | 55,874 | 1,688,785 | ||||||||||||||||||||
| (1) |
|
All annually granted RSUs for all NEOs, each of whom are retirement eligible, except Mr. Carr, were vested at December 31, |
Includes an additional death benefit under the Supplemental Plan equal to 1.5 times base salary. |
Potential Payments Upon Termination of Employment or Change-in-Control – Change-in-Control
Under our Key Executive Severance Plan, if any of Mr. Izzo,LaRossa, Mr. Cregg, Mr. LaRossa, Ms. Linde, Ms. Hanemann and Mr. DalyCarr is terminated without cause or resigns for good reason within two years after a change-in-control, the individual will receive (1) three times (two times for Mr. Cregg, Ms. Linde, Ms. Hanemann and Mr. Daly)Carr) the sum of the NEO’s salary and target incentive bonus, (2) a pro rata bonus based on the NEO’s target annual incentive compensation, (3) accelerated vesting of equity-based awards, except for PSUs, which vest pro rata, based on target, (4) a lump sum payment equal to the actuarial equivalent of the NEO’s benefits under all of our retirement plans in which the individual participates calculated as though the NEOs remained employed for three years (two years for Mr. Cregg, Ms. Linde, Ms. Hanemann and Mr. Daly)Carr) beyond the date employment is terminated less the actuarial equivalent of such benefits on the date employment terminates (reported in the table below as Enhanced Retirement Benefit for pension-related amount and as Retiree Medical Increase for amount due for retiree medical benefits)benefits for all NEOs except Mr. Carr), (5) three years (two years for Mr. Cregg, Ms. Linde, Ms. Hanemann and Mr. Daly)Carr) continued welfare benefits, (6) one year of PSEG-paid outplacement services and (7) vesting of any compensation previously deferred. Payments are limited to an amount that would not give rise to an excise tax liability under applicable IRS provisions, currently 2.993.0 times the individual’s average W-2 compensation minus $1.00 for the period. Amounts above that limit are forfeited. Potential payments are shown in the Change-in-Control Termination Table.
PSEG 2023 Proxy Statement 67
Potential Payments Upon Termination of Employment or Change-in-Control – Change-in-Control
Assuming a termination without cause or resignation with good reason had occurred on December 31, 20202022 following a change-in-control, each of the NEOs would have received the following benefits:
Change-in-Control Termination | Izzo ($) | Cregg ($) | LaRossa ($) | Linde ($) | Daly ($) |
LaRossa | Cregg ($) | Linde ($) | Hanemann ($) | Carr ($) | ||||||||||||||||||||||||||||||
Severance
|
| 10,234,080
|
|
| 2,380,000
|
|
| 4,485,900
|
|
| 2,235,100
|
|
| 2,100,000
|
| 8,625,000 | 2,648,520 | 2,466,000 | 2,271,150 | 1,571,565 | ||||||||||||||||||||
Pro Rata Bonus (SMICP)
|
| 1,989,960
|
|
| 510,000
|
|
| 708,300
|
|
| 478,950
|
|
| 450,000
|
| |||||||||||||||||||||||||
Pro Rata Bonus (MICP) | 1,625,000 | 588,560 | 548,000 | 486,675 | 431,410 | |||||||||||||||||||||||||||||||||||
Unvested and Vested Restricted Stock Units(1)(2)
|
| 14,521
|
|
| 2,635
|
|
| 1,972,231
|
|
| 2,221
|
|
| 2,166
|
| |||||||||||||||||||||||||
Unvested and Vested Restricted Stock Units(1) | 259,193 | 86,321 | 64,900 | 55,874 | 970,639 | |||||||||||||||||||||||||||||||||||
Performance Share Unit Payout
|
| 5,960,028
|
|
| 1,100,257
|
|
| 1,313,674
|
|
| 965,759
|
|
| 888,356
|
| 2,845,358 | 1,204,303 | 900,036 | 724,518 | 718,146 | ||||||||||||||||||||
Enhanced Retirement Benefit
|
| -
|
|
| 562,000
|
|
| -
|
|
| 368,000
|
|
| 393,000
|
| 1,174,000 | 444,000 | 355,000 | 566,000 | 104,000 | ||||||||||||||||||||
Retiree Medical Increase
|
| -
|
|
| 269,000
|
|
| -
|
|
| -
|
|
| -
|
| - | - | - | - | - | ||||||||||||||||||||
Health/Welfare Benefits
|
| 98,456
|
|
| 23,963
|
|
| 90,254
|
|
| 58,167
|
|
| 40,637
|
| 87,954 | 22,358 | 61,984 | 59,582 | 43,897 | ||||||||||||||||||||
Outplacement
|
| 25,000
|
|
| 25,000
|
|
| 25,000
|
|
| 25,000
|
|
| 25,000
|
| 25,000 | 25,000 | 25,000 | 25,000 | 25,000 | ||||||||||||||||||||
Education Assistance
|
| 3,000
|
|
| 3,000
|
|
| 3,000
|
|
| 3,000
|
|
| 3,000
|
| 3,000 | 3,000 | 3,000 | 3,000 | 3,000 | ||||||||||||||||||||
Parachute Payments Forfeited
|
| -
|
|
| (1,581,879
| )
|
| -
|
|
| -
|
|
| (665,555
| )
| (2,782,465 | ) | - | - | (556,918 | ) | - | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Aggregate Payments
|
| 18,325,045
|
|
| 3,293,976
|
|
| 8,598,359
|
|
| 4,136,197
|
|
| 3,236,604
|
| 11,862,040 | 5,022,062 | 4,423,920 | 3,634,881 | 3,867,657 | ||||||||||||||||||||
| (1) |
|
All annually granted RSUs for all NEOs, each of whom are retirement eligible, except Mr. Carr, were vested at December 31, |
A NEO would not be eligible for any payments under the Key Executive Severance Plan, either prior to or following a change-in-control, if the NEO voluntarily terminated employment (other than for good reason as described above under Termination Without Cause) or if employment was terminated for cause.
In the case of a NEO’s retirement or termination of employment on account of death or disability, the Key Executive Severance Plan provides that the NEO would be entitled to accrued pay through the date of termination and prorated payment of that NEO’s target incentive award for the year of termination.
Change-in-control provisions under the Key Executive Severance Plan generally mean the occurrence of any of the following events:
Any person is or becomes the beneficial owner of our securities representing 25% or more of the combined voting power of our then outstanding securities; or
| • | Any person is or becomes the beneficial owner of our securities representing 25% or more of the combined voting power of our then outstanding securities; or |
A majority of the Board is replaced without approval of the current Board; or
| • | A majority of the Board is replaced without approval of the current Board; or |
There is consummated a merger or consolidation of us, other than a merger or consolidation which would result in our voting securities outstanding immediately prior to the merger continuing to represent at least 75% of the combined voting power of the securities of us or the surviving entity immediately after the merger or consolidation; or
| • | There is consummated a merger or consolidation of us, other than a merger or consolidation which would result in our voting securities outstanding immediately prior to the merger continuing to represent at least 75% of the combined voting power of the securities of us or the surviving entity immediately after the merger or consolidation; or |
Our stockholders approve a plan of complete liquidation or dissolution of us or there is consummated an agreement for the sale or disposition by us of all or substantially all of our assets.
| • | Our stockholders approve a plan of complete liquidation or dissolution of us or there is consummated an agreement for the sale or disposition by us of all or substantially all of our assets. |
For additional information regarding the provisions of LTIP awards, see Material Factors Concerning Awards Shown in Summary Compensation Table, Grants of Plan-Based Awards Table and Employment Agreements.
Pay Ratio
As noted earlier, we had two CEOs during 2022. We have calculated the ratio of our combined CEO’s compensation to that of our median employee. In doing so, we reviewed a comparison of our combined CEO’s annual total compensation for 20202022 to that of all other employees in 2020,2022, using the same methodology and elements of compensation as we used in determining the total compensation shown for our CEOboth CEOs in the Summary Compensation Table that appears on page 56.55. The median employee was determined using internal payroll records of income reported on IRS Form W-2, which is a consistently applied compensation measure, as provided by the applicable SEC provisions. We believe that the pay ratio shown below is a reasonable estimate calculated in a manner consistent with those provisions. We note that our calculation does not include all elements of our employee compensation package, such as health insurance and other benefits generally applicable to all employees.
For 2020,2022, for purposes of this pay ratio disclosure, the compensation of our median employee was $142,464$131,500 and the total combined compensation of ourpaid to Mr. Izzo and Mr. LaRossa for the time each served as CEO during 2022 was $14,308,254.$12,065,070. The ratio of the combined annual total CEO compensation to median employee pay was approximately 100:92:1.
68 PSEG 2023 Proxy Statement
Year | Summary Compensation Table Total for PEO #1 (1&2) ($) | Compensation Actually Paid to PEO #1 (1&3) ($) | Summary Compensation Table Total for PEO #2 (1&2) ($) | Compensation Actually Paid to PEO #2 (1&3) ($) | Average Summary Compensation Table Total for Non-PEO NEOs (1&2) ($) | Average Compensation Actually Paid to Non-PEO NEOs ($) (1&3) | Value of Initial Fixed $100 Investment based on Total Shareholder Return ($) (4) | Value of Initial Fixed $100 Investment based on Peer Group Total Shareholder Return ($) (4) | Net Income (Loss) ($ millions) (5) | Operating EPS (Non-GAAP) ($) (6) | ||||||||||||||||||||||||||||||
| 2022 | 12,869,210 | 1,495,352 | 9,510,542 | 6,408,817 | 2,733,718 | 1,371,783 | 114.98 | 121.88 | 1,031 | 3.47 | ||||||||||||||||||||||||||||||
| 2021 | 14,208,674 | 16,757,115 | - | - | 3,834,217 | 4,311,559 | 121.14 | 119.44 | (648 | ) | 3.65 | |||||||||||||||||||||||||||||
| 2020 | 14,308,254 | 21,440,227 | - | - | 3,677,833 | 4,733,261 | 102.37 | 101.68 | 1,905 | 3.43 | ||||||||||||||||||||||||||||||
| (1) | NEOs included in these columns reflect the following: |
Year | | PEO #1 | PEO #2 | Non-PEO NEOs | ||
| 2022 | Mr. Izzo | Mr. LaRossa | Mr. Cregg, Ms. Linde, Ms. Hanemann, and Mr. Carr | |||
| 2021 | Mr. Izzo | N/A | Mr. Cregg, Mr. LaRossa, Ms. Linde, and Mr. Daly | |||
| 2020 | Mr. Izzo | N/A | Mr. Cregg, Mr. LaRossa, Ms. Linde, and Mr. Daly | |||
| (2) | Amounts reflect the total compensation for our NEOs, as reported in the Summary Compensation Table for each applicable year. |
| (3) | In accordance with Item 402(v) requirements, the fair values of unvested and outstanding equity awards were remeasured as of the end of each fiscal year, and as of each vesting date, during the years displayed in the tables below. For PSUs with a relative TSR metric, the fair values as of each measurement date (prior to the end of the performance period) were determined using a Monte Carlo simulation pricing model, with assumptions and methodologies that are generally consistent with those used to estimate fair value at grant under U.S. GAAP. The range of estimates used in the Monte Carlo calculations are as follows: (i) for 2022, volatility between 19%-41% and risk-free rate of 0.1%; (ii) for 2021, volatility between30%-32% and risk-free rate between0.4%-0.7%; and (iii) for 2020, volatility between22%-24% and risk-free rate between4.3%-4.6%. For PSUs with a ROIC metric, fair values reflect the probable outcome of the performance vesting conditions as of each measurement date. For a discussion of the assumptions made in the valuation at grant, see Note 20 to the Consolidated Financial Statements included in our Form10-K. In calculating the “compensation actually paid” amounts reflected in the columns below, the adjustments made to the pension benefit values were computed in accordance with U.S. GAAP. For each fiscal year reflected, the “compensation actually paid” to the PEO and the average “compensation actually paid” to thenon-PEO NEOs reflect the following adjustments made to the total compensation amounts reported in the Summary Compensation Table for each applicable fiscal year, computed in accordance with Item 402(v) of RegulationS-K. |
PEO #1 | PEO #2 | |||||||||||||||
2022 ($) | 2021 ($) | 2020 ($) | 2022 ($) | |||||||||||||
Summary Compensation Table Total for PEO | 12,869,210 | 14,208,674 | 14,308,254 | 9,510,542 | ||||||||||||
| Less: Grant Date Fair Value of Equity Awards and Less; Change in Actuarial Present Value of Benefits Reported in the Summary Compensation Table | (9,100,044 | ) | (9,100,065 | ) | (10,435,075 | ) | (7,350,100 | ) | ||||||||
| Add: Actuarially Determined Service Cost for Services Rendered During the Fiscal Year | 392,466 | 424,401 | 475,639 | 231,485 | ||||||||||||
| Add: Entire Cost of Benefits Granted in an Amendment or Initiation During the Applicable Fiscal Year Atributed to Services Rendered Prior to the Amendment or Initiaion | - | - | - | - | ||||||||||||
Add: Year-End Fair Value of Awards Granted in the Applicable Year that are Outstanding and Unvested | 7,541,414 | 10,314,918 | 11,254,928 | 6,615,452 | ||||||||||||
| Add: Year over Year Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year | (7,704,660 | ) | (2,861,237 | ) | 1,673,319 | (2,032,007 | ) | |||||||||
| Add: Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year | - | - | - | - | ||||||||||||
| Add: Year over Year Change in Fair Value of Outstanding and Unvested Equity Awards | (2,900,512 | ) | 2,891,656 | 2,923,601 | (764,993 | ) | ||||||||||
| Less: Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year | - | - | - | - | ||||||||||||
| Add: Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation | 397,478 | 878,768 | 1,239,561 | 198,439 | ||||||||||||
Compensation Actually Paid for PEO | 1,495,352 | 16,757,115 | 21,440,227 | 6,408,817 | ||||||||||||
2022 ($) | 2021 ($) | 2020 ($) | ||||||||||
Average of Summary Compensation Table Total for NEOs (other than PEO) | 2,733,718 | 3,834,217 | 3,677,833 | |||||||||
| Less: Grant Date Fair Value of Equity Awards and Less; Change in Actuarial Present Value of Benefits Reported in the Summary Compensation Table | (1,437,564 | ) | (1,841,049 | ) | (2,365,541 | ) | ||||||
| Add: Actuarially Determined Service Cost for Services Rendered During the Fiscal Year | 141,217 | 201,866 | 179,836 | |||||||||
| Add: Entire Cost of Benefits Granted in an Amendment or Initiation During the Applicable Fiscal Year Atributed to Services Rendered Prior to the Amendment or Initiation | - | - | - | |||||||||
Add: Year-End Fair Value of Awards Granted in the Applicable Year that are Oustanding and Unvested | 1,191,343 | 1,929,838 | 2,065,496 | |||||||||
| Add: Year over Year Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year | (925,014 | ) | (503,004 | ) | 406,831 | |||||||
| Add: Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year | - | - | - | |||||||||
| Add: Year over Year Change in Fair Value of Outstanding and Unvested Equity Awards | (395,767 | ) | 528,106 | 508,560 | ||||||||
| Less: Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year | - | - | - | |||||||||
| Add: Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation | 63,850 | 161,585 | 260,246 | |||||||||
Average Compensation Actually Paid for NEOs (other than PEO) | 1,371,783 | 4,311,559 | 4,733,261 | |||||||||
| (4) | The Company’s TSR and the Company’s Peer Group TSR reflected in these columns for each applicable fiscal year is calculated based on a fixed investment of $100 at the applicable measurement point on the same cumulative basis as is used in Item 201(e) of Regulation S-K. The Peer Group used to determine the Company’s Peer Group TSR for each applicable fiscal year is the following published industry index (Dow Jones Utilities (DJU) Index), as disclosed in our annual report on Form 10K for fiscal year ended 2022 pursuant to Item 201(e) of RegulationS-K. |
| (5) | Amounts reflect PSEG’s net income as reported in our audited financial statements for the applicable year. |
| (6) | While we use numerous financial and non-financial performance measures to evaluate performance under our compensation programs,Non-GAAP Operating EPS is the financial performance measure that, in PSEG’s assessment, represents the most important performance measure (that is not otherwise required to be disclosed in the table) used to link compensation actually paid to NEOs, for the most recently completed fiscal year, to company performance. |
Most Important Performance Measures |
Operating Earnings Per Share (non-GAAP) |
Relative Total Shareholder Return |
Return on Invested Capital |
Earnings Per Share Growth |
Environmental, Social, Governance (ESG) Index |
Ratification of AuditorAdvisory Vote
PROPOSALIn this Proposal 3, RATIFICATIONwe are providing you with the opportunity to cast an advisory vote on the frequency of the future advisory votes on executive compensation. This is sometimes referred to as “say-when-on-pay” vote. This is a non-binding vote which allows you to advise us from among three choices, or abstain, as to how often you think we should include a say-on-pay vote in our proxy statement. You may choose whether this should occur once every year, every two years or every three years, or you may choose to abstain. Under the Dodd-Frank Act, we must provide you with this “say-when-on-pay” voting opportunity at least once every six years.
We believe that we should submit the advisory vote on say-on-pay to you annually. Providing you with this opportunity each year is a good corporate governance practice promoting communication between us and our stockholders. An annual advisory vote allows you, as a stockholder, to express your views on an important issue at the same time as voting on other annual matters such as election of directors. The vote is advisory and thus it is non-binding on us and the Board, with whom the final determination remains. However, the Board intends to carefully review the voting results and take them into consideration when making future decisions regarding the frequency of say-on-pay votes.
Vote required: We will tally the votes cast for each of the three choices, excluding abstentions and shares withheld or for which no instructions are given.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR “1 YEAR” IN REGARD TO THIS PROPOSAL.
PSEG 2023 Proxy Statement 73
Amendments to Certificate of Incorporation and By-Laws
There will be presented at the Annual Meeting three proposals to approve amendments to PSEG’s Certificate of Incorporation, as amended, and By-Laws to eliminate provisions currently requiring a supermajority vote for certain actions. These amendments are described in Proposals 4(a), 4(b) and 4(c) below (Proposed Amendments).
A stockholder proposal was submitted on this topic at the Annual Meeting of Stockholders in 2013 and a management proposal was submitted on the topic at the Annual Meeting of Stockholders in 2014. The 2013 proposal did not receive the requisite supermajority support of outstanding shares and only received the support of a majority of the votes cast. The 2014 proposal did not receive the requisite supermajority support of outstanding shares and only received the support of more than a majority of outstanding shares. After consideration of the advantages and disadvantages of and stockholder support for the proposal to eliminate supermajority voting provisions, the Board has determined that, subject to the requisite approval of our stockholders, it is appropriate to remove these provisions from our governance documents and replace them with a majority of the shares outstanding vote standard. The Board’s ability to do so is governed by the laws of the State of New Jersey, where we are incorporated, and our Certificate of Incorporation and By-Laws.
Currently, our Certificate of Incorporation and By-Laws require the affirmative vote of shares representing 80% of our outstanding Common Stock for the following matters: (i) certain mergers and other business combinations; (ii) the removal of a director without cause; (iii) certain amendments to the By-Laws; and (iv) certain amendments to the Certificate of Incorporation, including to amend, or adopt a provision inconsistent with, a provision relating to the matters described in the foregoing items (i)-(iii)
Below is a summary of the recommended material terms and revisions. The actual text of the Proposed Amendments to the Certificate of Incorporation and By-Laws are set forth respectively in Appendices B and C to this Proxy Statement, marked with deletions indicated by strike-outs and additions indicated by underlining. Approval of any one of the three proposals with respect to the Proposed Amendments is not conditioned upon approval of any of the other proposals. Under the provisions of our Certificate of Incorporation and By-Laws as now in effect, the affirmative vote of at least 80% of the outstanding shares of our Common Stock is required for the approval of each of the Proposed Amendments set forth in these proposals. Any shares that are not voted (whether by abstention or otherwise) on any such proposal will have the effect of a vote against the proposal.
Proposal 4(a)
Approval of Amendments to Article 7 of our Certificate of Incorporation to Eliminate the Supermajority Voting Requirements for Certain Business Combinations and Change Provisions Applicable to Certain Business Combinations
Article 7, Section 1 of our Certificate of Incorporation currently requires the approval of 80% of shares of our Common Stock outstanding for certain mergers and other business combinations. This provision would be revised to require a majority vote of shares of our Common Stock outstanding for such transactions.
Article 7, Section 7 of our Certificate of Incorporation, which currently requires the affirmative vote of 80% of shares of our Common Stock outstanding in order to make certain amendments to or to adopt certain provisions or take certain actions inconsistent with Article 7 would be revised to require a majority vote of shares of our Common Stock outstanding to make such revisions and take such actions.
Approval of this proposal requires the affirmative vote of at least 80% of shares of our Common Stock outstanding. If approved, the Board will take the next steps required to implement these proposed amendments.
Proposal 4(b)
Approval of Amendments to Article 8 of our Certificate of Incorporation and Article I, Section 1(d) of our By-Laws to Eliminate the Supermajority Voting Requirements to Remove a Director Without Cause and Change Provisions Applicable to Board-Related Matters
Article 8, Section 4 of our Certificate of Incorporation and Article I, Section 1(d) of our By-Laws each currently requires the affirmative vote of 80% of shares outstanding in order to remove a director from office without cause. Each respective provision would be revised to require a majority vote of shares outstanding to remove a director without cause.
74 PSEG 2023 Proxy Statement
Amendments to Certificate of Incorporation and By-Laws
Article 8, Section 5 of our Certificate of Incorporation currently requires the affirmative vote of 80% of shares outstanding in order to make certain amendments to or adopt any provisions inconsistent with Article 8. This provision would be revised to require a majority vote of shares outstanding to make certain amendments and to adopt provisions inconsistent with Article 8.
Approval of this proposal requires the affirmative vote of at least 80% of shares of our Common Stock outstanding. If approved, the Board will take the next steps required to implement these proposed amendments.
Proposal 4(c)
Approval of Amendment to Article 9 of our Certificate of Incorporation to Eliminate the Supermajority Voting Requirement to Make Certain Amendments to our By-Laws and Change Provisions Applicable to By-Law Amendments
Article 9 of our Certificate of Incorporation currently requires the approval of 80% of shares outstanding in order to make certain amendments to our By-Laws or to make certain amendments to or adopt any provisions inconsistent with Article 9. This provision would be revised to require a majority vote of shares outstanding to make certain amendments to our By-Laws or to make certain amendments and to adopt any provisions inconsistent with Article 9.
Approval of this proposal requires the affirmative vote of at least 80% of shares of our Common Stock outstanding. If approved, the Board will take the next steps required to implement the proposed amendment.
The full text of the proposed restated Certificate of Incorporation is set forth in Appendix D to this Proxy Statement.
THE APPOINTMENTBOARD RECOMMENDS A VOTE FOR EACH OF INDEPENDENT AUDITORPROPOSALS 4(a), 4(b) and 4(c).
PSEG 2023 Proxy Statement 75
Ratification of Auditor
The Audit Committee has appointed Deloitte & Touche LLP of Parsippany,Morristown, NJ, as the independent auditor for the fiscal year ending December 31, 2021,2023, because it believes that doing so is in the best interests of the Company and its stockholders. The responsibilities of the independent auditor include auditing our financial statements and our internal controls over our financial reporting. Deloitte (or its predecessors) has performed the annual audit of the books of account of PSEG (and its predecessors) since 1934. PSEG derives many benefits from the long-term relationship, including:
Enhanced audit quality due to a deep understanding of our business, accounting policy and practices and internal controls; and
| • | Enhanced audit quality due to a deep understanding of our business, accounting policy and practices and internal controls; and |
Efficient fee structures due to experience and a familiarity with our Company and industry.
| • | Efficient fee structures due to experience and a familiarity with our Company and industry. |
As recommended by the Board, we ask you to ratify this appointment.
Representatives of Deloitte plan to be present atattend the 20212023 Annual Meeting. They will have an opportunity to make a statement if they so desire and to respond to appropriate questions.
Vote required: An affirmative vote requires a majority of the votes cast, excluding abstentions and shares withheld for which no instructions are given and are not voted.
THE BOARD RECOMMENDS A VOTE FOR THIS PROPOSAL.
76 PSEG 2023 Proxy Statement
Ratification of Auditor – Oversight of the Independent Auditor
OVERSIGHT OF THE INDEPENDENT AUDITOR
The Audit Committee is solely responsible for the appointment, termination, compensation and oversight of the work of PSEG’s independent registered public accounting firm, Deloitte. The Audit Committee also annually reviews its independence, performance, the selection of the lead engagement partner and reports on its performance by the Public Company Accounting Oversight Board and peer reviewers. Under applicable accounting requirements, there is a mandatory rotation of the lead engagement partner every five years. The current lead engagement partner was appointed in 2018. A successor has been appointed effective for the 2023 audit. The Audit Committee discusses with the independent auditor the audit and any issues encountered. Additional information about the Audit Committee’s responsibilities appears above in the section on the Audit Committee on page 18.19.
In accordance with its charter, the Audit Committee annually pre-approves all audit and non-audit services to be provided by our independent auditor subject to predetermined limits set for each category of service. The annual pre-approval of services and predetermined limits is documented in an Audit Committee resolution.
During the year, circumstances may arise when it becomes necessary to engage the independent auditor for additional services. For those instances, the Chair of the Audit Committee has been authorized to approve fees and services in excess of those authorized in the resolution. The Chair is required to report any such authorizations to the Audit Committee at its next meeting.
Fees Billed by Deloitte for 20202022 and 20192021
The table below shows the fees paid to Deloitte during or in connection with 20202022 and 2019.2021. All fees billed by and paid to Deloitte were negotiated by management under the direction of our CFO with the oversight and approval of the Audit Committee.
| Years ended December 31 | Years ended December 31 | |||||||||||||||
| 2020 | 2019 | 2022 | 2021 | |||||||||||||
| Description of Professional Service | (millions) | (millions) | ||||||||||||||
Audit Fees - The audit fees were incurred for audits of our annual consolidated financial statements and those of our subsidiaries, including our Annual Reports on Form 10-K, reviews of financial statements included in our quarterly reports on Form 10-Q and for services rendered in connection with certain financing transactions, statutory and regulatory filings and fees for accounting consultations related to the application of new accounting standards and rules. | $7.4 | $6.8 | $ | 7.4 | $ | 7.3 | ||||||||||
Audit Related Fees - The audit related fees primarily related to performing certain attest services. | - | - | ||||||||||||||
Audit Related Fees - The audit related fees primarily related to performing certain attest services.(1) | - | - | ||||||||||||||
Tax Fees - The tax fees relate to tax compliance and tax advice for preparation of various state and foreign corporate returns and assistance with filing tax refund claims. | 0.2 | 0.1 | 0.1 | 0.2 | ||||||||||||
All Other Fees | - | - | ||||||||||||||
All Other Fees - nonrecurring fees related to advisory benchmarking support | - | 0.1 | ||||||||||||||
(1) In 2021, nonrecurring audit related services of $0.8M were provided as part of a dual engagement with LS Power related to the audit of PSEG Solar Source as requested by LS Power in relation to LS Power’s acquisition of PSEG Solar Source. We were fully reimbursed for the costs incurred and the services were not provided to, or on behalf of, the Company.
PSEG 2023 Proxy Statement 77
Ratification of Auditor – Audit Committee Report
The Audit Committee’s primary responsibilities are to assist the Board with oversight of the integrity of PSEG’s financial statements and public filings, the independent auditor’s qualifications and independence, the performance of PSEG’s internal audit function and independent auditor and PSEG’s compliance with legal and regulatory requirements. For more information about our Audit Committee’s responsibilities, see the Audit Committee on page 1819 and our Audit Committee Charter, which is posted on our website at: https://corporate.pseg.com/aboutpseg/leadershipandgovernance/boardofdirectors/committeedescriptions.
It is not the duty of the Audit Committee to prepare PSEG’s financial statements, to plan or conduct audits or to determine that PSEG’s financial statements are complete and accurate and are in accordance with GAAP in the United States. PSEG’s management is responsible for preparing PSEG’s financial statements and for maintaining internal control over financial reporting and disclosure controls and procedures. The independent registered public accounting firm is responsible for auditing the financial statements and expressing an opinion as to whether those audited financial statements fairly present, in all material respects, the financial position, results of operations and cash flows of PSEG in conformity with GAAP in the United States.
In performing our oversight role, we have reviewed and discussed PSEG’s audited financial statements with management and with Deloitte and Touche LLP (Deloitte), PSEG’s independent registered public accounting firm for 2020.2022.
We have further discussed with Deloitte the matters required to be discussed under applicable Public Company Accounting Oversight Board (PCAOB) standards.
We have received from Deloitte the written disclosures required by applicable PCAOB rules regarding Deloitte’s independence, discussed with Deloitte its independence and considered whether the non-audit services provided by Deloitte are compatible with maintaining its independence.
Based on the review and discussions referred to above, we recommended to the Board, and the Board approved, inclusion of the audited financial statements in PSEG’s Annual Report on Form 10-K for the year ended December 31, 20202022 for filing with the SEC.
Members of the Audit Committee:
February 15, 2021
Approval of the 2021 Equity Compensation Plan for Outside Directors
PROPOSAL 4 APPROVAL OF THE 2021 EQUITY COMPENSATION PLAN FOR OUTSIDE DIRECTORS
OVERVIEW OF SUMMARY PLAN TERMS
You are being asked to consider and approve the adoption of the Public Service Enterprise Group Incorporated 2021 Equity Compensation Plan for Outside Directors (2021 Plan). The purpose of the 2021 Plan is to advance the interests of the Company and its stockholders by assisting the Company in attracting and retaining individuals of superior talent, ability and achievement to serve on its Board.
The Company’s current 2007 Equity Compensation Plan for Outside Directors has 28,809 shares authorized but not granted, and 209,214 shares outstanding at the date of this Proxy Statement. If approved by our shareholders, the 2021 Plan will become effective and no further awards will be granted under the 2007 Equity Compensation Plan for Outside Directors. However, all awards issued under the 2007 Equity Compensation Plan for Outside Directors that are outstanding as of the 2021 Plan approval date will continue to be governed by the terms of the 2007 Equity Compensation Plan for Outside Directors. If the 2021 Plan is not approved by our shareholders, awards will continue to be made under the 2007 Equity Compensation Plan for Outside Directors and the Company will evaluate its alternatives.
Under the 2021 Plan, each outside director and each nominee for outside director of the Company will be eligible to receive an award of Restricted Stock Units (RSUs) effective May 1, 2021. The 2021 Plan provides for an award of RSUs to outside directors in an amount to be determined from time-to-time by the Corporate Governance Committee, at the commencement of each year of service as a director. For 2021, the Board has established an award value of $135,000.
The description of the 2021 Plan set forth below is a summary only. For a complete understanding of its terms, you should review the 2021 Equity Compensation Plan for Outside Directors which is attached as Appendix B to this Proxy Statement. Capitalized terms used but not defined herein have the meanings ascribed to such terms in the 2021 Plan.
Description of the 2021 Equity Compensation Plan for Outside Directors
Administration. The 2021 Plan is administered by the Corporate Governance Committee, or any committee designated by the Board as successors to the powers and duties of the Corporate Governance Committee. The Corporate Governance Committee shall be comprised of not less than two members who shall be “non-employee directors” within the meaning of Rule 16b-3(b)(3) (or any successor rule) promulgated under the Exchange Act. The Corporate Governance Committee has authority to make rules and regulations regarding the administration and operation of the 2021 Plan, including acceptable forms of notices under the 2021 Plan.
Share Reserve. The total number of shares reserved to satisfy Awards under the 2021 Plan is 250,000 shares of Common Stock. Such shares may be acquired directly from the Company or, at the discretion of the Company, purchased on the open market by the Company or its agent. The maximum number of shares that may be issued under an award shall be counted against the shares subject to the 2021 Plan at the time of grant and reserved for issuance, unless the Award Agreement provides otherwise. The maximum number of shares of Common Stock available for issuance under the 2021 Plan shall not be reduced to reflect any dividends or dividend equivalents that are reinvested into additional shares or credited as additional Award Units.
No Liberal Recycling Provisions. Any shares withheld by the Company or otherwise used to satisfy tax withholding obligations associated with an Award granted under this 2021 Plan, shall, in each case, count against the shares subject to the 2021 Plan.
Participant Award Limits. The maximum aggregate value of shares with respect to which Awards may be granted in any one calendar year to any one Participant shall not exceed $750,000. This is a new feature of the 2021 Plan that was not included in the 2007 Equity Compensation Plan for Outside Directors.
Eligibility and Participation. Each member of the Board who is not and has never been a PSEG employee or an employee of any of PSEG’s affiliates (Outside Directors) will automatically participate in and receive awards under the 2021 Plan for each year of service as a director. Currently, there are nine (9) Outside Directors.
Annual Awards. The 2021 Plan provides for an annual award of RSUs to each Outside Director in an amount to be determined from time-to-time by the Board (for 2021, this amount is $135,000). Awards are made as of the first business day of May, except
Approval of the 2021 Equity Compensation Plan for Outside Directors
with respect to any Outside Director first elected as a director after May 1 of any year. In such case, the date of such Outside Director’s initial award grant under this 2021 Plan will be the first business day of the month next following the Outside Director’s initial election as a member of the Board. The number of RSUs to be awarded on any particular date of grant will be equal to the amount of the award grant (expressed in dollars) divided by the closing price of the Common Stock on the NYSE on the date of grant, rounded up to the next whole share.
Continued Service Requirement. If a participant fails to remain as a member of the Board (other than on account of disability or death) until the earlier of the succeeding April 30th or the next Annual Meeting of Stockholders, the award for that year will be prorated to reflect actual service.
Restricted Stock Unit. A Restricted Stock Unit award is a right to receive shares of Common Stock upon the distribution of the RSUs to the participant in accordance with the 2021 Plan and as described below. The awards are evidenced by a bookkeeping account maintained by PSEG in the participant’s name. PSEG is not required to segregate any amounts credited to these accounts, which are established merely as an accounting convenience. Amounts credited to these accounts at all times remain solely PSEG’s property subject to the claims of its general creditors and available for its use for whatever purpose desired. The accounts will be credited with dividend equivalents at a rate equal to such dividends as may be declared on the Common Stock. Such dividend equivalents will be credited as additional Restricted Stock Units on the dividend payable date at a share price equal to closing price of the Common Stock on the NYSE on such date.
No participant shall have any of the rights of a stockholder with respect to RSUs unless and until shares of the Common Stock are actually issued in their name.
Distributions. A Participant who has met the stock ownership requirements as outlined in the PSEG Corporate Governance Principles, determined as of the beginning of the annual election period, may make an election to (i) receive the shares attributable to their vested RSU Award within the 30-day period following the next April 30th, or (ii) defer receipt of the shares in accordance with Paragraphs B through H in Section VI of the 2021 Plan. Such election is irrevocable.
A participant who has not satisfied the stock ownership requirements shall be required to defer their award and elect a distribution in accordance with Paragraphs B through H in Section VI. Such election is irrevocable.
The 2021 Plan has been drafted with requirements and conditions designed to comply with the provisions of the Code for deferred compensation plans.
Adjustments, Amendments and Termination. In the event of any corporate event or transaction, such as a stock dividend, stock split, combination or exchange of shares, merger, consolidation, spin-off or other distribution (other than normal cash dividends) of our assets to stockholders, or any other change affecting Common Stock, appropriate adjustments to reflect such change will be made with respect to outstanding RSU Awards.
PSEG has reserved the right to amend, discontinue and/or terminate the 2021 Plan, at any time, by the action of the Board. In general, upon the termination of the 2021 Plan, participants will receive payment of their benefits in accordance with the terms of the 2021 Plan. However, PSEG may, in its discretion, terminate the entire Plan and pay each participant a single lump-sum distribution of their entire account balance, in certain circumstances, each of which is intended to comply with the IRC’s 409A requirements for deferred compensation plans.
As of March 2, 2021:
There are a total of 209,214 full value awards outstanding, all of which are shares underlying Restricted Stock Units, as the 2021 Plan only provides for the grant of Restricted Stock Units; and
There are 28,809 shares of common stock remaining available under the 2007 Equity Compensation Plan for Outside Directors. If the 2021 Plan is approved by our shareholders, the 2021 Plan will become effective and no further awards will be made under the 2007 Equity Compensation Plan for Outside Directors and the remaining balance under the 2007 Equity Compensation Plan for Outside Directors will be cancelled.
No further awards are expected to be granted under the 2007 Equity Compensation Plan for Outside Directors unless the 2021 Plan is not approved by shareholders.
If the 2021 Plan is approved, our share dilution on December 31, 2020 will be 0.05%. This level of full dilution assumes all 250,000 shares will actually be issued under the 2021 Plan. Management and our Board are cognizant of dilution levels and strive to maintain dilution at an appropriate level.
Approval of the 2021 Equity Compensation Plan for Outside Directors
New Plan Benefits
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Equity Compensation Plan Information
Please see “Equity Compensation Plan Information” in Proposal 5 for certain information with respect to shares of the Company’s Common Stock that may be issued under the Company’s existing compensation plans.
Vote required: An affirmative vote of a majority of the votes cast at the meeting. Abstentions will be counted as votes cast and will have the effect of votes against the Proposal. If you own shares through a broker, you must instruct your broker how to vote in order for your vote to be counted on this proposal.
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| David Lilley | ||||
Approval of the 2021 Long-Term Incentive Plan
PROPOSAL 5 APPROVAL OF THE 2021 LONG-TERM INCENTIVE PLAN
On February 15, 2021, the Organizational and Compensation Committee (O&CC) unanimously recommended that our Board approve, and on February 16, 2021, our Board unanimously approved and adopted, subject to the approval of our shareholders at the Annual Meeting, the Public Service Enterprise Group Incorporated 2021 Long-Term Incentive Plan (the “Plan”). The Plan will afford the O&CC, or another designee of the Board, the ability to design compensatory awards that advance the interests of the Company and its stockholders by assisting the Company in attracting and retaining individuals needed for positions of substantial responsibility, provide incentive compensation opportunities that are competitive with those of other companies; and contribute to the future growth in value of the Company’s equity and enhancement of long-term shareholder returns.
We have historically granted equity awards under various plans, including most recently under the 2004 Long-Term Incentive Plan Amended and Restated as of April 16, 2013. The 2004 Long-Term Incentive Plan has approximately 12 million shares authorized but not granted at the date of this Proxy Statement.
The Board believes “at risk” compensation is a significant factor in motivating performance to increase stockholder value. The Plan is designed to afford the Board or, if and to the extent the Board or its designee, the ability to design incentive awards that link pay and performance by providing the select Company’s employees with the opportunity to receive an annual award based upon factors as determined by the O&CC. If approved by our shareholders, the Plan will become effective and no further awards will be granted under the 2004 Long-Term Incentive Plan. However, all awards issued under the 2004 Long-Term Incentive Plan that are outstanding as of the Plan approval date will continue to be governed by the terms of the 2004 Long-Term Incentive Plan. If the Plan is not approved by our shareholders, awards will continue to be made under the 2004 Long-Term Incentive Plan and the Company will evaluate its alternatives.
Why You Should Vote in Favor of the Plan
We believe our future success depends on our ability to attract, motivate and retain high quality employees for positions substantial responsibility and that approval of the Plan is a key component to achieving this success.
The use of equity as part of our compensation programs is also important to our continued success because it fosters a pay-for-performance culture, which is an important element of our overall compensation philosophy. We believe that equity compensation motivates employees to create shareholder value because the value employees realize from equity compensation is based on our stock performance. Because equity compensation awards under the Plan will generally be subject to vesting and/or performance criteria, the Plan also aligns the goals and objectives of our employees with the interests of our shareholders and promotes a focus on long-term value creation. These vesting conditions also enhance our ability to retain our key employees.
We also believe we have demonstrated our commitment to sound equity compensation practices. We recognize that equity compensation awards dilute shareholder equity and, therefore, we have carefully managed our equity incentive compensation to ensure that the cost of equity compensation to our shareholders is reasonable in relation to the important benefits gained.
Plan Highlights
The Plan authorizes the O&CC, or a designee thereof, to provide equity-based compensation in the form of stock options, stock appreciation rights (SARs), restricted share awards, restricted stock units, performance stock units, performance shares or any combination thereof, in each case for the purpose of providing our officers, and other key employees, incentives and rewards for superior performance. Some of the key features of the Plan that reflect our commitment to effective management of incentive compensation are set forth below and are described more fully under the heading “Summary of the Plan” and are detailed in their entirety by reference to the full copy of the proposed Plan, which is set forth as Appendix C to this Proxy Statement. Capitalized terms used but not defined herein have the meanings ascribed to such terms in the Plan.
Administration. The Plan will be administered by the Organizational and Compensation Committee, or a designee thereof. The O&CC may authorize one or more officers of the Company (the “Authorized Officers”) to do one or both of the following: (a) designate Employees (other than Authorized Officers) to be recipients of awards, as defined in the Plan; and (b) determine the size of any such awards provided the employee is not considered an insider as determined by the Board applying Section 16 of the Exchange Act and related guidance.
| Alfred W. Zollar | ||
Approval of the 2021 Long-Term Incentive Plan
Share Reserve. The total number of shares reserved under the Plan is 8,000,000 shares, subject to customary capitalization adjustments. Any shares of common stock subject to an award that terminate by expiration, forfeiture, cancellation, or surrender or otherwise without the issuance of such shares, are settled in cash in lieu of shares, or are exchanged prior to the issuance of shares for awards not involving shares, shall again be available for grant under the Plan. Shares underlying awards that can only be paid in cash, dividends or dividend equivalents do not count against the overall Plan Reserve. In addition, any shares that are granted or transferred by, or that are subject to any Awards that are granted by, or become obligations of, the Company described in Section 6(a) of the Plan will not reduce the Shares available under this Plan.
No Liberal Recycling Provisions. The Plan provides that the following shares shall not be recycled and again made available for grant under the Plan: (1) those tendered or withheld in payment of an exercise price; (2) those delivered to or withheld by us for the payment of withholding taxes related to an award; and (3) those subject to an option or SAR that are not issued or delivered upon the net settlement or net exercise of such option or SAR.
Minimum Vesting. The Plan generally provides that, other than awards representing a maximum of five percent (5%) of the shares reserved for issuance under the Plan, all share-settled awards will have a vesting period of at least 12 months, subject to limited exceptions for death and disability, and for retirement eligible individuals, provided that any such awards do not settle until the date that they otherwise would settle if the individual was not retirement eligible and/or had not retired, in compliance with Code Section 409A and the change in control provisions of the Plan, as described below.
No Repricing. We have never repriced underwater stock options or SARs and repricing of options and SARs is prohibited without shareholder approval under the Plan other than as a result of certain customary capitalization adjustments.
Participant Award Limits. Subject to the Plan’s adjustment provisions, no more than 500,000 shares subject to an Award may be granted to any Participant during any calendar year.
Dividend Payouts. No dividends or dividend equivalents on unvested awards will be paid until those awards are vested and earned. No dividend equivalents will be paid with respect to stock options and SARs.
No Evergreen Provision. There is no evergreen feature under which the shares authorized for issuance under the Plan can be automatically replenished.
Other Features
The Plan also provides that no stock options or SARs will be granted with an exercise or base price less than the Fair Market Value, as defined in the Plan, of our common stock on the date of grant.
All awards under the Plan are subject to the “clawback” policy adopted by our Board and to any other clawback or recoupment policy we may adopt from time to time.
The Plan imposes “double-trigger” change in control vesting for equity awards that are not assumed by an acquirer.
As of March 2, 2021:
There are a total of 1,734,035 full value awards outstanding, all of which are shares underlying performance share units and restricted stock units, and currently no options are outstanding and options have not been granted since December 2009; and
There are 11,359,318 shares of common stock remaining available under the 2004 Long-Term Incentive Plan, of which 8,297,303 are explicitly reserved for the grant of options which the Company has not granted since December 2009. If the Plan is approved by our shareholders, the Plan will become effective and no further awards will be made under the 2004 Long-Term Incentive Plan and the remaining balance under the 2004 Long-Term Incentive Plan will be cancelled.
No further awards are expected to be granted under the 2004 Long-Term Incentive Plan unless the Plan is not approved by shareholders.
If the Plan is approved, our share dilution on December 31, 2020 will be 1.58%. This level of full dilution assumes all 8,000,000 shares will actually be issued under the Plan. Management and our Board are cognizant of dilution levels and strive to maintain dilution at an appropriate level.
Approval of the 2021 Long-Term Incentive Plan
Summary of the Public Service Enterprise Group Incorporated 2021 Long-Term Incentive Plan
The following summary of the material provisions of the Plan is not intended to be exhaustive and is detailed in its entirety by the terms of the Plan, a copy of which is set forth as Appendix C to this Proxy Statement.
Term
If approved by the shareholders, the Plan will be effective as of the date of shareholder approval. No awards shall be granted under the Plan later than ten years following the date of its approval by the Board.
Administration
The O&CC, or another designee of the Board thereof shall administer the Plan in accordance with its terms and shall have all powers, authority and discretion necessary or proper for such purpose, including the sole and exclusive power and discretion to:
determine which participants will be granted an award; the time or times at which awards will be granted; the form and amount or number of shares subject to each award; the expiration date of each award; the time or times within which the awards shall vest or may be exercised or otherwise settled; the Fair Market Value of an award, as defined in the Plan; whether to accelerate the exercise or vesting date of any outstanding award in the event of a grantee’s death or disability; the cancellation of the awards; the performance goals, if any, applicable to awards; and the other limitations, restrictions, terms and conditions applicable to the grant of the awards;
establish such rules and regulations as the administrator shall deem desirable or necessary for the proper administration of the Plan;
make determinations regarding and take such other action in connection with or in relation to the Plan as the O&CC deems necessary or advisable; and
interpret the provisions of, and correct or supply any omission in, the Plan or any award or award agreement in the manner and to the extent the O&CC deems desirable. Notwithstanding the foregoing, it is expected that, unless the Board determines otherwise, the Plan will be administered by the Board with respect to any award granted to a non-employee director.
Eligibility
Eligibility under the Plan is limited to employees of Public Services Enterprise Group Incorporated and its Subsidiaries, who are receiving remuneration for personal services rendered to the Company or Subsidiary, including and such person who is an officer of the Company or Subsidiary, subject to certain restrictions necessary to avoid adverse tax consequences under Code Section 409A. As of February 19, 2021, approximately 300 employees (including 43 officers) were eligible to participate in the Plan. The O&CC, in its sole discretion, shall determine and designate, from time to time, those Employees who will be granted one or more Awards under the Plan, and who thereby will become “Participants” in the Plan.
Securities Subject to the Plan
Subject to customary capitalization adjustments, the number of shares of Company common stock that may be issued under the Plan may not exceed, in the aggregate, 8,000,000 shares. Any shares related to awards that terminate by expiration, forfeiture, cancellation, or otherwise without the issuance of such shares, or are settled in cash in lieu of shares, shall be available again for grant under the Plan. Any such shares that again become available for future grants pursuant to the preceding sentence shall be added back to the maximum aggregate shares available under the Plan as one share. The Plan, however, provides that the following shares will not be recycled and again made available for grant under the Plan: (a) those surrendered or withheld in payment of the exercise price of an award (including shares underlying a SAR, as defined below, that are retained by the Company to account for the exercise price of such SAR) or (b) those surrendered or withheld as payment of withholding taxes related to an award. In addition, shares underlying awards that can only be paid in cash do not count against the overall Plan limit. Awards that do not count against the overall share limit under the Plan include awards granted in assumption of, or in substitution for, outstanding awards previously granted by a corporation or other entity acquired by us or our affiliates, or which we or our affiliates combine by merger or otherwise.
An equitable substitution or proportionate adjustment shall be made in the event of any corporate event or transaction (including a change in the shares of the Company or the capitalization of the Company) such as a merger, consolidation, reorganization, recapitalization, separation, partial or complete liquidation, stock dividend, stock split, reverse stock split, split up or split off, spinoff or spinout, or other distribution of stock or property of the Company, combination of shares, exchange of shares, dividend in-kind,
Approval of the 2021 Long-Term Incentive Plan
or other like change in capital structure, number of outstanding shares or distribution (other than normal cash dividends) to shareholders of the Company, issuance of rights or warrants, or any similar corporate event or transaction, the O&CC, in order to prevent dilution or enlargement of Participants’ rights under this Plan, may substitute or adjust, as applicable, the number and kind of shares that may be issued under this Plan or under particular forms of Awards, the number and kind of shares subject to outstanding Awards, the Exercise Price applicable to outstanding Awards, other Award terms, and other value determinations applicable to outstanding Awards. The O&CC may also make adjustments in the terms and conditions of, and the criteria included in, outstanding awards in recognition of unusual or infrequent events affecting the Company or the financial statements of the Company, or in response to changes in applicable laws, regulations, or accounting principles, if the O&CC determines that it is necessary to do so in order to prevent dilution or enlargement of the benefits or potential benefits intended to be conferred under the Plan. As determined by the O&CC in its sole discretion, other equitable substitutions or adjustments shall be made.
Subject to compliance with Code Section 409A, the O&CC may also cancel any outstanding award in exchange for (i) consideration (paid in cash or other property) having an aggregate Fair Market Value equal to the difference between (a) the fair market value of the shares, cash or other property covered by such award, less (b) the aggregate exercise price or purchase price thereof, if any, or (ii) for no consideration if the exercise price or purchase price of outstanding award is equal to or greater than the Fair Market Value, as defined in the Plan, of the shares of common stock, cash or other property covered by such Award.
On February 19, 2021, the closing per-share price of our common stock on the NYSE was $57.75.
Limits on Awards to Participants
The maximum number of shares that may be covered by Awards granted to any one individual pursuant to this Plan shall be five hundred thousand (500,000) shares during any calendar year.
Stock Options
The Plan authorizes awards of stock options, which includes (i) an option award intended to qualify as and designated as an “incentive stock option” as defined in Section 422 of the Code (an “Incentive Option”), and an option that is not designated as an Incentive Option or that otherwise does not qualify as an Incentive Option (Non-Qualified Stock Option). Subject to the limits of the Plan, the O&CC may grant options for such number of shares and having such terms as the Organizational and O&CC’s designates.
Options shall vest and be exercisable in the time-frame determined by the O&CC, which shall be set forth in the applicable option award agreement. No option shall be exercisable after ten years from the date such option is granted.
The exercise price of shares under an option is determined by the O&CC shall not be less than the Fair Market Value, as defined in the Plan, of a share of common stock on the date of grant. Once determined by the O&CC, no price of any option shall be decreased, other than pursuant to customary adjustment provisions, unless that change is authorized by the Company’s shareholders.
Under the Plan, to the extent permitted under applicable law and the relevant option award agreement, the O&CC in its sole discretion may make available one or more of the following alternatives for the payment in whole or in part of the option exercise price (a) paying cash or its equivalent; (b) tendering (either by actual delivery or attestation) previously acquired shares having an aggregate Fair Market Value at the time of exercise equal to the Exercise Price; (c) cashless (broker-assisted or otherwise) exercise; (d) any combination of (a), (b), and (c); or (e) any other method or methods approved or accepted by the O&CC in its sole discretion.
Options may be exercised in whole or in part by giving written notice under the Plan. If an option award is intended to qualify as and is designated as an Incentive Option, then the Fair Market Value, determined as of the date of grant, of Incentive Stock Options that can first become exercisable in any calendar year will not exceed $100,000 without such excess amount ceasing to constitute an Incentive Option. Any Incentive Option granted to an owner of more than 10% of the total combined voting power of all classes of Company stock will have an exercise price that is not less than 110% of the Fair Market Value of a share of our common stock on the grant date, and the term of the Incentive Option shall not exceed five years after the grant date.
Share Appreciation Rights (SARs)
The Plan authorizes awards of share appreciation rights (SARs) the O&CC may grant SARs either (i) independently of Non-Qualified Options or (ii) in tandem with Non-Qualified Options such that the exercise of the Option or SAR with respect to a share of Common Stock cancels the tandem SAR or Non-Qualified Option, respectively, with respect to such share. However, an Employee of a Subsidiary may only be granted SARs to the extent the Subsidiary is, as of the Grant Date, part of: (a) the
Approval of the 2021 Long-Term Incentive Plan
Company’s controlled group of corporations, or (b) a trade or business under common control with the Company, each determined under the rules of Code Section 414, but substituting for this purpose ownership of at least fifty percent (50%) of the Subsidiary to determine the members of the controlled group of corporations and the entities under common control.
The terms and conditions of a SAR award will be set forth in an applicable award agreement, as determined by the O&CC, in its sole discretion; provided, however, SARs granted in tandem with options will generally be exercisable only at such time or times and to the extent that the options to which they relate are exercisable under the Plan.
A freestanding SAR generally entitles the holder, upon exercise of the SAR, to receive payment up to, but not more than, an amount determined by multiplying (i) the excess of the fair market value of a share of common stock on the date of exercise over the strike price established for such SAR on its grant date, by (ii) the number of shares as to which such SAR is being exercised. A SAR granted in tandem with an option award generally entitles the holder, upon exercise, to receive payment up to, but not more than, the number of shares equal in value to the number determined by multiplying (i) the excess of the Fair Market Value as of the date of exercise over the strike price specified in the related option, by (ii) the number of shares in respect of which the related SAR is being exercised.
The strike price for each SAR shall be not less than the Fair Market Value, as defined in the Plan, of a share of common stock on the grant date of the SAR. No SAR may be exercised after ten years from the date such SAR is granted.
Restricted Share Awards
Under the Plan, the O&CC may, in its discretion, grant shares of Restricted Stock to Participants in such number, and upon such terms, and at any time and from time to time, as shall be determined by the O&CC, in its sole discretion.
Restricted share awards may be granted by the O&CC to Participants under the Plan. Each restricted share award shall be evidenced by an award agreement that shall specify the restricted period(s), the number of shares of restricted stock to be awarded, the price (if any) to be paid by the Participant to acquire such shares, the period of time of restrictions and the performance goals applicable to such restricted shares and such other terms and conditions as the O&CC determines. To the extent deemed appropriate by the O&CC, the Company may require that it will retain any certificates or statements of holdings representing certain restricted share awards in the Company’s possession until such time as all conditions and restrictions applicable to such shares have been satisfied or lapse. A Participant shall forfeit a restricted share award if the restrictions, performance goals and conditions of the grant applicable to such shares are not attained.
Except as otherwise determined by the O&CC and set forth in a Participant’s Award Agreement, to the extent permitted or required by law, as determined by the O&CC, Participants holding shares of Restricted Stock granted hereunder may be granted the right to exercise full voting rights with respect to those shares during the Period of Restriction. Except as otherwise set forth in the Award Agreement, dividends or other distributions paid on Restricted Stock shall be accumulated and payable subject to the same restrictions and conditions as the shares underlying the Award.
Restricted Stock Units
The O&CC may, in its discretion, grant RSUs to eligible persons providing the right to receive one share of common stock or, in lieu thereof and to the extent provided in the applicable award agreement, the Fair Market Value, as defined in the Plan, of such share of common stock in cash, on the date or upon the occurrence of one or more events specified in the award agreement, including the attainment of applicable performance goals.
RSUs stock units are contingent upon the expiration of a specified restricted period and may, in addition thereto, be contingent upon the attainment of specified performance goals or such other restrictions or conditions as the O&CC may determine.
RSUs stock units are similar to restricted stock except that no shares of common stock are actually awarded to the Participant on the grant date of the RSUs.
During the Period of Restriction or Performance Period, the Participant will have no rights of ownership in the shares subject to the RSUs and shall have no right to vote such shares. Except as otherwise set forth in the Award Agreement, dividend equivalents equal to the per-share cash dividend paid by the Company shall be accumulated on RSUs and payable subject to the same restrictions and conditions as the shares underlying the Award.
Performance Awards
Subject to the terms of this Plan, Performance Awards may be granted to Participants in such number, and upon such terms, at any time and from time to time, as shall be determined by the O&CC in its sole discretion.
Approval of the 2021 Long-Term Incentive Plan
Each Performance Award shall have an initial value equal to the Fair Market Value of a Share on the Grant Date. The O&CC shall set Performance Goals in its sole discretion which, depending on the extent to which they are met, will determine the value and number of Performance Awards upon which payout will be based. The terms and conditions of performance awards shall be set forth in the applicable award agreement.
During the Period of Restriction or Performance Period, the Participant will have no rights of ownership in the shares subject to the Performance Stock Units (PSU) and shall have no right to vote such Shares.
Except as otherwise set forth in the Award Agreement, dividend equivalents equal to the per-share cash dividend paid by the Company shall be accumulated on Performance Shares and payable subject to the same restrictions and conditions as the shares underlying the Award.
New Plan Benefits
Because grants under the Plan are subject to the discretion of the O&CC it is not possible to determine the benefits that will be received by our executive officers and other employees if the Plan is approved by the shareholders. However, it is anticipated that, among others, all of our current executive officers, including our named executive officers, will receive awards under this Plan.
Equity Compensation Plan
The following table indicates the securities authorized for issuance under equity compensation plans as of December 31, 2020.
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The number of shares available for future issuance includes amounts remaining under our Amended and Restated 2004 Long-Term Incentive Plan (LTIP), 2007 Equity Compensation Plan for Outside Directors and Employee Stock Purchase Plan and reflect a reduction for non-vested restricted stock units and performance share units (assumed at target payout), including accrued dividend equivalent units. The number of shares available for future issuance may be increased or decreased depending on actual payouts for the performance share units based on achievement of targets and is also increased by the number of shares that are withheld to satisfy tax withholding obligations relating to any plan awards as well as shares subject to awards that are forfeited, canceled or otherwise terminated without the issuance of shares.
Transfer of Awards
Generally, no award under the Plan may be transferred other than by will or the laws of descent and distribution, until the award is fully vested or exercisable in accordance with the Plan or an Award Agreement. An Option or SAR transferred to a third-party financial institution shall be prohibited.
Amendment
The Board can amend, alter or terminate the Plan in whole at any time, and the O&CC may amend the terms of any award agreement, provided in either case that no amendment, alteration or termination shall be made that would impair the rights of any participant under any outstanding award under the Plan without the Participant’s consent. However, the Company shall obtain shareholder approval of any amendment to the extent required to comply with applicable law or the rules of any stock exchange on which the Company’s common stock is listed.
Change in Control
Unless otherwise determined by the O&CC and evidenced in an award agreement, in the event that a Change in Control (as defined in the Plan) occurs and either (i) an outstanding award is not assumed or substituted in connection with the Change in Control, or (ii) an outstanding award is assumed or substituted in connection therewith but the Participant’s employment is terminated by the Company (or its successor or affiliate) without Cause or by the Participant for Good Reason (each as defined in the Plan) within twenty-four (24) months after the Change in Control, then: (1) any unvested or un-exercisable portion of such award carrying a right to exercise shall become fully vested and exercisable, and (2) the restrictions, deferral limitations, payment conditions and forfeiture conditions applicable to the award granted will lapse and be treated as satisfied, and any performance conditions on the award will be deemed achieved at actual performance levels and payment will be made in respect of the award on a pro-rated basis, based on the elapsed proportion of the applicable performance period. Except as otherwise provided in an applicable award agreement, the Change in Control provisions of the Plan do not, unless explicitly provided in the applicable award agreement, apply to any cash awards.
Approval of the 2021 Long-Term Incentive PlanFebruary 13, 2023
Clawback
The awards (and any cash payments or shares delivered pursuant thereto) are subject to forfeiture and recovery by the Company and our affiliates pursuant to the applicable award agreement or any clawback or recoupment policy which we adopt or our affiliates adopt from time to time, as set forth under the Plan.
Income Tax Consequences
The grant of a non-qualified stock option will not result in income for a Participant or in a deduction for PSEG. However, the exercise of a non-qualified stock option will result in ordinary income for the Participant and a deduction for 78 PSEG (subject to applicable limits) measured by the difference between the option price and the fair market value of the shares received at the time of exercise. Income tax withholding would be required.2023 Proxy Statement
With respect to performance awards under the Plan, the Participant who receives such an award will recognize ordinary income at the time unrestricted stock or cash is received at the end of the performance period. If unrestricted stock is awarded to a Participant, the Participant will recognize ordinary income equal to the fair market value of the stock received less any amount paid for the stock. If the award is paid in cash, the Participant will recognize ordinary income equal to the amount of cash received. PSEG will be entitled to a deduction as a business expense in an equal amount subject to applicable limits. Income tax withholding would be required.
Generally, a Participant who receives shares of restricted stock will not be taxed on the grant until the applicable restrictions lapse since there is a substantial risk of forfeiture of the stock. When the restrictions lapse, the Participant will be taxed on the then current fair market value of the stock less any amount paid for the stock at ordinary tax rates, and PSEG will be entitled to a deduction as a business expense in an equal amount subject to applicable limits. The Participant may elect, pursuant to Section 83(b) of the Code, to accelerate the ordinary income tax event to the date of acquisition by filing an election with the Internal Revenue Service no later than 30 days after the date the shares are acquired. Dividends paid on restricted stock are considered compensation and are taxable to the Participant at ordinary income tax rates or at the qualifying dividend rate, as applicable, and PSEG will be entitled to a deduction as a business expense in an equal amount subject to applicable limits. Income tax withholding would be required.
Neither the grant nor exercise of an incentive stock option results in taxable income to the grantee or in a deduction as a business expense for PSEG. However, the spread between the exercise price of the incentive stock option and its fair market value constitutes an item of adjustment to the grantee for alternative minimum tax purposes. Subsequent qualifying transfers of stock acquired through the exercise of incentive stock options are taxed at capital gains rates. PSEG will not be entitled to a tax deduction at the time of transfer.
The grant of a SAR would not result in income for a grantee or in a deduction for PSEG. However, the exercise of a SAR would result in ordinary income for the grantee and a deduction for PSEG (subject to applicable limits) measured by the fair market value of and stock and/or cash received at the time of exercise. Income tax withholding would be required.
The Company shall have the power and the right to deduct or withhold, or require a Participant to remit to the Company, an amount necessary to satisfy federal, state, local or other taxes required by law or regulation to be withheld with respect to any taxable event arising as a result of this Plan, an Award Agreement or Awards.
Special rules limit the deductibility of compensation paid to our chief executive officer, chief financial officer and the other “covered employees” as determined under Section 162(m) and applicable guidance. Under Section 162(m), the annual compensation paid to any of these covered employees, including awards that the Company grants pursuant to the Plan, whether performance-based or otherwise, will be subject to the $1 million annual deduction limitation. Because of the elimination of the performance-based compensation exemption, it is possible that all or a portion of the compensation paid to covered employees in the form of equity grants under the Plan may not be deductible by the Company to the extent that the annual deduction limitation is exceeded.
The foregoing is only a summary of the effect of current U.S. federal income taxation upon participants and the company and with respect to awards under the Plan. It does not purport to be complete and does not discuss the impact of employment or other tax requirements, the tax consequences of a Participant’s death, or the provisions of the income tax laws of any municipality, state, or foreign country in which the Participant may reside. These rules are subject to change and Participants should seek their own advice.
Code Section 409A
The Company intends that this Plan and Awards granted under the Plan shall be exempt from, or otherwise comply with, the requirements of Code Section 409A, and it shall be interpreted and administered accordingly, including the six-month delay for specified employees. To the extent that Code Section 409A applies, the date of a termination of employment shall be determined in accordance with the separation from service rules under Code Section 409A.
Vote required: An affirmative vote of a majority of the votes cast at the meeting. Abstentions will be counted as votes cast and will have the effect of votes against the Proposal. If you own shares through a broker, you must instruct your broker how to vote in order for your vote to be counted on this proposal.
THE BOARD RECOMMENDS A VOTE FOR THE APPROVAL OF THIS PROPOSAL.
Annual Meeting, Voting and Procedures
VOTING ANNUAL MEETING, VOTING AND PROCEDURES
Proxy Statement
This Proxy Statement is provided by us on behalf of the Board. A proxy is a person you have legally designated to vote the stock you own. We are asking you to designate as proxies the individuals named by us on the proxy card, voting instruction form or electronic instruction associated with this Proxy Statement to vote at the 20212023 Annual Meeting of Stockholders scheduled to be held on April 20, 202118, 2023 and at all adjournments or postponements of that meeting. For instructions on how to vote, please see the Notice of Internet Availability of Proxy Materials, the Proxy Card, andor the Voting of Shares section below.
The mailing address of our principal executive offices is 80 Park Plaza, Newark, NJ 07102, telephone (973) 430-7000. Our Internet website is https://corporate.pseg.com.
Annual Report on Form 10-K
We have provided without chargeOur Annual Report on Form 10-K is available on our website at https://investor.pseg.com/financial-information/sec-filings. If you received a physical copy in the mail, and would like to each person solicited by means of this Proxy Statement a copy of our Form 10-K for 2020, which has been filed with the SEC, including a list briefly describing the related exhibits. You may request copies of the Form 10-Kexhibits, you can do so by writing to: Vice President—Investor Relations, Public Service Enterprise Group Incorporated, 80 Park Plaza, T4B, Newark, NJ 07102. The Form 10-K is also available on our website https://investor.pseg.com/financial-information/sec-filings.
Delivery of Documents and Internet Availability
We use several different methods to deliver the Proxy Statement and votingThis year we are delivering proxy materials to many shareholders via the Internet under the SEC rule for “Notice and Access.” We believe that this process provides you includingwith a convenient way to access the U.S. Mailproxy materials and the Internet. Each stockholder receivesto authorize a proxy card, voting instruction formto vote your shares, while saving us the cost of producing and mailing documents, reducing the amount of mail you receive and allowing us to conserve natural resources. Using this method of delivery, on or electronicabout March X, 2023, we will mail a Notice that contains basic information about our 2023 Annual Meeting and instructions for voting. For detailed information on how to view all proxy materials, and vote see Proxy Card and Voting of Shares below.electronically, on the Internet.
One Copy per Household
We have sent onlyThe SEC rules permit companies and intermediaries (such as brokers) to implement a singledelivery procedure known as “householding.” Under this procedure, multiple stockholders who reside at the same address may receive one copy of our Annual Report to Stockholders, including our Form 10-K and Proxy Statement, to any household with twoNotice or more stockholders having the same last name and addresssingle set of proxy materials, unless one or more of the stockholders has requested individual copies.provided contrary instructions. This householdingprocedure reduces printing costs and postage fees and saves our Company printing and delivery costs.natural resources. If you share an address with another stockholder and receive onlyif you received a single copy of one of those documents,householding mailing this year, you may request an additional copycopies of our Notice or delivery of a separate copy in the futureproxy materials be delivered to you by writing to the above address or contacting us at (973) 430-8249.
Electronic Delivery
Stockholders may choose to no longer receive printedIf you received paper copies of our Annual Report, Form 10-K andthis year’s Proxy Statement and instead receive and view them electronically over the internet. IfAnnual Report on Form 10-K by mail, you would likecan elect to receive these documents, as well as other stockholder communications and materials, electronicallyan e-mail message in the future that will provide a link to those documents and voting instructions on the Internet. By opting to access your proxy materials via the Internet, you will gain faster access to your proxy materials, save us the cost of printingproducing and mailing themdocuments to you, reduce the amount of mail you may do so by following the instructions at the websites shown on page i, under Future Electronic Delivery. receive, and help preserve environmental resources.
If your shares are held in the name of a bank or broker, please follow that organization’s instructions for electronic delivery. You may also follow the instructions provided for future electronic delivery if you vote via the Internet.
If you receive our future Proxy Statements and Annual Reports and Forms 10-Kelectronically, over the Internet, you will receive each year an e-mail message containing the Internet address to access these documents. The e-mail will also include instructions for voting via the Internet as you will not receive a separate proxy card.card unless specifically requested by you.
PSEG 2023 Proxy Statement 79
Annual Meeting, Voting and Procedures
Stockholder Engagement and Communications with the Board
You, as a stockholder, and other interested parties, have a variety of channels for expressing your views to the Board:
| • | You may communicate directly with the Board, including the Lead Director and other Independent Directors, by writing to: |
You may communicate directly with the Board, including the Lead Director and other independent directors, by writing to:
Michael K. Hyun,Justin B. Incardone, Secretary
Public Service Enterprise Group Incorporated
80 Park Plaza, T4B, Newark, NJ 07102
Please indicate who should receive the communication. Unless the context otherwise requires, the Secretary will provide the communication to the Lead Director and to the Chair of the Board committee most closely associated with the nature of the request. The Secretary has the discretion not to forward communications that are commercial advertisements, other forms of soliciting material or billing complaints. All communications are available to any member of the Board upon request.
Voting for Directors – you have the opportunity to vote for the election of all of our directors on an annual basis.
| • | Voting for Directors – you have the opportunity to vote for the election of all of our directors on an annual basis. |
Say-On-Pay – you have the opportunity to cast an advisory vote each year on our executive compensation program.
| • | Say-On-Pay – you have the opportunity to cast an advisory vote each year on our executive compensation program. |
Director Nominations – you have the opportunity to recommend nominees for election to the Board in accordance with our By-Laws.
| • | Director Nominations – you have the opportunity to recommend nominees for election to the Board in accordance with our By-Laws. |
Shareholder Proposals – you may submit proposals intended for inclusion in our Proxy Statement, in accordance with SEC rules.
| • | Shareholder Proposals – you may submit proposals intended for inclusion in our Proxy Statement, in accordance with SEC rules. |
Proxy Access – subject to the applicable criteria, stockholders may nominate and include in our Proxy Statement director candidates.
| • | Proxy Access – subject to the applicable criteria, stockholders may nominate and include in our Proxy Statement director candidates. |
| • | Engagement – we dialogue with a variety of our stockholders throughout the year, including at meetings of our major stockholders and at investor conferences. |
Engagement – we dialogue with a variety of our stockholders throughout the year, including at meetings of our major stockholders and at investor conferences.
Stockholder NominationsProposals and Proxy Access
The Corporate Governance, Nominating and Sustainability Committee will consider stockholders’ recommendations for nominees for election to the Board. The Corporate Governance, Nominating and Sustainability Committee utilizes the same criteria to evaluate all potential nominees, including those recommended by stockholders or other sources. Our By-Laws require that stockholder proposals and director nominations must be delivered to the Company’s Secretary at least 90 days in advance of an Annual Meeting of Stockholders. With respect to an election to be heldstockholder proposals and director nominations made at a special meeting of stockholders, for the election of directors, advance notice of the nomination must be delivered to the Company’s Secretary no later than the close of business on the seventh day following the date on which notice of the meeting is first given to stockholders. The chairmanchair of the meeting may refuse to acknowledge the proposal or director nomination of any person not made in compliance with the advance notice procedure contained in our By-Laws.
In order for a stockholder’s proposed nominee to be included in the Company’s Proxy Statement pursuant to the proxy access provisions of our By-Laws, the proposal must be received by the Company’s Secretary no earlier than 150 days and no later than 120 days prior to the anniversary of the mailing date of the Company’s Proxy Statement in the prior year. The proxy access provisions of our By-Laws permit an eligible stockholder (or a group of no more than 20 eligible stockholders) owning 3% or more of the Company’s common stock continuously for at least three years to nominate director candidates representing up to 25% of the Board, and, upon the eligible stockholder’s satisfaction of certain conditions as outlined in our By-Laws, require us to include the proposed nominees in our Proxy Statement and proxy card for the Annual Meeting of Stockholders. These proxy access provisions were adopted by the Board in 2015. In its consideration of proxy access, the Board engaged with a number of our significant stockholders and reviewed the published positions of other significant stockholders. Following these outreach efforts, the Board amended our By-Laws in order to provide meaningful proxy access rights to stockholders who are representative of the long-term interests of our Company.
In December 2022, the Board adopted an amendment to the By-Laws to add a customary advance notice provision for stockholder proposals (other than for director nominations). In addition, in February 2023, in response to increased stockholder interest, the Board adopted an amendment to the By-Laws to reduce the threshold needed to call a special meeting of the stockholders from a majority of holders entitled to cast votes to 25% of holders entitled to cast votes. In its consideration of the above mentioned amendments, the Board reviewed governance best practices of publicly traded companies and specifically of companies in our peer group and determined that it is in the best interest of the company and its stockholders to update these provisions and align with market standard practices.
Each proposal or nomination discussed above must be submitted in writing to Michael K. Hyun,Justin B. Incardone, Secretary, Public Service Enterprise Group Incorporated, 80 Park Plaza, T4B, Newark, NJ 07102. NominationsProposals and nominations must be made in compliance with the procedures and requirements set forth in our By-Laws and, for nominations, accompanied by the written consent of the nominee to serve if nominated and elected and by biographical material and the applicable requirements of the SEC to permit evaluation of the recommended nominee.
80 PSEG 2023 Proxy Statement
Annual Meeting, Voting and Procedures
Annual Meeting
This year we will be holding our Annual Meeting virtually and no physical location will be available.
Attendance
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Our Annual Meeting will be held virtually on April |
• You have the right to attend virtually the Annual Meeting if you are a stockholder of record, beneficial owner whose shares are held of record by a bank, a broker or a participant in one of the plans noted below. |
• If you plan to attend the virtual Annual Meeting, you will need to register in advance at register.proxypush.com/peg |
Holders of record of the 505,093,089498,769,910 shares of common stock outstanding on February 19, 202117, 2023 will have one vote per share. A quorum will consist of the holders of common stock entitled to cast a majority of the votes at the Annual Meeting, present at the virtual meeting or represented by proxy. All cashcast votes will be counted. Except for Proposals 4 and 5, abstentionsAbstentions and broker non-votes will not be counted other than for the purpose of establishing a quorum. For Proposals 4 and 5, abstentions will be counted and have the same effect as an “against” vote and broker non-votes will not be counted. All votes will be tabulated by an independent inspector of elections.
Election of Directors under Proposal 1 is subject to our majority vote requirement described below. The Advisory Vote on the Approval of Executive Compensation in Proposal 2 is advisory and non-binding, whether or not approved by a majority of the votes cast. The frequency of future say-on-pay votes presented in Proposal 3 is advisory and non-binding, whether or not approved by a majority of the votes cast. The approval of each of the amendments to our Certificate of Incorporation and By-Laws set forth in Proposals 4(a), 4(b) and 4(c) must receive a favorable vote of at least 80% of the outstanding shares eligible to vote to be approved. The affirmative vote of a majority of the votes cast is needed for Ratification of the Appointment of Independent Auditor under Proposal 3. For Proposals 4 and 5, the affirmative vote of a majority of the votes cast for each proposal is needed for approval of the respective equity plan under that proposal.5.
Majority Voting for Election of Directors
Our By-laws provide that in an uncontested election, each director shall be elected by a majority of the votes cast with respect to the director. A majority of votes cast means that the number of shares cast for a director’s election exceeds the number of votes cast against that director. We do not include as votes cast (i) shares which are marked withheld, (ii) abstentions and (iii) shares as to which a stockholder has given no authority or direction.
As provided in the Corporate Governance Principles, the Board has adopted a policy whereby any incumbent director receiving a majority vote against must promptly tender an offer of resignation. As a result, in uncontested elections, the Board will nominate for election or re-election as a director only candidates who have agreed promptly to tender a letter of resignation in the event that the number of shares voted for that director does not exceed the number of shares voted against that director. If an incumbent director fails to receive the required majority vote, the Corporate Governance, Nominating and Sustainability Committee will consider the matter and then make a recommendation to the Board as to whether or not to accept the resignation. The Board will make the determination on whether or not to accept the recommendation of the Corporate Governance, Nominating and Sustainability Committee.
Failure to Receive a Majority Vote
Under our Corporate Governance Principles, a director who fails to receive a majority vote in an uncontested election shall not participate in the recommendation of the Corporate Governance, Nominating and Sustainability Committee or the determination of the Board with respect to the director’s resignation letter or that of any other director in regard to that year’s Annual Meeting election. The director may, however, participate in other matters of the Board and its various committees to the fullest extent to which the director would otherwise be permitted in accordance with applicable law and the Governance Principles. If a majority of the Corporate Governance Committee fails to receive a majority vote, then the remaining independent directors will determine whether to accept one or more of the applicable resignations. If three or fewer independent directors do not receive a majority vote in the same election, then all independent directorsPrinciples.
| • | If a majority of the Governance, Nominating and Sustainability Committee fails to receive a majority vote, then the remaining Independent Directors will determine whether to accept one or more of the applicable resignations. |
| • | If three or fewer Independent Directors do not receive a majority vote in the same election, then all Independent Directors may participate in any discussions or actions with respect to accepting or rejecting the resignation offers (except that directors may not vote to accept or reject their own resignation offers). |
PSEG 2023 Proxy Statement 81
Annual Meeting, Voting and Procedures
In evaluating tendered resignations, the Corporate Governance, Nominating and Sustainability Committee and the Board may consider all factors they deem relevant, including, but not limited to, the stated reason(s) for the against vote, the impact that the acceptance of the resignation would have upon our compliance with applicable law or regulation, the potential triggering of any change in control or similar provision in contracts, benefit plans or otherwise, the qualifications of the director and the director’s past and anticipated future contributions to us.
The Corporate Governance, Nominating and Sustainability Committee and the Board may consider possible remedies or actions to take in lieu of or in addition to accepting or rejecting of the resignation, such as development and implementation of a plan to address and cure the issues underlying the failure to receive a majority vote.
Annual Meeting, Voting and Procedures
Following the Board’s determination, we will publicly disclose the decision and, as applicable, the reasons for accepting or rejecting the resignation. To the extent that the Board accepts one or more resignations, the Corporate Governance, Nominating and Sustainability Committee may recommend to the Board, and the Board will then determine, whether to fill any vacancy.
Proxy Card and Voting of Shares: How to VoteShares
Stockholders of Record
Every vote is important. We urge you to vote whether or not you plan to attend the virtual Annual Meeting. You may specify your choices by marking the appropriate boxes on the enclosed proxy card. Once done, kindly sign, date and return the accompanying proxy card or you may vote your proxy using the toll-free telephone number listed on the proxy card(866) 883-3382 or via the Internet at the electronic address provided on the Notice of Annual Meeting of Stockholders and also listed on the proxy card. When(at www.proxypush.com/peg). If you received a proxy card, is returned properly datedthen you may vote by marking, signing, dating and signed, or properly voted telephonically or electronically,returning the shares represented by thepaper proxy will be voted by the persons namedcard mailed to you as proxies in accordance with the voting stockholder’s directions.part of your proxy materials. If you are a stockholder of record, your shares will not be voted unless you provide a proxy by return mail, telephonically.telephonically or electronically.
Shares Held in Plans
| • | Enterprise Direct: The proxy card includes any shares registered in the names shown on the proxy in Enterprise Direct (our dividend reinvestment and stock purchase plan). If a proxy card is dated, signed and returned without specifying choices, the shares will be voted as recommended by the Board. If you vote telephonically or electronically, you should follow the directions given during the call or on the computer screen. If no instructions are received from you with respect to any shares held in Enterprise Direct, the administrator of the plan will vote those shares in accordance with the recommendations of the Board. |
| • | PSEG Employee Stock Purchase Plan (ESPP): If you are a participant in the ESPP, you will receive a separate voting instruction form from the administrator of the plan. If no instructions are received from you with respect to any shares held in the ESPP, the administrator of the plan may vote those shares in accordance with the recommendations of the Board for routine proposals only, such as ratification of the independent auditor, but will not vote those shares on non-routine |
| • | PSEG Employee Benefit Plans:If you are a participant in the Thrift and Tax-Deferred Savings Plan or the Employee Savings Plan of PSEG (PSEG Savings Plans) or either of the two Incentive Thrift Plans (Incentive Thrift Plans) of Long Island Electric Utility Servco LLC, a subsidiary of PSEG Long Island, you will receive a separate proxy card from the respective plan’s trustee for shares that have been allocated to your accounts. The trustee will vote the shares of common stock beneficially owned by you under the respective plan in accordance with your instructions. If no instructions are received with respect to the PSEG Savings Plans, the shares will not be voted. If no instructions are received with respect to the Incentive Thrift Plans, the respective trustee will vote your shares in the same proportion as those shares as to which it receives instructions from other participants in the plan in which you participate. |
Shares Held by Banks or Brokers
If your shares are held in the name of a bank or broker, you should follow the voting directions on the instruction form received from your bank or broker. For such shares, while the availability of telephone or Internet voting will depend on the processes of your bank or broker. In accordance with the rules of the NYSE, if no instructions are received from you by a bank or broker with respect to your shares, the bank or broker may use its discretion to vote your shares that are held by it only in regard to Proposal 3:5: Ratification of the Appointment of Independent Auditor and the shares will not be voted on the other proposals presented in this Proxy Statement.
82 PSEG 2023 Proxy Statement
Annual Meeting, Voting and Procedures
Revoking a Proxy
You may revoke a proxy given in the form of the card that accompanies this Proxy Statement or a vote made telephonically or electronically. Appearing atAttending the virtual Annual Meeting will not revoke a proxy you have given unless you file a written notice of revocation with the Secretary of PSEG prior to the voting of the proxies at the virtual Annual Meeting or you vote the shares subject to the proxy by written ballot. The Secretary’s mailing address is: Corporate Secretary, Public Service Enterprise Group Incorporated, 80 Park Plaza, T4B, Newark, NJ 07102.
Solicitation
The cost of soliciting proxies in the form accompanying this Proxy Statement will be borne by us. In addition to solicitation by mail, proxies may be solicited by our directors, officers and employees, none of whom will be directly compensated for these services, in
Annual Meeting, Voting and Procedures
person or by telephone, electronically or by facsimile. We have also retained Alliance Advisors to assist in the distribution and solicitation of proxies from brokers, bank nominees, other institutional holders and certain large individual holders. The anticipated cost of these services to us is approximately $21,500 $22,000plus reimbursement of expenses.
Date for Submission of Stockholder Proposals for 2024 Annual Meeting
In accordance with SEC rules, stockholders may submit proposals intended for inclusion in the Proxy Statement in connection with our 20222024 Annual Meeting of Stockholders. Proposals should be sent to: Corporate Secretary, Public Service Enterprise Group Incorporated, 80 Park Plaza, T4B, Newark, NJ 07102 and must be received by November 15, 2021.10, 2023.
Proxy Voting Authority
If any matters not described in this Proxy Statement are properly presented at the Annual Meeting, the persons named in the enclosed proxy card or their substitutes will vote their proxies in accordance with their best judgment. As of the date of this Proxy Statement, the Board and management did not know of any other matters that might be presented for stockholder action at the Annual Meeting.
If we are not notified by January 29, 202218, 2023 of any proposal intended to be presented for consideration at the 20222023 Annual Meeting of Stockholders, then the persons named by us shall have discretionary voting authority with respect to such proposal if presented at that Annual Meeting.
The named proxies may vote at their discretion for any replacement nominee if any nominee named in this Proxy Statement withdraws, resigns or otherwise does not stand for election.
Voting Tabulation Results
Proxies and ballots will be received and tabulated by an independent inspector of elections. We will announce preliminary voting results at the Annual Meeting. We will disclose the final voting results in a Current Report on Form 8-K to be filed with the SEC within four business days after the date of the Annual Meeting. After it is filed, the Form 8-K will be available on our website at https://investor.pseg.com/sec-filings and on the SEC’s website at www.sec.gov.
PSEG 2023 Proxy Statement 83
Appendix A: Reconciliations
For a comprehensive assessment of the Company’s performance, please review the entire Proxy Statement and our Annual Report on Form 10-K for the year ended December 31, 2020,2022, which can be found on our website https://investor.pseg.com/financial-information/sec-filings and on the SEC’s website, www.sec.gov. A copy of our Form 10-K has been provided to each person solicited by means of this Proxy Statement.
Operating Earnings (Non-GAAP) and Adjusted EBITDA (Non-GAAP) Reconciliations
| Public Service Enterprise Group Incorporated | ||||||||||||||||||||
| Year Ended December 31 | ||||||||||||||||||||
| 2020 | 2019 | 2018 | 2017 | 2016 | ||||||||||||||||
Reconciling Items | ($ millions, Unaudited) | |||||||||||||||||||
Net Income | $ | 1,905 | $ | 1,693 | $ | 1,438 | $ | 1,574 | $ | 887 | ||||||||||
(Gain) Loss on Nuclear Decommissioning Trust (NDT) Fund Related Activity, pre-tax(a) (PSEG Power) | (231) | (255) | 144 | (133) | (5) | |||||||||||||||
(Gain) Loss on Mark-to-Market (MTM), pre-tax(b) (PSEG Power) | 81 | (285) | 117 | 167 | 168 | |||||||||||||||
Plant Retirements and Dispositions, pre-tax (PSEG Power) | (122) | 402 | (51) | 975 | 669 | |||||||||||||||
Goodwill Impairment, pre-tax (PSEG Power) | - | 16 | - | - | - | |||||||||||||||
Oil Lower of Cost or Market (LOCOM) adjustment, pre-tax (PSEG Power) | 2 | - | - | - | - | |||||||||||||||
Lease Related Activity, pre-tax (PSEG Enterprise/Other) | - | 58 | 8 | 77 | 147 | |||||||||||||||
Income Taxes related to Operating Earnings (non-GAAP) reconciling items, excluding Tax Reform(c) | 106 | 37 | (74) | (427) | (391) | |||||||||||||||
Tax Reform | - | - | - | (745) | - | |||||||||||||||
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Operating Earnings (non-GAAP) | $ | 1,741 | $ | 1,666 | $ | 1,582 | $ | 1,488 | $ | 1,475 | ||||||||||
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Fully Diluted Average Shares Outstanding (in millions) | 507 | 507 | 507 | 507 | 508 | |||||||||||||||
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Net Income | $ | 3.76 | $ | 3.33 | $ | 2.83 | $ | 3.10 | $ | 1.75 | ||||||||||
(Gain) Loss on NDT Fund Related Activity, pre-tax(a) (PSEG Power) | (0.46) | (0.50) | 0.28 | (0.26) | (0.01) | |||||||||||||||
(Gain) Loss on MTM, pre-tax(b) (PSEG Power) | 0.16 | (0.56) | 0.23 | 0.33 | 0.33 | |||||||||||||||
Plant Retirements and Dispositions, pre-tax (PSEG Power) | (0.24) | 0.79 | (0.10) | 1.92 | 1.32 | |||||||||||||||
Goodwill Impairment, pre-tax (PSEG Power) | - | 0.03 | - | - | - | |||||||||||||||
Oil LOCOM adjustment, pre-tax (PSEG Power) | - | - | - | - | - | |||||||||||||||
Lease Related Activity, pre-tax (PSEG Enterprise/Other) | - | 0.11 | 0.02 | 0.15 | 0.29 | |||||||||||||||
Income Taxes related to Operating Earnings (non-GAAP) reconciling items, excluding Tax Reform(c) | 0.21 | 0.08 | (0.14) | (0.84) | (0.78) | |||||||||||||||
Tax Reform | - | - | - | (1.47) | - | |||||||||||||||
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Operating Earnings (non-GAAP) | $ | 3.43 | $ | 3.28 | $ | 3.12 | $ | 2.93 | $ | 2.90 | ||||||||||
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| Public Service Enterprise Group Incorporated | ||||||||||||||||||||
| Year Ended December 31 | ||||||||||||||||||||
| 2022 | 2021 | 2020 | 2019 | 2018 | ||||||||||||||||
Reconciling Items | ($ millions, Unaudited) | |||||||||||||||||||
Net Income (Loss) | $ | 1,031 | $ | (648 | ) | $ | 1,905 | $ | 1,693 | $ | 1,438 | |||||||||
(Gain) Loss on Nuclear Decommissioning Trust (NDT) Fund Related Activity, pre-tax | 270 | (178 | ) | (231 | ) | (255 | ) | 144 | ||||||||||||
(Gain) Loss on Mark-to-Market (MTM), pre-tax(a) | 635 | 620 | 81 | (285 | ) | 117 | ||||||||||||||
Plant Retirements, Dispositions and Impairments, pre-tax(b) | 31 | 2,940 | (122 | ) | 402 | (51 | ) | |||||||||||||
Goodwill Impairment, pre-tax | - | - | - | 16 | - | |||||||||||||||
Oil Lower of Cost of Market (LOCOM) adjustment, pre-tax | - | - | 2 | - | - | |||||||||||||||
Lease Related Activity, pre-tax | 78 | 10 | - | 58 | 8 | |||||||||||||||
Income Taxes related to Operating Earnings (non-GAAP) reconciling items(c) | (306 | ) | (891 | ) | 106 | 37 | (74 | ) | ||||||||||||
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Operating Earnings (non-GAAP) | $ | 1,739 | $ | 1,853 | $ | 1,741 | $ | 1,666 | $ | 1,582 | ||||||||||
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Fully Diluted Average Shares Outstanding (in millions)(d) | 501 | 504 | 507 | 507 | 507 | |||||||||||||||
| ($ Per Share Impact - Diluted, Unaudited) | ||||||||||||||||||||
Net Income (Loss) | $ | 2.06 | $ | (1.29 | ) | $ | 3.76 | $ | 3.33 | $ | 2.83 | |||||||||
(Gain) Loss on NDT Fund Related Activity, pre-tax(a) | 0.54 | (0.35 | ) | (0.46 | ) | (0.50 | ) | 0.28 | ||||||||||||
(Gain) Loss on MTM, pre-tax(b) | 1.27 | 1.23 | 0.16 | (0.56 | ) | 0.23 | ||||||||||||||
Plant Retirements, Dispositions and Impairments, pre-tax(c) | 0.06 | 5.83 | (0.24 | ) | 0.79 | (0.10 | ) | |||||||||||||
Goodwill Impairment, pre-tax | - | - | - | 0.03 | - | |||||||||||||||
Lease Related Activity, pre-tax | 0.15 | 0.02 | - | 0.11 | 0.02 | |||||||||||||||
Income Taxes related to Operating Earnings (non-GAAP) reconciling items(c) | (0.61 | ) | (1.77 | ) | 0.21 | 0.08 | (0.14 | ) | ||||||||||||
Share Differential(d) | - | (0.02 | ) | - | - | - | ||||||||||||||
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Operating Earnings (non-GAAP) | $ | 3.47 | $ | 3.65 | $ | 3.43 | $ | 3.28 | $ | 3.12 | ||||||||||
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Includes the financial impact from positions with forward delivery months. |
| (b) | 2022 includes the results for fossil generation sold. 2021 amounts include a pre-tax loss of $298 million for the make-whole premium paid upon the early redemption of PSEG Power’s debt and other non-cash debt extinguishment costs. |
| (c) | Income tax effect calculated at |
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| Year Ended December 31 | ||||||||||||||||||||
| 2020 | 2019 | 2018 | 2017 | 2016 | ||||||||||||||||
| Reconciling Items | ($ millions, Unaudited) | |||||||||||||||||||
Net Income | $ | 1,327 | $ | 1,250 | $ | 1,067 | $ | 973 | $ | 889 | ||||||||||
Tax Reform | - | - | - | (10) | - | |||||||||||||||
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Operating Earnings (non-GAAP) | $ | 1,327 | $ | 1,250 | $ | 1,067 | $ | 963 | $ | 889 | ||||||||||
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Appendix A: Reconciliations
| PSEG Power LLC | ||||||||||||||||||||
| Year Ended December 31 | ||||||||||||||||||||
| 2020 | 2019 | 2018 | 2017 | 2016 | ||||||||||||||||
Reconciling Items | ($ millions, Unaudited) | |||||||||||||||||||
Net Income | $ | 594 | $ | 468 | $ | 365 | $ | 479 | $ | 18 | ||||||||||
(Gain) Loss on NDT Fund Related Activity, pre-tax(a) | (231) | (255) | 144 | (133) | (5) | |||||||||||||||
(Gain) Loss on MTM, pre-tax(b) | 81 | (285) | 117 | 167 | 168 | |||||||||||||||
Plant Retirements and Dispositions, pre-tax | (122) | 402 | (51) | 975 | 669 | |||||||||||||||
Goodwill Impairment, pre-tax | - | 16 | - | - | - | |||||||||||||||
Oil LOCOM adjustment, pre-tax | 2 | - | - | - | - | |||||||||||||||
Income Taxes related to Operating Earnings (non-GAAP) reconciling items, excluding Tax Reform(c) | 106 | 63 | (73) | (395) | (336) | |||||||||||||||
Tax Reform | - | - | - | (588) | - | |||||||||||||||
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Operating Earnings (non-GAAP) | $ | 430 | $ | 409 | $ | 502 | $ | 505 | $ | 514 | ||||||||||
Depreciation and Amortization, pre-tax(d) | 360 | 372 | 346 | 333 | 329 | |||||||||||||||
Interest Expense, pre-tax(d)(e) | 118 | 114 | 72 | 48 | 83 | |||||||||||||||
Income Taxes(d) | 82 | 140 | 139 | 286 | 275 | |||||||||||||||
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Adjusted EBITDA (non-GAAP) | $ | 990 | $ | 1,035 | $ | 1,059 | $ | 1,172 | $ | 1,201 | ||||||||||
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Approximately three million potentially dilutive shares were excluded from fully diluted average shares outstanding used to calculate the diluted GAAP loss per share for the year ended December 31, 2021 as their impact was antidilutive to GAAP results. For non-GAAP per share calculations, we used fully diluted average shares outstanding of 507 million, including the three million potentially dilutive shares as they were dilutive to non-GAAP results. As a result of the use of different denominators for non-GAAP Operating Earnings and GAAP Net Loss, a reconciling line item, “Share Differential,” has been added to the year to date results to reconcile the two EPS calculations. |
A-1 PSEG 2023 Proxy Statement
Appendix A: Reconciliations
| PSEG Power & Other | ||||||||||||||||||||
| Year Ended December 31 | ||||||||||||||||||||
| 2022 | 2021 | 2020 | 2019 | 2018 | ||||||||||||||||
Reconciling Items | ($ millions, Unaudited) | |||||||||||||||||||
Net Income (Loss) | $ | (534 | ) | $ | (2,094 | ) | $ | 578 | $ | 443 | $ | 371 | ||||||||
(Gain) Loss on NDT Fund Related Activity, pre-tax | 270 | (178 | ) | (231 | ) | (255 | ) | 144 | ||||||||||||
(Gain) Loss on MTM, pre-tax(a) | 635 | 620 | 81 | (285 | ) | 117 | ||||||||||||||
Plant Retirements, Dispositions and Impairments, pre-tax(b) | 31 | 2,940 | (122 | ) | 402 | (51 | ) | |||||||||||||
Goodwill Impairment, pre-tax | - | - | - | 16 | - | |||||||||||||||
Oil LOCOM adjustment, pre-tax | - | - | 2 | - | - | |||||||||||||||
Lease Related Activity, pre-tax | 78 | 10 | - | 58 | 8 | |||||||||||||||
Income Taxes related to Operating Earnings (non-GAAP) reconciling items(c) | (306 | ) | (891 | ) | 106 | 37 | (74 | ) | ||||||||||||
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Operating Earnings (non-GAAP) | $ | 174 | $ | 407 | $ | 414 | $ | 416 | $ | 515 | ||||||||||
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| (a) | Includes the financial impact from positions with forward delivery months. |
| (b) | 2022 includes the results for fossil generation sold. 2021 amounts include a pre-tax loss of $298 million for the make-whole premium paid upon the early redemption of PSEG Power’s debt and other non-cash debt extinguishment costs. |
| (c) | Income tax effect calculated at |
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| Year Ended December 31 | ||||||||||||||||||||
| 2020 | 2019 | 2018 | 2017 | 2016 | ||||||||||||||||
Reconciling Items | ($ millions, Unaudited) | |||||||||||||||||||
Net Income (Loss) | $ | (16) | $ | (25) | $ | 6 | $ | 122 | $ | (20) | ||||||||||
Lease Related Activity, pre-tax | - | 58 | 8 | 77 | 147 | |||||||||||||||
Income Taxes related to Operating Earnings (non-GAAP) reconciling items, excluding Tax Reform(a) | - | (26) | (1) | (32) | (55) | |||||||||||||||
Tax Reform | - | - | - | (147) | - | |||||||||||||||
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Operating Earnings (non-GAAP) | $ | (16) | $ | 7 | $ | 13 | $ | 20 | $ | 72 | ||||||||||
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Management uses Operating Earnings and Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) in addition to its Net Income (Loss) reported in accordance with accounting principles generally accepted in the United States (GAAP). Operating Earnings and Adjusted EBITDA are is a non-GAAP financial measuresmeasure that differ from Net Income. Income (Loss). Non-GAAP Operating Earnings exclude the impact of returns (losses) associated with the Nuclear Decommissioning Trust (NDT), Mark-to-Market (MTM) accounting and material one-time items.Non-GAAP Adjusted EBITDA excludes the same items as our non-GAAP Operating Earnings measure as well as income tax expense, interest expense and depreciation and amortization.
Management uses non-GAAP Operating Earnings in its internal analysis, and in communications with investors and analysts, as a consistent measure for comparing PSEG’s financial performance to previous financial results. Management believes non-GAAP Adjusted EBITDA is useful to investors and other users of our financial statements in evaluating operating performance because it provides them with an additional tool to compare business performance across companies and across periods. Management also believes that non-GAAP Adjusted EBITDA is widely used by investors to measure operating performance without regard to items such as income tax expense, interest expense and depreciation and amortization, which can vary substantially from company to company depending upon, among other things, the book value of assets, capital structure and whether assets were constructed or acquired. Non-GAAP Adjusted EBITDA also allows investors and other users to assess the underlying financial performance of our fleet before management’s decision to deploy capital. The presentation of non-GAAP Operating Earnings and non-GAAP Adjusted EBITDA is intended to complement, and should not be considered an alternative to, the presentation of Net Income (Loss), which is an indicator of financial performance determined in accordance with GAAP. In addition, non-GAAP Operating Earnings and non-GAAP Adjusted EBITDA as presented in the tables above may not be comparable to similarly titled measures used by other companies.
PSEG 2023 Proxy Statement A-2
Appendix B: 2021 Equity Compensation Plan for Outside DirectorsProposed Amendments to Certificate of Incorporation
PROPOSED AMENDMENTS TO CERTIFICATE OF INCORPORATION
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED 2021 EQUITY
COMPENSATION PLAN FOR OUTSIDE DIRECTORSProposed Amendments to Public Service Enterprise Group Incorporated’s Amended Certificate of Incorporation to Eliminate Supermajority Voting Requirements
Sections 1, 2 and 7 of Article 7 CERTAIN BUSINESS COMBINATIONS of the Certificate of Incorporation of this corporation, as amended to date, are amended to read as follows:
SECTION 1. Vote Required for Certain Business Combinations. In addition to any affirmative vote required by law and except as otherwise expressly provided in Section 2 of this Article 7:
(a) any merger or consolidation of the corporation or any Subsidiary (hereinafter defined) with (i) any Interested Shareholder (hereinafter defined) or (ii) any other corporations (whether or not itself an Interested Shareholder) which is, or after such merger or consolidation would be, an Affiliate (hereinafter defined) of an Interested Shareholder; or
(b) any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions) to or with any Interested Shareholder or any Affiliate of any Interested Shareholder of any assets of the corporation or any Subsidiary having an aggregate Fair Market Value (hereinafter defined) of $25,000,000 or more; or
(c) the issuance or transfer by the corporation or any Subsidiary (in one transaction or a series of transactions) of any securities of the corporation or any Subsidiary to any Interested Shareholder or Affiliate of any Interested Shareholder in exchange for cash, securities or other property (or a combination thereof) having an aggregate Fair Market Value of $25,000,000 or more; or
(d) the adoption of any plan or proposal for the liquidation or dissolution of the corporation proposed by or on behalf of any Interested Shareholder or any Affiliate of any Interested Shareholder; or
(e) any reclassification of securities (including any reverse stock split), recapitalization of the corporation, any merger or consolidation of the corporation with any of its Subsidiaries or any other transaction (whether or not with or into or otherwise involving an Interested Shareholder) which has the effect, directly or indirectly, of increasing the proportionate share of the outstanding shares of any class of equity or convertible securities of the corporation or any Subsidiary which is directly or indirectly owned by any Interested Shareholder or any Affiliate of any Interested Shareholder;
shall require prior approval by the affirmative vote of 80%a majority of the votes which the holders of the then outstanding shares of capital stock of the corporation are entitled to vote in the election of directors (the “Voting Stock”), voting together as a single class (each share of the Voting Stock having a number of votes duly fixed by the Board of Directors pursuant to Article 3 of the Certificate of Incorporation or provided by the By-Laws). Such affirmative vote shall be required notwithstanding the fact that no vote may be required, or that a lesser percentage may be specified, by law or in any agreement with any national securities exchange or otherwise. The term “Business Combination” as used in this Article 7 shall mean any transaction which is referred to in any one or more of paragraphs (a) through (e) of this Section 1.
SECTION 2. Exceptions to 80% Vote Required By Section 1. The provisions of Section 1 of this Article 7 shall not be applicable to any particular Business Combination (and such Business Combination shall require only such affirmative vote which may be required by law or otherwise) if all of the conditions specified in either of the following paragraphs (a) or (b) are met:
(a) The Business Combination shall have been approved by majority vote of the Disinterested Directors (hereinafter defined).
(b) All of the following conditions shall have been met:
(i) The aggregate amount of the cash and the Fair Market Value, as of the date of the consummation of the Business Combination, of consideration other than cash to be received per share by holders of Common Stock in such Business Combination shall be at least equal to the higher of:
(1) if applicable, the highest per share price (including any brokerage commissions, transfer taxes and soliciting dealers’ fees) paid by the Interested Shareholder for any shares of Common Stock acquired by it (x) within the two-year period immediately prior to the first public announcement of the proposal of the Business Combination (the “Announcement Date”) or (y) in the transaction in which it became an Interested Shareholder, whichever is higher; or
B-1 PSEG 2023 Proxy Statement Appendix B: Proposed Amendments to Certificate of Incorporation (2) the Fair Market Value per share of Common Stock on the Announcement Date or on the date (the “Determination Date”) on which the Interested Shareholder became an Interested Shareholder, whichever is higher. (ii) The aggregate amount of the cash and the Fair Market Value, as of the date of the consummation of the Business Combination, of consideration other than cash to be received per share by holders of shares of any class or series of outstanding Voting Stock other than Common Stock shall be at least equal to the highest of the following (it being intended that the requirements of this paragraph (b)(ii) shall be met with respect to every such class or series whether or not the Interested Shareholder has previously acquired any shares thereof): (1) if applicable, the highest per share price (including any brokerage commissions, transfer taxes and soliciting dealers’ fees) paid by the Interested Shareholder for any shares of such class or series acquired by it (x) within the two-year period immediately prior to the “Announcement Date” or (y) in the transaction in which it became an Interested Shareholder, whichever is higher; or (2) if applicable, the highest preferential amount per share to which the holders of shares of such class or series are entitled in the event of any voluntary or involuntary liquidation, dissolution or winding up of the corporation; or (3) the Fair Market Value per share of such class or series on the Announcement Date or on the Determination Date, whichever is higher. (iii) The consideration to be received by holders of a particular class or series of outstanding Voting Stock (including Common Stock) shall be in cash or in the same form as the Interested Shareholder has previously paid for shares of such class or series of Voting Stock. If the Interested Shareholder has paid for shares of any class or series of Voting Stock with varying forms of considerations, the form of consideration for such class or series shall be either cash or the form used to acquire the largest number of shares of such class or series previously acquired by it. The price determined in accordance with paragraphs (b)(i) and (b)(ii) of this Section 2 shall be subject to appropriate adjustment in the event of any stock dividend, stock split, combination of shares or similar event. (iv) After such Interested Shareholder has become an Interested Shareholder and prior to the consummation of such Business Combination: (1) except as approved by a majority of the Disinterested Directors, there shall have been no failure to declare and pay at the regular date therefor any dividends (whether or not cumulative) on any outstanding series of Preferred Stock: (2) there shall have been (x) no reduction in the annual rate of dividends paid on the Common Stock (except as necessary to reflect any subdivisions of the Common Stock), except as approved by a majority of the Disinterested Directors and (y) an increase in such annual rate of dividends as necessary to reflect any reclassification (including any reverse stock split), recapitalization, reorganization or any similar transaction which has the effect of reducing the number of outstanding shares of Common Stock, unless the failure to so increase such annual rate is approved by a majority of the Disinterested Directors; and (3) such Interested Shareholder shall have not become the beneficial owner of any additional shares of Voting Stock except as part of the transaction which results in such Interested Shareholder becoming an Interested Shareholder. (v) After such Interested Shareholder has become an Interested Shareholder, such Interested Shareholder shall not have received the benefit directly or indirectly (except proportionately as a shareholder) of any loans, advances, guarantees, pledges or other financial assistance, or any tax credits or other tax advantages, provided by the corporation, whether in anticipation of or in connection with such Business Combination or otherwise. (vi) A proxy or information statement describing the proposed Business Combination and complying with the requirements of the Securities Exchange Act of 1934 and the rules and regulations thereunder (or any subsequent provisions replacing such act, rules or regulations) shall be mailed to shareholders of the corporation at least 30 days prior to the consummation of such Business Combination (whether or not such proxy or information statement is required to be mailed pursuant to such act, rules and regulations or subsequent provisions). SECTION 7. Amendment. Notwithstanding any other provisions of this Certificate of Incorporation, the By-Laws of the corporation or applicable law, the affirmative vote of 80%a majority of the votes of the then outstanding Voting Stock, voting together as a single class, shall be required (a) to amend, modify or repeal this Article 7, (b) adopt any provision to this Certificate of Incorporation or By-Laws which is inconsistent with this Article 7, or (c) prior to the fixing by the Board of Directors of any right or preference of any series of Preferred Stock which is inconsistent with the provisions of this Article 7. PSEG 2023 Proxy Statement B-2 Appendix B: Proposed Amendments to Certificate of Incorporation Sections 4 and 5 of Article 8 BOARD OF DIRECTORS of the Certificate of Incorporation of this corporation, as amended to date, are amended to read as follows: SECTION 4. Removal and Suspension. Subject to the rights of any class or series of stock having a preference over the Common Stock as to dividends or upon liquidation to elect directors under specified circumstances, any director may be removed from office without cause only by the affirmative vote of the holders of 80%a majority of the combined voting powersvotes of the then outstanding shares of stock entitled to vote generally in the election of directorsVoting Stock, voting together as a single class. The Board of Directors, by the affirmative vote of a majority of the directors in office, may remove a director or directors for cause where, in the judgment of such majority, the continuation of the director or directors in office would be harmful to the corporation and may suspend the director or directors for a reasonable period pending final determination that cause exists for such removal. SECTION 5. Amendment, repeal, etc. Notwithstanding anything in this Certificate of Incorporation to the contrary, the affirmative vote of the holders of at least 80%a majority of the voting power of all shares of the corporation entitled to vote generally in the election of directorsvotes of the then outstanding Voting Stock, voting together as a single class, shall be required to alter, amend, adopt any provision inconsistent with or repeal this Article 8. Article 9 BY-LAW AMENDMENTS of the Certificate of Incorporation of this corporation, as amended to date, is amended to read as follows: |
The purposeBoard of Directors shall have power to make, alter, amend and repeal the By-Laws of the corporation (except so far as the By-Laws of the corporation adopted by the shareholders shall otherwise provide). Any By-Laws made by the Directors under the powers conferred hereby may be altered, amended or repealed by the directors or by the shareholders. Notwithstanding the foregoing and anything contained in this Certificate of Incorporation to the contrary, Article 1, Section 1; Article IX, Section 9; and Article XVI of the By-Laws shall not be altered, amended or repealed and no provision inconsistent therewith shall be adopted without the affirmative vote of the holders of at least 80%a majority of the voting power of all the shares of the corporation entitled to vote generally in the election of directorsvotes of the then outstanding Voting Stock, voting together as a single class. Notwithstanding anything contained in this Certificate of Incorporation to the contrary, the affirmative vote of the holders of at least 80%a majority of the voting power of all the shares of the corporation entitled to vote generally in the election of directorsvotes of the then outstanding Voting Stock, voting together as a single class, shall be required to alter, amend, or adopt any provision inconsistent with or repeal this Article 9.
B-3 PSEG 2023 Proxy Statement
Appendix C: Proposed Amendment to By-Laws
APPENDIX C
PROPOSED AMENDMENT TO BY-LAWS
Proposed Amendments to Public Service Enterprise Group Incorporated’s By-Laws to Eliminate Supermajority Voting Requirements
Article 1 SECTION 1(d) of the By-Laws of this corporation is amended to read as follows:
(d) Removal and Suspension. Subject to the rights of any class or series of stock having a preference over the Common Stock as to dividends or upon liquidation to elect directors under specified circumstances, any director may be removed from office without cause only by the affirmative vote of the holders of 80%a majority of the combined voting power of the then outstanding shares of stock entitled to vote generally in the election of directors, voting together as a single class. The Board of Directors, by the affirmative vote of a majority of the directors in office, may remove a director or directors for cause where, in the judgment of such majority, the continuation of the director or directors in office would be harmful to the corporation and may suspend the director or directors for a reasonable period pending final determination that cause exists for such removal.
PSEG 2023 Proxy Statement C-1
Appendix D: Restated Certificate of Incorporation
APPENDIX D
RESTATED CERTIFICATE OF INCORPORATION
RESTATED CERTIFICATE OF INCORPORATION
OF
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
Pursuant to Section 14A:9-5(3) of the New Jersey Business Corporation Act, as amended, Public Service Enterprise Group Incorporated 2021 Equity Compensation Plan for Outside Directors (“Plan”) ishereby restates and integrates and also substantively amends its Certificate of Incorporation to advance the interests of the Company and its stockholders by assisting the Companyread in attracting and retaining individuals of superior talent, ability and achievement to serve on its Board of Directors.
It is intended that the Plan will be interpreted and administered to prevent taxation under Section 409A of the Code. Any provision of or amendment to this Plan that would cause any amount to be taxable under Section 409A with respect to any individual is void and without effect. Any election by any Participant, and any administrative action by the Committee that would cause any amount to be taxable under Section 409A with respect to any individual is void and without effect under the Plan. In the event that a Participant fails to make a Section 409A-compliant payment election, the Plan’s default payment provisions,full as set forth in Subsection VI.G and Section VIII, shall apply.
This Plan shall become effective upon the date it receives shareholder approval, April 20, 2021 (the “Effective Date”) and terminate on the tenth anniversary of the Effective Date, unless terminated earlier pursuant to Section VIII of the Plan. After this Plan is terminated, no Awards may be granted however, Awards previously granted shall remain outstanding subject to this Plan’s terms and conditions.follows:
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The following words and phrasesname of the corporation is PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED.
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The purpose for which the corporation is organized is to engage in any activity within the purposes for which corporations may be organized under the New Jersey Business Corporation Act, as from time to time amended or supplemented.
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SECTION 1. Capital Stock. The corporation shall have the meanings set forth below unless a different meaning is required by the context:
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Appendix B: 2021 Equity Compensation Plan for Outside Directors
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250,000authority to issue 1,000,000,000 shares of Common Stock, are reservedwithout par value, and 50,000,000 shares of Preferred Stock, without par value.
SECTION 2. Preferred Stock.
The Board of Directors shall have authority to satisfy Awards pursuantissue the shares of Preferred Stock from time to time on such terms as it may determine, and to divide the Preferred Stock into one or more classes or series and in connection with the creation of any such class or series to fix, by resolution or resolutions providing for the issue thereof, the designation, the number of shares, and the relative rights, preferences and limitations thereof, to the terms of this Plan. Such shares may be acquired directly from the Companyfull extent now or at the discretion of the Company, purchased on the open markethereafter permitted by the Company or its agent.
Individual Limit: The maximum aggregate value of shares with respect to which Awards may be granted in any one calendar year to any one Participant shall not exceed $750,000.
Share Usage. The number of Shares available for issuance under the Plan, shall be subject to the following:law.
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Adjustments in Authorized shares. In the event of any corporate event or transaction (including a change in the sharesclass of stock of the Company or the capitalizationcorporation except out of the Company) such as a merger, consolidation, reorganization, recapitalization, separation, partial or complete liquidation, stock dividend, stock split, reverse stock split, split up or split off, spinoff or spinout, or other distribution of stock or property of the Company, combination of shares, exchange of shares, dividend in-kind, or other like change in capital structure, number of outstanding shares or distribution (other than normal cash dividends) to shareholders of the Company, issuance of rights or warrants, or any similar corporate event or transaction, the Committee, in order to prevent dilution or enlargement of Participants’ rights under this Plan, shall substitute or adjust, as applicable, the number and kind of shares that may be issued under this Plan or under particular forms of Awards, the number and kind of shares subject to outstanding Awards, other Award terms, and other value determinations applicable to outstanding Awards.its earned surplus.
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The Plan shall be administeredExcept as otherwise required by law or this Certificate of Incorporation, action by the Committee, which shall establish rules and regulations regardingstockholders to adopt a proposed amendment to this Certificate of Incorporation or to approve a proposed plan of merger or consolidation involving the administration and operationcorporation or to approve a proposed sale, lease, exchange or other disposition of all, or substantially all, the assets of the Plan, including acceptable formscorporation, if not in the usual and regular course of notices underits business as conducted by it, or to dissolve, may be taken by the Plan.affirmative vote of a majority of the votes cast by the holders of stock of the corporation entitled to vote thereon and, in addition, if any class or series of stock is entitled to vote thereon as a class, by the affirmative vote of a majority of the votes cast in each class vote.
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SECTION 1. Indemnification. The corporation shall indemnify to the full extent from time to time permitted by law any person made, or threatened to be made, a party to any pending, threatened or completed civil, criminal, administrative or arbitrative action, suit or proceeding and any appeal therein (and any inquiry or investigation which could lead to such action, suit or proceeding) by reason of the fact that he is or was a director, officer or employee of the corporation or serves or served any other enterprise as a director, officer or employee at the request of the corporation. Such right of indemnification shall inure to the benefit of the legal representative of any such person.
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D-1 PSEG 2023 Proxy Statement
Appendix B: 2021 Equity Compensation Plan for Outside DirectorsD: Restated Certificate of Incorporation
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Appendix B: 2021 Equity Compensation Plan for Outside Directors
damages for breach of any duty owed to the corporation or its shareholders. No amendment or repeal of this provision shall adversely affect any right or protection of a director or officer of the corporation existing at the time of such amendment or repeal.
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Appendix B: 2021 Equity Compensation Plan for Outside Directors
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Appendix B: 2021 Equity Compensation Plan for Outside Directors
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The Company, by action(a) any merger or consolidation of the Boardcorporation or any Subsidiary (hereinafter defined) with (i) any Interested Shareholder (hereinafter defined) or (ii) any other corporation (whether or not itself an Interested Shareholder) which is, or after such merger or consolidation would be, an Affiliate (hereinafter defined) of Directors, reservesan Interested Shareholder; or
(b) any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions) to or with any Interested Shareholder or any Affiliate of any Interested Shareholder of any assets of the rightcorporation or any Subsidiary having an aggregate Fair Market Value (hereinafter defined) of $25,000,000 or more; or
(c) the issuance or transfer by the corporation or any Subsidiary (in one transaction or a series of transactions) of any securities of the corporation or any Subsidiary to amendany Interested Shareholder or Affiliate of any Interested Shareholder in exchange for cash, securities or other property (or a combination thereof) having an aggregate Fair Market Value of $25,000,000 or more; or
(d) the Plan atadoption of any time andplan or proposal for the liquidation or dissolution of the corporation proposed by or on behalf of any reason. AlthoughInterested Shareholder or any Affiliate of any Interested Shareholder; or
(e) any reclassification of securities (including any reverse stock split), recapitalization of the Company anticipates that it will continuecorporation, any merger or consolidation of the Plan forcorporation with any of its Subsidiaries or any other transaction (whether or not with or into or otherwise involving an indefinite periodInterested Shareholder) which has the effect, directly or indirectly, of time, thereincreasing the proportionate share of the outstanding shares of any class of equity or convertible securities of the corporation or any Subsidiary which is no guarantee thatdirectly or indirectly owned by any Interested Shareholder or any Affiliate of any Interested Shareholder;
shall require prior approval by the Company will continueaffirmative vote of a majority of the Plan or will not terminatevotes which the Plan at any timeholders of the then outstanding shares of capital stock of the corporation are entitled to vote in the future. Accordingly,election of directors (the “Voting Stock”), voting together as a single class (each share of the Company,Voting Stock having a number of votes duly fixed by the Board of Directors reserves the rightpursuant to discontinue its sponsorshipArticle 3 of the PlanCertificate of Incorporation or to terminate the Plan (or both), at any time,provided by the actionBy-Laws). Such affirmative vote shall be required notwithstanding the fact that no vote may be required, or that a lesser percentage may be specified, by law or in any agreement with any national securities exchange or otherwise. The term “Business Combination” as used in this Article 7 shall mean any transaction which is referred to in any one or more of paragraphs (a) through (e) of this Section 1.
SECTION 2. Exceptions to Vote Required By Section 1. The provisions of Section 1 of this Article 7 shall not be applicable to any particular Business Combination (and such Business Combination shall require only such affirmative vote which may be required by law or otherwise) if all of the Board of Directors. In general, upon the terminationconditions specified in either of the Plan, the affected Participantsfollowing paragraphs (a) or (b) are met:
(a) The Business Combination shall receive payment of their benefits in accordance with the terms of Section VI. However, the Company may, in its discretion, terminate the entire Plan and pay each Participant a single lump-sum distribution of their entire Account Balance, in the event that the Company satisfies anyhave been approved by majority vote of the following:Disinterested Directors (hereinafter defined).
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The termination(b) All of the Planfollowing conditions shall not adversely affect any Participant or Beneficiary who has become entitled tohave been met:
(i) The aggregate amount of the payment of any benefits undercash and the PlanFair Market Value, as of the date of termination.the consummation of the Business Combination, of consideration other than cash to be received per share by holders of Common Stock in such Business Combination shall be at least equal to the higher of:
(1) if applicable, the highest per share price (including any brokerage commissions, transfer taxes and soliciting dealers’ fees) paid by the Interested Shareholder for any shares of Common Stock
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Nothing contained in the Plan or in any stock unit agreement executed pursuant hereto shall be deemed to confer upon any Outside Director to whom Awards are or may be awarded hereunder any right to remain a memberPSEG 2023 Proxy Statement D-2
Appendix D: Restated Certificate of the Board or in any way limit the right of the Board or the Stockholders to terminate or fail to renominate or reelect any such Outside Director as a member of the Board.
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Appendix C: 2021 Long-Term Incentive PlanIncorporation
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED 2021 LONG-TERM INCENTIVE PLAN
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The purposesacquired by it (x) within the two-year period immediately prior to the first public announcement of the Public Service Enterprise Group Incorporated 2021 Long-Term Incentive Plan (“Plan”) are to promote the growth and profitabilityproposal of the Company and its Subsidiaries by enabling them to attract and retainBusiness Combination (the “Announcement Date”) or (y) in the best available personnel for positionstransaction in which it became an Interested Shareholder, whichever is higher; or
(2) the Fair Market Value per share of substantial responsibility; to align Participants’ interests with thoseCommon Stock on the Announcement Date or on the date (the “Determination Date”) on which the Interested Shareholder became an Interested Shareholder, whichever is higher.
(ii) The aggregate amount of the Company’s shareholderscash and thereby promote the long-term financial interestFair Market Value, as of the Company and its Subsidiaries, including the growth in value of the Company’s equity and enhancement of long-term shareholder return. To accomplish these purposes, the Plan provides that the Company may grant Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Shares or Performance Share Units, or any combination of the foregoing.
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This Plan shall become effective upon the date it receives shareholder approval on April 20, 2021 (the “Effective Date”) and terminate on the tenth anniversary of the Effective Date, unless terminated earlier pursuant to Section 17 of the Plan. After this Plan is terminated, no Awards may be granted, however Awards previously granted shall remain outstanding subject to the terms and conditions of this Plan and the applicable Award Agreement.
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Capitalized terms used in this Plan have the meanings specified in this Section 3:
“Award” means a grant to a Participant of one or more Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Shares, Performance Share Units, or any combination thereof.
“Award Agreement” means an agreement, certificate, resolution or other type or form of writing or other evidence approved by the Committee that sets forth the terms and conditions of an Award granted under this Plan. An Award Agreement may be in an electronic medium, may be limited to notation on the books and records of the Company and, unless otherwise determined by the Committee, must be accepted by Participants within 45 calendar days from Grant Date and if not accepted within this period of time will result in the forfeiture of the Award.
“Aggregate Share Limit” means the maximum number of shares available for Awards under the Plan, as set forth in Section 6.
“Board of Directors” or “Board” means the Board of Directors of the Company.
“Cause” means an act of dishonesty, moral turpitude or an intentional or grossly negligent act, in each case, detrimental to the best interests of the Company or a Subsidiary, including violation of the Company’s Standards of Conduct, as determined by the Committee in its sole discretion, and as may be further defined in the Award Agreement.
“Change in Control” means the occurrence of any of the following events:
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Appendix C: 2021 Long-Term Incentive Plan
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Notwithstanding the foregoing subparagraphs (1), (2), (3) and (4), a “Change in Control” shall not be deemed to have occurred by virtue of the consummation of the Business Combination, of consideration other than cash to be received per share by holders of shares of any transactionclass or series of integrated transactionsoutstanding Voting Stock other than Common Stock shall be at least equal to the highest of the following (it being intended that the requirements of this paragraph (b)(ii) shall be met with respect to every such class or series whether or not the Interested Shareholder has previously acquired any shares thereof):
(1) if applicable, the highest per share price (including any brokerage commissions, transfer taxes and soliciting dealers’ fees) paid by the Interested Shareholder for any shares of such class or series acquired by it (x) within the two-year period immediately followingprior to the Announcement Date or (y) in the transaction in which it became an Interested Shareholder, whichever is higher; or
(2) if applicable, the highest preferential amount per share to which the record holders of shares of such class or series are entitled in the event of any voluntary or involuntary liquidation, dissolution or winding up of the corporation; or
(3) the Fair Market Value per share of such class or series on the Announcement Date or on the Determination Date, whichever is higher.
(iii) The consideration to be received by holders of a particular class or series of outstanding Voting Stock (including Common Stock) shall be in cash or in the same form as the Interested Shareholder has previously paid for shares of such class or series of Voting Stock. If the Interested Shareholder has paid for shares of any class or series of Voting Stock with varying forms of considerations, the form of consideration for such class or series shall be either cash or the form used to acquire the largest number of shares of such class or series previously acquired by it. The price determined in accordance with paragraphs (b)(i) and (b)(ii) of this Section 2 shall be subject to appropriate adjustment in the event of any stock dividend, stock split, combination of shares or similar event.
(iv) After such Interested Shareholder has become an Interested Shareholder and prior to the consummation of such Business Combination: (1) except as approved by a majority of the Disinterested Directors, there shall have been no failure to declare and pay at the regular date therefor any dividends (whether or not cumulative) on any outstanding series of Preferred Stock: (2) there shall have been (x) no reduction in the annual rate of dividends paid on the Common Stock (except as necessary to reflect any subdivisions of the Common Stock), except as approved by a majority of the Disinterested Directors, and (y) an increase in such annual rate of dividends as necessary to reflect any reclassification (including any reverse stock split), recapitalization, reorganization or any similar transaction which has the effect of reducing the number of outstanding shares of Common Stock, unless the failure to so increase such annual rate is approved by a majority of the Disinterested Directors; and (3) such Interested Shareholder shall have not become the beneficial owner of any additional shares of Voting Stock except as part of the transaction which results in such Interested Shareholder becoming an Interested Shareholder.
(v) After such Interested Shareholder has become an Interested Shareholder, such Interested Shareholder shall not have received the benefit, directly or indirectly (except proportionately as a shareholder), of any loans, advances, guarantees, pledges or other financial assistance, or any tax credits or other tax advantages, provided by the corporation, whether in anticipation of or in connection with such Business Combination or otherwise.
(vi) A proxy or information statement describing the proposed Business Combination and complying with the requirements of the Securities Exchange Act of 1934 and the rules and regulations thereunder (or any subsequent provisions replacing such act, rules or regulations) shall be mailed to shareholders of the
D-3 PSEG 2023 Proxy Statement
Appendix D: Restated Certificate of Incorporation
corporation at least 30 days prior to the consummation of such Business Combination (whether or not such proxy or information statement is required to be mailed pursuant to such act, rules and regulations or subsequent provisions).
SECTION 3. Certain Definitions. For the purposes of this Article 7:
(a) “Person” shall mean any individual, firm, corporation or other entity.
(b) “Interested Shareholder” shall mean any person (other than the corporation or any Subsidiary) who or which:
(i) is the beneficial owner, directly or indirectly, of shares having 10% or more of the votes of the then outstanding Voting Stock; or
(ii) is an Affiliate of the corporation and at any time within the two-year period immediately prior to the date in question was the beneficial owner, directly or indirectly, of shares having 10% or more of the votes of the then outstanding Voting Stock; or
(iii) is an assignee of or has otherwise succeeded to any shares of Voting Stock which were at any time within the two-year period immediately prior to the date in question beneficially owned by any Interested Shareholder, if such assignment or succession shall have occurred in the course of a transaction or series of transactions continue to have substantially the same proportionate ownership in an entity which owns all or substantially all of the assets of the Company immediately following such transaction or series of transactions.
“Code” means the Internal Revenue Code of 1986, as amended, including regulations and guidance issued thereunder.
“Committee” means the Organization and Compensation Committee of the Board of Directors, or any committee or other person or persons designated by the Board of Directors as successor to the powers and duties of the Organization and Compensation Committee.
“Common Stock” means the Company’s authorized Common Stock, no par value, except as this may be adjusted pursuant to Section 16 or may be modified as provided in Section 17.
“Company” means Public Service Enterprise Group Incorporated,not involving a New Jersey corporation, or any successor thereto.
“Date of Termination” means the first day occurring on or after the Grant Date of an Award on which the Participant is not performing services as an Employee for the Company or any Subsidiary, regardless of the reason for cessation of services. Unless determined otherwise by the Committee, if, as a result of a sale or other transaction, the organization for which a Participant is performing services as an Employee ceases to be the Company or a Subsidiary and the Participant is not, at the end of the 30-day period following the transaction, performing services as an Employee for the Company or a Subsidiary, then the occurrence of such transaction shall be treated as the Participant’s Date of Termination.
“Disability” shall have the meaning ascribed to such term in the Company’s Long-Term Disability Plan (regardless of whether the Participant has such coverage).
“Effective Date” shall have the meaning set forth in Section 2.
“Employee” means any employee of the Company or a Subsidiary who is receiving remuneration for personal services rendered to the Company or Subsidiary, including any such person who is an officer of the Company or Subsidiary, but, for the avoidance of doubt, excluding (1) a non-employee director of the Company or a Subsidiary, (2) a consultant, (3) an independent contractor, (4) an individual who is a “leased employee”public offering within the meaning of Code Section 414(n)the Securities Act of 1933.
(c) A person shall be a “beneficial owner” of any Voting Stock:
(i) which such person, or any of its Affiliates or Associates (as hereinafter defined), beneficially owns, directly or (5)indirectly; or
(ii) which such person, or any of its Affiliates or Associates, has (1) the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding or upon the exercise of conversion rights, exchange rights, warrants or options or otherwise, or (2) the right to vote pursuant to any agreement, arrangement or understanding; or
(iii) which is beneficially owned, directly or indirectly, by any other individual engaged byperson with which such person or any of its Affiliates or Associates has any agreement, arrangement or understanding for the Companypurpose of acquiring, holding, voting or Subsidiary in a relationship that the Company characterizes as other than an employment relationship or who has waived their rights to coverage as an employee (regardlessdisposing of whether a determination is made by the Internal Revenue Service or other governmental agency or court after the individual is engaged to perform such services that the individual is an employeeany shares of the Company or Subsidiary forVoting Stock.
For the purposes of determining whether a person is an Interested Shareholder, the Codenumber of shares of Voting Stock deemed to be outstanding shall include shares deemed owned through application of this paragraph (c) of Section 3 but shall not include any other shares of Voting Stock which may be issuable pursuant to any agreement, arrangement or otherwise).understanding, or upon exercise of conversion rights, warrants or options or otherwise.
“Exchange Act” means(d) “Affiliate” or “Associate” shall have the respective meanings given for such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended.
“Exercise Period” means(e) “Subsidiary” shall mean any corporation of which a majority of the period beginningvoting shares is owned, directly or indirectly, by the corporation.
(f) “Disinterested Director” shall mean any member of the Board of Directors of the corporation who is not an Affiliate, Associate or representative of the Interested Shareholder and was a member of the Board of Directors prior to the time that the Interested Shareholder became an Interested Shareholder, and any successor of a Disinterested Director who is not an Affiliate, Associate or representative of the Interested Shareholder and was recommended or elected to succeed a Disinterested Director by a majority of Disinterested Directors then on the date on which an Option or Stock Appreciation Right becomes exercisable pursuant to its terms, and ending on the Expiration Date (as definedBoard of Directors.
(g) “Fair Market Value” shall mean:
(i) in the applicable Award Agreement)case of such Option or Stock Appreciation Right.
“Exercise Price” meansstock, the price established by the Committee (or determined according to a method established by the Committee) at the time an Option or Stock Appreciation Right is granted.
“Fair Market Value” or (“FMV”) as of any specified date means thehighest closing sale price during the 30-day period immediately preceding the date in question on the Composite Tape for New York Stock Exchange-Listed Stocks, or, if such stock is
PSEG 2023 Proxy Statement D-4
Appendix D: Restated Certificate of Incorporation
not quoted on the Common StockComposite Tape on the New York Stock Exchange, - Composite Tapeor, if such stock is not listed on such dateexchange, on the principal United States securities exchange registered under the Securities Exchange Act of 1934 on which such stock is listed, or, if there are no sales on such date, on the next preceding day on which there are
Appendix C: 2021 Long-Term Incentive Plan
sales. If the shares arestock is not then listed on the NYSE, and if the shares of Common Stock are then listed on any other national securities exchange or traded on the over-the-counter market, the fair market value shall be the closing price on such exchange, or on the NASDAQ National Market System or the mean of thehighest closing bid and asked pricesquotation with respect to a share of such stock during the shares of Common Stock30-day period preceding the date in question on the over-the-counter market, as reported by the NASDAQ, the National Association of Securities Dealers, OTC Bulletin BoardInc. Automated Quotations System or the National Quotation Bureau, Inc., as the case may be, on such dateany system then in use, or if there is no closing price or bid or asked price on that day,such quotations are available, the closing price or mean of the closing bid and asked prices on the most recent day preceding such date for which such prices are available. In all events, with respect to Non-Qualified Options and Stock Appreciation Rights, Fair Market Value shall not be less than fair market value on the date in question as determined under Code Section 409A, and with respect to Incentive Options,by a majority of the Disinterested Directors in a manner consistent with Code Section 422.good faith; or
“Grant Date” means the grant date specified(ii) in the Award Agreement.case of property other than stock, the fair market value of such property on the date in question as determined by a majority of the Disinterested Directors in good faith.
“Incentive Option” means an Option(h) In the event of any Business Combination in which is intendedthe corporation survives, the phrase “consideration other than cash to be an “incentive stock option”received” as definedused in Codeparagraphs (b)(i) and (ii) of Section 422.
“Non-Qualified Option” means an Option which is not intended to qualify as an Incentive Option as defined above.
“NYSE” means2 of this Article 7 shall include the New York Stock Exchange, any successor stock exchange thereto or such other stock exchange upon which the Common Stock is listed.
“Option” means an Incentive Option or a Non-Qualified Option granted by the Company pursuant to the Plan to purchase shares of Common Stock at an Exercise Price establishedand/or the shares of any other class of outstanding Voting Stock retained by the Committee.holders of such shares.
“Participant” meansSECTION 4. Powers of the Board of Directors. The Board of Directors shall have the power and duty, by majority vote of the Disinterested Directors, to determine for the purposes of this Article 7, on the basis of information known to them after reasonable inquiry, (a) whether a person is an Employee selectedInterested Shareholder, (b) the number of shares of Voting Stock beneficially owned by any person, (c) whether a person is an Affiliate or Associate of another and (d) whether the assets which are the subject of any Business Combination have, or the consideration to be received for the issuance or transfer of securities by the Committeecorporation or any Subsidiary in any Business Combination has, an aggregate Fair Market Value of $25,000,000 or more. A majority of the Disinterested Directors shall also have the power to receive an Award. The term shall includeinterpret all of the other terms and provisions of this Article 7 and to make any transferee or transferees of any person who has received an Awardother factual determinations in regard to the extent the transfer is permittedapplicability of this Article 7. Any interpretations or determination made in good faith by the Plan and the applicable Award Agreement.
“Performance Award” means an Award of Performance Shares, and/or Performance Share Units.
“Performance Goal” means a target based on Performance Measures that is established by the Committee in connection with a Performance Award. Performance Goals may be established on a corporate-wide basis or with respect to one or more business units, divisions, or Subsidiaries or any combination thereof, and may be in either absolute terms or relative to the performance of one or more comparable companies or an index covering multiple companies, in each case as the Committee may deem appropriate.
“Performance Measures” means the measurable performance objective or objectives established pursuant to this Plan, when determined by the Committee, for Awards granted to Participants pursuant to this Plan. If the Committee determines that a change in the business, operations, corporate structure or capital structuremajority vote of the Company, orDisinterested Directors with regard to application of this Article 7 on the manner in which it conducts its business, or other events or circumstances render the Performance Measures unsuitable, the Committee may in its discretion modifybasis of such Performance Measures or the goals or actual levels of achievement regarding the Performance Measures, in whole or in part,information as the Committee deems appropriate and equitable. Refer to Section 12was then available for a non-exhaustive list of possible Performance Measures.
“Performance Period” means the period of time designated by the Committee during which (i) the Performance Measures applicable to an awardsuch purpose shall be measuredconclusive and (ii)binding on the conditionscorporation and on all of its shareholders, including any Interested Shareholder.
SECTION 5. No Effect on Fiduciary Obligations of Interested Shareholders. Nothing contained in this Article 7 shall be construed to vesting applicablerelieve any Interested Shareholder from any fiduciary obligations imposed by law.
SECTION 6. Severability. In the event any provision (or part thereof) of this Article 7 should be determined to an awardbe invalid, prohibited or unenforceable for any reason, the remaining provisions, and parts thereof, shall remain in effect.full force and effect and enforceable against the corporation and its shareholders, including any Interested Shareholder, to the fullest extent permitted by law.
“Performance Share” meansSECTION 7. Amendment. Notwithstanding any other provisions of this Certificate of Incorporation, the By-Laws of the corporation or applicable law the affirmative vote of a grantmajority of sharesthe votes of Commonthe then outstanding Voting Stock, voting together as a single class, shall be required (a) to amend, modify or repeal this Article 7, (b) adopt any provision to this Certificate of Incorporation or By-Laws which is inconsistent with this Article 7, or (c) prior to the fixing by the Board of Directors of any right or preference of any series of Preferred Stock which is contingent on achievementinconsistent with the provisions of Performance Goalsthis Article 7.
| 8. | BOARD OF DIRECTORS: |
SECTION 1. Number, election and satisfactionterms. Except as otherwise fixed by or pursuant to the provisions of such other restrictions and conditions as may be established byArticle 3 hereof relating to the Committee.
“Performance Share Unit” meansrights of the holders of any class or series of stock having a grant of a Stock Unit which is contingent on the achievement of Performance Goals and satisfaction of such restrictions and conditions as may be established by the Committee.
“Period of Restriction” means any period designated by the Committee during which (i)preference over the Common Stock Awardas to dividends or upon liquidation to elect additional directors under specified circumstances, the number of the directors of the corporation shall be fixed from time to time by or pursuant to the By-Laws of the corporation. Directors shall hold office for a term expiring at the next annual meeting of stockholders or until their respective successors are elected and qualified; provided, however, that directors elected to terms expiring at the annual meetings of stockholders to be held in 2009 and 2010, respectively, shall continue to hold office until the expiration of such terms or until their respective successors are elected and qualified.
SECTION 2. Stockholder nomination of director candidates. Advance notice of shareholder nominations for the election of directors shall be given in the manner provided in the By-Laws of the corporation.
D-5 PSEG 2023 Proxy Statement
Appendix D: Restated Certificate of Incorporation
SECTION 3. Newly created directorships and vacancies. Except as otherwise provided for or fixed by or pursuant to the provisions of Article 3 hereof relating to the rights of the holders of any class or series of stock having a preference over the Common Stock as to dividends or upon liquidation to elect directors under specified circumstances, newly created directorships resulting from any increase in the number of directors and any vacancies on the Board of Directors resulting from death, resignation, disqualifications, removal or other cause shall be filled by the affirmative vote of a majority of the remaining directors then in office, even though less than a quorum of the Board of Directors. Any director elected in accordance with the preceding sentence shall hold office until the next succeeding annual meeting of shareholders and until such director’s successor shall have been elected and qualified. No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director.
SECTION 4. Removal and Suspension, Subject to the rights of any class or series of stock having a preference over the Common Stock as to dividends or upon liquidation to elect directors under specified circumstances, any director may be removed from office without cause only by the affirmative vote of the holders of a majority of the votes of the then outstanding Voting Stock, voting together as a single class. The Board of Directors, by the affirmative vote of a majority of the directors in office, may remove a director or directors for cause where, in the judgment of such majority, the continuation of the director or directors in office would be harmful to the corporation and may suspend the director or directors for a reasonable period pending final determination that cause exists for such removal.
SECTION 5. Amendment, repeal, etc. Notwithstanding anything in this Certificate of Incorporation to the contrary, the affirmative vote of the holders of at least a majority of the votes of the then outstanding Voting Stock, voting together as a single class, shall be required to alter, amend, adopt any provision inconsistent with or repeal this Article 8.
| 9. | BY-LAW AMENDMENTS: |
The Board of Directors shall have power to make, alter, amend and repeal the By-Laws of the corporation (except so far as the By-Laws of the corporation adopted by the shareholders shall otherwise provide). Any By-Laws made by the Directors under the powers conferred hereby may be altered, amended or repealed by the directors or by the shareholders. Notwithstanding the foregoing and anything contained in this Certificate of Incorporation to the contrary, Article I, Section 1; Article IX, Section 9; and Article XVI of the By-Laws shall not be sold, transferred, assigned, pledged, hypothecatedaltered, amended or otherwise encumbered or disposedrepealed and no provision inconsistent therewith shall be adopted without the affirmative vote of exceptthe holders of at least a majority of the votes of the then outstanding Voting Stock, voting together as provideda single class. Notwithstanding anything contained in this PlanCertificate of Incorporation to the contrary, the affirmative vote of the holders of at least a majority of the votes of the then outstanding Voting Stock, voting together as a single class, shall be required to alter, amend, or adopt any provision inconsistent with or repeal this Article 9.
| 10. | QUORUM OF STOCKHOLDERS: |
At any meeting of the termsstockholders of Award Agreement relatingthe corporation, the holders of stock entitled to cast a majority of the votes at the meeting, present in person or represented by proxy, shall constitute a quorum of the stockholders for all purposes unless the representation of a larger number shall be required by law, and in that case the representation of the number so required shall constitute a quorum.
If the holders of the amount of stock necessary to constitute a quorum shall fail to attend in person or by proxy at the time and place fixed for any meeting of stockholders, the meeting may be adjourned from time to time by the vote of a majority of the votes cast by the holders of stock present in person or represented by proxy at such award,meeting, without notice other than by announcement at the meeting, and at any such adjourned meeting held more than one week after such time the holders of stock entitled to cast 40% of the votes at such meeting, present in person or (ii)represented by proxy, shall constitute a quorum of the conditions to vesting applicable tostockholders for all purposes unless the representation of a Restricted Stock Awardlarger number shall remainbe required by law, and in effect.that case the representation of the number so required shall constitute a quorum. At any such adjourned meeting, whenever held, at which a quorum shall be present, any business may be transacted which might have been transacted at the meeting as originally called.
“Plan” means this Public Service Enterprise Group Incorporated 2021 Long-Term Incentive Plan.
| 11. | REGISTERED OFFICE AND AGENT: |
“Prior Plans” meanThe address of the Public Service Enterprise Group Incorporated 1989 Long-Term Incentive Plan, the Public Service Enterprise Group Incorporated 2001 Long-Term Incentive Plancorporation’s registered office is 181 New Road #304, Parsippany, NJ 07054 and the Public Service Enterprise Group Incorporated 2004 Long-Term Incentive Plan.name of the corporation’s registered agent at such address is Corporate Creations Network Inc.
“Reduction in Force” means an event determined by
PSEG 2023 Proxy Statement D-6
Appendix D: Restated Certificate of Incorporation
| 12. | DIRECTORS: |
The number of directors constituting the CompanyBoard of Directors of the corporation is ten, and the names and addresses of the persons who are to be a reduction in force.
“Restricted Stock” means an Award of Common Stock pursuant to Section 9, which is not a Restricted Stock Unit.serve as such directors are as follows:
Appendix C: 2021 Long-Term Incentive Plan
“Restricted Stock Unit” means a grant of a Stock Unit which is subject to transfer restrictions and a risk of forfeiture or other restrictions that will lapse upon the completion of service by the Participant, or achievement of other objectives or conditions, as determined by the Committee.
“Retirement” means cessation of services as an Employee for the Company or a Subsidiary by reason of satisfying the criteria for retirement (normal retirement or early retirement) under the provisions of the qualified defined benefit plan of the Company or Subsidiary in which the Employee participates on the date of the Employee’s cessation of services.
“Stock Appreciation Right” or “SAR” means a grant of an Award that will enable the Participant to receive shares of Common Stock or cash equal to the appreciation in value, if any, of the Common Stock between the Fair Market Value of the Common Stock on the date the Stock Appreciation Right is granted and the Fair Market Value of the Common Stock on a future exercise date.
“Stock Unit” means a right to receive a share of Common Stock in the future.
“Subsidiary” means any corporation, limited liability company, partnership, joint venture or other entity during any period in which at least fifty percent of the voting or profits interest is owned, directly or indirectly, by the Company (or by any entity that is a successor to the Company), and any other business venture designated by the Committee in which the Company (or any entity that is a successor to the Company) has a significant interest, as determined in the discretion of the Committee.
“Successor” means the person or persons entitled in lieu of the Participant to receive any shares of Common Stock or other benefits under the Plan by reason of a beneficiary designation, will, laws of intestacy, or family assignments as permitted under the Plan. The Successor of a deceased Participant shall be the person or persons entitled to do so under a beneficiary designation in accordance with Section 13 or, if none, under the Participant’s will or, if the Participant shall have failed to designate a beneficiary or make testamentary disposition of such Awards or shall have died intestate, by the Participant’s legal representative or representatives.
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General. The Committee is responsible for administering this Plan subject to the provisions of the Plan. The Committee may employ attorneys, consultants, accountants, agents, and other individuals, any of whom may be an Employee. The Committee, the Company, and the Company’s officers, administrators and Board of Directors shall be entitled to rely upon the advice, opinions or valuations of any such individuals. All actions taken and all interpretations and determinations made by the Committee shall be final and binding upon the Participants, the Company and all other parties.
Authority of the Committee and the Board. With respect to Awards granted to Employees, the Committee has full and exclusive discretionary power to determine eligibility and to interpret the terms of this Plan, any Award Agreement and any other document ancillary or related to this Plan, to determine eligibility for Awards. The Committee shall adopt such rules, regulations, forms and guidelines for administering this Plan as the Committee may deem necessary or proper. The Committee’s authority shall include, but not be limited to: (i) selecting Award recipients, (ii) establishing all Award terms and conditions, (iii) resolving or reconciling any ambiguity or inconsistency of or among provisions of the Plan, any Award Agreement or related documents, (iv) correcting any defect (including scrivener’s errors) in the Plan, Award Agreement or other related document, (v) supplying any omission in the Plan, Award Agreement or other related document, (vi) making substitutions or adjustments pursuant to Section 16, and (vii) subject to Section 17, adopting modifications and amendments to this Plan, any Award Agreement or other related document. In addition, the Committee is authorized to take any action it determines, in its sole discretion, to be appropriate subject only to the express limitations contained in this Plan, and no authorization in any Plan section or other provision of this Plan is intended or may be deemed to constitute a limitation on the authority of the Committee.
Delegation. To the extent permitted under applicable law and NYSE listing standards, the Committee may delegate to one or more of its members or to one or more officers or employees of the Company and its Subsidiaries, such administrative duties or powers as it may deem advisable, and the Committee or any individuals to whom it has delegated duties or powers as aforesaid may employ one or more individuals to render advice with respect to any responsibility the Committee or such individuals may have under this Plan. The Committee may authorize one or more officers of the Company (the “Authorized Officers”) to do one or both of the following on the same basis as can the Committee:
(a) designate Employees (other than the Authorized Officers) to be recipients of Awards; and
(b) determine the size of any such Awards; provided, however, (i) the Committee shall not delegate such responsibilities to any such officer for Awards granted to an Employee or a Non-employee member of the Board of Directors who is considered an insider (as determined by the Board applying Section 16 of the Exchange Act and related guidance);
(ii) the Committee action providing such authorization sets forth the total number of shares that may be issued with respect to Awards granted by such officer; and (iii) the officer(s) shall report periodically to the Committee regarding the nature and scope of the Awards granted pursuant to the authority delegated.
Any such allocation or delegation may be revised or revoked by the Committee at any time.
| 80 Park Plaza, Newark, New Jersey 07102 | ||||
| 80 Park Plaza, Newark, New Jersey 07102 | ||||
| Ralph A. LaRossa | | 80 Park Plaza, Newark, New Jersey 07102 |
Appendix C: 2021 Long-Term Incentive Plan
Minimum Vesting Requirements. The administrator shall provide that the Participant’s right to an Award, or a portion thereof, becomes non-forfeitable or unrestricted no earlier than the first anniversary of the Award’s Grant Date. Notwithstanding the preceding sentence, to the extent provided in the Award Agreement, an Award may become non- forfeitable or unrestricted earlier than the first anniversary of the Award’s Grant Date: (i) in connection with a Change in Control, or the death or Disability of the Participant, (ii) for retirement eligible individuals, provided that any such awards do not settle until the date that they otherwise would settle if the individual was not retirement eligible and/or had not retired, or (iii) with respect to up to five percent (5%) of the aggregate number of shares of Common Stock authorized for issuance under the Plan that shall be issued as an Award without regard to the employment vesting requirements.
Consultation. In making its determinations relating to Award grants, the Committee may consult with the Chief Executive Officer of the Company and may take into account the recommendations of the Chief Executive Officer with respect to grants to be made to Employees other than the Chief Executive Officer. The Committee may also take into account the nature of the services rendered by such individuals, their present and potential contributions to the Company’s success and such other factors as the Committee, in its discretion, shall deem relevant.
Clawback. All Awards granted under the Plan shall be subject to the Company’s Clawback Practice on the clawback or recoupment of gains realized from any Awards as may be in effect from time to time.
| 80 Park Plaza, Newark, New Jersey 07102 |
Subject to the provisions of the Plan, the Committee shall determine and designate, from time to time, those Employees who will be granted one or more Awards under the Plan, and who thereby will become “Participants” in the Plan.
| 80 Park Plaza, Newark, New Jersey 07102 | |
| Scott G. Stephenson | 80 Park Plaza, Newark, New Jersey 07102 | |
| Laura A. Sugg | 80 Park Plaza, Newark, New Jersey 07102 | |
| John P. Surma | 80 Park Plaza, Newark, New Jersey 07102 | |
| Susan Tomasky | 80 Park Plaza, Newark, New Jersey 07102 | |
| Alfred W. Zollar | 80 Park Plaza, Newark, New Jersey 07102 |
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D-7 PSEG 2023 Proxy Statement
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Number of Shares Available for Awards. The type and number of shares of Common Stock for which Awards may be granted under the Plan shall be determined in accordance with this Section 6:
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Appendix C: 2021 Long-Term Incentive Plan
Share Usage. The number of shares available for issuance under the Plan, shall be subject to the following:
Shares of Common Stock covered by an Award shall only be counted as used to the extent they are actually issued and delivered to a Participant, or, if permitted by the Committee, a Participant’s designated transferee;
Any shares of Common Stock related to Awards which terminate by expiration, forfeiture, cancellation, or otherwise without issuance, are settled in cash in lieu of shares, or are exchanged with the Committee’s permission, prior to the issuance of the Common Stock, for Awards not involving shares of Common Stock, shall be available again for grant under the Plan;
The maximum number of shares that may be issued under an Award shall be counted against the Aggregate Share Limit at the time of grant and reserved for issuance, unless the Award Agreement provides that the Award will be paid in cash;
Any Award thatPSEG’s vision is to be paid in cash pursuant to the applicable Award Agreement, whether or not such Award is denominated in shares, shall not result in any shares being counted against the Aggregate Share Limit and shares of Common Stock reserved for issuance;
The maximum number of shares of Common Stock available for issuance under the Plan shall not be reduced to reflect any dividends or dividend equivalents that are reinvested into additional shares or credited as additional Restricted Stock, Restricted Stock Units, Performance Shares, Performance Share Units; and
Any shares withheld by the Company or otherwise used (i) to pay the Exercise Price of an Option granted under this Plan or (ii) to satisfy tax withholding obligations associated with an Award granted under this Plan, shall, in each case, count against the Aggregate Share Limit.
Any Shares that are issued or transferred by, or that are subject to any Awards that are granted by, or become obligations of, the Company under Section 6(a) of this Plan will not reduce the Shares available under this Plan or otherwise count against the limits contained in Section 6 of this Plan. In addition, no Shares subject to an Award that is granted by, or becomes an obligation of, the Company under Section 6(b) of this Plan, will be added to the Aggregate Share Limit.
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Grant of Options. Subject to the terms of this Plan, Options may be granted to Participants in such number, and upon such terms, and at any time and from time to time, as shall be determined by the Committee, in its sole discretion; provided, however, that Incentive Options may be granted only to eligible Employees of the Company or any Subsidiary (as permitted under Code Sections 422 and 424) and only prior to the tenth anniversary of the Effective Date. An Employee who is employed by a Subsidiary may only be granted Options to the extent the Subsidiary is, as of the Grant Date, part of: (a) the Company’s controlled group of corporations, or (b) a trade or business under common control with the Company, each as determined under the rules of Code Section 414, but substituting for this purpose ownership of at least fifty percent (50%) of the Subsidiary to determine the members of the controlled group of corporations and the entities under common control. No Award of an Option may entitle a Participant to dividends or dividend equivalents with respect to the shares covered by the Option.
Award Agreement. Each Award of Options shall be evidenced by an Award Agreement that shall specify the Exercise Price, the maximum duration of the Option, the number of shares to which the Option pertains, the conditions upon which the Option shall become vested and exercisable, and such other provisions as the Committee shall determine which are not inconsistent with the terms of this Plan. The Award Agreement shall also specify whether the Option is intended to be an Incentive Option or a Non-Qualified Option.
Exercise Price. The Exercise Price for each grant of an Option under this Plan shall be determined by the Committee in its sole discretion, shall be specified in the Award Agreement and must be at least equal to one hundred percent (100%) of the FMV of the underlying shares on the Grant Date. Notwithstanding the preceding sentence, Incentive Options shall be granted only in accordance with Code Section 422.
Term of Options. Each Option granted to a Participant shall expire at such time as the Committee shall determine at the time of grant; provided, however, no Option shall be exercisable on or after the tenth (10th) anniversary of its Grant Date.
Exercise of Options. Options may be exercised at such times and be subject to such restrictions and conditions as the Committee in its sole discretion shall in each instance approve, which terms and restrictions need not be the same for each Grant or for each Participant. Options, or a portion thereof, may become exercisable upon certain events, such as the Participant’s death, Disability, Reduction in Force, Retirement or termination of employment under certain circumstances. The aggregate FMV of
Appendix C: 2021 Long-Term Incentive Plan
shares with respect to which Incentive Options are exercisable for the first time by a grantee during any calendar year (under this Plan or any other plan adopted by the Company or its parent or subsidiary) shall not exceed one hundred thousand dollars ($100,000). If such aggregate FMV (determined with respect to each Incentive Option at the time of grant) exceeds such amount, such number of Incentive Options as have an aggregate FMV equal to the amount in excess of such amount shall be treated as Non-Qualified Options.
Payment. Options shall be exercised by the delivery of a written notice of exercise to the Company or an agent designated by the Company in a form specified or accepted by the Committee, or by complying with any alternative procedures which may be authorized by the Committee, setting forth the number of shares with respect to which the Option is to be exercised, accompanied by full payment for the shares as set forth below.
Payment of the Exercise Price is a condition precedent to the issuance of the shares as to which an Option is exercised. The Exercise Price shall be payable to the Company in full by, to the extent permitted by law: (a) paying cash or its equivalent; (b) tendering (either by actual delivery or attestation) previously acquired shares having an aggregate Fair Market Value at the time of exercise equal to the Exercise Price; (c) cashless (broker- assisted or otherwise) exercise; (d) any combination of (a), (b), and (c); or (e) any other method or methods approved or accepted by the Committee in its sole discretion.
Subject to any governing rules or regulations, as soon as practicable after receipt of written notification of exercise and full payment (including satisfaction of any applicable tax withholding), the Company shall deliver to the Participant evidence of book entry shares or, if requested by the Participant, certificated shares in an appropriate amount based upon the number of shares purchased under the Option(s). Alternatively, if the relevant Award Agreement requires payment of cash or its equivalent at that time, the Company shall pay to the Participant the appropriate amount of cash or its equivalent.
Termination of Employment. Each Award Agreement shall set forth the extent, if any, to which the Participant shall have the right to exercise any Option following termination of the Participant’s employment with the Company and/or Subsidiaries, as the case may be. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Agreement entered into with each Participant, need not be uniform among all Options issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination.
Prohibition on Repricing. Subject to Section 16, in no event shall the Committee or the Board, without first obtaining the approval of the Company’s shareholders, have the right to: (i) cancel outstanding Options for the purpose of replacing or re-granting such Options with an Exercise Price that is less than the original Exercise Price of the Option, or (ii) change the Exercise Price of an Option to an Exercise Price that is less than the original Exercise Price of the Option, or (iii) cancel outstanding Options with an Exercise Price that is more than the Fair Market Value of a Share on the date of cancellation in exchange for cash or another Award.
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Grant of SARs. Subject to the terms of this Plan, SARs may be granted to Participants in such number, and upon such terms, at any time, and from time to time, as shall be determined by the Committee in its sole discretion. In addition, the Committee may grant SARs either (i) independently of Non-Qualified Options or (ii) in tandem with Non- Qualified Options such that the exercise of the Option or SAR with respect to a share of Common Stock cancels the tandem SAR or Non-Qualified Option, respectively, with respect to such share. However, an Employee of a Subsidiary may only be granted SARs to the extent the Subsidiary is, as of the Grant Date, part of: (a) the Company’s controlled group of corporations, or (b) a trade or business under common control with the Company, each determined under the rules of Code Section 414, but substituting for this purpose ownership of at least fifty percent (50%) of the Subsidiary to determine the members of the controlled group of corporations and the entities under common control.
The Exercise Price for each SAR shall be determined by the Committee and shall be specified in the Award Agreement; provided, however, except with respect to Awards granted under Section 16 of this Plan, the Exercise Price must be at least equal to one hundred percent (100%) of the FMV of the underlying shares on the Grant Date.
No Award of a SAR may entitle a Participant to dividends or dividend equivalents with respect to the shares covered by the SAR.
Award Agreement. Each Award of SARs shall be evidenced by an Award Agreement that shall specify the Exercise Price, the term of the SAR, the number of shares to which the SAR pertains, the conditions upon which the SAR shall become vested and exercisable, and such other provisions as the Committee shall determine which are not inconsistent with the terms of this Plan.
Term of SARs. The term of a SAR granted under this Plan shall be determined by the Committee, in its sole discretion, and except as determined otherwise by the Committee and specified in the SAR Award Agreement, no SAR shall be exercisable on or after the tenth (10th) anniversary of its Grant Date.
Appendix C: 2021 Long-Term Incentive Plan
Exercise of SARs. SARs may be exercised at such times and be subject to such restrictions and conditions as the Committee in its sole discretion shall in each instance approve, which restrictions and conditions need not be the same for each Grant or for each Participant. SARs, or a portion thereof, may become exercisable upon certain events, such as the Participant’s death, Disability, Reduction in Force, Retirement or termination of employment under certain circumstances.
Settlement of SARs. Upon the exercise of a SAR, a Participant shall be entitled to receive payment from the Company in an amount determined by multiplying: (i) the excess of the Fair Market Value of a Share on the date of exercise over the Exercise Price; by (ii) the number of shares with respect to which the SAR is exercised.
At the discretion of the Committee, payment upon the exercise of a SAR may be in cash, shares or a combination thereof, or in any other manner approved by the Committee. The Committee’s determination regarding the form of SAR payout shall be set forth in the Award Agreement pertaining to the grant of the SAR.
Termination of Employment. Each Award Agreement shall set forth the extent, if any, to which the Participant shall have the right to exercise any SAR following termination of the Participant’s employment with the Company and/or its Subsidiaries, as the case may be. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Agreement entered into each Participant, need not be uniform among all SARs issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination.
Other Restrictions. The Committee may impose such restrictions on any shares acquired pursuant to the exercise of a SAR granted under this Plan as it may deem advisable.
Prohibition on Repricing. Subject to Section 16, in no event shall the Committee or the Board, without first obtaining the approval of the Company’s shareholders, have the right to: (i) cancel outstanding SARs for the purpose of replacing or regranting such SARs with an Exercise Price that is less than the original Exercise Price of the SAR, or (ii) change the Exercise Price of a SAR to an Exercise Price that is less than the original SAR Exercise Price, or (iii) cancel outstanding SARs with an Exercise Price that is more than the Fair Market Value of a Share on the date of cancellation in exchange for cash or another Award.
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Grant of Restricted Stock. Subject to the terms of this Plan, shares of Restricted Stock may be granted to Participants in such number, and upon such terms, and at any time and from time to time, as shall be determined by the Committee, in its sole discretion.
Award Agreement. Each Award of Restricted Stock shall be evidenced by an Award Agreement that shall specify the Period of Restriction or Performance Period, the number of shares of Restricted Stock issued and such other provisions as the Committee shall determine which are not inconsistent with the terms of this Plan.
Termination of Employment. Each Award Agreement shall set forth the extent, if any, to which the Participant shall have the right to retain shares of Restricted Stock following termination of the Participant’s employment with the Company and/or its Subsidiaries, as the case may be. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Agreement entered into with each Participant, need not be uniform among all shares of Restricted Stock issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination.
Other Restrictions. The Committee may impose such restrictions on any shares of Restricted Stock granted under this Plan as it may deem advisable including requirements that Participants pay stipulated purchase prices for each Share of Restricted Stock, restrictions based upon the achievement of specific performance goals, time-based restrictions on vesting following the attainment of the performance goals and/or time- based restrictions placed on the shares by the Company upon vesting of such Restricted Stock. Restricted Stock, or a portion thereof, may become nonforfeitable or vest upon certain events, such as the Participant’s death, Disability, Reduction in Force, Retirement or termination of employment under certain circumstances.
Voting Rights. Unless otherwise determined by the Committee and set forth in a Participant’s Award Agreement, to the extent permitted or required by law, as determined by the Committee, Participants holding shares of Restricted Stock granted hereunder may be granted the right to exercise full voting rights with respect to those shares during the Period of Restriction.
Dividends. Except as otherwise set forth in the Award Agreement, dividends or other distributions paid on Restricted Stock shall be accumulated and payable subject to the same restrictions and conditions as the shares underlying the Award.
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Grant of Restricted Stock Units. Subject to the terms of this Plan, Restricted Stock Units may be granted to Participants in such number, and upon such terms, at any time and from time to time, as shall be determined by the Committee in its sole discretion.
Appendix C: 2021 Long-Term Incentive Plan
Award Agreement. Each Award of Restricted Stock Units shall be evidenced by an Award Agreement that shall specify the Period of Restriction or Performance Period, the number Restricted Stock Units granted and such other provisions as the Committee shall determine.
Termination of Employment. Each Award Agreement shall set forth the extent, if any, to which the Participant shall have vested in their Restricted Stock Units following termination of the Participant’s employment with the Company and/or its Subsidiaries, as the case may be. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Agreement entered into with each Participant, need not be uniform among all Awards of Restricted Stock Units issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination.
Other Restrictions. The Committee may impose such restrictions on any Restricted Stock Units granted under this Plan as it may deem advisable including requirements that Participants pay stipulated purchase prices for each Share subject to a Restricted Stock Unit and/or time-based restrictions placed by the Company on the shares delivered to a Participant upon the vesting of the Restricted Stock Units. Restricted Stock Units, or a portion thereof, may become nonforfeitable or vest upon certain events, such as the Participant’s death, Disability, Retirement or termination of employment under certain circumstances.
Ownership. During the Period of Restriction or Performance Period, the Participant will have no rights of ownership in the shares subject to the Restricted Stock Units and shall have no right to vote such shares.
Dividend Equivalents. Except as otherwise set forth in the Award Agreement, dividend equivalents equal to the per-share cash dividend paid by the Company shall be accumulated on Restricted Stock Units and payable subject to the same restrictions and conditions as the shares underlying the Award.
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Grant of Performance Awards. Subject to the terms of this Plan, Performance Awards may be granted to Participants in such number, and upon such terms, at any time and from time to time, as shall be determined by the Committee in its sole discretion.
Value of Performance Awards. Each Performance Award shall have an initial value equal to the Fair Market Value of a Share on the Grant Date. The Committee shall set Performance Goals in its sole discretion which, depending on the extent to which they are met, will determine the value and number of Performance Awards upon which payout will be based.
Earning of Performance Awards. Subject to the terms of this Plan, including after the applicable Performance Period has ended, the holder of Performance Shares shall be entitled to receive payout based upon the value and number of Performance Shares earned by the Participant over the Performance Period determined as a function of the extent to which, or whether, the corresponding performance goals have been achieved.
Payment of Performance Awards. Payment of earned Performance Awards shall be in such form and at such time as determined by the Committee and as evidenced in the Award Agreement. Subject to the terms of this Plan, the Committee, in its sole discretion, may pay earned Performance Shares in the form of cash or shares (or in a combination thereof) equal to the value of the earned Performance Shares.
Termination of Employment. Each Award Agreement shall set forth the extent, if any, to which the Participant shall have the right to vest in their Performance Awards following termination of the Participant’s employment with the Company and/or its Subsidiaries, as the case may be. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Agreement entered into with each Participant, need not be uniform among all Performance Awards issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination.
Other Restrictions. The Committee may impose such restrictions on any Performance Awards granted under this Plan as it may deem advisable. Any shares delivered to a Participant upon the vesting and settlement of Performance Awards may be subject to any restrictions deemed appropriate by the Committee. Performance Shares, or a portion thereof, may become nonforfeitable or vest upon certain events, such as the Participant’s death, Disability, Reduction in Force, Retirement or termination of employment under certain circumstances.
Ownership. During the Period of Restriction or Performance Period, the Participant will have no rights of ownership in the shares subject to the Restricted Stock Units and shall have no right to vote such Shares.
Dividends Equivalents. Except as otherwise set forth in the Award Agreement, dividend equivalents equal to the per-share cash dividend paid by the Company shall be accumulated on Performance Shares and payable subject to the same restrictions and conditions as the shares underlying the Award.
Appendix C: 2021 Long-Term Incentive Plan
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A non-exhaustive list of Performance Measures criteria established by the Committee that could be used for performance-based Awards under this Plan includes any of the following: revenue; earnings before interest, taxes, depreciation and amortization (EBITDA); operating income; pre- or after-tax income; cash flow; cash flow per share; net earnings; earnings per share; return on equity; return on invested capital; return on assets; economic value added (or an equivalent metric); share price performance; total shareholder return; improvement in or attainment of expense levels; improvement in or attainment of working capital levels; safety performance; workforce hiring plan measures; air quality control project management; environmental; OSHA recordable rate; lost time accident rate; forced outage rate; nuclear capacity factor; INPO rating; availability factor; customer average interruption duration index (CAIDI); system average interruption frequency index (SAIFI); or leak rate per mile.
Performance Measures may be applied by excluding the impact of charges for restructurings, discontinued operations, extraordinary items, and other unusual or non- recurring items, and the cumulative effects of accounting changes, each as defined by Generally Accepted Accounting Principles in the United States (“GAAP”). Any Performance Measure(s) may be used to measure the performance of the Company on a corporate-wide basis or one or more business units, divisions, or Subsidiaries and may be in either absolute terms or relative to the performance of one or more comparable companies or an index covering multiple companies, in each case as the Committee may deem appropriate. In establishing Performance Measures, the Committee may provide that any financial factor that in whole or in part comprises any Performance Measure will be determined in accordance with GAAP or that any such financial factor may be non- GAAP or that such financial factor may be adjusted to exclude any or all GAAP or non- GAAP items.
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Unless otherwise designated by the Committee to the contrary, each Award granted under the Plan shall by its terms be non-transferable by the Participant (except by will or the laws of descent and distribution). An Option or Stock Appreciation Right shall be exercisable during the Participant’s lifetime only by the Participant, their guardian or legal representative or by such other means as the Committee may approve from time to time that is not inconsistent with or contrary to the provisions of either Section 16(b) of the Exchange Act or Rule 16b-3, as either may be amended from time to time, or any law, rule, regulation or other provision that may hereafter replace such Rule. A Participant may also designate a beneficiary to exercise their Awards after the Participant’s death. An Option or Stock Appreciation Right transferred to a third-party financial institution shall be prohibited. The Committee may amend outstanding Awards to provide for transfer, without payment of consideration, to immediate family members of the Participant or to trusts or partnerships for such family members.
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Nothing in this Plan or any Award Agreement shall interfere with or limit in any way the right of the Company or any of its Subsidiaries to terminate any Participant’s employment or service, at any time or for any reason, nor shall they confer upon any Participant any right to continue employment or service as an Employee for any specified period of time.
Neither an Award nor any benefits arising under this Plan shall constitute an employment contract with the Company or its Subsidiaries and, accordingly, subject to Sections 3 and 17, this Plan and the benefits hereunder may be terminated at any time in the sole and exclusive discretion of the Committee without giving rise to any liability on the part of the Company and its Subsidiaries.
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If at any time the Board of Directors shall determine, in its discretion, that the listing, registration or qualification of any of the shares subject to Awards under the Plan upon any securities exchange or under any state or federal law, or the consent or approval of any governmental regulatory body, is necessary or desirable as a condition of or in connection with the purchase or issue of shares thereunder, no outstanding Awards which would result in the purchase or issuance of shares may be exercised or otherwise settled unless such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Board of Directors or the Committee. The Board of Directors or the Committee may require any Participant to make such representations and furnish such information as it may consider appropriate in connection with the issuance or delivery of the shares in compliance with applicable law and shall have the authority to cause the Company at its expense to take any action related to the Plan which may be required in connection with such listing, registration, qualification, consent or approval.
The Committee may impose such restrictions on any shares acquired pursuant to any Award as it may deem advisable, including restrictions to comply with applicable state and federal securities laws, rules and regulations or any NYSE listing standards applicable to such shares.
Appendix C: 2021 Long-Term Incentive Plan
In addition to any legends that may be required pursuant to applicable state and federal securities laws, certificates representing shares subject to Restricted Stock Awards may bear a legend substantially as follows:
The sale or other transfer of the shares of stock represented by this certificate, whether voluntary, involuntary or by operation of law, is subject to certain restrictions on transfer as set forth in the Public Service Enterprise Group Incorporated 2021 Long-Term Incentive Plan, and in an award document. A copy of such Plan and award documents may be obtained from Public Service Enterprise Group Incorporated.
The Company shall have the right to retain (or escrow) shares of Common Stock that are subject to Restricted Stock Awards until such time as all restrictions applicable to such shares have been satisfied. Shares subject to Restricted Stock Awards shall become freely transferrable (subject to applicable laws and Company imposed trading restrictions) once all restrictions applicable to such shares have been satisfied.
The Committee may require Participants to execute stock powers or other similar instruments in order to facilitate the return to the Company of shares upon forfeiture of Restricted Stock Awards or for such other purposes as deemed reasonably necessary by the Committee to facilitate the administration of the Plan, any Award Agreement or any Award.
Except as otherwise set forth in this Plan or any Award Agreement, neither the Participant nor their Successor will have any of the rights or privileges of a shareholder of the Company in respect of any shares deliverable hereunder unless and until certificates representing such shares (which may be certificated or in book entry form) will have been issued and recorded on the records of the Company or its transfer agents or registrars, and delivered to the Participant (including through electronic delivery to a brokerage account).
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Adjustments. The Committee may make such adjustments as it deems appropriate to meet the intent of the Plan in the event of changes that impact the Company’s share price or share status, provided that any such actions are consistently and equitably applicable to all affected Participants.
Adjustments in Authorized Shares. In the event of any corporate event or transaction (including a change in the shares of the Company or the capitalization of the Company) such as a merger, consolidation, reorganization, recapitalization, separation, partial or complete liquidation, stock dividend, stock split, reverse stock split, split up or split off, spinoff or spinout, or other distribution of stock or property of the Company, combination of shares, exchange of shares, dividend in-kind, or other like change in capital structure, number of outstanding shares or distribution (other than normal cash dividends) to shareholders of the Company, issuance of rights or warrants, or any similar corporate event or transaction, the Committee, in order to prevent dilution or enlargement of Participants’ rights under this Plan, may substitute or adjust, as applicable, the number and kind of shares that may be issued under this Plan or under particular forms of Awards, the number and kind of shares subject to outstanding Awards, the Exercise Price applicable to outstanding Awards, other Award terms, and other value determinations applicable to outstanding Awards.
Notwithstanding anything in this Plan to the contrary:
Awards may be granted under this Plan in substitution for or in conversion of, or in connection with an assumption of, stock options, stock appreciation rights, restricted stock, restricted stock units held by awardees of an entity engaging in a corporate acquisition or merger transaction with the Company or any Subsidiary. Any conversion, substitution or assumption will be effective as of the close of the merger or acquisition, and, to the extent applicable, will be conducted in a manner that complies with Code Section 409A. The Awards so granted may reflect the original terms of the awards being assumed or substituted or converted for and need not comply with other specific terms of this Plan, and may account for shares substituted for the securities covered by the original awards and the number of shares subject to the original awards, as well as any exercise or purchase prices applicable to the original awards, adjusted to account for differences in stock prices in connection with the transaction.
In the event that a company acquired by the Company or any Subsidiary or with which the Company or any Subsidiary merges has shares available under a pre-existing plan previously approved by shareholders of the Company and not adopted in contemplation of such acquisition or merger, the shares available for grant pursuant to the terms of such plan (as adjusted, to the extent appropriate, to reflect such acquisition or merger) may be used for Awards made after such acquisition or merger under this Plan; provided, however, that Awards using such available shares may not be made after the date awards or grants could have been made under the terms of the pre-existing plan absent the acquisition or merger, and may only be made to individuals who were not employees or directors of the Company or any Subsidiary prior to such acquisition or merger.
Appendix C: 2021 Long-Term Incentive Plan
The determination of the Committee as to the adjustments and substitutions described above, if any, shall be conclusive and binding on the Company, Participants and beneficiaries under this Plan. The adjustments and substitutions described in this Section shall be made in compliance with: (i) Code Sections 422 and 424 with respect to Incentive Options; (ii) Treasury Department Regulation Section 1.424-1 (and any successor) with respect to Non-Qualified Options, applied as if the Non-Qualified Options were Incentive Options; and (iii) Code Section 409A, to the extent necessary for exemption therefrom, and to avoid adverse tax consequences.
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The Committee, in its sole discretion, may also make appropriate adjustments in the terms of any Performance Awards under this Plan.
By accepting an Award under this Plan, a Participant agrees to any amendment made pursuant to this Section 17(b) to any Award granted under the Plan without further consideration or action. No amendment shall have a materially adverse impact to a Participant without written consent to the amendment by the Participant.
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Tax Withholding. The Company shall have the power and the right to deduct or withhold, or require a Participant to remit to the Company, an amount necessary to satisfy federal, state, local or other taxes required by law or regulation to be withheld with respect to any taxable event arising as a result of this Plan, an Award Agreement or Awards hereunder.
Share Withholding. With respect to withholding required upon the lapse of restrictions, settlement or any other taxable event arising as a result of an Award that is payable through the issuance and delivery of shares to the Participant, unless the Committee determines otherwise, each Participant may satisfy their withholding requirement by having the Company withhold a number of shares having a Fair Market Value on the date the withholding amount is to be determined in an amount not to exceed the maximum rate for the Participant in the applicable jurisdiction.
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The Committee may, from time to time, adopt, amend, and terminate under the Plan such arrangements, not inconsistent with the intent of the Plan, as it may deem necessary or desirable, to make available tax or other benefits of laws of any foreign jurisdiction to Participants who are subject to such laws and who receive Awards under the Plan.
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The Company intends that this Plan and Awards granted under the Plan shall be exempt from, or otherwise comply with, the requirements of Code Section 409A, and it shall be interpreted and administered accordingly, including the six-month delay for specified employees. To the extent that Code Section 409A applies, the date of a termination of employment shall be determined in accordance with the separation from service rules under Code Section 409A.
Appendix C: 2021 Long-Term Incentive Plan
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All notices under the Plan shall be in writing, and if to the Company, shall be delivered to the Secretary of the Company or mailed to its principal office, 80 Park Plaza, Newark, New Jersey 07102, addressed to the attention of the Secretary; and if to the Participant, shall be delivered personally or mailed to the Participant at the address appearing in the payroll records of the Company or Subsidiary or, if applicable, to the Participant’s Successor at the last known address appearing in the records of the Company. Such addresses may be changed at any time by written notice to the other party.
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Except where otherwise indicated by the context, any masculine term used herein shall also include the feminine; the singular shall include the plural and the plural shall include the singular.
Reference to “including”, “include” or “includes” does not limit the generality of the relevant statement.
The titles and headings of the sections of the Plan are for convenience of reference only and, in the event of any conflict, the text of the Plan, rather than such titles or headings, shall control.
If any part of the Plan is declared to be unlawful or invalid, such unlawfulness or invalidity shall not invalidate any other part of the Plan. Any part of the Plan so declared to be unlawful or invalid shall, if possible, be construed in a manner that will give effect to the terms of such part to the fullest extent possible while remaining lawful and valid.
The provisions of the Plan shall take precedence over any conflicting provision contained in an Award or Award Agreement. All matters relating to the Plan, an Award Agreement or an Award granted hereunder shall, to the extent not preempted by Federal law, be governed and construed in accordance with the laws of the State of New Jersey, without regard to the principles of conflict of laws.
The Plan, the Award Agreement and any Award shall be binding on the Company and on successors to the Company, whether the existence of such successor to the Company is the result of a direct or indirect purchase of all or substantially all of the business and/or assets of the Company, or a merger, consolidation, or otherwise.
Action Required. If the Company, a Participant or beneficiary is required to take any action under this Plan within a certain number of days, and the final day of such period ends on Saturday, Sunday or a federal holiday, the Company, Participant or beneficiary must take such action no later than the last business day preceding such day.
THE PSEG VISION: POWERING PROGRESSOur vision for a future where people use less energy, and itsit’s cleaner, safer and delivered more reliablereliably than ever.
PSEG CORE COMMITMENTS SAFETY Mission Be a positive force in a changing world by providing infrastructure to access safe, affordable, reliable and cleaner energy; Work toward a carbon-free economy; Empower the lives of our customers, our communities, our workforce and other stakeholders; Embrace diversity and inclusion, and promote equitable and ethical behavior.
PSEG Core Commitments
Safety
We put safety first. INTEGRITY Integrity
We do whatswhat’s right. CONTINUOUS IMPROVEMENT
Continuous Improvement
We aspire to achieve excellence. DIVERSITY, EQUITY AND INCLUSION
Diversity, Equity & Inclusion
We treat all individuals fairly, equitably, and with dignity and respect. CUSTOMER SERVICE
Customer Service
We keep customers at the heart of everything we do. ACHIEVEMENTS ENVIRONMENT AND SUSTAINABILITY Published inaugural PSEG Climate Report Dow Jones Sustainability North America Index for 13th consecutive year 2021 selection in S&P Sustainability Yearbook Announced plans to explore strategic alternatives for PSEGs non-nuclear generation fleet Landmark $1B Clean Energy Future Energy Efficiency program in N.J. Announced intent to acquire 25% equity interest in N.J. Ocean Wind project New Jerseys largest source of carbon-free energy DIVERSITY, EQUITY AND INCLUSION One of Forbes Best Employers for Diversity Member of EEI Diversity and Inclusion Initiative Joined The Valuable 500 disability inclusion organization Named to Newsweeks 2021 list of Americas Most Responsible Companies CORPORATE RESPONSIBILITY Donated 50,000 masks and 200,000 pairs of gloves to frontline medical workers $4M PSEG Foundation, Corporate Giving commitment to COVID-19 relief efforts, including $1M to N.J. Pandemic Relief Fund $1M PSEG Foundation, Corporate Giving commitment to Powering Equity and Social Justice Initiative Employee volunteerism participation continued throughout the pandemic COMMUNITIES AND THE ECONOMY Joined New Jersey CEO Council hiring, supplier diversity commitment to address COVID-19 economic impacts $1.5M PSEG Community Gift to 14 organizations addressing pandemic needs Corporate Citizenship Award from Long Island Business News CUSTOMER SERVICE AND RELIABILITY ReliabilityOne" Award for Outstanding Reliability Performance in Mid-Atlantic Region, 19th consecutive year 2020 Outstanding Customer Engagement Award Launched first mobile apps for PSE&G, PSEG Long Island customers Continued to provide essential energy services throughout global pandemic EMPLOYEES One of Americas Best Employers by Forbes magazine 2021 Military Friendly Employer Industry leader in employee PPE, health and safety protocols
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| P.O. Box 64945 | ||||||||||||
| St. Paul, MN 55164-0945 | ||||||||||||
| Address Change? Mark box, sign, and indicate changes below: ☐ | ||||||||||||
TO VOTE BY INTERNET OR TELEPHONE, SEE REVERSE SIDE OF THIS PROXY CARD. | ||||||||||||
TO VOTE BY MAIL AS THE BOARD OF DIRECTORS RECOMMENDS ON ALL ITEMS BELOW, SIMPLY SIGN, DATE, AND RETURN THIS PROXY CARD.
The Board of Directors Recommends a Vote “FOR” Items 1-5.1, 2, 4(a), 4(b), 4(c) and 5 and “1 YEAR” on Item 3.
| 1. | ELECTION OF DIRECTORS: | |||||||||||||||||||||
| FOR | AGAINST | ABSTAIN | FOR | AGAINST | ABSTAIN | |||||||||||||||||
| 1.1 | Ralph A. LaRossa | ☐ | ☐ | ☐ | 1.6 | Valerie A. Smith | ☐ | ☐ | ☐ | |||||||||||||
| 1.2 | Susan Tomasky | ☐ | ☐ | ☐ | 1.7 | Scott G. Stephenson | ☐ | ☐ | ☐ | |||||||||||||
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| 1.3 | Willie A. Deese | ☐ | ☐ | ☐ | 1.8 | Laura A. Sugg | ☐ | ☐ | ☐ | |||||||||||||
| 1.4 | Jamie M. Gentoso | ☐ | ☐ | ☐ | 1.9 | John P. Surma | ☐ | ☐ | ☐ | |||||||||||||
| 1.5 | Barry H. Ostrowsky | ☐ | ☐ | ☐ | 1.10 | Alfred W. Zollar | ☐ | ☐ | ☐ | |||||||||||||
| 2. | Advisory Vote on the Approval of Executive Compensation | ☐ For | ☐ | Against | ☐ | Abstain | ||||||||||||||||
| 3. | Advisory Vote on the Frequency of Future Advisory Votes on Executive Compensation | ☐ 1 year ☐ 2 years | ☐ | 3 years | ☐ | Abstain | ||||||||||||||||
| 4(a). | Approval of Amendments to our Certificate of Incorporation – to eliminate supermajority voting requirements for certain business combinations. | ☐ For | ☐ | Against | ☐ | Abstain | ||||||||||||||||
| 4(b). | Approval of Amendments to our Certificate of Incorporation and By-Laws – to eliminate supermajority voting requirements to remove a director without cause. | ☐ For | ☐ | Against | ☐ | Abstain | ||||||||||||||||
| 4(c). | Approval of Amendments to our Certificate of Incorporation – to eliminate supermajority voting requirement to make certain amendments to our By-Laws. | ☐ For | ☐ | Against | ☐ | Abstain | ||||||||||||||||
| 5. | Ratification of the Appointment of Deloitte as Independent Auditor for 2023 | ☐ For | ☐ | Against | ☐ | Abstain | ||||||||||||||||
| THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, WILL BE VOTED AS THE BOARD RECOMMENDS. | ||||||||||||||||||||||
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THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, WILL BE VOTED AS THE BOARD RECOMMENDS.
Date ��
| Signature(s) in Box | |||
| Please sign exactly as your name(s) appears on Proxy. If held in joint tenancy, all persons should sign. Trustees, administrators, etc., should include title and authority. Corporations should provide full name of corporation and title of authorized officer signing the Proxy. |
Public Service Enterprise Group Incorporated
20212023 Annual Meeting of Stockholders
April 20, 202118, 2023 at 1:00 p.m. ET via Live Webcast
To register for the virtual meeting along with voting your shares, please follow the instructions below:
Visit register.proxypush.com/peg on your smartphone, tablet or computer. You will need the latest versions of Chrome, Safari, Internet Explorer 11, Edge or Firefox. Please ensure your browser is compatible.
| • | Visit register.proxypush.com/peg on your smartphone, tablet or computer. You will need the latest versions of Chrome, Safari, Internet Explorer 11, Edge or Firefox. Please ensure your browser is compatible. |
Enter your control number which is located in the upper right hand corner on the reverse side of this proxy card.
After registering, you will receive a confirmation e-mail and a second e-mail approximately 1 hour prior to the start of the meeting to the e-mail address you provided during registration with a unique link to the virtual meeting.
| • | After registering, you will receive a confirmation e-mail and a second e-mail approximately 1 hour prior to the start of the meeting to the e-mail address you provided during registration with a unique link to the virtual meeting. |
For electronic delivery of future proxy materials, please visit www.proxyconsent.com/peg.
Important notice regarding the Internet availability of proxy materials for the
Annual Meeting of Stockholders
The 20212023 Proxy Statement and the 20202022 Annual Report to Stockholders are available
at:www.pseg.com/annualmeeting
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED (PSEG)
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
April 20, 202118, 2023
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF PSEG
The undersigned hereby appoints Shirley Ann JacksonSusan Tomasky and Ralph Izzo,A. LaRossa, and each or either of them, proxies of the undersigned, each with full power of substitution, to vote in their discretion (subject to any directions indicated on the reverse side of this proxy) at the Annual Meeting of Stockholders of PSEG to be held on April 20, 202118, 2023 and at all adjournments or postponements thereof, upon all matters which may properly come before the meeting or any adjournment or postponement thereof, including the proposals set forth in the Notice of Meeting and Proxy Statement, receipt of which is hereby acknowledged. Said proxies are instructed to vote as set forth on the reverse side hereof with respect to said proposals.
Shares represented by this proxy will be voted in accordance with recommendations of the Board of Directors of PSEG as stated on the reverse side, unless otherwise indicated on the reverse, in which case they will be voted as marked.Information pertaining to each proposal is included in the Proxy Statement under proposals corresponding to the item numbers set forth on the reverse side.
Please mark your proxy on the reverse side,
sign and date it, and return it promptly in the envelope provided.
Vote by Internet, Telephone or Mail
24 Hours a Day, 7 Days a Week
Your phone or Internet vote authorizes the named proxies to vote your shares
in the same manner as if you marked, signed, dated and returned your proxy card.
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| INTERNET/MOBILE | PHONE | |||
| www.proxypush.com/peg | 1-866-883-3382 | |||
Use the Internet to vote your proxy. |
Use a touch-tone telephone to vote your proxy. | Mark, sign and date your proxy card and return it in the postage-paid envelope provided in time to be received by April | ||
If you vote your proxy by Internet or by Telephone, you do NOT need to mail back your Proxy Card.