4 results
DEF 14A
NWE
NorthWestern Energy Group, Inc.
6 Mar 24
Definitive proxy
2:58pm
Our executive pay program is designed to align the long-term interests of our executives, shareholders, and customers. For many years, the program has consisted of four components (base salary, annual cash incentive, long-term equity incentive, and executive retirement equity awards). In 2023, we made two changes to our pay program. First, we updated our long-term equity incentive awards, which now are split 70/30 between performance share units with a three-year performance period and restricted share units with a three-year restricted period. Previously, such awards were 100 percent performance share units with a three-year performance period. Second, we discontinued our executive retirement equity awards and intend to replace such awards in 2024 with a more traditional supplemental executive retirement contribution. These changes better align our executive pay program with our peers and the market. The full design of our compensation program and its components are detailed in the Compensation Discussion and Analysis , beginning on page 18 .
Percent of Total Compensation | |||||||||||
Component | Description | CEO | Other NEO Avg. | ||||||||
Base Salary Fixed, paid in cash | Target middle of competitive range of peer group, with adjustments for trade area economics, turnover, tenure, and experience | 25% | 44% | ||||||||
Annual Cash Incentive Variable, paid in cash | Based on net income, safety, reliability, and customer satisfaction metrics and individual performance | 25% | 22% | ||||||||
Long-Term Incentive Program Award Variable or at risk, paid in equity | 70 percent performance share units, based on EPS, ROAE and relative TSR performance over a three-year performance period and 30 percent restricted share units vesting over a three-year restricted period. | 50% | 34% |
DEF 14A
NWE
NorthWestern Energy Group, Inc.
6 Mar 24
Definitive proxy
2:58pm
Last year, we worked as safely as ever (equaling our previous best safety performance) and provided highly reliable service to our customers. However, our customer satisfaction performance did not align with our strong operational record. Thus, we achieved near target performance for our 2023 annual incentive awards. Further details regarding these awards and how performance is calculated are provided in the Compensation Discussion and Analysis .
2023 Annual Cash Incentive Outcome | 77% | Long-Term Incentive Program Vesting in 2023 | 28% |
DEF 14A
NWE
NorthWestern Energy Group, Inc.
6 Mar 24
Definitive proxy
2:58pm
The plan funding percentage is determined by the Company’s performance against certain financial and operational measures. Management proposes the performance measures and associated targets, which the Compensation Committee and the Board review, adjust if deemed necessary, and then approve with adoption of the plan. Following the end of the plan year, the Compensation Committee reviews data submitted by management regarding Company performance against each of the specific performance targets and determines the degree to which each performance measure was met during the year, subject to Board approval. The aggregate percentage of financial and operational measures met during the plan year represents the plan funding percentage for the annual incentive plan.
For our executives, the funding (as a percentage of target) under the annual incentive plan has ranged from 74 percent to 136 percent for the five previous years, as illustrated in the table to the right. | Historical Funding of Annual Cash Incentive (as a percentage of target) | ||||||||||||||||||||||
2018 | 2019 | 2020 | 2021 | 2022 | |||||||||||||||||||
136% | 126% | 74% | 106% | 96% | |||||||||||||||||||
For many years, including 2023, the annual incentive plan has used four categories of performance measures to determine the plan funding percentage – financial, safety, reliability, and customer satisfaction. The relative weightings of these measures are set forth in the graphic to the left. In order for any awards under the 2023 annual incentive plan to be earned and paid out, the Company must attain at least 90 percent of the budgeted net income target, which coincides with the threshold net income target for the plan. This metric for determining performance against our financial goal is derived from our audited financial statements. |
DEF 14A
NWE
NorthWestern Energy Group, Inc.
6 Mar 24
Definitive proxy
2:58pm
2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Annual Incentive Plan Information | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Performance Measures | Weight (% of Total Plan Payout) | Performance Level | Target % Achieved | Final Funding % of Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Threshold | Target | Maximum | Actual Achieved | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial (55%) (1) | Net Income ($ in millions) | 55 | % | $191.0 | $ | 212.3 | $ | 233.5 | $194.1 | 57.3 | 31.5 | Safety (15%) (2) | Lost Time Incident Rate | 5 | % | 0.56 | 0.46 | 0.23 | 0.45 | 102.2 | 5.1 | Total Recordable Incident Rate | 5 | % | 1.75 | 1.49 | 1.05 | 1.34 | 117.0 | 5.9 | Safety Training Completion | 5 | % | 99.0 | % | 99.5 | % | 100.0 | % | 100.0 | % | 149.6 | 7.5 | Reliability (15%) (3) | SAIDI (excluding major event days) | 5.0 | % | 116.00 | 102.00 | 89.00 | 88.80 | 150.0 | 7.5 | SAIDI (including major event days) | 5.0 | % | 165.00 | 122.00 | 94.00 | 94.80 | 148.6 | 7.4 | Gas – Leaks per 100 Miles of Main | 2.5 | % | 14.60 | 10.00 | 6.80 | 9.60 | 106.4 | 2.7 | Gas – Damages per 1000 Locates | 2.5 | % | 3.80 | 3.00 | 1.20 | 3.10 | 96.3 | 2.4 | Customer Satisfaction (15%) (4) | J.D. Power Residential Electric and Gas Survey Performance Ranking | 5 | % | 720.00 | 730.00 | 734.00 | 696.80 | — | — | Operational Performance – Customer Survey by Flynn Wright | 5 | % | 33.48 | 37.20 | 40.92 | 35.20 | 73.1 | 3.7 | Reputational Perceptions – Customer Survey by Flynn Wright | 5 | % | 32.17 | 35.75 | 39.32 | 33.40 | 66.5 | 3.3 | TOTAL FUNDING PERCENTAGE | 77 |
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