| Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
On July 22, 2021, CenterPoint Energy, Inc. (the “Company”) announced the following determinations and decisions of the independent directors of the Board of Directors (“Board”) of the Company, which included various actions and recommendations by the Compensation Committee of the Board and the Governance Committee of the Board, as applicable:
(1) the immediate implementation of a new independent leadership and governance structure for the Company following the substantial refreshment of the Company’s Board in recent years, specifically the creation and appointment of the Independent Chair of the Board role, the elimination of the Executive Chairman position, the maintenance of the separation of the roles of Board Chair and Chief Executive Officer at the Company, and the appointment of current independent member of the Board and chair of the Governance Committee of the Board, Mr. Martin H. Nesbitt, to the newly created position of Independent Chair of the Board;
(2) the accelerated departure of Mr. Milton Carroll, Executive Chairman of the Company, from his long-time chairmanship, employee and director roles, and associated arrangements, as more fully described below and in the Company’s announcements – Mr. Carroll’s board, executive and employee position as Executive Chairman terminated as of close of business on July 21, 2021 and he will cease serving as a member of the Board on September 30, 2021; and
(3) taking into account the departure of Mr. Carroll, elimination of the Executive Chair role and immediate implementation of the new independent leadership and governance structure at the Company, and recognizing, among other things and the matters referred to in the Company’s announcements, the importance of retaining Mr. David J. Lesar, President and Chief Executive Officer of the Company, his continuing to lead the Company and having Mr. Lesar hold a more significant amount of equity in the Company to more closely tie his interests to those of the Company’s shareholders, entry into retention incentive arrangements, as more fully described below, with Mr. Lesar – such arrangements are neither part of Mr. Lesar’s regular annual compensation nor being awarded on a regularly recurring basis.
Mr. Carroll’s departure from the Company is not the result of any disagreement he had with the Company on any matter relating to the Company’s operations, policies and practices, including any matters concerning the Company’s controls or any financial or accounting-related matters or disclosures.
On the approval and recommendation of the Compensation Committee and approval of the Board (acting solely through its independent directors), the Company has entered into a separation agreement between the Company and Mr. Carroll (the “Separation Agreement”), dated July 21, 2021. Under the terms of the Separation Agreement, Mr. Carroll is required to exit the position of Executive Chairman on July 21, 2021 and from his position as a Board member by September 30, 2021. He is also required to comply with various restrictive and other covenants, execute a release of claims against the Company and agree to provide transition services, cooperation and other support as may be reasonably requested. Under the terms of the Separation Agreement, Mr. Carroll receives a lump sum cash payment of $28,072,000 and his separation is treated as an “enhanced retirement” for purposes of his outstanding 2019, 2020 and 2021 equity award agreements.
On the approval and recommendation of the Compensation Committee and approval of the Board (acting solely through its independent directors), the Company has entered in a retention incentive agreement with Mr. Lesar (the “Retention Incentive Agreement”), dated July 20, 2021. Under the terms of the Retention Incentive Agreement, Mr. Lesar will receive a total of 1 million shares of common stock of the Company (the “Total Share Award”) as follows: (i) an equity award to be granted in July 2021 consisting of 400,000 restricted stock units or such lesser number as may be required pursuant to the annual individual restricted stock unit award limitation (the “Award Limitation”) under the Company’s Long-term Incentive Plan (the “LTIP”), which will vest in full on December 31, 2022 (the “July 2021 Award”); (ii) an equity award to be granted in February 2022 consisting of the number of restricted stock units equal to the remainder of the Total Share Award not granted under the July 2021 Award or such lesser number as may be required pursuant to the Award Limitation under the LTIP, which will vest in full on December 31, 2023 (the “February 2022 Award”); (iii) an equity award to be granted in February 2023 consisting of the number of restricted stock units equal to the remainder of the Total Share Award not granted in the aggregate
