UNITED STATES |
SECURITIES AND EXCHANGE COMMISSION |
Washington, D.C. 20549 |
SCHEDULE 14A |
Proxy Statement Pursuant to Section 14(a) of the |
Securities Exchange Act of 1934 |
(Amendment No. ) |
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CHESAPEAKE UTILITIES CORPORATION |
(Name of Registrant as Specified In Its Charter) |
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Proposal | Board Recommendation | |
FOR each nominee | ||
Proposal 2 | Non-binding advisory vote to approve the compensation of the Company's |
Named Executive Officers | FOR | |
FOR |
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1 | Proxy Statement | ||
2 | Proposals | ||
3 | Audit Related Matters | ||
4 | Board of Directors and Its Committees | ||
5 | Corporate Governance and Stock Ownership | ||
6 | Our Engaging Culture | ||
7 | Director and Executive Compensation | ||
8 | Other Important Information | ||
Statement. | ||
2015 Cash Plan: | The Company's Cash Bonus Incentive Plan as approved by our stockholders in May 2015 | |
2017 Equity Incentive Award: | An equity incentive award granted by the Compensation Committee pursuant to the SICP for the 2017-2019 performance period | |
An equity incentive award granted by the Compensation Committee pursuant to the SICP for the 2018-2020 performance period | ||
2019 Equity Incentive Award: | An equity incentive award granted by the Compensation Committee pursuant to the SICP for the 2019-2021 performance period | |
Aspire Energy: | Aspire Energy of Ohio, LLC, a wholly-owned subsidiary of Chesapeake Utilities | |
Baker Tilly: | Baker Tilly Virchow Krause, LLP, the Company's independent registered public accounting firm, or our external audit firm | |
Bylaws: | ||
Bylaws, as amended through May 8, 2019 | ||
Board: | ||
Cash Incentive Award: | ||
pursuant to the 2015 Cash Plan for the 2019 performance period | ||
Chesapeake Utilities or Company: | Chesapeake Utilities Corporation, its divisions and subsidiaries, as appropriate in the context of the disclosure | |
FW Cook: | Frederic W. Cook & Co., Inc., the Compensation Committee's independent compensation consultant | |
Deferred Compensation Plan: | A non-qualified, deferred compensation plan under which compensation may be deferred by eligible participants | |
Delmarva Peninsula: | A peninsula on the east coast of the U.S. occupied by Delaware and portions of Maryland and Virginia | |
Dodd-Frank Act: | The Dodd-Frank Wall Street Reform and Consumer Protection Act | |
EPS: | Basic earnings per share (GAAP unless otherwise noted) | |
Exchange Act: | The Securities Exchange Act of 1934, as amended | |
FASB: | Financial Accounting Standards Board | |
FPU: | Florida Public Utilities Company, a wholly-owned subsidiary of Chesapeake Utilities | |
IRS: | Internal Revenue Service | |
Marlin Gas Transport: | Marlin Gas Transport, Inc., a wholly-owned subsidiary of Chesapeake Utilities | |
Named Executive Officer, NEO, or Executive NEO: | Individuals as defined in Item 402(a)(3) of Regulation S-K are collectively referred to as "Named Executive Officers" or "NEOs." Four NEOs that currently serve as Executive Officers of the Company are collectively referred to as "Executive NEOs." | |
NYSE: | New York Stock Exchange | |
Public Company Accounting Oversight Board | ||
Pension Plan: | A defined benefit pension plan sponsored by the Company | |
Pension SERP: | An unfunded supplemental executive retirement pension plan sponsored by the Company | |
PESCO: | Peninsula Energy Services Company, Inc., a wholly-owned subsidiary of Chesapeake Utilities | |
The Company's qualified 401(k) retirement savings plan | ||
ROE: | Return on equity | |
SEC: | Securities and Exchange Commission | |
SICP: | The Company's 2013 Stock and Incentive Compensation Plan | as approved by our stockholders in May 2013 and amended by the Compensation Committee of the Board in January 2017 |
TSR: | ||
Total shareholder return |
Proposal Number | Description | Board of Directors' Vote Recommendation |
1 | Election of one Class II director for a two-year term ending in 2022 and election of four Class III directors | FOR each nominee |
2 | ||
Non-binding advisory vote to approve the compensation of the Company's | FOR | |
Non-binding advisory vote to ratify the appointment of the | FOR |
Name | Age | Director Since | Principal Occupation | Independent | Committee Memberships | Experience and Skills |
Thomas J. Bresnan | 64 | 2001 | Owner and President, Accounting and Business School of the Rockies and Denver Accounting Services | Yes | Chair, Audit Committee Member, Investment Committee | • Executive Management• Sales and Marketing• Technology• Financial Expert |
Ronald G. Forsythe, Jr. | 48 | 2014 | President and Chief Executive Officer, Quality Health Strategies | Yes | Member, Audit Committee | • Technology• Market Knowledge andEconomic Development (Delmarva Peninsula) • Organizational Positioning• Financial Expert |
Dianna F. Morgan | 65 | 2008 | Former Senior Vice President of Public Affairs and Human Resources, Walt Disney World Company | Yes | Chair, Compensation Committee | • Leadership Development and Organizational Culture• Customer Experience• Media Relations• Government Relations |
John R. Schimkaitis | 69 | 1996 | Chair of the Board of Directors, Chesapeake Utilities Corporation | Yes | Chair, Investment Committee | • Executive Management• Leadership Development• Energy Industry• Market Knowledge (Delmarva Peninsula and Florida) |
Class II Director | Age | Director Since | Principal Occupation | Independent | Committee Memberships | Experience and Skills |
Lila A. Jaber | 53 | 2020 | President, Jaber Group Inc. | Yes | – | • Extensive experience in strategy, ethics, and government affairs • Established relationships with colleagues and members of the business and political community throughout Florida • In-depth knowledge of the energy industry and regulatory policy |
Class III Directors | Age | Director Since | Principal Occupation | Independent | Committee Memberships | Experience and Skills |
Thomas J. Bresnan | 67 | 2001 | Owner & President, Career School of the Rockies and Denver Accounting Services | Yes | Audit Committee Chair Investment Committee Member | • Extensive leadership, technology, sales and marketing experience • In-depth experience in acquisitions and the post integration process • Financial and Audit Committee expertise |
Ronald G. Forsythe, Jr. | 51 | 2014 | Chief Executive Officer, Qlarant Corporation | Yes | Audit Committee Member Compensation Committee Member | • Extensive experience in leadership, organizational positioning, energy, community engagement, and technology including cyber security • Established relationships with colleagues and members of the community throughout the Delmarva Peninsula • Financial and Audit Committee expertise |
Dianna F. Morgan | 68 | 2008 | Former Senior Vice President, Walt Disney World Co. | Yes | Compensation Committee Chair Corporate Governance Committee Member | • Extensive public company, leadership development, and organizational culture experience • Expertise in human capital, public affairs and the customer experience • In-depth knowledge in media relations and government relations |
John R. Schimkaitis | 72 | 1996 | Retired President and Chief Executive Officer, Chesapeake Utilities Corporation | Yes | Investment Committee Member | • Extensive financial, regulatory and industry experience • Extensive leadership and strategic foresight evidenced by our growth from $95 million market capitalization at the end of 1999 to approximately $395 million at the end of 2010 • In-depth knowledge of the markets in Florida and on the Delmarva Peninsula |
Types of Fees | 2016 | 2015 | |||||
Audit Fees | $ | 846,249 | $ | 767,176 | |||
Audit-Related Fees | $ | 80,183 | $ | 54,238 | |||
Tax and Other Fees | $ | 0 | $ | 0 |
Proposal | Description of Proposal | Board Recommendation | Vote | Effect of Abstentions | Effect of Broker Non-Votes |
Proposal 1 | Election of one Class II director for a two-year term ending in 2022 and election of four Class III directors | FOR each nominee | Plurality of the votes cast by the holders of shares present at the Meeting or represented by proxy and entitled to vote at the Meeting | No effect | No effect |
Proposal 2 | |||||
Non-binding advisory vote to approve the compensation of the Company's | FOR | ||||
No effect | |||||
Non-binding advisory vote to ratify the appointment of the | FOR | Approved, on a non-binding advisory basis, if a majority of the shares present at the Meeting or represented by proxy and entitled to vote support the proposal | Treated as votes against proposal | Brokers have discretion to vote |
Internet | Type www.proxyvote.com in your internet browser and enter the control number on your proxy card. | |
Mobile Device | Scan the QR code on your proxy card with your mobile device and enter the control number on your proxy card. | |
Telephone | Dial toll free (800) 690-6903 to reach our agent and follow the telephone prompts. | |
Cast your ballot, sign and date your proxy card, and mail it in the enclosed envelope. |
Proposal | ELECTION OF DIRECTORS |
1 | The Board recommends a vote FOR each of the director nominees. The Board, upon recommendation of the Corporate Governance Committee, nominated five incumbent directors - Thomas J. Bresnan, Ronald G. Forsythe, Jr., Lila A. Jaber, Dianna F. Morgan and John R. Schimkaitis. The Board has a diverse combination of leadership, professional skills, and experience that support our business and long-term strategic focus. |
DIRECTOR NOMINEE - CLASS II - TERM EXPIRES IN 2022 If elected, directors are subject to the Company’s Bylaws, including the current age eligibility requirement. | |||
LILA A. JABER | |||
Ms. Jaber is President of Jaber Group Inc., a consulting firm. Ms. Jaber retired in 2019 from Gunster Yoakley & Stewart, P.A. where she served as Gunster's regional managing shareholder having led the regulatory law and legislative government affairs practice in Florida and assisted in developing the firm’s presence in Central and North Florida. Ms. Jaber was appointed by the Governor to serve two terms (1995-2005), initially as Commissioner, and then Chair of the Florida Public Service Commission overseeing the state’s implementation of economic regulatory policy and procedures for the energy and natural gas industries. In 2015, Ms. Jaber launched Florida’s Women in Energy Leadership Forum to celebrate the success of women leaders in the energy industry and their role in growing Florida’s economy and diversified workforce. A life-long servant leader, Ms. Jaber serves as a trustee on the Stetson University Board of Trustees, is past chair of Leadership Florida, former vice-chair and founding member of the Big Bend Minority Chamber of Commerce, and past inaugural chair of the City of Tallahassee’s Independent Ethics Board. Ms. Jaber was named the 2019 Lifetime Advocacy honoree by the Big Bend Minority Chamber of Commerce, received the Tallahassee Women Lawyers Diversity & Inclusion Award, and in 2016, received the commission of Kentucky Colonel by Kentucky’s Governor. | |||
Director since 2020 Independent Director Age 53 | |||
Key Attributes and Skills: •Extensive experience in strategy, ethics, and government affairs •Established relationships with colleagues and members of the business and political community throughout Florida •In-depth knowledge of the energy industry and regulatory policy |
DIRECTOR NOMINEES - CLASS III - TERMS EXPIRE IN 2023 If elected, directors are subject to the Company’s Bylaws, including the current age eligibility requirement. | |||
THOMAS J. BRESNAN | |||
Mr. Bresnan is an entrepreneur who owns and has served as President of the Career School of the Rockies, and also of Denver Accounting Services since 2012 and 2014, respectively. He served as President of Global LT, a language and cross-cultural training company from 2017 until 2019 and has served as a member of its Board since 2014. From 2008-2012, Mr. Bresnan served as a majority stockholder, President and Chief Executive Officer of Schneider Sales Management, LLC. He previously served as a member of the Board, and President and Chief Executive Officer of New Horizons Worldwide, Inc., an information technology training company. He has also served as President of Capitol American Life Insurance, Chief Financial Officer at Capitol American Finance, and has held positions at Arthur Andersen & Co. | |||
Director since 2001 Independent Director Age 67 Audit Committee Chair and Financial Expert Investment Committee Member | |||
Key Attributes and Skills: •Extensive leadership, technology, sales and marketing experience •In-depth experience in acquisitions and the post integration process •Financial and Audit Committee expertise |
RONALD G. FORSYTHE, JR. | |||
Dr. Forsythe has served as Chief Executive Officer of Qlarant Corporation since July 2015. Qlarant Corporation previously operated as Quality Health Strategies until its comprehensive rebranding and new name formation in February 2018. He served as President of Quality Health Strategies from July 2015 until February 2018 and as its Chief Operating Officer from 2012-2015. He previously served as Chief Information Officer and Vice President of Technology and Commercialization at the University of Maryland Eastern Shore, and as an IT consultant for a large water and wastewater utility. He has served as a member of the Regional Advisory Board of Branch Banking and Trust Company, the Board of the Peninsula Regional Medical Center Foundation, and on the Higher Education Advisory Boards for Sprint Corporation and Gateway Computers. Dr. Forsythe also previously served as a member of Quality Health Foundation, and Horizons® at the Salisbury School. He is a NACD Board Leadership Fellow and was recognized by Savoy Magazine as one of 2017’s Most Influential Black Corporate Directors. | |||
Director since 2014 Independent Director Age 51 Audit Committee Member and Financial Expert Compensation Committee Member | |||
Key Attributes and Skills: •Extensive experience in leadership, organizational positioning, energy, community engagement, and technology including cyber security •Established relationships with colleagues and members of the community throughout the Delmarva Peninsula •Financial and Audit Committee expertise | |||
DIANNA F. MORGAN | |||
Ms. Morgan retired in 2001 from Walt Disney World Company where she served as Senior Vice President of Public Affairs and Human Resources. She previously oversaw the Disney Institute - a leader in experiential training, leadership development, benchmarking and cultural change for business professionals around the world. Ms. Morgan is a member of the Boards of Marriott Vacations Worldwide Corporation, CNL Healthcare Properties, Inc., and Hersha Hospitality Trust. Ms. Morgan serves as a member of Marriott's Compensation Policy, and Nominating and Corporate Governance Committees. She also serves as Chair of Hersha's Risk Sub-Committee, and as a member of Hersha's Audit, Compensation, and Nominating and Corporate Governance Committees. Ms. Morgan is the past Chair of the Board of Trustees for the University of Florida, Orlando Health, and the National Board for the Children’s Miracle Network, as well as a former member of the Boards of CNL Hotels & Resorts, and CNL Bancshares, Inc. | |||
Director since 2008 Independent Director Age 68 Compensation Committee Chair Corporate Governance Committee Member | |||
Key Attributes and Skills: •Extensive public company, leadership development, and organizational culture experience •Expertise in human capital, public affairs and the customer experience •In-depth knowledge in media relations and government relations |
JOHN R. SCHIMKAITIS | |||
Mr. Schimkaitis retired in 2010 as President and Chief Executive Officer of Chesapeake Utilities Corporation. He previously served as Executive Vice President and Chief Operating Officer of the Company and held various other financial and managerial positions throughout his career at Chesapeake Utilities from June 1984 - December 2010. His leadership, business acumen and astute skills successfully led the Company through a period of diversification and growth, including the execution in 2009 of the Company's largest acquisition. Mr. Schimkaitis has served as Chair of the Board of Chesapeake Utilities since 2015 and was Vice Chair of the Board from 2010-2015. | |||
Director since 1996 Independent Director Age 72 Chair of the Board Investment Committee Member | |||
Key Attributes and Skills: •Extensive financial, regulatory and industry experience •Extensive leadership and strategic foresight evidenced by our growth from $95 million market capitalization at the end of 1999 to approximately $395 million at the end of 2010 •In-depth knowledge of the markets in Florida and on the Delmarva Peninsula | |||
CONTINUING DIRECTORS - CLASS I - TERMS EXPIRE IN 2021 | |||
THOMAS P. HILL, JR. | |||
Mr. Hill retired in 2002 from Exelon Corporation where he served as Vice President of Finance and Chief Financial Officer of Exelon Energy Delivery Company. Exelon Corporation is an electric utility that provides energy generation, power marketing and energy delivery. Mr. Hill previously served as Vice President and Controller for PECO Energy, a predecessor company of Exelon Corporation, and held various senior financial, managerial, and other positions during his tenure which began in 1970. Mr. Hill is a Trustee at Magee Rehabilitation Hospital, a member of the Thomas Jefferson University hospital system, and served as Chair of the Audit Committee, and member of the Finance and Investment Committee until August 2018. He is also a Trustee of the Magee Rehabilitation Foundation and Trustee of Abington Memorial Hospital. He served on the Audit Committee for Jefferson Health System, Inc. until its corporate restructuring in 2014. | |||
Director since 2006 Independent Director Age 71 Audit Committee Member and Financial Expert Investment Committee Member | |||
Key Attributes and Skills: •Extensive energy industry experience with energy generation, supply portfolios, marketing and delivery •In-depth knowledge of utility engineering principles and procedures, regulatory environment and utility operations •Financial and Audit Committee expertise | |||
DENNIS S. HUDSON, III | |||
Mr. Hudson has served as Chairman of the Board of Seacoast Banking Corporation of Florida since 2005 and Chief Executive Officer since 1998, and as Chairman of the Board and Chief Executive Officer of Seacoast National Bank since 1992. He is the former President and Chief Operating Officer of these entities and has held various managerial positions. Mr. Hudson served as a Director and member of the Audit Committee of FPU prior to its acquisition by Chesapeake Utilities. He is an independent Trustee, member of the Audit Committee, and Chair of the Nominating Committee of Penn Capital Funds. He serves on the Boards of the Community Foundation of Palm Beach and Martin Counties, and Visiting Nurses Association of Florida. Mr. Hudson previously served on the Boards of Martin Health System, Helping People Succeed, and the United Way of Martin County, as well as serving as Chair of the Economic Council of Martin County and member of the Miami Board of Directors of the Federal Reserve Bank of Atlanta. | |||
Director since 2009 Independent Director Age 64 Audit Committee Member and Financial Expert Compensation Committee Member | |||
Key Attributes and Skills: •Extensive public company, leadership, and banking experience •In-depth knowledge of the Florida markets •Financial and Audit Committee expertise |
CALVERT A. MORGAN, JR. | |||
Mr. Morgan is the former special advisor to WSFS Financial Corporation, a multi-billion dollar financial services company. Mr. Morgan served as a member of the WSFS Board and the Audit, Corporate Governance and Nominating, Personnel and Compensation, and Trust Audit Committees until 2019. He also served as a member of the Board and Vice Chair of its principal subsidiary, WSFS Bank. Mr. Morgan is the retired Chair of the Board, President and Chief Executive Officer of PNC Bank, Delaware. He is a member of the Delaware Economic and Financial Advisory Council which provides advice to the Governor and Secretary of Finance on financial and economic conditions involving the State. Mr. Morgan previously served as Chair of the Delaware Business Roundtable, and continues to serve as a Trustee of Christiana Care Corporation. In 2019, Mr. Morgan was inducted into the Delaware Business Leaders Hall of Fame by the Junior Achievement of Delaware Leadership Council. | |||
Director since 2000 Independent Director Age 72 Corporate Governance Committee Chair Compensation Committee Member Investment Committee Member | |||
Key Attributes and Skills: •Approximately 49 years of banking, trust and finance experience and executive leadership expertise •Extensive public company experience •Broad knowledge of the business and economic climate in Delaware | |||
CONTINUING DIRECTORS - CLASS II - TERMS EXPIRE IN 2022 | |||
EUGENE H. BAYARD | |||
Mr. Bayard is Of Counsel with the law firm of Morris James LLP in Georgetown, Delaware. He was a partner with the predecessor law firm of Wilson Halbrook & Bayard where he has served clients since 1974. Mr. Bayard serves in numerous business and community board capacities including: Delaware State Fair, Inc.; Chair of Harrington Raceway & Casino; O.A. Newton & Son Company; J.G. Townsend Jr. and Company; Southern Delaware Advisory Board for WSFS Bank; President of Delaware Wild Lands, Inc.; and Mid-Del Charitable Foundation. Mr. Bayard previously served as a member of the Board of the Delaware Community Foundation. | |||
Director since 2006 Independent Director Age 73 Corporate Governance Committee Member | |||
Key Attributes and Skills: •Extensive expertise in the Delaware legal community, home of the nation’s preeminent forum for Delaware corporations and other business entities •Established relationships with colleagues and members of the community throughout the Delmarva Peninsula •In-depth knowledge of legal, regulatory, and corporate governance practices | |||
JEFFRY M. HOUSEHOLDER | |||
Mr. Householder was appointed as President and Chief Executive Officer of Chesapeake Utilities Corporation effective January 1, 2019. He previously served as President of Florida Public Utilities Company from 2010 until December 31, 2018. Mr. Householder has more than 30 years of experience in the energy industry and has served in leadership positions with TECO Energy Peoples Gas, West Florida Gas Company, Florida City Gas, and Tallahassee Utilities. He serves on the Boards of the American Gas Association, the Edison Electric Institute, the Southern Gas Association, and the Florida Natural Gas Association. Mr. Householder is a member of the Delaware Business Roundtable, which focuses on the business and economic climate of Delaware and fostering growth. | |||
Director since 2019 President and CEO, Chesapeake Utilities Corporation Age 62 Investment Committee Chair | |||
Key Attributes and Skills: •Extensive natural gas industry and regulatory experience •Extensive leadership and strategic foresight •Knowledge of the business and economic climate in our service territories, including Florida |
PAUL L. MADDOCK, JR. | |||
Mr. Maddock is the Chief Executive Officer and Manager of Palamad, LLC, a real estate holding company located in Palm Beach, Broward, and Dade counties. Mr. Maddock is a member of the Board, Corporate Governance, and Executive Committees of W.C. & A.N. Miller Company, a real estate company in Washington, D.C. He served as a Director and member of the Audit, Compensation and Executive Committees of FPU prior to its acquisition by Chesapeake Utilities. He previously served as Director, Audit Committee Chair, and Executive Committee member of Lydian Bank and Trust, as well as a member of the Boards of PRB Energy, Inc., Wachovia Bank of Florida, 1st United Bank and Trust, and Island National Bank and Trust. Mr. Maddock is the President of THRIFT, Inc., a Palm Beach charitable organization, and is a former Director of the Good Samaritan Hospital. | |||
Director since 2009 Independent Director Age 70 Corporate Governance Committee Member | |||
Key Attributes and Skills: •Extensive public company and utility experience •Expertise in a broad range of real estate matters •In-depth knowledge of the Florida economy |
The Board recommends that stockholders vote FORthe approval of the compensation of the Company's NEOs. We promote a pay-for-performance culture by designing an executive compensation program that includes base salary, as well as short and long-term performance-based incentive awards. Our Compensation Committee |
• | The Compensation Committee retains discretion in administering all awards and performance goals, and determining performance achievement; |
• | Each incentive award features a cap on the maximum amount that can be earned for any performance period; |
• | Dividends on the equity incentive awards accrue in the form of dividend equivalents during the performance period and are only paid |
• | Stock ownership requirements are in place for |
• | |
• | The |
• | |
Proposal | NON-BINDING ADVISORY VOTE TO RATIFY THE APPOINTMENT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
3 | The Board recommends a vote FOR the ratification of the appointment of Baker Tilly Virchow Krause, LLP as the Company’s independent registered public accounting firm for 2020. Prior to the reappointment of Baker Tilly, the Audit Committee considered factors such as Baker Tilly's professional qualifications, past performance, quality and level of transparency, expanding utility practice, internal annual evaluations, as well as the length of time the firm has been engaged. |
Thomas J. Bresnan, Chair | Ronald G. Forsythe, Jr. | Thomas P. Hill, Jr. | Dennis S. Hudson, III |
In 2019, the Committee continued to oversee the review of our financial reports filed with the SEC, risk management program, cyber security efforts, implementation of several significant accounting standards, internal controls, and compliance initiatives. The Committee focused on policies and procedures, as well as ensuring the appropriate risk infrastructure is in place that will support operations as we continue to grow. | |||||
Thomas J. Bresnan, Chair | Ronald G. Forsythe, Jr. | Thomas P. Hill, Jr. | Dennis S. Hudson, III | ||
4 - Financial Experts 5 - Meetings held in 2019 |
In 2019, the Company's Corporate Governance team was named Governance Team of the Year (small to mid-cap sized companies) by the Corporate Secretary magazine. We continue to focus on Board Succession and promoting the diversity of experiences and perspectives on the Board. In addition, we continue to collectively enhance our established culture of sustainability and corporate governance, and commit to the highest ethical standards in conducting business every day. | ||||||
Calvert A. Morgan, Jr., Chair | Eugene H. Bayard | Paul L. Maddock, Jr. | Dianna F. Morgan |
6 - Meetings held in 2019 |
In 2019, the Committee oversaw the Company's ongoing management succession planning and reviewed the executive compensation structure and practices to ensure alignment with the Company's strategic initiatives and performance goals. The Company's success is the direct result of its strong culture that fully engages employees and promotes the inclusion of every team member. | |||||
Dianna F. Morgan, Chair | Ronald G. Forsythe, Jr. | Dennis S. Hudson | Calvert A. Morgan, Jr. | ||
for additional information on the Committee's responsibilities. |
We have several security teams comprised of diverse representation across the enterprise with varying expertise | We receive presentations from external parties on topics related to cyber and physical security | |
The Board and Audit Committee receive periodic updates from the Chief Information Officer, Internal Audit team, and other members of our management team | The Audit Committee oversees our cyber and physical risks and reviews the appropriateness of our insurance coverage after considering the expertise and advice of our insurance broker | Certain Board members have technology experience, including previous service as Chief Information Officer and as Chief Executive Officer of a technology service provider |
We have an established companywide cyber security education and training program | We have multiple layers of controls, which include comprehensive due diligence and oversight of third-party relationships | |
We have established relationships with our service providers | We have engaged independent third-parties to assist in enhancing our security posture | We continue to make investments in our technology and physical infrastructure |
We are members of trade organizations that |
• | Industry experts on energy policy, energy trends, market factors and competition, growth opportunities, key customer growth expectations, and future outlook of the natural gas industry |
• | Industry experts on corporate governance, proxy advisory services and investor relations |
• | Institutional investors on portfolio management and the firms’ views on our performance, industry dynamics, and valuation |
• | Financial community on the utility industry, including macro-economic outlook, market trends and valuations, industry fundamentals, investor perception, and industry framework |
• | Members of the legal community on corporate governance topics, including a former Chancellor of the Delaware Court of Chancery, and a former Chief Justice of the Delaware Supreme Court |
• | Established members of academia experienced in the utilities industry and broader market |
SECURITY OWNERSHIP OF CERTAIN BENEFICAL OWNERS AND MANAGEMENT | ||
Name of Beneficial Owner | Total Shares Owned Beneficially(1) | % of Class (* Less than 1%) |
Eugene H. Bayard | 32,660 | * |
Thomas J. Bresnan | 22,525 | * |
Beth W. Cooper | 79,758 | * |
Ronald G. Forsythe, Jr. | 5,369 | * |
Thomas P. Hill, Jr. | 32,748 | * |
Jeffry M. Householder | 18,791 | * |
Dennis S. Hudson, III | 13,598 | * |
Lila A. Jaber | 254 | * |
Paul L. Maddock, Jr. | 49,256 | * |
Calvert A. Morgan, Jr. | 45,732 | * |
Dianna F. Morgan | 15,035 | * |
James F. Moriarty | 9,666 | * |
John R. Schimkaitis(2) | 116,616 | * |
Stephen C. Thompson | 72,893 | * |
Kevin J. Webber | 209 | * |
Executive Officers and Directors as a Group | 515,110 | 3.14% |
Name of Investment Advisor | ||
T. Rowe Price Associates, Inc.(3) 100 E. Pratt Street Baltimore, MD 21202 | 2,310,075 | 14.07% |
BlackRock, Inc.(4) 55 East 52nd Street New York, NY 10055 | 1,200,765 | 7.31% |
The Vanguard Group(5) 100 Vanguard Blvd. Malvern, PA 19355 | 1,074,976 | 6.55% |
1 | Unless otherwise indicated in a footnote, each beneficial owner possesses sole voting and sole investment power with respect to his or her shares shown in the table.Voting rights are shared with spouses and other trustees in certain accounts for Thomas J. Bresnan (10,741 shares), Beth W. Cooper (2,131 shares), Jeffry M. Householder (408 shares), Paul L. Maddock, Jr. (18,000 shares), Calvert A. Morgan, Jr. (21,207 shares) and John R. Schimkaitis (92,894 shares). An independent account is held by the spouse of Thomas P. Hill, Jr. (14,937 shares). |
2 | Mr. Schimkaitis held the position of Chief Executive Officer of the Company from January 1999 until his retirement in December 2010. Mr. Schimkaitis received a reduced early retirement payment under the Pension Plan. Mr. Schimkaitis received his distribution in the form of a lump sum after providing property equal to 125% of the restricted portion of the lump sum in accordance with the Internal Revenue Code’s tax requirements. Currently, Mr. Schimkaitis has deposited 7,000 shares in escrow to satisfy the requirement. This property was placed in escrow, with oversight by a third party escrow agent. Until the Pension Plan is fully funded, as defined under the Internal Revenue Code, each year, shares equal to the value of payments that would have been paid to Mr. Schimkaitis if he had elected the life annuity form of distribution will become unrestricted and returned to Mr. Schimkaitis, subject to the remaining property retaining a minimum market value. |
3 | According to their report on Schedule 13G/A, filed on February 14, 2020, T. Rowe Price Associates, Inc. (“T. Rowe Price”) was deemed to beneficially own 2,310,075 shares or 14.0%, of our common stock as of December 31, 2019. According to the Schedule 13G/A, T. Rowe Price had sole power to vote 608,182 shares and to dispose of 2,310,075 shares. T. Rowe Price’s Schedule 13G/A, as filed with the SEC, certified that it acquired the shares of our common stock in the ordinary course of business and not for the purpose of changing or influencing the control of the Company. |
4 | According to their report on Schedule 13G/A, filed on February 5, 2020, BlackRock, Inc. (“BlackRock”) was deemed to beneficially own 1,200,765 shares, or 7.3%, of our common stock as of December 31, 2019. According to the Schedule 13G/A, BlackRock had sole power to vote 1,160,775 shares and to dispose of 1,200,765 shares. BlackRock’s Schedule 13G/A, as filed with the SEC, certified that it acquired the shares of our common stock in the ordinary course of business and not for the purpose of changing or influencing the control of the Company. |
5 | According to their report on Schedule 13G/A, filed on February 12, 2020, The Vanguard Group (“Vanguard”) was deemed to beneficially own 1,074,976 shares, or 6.55%, of our common stock as of December 31, 2019. According to the Schedule 13G/A, Vanguard had sole power to vote 33,547 shares and to dispose of 1,035,882 shares. Vanguard’s Schedule 13G/A, as filed with the SEC, certified that it acquired the shares of our common stock in the ordinary course of business and not for the purpose of changing or influencing the control of the Company. |
29 American Gas Associations Safety Achievement Awards earned over the past 17 years | Top Workplace for Eight Consecutive Years | 2019 Governance Team of the Year (small to mid-cap sized companies) by Corporate Secretary Magazine |
Industry Support of Alternative Fuels award by Eastern Pennsylvania Alliance for Clean Transportation | 2018 Chartwell’s Best Practices in Outage Communications Bronze Award for mid-size utilities for its Hurricane Irma community engagement campaign | 2018 Best for Corporate Governance Among North American Utilities by Ethical Boardroom Magazine |
2018 Air Quality Awareness Champion by Clean Cities Coalition | 2017 Industry Excellence Award for our Eight Flags Energy CHP Plant by Southeastern Electric Exchange, Inc. | 2017 Best Gas Company on the Eastern Shore and Sussex County, Metropolitan Magazine |
Name of Beneficial Owner | Qualified 401(k) Retirement Savings Plan | Non-Qualified Deferred Compensation Plan(1) | Total Shares Owned Beneficially(2)(3) | Percent of Class | ||||
Eugene H. Bayard | — | — | 29,366 | * | ||||
Elaine B. Bittner | 7,746 | 2,721 | 32,177 | * | ||||
Thomas J. Bresnan | — | 8,862 | 19,603 | * | ||||
Beth W. Cooper | 11,569 | 14,414 | 65,933 | * | ||||
Ronald G. Forsythe, Jr. | — | 2,285 | 2,769 | * | ||||
Thomas P. Hill, Jr. | — | 6,414 | 27,781 | * | ||||
Jeffry M. Householder | — | 7,527 | 9,619 | * | ||||
Dennis S. Hudson, III | — | — | 11,220 | * | ||||
Paul L. Maddock, Jr. | — | — | 46,317 | * | ||||
Michael P. McMasters | 19,568 | 43,710 | 141,370 | * | ||||
Calvert A. Morgan, Jr. | — | — | 43,354 | * | ||||
Dianna F. Morgan | — | — | 12,010 | * | ||||
John R. Schimkaitis(4) | — | — | 145,112 | * | ||||
Stephen C. Thompson | 22,043 | — | 92,793 | * | ||||
Executive Officers and Directors as a Group | 60,926 | 85,933 | 679,424 | 4.16 | % | |||
* Less than one percent. | ||||||||
Name of Investment Advisor | ||||||||
T. Rowe Price Associates, Inc.(5) 100 E. Pratt Street Baltimore, MD 21202 | — | — | 1,538,892 | 9.40 | % | |||
BlackRock, Inc.(6) 55 East 52nd Street New York, NY 10055 | — | — | 972,470 | 6.00 | % | |||
2016 Annual Meeting until the 2017 Annual Meeting | 2015 Annual Meeting until the 2016 Annual Meeting | 2019 Annual Meeting until the 2020 Annual Meeting | 2018 Annual Meeting until the 2019 Annual Meeting | |||||||||||||
Board Retainers(1) | ||||||||||||||||
Board Member - Cash | $ | 70,000 | $ | 65,000 | ||||||||||||
Board Member - Equity(2) | $ | 60,000 | $ | 55,000 | ||||||||||||
Board Retainers - Cash(1) | ||||||||||||||||
Board Member | $ | 80,000 | $ | 80,000 | ||||||||||||
Board Chair | $ | 65,000 | $ | 65,000 | $ | 75,000 | $ | 75,000 | ||||||||
Committee Retainers(3) | ||||||||||||||||
Board Retainers - Equity(2) | ||||||||||||||||
Board Member | $ | 70,000 | $ | 60,000 | ||||||||||||
Committee Retainers - Cash(3) | ||||||||||||||||
Committee Member | $ | 5,000 | $ | 5,000 | $ | 5,000 | $ | 5,000 | ||||||||
Audit Committee Chair | $ | 12,000 | $ | 12,000 | $ | 14,000 | $ | 14,000 | ||||||||
Compensation Committee Chair | $ | 10,000 | $ | 10,000 | $ | 12,000 | $ | 12,000 | ||||||||
Corporate Governance Committee Chair | $ | 8,000 | $ | 8,000 | $ | 10,000 | $ | 10,000 |
1 | No additional compensation is received for attendance at a Board or Committee meeting. The Chair of the Board receives a cash retainer that is in addition to the Board Member retainer. |
2 | Fractional shares are rounded down to the nearest whole number. Fractional shares are paid in cash. |
3 | In addition to Board retainers, Committee members receive a retainer fee for each Standing Committee on which he or she |
2016 Director Compensation | ||||||
Name | Fees Earned or Paid in Cash(1) ($) | Stock Awards(2) ($) | Total(3) ($) | |||
Eugene H. Bayard | 75,000 | 59,944 | 134,944 | |||
Thomas J. Bresnan(4) (5) | 87,000 | 59,944 | 146,944 | |||
Ronald G. Forsythe, Jr. (5) | 75,000 | 59,944 | 134,944 | |||
Thomas P. Hill, Jr. (4) (5) | 75,000 | 59,944 | 134,944 | |||
Dennis S. Hudson, III | 80,000 | 59,944 | 139,944 | |||
Paul L. Maddock, Jr. | 75,000 | 59,944 | 134,944 | |||
Calvert A. Morgan, Jr. (4) | 88,000 | 59,944 | 147,944 | |||
Dianna F. Morgan | 85,000 | 59,944 | 144,944 | |||
John R. Schimkaitis(4) | 135,000 | 59,944 | 194,944 |
2019 DIRECTOR COMPENSATION | |||||||||||||||||
Director Name(1) | Fees Earned or Paid in Cash(2) | Stock Awards(3) | Total(4) | ||||||||||||||
Eugene H. Bayard | $ | 85,052 | $ | 69,948 | $ | 155,000 | |||||||||||
Thomas J. Bresnan(5) | $ | 104,052 | $ | 69,948 | $ | 174,000 | |||||||||||
Ronald G. Forsythe, Jr.(5) | $ | 90,052 | $ | 69,948 | $ | 160,000 | |||||||||||
Thomas P. Hill, Jr.(5) | $ | 90,052 | $ | 69,948 | $ | 160,000 | |||||||||||
Dennis S. Hudson, III | $ | 90,052 | $ | 69,948 | $ | 160,000 | |||||||||||
Lila A. Jaber(6) | $ | 27,851 | $ | 24,341 | $ | 52,192 | |||||||||||
Paul L. Maddock, Jr. | $ | 85,052 | $ | 69,948 | $ | 155,000 | |||||||||||
Calvert A. Morgan, Jr. | $ | 105,052 | $ | 69,948 | $ | 175,000 | |||||||||||
Dianna F. Morgan | $ | 102,052 | $ | 69,948 | $ | 172,000 | |||||||||||
John R. Schimkaitis(5) | $ | 160,052 | $ | 69,948 | $ | 230,000 |
1 | Jeffry M. Householder was appointed to serve as a director and our President and Chief Executive Officer effective January 1, 2019. Mr. Householder does not receive compensation for his services as a director or Chair of the Investment Committee. |
2 | The Fees Earned or Paid in Cash column reflects Board and Committee retainers paid in May |
3 | The Stock Awards column reflects the grant date fair value of the prorated award on May |
4 | There is no compensation that needs to be included in the Option Awards, Non-equity Incentive Plan Compensation, or Change in Pension Value and Non-Qualified Deferred Compensation Earnings or All Other Compensation columns. Dividends on deferred stock units in the Deferred Compensation Plan (which are settled on a one for one basis in shares of common stock) are the same as dividends paid on the Company’s outstanding shares of common stock. Additionally, cash retainer compensation deferred under the Deferred Compensation Plan has investment crediting options that are the same as investment options available to all employees under the Company's Retirement Savings Plan. As a result, the directors participating in the Deferred Compensation Plan do not receive preferential earnings on their investments. Directors do have the ability to purchase propane at the same discounted rate that we offer to our employees, the value of which, when combined with all other perquisites and personal benefits, does not exceed $10,000 in the aggregate. |
The following directors deferred their annual stock retainer as follows: Bresnan - $69,948; Forsythe - $69,948; Hill |
6 | Lila A. Jaber was appointed to serve as a director effective January 1, 2020. Effective with her appointment, Ms. Jaber received a cash payment of $27,851 for the prorated Board retainer and fractional shares paid in cash for services to be performed from January 1, 2020 through May 7, 2020. The Stock Award column reflects a grant date fair value of $24,341 (254 shares based on a price per share of $95.83, the closing price on December 31, 2019). The stock award is fully vested in that it is not subject to forfeiture. |
Dianna F. Morgan, Chair | Ronald G. Forsythe, Jr. | Dennis S. Hudson, III | Calvert A. Morgan, Jr. |
Strong Performance in 2019 | As a result of the collective efforts of the Chesapeake Utilities team, we generated strong financial results in 2019, including for those metrics that are tied to performance-based compensation. | |
• | EPS: The growth and initiatives pursued by our businesses resulted in basic 2019 EPS of $3.97 per share (versus $3.46 per share in 2018). | |
• | ROE: ROE was 12% (or 11.3% on a continuing basis) as a result of growing earnings from a stable utility foundation and investing in related businesses and services that provide opportunities for returns greater than traditional utility returns. | |
• | TSR: Over the long term, our strategic growth has led to a compound annual total shareholder return that has exceeded 14% for the past 3, 5, 10 and 20 year periods ended December 31, 2019. In 2019, the Board increased | |
• | Capital Investments: Future growth is generated in part from successfully identifying and making profitable capital investments. We continued to invest in high levels of capital expenditures, with an investment of $199 million in capital expenditures in 2019. | |
Strategic Growth | We are focused on identifying and developing opportunities across the energy value chain, with emphasis on midstream and downstream investments that are accretive to earnings per share and consistent with our long-term growth strategy. Our diverse asset base includes a utility foundation with upside from our complementary unregulated energy businesses. We are continuing to pursue and develop new growth opportunities and regulatory strategies that build upon our core platform. In 2019, we generated $25.0 million in additional gross margin reflecting strong growth across our regulated and unregulated energy businesses (exclusive of the natural gas marketing business which was sold in 2019). In terms of continuing operations, this represents the largest level of gross margin increase (measured in dollars) in our history. Overall, the growth and initiatives pursued by our businesses in 2019 resulted in strong performance across the Company. See the Strategic Growth section in this Proxy Statement for additional information. | |
Executive Compensation Program | The executive compensation program is designed to focus executive officers on both short-term and long-term financial and operational performance of the Company. Performance-based incentive awards comprised between 71% to 81% of base salary and incentive compensation in 2019 (including one-time transitional equity awards) for each Executive NEO. The compensation program for the Executive NEOs is comprised of the following components: | |
• | Base Salary is a fixed compensation element that is set at competitive levels in order to attract and retain executive officers with skills and attributes that align with our culture and strategic goals. | |
• | Short-Term Cash Incentive Compensation is one of two at-risk compensation elements that incentivizes Executive NEOs upon the achievement of pre-established financial and non-financial performance metrics over an annual period. | |
• | Long-Term Equity Incentive Compensation is the second at-risk compensation element that incentivizes Executive NEOs upon the achievement of pre-established financial performance metrics over a three-year performance period. | |
• | Executive NEOs participate in the same benefits that are available to other employees. |
Determination of Compensation | The Compensation Committee aims to provide a fair, reasonable and competitive executive compensation program that aligns compensation to | |
• | Independent Consultant Review: To assess the competitiveness of our executive compensation program, the Compensation Committee engages an independent compensation consultant, FW Cook. | |
• | Peer Comparison: FW Cook prepares a market analysis that compares our compensation practices against those of our compensation peer group and a broader energy industry survey group, which is reviewed and discussed by the Compensation Committee. | |
• | Market Median: In the market analysis, FW Cook concluded that the target total direct compensation for the NEOs was, in aggregate, slightly below a competitive range of the market median of the Company's peer group. | |
• | Benchmarking Performance: Our short-term and long-term incentive programs include financial metrics that are benchmarked against the peer group. | |
• | Say-on-Pay: The Compensation Committee will consider advisory stockholder votes in the future when determining executive compensation. The Board adopted annual say-on-pay advisory votes as supported by our stockholders. The next advisory vote on the frequency of future say-on-pay advisory votes will occur at the 2023 Annual Meeting of Stockholders. | |
Compensation Practices | Our processes and controls related to the executive compensation program mitigate unnecessary risk-taking. | |
• | Process and Controls:Our short-term and long-term incentive programs: (i) utilize multiple performance criteria; (ii) allow our Compensation Committee to adjust awards based on individual performance; (iii) require the Audit Committee to review the relevant financial results prior to the issuance of any award; and (iv) feature a cap on the maximum amount that can be earned during any performance period. | |
• | Stock Ownership Guidelines:Our stock ownership guidelines require the Executive NEOs to retain a certain number of shares over the applicable time period, which encourages long-term ownership in the Company, aligns interests with the Company's stockholders, and mitigates potential compensation-related risk. | |
Key Compensation Decisions | In 2019, the Compensation Committee approved the following payouts under the compensation program for base salary, short-term cash, and long-term equity. | |
• | Increased Salaries: For 2019, each NEO's respective base salary increased after considering a market analysis by FW Cook, the NEO's role and scope of responsibilities, prior performance, and the competitive nature of our business. | |
• | Short-Term Incentive Payout: Cash incentive award payouts for the NEOs as provided in the Summary Compensation Table ranged from 135% to 153% of each NEO's respective target opportunity based on performance over the period from January 1, 2019 through December 31, 2019. | |
• | Long-Term Incentive Payout: Equity and long-term cash incentive award payouts were 132% to 174% of each NEO's respective target opportunity based on performance over the period from January 1, 2017 through December 31, 2019. |
BASIC EARNINGS PER SHARE 5-Year CAGR Earnings Growth - 9.9% Reported net income for 2019 was $65.2 million, or $3.97 per share compared to $56.6 million, or $3.46 per share for 2018. The Company's net income from continuing operations for 2019 increased to $61.1 million, or $3.73 per share, from $56.9 million, or $3.48 per share in 2018, representing a growth rate of over 7%. Continued growth across our businesses, the acquisition of certain assets, organic growth in the natural gas distribution operations, and higher retail propane margins were the most significant contributors to higher earnings in 2019. Our basic earnings per share for 2015 through 2019 is as follows: | ANNUALIZED DIVIDEND GROWTH 5-Year CAGR Dividend Growth – 8.5% Chesapeake Utilities has paid dividends to its stockholders without interruption for 59 years. During those 59 years, we have either maintained or increased our annualized dividend. Over the past five years, the annual dividend increase has grown from 6.5% in 2015 to 9.5% in 2019. The Board increased the annualized dividend in 2019 by $0.14 per share, or 9.5% over the prior year reflecting our commitment to stockholder value through dividend growth that is cultivated from sustainable earnings growth. This resulted in an annualized dividend of $1.62 per share in 2019. Our annualized dividend per share from 2015 through 2019 is as follows: |
TOTAL DIRECT COMPENSATION FOR THE EXECUTIVE NEOs | ||
Base Salary | • | Base salaries are set at competitive levels to attract and retain executive officers that have the knowledge and skills necessary to achieve the Company's established goals |
• | The Compensation Committee considered the following, among other factors, when setting 2019 base salaries: scope of the executive’s responsibilities, prior year’s performance, internal equity and the competitive nature of our business | |
Short-Term Incentive Compensation | • | The 2015 Cash Plan, under which cash incentive awards may be granted, was approved by the Company's stockholders in May 2015 |
• | In February 2019, the Compensation Committee granted cash incentive awards for the performance period January 1, 2019 through December 31, 2019 | |
1-year Performance Based Award | • | Evaluation of performance is based on achieving financial and non-financial targets |
• | Awards are subject to a cap of 200% of target on the maximum amount that can be earned during any performance period, as well as an absolute dollar limit set under the terms of the 2015 Cash Plan | |
Long-Term Incentive Compensation | • | The SICP, under which equity incentive awards may be granted, was approved by the Company's stockholders in May 2013 |
• | In February 2019, the Compensation Committee granted 2019 Equity Incentive Awards which are based upon a three-year performance period ending December 31, 2021; in December 2019, the Executive NEOs also received transitional equity awards for the 2019-2020 and 2019-2021 performance periods in connection with their increased responsibilities in 2019 | |
3-year Performance Based Award | • | Awards are issued based on achievement of the following performance metrics: TSR, growth in long-term earnings, and ROE |
• | Awards are subject to a cap of 200% of target on the maximum amount that can be earned during any performance period, as well as an absolute total share award limit set under the terms of the SICP | |
• | Dividends on the equity incentive awards accrue in the form of dividend equivalents during the performance period and are only paid to the executive if the awards are earned and then only in proportion to the actual shares earned |
BENEFIT PLANS AND PERQUISITES AVAILABLE TO CERTAIN EMPLOYEES, INCLUDING EXECUTIVE NEOs | ||
Pension Plan | • | The Pension Plan and benefits thereunder were frozen as of January 1, 2005. In 2019, the Committee received updates on the Company's Pension Plan de-risking strategy after approval by the Board |
• | Provides retirement income based on years of service and highest average earnings as of December 31, 2004 | |
Pension SERP | • | The Pension SERP is an excess plan that covers compensation not included in the qualified plan as a result of IRS compensation limitations |
• | Provides retirement income under the same terms as the Pension Plan for compensation in excess of tax code limitations | |
• | Benefits under the Pension SERP have been frozen since January 1, 2005 | |
• | The Pension SERP does not provide additional benefits or additional future years of service after 2004 |
Retirement Savings Plan | • | The Retirement Savings Plan is available to all eligible employees of the Company and its subsidiaries |
• | For 2019, employees who participated in the Retirement Savings Plan received matching contributions of up to 6% of eligible cash compensation deferred in the plan up to the applicable statutory compensation limit. The IRS limits the amount of pre-tax contributions that a participant may make to his or her Retirement Savings Plan. | |
• | Employees of the Company and its subsidiaries, as applicable, are eligible to receive an additional supplemental employer contribution at the discretion of the Company | |
Deferred Compensation Plan | • | Extends the Retirement Savings Plan, on a non-qualified basis, for deferral of compensation that is in excess of the tax code limitations, as well as for Company matching and supplemental contributions on such excess cash deferrals under the same terms as the Retirement Savings Plan for a select group of management employees |
• | Select employees of the Company and its subsidiaries, as applicable, are also eligible to receive an additional supplemental employer contribution at the discretion of the Company if such a contribution would have been made in the Retirement Savings Plan absent the compensation limit | |
• | Cash incentive awards may be deferred and paid at a later, predesignated time. Deferred cash incentive awards are eligible for matching or supplemental contributions by the Company. | |
• | Equity incentive awards may be deferred for later settlement; any deferred equity awards are not eligible for matching or supplemental contributions | |
Benefits /Perquisites | • | Executives participate in the same benefits that are available to all employees of the Company |
• | The All Other Compensation column of the Summary Compensation Table provides benefits where the aggregate value is more than $10,000 | |
• | On behalf of each employee, the Company pays an annual premium in connection with term life insurance. The life insurance benefit of two times base salary is capped at $500,000, which limits the benefit to highly compensated employees. | |
• | Company-owned vehicles are available to the Executive NEOs. Company vehicles are treated as imputed income for any personal use of the vehicle and is filed with the IRS on Form W-2. | |
• | Employees have the ability to purchase propane at a discounted rate |
Peer Company(1) | Market Capitalization (millions) | Revenues (millions) | ||||
Delta Natural Gas Company, Inc. | $ | 209 | $ | 67 | ||
MGE Energy, Inc. | $ | 2,264 | $ | 545 | ||
Northwest Natural Gas Company | $ | 1,712 | $ | 676 | ||
South Jersey Industries, Inc. | $ | 2,678 | $ | 1037 | ||
Spire Inc. | $ | 2,952 | $ | 1,633 | ||
Suburban Propane Partners LP | $ | 1,820 | $ | 1,088 | ||
Unitil Corp | $ | 638 | $ | 383 |
2016 Target Cash Incentive Award Opportunity | Weighting for the Performance Targets | Actual Achievement of Performance Targets | Actual Payout Based on Achievement of Performance Targets | ||||||||||||
Named Executive Officer | Base Salary (as of December 31, 2016) | Bonus Opportunity (% of Base Salary) | Target Cash Incentive Award at 100% | Non- Financial | Financial | Non- Financial | Financial | Non-Financial | Financial | Payout as reflected in the Summary Compensation Table | |||||
Michael P. McMasters | $580,000 | 60% | $348,000 | 20% | 80% | 175.00% | 75.00% | $121,800 | $ | 208,800 | $330,600 | ||||
Stephen C. Thompson | $340,000 | 30% | $102,000 | 20% | 80% | 200.00% | 132.50% | $40,800 | $ | 108,120 | $148,920 | ||||
Beth W. Cooper | $310,000 | 30% | $93,000 | 20% | 80% | 165.00% | 75.00% | $30,690 | $ | 55,800 | $86,490 | ||||
Elaine B. Bittner | $305,000 | 30% | $91,500 | 20% | 80% | 200.00% | 46.88% | $36,600 | $ | 34,313 | $70,913 | ||||
Jeffry M. Householder | $305,000 | 30% | $91,500 | 20% | 80% | 200.00% | 67.50% | $36,600 | $ | 49,411 | $86,011 |
Equity Incentive Award Opportunity for the 2016-2018 Performance Period | ||||||||
Named Executive Officer | Base Salary (approved on February 22, 2016) | Bonus Opportunity (% of Base Salary) | Target Equity Value | Average Closing Stock Price Per Share from 11/1/2015 -12/31/2015 | Target Equity Shares | |||
Michael P. McMasters | $580,000 | 75% | $ | 435,000 | $53.95 | 8,063 | ||
Stephen C. Thompson | $340,000 | 50% | $ | 170,000 | $53.95 | 3,151 | ||
Beth W. Cooper | $310,000 | 50% | $ | 155,000 | $53.95 | 2,873 | ||
Elaine B. Bittner | $305,000 | 50% | $ | 152,500 | $53.95 | 2,827 | ||
Jeffry M. Householder | $305,000 | 50% | $ | 152,500 | $53.95 | 2,827 |
Peer Company(1) | Market Capitalization (millions) | Revenues (millions) | ||||
Atmos Energy Corporation | $ | 7,794 | $ | 3,224 | ||
Delta Natural Gas Company, Inc. | $ | 209 | $ | 67 | ||
New Jersey Resources Corp. | $ | 3,060 | $ | 1,978 | ||
NiSource Inc. | $ | 7,155 | $ | 4,493 | ||
Northwest Natural Gas Company | $ | 1,712 | $ | 676 | ||
One Gas, Inc. | $ | 3,344 | $ | 1,427 | ||
RGC Resources, Inc. | $ | 120 | $ | 62 | ||
South Jersey Industries, Inc. | $ | 2,678 | $ | 1,037 | ||
Spire Inc. | $ | 2,952 | $ | 1,633 | ||
WGL Holdings, Inc. | $ | 3,906 | $ | 2,346 |
Total Equity Target Shares for the 2014-2016 Performance Period | Achievement of Performance Components | ||||
Named Executive Officer | Shareholder Return (30% Weighting) | Growth (35% Weighting) | Earnings Performance (35% Weighting) | Actual Payout for the 2014 - 2016 Performance Period | |
Michael P. McMasters | 8,634 | 3,885 | 4,533 | 4,533 | 12,951 |
Stephen C. Thompson | 4,187 | 1,884 | 2,198 | 2,198 | 6,280 |
Beth W. Cooper | 3,729 | 1,678 | 1,958 | 1,958 | 5,594 |
Elaine B. Bittner | 3,075 | 1,385 | 1,614 | 1,614 | 4,613 |
Jeffry M. Householder | 3,578 | 1,610 | 1,878 | — | 3,488 |
Stock Vested During 2016 | ||
Named Executive Officer | Number of Shares Acquired on Vesting(1) (#) | Value Realized on Vesting(2) ($) |
Michael P. McMasters | 12,951 | 871,602 |
Stephen C. Thompson | 6,280 | 422,644 |
Beth W. Cooper | 5,594 | 376,476 |
Elaine B. Bittner | 4,613 | 310,455 |
Jeffry M. Householder | 3,488 | 234,742 |
COMPENSATION PEER GROUP AND PERFORMANCE PEER GROUP | |||||||||||||||||||
Compensation Peer Group | Performance Peer Group | ||||||||||||||||||
Company | In Peer Group | Market Capitalization (in millions at 1/25/2019) | Revenues (in millions) | In Peer Group | Market Capitalization (in millions at latest fiscal year-end reported as of 2/5/2020) | Revenues (in millions) | |||||||||||||
Atmos Energy Corporation | — | — | — | x | $ | 13,592 | $ | 2,909 | |||||||||||
Black Hills Corporation | — | — | — | x | $ | 3,767 | $ | 1,755 | |||||||||||
MGE Energy, Inc. | x | $ | 2,205 | $ | 560 | — | — | — | |||||||||||
New Jersey Resources Corp. | — | — | — | x | $ | 4,070 | $ | 2,617 | |||||||||||
NiSource Inc. | — | — | — | x | $ | 9,439 | $ | 5,158 | |||||||||||
Northwest Natural Holding Co. | x | $ | 1,797 | $ | 725 | x | $ | 1,746 | $ | 704 | |||||||||
Northwestern Corporation | — | — | — | x | $ | 2,991 | $ | 1,196 | |||||||||||
ONE Gas, Inc. | — | — | — | x | $ | 4,184 | $ | 1,634 | |||||||||||
RGC Resources, Inc. | — | — | — | x | $ | 236 | $ | 71 | |||||||||||
South Jersey Industries, Inc. | x | $ | 2,823 | $ | 1,397 | x | $ | 2,377 | $ | 1,649 | |||||||||
Spire Inc. | x | $ | 3,906 | $ | 1,965 | x | $ | 4,447 | $ | 1,974 | |||||||||
Suburban Propane Partners, LP | x | $ | 1,419 | $ | 1,344 | — | — | — | |||||||||||
Unitil Corporation | x | $ | 726 | $ | 434 | x | $ | 923 | $ | 439 |
2019 CASH INCENTIVE AWARD | |||||||||||||||||||||||||||
Executive NEO(1) | Base Salary (at 12/31/2019) | Cash Opportunity (% of Base Salary) | Award at Target (100%) | Weighting for the Performance Targets | Actual Achievement of Performance Targets and Associated Payout | Payout reflected in Summary Compensation Table | |||||||||||||||||||||
Non-Financial | Financial | Non- Financial | Financial | ||||||||||||||||||||||||
Jeffry M. Householder | $ | 600,000 | 60% | $ | 360,000 | 20% | 80% | 153% | $ | 110,250 | 153% | $ | 441,000 | $ | 551,250 | ||||||||||||
James F. Moriarty(2) | $ | 385,000 | 45% | $ | 173,250 | 20% | 80% | 153% | $ | 53,058 | 153% | $ | 212,231 | $ | 265,289 | ||||||||||||
Beth W. Cooper | $ | 385,000 | 45% | $ | 173,250 | 20% | 80% | 153% | $ | 53,058 | 153% | $ | 212,231 | $ | 265,289 | ||||||||||||
Kevin J. Webber | $ | 275,000 | 35% | $ | 96,250 | 20% | 80% | 153% | $ | 29,477 | 134% | $ | 103,192 | $ | 132,669 |
1 | Mr. Thompson was not included in this table because he retired effective December 31, 2019. As of his retirement, Mr. Thompson had a target award valued at $124,250 which is 35% of his base salary of $355,000. Mr. Thompson's weightings for the performance targets was 20% for the non-financial component and 80% for the financial component. For the non-financial component, Mr. Thompson achieved 100% of the performance target and received $24,850 as the associated payout. For the financial component, Mr. Thompson achieved 144% of the performance target and received $143,413 as the associated payout. The actual cash incentive payout amount for Mr. Thompson is reflected in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table. |
2 | In February 2017, Mr. Moriarty received a $305,000 time-vested cash award granted to him pursuant to the 2015 Cash Plan in connection with his promotion. The award vested in two equal amounts of $152,500 in February 2018 and February 2019 and is included in the applicable row in the Summary Compensation Table. |
EQUITY INCENTIVE AWARD OPPORTUNITY FOR THE 2019-2021 PERFORMANCE PERIOD | |||||||||||||||||
Executive NEO(1) | Base Salary (at 2/25/2019) | Opportunity (% of Base Salary) | Target Equity Value | Average Closing Stock Price | Target Equity Shares | ||||||||||||
Jeffry M. Householder | $ | 600,000 | 100% | $ | 600,000 | $ | 84.01 | 7,142 | |||||||||
James F. Moriarty | $ | 385,000 | 75% | $ | 288,750 | $ | 84.01 | 3,437 | |||||||||
Beth W. Cooper | $ | 385,000 | 75% | $ | 288,750 | $ | 84.01 | 3,437 | |||||||||
Kevin J. Webber | $ | 275,000 | 65% | $ | 178,750 | $ | 84.01 | 2,128 |
1 | On February 25, 2019, the Compensation Committee granted awards to Mr. Thompson under the 2019 Equity Incentive Plan. The award was based on 65% of Mr. Thompson's base salary of $355,000, resulting in a target equity value of $230,750 (or 2,747 shares based on an average closing stock price of $84.01). Mr. Thompson retired effective December 31, 2019 and is eligible for a prorata portion of his target shares (33%) at the end of the 2019-2021 performance period depending on the extent to which performance targets were achieved during his service with the Company. |
Performance Component | Benchmark and Description of Benchmark | % of Target Award |
TSR | Total shareholder return compared to the total shareholder returns of companies included in the peer group for the performance period. Shareholder Return incentivizes executives to generate additional value for our stockholders. | 30% |
Growth in Long-Term Earnings | Total capital expenditures as a percentage of total capitalization as compared to companies in the peer group for the performance period. In the long-term, the Company’s growth in earnings per share is dependent upon continuous investment of capital at levels sufficient to drive growth. | 35% |
ROE | Average ROE compared to pre-determined ROE targets and the ROE relative to peer group performance. ROE measures the Company’s ability to generate current income using equity investors’ capital. | 35% |
Percentile Ranking as Compared To Companies in the Performance Peer Group | Percentage of Payout of Target Equity Incentive Award | |
40th – 49th percentile | 50% | |
50th – 54th percentile | 75% | |
55th – 59th percentile | 100% | |
60th – 64th percentile | 125% | |
65th – 69th percentile | 150% | |
70th – 80th percentile | 175% | |
Greater than 80th percentile | 200% |
Percentile Rank | Payout Matrix | ||||
Maximum | 75% | 75% | 100% | 175% | 200% |
Target | 50% | 50% | 75% | 100% | 150% |
Threshold | 25% | 25% | 50% | 75% | 100% |
Threshold | Low Target | Target | Maximum | ||
10.00% | 11.00% | 11.25% | 12.00% | ||
3 YEAR AVERAGE ROE COMPARED TO FIXED TARGETS |
ACHIEVEMENT OF 2017 EQUITY INCENTIVE AWARD FOR THE 2017 - 2019 PERFORMANCE PERIOD | ||||||||
Executive NEO(1)(2) | Target Shares | TSR (30% Weighting) | Growth in Long-Term Earnings (35% Weighting) | ROE (35% Weighting) | Actual Payout | |||
Jeffry M. Householder | 2,943 | 1,324 | 2,060 | 1,741 | 5,125 | |||
James F. Moriarty | 2,805 | 1,262 | 1,964 | 1,659 | 4,885 | |||
Beth W. Cooper | 2,943 | 1,324 | 2,060 | 1,741 | 5,125 |
1 | Mr. Thompson was not included in this table because he retired effective December 31, 2019. In February 2017, the Compensation Committee granted awards to Mr. Thompson under the 2017 Equity Incentive Plan with a target equity award of 3,173 shares having the same weightings and performance metrics as Messrs. Householder, Moriarty and Ms. Cooper. Mr. Thompson's actual payout for the 2017-2019 performance period was 5,526 shares. |
2 | Mr. Webber'sincentive award for the 2017-2019 performance period was established by the Chief Executive Officer and is a long-term cash incentive award. The award is based on 25% of Mr. Webber’s base salary of $275,000, resulting in a target value of $68,750. The payout opportunity for Mr. Webber is 0% (minimum), 50% (threshold), 100% (target), and 150% (maximum). Mr. Webber’s award is based on the following performance components and weights: TSR (30%), Growth in Long-Term Earnings for our Florida businesses and for the Company on a consolidated basis (35%), and ROE for our Florida businesses and for the Company on a consolidated basis (35%). Mr. Webber's actual payout for the 2017-2019 performance period was $91,093. |
STOCK VESTED DURING 2019 | |||||||||||||||
Executive NEO(1)(2) | Date Shares Awarded by Compensation Committee | Number of Shares Acquired on Vesting(3) | Stock Price | Value Realized on Vesting | |||||||||||
Jeffry M. Householder | 2/25/2020 | 5,125 | $ | 94.64 | $ | 485,030 | |||||||||
James F. Moriarty | 2/25/2020 | 4,885 | $ | 94.64 | $ | 462,316 | |||||||||
Beth W. Cooper | 2/25/2020 | 5,125 | $ | 94.64 | $ | 485,030 |
2016 Summary Compensation Table | ||||||||||||||
Name and Principal Position | Year | Salary | Stock Awards | Bonus | Non-Equity Incentive Plan Compensation | Change in Pension Value and Non-Qualified Deferred Compensation Earnings | All Other Compensation | Total | ||||||
($) | ($)1 | ($)2 | ($)3 | ($)4,5 | ($)6 | ($) | ||||||||
Michael P. McMasters7 Chief Executive Officer, President, and Director | 2016 | 572,500 | 730,840 | — | 330,600 | 64,469 | 72,964 | 1,771,373 | ||||||
2015 | 531,250 | 477,424 | — | 617,100 | 23,456 | 80,247 | 1,729,477 | |||||||
2014 | 466,250 | 443,867 | — | 339,739 | 107,742 | 111,778 | 1,469,376 | |||||||
Stephen C. Thompson Senior Vice President | 2016 | 338,750 | 285,616 | — | 148,920 | 57,571 | 48,566 | 879,423 | ||||||
2015 | 333,750 | 221,123 | — | 186,930 | 3,310 | 52,153 | 797,266 | |||||||
2014 | 327,500 | 215,208 | — | 136,470 | 145,742 | 66,086 | 891,006 | |||||||
Beth W. Cooper Senior Vice President and Chief Financial Officer | 2016 | 308,000 | 260,414 | — | 86,490 | 14,727 | 51,785 | 721,416 | ||||||
2015 | 300,625 | 198,675 | — | 169,422 | 2,444 | 49,345 | 720,511 | |||||||
2014 | 293,625 | 191,670 | — | 127,062 | 31,620 | 53,590 | 697,567 | |||||||
Elaine B. Bittner Senior Vice President | 2016 | 297,500 | 256,214 | — | 70,913 | — | 41,318 | 665,945 | ||||||
2015 | 271,250 | 174,218 | — | 156,750 | — | 36,334 | 638,552 | |||||||
2014 | 253,750 | 158,043 | — | 113,101 | — | 46,324 | 571,218 | |||||||
Jeffry M. Householder President of Florida Public Utilities Company | 2016 | 302,308 | 256,214 | — | 86,011 | — | 34,701 | 679,234 | ||||||
2015 | 291,500 | 188,959 | 50,000 | 112,838 | — | 26,571 | 669,868 | |||||||
2014 | 279,711 | 183,936 | 30,000 | 69,144 | — | 49,920 | 612,711 |
2019 SUMMARY COMPENSATION TABLE | Change in Pension Value and NQDC Earnings(5)(6) | |||||||||||||||||||||||||
NEO and Principal Position | Year | Salary | Stock Awards(1),(2) | Bonus(3) | Non-Equity Incentive Plan Compensation(4) | All Other Compensation(7) | Total | |||||||||||||||||||
Jeffry M. Householder(8) Chief Executive Officer and President | 2019 | $ | 614,596 | $ | 2,115,485 | $ | — | $ | 551,250 | $ | — | 59,680 | $ | 3,341,011 | ||||||||||||
2018 | $ | 338,269 | $ | 251,872 | $ | — | $ | 169,095 | $ | — | $ | 33,538 | $ | 792,774 | ||||||||||||
2017 | $ | 315,962 | $ | 264,670 | $ | 15,000 | $ | 61,824 | $ | — | $ | 61,803 | $ | 719,259 | ||||||||||||
James F. Moriarty Executive Vice President, General Counsel, Corporate Secretary and Chief Policy and Risk Officer | 2019 | $ | 377,244 | $ | 663,322 | $ | 20,000 | $ | 417,789 | $ | — | 58,115 | $ | 1,536,470 | ||||||||||||
2018 | $ | 327,500 | $ | 244,595 | $ | — | $ | 314,975 | $ | — | 25,152 | $ | 912,222 | |||||||||||||
Beth W. Cooper Executive Vice President, Chief Financial Officer and Assistant Secretary | 2019 | $ | 378,795 | $ | 642,118 | $ | 50,000 | $ | 265,289 | $ | 54,508 | 47,742 | $ | 1,438,452 | ||||||||||||
2018 | $ | 338,750 | $ | 251,872 | $ | — | $ | 167,325 | $ | — | $ | 44,292 | $ | 802,239 | ||||||||||||
2017 | $ | 317,500 | $ | 264,670 | $ | 25,000 | $ | 35,520 | $ | 31,032 | $ | 69,981 | $ | 743,703 | ||||||||||||
Kevin J. Webber Senior Vice President | 2019 | $ | 278,865 | $ | 652,155 | $ | 20,000 | $ | 132,669 | $ | — | 33,541 | $ | 1,117,230 | ||||||||||||
Stephen C. Thompson Retired Senior Vice President | 2019 | $ | 353,750 | $ | 346,835 | $ | — | $ | 168,263 | $ | 174,391 | 52,530 | $ | 1,095,769 | ||||||||||||
2018 | $ | 348,750 | $ | 255,511 | $ | — | $ | 183,016 | $ | — | $ | 47,518 | $ | 834,795 | ||||||||||||
2017 | $ | 343,750 | $ | 285,348 | $ | 15,000 | $ | 73,278 | $ | 114,554 | $ | 77,254 | $ | 909,184 |
1 | Executive NEOs received an equity incentive award for the 2019-2021 performance period as follows: Householder - $901,745; Moriarty - $433,954; Cooper - $433,954; Webber - $268,680; Thompson - $346,835. On December 4, 2019 the Board of Directors, upon recommendation from the Compensation Committee, approved transitional equity incentive awards for Messrs. Householder, Moriarty and Webber, and Ms. Cooper in connection with their increased responsibilities in 2019. Executive NEOs received a transitional equity incentive award for the 2019-2021 performance period as follows: Householder - $603,866; Moriarty - $114,116; Cooper - $103,567; and Webber - $190,788. Executive NEOs received a transitional equity incentive award for the 2019-2020 performance period as follows: Householder - $609,874; Moriarty - $115,252; Cooper - $104,597; and Webber - $192,687. The features of these awards are described under the Transitional Equity Incentive Awards Sections in this Proxy Statement. |
2 | For |
Estimated Payout for Performance-Based Equity Incentive Awards | Estimated Payout for Market-Based Equity Incentive Awards | ||||||||||||||||
Year | Performance Period | Grant Date | Growth in Long-Term Earnings | Earnings Performance | Fair Value Per Share | Shareholder Return | Monte Carlo Estimated Percentile Ranking | Fair Value Per Share | |||||||||
2016 | 2016-2018 | 2/22/2016 | 150% | 100% | $ | 64.00 | 150% | 65% | $ | 76.98 | |||||||
2015 | 2015-2017 | 1/13/2015 | 150% | 100% | $ | 50.20 | 150% | 65% | $ | 43.55 | |||||||
2014 | 2014-2016 | 1/7/2014 | 150% | 100% | $ | 39.97 | 150% | 65% | $ | 36.53 |
ESTIMATED PAYOUT FOR EQUITY INCENTIVE AWARDS | ||||||||||||||||
Performance-Based Equity Awards | Market-Based Equity Awards | |||||||||||||||
Year | Performance Period | Grant Date | Growth in Long-Term Earnings | ROE | Fair Value Per Share | TSR | Monte Carlo Estimated Percentile Ranking | Fair Value Per Share | ||||||||
2019 | 2019-2021 | 2/25/2019 | 200% | 100% | $ | 91.19 | 100% | 53% | $ | 101.70 | ||||||
2019 | 2019-2021 | 12/3/2019 | 200% | 178% | $ | 91.48 | 100% | 51% | $ | 91.87 | ||||||
2019 | 2019-2020 | 12/3/2019 | 200% | 186% | $ | 91.48 | 100% | 52% | $ | 88.26 | ||||||
2018 | 2018-2020 | 2/26/2018 | 200% | 100% | $ | 68.85 | 100% | 43% | $ | 62.23 | ||||||
2017 | 2017-2019 | 2/23/2017 | 200% | 100% | $ | 67.40 | 100% | 65% | $ | 63.83 |
3 |
4 |
5 | The two defined benefit pension plans (a qualified plan, the Pension Plan, and a non-qualified plan, the Pension SERP) were frozen as of |
6 | Dividends on deferred stock units (which are settled on a one-for-one basis in shares of common stock) are the same as dividends paid on the Company’s outstanding shares of common stock. For |
7 | The following table includes payments that were made by the Company on behalf of the NEOs in 2017, 2018 and 2019. |
Named Executive Officer | Qualified and Nonqualified Retirement Plan Matching and Supplemental Contributions ($) | Term Life Insurance Premiums ($) | Vehicle Allowance ($) | Dividends on shares earned for the 2014-2016 Performance Period ($) | |||||||||||||||
2014 | 2015 | 2016 | 2014 | 2015 | 2016 | 2014 | 2015 | 2016 | 2014 | ||||||||||
Michael P. McMasters | 56,960 | 73,106 | 64,398 | 480 | 480 | 480 | 10,283 | 6,661 | 8,086 | 44,055 | |||||||||
Stephen C. Thompson | 37,376 | 44,146 | 41,351 | 480 | 480 | 480 | 6,867 | 7,527 | 6,735 | 21,363 | |||||||||
Beth W. Cooper | 24,833 | 39,938 | 42,017 | 480 | 480 | 480 | 9,248 | 8,927 | 9,288 | 19,029 | |||||||||
Elaine B. Bittner | 26,520 | 34,872 | 39,093 | 472 | 480 | 480 | 3,640 | 982 | 1,745 | 15,692 | |||||||||
Jeffry M. Householder | 36,918 | 25,431 | 31,994 | 480 | 480 | 480 | 657 | 660 | 2,227 | 11,865 |
NEO | Qualified and Non-Qualified 401(k) Plan Matching and Supplemental Contributions | Term Life Insurance Premiums | Vehicle Allowance | Dividends on shares earned for the 2017-2019 Performance Period | |||||||||||||||||||||||||||
2017 | 2018 | 2019 | 2017 | 2018 | 2019 | 2017 | 2018 | 2019 | 2017 | ||||||||||||||||||||||
Jeffry M. Householder | $ | 37,058 | $ | 30,632 | $ | 56,221 | $ | 480 | $ | 480 | $ | 520 | $ | 2,227 | $ | 2,426 | $ | 2,939 | $22,038 | ||||||||||||
James F. Moriarty | n/a | $ | 20,810 | $ | 53,016 | n/a | $ | 480 | $ | 480 | n/a | $ | 3,862 | $ | 4,619 | $21,006 | |||||||||||||||
Beth W. Cooper | $ | 38,781 | $ | 36,431 | $ | 44,903 | $ | 480 | $ | 480 | $ | 480 | $ | 8,682 | $ | 7,381 | $ | 2,359 | $22,038 | ||||||||||||
Kevin J. Webber | n/a | n/a | $ | 32,322 | n/a | n/a | $ | 477 | n/a | n/a | $ | 742 | n/a | ||||||||||||||||||
Stephen C. Thompson | $ | 45,853 | $ | 40,255 | $ | 45,576 | $ | 480 | $ | 480 | $ | 480 | $ | 7,159 | $ | 6,783 | $ | 6,474 | $23,762 |
8 | Mr. |
Grants of Plan-Based Awards | ||||||||||
Plan | Grant Date / Date of Compensation Committee Action | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards | Grant Date Fair Value of Stock Awards1 | ||||||
Threshold at 50% | Target at 100% | Maximum at 200% | Threshold at 50% | Target at 100% | Maximum at 200% | |||||
Name | ($) | ($) | ($)2 | (#) | (#) | (#) | ($) | |||
Michael P. McMasters | 2016 Cash Incentive Plan | 2/22/2016 | 174,000 | 348,000 | 696,000 | |||||
2016-2018 Equity Incentive Plan | 2/22/2016 | 4,032 | 8,063 | 16,126 | 730,840 | |||||
Stephen C. Thompson | 2016 Cash Incentive Plan | 2/22/2016 | 51,000 | 102,000 | 204,000 | |||||
2016-2018 Equity Incentive Plan | 2/22/2016 | 1,576 | 3,151 | 6,302 | 285,616 | |||||
Beth W. Cooper | 2016 Cash Incentive Plan | 2/22/2016 | 46,500 | 93,000 | 186,000 | |||||
2016-2018 Equity Incentive Plan | 2/22/2016 | 1,437 | 2,873 | 5,746 | 260,414 | |||||
Elaine B. Bittner | 2016 Cash Incentive Plan | 2/22/2016 | 45,750 | 91,500 | 183,000 | |||||
2016-2018 Equity Incentive Plan | 2/22/2016 | 1,413 | 2,827 | 5,653 | 256,214 | |||||
Jeffry M. Householder | 2016 Cash Incentive Plan | 2/22/2016 | 45,750 | 91,500 | 183,000 | |||||
2016-2018 Equity Incentive Plan | 2/22/2016 | 1,413 | 2,827 | 5,653 | 256,214 |
GRANTS OF PLAN-BASED AWARDS | ||||||||||||||||||
2019 Cash Incentive Plan | 2019-2021 Equity Incentive Plan | |||||||||||||||||
Estimated Future Payouts Under Non-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards | Grant Date Fair Value(2) | ||||||||||||||||
EXECUTIVE NEO(1) | Grant Date | Threshold 50% | Target 100% | Maximum 200% | Grant Date | Threshold 50% | Target 100% | Maximum 200% | ||||||||||
Jeffry M. Householder | 2/25/2019 | $ | 180,000 | $ | 360,000 | $ | 720,000 | 2/25/2019 | 3,571 | 7,142 | 14,284 | $ | 901,745 | |||||
James F. Moriarty | 2/25/2019 | $ | 86,625 | $ | 173,250 | $ | 346,500 | 2/25/2019 | 1,719 | 3,437 | 6,874 | $ | 433,954 | |||||
Beth W. Cooper | 2/25/2019 | $ | 86,625 | $ | 173,250 | $ | 346,500 | 2/25/2019 | 1,719 | 3,437 | 6,874 | $ | 433,954 | |||||
Kevin J. Webber | 2/25/2019 | $ | 48,125 | $ | 96,250 | $ | 192,500 | 2/25/2019 | 1,064 | 2,128 | 4,256 | $ | 268,680 |
1 | Mr. Thompson was not included in this table because he retired effective December 31, 2019. On February 25, 2019, the Compensation Committee granted awards to Mr. Thompson under the 2019 Cash Incentive Award as follows: Threshold (50%) $62,125, Target (100%) $124,250, Maximum (200%) $248,500. The actual cash incentive payout amount for Mr. Thompson is reflected in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table. On February 25, 2019, the Compensation Committee granted an award to Mr. Thompson under the 2019-2021 Equity Incentive Plan as follows: Threshold (50%) 1,374 shares, Target (100%) 2,747 shares and Maximum (200%) 5,494 shares. The Grant Date Fair Value on February 25, 2019 at target was $346,835. The Compensation Committee will determine the achievement of equity incentive grants made to the NEOs for the 2019 Equity Incentive Award upon consideration of pre-established performance targets for the 2019-2021 performance period. |
2 | For the 2019-2021 performance period, we calculated the aggregate grant date fair value of the performance-based equity incentive awards based on the estimated compensation costs on the grant date. We estimated that 200% of the Growth in Long-Term Earnings component and 100% of the ROE component are likely to be earned. These equity incentive awards have been recorded at the grant date fair value of $91.19 per share, which is based on the closing price on February 25, 2019, the grant date. We also evaluated the likelihood of earning the TSR component for this performance period. We first determined the aggregate fair value of the award using a Black-Scholes model. The Company's TSR was then compared to the TSR of companies in our performance peer group using a Monte Carlo stock simulation. The Monte Carlo stock simulation estimated a percentile ranking for the TSR component of greater than 53%, representing a 100% payout. For the 2019-2021 performance period, the performance share fair value of $101.70 was generated from the Black-Scholes model and used to calculate the aggregate grant date value of this component of the award. The number of actual performance shares earned will range from 0% to 200% of the target performance shares depending on actual performance as compared to the performance goals. |
2019-2020 Transitional Equity Incentive Plan | 2019-2021 Transitional Equity Incentive Plan | ||||||||||||||
Estimated Future Payouts Under Equity Incentive Plan Awards | Grant Date Fair Value(1) | Estimated Future Payouts Under Equity Incentive Plan Awards | Grant Date Fair Value(2) | ||||||||||||
EXECUTIVE NEO | Grant Date | Threshold 50% | Target 100% | Maximum 200% | Threshold 50% | Target 100% | Maximum 200% | ||||||||
Jeffry M. Householder | 12/3/2019 | 2,032 | 4,064 | 8,128 | $ | 609,874 | 2,032 | 4,064 | 8,128 | $ | 603,866 | ||||
James F. Moriarty | 12/3/2019 | 384 | 768 | 1,536 | $ | 115,252 | 384 | 768 | 1,536 | $ | 114,116 | ||||
Beth W. Cooper | 12/3/2019 | 349 | 697 | 1,394 | $ | 104,597 | 349 | 697 | 1,394 | $ | 103,567 | ||||
Kevin J. Webber | 12/3/2019 | 642 | 1,284 | 2,568 | $ | 192,687 | 642 | 1,284 | 2,568 | $ | 190,788 |
1 | For the transitional Equity Incentive Plan for the 2019-2020 performance period, we calculated the aggregate grant date fair value of the performance-based equity incentive awards based on the estimated compensation costs on the grant date. We estimated that 200% of the Growth in Long-Term Earnings component and 186% of the ROE component are likely to be earned. These equity incentive awards have been recorded at the grant date fair value of $91.48 per share, which is based on the closing price on December 3, 2019, the grant date. We also evaluated the likelihood of earning the TSR component for this performance period. We first determined the aggregate fair value of the award using a Black-Scholes model. The Company's TSR was then compared to the TSR of companies in our performance peer group using a Monte Carlo stock simulation. The Monte Carlo stock simulation estimated a percentile ranking for the TSR component of greater than 52%, representing a 100% payout. For the 2019-2020 performance period, the performance share fair value of $88.26 was generated from the Black-Scholes model and used to calculate the aggregate grant date value of this component of the award. The number of actual performance shares earned will range from 0% to 200% of the target performance shares depending on actual performance as compared to the performance goals. |
2 | For the transitional Equity Incentive Plan for the 2019-2021 performance period, we calculated the aggregate grant date fair value of the performance-based equity incentive awards based on the estimated compensation costs on the grant date. We estimated that 200% of the Growth in Long-Term Earnings component and 178% of the ROE component are likely to be earned. These equity incentive awards have been recorded at the grant date fair value of $91.48 per share, which is based on the closing price on December 3, 2019, the grant date. We also evaluated the likelihood of earning the TSR component for this performance period. We first determined the aggregate fair value of the award using a Black-Scholes model. The Company's TSR was then compared to the TSR of companies in our performance peer group using a Monte Carlo stock simulation. The Monte Carlo stock simulation estimated a percentile ranking for the TSR component of greater than 51%, representing a 100% payout. For the 2019-2021 performance period, the performance share fair value of $91.87 was generated from the Black-Scholes model and used to calculate the aggregate grant date value of this component of the award. The number of actual performance shares earned will range from 0% to 200% of the target performance shares depending on actual performance as compared to the performance goals. |
Named Executive Officer | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested(1) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units, or Other Rights That Have Not Vested(2) | |
(#) | ($) | ||
Michael P. McMasters | 27,400 | 1,834,430 | |
Stephen C. Thompson | 11,524 | 771,532 | |
Beth W. Cooper | 10,437 | 698,757 | |
Elaine B. Bittner | 9,767 | 653,901 | |
Jeffry M. Householder | 10,115 | 677,199 |
OUTSTANDING EQUITY AWARDS FOR THE NEOs AT DECEMBER 31, 2019 | ||||||
Executive NEO(1) | 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) | ||||
Jeffry M. Householder | 36,078 | $ | 3,457,355 | |||
James F. Moriarty | 15,324 | $ | 1,468,499 | |||
Beth W. Cooper | 15,200 | $ | 1,456,616 | |||
Kevin J. Webber | 9,392 | $ | 900,035 |
1 | Mr. Thompson was not included in this table because he retired effective December 31, 2019. The Compensation Committee will determine the achievement of equity incentive grants made to the Mr. Thompson for the 2018 Equity Incentive Award and the 2019 Equity Incentive Award upon consideration of pre-established performance targets for the 2018-2020 and 2019-2021 performance periods. Mr. Thompson will be eligible for a prorata portion of the target shares, based on his service during the performance period. |
2 | The share |
3 | The market value represents the unearned shares multiplied by |
Name | Plan Name | Number of Years Credited Service(1) (#) | Present Value of Accumulated Benefits(2) ($) | Payments During the Last Fiscal Year ($) | |||||||||||||||||||||
Michael P. McMasters(3) | Pension Plan | 25 | 770,219 | 0 | |||||||||||||||||||||
PRESENT VALUE OF NEO ACCUMULATED BENEFITS UNDER THE PENSION PLAN AND PENSION SERP | PRESENT VALUE OF NEO ACCUMULATED BENEFITS UNDER THE PENSION PLAN AND PENSION SERP | ||||||||||||||||||||||||
Pension SERP | 25 | 201,272 | 0 | ||||||||||||||||||||||
Pension Plan | Pension SERP | ||||||||||||||||||||||||
Number of Years Credited Service(1) | Present Value of Accumulated Benefits(2) | Payments During the Last Fiscal Year | Number of Years Credited Service(1) | Present Value of Accumulated Benefits(2) | Payments During the Last Fiscal Year | ||||||||||||||||||||
NEO | |||||||||||||||||||||||||
Beth W. Cooper(3) | 17 | $ | 232,414 | $ | — | — | $ | — | $ | — | |||||||||||||||
Stephen C. Thompson(3) | Pension Plan | 24 | 656,297 | 0 | 24 | $ | 902,762 | $ | — | 24 | $ | 220,744 | $ | — | |||||||||||
Pension SERP | 24 | 177,457 | 0 | ||||||||||||||||||||||
Beth W. Cooper(3) | Pension Plan | 17 | 149,621 | 0 |
1 | Number of years of service equals total service from date of employment until the plans were frozen. Additionally, on December 31, 2004, in conjunction with the freezing of the Pension Plan and the Pension SERP, each employee participating in such plans was credited with an additional two years of service. Since the Plans are now frozen, service and compensation on or after January 1, 2005 will not affect the benefits available to any participant. Due to the additional two years of credited service, the monthly accrued benefit payable at normal retirement age from the Pension Plan increased as follows: |
2 | Actuarial present value is based on assumptions and methods used to calculate the benefit obligation under standards established by the Financial Accounting Standards Board (see Note |
3 |
(i) |
(ii) |
(iii) | Credited years of service (but not more than 35 years) |
Non-qualified Deferred Compensation for the 2016 Fiscal Year | |||||
Executive Deferrals in 2016 ($) | Registrant Contributions in 2016(1) ($) | Aggregate Earnings in 2016(2)(3) ($) | Aggregate Withdrawals/ Distributions in 2016 ($) | Aggregate Balance at December 31, 2016 ($) | |
Michael P. McMasters | 38,466 | 45,061 | 567,926 | (3,222) | 3,690,903 |
Stephen C. Thompson | 46,167 | 22,951 | 64,273 | 0 | 738,935 |
Beth W. Cooper | 141,938 | 18,820 | 185,594 | 0 | 1,374,076 |
Elaine B. Bittner | 96,236 | 15,967 | 50,947 | 0 | 508,884 |
Jeffry M. Householder | 305,998 | 23,220 | 57,329 | 0 | 813,096 |
NON-QUALIFIED DEFERRED COMPENSATION FOR THE 2019 FISCAL YEAR | |||||||||||||||||||||
Executive Deferrals in 2019 | Registrant Contributions in 2019(1) | Aggregate Earnings in 2019(2)(3) | Aggregate Withdrawals/ Distributions in 2019 | Aggregate Balance at December 31, 2019 | |||||||||||||||||
Jeffry M. Householder | $ | 360,289 | $ | 37,077 | $ | 341,030 | $ | 0 | $ | 2,056,909 | |||||||||||
James F. Moriarty | $ | 140,066 | $ | 34,235 | $ | 15,609 | $ | 0 | $ | 194,456 | |||||||||||
Beth W. Cooper | $ | 383,919 | $ | 22,226 | $ | 521,240 | $ | (39,864 | ) | $ | 3,090,917 | ||||||||||
Kevin J. Webber | $ | 98,790 | $ | 14,127 | $ | 106,819 | $ | 0 | $ | 699,713 | |||||||||||
Stephen C. Thompson | $ | 50,527 | $ | 22,584 | $ | 201,622 | $ | 0 | $ | 1,249,363 |
1 | Represents our matching and supplemental contributions associated with the Deferred Compensation Plan. These dollars are included in the All Other Compensation column of the Summary Compensation Table. |
2 | The investment options available under the |
3 | Dividends on deferred stock units in the |
Name | Amount included in both Non-Qualified Deferred Compensation Table and Summary Compensation Table | Amount included in both Non-Qualified Deferred Compensation Table and previously reported in Prior Years’ Summary Compensation Tables | ||||||||
Jeffry M. Householder | $ | 397,366 | $ | 959,945 | ||||||
James F. Moriarty | $ | 174,301 | $ | 2,729 | ||||||
Beth W. Cooper | $ | 406,145 | $ | 1,712,293 | ||||||
Kevin J. Webber | $ | 112,918 | $ | 0 | ||||||
Stephen C. Thompson | $ | 73,110 | $ | 569,638 |
Name | Amount included in both Non-Qualified Deferred Compensation Table and Summary Compensation Table ($) | Amount included in both Non-Qualified Deferred Compensation Table and previously reported in Prior Years’ Summary Compensation Tables ($) |
Michael P. McMasters | 83,527 | 1,086,106 |
Stephen C. Thompson | 69,118 | 382,433 |
Beth W. Cooper | 160,758 | 897,414 |
Elaine B. Bittner | 112,203 | 234,750 |
Jeffry M. Householder | 329,218 | 315,595 |
Michael P. McMasters | Stephen C. Thompson | Beth W. Cooper | Elaine B. Bittner | Jeffry M. Householder | |||||||||||||||
Base Salary (based upon severance multiple) | $ | 1,740,000 | $ | 680,000 | $ | 620,000 | $ | 610,000 | $ | 610,000 | |||||||||
Annual Cash Bonus (based upon severance multiple)1 | $ | 1,317,199 | $ | 332,080 | $ | 301,397 | $ | 257,451 | $ | 224,773 | |||||||||
Healthcare and Other Insurance Benefits2 | $ | 54,081 | $ | 36,125 | $ | 36,216 | $ | 36,256 | $ | 25,561 | |||||||||
Unpaid Equity Incentive Compensation3 | $ | 1,043,014 | $ | 444,012 | $ | 401,767 | $ | 372,912 | $ | 388,444 | |||||||||
Total | $ | 4,154,294 | $ | 1,492,218 | $ | 1,359,380 | $ | 1,276,618 | $ | 1,248,777 | |||||||||
Reduced to Not Exceed the IRC 280G Limit4 | $ | (58,217 | ) | — | — | — | — | ||||||||||||
Net Amount Payable to Executive | $ | 4,096,077 | $ | 1,492,218 | $ | 1,359,380 | $ | 1,276,618 | $ | 1,248,777 |
ESTIMATED PAYMENTS OR BENEFITS TO EXECUTIVE NEOs IN CONNECTION WITH A CHANGE IN CONTROL(1) | ||||||||||||||||
Jeffry Householder | James Moriarty | Beth Cooper | Kevin Webber | |||||||||||||
Base Salary (based upon severance multiple) | $ | 1,800,000 | $ | 770,000 | $ | 770,000 | $ | 550,000 | ||||||||
Cash Bonus (based upon severance multiple)(2) | $ | 316,929 | $ | 199,564 | $ | 192,890 | $ | 158,298 | ||||||||
Healthcare and Other Insurance Benefits(3) | $ | 40,864 | $ | 22,122 | $ | 37,137 | $ | 52,397 | ||||||||
Unpaid Equity or Long-Term Cash Incentive Compensation(4) | $ | 1,728,677 | $ | 734,249 | $ | 728,308 | $ | 525,018 | ||||||||
Total | $ | 3,886,470 | $ | 1,725,935 | $ | 1,728,335 | $ | 1,360,713 | ||||||||
Reduced to Not Exceed the IRC 280G Limit (5) | $ | (2,235,098 | ) | $ | (143,374 | ) | $ | (246,822 | ) | $ | (614,881 | ) | ||||
Net Amount Payable to Executive | $ | 1,651,372 | $ | 1,582,561 | $ | 1,481,513 | $ | 745,832 |
1 | Mr. Thompson was not included in this table because he retired effective December 31, 2019. |
2 | The average of the cash incentive awards under the 2015 Cash Plan (or any predecessor plan) for |
3 | Based upon the expected healthcare cost per employee for |
4 | This represents the target equity awards under the |
5 | The total severance amount payable to a |