3 results
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. |
10-K
2023 FY
NWE
NorthWestern Energy Group, Inc.
14 Feb 24
Annual report
7:42pm
The most important component of an investment strategy is the portfolio asset mix, or the allocation between the various classes of securities available. The mix of assets is based on an optimization study that identifies asset allocation targets in order to achieve the maximum return for an acceptable level of risk, while minimizing the expected contributions and pension and postretirement expense. In the optimization study, assumptions are formulated about characteristics, such as expected asset class investment returns, volatility (risk), and correlation coefficients among the various asset classes, and making adjustments to reflect future conditions expected to prevail over the study period. Based on this, the target asset allocation established, within an allowable range of plus or minus 5 percent, is as follows:
NorthWestern Energy Pension | NorthWestern Corporation Pension | NorthWestern Energy Health and Welfare | |||||||||||||||||||||||||||||||||
December 31, | December 31, | December 31, | |||||||||||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||||||||||||
Fixed income securities | 45.0 | % | 45.0 | % | 90.0 | % | 90.0 | % | 40.0 | % | 40.0 | % | |||||||||||||||||||||||
Non-U.S. fixed income securities | — | — | — | 1.0 | — | — | Opportunistic fixed income | 11.0 | 5.5 | 3.0 | — | — | — | Global equities | 38.5 | 44.0 | 7.0 | 9.0 | 60.0 | 60.0 | Private real estate | 5.5 | 5.5 | — | — | — | — | ||||||||
10-K
2023 FY
NWE
NorthWestern Energy Group, Inc.
14 Feb 24
Annual report
7:42pm
Fair value is determined for each component of the performance unit awards. The fair value of the service-based component is estimated based upon the closing market price of our common stock as of the grant date less the present value of expected dividends. The fair value of the performance-based component is estimated based upon the closing market price of our common stock as of the grant date less the present value of expected dividends, multiplied by an estimated performance multiple determined on the basis of historical experience, which is subsequently trued up at vesting based on actual performance. The fair value of the market-based component is estimated using a statistical model that incorporates the probability of meeting performance targets based on historical returns relative to the peer group. The following summarizes the significant assumptions used to determine the fair value of performance shares and related compensation expense as well as the resulting estimated fair value of performance shares granted:
2023 | 2022 | ||||||||
Risk-free interest rate | 4.33 | % | 1.82 | % | |||||
Expected life, in years | 3 | 3 | |||||||
Expected volatility | 30.4% to 41.0% | 28.2% to 38.8% | |||||||
Dividend yield | 4.4 | % | 4.5 | % |
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