COMPENSATION DISCUSSION AND ANALYSIS (CD&A)
IntroductionOur Named Executive Officers
| | | | | | | | | | | | | | |
| Joseph Hamrock
President and CEO | | | Donald E. Brown
Executive Vice President (“EVP”), CFO and President, NiSource Corporate Services (“NCS”) | | | Carrie J. Hightman*
EVP, Chief Legal Officer (“CLO”) and CEO of Columbia Gas of Massachusetts (“CMA”) | | | Violet G. Sistovaris
EVP and Chief Experience Officer | | | Pablo A. Vegas
EVP, COO and President, NiSource Utilities | |
*
| Ms. Hightman separated from the Company on January 29, 2021. |
This CD&A describes2020 Business Developments and Accomplishments
Fiscal 2020 was an important transitional year for the Company. We kept our compensation philosophyfocus on execution despite the backdrop of COVID-19 and the material elementssale of the CMA business. This focused execution drove continued investments in our asset modernization programs, enhanced our implementation of a safety management system across all of our 2019 executive compensation program applicableoperating companies, and advanced our transition to renewable energy generation. Throughout the Named Executive Officers.year, we responded to our customer and community needs as relentless champions of safety, service and comfort. Our operating companies maintained their commitment to delivering safe and reliable utility service, while supporting customers through the challenges of COVID-19 by suspending shut offs, stopping late fees and offering additional flexible payment plans.
The Named Executive OfficersFollowing the closing of the CMA transaction in 2019 were:
Joseph Hamrock- PresidentOctober, we repositioned our leadership and CEO
Donald E. Brown- Executive Vice Presidentlaunched a Company-wide, multi-year initiative to enhance efficiencies and CFO
Carrie J. Hightman- Executive Vice Presidentreduce overhead costs as we propel our safety and Chief Legal Officermodernization strategies forward (“CLO”NiSource Next”)
Violet G. Sistovaris- Executive Vice President and President, Northern Indiana Public Service Company LLC (“NIPSCO”)
Pablo A. Vegas- Executive Vice President and President, Gas Utilities
2019 Business Developments
During 2019,. At the same time, we continued to execute on our established infrastructure investment-driven business strategy and remained deeply focused on our top priority- safety. We continue to invest in safety improvements, implement policies and procedures, develop technical training and guidelines for our employees and leverage new tools and technology to improve our maps, records and infrastructure performance. Importantly, we followed through on our commitment to accelerate and enhance our schedule for implementation of a Safety Management System (“SMS”) across all of our operating companies. Key developments during 2019 included:
Installing over-pressurization protection on low pressure systems across our seven-state service territory, including the completion of those upgrades in Massachusetts and Virginia.
Implementing an Incident Command Structure (ICS) aligned with Federal Emergency Management Agency standards and providing ICS training to nearly all our employees, enhancing our emergency preparedness and response capability.
Introducing a corrective action program which offers a simple way for employees and contractors to report safety concerns and supports our systematic process to review, prioritize, and track progress to reduce risk.
Training 86% of gas employees on SMS, with the completion of the training of the rest of our gas employees targeted for 2020.
Appointing an independent quality review board to oversee our safety programs.
Investing approximately $1.9 billion of capital across our Columbia Gas and NIPSCO operating companies in support of long-term safety and service reliability for our customers and communities.
Replacing approximately 337 miles of priority gas pipelines across seven states, with the goal of enhancing gas system safety and reliability, and reducing methane emissions.
Replacing approximately 33 miles of underground electric cable and more than 1900 electric poles in Indiana to further support increased electric reliability.
Advancing our electric generation strategy in Indiana, consistent with our 2018 Integrated Resource Plan by obtaining approval for wind projects announced in 2019 and completing our Coal Combustion Residuals (CCR) capital investments.
Achieving significant industry and national recognition, including: being named to the Dow Jones Sustainability-North America Index for the sixth consecutive year; being named to the Bloomberg Gender Equality Index for the second consecutive year; listed as one of America’s Best Large Employers by Forbes magazine for the fourth consecutive year; and, once again, being named to the FTSE4Good index, an index that measures the performance of companies demonstrating strong environmental, social and governance practices.(“ESG”) strategies, which along with NiSource Next, are designed to deliver sustained value over the long-term to all our stakeholders, including our customers, communities and employees.
Despite significant transitional and operational achievements in 2020, our performance results and stock price were significantly impacted by COVID-19 and the effect of the sale of the CMA business. This resulted in declines in executive pay for 2020 as compared to 2019, as reflected by our short-term cash-based incentive program (“STI”) and performance-based stock unit (“PSU”) incentive program results. For illustrative purposes:
■ | Our 2020 STI program paid out at 40% of target, as compared to an STI payout at 62% of target in 2019 |
■ | Our 2018 PSU program that vested based on performance through December 31, 2020 and continued service through February 26, 2021, paid out at a vesting level of approximately 55% of target, as compared to a vesting level of 100% of target for the PSUs that vested based on performance through December 31, 2019 |