UNITED STATES |
SECURITIES AND EXCHANGE COMMISSION |
Washington, D.C. 20549 |
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Proxy Statement Pursuant to Section 14(a) of |
the Securities Exchange Act of 1934 (Amendment No. ) |
Filed by the Registrant x |
Filed by a Party other than the Registrant |
Check the appropriate box: | |
| Preliminary Proxy Statement |
| Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
| Definitive Proxy Statement |
| Definitive Additional Materials |
| Soliciting Material Pursuant to §240.14a-12 |
NorthWestern Corporation |
(Name of Registrant as Specified In Its Charter) |
(Name of Person(s) Filing Proxy Statement, if other than the Registrant) |
Payment of Filing Fee (Check the appropriate box): | |||
x | No fee required. | ||
o | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. | ||
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NorthWestern Corporation
d/b/a NorthWestern Energy
3010 W. 69th Street
Sioux Falls, SD 57108
www.northwesternenergy.com
March 9, 2009
W., Huron, South Dakota.
The 2009 Annual Meeting of Stockholders of NorthWestern Corporation will be held on
Wednesday, April 22, 2009, at 2:00 p.m. Mountain Time at the Montana Tech Student Union Building, 1300 West Park Street, Butte, Montana. The purpose of the annual meeting is to:
Meeting Date: |
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Meeting Time: | 9:00 a.m. CDT |
Location: | NorthWestern Energy Operations Center |
600 Market Street W. | |
Huron, South Dakota | |
Record Date: | February 22, 2010 |
· | Elect our slate of |
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| Ratify our appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the year ending December 31, |
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| Transact any other business |
This year, we are pleased
Holders ofowning NorthWestern Corporation common stock of NorthWestern Corporation at the close of business on February 23, 2009 will be entitled to vote on all matters that may come before the meeting22, 2010, or any adjournments or postponements thereof. A complete list of the stockholderstheir legal proxy holders, are entitled to vote at the meetingannual meeting. Please refer to page 2 of the proxy statement for information about our voting procedures.
Stockholders are urged to vote their proxy throughmaterials on the Internet, by telephone or by mail. A stockholder who attends the meeting in person may withdraw his or her(2) a copy of our proxy statement, a proxy card and vote at the meeting. The Board of Directors recommends a vote “FOR” each of the proposals.
our 2009 Annual Report.
Miggie E. Cramblit
Vice President,
March 9, 2009
Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to Be Held on April 22, 2009: The proxy statement and annual report to stockholders are available on the Internet at http://www.proxyvote.com.
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Items of Business to Be Considered at the Annual Meeting | 1 |
Appointment of Proxy Holders | 1 |
Record Date and Voting | 1 |
Quorum, Vote Required and Method of Counting | 2 |
Method and Cost of Soliciting and Tabulating Votes | 4 |
Electronic Access to Proxy Statement and Annual Report | 4 |
Attending the Annual Meeting |
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Householding; Receipt of Multiple Notices |
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Additional Information |
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Stockholder Proposals |
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Assistance |
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Proposal |
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Board Leadership Structure | 15 |
Risk Oversight of the Company | 15 |
Determination of Independence |
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Code of Conduct |
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Committees of the Board |
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Transactions with Related Persons | 18 |
Communications with Our Board |
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Audit Committee Report |
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Executive Summary |
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Oversight of Our Executive Compensation Program |
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Targeted Overall Compensation and Competitive Analysis |
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Components of Executive Compensation |
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Employment Agreements |
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Compensation Committee Interlocks and Insider Participation |
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2009 Summary Compensation |
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2009 Grants of Plan-Based Awards |
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Outstanding Equity Awards at |
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2009 Stock Vested |
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Post Employment Compensation | 33 |
2009 Pension Benefits |
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Non-qualified Deferred Compensation |
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Termination or Change in Control Arrangements |
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Death and Disability Benefits |
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2009 Director Compensation |
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Section 16(a) Beneficial Ownership Reporting Compliance | 39 |
Security Ownership of Certain Beneficial Holders | 40 |
Proposal2 – Ratification of Independent Registered Public Accounting Firm |
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ABOUTStockholders.
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Election of our seven nominees to serve on our Board;
Ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for 2009;
Approval of the NorthWestern Energy Employee Stock Purchase Plan; and
Transaction of any other matters and business as may properly come before the annual meeting or any postponement or adjournment of the annual meeting.
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Ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for 2009 requires the affirmative vote of a majority of the shares of common stock present in person or represented by proxy at the annual meeting and entitled to vote thereon.
Approval of the NorthWestern Energy Employee Stock Purchase Plan requires the affirmative vote of a majority of the shares of common stock present in person or by proxy and entitled to vote at the annual meeting.
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“FOR”
“FOR” ratification of
“FOR” the approval of the NorthWestern Energy Employee Stock Purchase Plan.
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Voting in Person at the Annual Meeting.Submitting your vote by proxy will not affect your right to attend the annual meeting and to vote in person. If you attend the annual meeting and wish to vote in person, you will be given a ballot at the annual meeting. Please note, however, that if your shares are held in “street name” by a broker, bank or other nominee and you wish to vote at the annual meeting, you must bring to the annual meeting a proxy from the recordholderrecord holder of the shares authorizing you to vote at the annual meeting.
We do Submitting your vote by proxy will not expect that any matters other than those described in this proxy statement will be brought beforeaffect your right to attend the annual meeting; however, by givingmeeting and to vote in person.
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For the proposal relating to ratification of the appointment of our independent registered public accounting firm, unless you instruct otherwise; but they do not have authority to vote on non-routine matters, such as the election of directors. If you do not provide voting instructions, your broker, bank or other nominee may vote “FOR,” “AGAINST”your shares only on routine matters or “ABSTAIN.” Assumingleave your shares unvoted. We encourage you to provide instructions to your broker, bank or other nominee. This ensures your shares will be voted at the meeting.
For the proposal relating to the approval of the NorthWestern Energy Employee Stock Purchase Plan, you may vote “FOR,” “AGAINST” or “ABSTAIN.” Assuming a quorum is present, the failure to vote, either by not returning a properly executed proxy card or not voting in person at the annual meeting, will have no effect on the outcome of the voting on the proposal. However, abstentions will have the same effect as voting “AGAINST” the approval of the NorthWestern Energy Employee Stock Purchase Plan.
follows. If you sign and return your proxy card without indicating your vote, your shares will be voted “FOR” each of the nominees for director, “FOR” ratification of Deloitte & Touche LLP as our independent registered public accounting firm, and “FOR” the approval of the NorthWestern Energy Employee Stock Purchase Plan, and in accordance with the recommendations of our Board on any other matters properly brought before the annual meeting for a vote.
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We will, on request, reimburse stockholders who are brokers, banks or other nominees for their reasonable expenses in sending proxy materials and annual reports to the beneficial owners of the shares they hold of record.
Dan Rausch Director – Investor Relations (605) 978-2902 | or | Tammy Lydic Assistant Corporate Secretary (605) 978-2913 |
The nominees for election to the seven positions on our Board, selected by our Nominating and Corporate Governance Committee of the Board and proposed by our Board to be voted upon at the annual meeting, are Stephen P. Adik; E. Linn Draper, Jr.; Dana J. Dykhouse; Julia L. Johnson; Philip L. Maslowe; D. Louis Peoples and Robert C. Rowe.
Unless authority to vote for the election of directors has been specifically withheld, the persons named in the accompanying proxy intend to vote “FOR” the election of director nominees Adik, Draper, Dykhouse, Johnson, Maslowe, Peoples and Rowe to hold office as directors until the next annual meeting of stockholders in 2010 and until their successors are duly elected and qualified. All nominees have advised the Board that they are able and willing to serve as directors.
vacated position.
Nominees
Stephen P. Adik, age 65, director since November 1, 2004, is the retired Vice Chairman (2001-2003) of NiSource Inc. (NYSE: NI), an electric and natural gas production, transmission and distribution company; formerly Senior Executive Vice President and Chief Financial Officer (1998-2001) of NiSource. Mr. Adik serves on the Boards of Beacon Power (NASDAQ: BCON), a designer and manufacturer of power conversion and sustainable energy storage systems for the distributed generation, renewable energy, and backup power markets; the Chicago SouthShore and South Bend Railroad, a regional rail carrier serving northwest Indiana; and Dearborn Midwest Conveyor Company, a manufacturer and installer of conveyor equipment for the bulk materials and automotive industries.
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E. Linn Draper, Jr., age 67, Chairman of the Board since November 1, 2004, is the retired Chairman, President and Chief Executive Officer of American Electric Power Company (NYSE: AEP), a public utility holding company (1992-2004). Mr. Draper serves on the Boards of Alliance Data Systems Corporation (NYSE: ADS), a provider of transaction services, credit services and marketing services; Alpha Natural Resources Inc. (NYSE: ANR), a coal producer; Temple-Inland Inc. (NYSE: TIN), a corrugated packing and forest products business; and TransCanada (NYSE: TRP), a transporter and marketer of natural gas and generator of electric power in Canada and the United States.
Dana J. Dykhouse,age 51, director since January 30, 2009, President and Chief Executive Officer of First PREMIER Bank, a regional bank headquartered in Sioux Falls, S.D. with bank locations across eastern South Dakota, since 1995. Mr. Dykhouse also serves in a variety of leadership roles in civic, community and professional organizations in South Dakota.
Julia L. Johnson, age 46, director since November 1, 2004, is President of NetCommunications, LLC, a strategy consulting firm specializing in the energy, telecommunications and information technology public policy arenas, since 2000. Ms. Johnson served as Commission Chairman (1997-1999) and Commissioner (1992-1997) for the Florida Public Service Commission. Ms. Johnson serves on the Boards of Allegheny Energy Inc. (NYSE: AYE), an electric utility holding company; MasTec, Inc. (NYSE: MTZ), a leading end-to-end voice, video, data and energy infrastructure solution provider; and American Water (NYSE: AWK), the largest investor-owned water and wastewater utility company in the United States which serves more than 15.6 million people in 32 U.S. states and in Ontario, Canada.
Philip L. Maslowe, age 62, director since November 1, 2004, was formerly Executive Vice President and Chief Financial Officer (1997-2002) of The Wackenhut Corporation, a security, staffing and privatized prisons corporation. Mr. Maslowe serves on the Board of Delek US Holdings, Inc. (NYSE: DK), a diversified energy business focused on petroleum refining and supply and retail marketing; Hilex Poly Co., LLC, a leading manufacturer of plastic bag and film products; and American Media, Inc., a leading publishing company in the field of celebrity journalism and health and fitness magazines.
D. Louis Peoples, age 68, director since January 14, 2006, is the retired Chief Executive Officer and Vice Chairman of the Board of Orange and Rockland Utilities, Inc. (1994-1999). Mr. Peoples serves on the Boards of the Center for Clean Air Policy, the North Lake Tahoe Historical Society, and the Nevada Area Council, Boy Scouts of America. He is also on the technical Advisory Board of the Nevada Institute for Renewable Energy Commercialization and serves as Regional Director for the San Francisco Bay Area and Northern Nevada for the Naval War College Foundation. Mr. Peoples is a sponsor of the Aspen Institute Forum on Energy, the Environment and the Economy.
Robert C. Rowe,age 53, President, Chief Executive Officer and director of NorthWestern Corporation since August 2008. Prior to joining NorthWestern, Mr. Rowe was co-founder and senior partner at Balhoff, Rowe & Williams, LLC, a specialized national professional services firm providing financial and regulatory advice to clients in the telecommunications and energy industries (January 2005-August 2008); and served as Chairman and Commissioner of the Montana Public Service Commission (1993–2004).
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR”
THE ELECTION OF THESE SEVEN NOMINEES.
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Directors Not Standing for Re-election
The following information is given with respect to Mr. Fossel, who is not standing for re-election at our annual meeting. Mr. Fossel will continue to serve on our Board until the annual meeting.
Jon S. Fossel, age 67, director since November 1, 2004, is the retired Chairman, President and Chief Executive Officer of Oppenheimer Management Corporation, a mutual fund investment company (“Oppenheimer”) (1989-1996). Mr. Fossel serves as nonexecutive chairman of the Board of UnumProvident Corporation (NYSE: UNM), a disability and life insurance provider.
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BENEFICIAL OWNERSHIP OF COMMON STOCK
Our common stock is currently the only class of voting securities. The number of shares noted are those beneficially owned, as determined under the rules of the Securities and Exchange Commission (“SEC”), and such information is not necessarily indicative of beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any shares as to which a person has sole or shared voting power or investment power and any shares which the person has the right to acquire within 60 days through the exercise of option, warrant or right.
Security Ownership of Directors and Management
The following table sets forth certain information as of February 23, 2009, with respect to the beneficial ownership of shares of our common stock owned by our current directors, the Named Executive Officers, and by all of our directors and executive officers as a group.
| Amount and Nature of Beneficial Ownership |
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Name of Beneficial Owner |
| Unrestricted Shares of Common Stock Beneficially Owned Directly |
| Unrestricted Shares of Common Stock Beneficially Owned Indirectly |
| Unvested Restricted Stock |
| Deferred Stock Units |
| Total Shares of Common Stock Beneficially Owned |
| Percent of Common |
Stephen P. Adik (1) |
| – |
| 20,000 |
| 4,999 |
| 19,843 |
| 44,842 |
| * |
E. Linn Draper, Jr. |
| – |
| – |
| 4,999 |
| 38,276 |
| 43,275 |
| * |
Dana J. Dykhouse |
| 3,000 |
| – |
| – |
| – |
| 3,000 |
| * |
Jon S. Fossel |
| 6,501 |
| – |
| 4,999 |
| – |
| 11,500 |
| * |
Julia L. Johnson |
| – |
| – |
| 4,999 |
| 27,671 |
| 32,670 |
| * |
Philip L. Maslowe |
| – |
| – |
| 4,999 |
| 25,944 |
| 30,943 |
| * |
D. Louis Peoples |
| 3,000 |
| – |
| 4,999 |
| 12,018 |
| 20,017 |
| * |
Robert C. Rowe (2) |
| – |
| 1,725 |
| – |
| – |
| 1,725 |
| * |
Brian B. Bird |
| 19,099 |
| – |
| 9,044 |
| – |
| 28,143 |
| * |
Gregory G. A. Trandem |
| 6,417 |
| – |
| – |
| – |
| 6,417 |
| * |
Curtis T. Pohl |
| 4,476 |
| – |
| 4,367 |
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| 8,843 |
| * |
Miggie E. Cramblit |
| – |
| – |
| 1,500 |
| – |
| 1,500 |
| * |
Michael J. Hanson |
| 36,031 |
| – |
| – |
| – |
| 36,031 |
| * |
Thomas J. Knapp |
| 4,197 |
| – |
| – |
| – |
| 4,197 |
| * |
Directors and Executive Officers as a Group (18 persons) |
| 95,091 |
| 21,725 |
| 57,414 |
| 123,752 |
| 297,982 |
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* Less than 1%. |
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Security Ownership of Certain Beneficial Holders
The following table sets forth information regarding whom we know to be the beneficial owners of more than 5 percent of our issued and outstanding common stock as of February 23, 2009. Such information is based on a review of statements filed with the SEC pursuant to Sections 13(d), 13(f) and 13(g) of the Exchange Act.
Name of Beneficial Owner |
| Shares of Common Stock |
| Percent of Common Stock |
Munder Capital Management (1) |
| 3,445,932 |
| 9.6% |
480 Pierce Street, Suite 300 Birmingham, MI 48009 |
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Zimmer Lucas Partners LLC (2) |
| 2,481,455 |
| 6.9% |
535 Madison Avenue, 6th Floor, New York, NY 10022 |
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CORPORATE GOVERNANCE
Our Board oversees the business of the company. It establishes overall policies and standards for us and reviews the performance of our management. The Board of Directors of the company operates pursuant to a set of written Corporate Governance Guidelines that set forth the company’s corporate governance philosophy and the governance policies and practices that the company has established to assist in governing the company and its affiliates.
All of our corporate governance materials, including our codes of business conduct and ethics, our Corporate Governance Guidelines, and the charters for the Audit Committee, the Nominating and Corporate Governance Committee and the Human Resources Committee, are available for public viewing on our Web site at http://www.northwesternenergy.com under the heading About Us/Corporate Governance. Copies of our corporate governance material also are available without charge to stockholders who request them. Requests must be in writing and sent to: NorthWestern Corporation, Attention: Corporate Secretary, 3010 W. 69th Street, Sioux Falls, SD 57108.
Our Board has adopted a policy that, in connection with the Board’s annual self-evaluation process, attendance and participation by directors is considered in determining continued service on the Board. The Board held 16 regular and special meetings in 2008. Each current director attended more than 75 percent of the aggregate number of the meetings of the Board and of each committee on which he/she served, except for Mr. Fossel. At our last annual meeting of stockholders in May 2008, all of the seven directors then serving were in attendance at the meeting.
Executive sessions of the non-management directors without management in attendance are provided for at each regularly scheduled Board meeting and are chaired by our non-executive Chairman of the Board.
Determination of Independence
A majority of NorthWestern’s directors are required to be independent. A director will be considered independent if he or she qualifies as “independent” under (a) NYSE standards and any applicable laws, and (b) he or she has never been (i) an employee of the company or any of its subsidiaries; (ii) is not a close relative of any management employee of the company; (iii) provides no services to the company, or is not employed by any firm providing major services to the company, other than as a director, and (iv) receives no compensation from the company other than director fees and benefits. The Board’s determination of independence is based upon a review of the questionnaires submitted on an annual basis by each director, the company’s relevant business records, publicly available information and the applicable SEC and NYSE requirements.
Based on its review, the Board determined that all of the non-employee directors (Messrs. Adik, Draper, Dykhouse, Fossel, Maslowe and Peoples and Ms. Johnson) are independent as defined in the listing standards of the NYSE. Mr. Rowe is an executive officer of the company and, therefore, is not independent.
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In August 2006, the
Stephen P. Adik Age 66, Director since 2004, Independent |
Dorothy M. Bradley Age 63, Director since 2009, Independent |
E. Linn Draper Jr. Chairman of the Board Age 68, Director since 2004, Independent |
Dana J. Dykhouse Age 53, Director since 2009, Independent |
Julia L. Johnson Age 47, Director since 2004, Independent |
Philip L. Maslowe Age 63, Director since 2004, Independent |
Denton Louis Peoples Age 69, Director since 2006, Independent |
Robert C. Rowe Age 54, Director since 2008 |
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www.northwesternenergy.com.
Board.
2009.
Our Compensation and Benefits Department administers our executive compensation and benefits plans.
2009.
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Towers Perrin and Watson Wyatt was completed in January 2010.
The NCG Committee has not established specific minimum qualities foreight director nominees or set forth specific qualities or skills thatwere in attendance at the nominating and corporate governance committee believes are necessary for one or more directors to posses. Instead, in considering director candidates, the NCG Committee will take into account whether a candidate has skills, experience and background that add to and complement the range of skills, experience and background of existing directors, based on the following: integrity, accomplishments, business judgment, experience and education, commitment, representation of stockholders, industry knowledge, independence and financial literacy.
meeting.
Communications by stockholders to our Board, including our Chairman and the non-management directors, individually or as a group, should be addressed to our Corporate Secretary at our principal offices at 3010 W. 69th Street, Sioux Falls, South Dakota 57108. The Corporate Secretary will forward directly to the Board any communication received.
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Section 16(a) Beneficial Ownership Reporting Compliance
Based solely on information furnished to us and contained in reports filed with the SEC, as well as written representations that no other reports were required, NorthWestern believes that during 2008, all of its directors and executive officers timely filed all reports required by Section 16 of the Securities Exchange Act of 1934, as amended.
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2009.
Attract and retain an executive team by providing competitive compensation and benefits that reflect our financial and operational size;
Reward executives for both individual and company performance; and
Maximize stockholder value by putting a significant emphasis on annual and long-term performance-based compensation.
· | Attract and retain an executive team by providing competitive compensation and benefits that reflect our financial and operational size; |
· | Reward executives for both individual and company performance; and |
· | Maximize stockholder value by putting a significant emphasis on annual and long-term performance-based compensation. |
While we experienced strong operating results2009. All regular non-represented employees participate in 2008, our Board determined that,this Board-designed program. Regular, represented employees participate in light of the broader economic circumstances, there will be no base pay increases for executive officers in 2009.
a separate management-designed annual incentive program.
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market data as further described below. A Towers PerrinWatson representative generally attends meetings of the HR Committee when compensation decisions are to be madeas necessary and also communicates directly with the HR Committee Chair.Chairman. The CEO provides recommendations to the HR Committee with respect to the corporate performance objectives and goals on which awards of both annual and long-term incentive compensation are based and with respect to issues related to attracting, retaining or motivating individual executive officers. The HR Committee considers this information, along with the advice of Towers Perrin,Watson, and takes into account several factors including but not limited to (1) the desire to align management (and employee) interests with those of stockholders;stockholders, (2) the desire to link management pay to both annual and long-term performance;performance, (3) the need to attract talent from both within and outside of the utility industry;industry, and (4) economic circumstances including turnover and retention considerations -− all of which ultimately determine theour executive compensation program.
The HR Committee considers the responsibilities of the job performed by each of our NEOsexecutive officers and his or her performance, and adjusts each executive’s targeted compensation amounts accordingly. Internal comparison with other officer positions also is considered.
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Several of these companies provide Supplemental Executive Retirement Plan, or SERP, or other special executive retirement plans, which may add significant value to overall compensation. NorthWestern does not provide executive retirement plans other than those available to regular employees. The targeted compensation (salary, annual incentive and long-term incentive) for our CEO, excluding benefits, is 87 percent of the median for energy and utility industry survey data.
Base salary;
Annual cash incentive awards; and
Vesting of long-term equity grants for executives hired prior to 2008.
· | Base salary; |
By targeting each component and total compensation levels to be consistent with utility and energy industry survey data and our peers, the
· | Annual cash incentive awards; and |
· | Long-term incentive awards. |
2009.
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(2) the executive’s target incentive percentage, (3) the annual incentive plan payout percentage, and (4) the executive’s performance multiple. These factors are utilized in the following formula to determine actual payouts of annual cash incentive awards:
Assuming achievement of the minimum financial metric threshold for payout, as further described below, the above formula provides for individual payouts ranging from 85 percent to 138 percent of the individual’s annual cash incentive opportunity.
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| 2008 Incentive Plan Information | ||||||||||||
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| Weight (Percent of Total Plan Payout Percentage) |
| Performance Level |
| Target % Achieved |
| Final Funding % of Total | ||||||
Performance Measures |
| Threshold |
| Target |
| Maximum |
| Actual Achieved | ||||||
Financial |
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Net Income (millions) |
| 55% |
| $61.6 |
| $68.5 |
| $75.3 |
| $67.6 |
| 93.7% |
| 52% |
Operational |
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CAIDI |
| 15% |
| 99.80 |
| 94.80 |
| 89.80 |
| 93.21 |
| 116.0% |
| 22% |
Customer Satisfaction (2) |
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Image Rating |
| 15% |
| 7.50 |
| 7.65 |
| 7.80 |
| 7.35 |
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Safety (3) |
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Lost Work Day Incident Target Rate |
| 15% |
| 2.60 |
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| 1.50 |
| 1.20 |
| 150.0% |
| 17% |
2009 Incentive Plan Information | ||||||||||||||
Weight (Percent of Total Plan Payout %) | Performance Level | Target % Achieved | Final Funding % of Total | |||||||||||
Performance Measures | Threshold ($) | Target ($) | Maximum ($) | Actual Achieved ($) | ||||||||||
Financial | ||||||||||||||
Net Income ($ in millions) | 55% | 66.4 | 73.8 | 81.2 | 73.4 | 97.6% | 53.7% | |||||||
Operational | ||||||||||||||
Safety (1) | ||||||||||||||
Lost Work Day Incident Target Rate | 15% | 1.30 | 1.10 | 1.00 | 0.9 | 150.0% | 22.5% | |||||||
Reliability (2) | ||||||||||||||
SAIDI (total duration of outage per customer─minutes) | 15% | 104 | 90 | 87 | 101 | 61.0% | 9.2% | |||||||
Customer Satisfaction (3) | ||||||||||||||
Image Rating (based on independent survey results) | ||||||||||||||
Reliability | 5% | 7.87 | 8.07 | 8.30 | 8.4 | 150.0% | 7.5% | |||||||
Friendly | 5% | 8.10 | 8.30 | 8.50 | 8.5 | 150.0% | 7.5% | |||||||
Value | 5% | 6.78 | 6.98 | 7.18 | 7.2 | 150.0% | 7.5% |
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| Safety performance is calculated by us and participating Edison Electric Institute, or EEI, benchmarking utilities as defined by Occupational Safety and Health Administration, or OSHA. OSHA specifically defines what workplace injuries and illnesses should be recorded and, of those recorded, which must be considered lost time incidents. The threshold level for the safety measure |
(2) | System Average Interruption Duration Index, or SAIDI, is a system reliability index used by us and participating Institute of Electrical and Electronic Engineers, Inc. benchmarking utilities to measure the duration of interruptions on a utility’s electric system. SAIDI indicates the total duration of interruption for the average customer during a predefined period of time. The threshold level for the reliability measure represents first quartile performance within the industry; the target level represents continual improvement over 2008 results of 93 minutes; and the maximum level represents a more than 5 percent improvement over 2008 results. |
(3) | Customer satisfaction is measured based on |
2009.
19
events, unanticipated developments and other extenuating circumstances. The HR Committee analyzes the total mix of available information (including performance against any quantitative performance goals) on a qualitative, and not strictly quantitative, basis in making annual cash incentive determinations.
executive officers.
Vesting of
OurIncentive Plan Program
20
the nonvested shares.
In February 2009, the Board approved a three-year, performance-based award program under the 2005 Long-Term Incentive Plan that will beis subject to cliff vesting on December 31, 2011. Shares will vest if, at the end of year three, with the first potentialthree-year performance period, we have achieved certain performance goals and the individual remains employed by us. The exact number of shares issued will vary from 0% to 200% of the target award, depending on actual company performance relative to the performance goals. These awards to vest on December 31, 2011.contain both a market- and performance-based component. The performance measuresgoals for these awards are based on a combined total stockholder returnindependent of each other and financial results matrix, and theequally weighted. The program is intended to align management with stockholder interests. Targets range from 40%40 percent to 100%100 percent of NEOeach executive officer’s base pay, depending on position. Settlement of awards will be made only if we maintain investment grade credit ratings on both a secured and unsecured basis.
The performance goals for these awards are based on a 50% weighting for both a three-year Return on Average Equity, or ROAE, and Basic Earnings Per Share, or EPS, growth performance; and a 50% weighting for Total Shareholder Return, or TSR, relative to the peer group noted above.
21
Human Resources Committee Interlocks and Insider Participation
During 2008, Stephen P. Adik, Julia L. Johnson and Philip L. Maslowe served on our Human Resources Committee. EachMr. Rowe’s employment agreement is an independent member as defined by New York Stock Exchange corporate governance listing standards. None of the persons who served as members of our HR Committee during 2008 are officers or employees or former employees of NorthWestern or any of its subsidiaries. In addition, no executive officer of NorthWestern or any of its subsidiaries served as a member of the Board or compensation committee of any other entity.
COMPENSATION COMMITTEE REPORT
The HR Committee reviewed and discussed the Compensation Discussion and Analysis with management. Based on this review and discussion, the HR Committee recommended to the Board that the Compensation Discussion and Analysis be included in the proxy statement and the Annual Report on Form 10-K for the year ended December 31, 2008.
Human Resources Committee
Philip L. Maslowe, Chairman
Stephen P. Adik
Julia L. Johnson
22
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
The table below shows the compensation earned during the years ended December 31, 2008, 2007 and 2006 by our Chief Executive Officer, Chief Financial Officer and the three most highly compensated officers, other than the Chief Executive Officer and Chief Financial Officer, who were serving as executive officers at the end of 2008. The table also includes our former Chief Executive Officer and a former executive officer who would have been among the three most highly compensated employees other than our Chief Executive Officer and Chief Financial Officer had they been employed by us at the end of 2008. Collectively, these officers are referred to as named executive officers, or NEOs.
2008 Summary Compensation
The following table sets forth the compensation earned during 2008, 2007 and 2006 for services in all capacities by the NEOs:
Name and | Year |
| Salary ($) |
| Stock Awards (1) ($) |
| Non-equity Incentive Plan Compensation (2) ($) |
| Change in Pension Value and Nonqualified Deferred Compensation Earnings (3) ($) |
| All Other Compen- sation (4) ($) |
| Total ($) |
Robert C. Rowe (5) | 2008 |
| 169,231 |
| — |
| 120,960 |
| 15,050 |
| 107,253 |
| 412,494 |
President & Chief |
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brian B. Bird | 2008 |
| 325,129 |
| 132,221 |
| 149,244 |
| 11,415 |
| 35,759 |
| 653,768 |
Vice President and | 2007 |
| 301,846 |
| 208,235 |
| 109,411 |
| 4,731 |
| 44,638 |
| 668,862 |
Chief Financial Officer | 2006 |
| 287,500 |
| 96,505 |
| 69,537 |
| 10,722 |
| 32,646 |
| 496,910 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gregory G. A. Trandem (6) | 2008 |
| 216,000 |
| 74,335 |
| 78,624 |
| 13,006 |
| 41,680 |
| 423,645 |
Former Vice President – | 2007 |
| 206,731 |
| 108,534 |
| 60,912 |
| 6,447 |
| 40,007 |
| 422,631 |
Administrative Services | 2006 |
| 199,588 |
| 31,205 |
| 36,240 |
| 10,327 |
| 34,874 |
| 312,234 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Curtis T. Pohl | 2008 |
| 207,988 |
| 63,840 |
| 67,012 |
| 17,813 |
| 39,159 |
| 395,812 |
Vice President – | 2007 |
| 190,000 |
| 93,973 |
| 51,846 |
| — |
| 41,426 |
| 377,245 |
Retail Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Miggie E. Cramblit | 2008 |
| 175,385 |
| 9,033 |
| 69,160 |
| N/A |
| 127,663 |
| 381,241 |
Vice President, |
|
|
|
|
|
|
|
|
|
|
|
|
|
General Counsel & |
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate Secretary (7) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael J. Hanson (8) | 2008 |
| 355,180 |
| (127,678 | ) | 210,825 |
| 26,115 |
| 608,158 |
| 1,072,600 |
Former President & | 2007 |
| 521,635 |
| 431,975 |
| — |
| 14 |
| 53,175 |
| 1,006,799 |
Chief Executive Officer | 2006 |
| 494,231 |
| 175,625 |
| 169,014 |
| 10,901 |
| 46,972 |
| 896,743 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas J. Knapp (9) | 2008 |
| 200,398 |
| (119,100 | ) | 68,543 |
| 11,018 |
| 348,655 |
| 509,514 |
Former Vice President, | 2007 |
| 265,420 |
| 139,482 |
| 77,842 |
| 7,950 |
| 46,338 |
| 537,033 |
General Counsel & | 2006 |
| 254,808 |
| 39,216 |
| 48,978 |
| 11,131 |
| 41,384 |
| 395,517 |
Corporate Secretary |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23
|
|
|
|
|
| Health Benefits ($) |
| Life Insurance ($) |
| 401(k) Contributions ($) |
| Severance Payments ($) |
| Relocation Expenses ($) |
| Other Income ($) |
| All Other Compensation ($) |
Robert C. Rowe |
| 1,291 |
| 962 |
| 5,000 |
| — |
| — |
| 100,000 |
| 107,253 |
Brian B. Bird |
| 13,867 |
| 1,313 |
| 20,579 |
| — |
| — |
| — |
| 35,759 |
Gregory G. A. Trandem |
| 13,867 |
| 4,353 |
| 22,917 |
| — |
| — |
| 543 |
| 41,680 |
Curtis T. Pohl |
| 13,867 |
| 1,826 |
| 22,923 |
| — |
| — |
| 543 |
| 39,159 |
Miggie E. Cramblit |
| 5,560 |
| 999 |
| 14,141 |
| — |
| 106,963 |
| — |
| 127,663 |
Michael J. Hanson |
| 14,655 |
| 3,518 |
| 20,494 |
| 536,900 |
| — |
| 32,591 |
| 608,158 |
Thomas J. Knapp |
| 14,918 |
| 4,218 |
| 22,363 |
| 284,012 |
| — |
| 23,1445 |
| 348,655 |
|
|
|
|
|
|
|
|
|
|
2008 Grants of Plan-Based Awards
Name |
|
|
| Grant Date |
|
Estimated Future Payouts Under Non-Equity Incentive Plan Awards |
| All Other Stock Awards: Number of Shares of Stock or Units (#) |
| Grant Date Fair Value of Stock Awards ($) | ||||
| Plan Type |
| Threshold ($) |
| Target ($) |
| Maximum ($) |
| ||||||
Robert C. Rowe (1) |
| Annual Cash Incentive |
| — |
| 66,462 |
| 132,924 |
| 199,386 |
| — |
| — |
Brian B. Bird |
| Annual Cash Incentive |
| — |
| 82,002 |
| 164,004 |
| 246,006 |
| — |
| — |
Gregory G.A.Trandem |
| Annual Cash Incentive |
| — |
| 43,200 |
| 86,400 |
| 129,600 |
| — |
| — |
Curtis T. Pohl |
| Annual Cash Incentive |
| — |
| 36,820 |
| 73,640 |
| 110,460 |
| — |
| — |
Miggie E. Cramblit (1) |
| Long-term Equity |
| 5/5/08 |
| — |
| — |
| — |
| 1,500 |
| 32,374 |
|
| Annual Cash Incentive |
|
|
| 38,000 |
| 76,000 |
| 114,000 |
|
|
|
|
Michael J. Hanson (1) |
| Annual Cash Incentive |
| — |
| 115,838 |
| 231,676 |
| 347,514 |
| — |
| — |
Thomas J. Knapp (1) |
| Annual Cash Incentive |
| — |
| 37,661 |
| 75,322 |
| 112,983 |
| — |
| — |
|
|
24
Non-equity Incentive Plan Awards
Non-equity incentive plan compensation includes amounts earned under the NorthWestern Energy 2008 Employee Incentive Plan, which were paid in 2009. The HR Committee reviewed 2008 performance against plan targets and the plan achieved a payout percentage of 91 percent, as discussed in the “Compensation Discussion and Analysis—Annual Cash Incentive Awards—Company Performance” section of this proxy statement. Awards for the NEOs for 2008 were calculated based on the formula described previously and are as follows:
Name |
| Annual Target Incentive as Percent of Base Pay |
| 2008 Actual Incentive as Percent of Base Pay (1) |
| Incentive Award (1) ($) | |
Robert C. Rowe |
| 70% |
| 63.7% |
| 120,960 | |
Brian B. Bird |
| 50% |
| 45.5% |
| 149,244 | |
Gregory G. A. Trandem |
| 40% |
| 36.4% |
| 78,624 | |
Curtis T. Pohl |
| 35% |
| 31.9% |
| 67,012 | |
Miggie E. Cramblit |
| 40% |
| 36.4% |
| 69,160 | |
Michael J. Hanson |
| 70% |
| 63.7% |
| 210,825 | |
Thomas J. Knapp |
| 40% |
| 36.4% |
| 68,543 | |
|
|
Equity Incentive Plan Awards
Upon our emergence from bankruptcy in 2004 and pursuant to our Plan of Reorganization, we designated 2,265,957 shares for the Board to use in establishing equity-based compensation plans for employees and directors. Stockholder approval of any new incentive plans was not required under the provisions of the Plan of Reorganization.
In March 2005, the Board established the NorthWestern Corporation 2005 Long-Term Incentive Plan, an equity-based plan that provides for grants of stock options, share appreciation rights, restricted and unrestricted share awards, deferred share units and performance awards. To date, all long-term incentive awards for employees have been provided in the form of restricted stock. Initially, we funded the 2005 incentive plan with 700,000 of the shares designated for equity-based compensation plans, and substantially all of those shares were granted to employees, executives and directors prior to 2007, as previously discussed in the “Compensation Discussion and Analysis—Long-Term Equity Grants” section in this proxy statement. On October 31, 2007, the Board approved funding the 2005 incentive plan with an additional 600,000 shares; however, none of these shares have yet been utilized.
We awarded Ms. Cramblit 1,500 restricted shares under the 2005 incentive plan upon her appointment as Vice President, General Counsel and Corporate Secretary in May 2008.
25
Employment Agreement
below.
As of August 13, 2010, Mr. Rowe will continue to serve as CEO at the pleasure of the Board, but without a contract.
26
Mr. Rowe did not receive any payment from Balhoff & Williams for his ownership interest in the firm.
Name and Principal Position | Year | Salary (1) ($) | Stock Awards (2) ($) | Non-equity Incentive Plan Compensation (3) ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings (4) ($) | All Other Compen- sation (5) ($) | Total ($) | ||||||
Robert C. Rowe (6) | 2009 | 519,231 | 433,972 | 378,000 | 25,176 | 167,372 | 1,523,751 | ||||||
President & Chief | 2008 | 169,231 | — | 120,960 | 15,050 | 107,253 | 412,494 | ||||||
Executive Officer | |||||||||||||
Brian B. Bird | 2009 | 340,624 | 213,532 | 177,124 | 23,843 | 38,702 | 793,825 | ||||||
Vice President, | 2008 | 325,129 | — | 149,244 | 11,415 | 35,759 | 521,547 | ||||||
Chief Financial Officer | 2007 | 301,846 | — | 109,411 | 4,731 | 44,638 | 460,626 | ||||||
and Treasurer | |||||||||||||
Miggie E. Cramblit (7) | 2009 | 295,961 | 123,692 | 123,120 | 19,433 | 36,343 | 598,549 | ||||||
Vice President, | 2008 | 175,385 | 32,374 | 69,160 | N/A | 127,663 | 404,582 | ||||||
General Counsel, | |||||||||||||
Corporate Secretary and | |||||||||||||
Chief Compliance Officer | |||||||||||||
Curtis T. Pohl | 2009 | 218,492 | 73,049 | 79,531 | 55,102 | 41,448 | 467,622 | ||||||
Vice President – | 2008 | 207,988 | — | 67,012 | 17,813 | 39,159 | 331,972 | ||||||
Retail Operations | 2007 | 190,000 | — | 51,846 | — | 41,426 | 283,272 | ||||||
David G. Gates (8) | 2009 | 224,899 | 75,179 | 81,863 | 96,633 | 28,744 | 507,318 | ||||||
Vice President – | |||||||||||||
Wholesale Operations | |||||||||||||
(1) | Base salary amounts for 2009 reflect 27 pay periods during the calendar year. |
(2) | These values reflect the grant date fair value of these awards as calculated utilizing the provisions of Accounting Standards Codification 718, Stock Compensation, and does not represent earned or paid compensation as the shares are subject to performance and vesting conditions. For the 2009 awards, the exact number of shares issued will vary from 0% to 200% of the target award, depending on actual company performance relative to the performance goals. The values in the table above assume 100% payout based on grant date fair value. See Note 13 to the consolidated financial statements in our 2009 Annual Report on Form 10-K for further information regarding assumptions underlying the valuation of equity awards. The values of awards assuming a maximum payout based on grant date fair value would be $867,944; $427,064; $247,385; $146,099 and $150,359 for each NEO, respectively. |
(3) | The Non-equity Incentive Plan Compensation column reflects cash incentive awards earned pursuant to our annual incentive plan as previously described. These awards are earned during the year reflected and paid in the following fiscal year. |
(4) | These amounts are attributable to a change in the value of each NEO’s defined benefit pension account balance. Changes in actuarial assumptions for the discount rate from 6.25% to 6.0% for the NorthWestern Energy Pension Plan and 5.75% for the NorthWestern Pension Plan resulted in significantly higher changes in pension value than was reported for 2008. Ms. Cramblit was not eligible to participate in the pension plan applicable to her in 2008, and therefore had no change in pension value. |
(5) | The following table identifies the items included in the All Other Compensation column for 2009. Employee benefits include employer contributions, as applicable, for health benefits (medical, dental, vision and employee assistance plan), group term life and 401(k) plan, which are generally available to all employees on a nondiscriminatory basis. Life insurance also includes imputed income consistent with IRS guidelines for coverage amounts in excess of $50,000 for each of the NEOs. Mr. Rowe’s other income is related to the buyout of his contract with his former employer. Mr. Bird’s other income is a perquisite, which consists of the use of a modest company-owned property in Montana. Ms. Cramblit’s other income includes relocation benefits. Mr. Gates’ other income includes vacation sold back to the company at a rate of 75% ($6,950) and the use of a modest company-owned property in Montana. |
Health Benefits ($) | Life Insurance ($) | 401(k) Contributions ($) | Other Income ($) | All Other Compensation ($) | ||||||
Robert C. Rowe | 4,464 | 3,108 | 9,800 | 150,000 | 167,372 | |||||
Brian B. Bird | 14,763 | 1,311 | 22,050 | 578 | 38,702 | |||||
Miggie E. Cramblit | 9,839 | 1,710 | 22,050 | 2,744 | 36,343 | |||||
Curtis T. Pohl | 14,763 | 2,185 | 24,500 | — | 41,448 | |||||
David G. Gates | 10,261 | 1,271 | 9,800 | 7,412 | 28,744 |
(6) | Mr. Rowe was hired in 2008 as President and CEO. Mr. Rowe’s 2008 compensation reflects amounts earned from August 14 to December 31, 2008. Mr. Rowe’s annualized salary for 2008 was $500,000. |
(7) | Ms. Cramblit was hired in 2008 as Vice President, General Counsel and Corporate Secretary. Ms. Cramblit’s 2008 compensation reflects amounts earned from May 5 to December 31, 2008. Ms. Cramblit’s annualized salary for 2008 was $285,000. |
(8) | Mr. Gates did not meet the criteria in 2008 and 2007 to be included as an NEO. |
Name | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards (1) | Grant Date Fair Value of Stock Awards (2) ($) | ||||||||||||
Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | |||||||||||
Robert C. Rowe | ||||||||||||||||
Annual Cash Incentive | — | 175,000 | 350,000 | 525,000 | — | — | — | — | ||||||||
Long-term Equity | 2/13/09 | — | — | — | — | 20,781 | 41,562 | 433,972 | ||||||||
Brian B. Bird | ||||||||||||||||
Annual Cash Incentive | — | 82,002 | 164,004 | 246,006 | — | — | — | — | ||||||||
Long-term Equity | 2/13/09 | — | — | — | — | 10,225 | 20,450 | 213,532 | ||||||||
Miggie E. Cramblit | ||||||||||||||||
Annual Cash Incentive | — | 57,000 | 114,000 | 171,000 | — | — | — | — | ||||||||
Long-term Equity | 2/13/09 | — | — | — | — | 5,923 | 11,846 | 123,692 | ||||||||
Curtis T. Pohl | ||||||||||||||||
Annual Cash Incentive | — | 36,820 | 73,640 | 110,460 | — | — | — | — | ||||||||
Long-term Equity | 2/13/09 | — | — | — | — | 3,498 | 6,996 | 73,049 | ||||||||
David G. Gates | ||||||||||||||||
Annual Cash Incentive | — | 37,900 | 75,799 | 113,699 | — | — | — | — | ||||||||
Long-term Equity | 2/13/09 | — | — | — | — | 3,600 | 7,200 | 75,179 |
(1) | Reflects possible payout range of 2009 Plan performance awards. Each unit has a weighted average grant date fair value of $21.53. |
(2) | These values reflect the grant date fair value of these awards as calculated utilizing the provisions of Accounting Standards Codification 718, Stock Compensation, and does not represent earned or paid compensation as the shares are subject to performance and vesting conditions. The values in the table above assume 100% payout based on grant date fair value. See Note 13 to the consolidated financial statements in our 2009 Annual Report on Form 10-K for further information regarding assumptions underlying the valuation of equity awards. |
Name | Annual Target Incentive as Percent of Base Pay | 2009 Actual Incentive as Percent of 2009 Salary | Incentive Award ($) | ||||
Robert C. Rowe (1) | 70% | 72.8% | 378,000 | ||||
Brian B. Bird | 50% | 52.0% | 177,124 | ||||
Miggie E. Cramblit | 40% | 41.6% | 123,120 | ||||
Curtis T. Pohl | 35% | 36.4% | 79,531 | ||||
David G. Gates | 35% | 36.4% | 81,863 |
(1) | Mr. Rowe executed a Rule 10b5-1 stock trading plan on February 25, 2010, and elected to purchase company stock during the period March 15-31, 2010, with $130,000 of his 2009 annual incentive award. |
|
|
|
| Stock Awards |
| ||||||
Name |
| Grant Date |
| Number of Shares or Units of Stock That Have Not Vested |
| Market Value of Shares or Units of Stock That Have Not Vested ($) |
| Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) |
| Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) |
|
Robert C. Rowe |
| — |
| — |
| — |
| — |
| — |
|
Brian B. Bird (1) |
| 11/6/06 |
| 9,044 |
| 212,263 |
| — |
| — |
|
Gregory G. A. Trandem (2) |
| 11/6/06 |
| 5,084 |
| 119,321 |
| — |
| — |
|
Curtis T. Pohl (1) |
| 11/6/06 |
| 4,367 |
| 102,493 |
| — |
| — |
|
Miggie E. Cramblit (3) |
| 5/5/08 |
| 1,500 |
| 35,205 |
| — |
| — |
|
Michael J. Hanson |
| — |
| — |
| — |
| — |
| — |
|
Thomas J. Knapp |
| — |
| — |
| — |
| — |
| — |
|
Stock Awards | ||||||||||
Name | Grant Date | Number of Shares or Units of Stock That Have Not Vested (#) (1) | Market Value of Shares or Units of Stock That Have Not Vested ($) (3) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) (4) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) (3) | |||||
Robert C. Rowe | 2/13/09 | — | — | 41,562 | 1,081,443 | |||||
Brian B. Bird | 2/13/09 | — | — | 20,450 | 532,109 | |||||
11/6/06 | 4,521 | 117,636 | — | — | ||||||
Miggie E. Cramblit (2) | 2/13/09 | — | — | 11,846 | 308,233 | |||||
5/5/08 | 1,000 | 26,020 | — | — | ||||||
Curtis T. Pohl | 2/13/09 | — | — | 6,996 | 182,036 | |||||
11/6/06 | 2,183 | 56,802 | — | — | ||||||
David G. Gates | 2/13/09 | — | — | 7,200 | 187,344 | |||||
11/6/06 | 1,912 | 49,750 | — | — |
(1) | For Messrs. Bird, Pohl and |
(2) |
|
(3) | Values were calculated based on a $26.02 closing price of our common stock, as reported on the |
(4) | These shares cliff vest on December 31, 2011, if performance targets are |
|
|
27
|
| Stock Awards | ||
Name |
| Number of Shares Acquired on Vesting (#) |
| Value Realized on Vesting ($) |
Robert C. Rowe |
| — |
| — |
Brian B. Bird |
| 3,016 |
| 61,315 |
Gregory G. A. Trandem |
| 1,696 |
| 34,479 |
Curtis T. Pohl |
| 1,456 |
| 29,600 |
Miggie E. Cramblit |
| — |
| — |
Michael J. Hanson |
| 6,414 |
| 165,994 |
Thomas J. Knapp |
| — |
| — |
Stock Awards | ||||
Name | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | ||
Robert C. Rowe | — | — | ||
Brian B. Bird | 4,523 | 109,547 | ||
Miggie E. Cramblit | 500 | 12,110 | ||
Curtis T. Pohl | 2,184 | 52,896 | ||
David G. Gates | 1,914 | 46,357 |
$24.22.
Name |
| Plan Name |
| Number of Years Credited Service (#) |
| Present Value of Accumulated Benefit ($) |
| Payments During Last Fiscal Year ($) |
|
Robert C. Rowe |
| NorthWestern Energy Pension Plan |
| 0 |
| 15,050 |
| — |
|
Brian B. Bird |
| NorthWestern Pension Plan |
| 5.08 |
| 49,627 |
| — |
|
Gregory G. A. Trandem |
| NorthWestern Pension Plan |
| 9.42 |
| 82,183 |
| — |
|
Curtis T. Pohl |
| NorthWestern Pension Plan |
| 22.39 |
| 160,456 |
| — |
|
Miggie E. Cramblit (1) |
| NorthWestern Pension Plan |
| — |
| — |
| — |
|
Michael J. Hanson (2) |
| NorthWestern Pension Plan |
| 10.58 |
| — |
| 118,507 |
|
Thomas J. Knapp |
| NorthWestern Pension Plan |
| 5.84 |
| 60,195 |
| — |
|
|
|
|
|
28
Name | Plan Name | Number of Years Credited Service (#) | Present Value of Accumulated Benefit ($) | Payments During Last Fiscal Year ($) | |||||
Robert C. Rowe | NorthWestern Energy Pension Plan | 1.00 | 40,226 | — | |||||
Brian B. Bird | NorthWestern Pension Plan | 6.08 | 73,470 | — | |||||
Miggie E. Cramblit | NorthWestern Pension Plan | 1.66 | 19,433 | — | |||||
Curtis T. Pohl | NorthWestern Pension Plan | 23.39 | 215,558 | — | |||||
David G. Gates | NorthWestern Energy Pension Plan | 31.00 | 632,546 | — |
Name |
| |
Robert C. Rowe |
| |
Brian B. Bird |
| |
|
| |
Curtis T. Pohl |
| |
|
| |
|
| |
|
|
|
|
|
|
To be eligible for either pension plan, an employee must have been employed on or before October 3, 2008, and have worked at least 1,000 hours in 2008.
Mercer Human Resources Consulting, the actuary for our pension plans, calculated the present value of accumulated benefits using participant data provided by us.
|
29
.
Effective October 1, 2008, our
a lump-sum cash payment equal to one times annual base pay;
reimbursement of COBRA premiums paid by the participant during the 12-month period following the participant’s termination date; and
$12,000 of outplacement services during the 12-month period following the participant’s termination date.
· | a lump-sum cash payment equal to one times annual base pay; |
· | reimbursement of COBRA premiums paid by the participant during the 12-month period following the participant’s termination date; and |
· | $12,000 of outplacement services during the 12-month period following the participant’s termination date. |
In addition, an eligible employee who was severed under the 2008 Severance Plan from October 1, 2008 through December 31, 2008, would have received a prorated short-term incentive payment, if any, in accordance with the NorthWestern Energy 2008 Employee Incentive Plan. Effective January 1, 2009, prorated short-term incentive is not a component of the 2008 Severance Plan or the NorthWestern Energy 2009 Employee Incentive Plan.
30
��
Name |
| Base Salary ($) |
| Short-Term Incentive (1) ($) |
| COBRA Premiums ($) |
| Out placement Services ($) |
| Amount of Potential Severance Benefit ($) |
Robert C. Rowe (2) |
| 1,326,923 |
| 120,960 |
| 4,988 |
| 12,000 |
| 1,464,871 |
Brian B. Bird |
| 328,008 |
| 149,244 |
| 16,548 |
| 12,000 |
| 505,800 |
Gregory G.A. Trandem (3) |
| 216,000 |
| 78,624 |
| 16,548 |
| 12,000 |
| 323,172 |
Curtis T. Pohl |
| 210,400 |
| 67,012 |
| 13,341 |
| 12,000 |
| 302,753 |
Miggie E. Cramblit |
| 285,000 |
| 69,160 |
| 11,499 |
| 12,000 |
| 377,659 |
Name | Base Salary ($) | COBRA Premiums ($) | Outplacement Services ($) | Amount of Potential Severance Benefit ($) | ||||
Robert C. Rowe (1) | 500,000 | 4,534 | 12,000 | 516,534 | ||||
Brian B. Bird | 328,008 | 15,040 | 12,000 | 355,048 | ||||
Miggie E. Cramblit (2) | 285,000 | 10,017 | 12,000 | 307,017 | ||||
Curtis T. Pohl | 210,400 | 15,040 | 12,000 | 237,440 | ||||
David G. Gates | 216,569 | 10,448 | 12,000 | 239,017 |
(1) |
|
| Mr. Rowe’s severance benefits were calculated in accordance with his employment agreement and provisions of the 2008 Severance Plan, as applicable. |
| Actual severance benefits received by |
2006 Officer Severance Plan
Prior to October 1, 2008, our NEOs participated in the 2006 Officer Severance Plan, which we refer to as the 2006 Severance Plan. The HR Committee engaged Towers Perrin in 2006 to evaluate our severance and change in control practices, particularly related to other utilities and believed it was important to implement a plan to ensure retention of key employees in the event of employment uncertainty related to a proposed merger transaction. The HR Committee believes the 2006 Severance Plan established a balance between the need to retain key employees without providing an overly generous benefit.
The 2006 Severance Plan provided for the payment of severance benefits in the event an officer was terminated involuntarily without cause. Cause generally was defined in the 2006 Severance Plan as (i) any form of illegal conduct or gross misconduct that results in substantial damage to NorthWestern, (ii) failure to comply with our Code of Conduct, (iii) willful failure to perform duties or (iv) willful and continued conduct injurious to us. For this purpose, involuntary termination does not include a termination resulting from a participant’s death or disability. The severance benefits payable under the 2006 Severance Plan included:
a lump-sum cash payment equal to one times annual base pay;
a pro-rata short-term incentive bonus;
reimbursement of COBRA premiums paid by the participant during the 12-month period following the participant’s termination date; and
$12,000 of outplacement services during the 12-month period following the participant’s termination date.
The pro-rata short-term incentive bonus is determined on the same basis as all other employees, as described in the “Compensation Discussion and Analysis—Individual Performance and Targets” section of this Proxy Statement, and then pro-rated based on the number of days during the year the individual was employed. The calculation is as follows:
(Base Salary x Target Incentive % x Total Plan Payout x Performance Multiple = Individual Payout )
x (# of days worked ÷ 360)
31
The 2006 Severance Plan also provided for change in control severance benefits in the event an eligible officer was terminated within 18 months after a change in control of the company. The change in control benefits included: (i) a lump-sum cash payment equal to two times annual base salary plus target annual short-term incentive pay to the Chief Executive Officer and Chief Financial Officer and one and one-half times annual base salary plus target annual short-term incentive pay to all other eligible officers, (ii) a pro-rata short-term incentive bonus (as described above), (iii) reimbursement of COBRA premiums paid by the participant during the 18-month period following the participant’s termination date, and (iv) $12,000 in outplacement services during the 12-month period following the participant’s termination date. In addition, the 2005 LTIP provides for accelerated vesting in the event of a change in control.
Mr. Hanson
Mr. Hanson submitted his resignation as our President, Chief Executive Officer and as a member of the Board on August 13, 2008. Upon receipt of Mr. Hanson’s resignation, the Board considered, among other things, entering into a separation agreement and a consulting agreement with Mr. Hanson. In evaluating the appropriateness of the terms of the agreements, the Board considered a number of factors, including the need for a smooth transition between Mr. Hanson and Mr. Rowe, the positive financial state of the company, including the fact that substantially all prior bankruptcy-related litigation had been resolved, and the benefits established pursuant to the 2006 Severance Plan. Based on the foregoing, the Board determined that the terms and conditions of the agreements were appropriate.
A Waiver and Release Agreement and a Consulting Agreement were each executed on August 21, 2008. Under the 2006 Severance Plan, Mr. Hanson received the following:
a lump-sum payment of $536,900, which equals Mr. Hanson’s then-current base salary;
a pro-rata annual short-term incentive bonus equal to $210,825, which was calculated at the end of the 2008 fiscal year and payable on or before March 15, 2009;
reimbursement of any COBRA premiums paid by Mr. Hanson during the 12-month period following his separation from the company; and
outplacement services provided by a company selected provider up to a maximum of $12,000 over the 12-month period following Mr. Hanson’s separation from the company.
In addition to these benefits, the Board agreed to accelerate the vesting, effective on August 28, 2008, of 6,414 restricted shares valued at $165,994, which were granted to Mr. Hanson on November 6, 2006 and scheduled to vest on November 3, 2008. To support the consulting work we requested of Mr. Hanson, including serving as a key witness in ongoing regulatory proceedings, he also was provided access to office space for a six-month period at a total cost to us of approximately $5,000. Mr. Hanson’s account balances under our qualified retirement plans were fully vested and were unaffected by the agreements. Mr. Hanson received a rollover distribution of $118,507 from the NorthWestern Pension Plan on December 1, 2008, and as of December 31, 2008, no longer has a pension benefit with the company.
Under a separate consulting agreement, Mr. Hanson agreed to provide services to us through February 2009, with compensation of $22,371 for August, 2008 and a monthly fee of $44,742 thereafter through the term of the agreement.
32
Mr. Knapp
On May 1, 2008, we announced that, effective May 5, 2008, Thomas J. Knapp would no longer serve in the capacity of Vice President, General Counsel and Corporate Secretary, but would remain as senior legal and governmental affairs advisor. On August 29, 2008, Mr. Knapp resigned from the company. Mr. Knapp’s resignation was deemed a termination without cause, and he executed a Waiver and Release Agreement effective September 5, 2008. Under the 2006 Severance Plan, Mr. Knapp received the following:
a lump-sum payment of $284,012, which equals Mr. Knapp’s then-current base salary;
a pro-rata annual short-term incentive bonus equal to $68,543, calculated at the end of the 2008 fiscal year and payable on or before March 15, 2009;
reimbursement of any COBRA premiums paid by Mr. Knapp during the 12-month period following his separation from the company; and
outplacement services provided by a provider selected by us up to a maximum of $12,000 over the 12-month period following Mr. Knapp’s separation.
Mr. Knapp’s account balances under our qualified retirement plans were fully vested and are unaffected by the agreement (as of December 31, 2008, the present value of such pension benefits was $60,195).
To allow Mr. Knapp to conclude various outstanding bankruptcy-related litigation matters, we entered into a consulting agreement with him on September 5, 2008, which provided for compensation for certain agreed upon consulting services of $15,000 per month through the term of the agreement, which expired December 31, 2008.
Mr. Trandem
On January 30, 2009, we eliminated Mr. Trandem’s position as Vice President - Administrative Services and deemed his termination a termination without cause. Mr. Trandem executed a Waiver and Release Agreement and is entitled to receive certain benefits, which include the following under the 2008 severance plan:
a lump-sum payment of $216,000, which equals Mr. Trandem’s current base salary;
reimbursement of any COBRA premiums paid by Mr. Trandem during the 12-month period following his separation from the company; and
outplacement services provided by a provider selected by us up to a maximum of $12,000 over the 12-month period following Mr. Trandem’s separation from the company.
The Board approved that, with respect to the continuation of medical benefits, Mr. Trandem may elect to be reimbursed, for a period of one year, for the employee portion of early retiree health benefit premiums in lieu of the COBRA premiums noted above. In addition, the Board approved to accelerate the vesting of 5,084 restricted shares, valued at approximately $124,500, which were granted to Mr. Trandem on November 6, 2006, and scheduled to vest in 2009, 2010 and 2011.
33
Mr. Trandem also received other benefits upon his termination that are due to all employees upon separation, including the value of his accrued but unpaid vacation, vested 401(k) plan account and vested pension benefits.
To allow a smooth transition of responsibilities, we entered into a consulting agreement with Mr. Trandem on January 31, 2009, which provides for compensation for certain agreed upon consulting services of $18,000 per month through April 30, 2009.
2005 Long-Term Incentive Plan Change in Control Provision
The
Name |
| |
Robert C. Rowe |
| |
Brian B. Bird |
| |
|
| |
Curtis T. Pohl |
| |
|
|
(1) |
|
· | a lump-sum payment of $285,000, equal to her base salary; |
· | an annual short-term incentive bonus of $123,120, calculated at the end of the 2009 fiscal year and payable on or before March 15, 2010; |
· | reimbursement of any COBRA premiums paid by Ms. Cramblit during the 12-month period following her separation from the company; and |
· | outplacement services through a provider selected by us up to a maximum of $12,000 over the 12-month period following Ms. Cramblit’s separation. |
2008
Cash ($) | Shares (#) | |||
Annual Board Retainer | ||||
Initial Stock Grant (sign-on grant to a new member) | N/A | 1,000 | ||
Board Chair | 100,000 | 3,000 | ||
Board Member | 25,000 | 2,000 | ||
Annual Committee Chair Retainer | ||||
Audit Committee | 10,000 | N/A | ||
Nominating and Corporate Governance Committee | 6,000 | N/A | ||
Human Resources Committee | 6,000 | N/A | ||
Meeting Fees (1) | ||||
Board Meeting | 2,000 | N/A | ||
Committee Meeting | 2,000 | N/A |
(1) | The Board Chairman does not receive meeting fees. |
34
Name |
| Fees Earned or Paid in Cash (1) ($) |
| Stock Awards (1) (2) ($) |
| Total ($) |
E. Linn Draper, Jr., Chairman |
| 100,000 |
| 160,178 |
| 260,178 |
Stephen P. Adik |
| 91,000 |
| 131,148 |
| 222,148 |
Jon S. Fossel |
| 53,000 |
| 131,148 |
| 184,148 |
Julia L. Johnson |
| 87,000 |
| 131,148 |
| 218,148 |
Philip L. Maslowe |
| 85,000 |
| 131,148 |
| 216,148 |
D. Louis Peoples |
| 75,000 |
| 131,148 |
| 206,148 |
Name | Fees Earned or Paid in Cash (1) ($) | Stock Awards (1) (2) ($) | Total ($) | |||
E. Linn Draper Jr., Chairman | 100,000 | 238,829 | 338,829 | |||
Stephen P. Adik | 73,000 | 132,995 | 205,995 | |||
Dorothy M. Bradley (3) | 28,667 | 62,040 | 90,707 | |||
Dana J. Dykhouse (4) | 48,917 | 73,830 | 122,747 | |||
Jon S. Fossel (5) | 22,333 | 46,960 | 69,293 | |||
Julia L. Johnson | 67,000 | 170,997 | 237,997 | |||
Philip L. Maslowe | 69,000 | 164,027 | 233,027 | |||
Denton Louis Peoples | 61,000 | 97,175 | 158,175 |
(1) | Amounts deferred under the deferred compensation plan described below included $100,000 |
(2) | These values reflect the |
(3) | Ms. Bradley began service on our Board on April 22, 2009. |
(4) | Mr. Dykhouse began service on our Board on January 30, 2009. |
(5) | Mr. Fossel resigned from our Board effective April 22, 2009. |
Eachthe designated investments.
Name | Stock Ownership Requirement ($) | Number of Shares or DSUs Owned (#) | Ownership as a Percent of Requirement (1) | |||
E. Linn Draper Jr., Chairman | 500,000 | 46,387 | 241% | |||
Stephen P. Adik | 175,000 | 44,703 | 665% | |||
Dorothy M. Bradley (2) | 125,000 | 3,039 | 63% | |||
Dana J. Dykhouse (2) | 125,000 | 3,000 | 62% | |||
Julia L. Johnson | 155,000 | 34,416 | 578% | |||
Philip L. Maslowe | 155,000 | 32,667 | 548% | |||
Denton Louis Peoples | 125,000 | 18,249 | 380% |
(1) | Ownership percentage calculated as of December 31, 2009, using a closing stock price of $26.02. |
(2) | Ms. Bradley and Mr. Dykhouse joined the Board in 2009 and have until 2014 to meet their stock ownership levels. |
Amount and Nature of Beneficial Ownership | ||||||||||||
Name of Beneficial Owner | Unrestricted Shares of Common Stock Beneficially Owned Directly | Unrestricted Shares of Common Stock Beneficially Owned Indirectly | Unvested Restricted Stock | Deferred Stock Units | Total Shares of Common Stock Beneficially Owned | Percent of Common Stock | ||||||
Stephen P. Adik (1) | – | 20,000 | 2,499 | 27,061 | 49,560 | * | ||||||
E. Linn Draper Jr. | – | – | 2,499 | 50,409 | 52,908 | * | ||||||
Dorothy M. Bradley | 3,039 | – | – | 2,000 | 5,039 | * | ||||||
Dana J. Dykhouse | 5,000 | – | – | – | 5,000 | * | ||||||
Julia L. Johnson | – | – | 2,499 | 36,733 | 39,232 | * | ||||||
Philip L. Maslowe | – | – | 2,499 | 34,667 | 37,166 | * | ||||||
Denton Louis Peoples | 3,000 | – | 2,499 | 17,249 | 22,748 | * | ||||||
Robert C. Rowe (2) | – | 2,275 | – | – | 2,275 | * | ||||||
Brian B. Bird | 22,836 | – | 4,521 | – | 27,357 | * | ||||||
Miggie E. Cramblit | 500 | – | – | – | 500 | * | ||||||
Curtis T. Pohl | 5,952 | – | 2,183 | 8,135 | * | |||||||
David G. Gates | 4,986 | – | 1,912 | – | 6,898 | * | ||||||
Directors and Executive Officers as a Group (15 persons) | 56,608 | 22,275 | 26,450 | 168,119 | 251,177 | * | ||||||
* Less than 1%. |
(1) | Shares held indirectly by Mr. Adik represent shares held in a trust of which Mr. Adik and his spouse are co-trustees. |
(2) | Shares held indirectly by Mr. Rowe represent shares held in a SEP IRA owned by Mr. Rowe. On February 24, 2010, Mr. Rowe purchased an additional 1,955 shares in his SEP IRA; and on February 25, 2010, Mr. Rowe executed a Rule 10b5-1 stock trading plan and elected to purchase company stock during the period March 15-31, 2010, with $130,000 of his 2009 annual incentive award. |
NorthWestern also reimburses non-employeeits directors forand executive officers timely filed all reports required by Section 16 of the costSecurities Exchange Act of participation in certain continuing education programs and travel costs to meetings.
35
AUDIT COMMITTEE REPORT
1934, as amended.
In the performance of the Audit Committee’s oversight function, and in connection with the December 31, 2008, financial statements, the Audit Committee reviewed and discussed the audited financial statements with management. The Audit Committee has discussed the matters requiredtable sets forth information regarding whom we know to be discussed by Statementthe beneficial owners of more than 5 percent of our issued and outstanding common stock as of February 22, 2010. Such information is based on Auditing Standards No. 61, as amended, as adopted by the Public Company Accounting Oversight Board, or PCAOB, in Rule 3200T. The Audit Committee received the written disclosures and the letter from Deloitte & Touche LLP, or Deloitte, our independent registered public accounting firm, required by applicable requirements of the PCAOB regarding the independent accountant’s communications with the Audit Committee concerning independence. The compatibility of non-audit services was considered with the auditor’s independence.
Based on itsa review of the consolidated financial statements and discussions with and representations from management and Deloitte referred to above, the Audit Committee recommended to the Board that the audited financial statements be included in NorthWestern Energy’s Form 10-K for the year ended December 31, 2008 filed with the SEC.
SEC pursuant to Sections 13(d), 13(f) and 13(g) of the Exchange Act.
Name of Beneficial Owner | Shares of Common Stock Beneficially Owned | Percent of Common Stock | ||
Munder Capital Management (1) | 3,050,916 | 8.5% | ||
480 Pierce Street, Suite 300 Birmingham, MI 48009 | ||||
BlackRock Institutional Trust Company, N.A. (2) | 1,924,456 | 5.4% | ||
500 Howard Street, San Francisco, CA 94105-2618 |
(1) | Reflects shares beneficially owned by Munder Capital Management as of December 31, 2009, according to a statement on Schedule 13G/A filed with the SEC on February 11, 2010, which indicates that the beneficial owner, an investment advisor, has sole voting power and dispositive power with respect to 3,050,916 shares. The beneficial owner holds shared voting power with respect to none of the shares. The Schedule 13G certifies that the securities were acquired in the ordinary course and not with the purpose or with the effect of changing or influencing the control of NorthWestern Corporation. |
(2) | Reflects shares beneficially owned by BlackRock Institutional Trust Company, N.A. as of December 31, 2009, according to a statement on Schedule 13G filed with the SEC on January 29, 2010, which indicates that the beneficial owner, an asset management subsidiary of Blackrock Inc., an institutional investment management firm, has sole voting and dispositive power with respect to 1,924,456 shares. The beneficial owner holds shared voting power with respect to none of the shares. The Schedule 13G certifies that the securities were acquired in the ordinary course and not with the purpose or with the effect of changing or influencing the control of NorthWestern Corporation. |
Stephen P. Adik, Chairman
Dana J. Dykhouse
Jon S. Fossel
Philip L. Maslowe
D. Louis Peoples
36
Fee Category |
| Fiscal 2008 ($) |
| Fiscal 2007 ($) |
Audit fees |
| 1,353,000 |
| 1,440,000 |
Audit-related fees |
| — |
| — |
Tax fees |
| 60,000 |
| 174,000 |
All other fees |
| — |
| — |
Total fees |
| 1,413,000 |
| 1,614,000 |
2008:
Fee Category | Fiscal 2009 Fees ($) | Fiscal 2008 Fees ($) | ||
Audit fees | 1,281,980 | 1,353,000 | ||
Audit-related fees | — | — | ||
Tax fees | 239,116 | 60,000 | ||
All other fees | — | — | ||
Total fees | 1,521,096 | 1,413,000 |
2008.
37
Preapproval
2010.
AS OUR
38
APPROVAL OF NORTHWESTERN ENERGY
EMPLOYEE STOCK PURCHASE PLAN
The company’s stockholders are asked to approve a proposal to create the NorthWestern Energy Employee Stock Purchase Plan, or ESPP. Our Board has approved, subject to the approval of the stockholders, the creation of the ESPP. The ESPP is intended to align the interests of our employees with those of our stockholders by encouraging employees to become stockholders and to increase their share ownership. The ESPP is a broad-based plan that allows eligible employees to purchase shares of our common stock at a discount (to be determined in accordance with the terms of the ESPP, but not more than 15 percent) to the average high and low price on the date of the purchase. Although the ESPP permits us to set the discount for employee purchases under the Plan at up to 15%, we currently do not intend to set the discount at more than 5%. The number of common shares available for purchase under the ESPP will be 500,000 shares, subject to adjustment in the event of a change in capitalization.
Pursuant to Section 423 of the Internal Revenue Code, participating employees in the ESPP are able to enjoy favorable tax treatment with regard to the shares purchased including the deferral of tax liability until the shares are sold and the taxing of any gain at favorable capital gains rates. The required holding period for favorable income tax treatment upon disposition of common stock acquired under the ESPP is the later of (a) two years after the deemed “option” is granted (the first day of the purchase period), or (b) one year after the deemed “option” period is exercised and the common stock is purchased (purchase date). When the common stock is disposed of prior to the expiration of the required holding period, the participant recognizes ordinary income to the extent of the difference between the price actually paid for the common stock and the fair market value of the common stock on the date the option was exercised (the purchase date), regardless of the price at which the common stock was sold.
All regular full-time and regular part-time employees are eligible to participate in the ESPP. However, no employee is eligible to participate in the ESPP if, immediately after participating, the employee would own, directly or indirectly, 5 percent or more of our common stock outstanding. The stock allocated to the participants in the ESPP may be acquired either through open market purchases by an independent administrator, through issuance of new shares or by using treasury shares.
An eligible employee may elect to purchase on a monthly basis, through payroll deduction and/or lump sum payments, shares of common stock at a discount (to be determined in accordance with the terms of the ESPP) to the fair market value of the common stock on the date of purchase. We will pay the remaining percentage of fair market value (if open market purchases). For any calendar year, the aggregate amount of payroll deductions and lump sum payments made by a participant cannot exceed 10 percent of his or her salary or $25,000, whichever is less.
A participant may elect to receive cash dividends or to reinvest dividends in additional shares of our common stock on shares held in the ESPP. A participant has the right to direct the vote of his or her shares held in the ESPP.
Participants incur no brokerage commissions or service charges for purchases of common stock under the ESPP; however, certain administrative fees may be charged to participants for sales, which may change from time to time.
We have the right to amend or terminate the ESPP at any time. In the event of termination, all stock and cash will be distributed to participants.
39
Approval of the ESPP requires the affirmative vote of a majority of the shares of common stock present in person or by proxy and entitled to vote at the meeting. Abstentions will be counted as present for quorum purpose, and will have the effect of a vote against the proposal. Brokers may not vote a client’s proxy in their own discretion on this proposal, and accordingly, broker non-votes will not affect the outcome of the vote on the proposal.
The full text of the ESPP is included in this proxy statement as Appendix 1.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR”
THE ADOPTION OF THE NORTHWESTERN ENERGY
EMPLOYEE STOCK PURCHASE PLAN.
40
STOCKHOLDER PROPOSALS
Stockholder Proposals for Inclusion in Next Year’s Proxy Statement
To be considered for inclusion in the proxy statement for our annual meeting to be held in 2010, stockholder proposals must be received by the Corporate Secretary of NorthWestern Corporation not later than November 9, 2009. This notice requirement is separate from and in addition to the SEC’s requirements that a stockholder must meet in order to have a stockholder proposal included in the company’s proxy statement.
Other Stockholder Proposals for Presentation at the 2010 Annual Stockholders’ Meeting
For any proposal that is not submitted for inclusion in next year’s proxy statement, but is instead sought to be presented directly from the floor of the 2010 Annual Stockholders’ Meeting, the company’s by-laws require that timely notice must be given to the Corporate Secretary. To be timely, the notice must be received by the Corporate Secretary of NorthWestern Corporation between December 23, 2009 and January 22, 2010.
Stockholder proposals should be delivered to or mailed and received by us on the dates set forth above and addressed to: Corporate Secretary, NorthWestern Corporation, 3010 W. 69th Street, Sioux Falls, SD 57108.
To be in proper written form, a stockholder’s notice for both annual and special meetings must set forth:
(i) as to each person whom the stockholder proposes to nominate for election as a Director, (A) the name, age, business address and residence address of the person, (B) the principal occupation or employment of the person, (C) the class or series and number of shares of capital stock of the company that are owned beneficially or of record by the person, (D) any other information relating to the person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of Directors pursuant to Section 14 of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations promulgated thereunder, and (E) such notice must be accompanied by a written consent of each proposed nominee to being named as a nominee and to serve as a Director if elected;
(ii) as to any other business that the stockholder proposes to bring before the meeting, (A) a brief description of the business desired to be brought before the meeting, (B) the text of the proposal or business (including the text of any resolutions proposed for consideration, and, in the event that such business includes a proposal to amend the Bylaws of the company, the language of the proposed amendment), (C) the reasons for conducting such business at the meeting, and (D) any material interest of such stockholder in the business being proposed and the beneficial owner, if any, on whose behalf the proposal is being made; and
(iii) as to the stockholder giving this notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made, (A) the name and record address of such stockholder and any such beneficial owner, (B) the class or series and number of shares of capital stock of the company that are owned beneficially or of record by such stockholder and beneficial owner, (C) a description of all arrangements or understandings between such stockholder and any such beneficial owner and each proposed nominee and any other persons (including their names) pursuant to which the nomination(s) are to be made by such stockholder, (D) a representation
41
that such stockholder is a stockholder of record entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to nominate the persons and/or conduct the business being proposed as described in the notice, and (E) a representation of whether such stockholder or any such beneficial owner intends or is part of a group which intends (1) to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the company’s outstanding capital stock required to approve or adopt the proposal or elect the nominee, and/or (2) otherwise to solicit proxies from stockholders in support of such proposal or nomination. The foregoing notice requirements shall be deemed satisfied by a stockholder with respect to an annual meeting if the stockholder has notified the company of his or her intention to present a proposal at such annual meeting in compliance with Regulation 14A (or any successor thereof) promulgated under the Exchange Act and such stockholder’s proposal has been included in a proxy statement that has been prepared by the company to solicit proxies for such annual meeting. The company may require any proposed nominee to furnish such other information as it may reasonably require to determine the eligibility of such proposed nominee to serve as a Director of the company.
42
i. |
| The aggregate number of shares of our common stock subject to outstanding stock options, warrants and rights; |
ii. |
| The weighted average exercise price of those outstanding stock options, warrants and rights; and |
iii. |
| The number of shares that remain available for future option grants, excluding the number of shares to be issued upon the exercise of outstanding options, warrants and rights described in (i) above. |
Plancategory |
|
|
| |||
Equity compensation plans approved by security holders | ||||||
None | ||||||
Equity compensation plans not approved by security holders | ||||||
New Incentive Plan (1) | — |
| ||||
Total | — |
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(1) | Upon our emergence from bankruptcy in 2004, a New Incentive Plan was established pursuant to our Plan of Reorganization, which set aside 2,265,957 shares for the new Board to establish equity-based compensation plans for employees and directors. As the New Incentive Plan was established by provisions of the Plan of Reorganization, stockholder approval was not required. During 2005 the NorthWestern Corporation 2005 Long-Term Incentive Plan was established under the New Incentive Plan, under which |
Other Business at the 2009 Annual Meeting – Discretionary Voting Authority
Management is not aware of any matter to be brought before the annual meeting, other than the matters described in the Notice of Annual Meeting accompanying this proxy statement. The persons named in the form of proxy solicited by our Board will vote all proxies, which have been properly executed, and if any matters not set forth in the Notice of Annual Meeting are properly brought before the meeting, such persons will vote thereon in accordance with their best judgment.
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Multiple Stockholders Sharing the Same Address
In accordance with notices we previously sent to “street name” stockholders who share a single address, we are sending only one Notice of Annual Meeting to that address unless we received contrary instructions from any stockholders at that address. This practice, known as “householding,” is designed to reduce our printing and postage costs. If any stockholder residing at such an address wishes to receive a separate Notice of Annual Meeting for this year’s meeting or in the future, or if you are receiving multiple copies of our Notice of Annual Meeting and wish to request householding, you may contact our Corporate Secretary by phone at (605) 978-2940 or by mail at NorthWestern Corporation, 3010 W. 69th Street, Sioux Falls, South Dakota 57108. We will deliver any requested documents to you promptly upon receipt of your request.
Where You Can Find Additional Information
We file annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy any reports, proxy statements or other information that we file with the SEC at the following location of the SEC:
Public Reference Room
100 F Street, N.E.
Room 1580
Washington, D.C. 20549
Please call the SEC at 1+ 800 SEC-0330 for further information on the public reference room. You may also obtain copies of this information by mail from the Public Reference Section of the SEC, 100 F Street, N.E., Room 1580, Washington, D.C. 20549, at prescribed rates. Our public filings are also available to the public from document retrieval services and the Internet Web site maintained by the SEC at http://www.sec.gov.
Assistance
If you need assistance with voting your proxy or have questions regarding our annual meeting, please contact:
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Any person, including any beneficial owner, to whom this proxy statement is delivered may request copies of reports, proxy statements or other information concerning us, without charge, by written or telephonic request directed to us at NorthWestern Corporation, 3010 W. 69th Street, Sioux Falls, South Dakota 57108, Attention: Investor Relations. If you would like to request documents, please do so by April 8, 2009, in order to receive them before the annual meeting.
No persons have been authorized to give any information or to make any representations other than those contained in this proxy statement and, if given or made, such information or representations must not be relied upon as having been authorized by us or any other person. This proxy statement is dated March 9, 2009. You should not assume that the information contained in this proxy statement is accurate as of any date other than that date, and the mailing of this proxy statement to stockholders shall not create any implication to the contrary.
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APPENDIX 1
NORTHWESTERN ENERGY
EMPLOYEE STOCK PURCHASE PLAN
Section 1.ESTABLISHMENT OF PLAN.The Company proposes to grant options for purchase of the Common Stock to Eligible Employees of the Company pursuant to this Plan. The Company intends this Plan to qualify as an “employee stock purchase plan” under Section 423 of the Code (including any amendments to or replacements of such Section), and this Plan shall be so construed. Any term not expressly defined in this Plan but defined for purposes of Section 423 of the Code shall have the same definition herein. The Plan shall become effective on June 1, 2009, subject to approval by the stockholders of the Company at the 2009 Annual Meeting of Stockholders.
Section 2.PURPOSE.The purpose of the Plan is to align the interests of the Company’s employees with those of its stockholders by encouraging current and future Eligible Employees to become stockholders of the Company and to increase their share ownership of Common Stock. The Plan is intended to comply with the provisions of Code Section 423 and shall be administered, interpreted and construed in accordance with such provisions.
Section 3.DEFINITIONS.When used in this Plan, the following terms shall have the following meanings:
3.1 “Administrator” means the Board of Directors or such officer or officers of the Company or such committee (which need not be a committee of the Board of Directors, but, if not a committee of the Board of Directors, then the committee shall be comprised solely of officers of the Company) to whom the Board of Directors delegates authority under the Plan in accordance with Section 13.1.
3.2 “Beneficiary” means such person, persons, or entity as are designated pursuant to Section 13.5 to receive, upon a participant’s death, all or a portion of such Participant’s Common Stock Account and Payroll Deduction Account.
3.3 “Board of Directors” means the Board of Directors of the Company, or any committee of such Board of Directors as the Board of Directors may determine from time to time.
3.4 “Cash Dividends” means the cash dividends paid with respect to shares of Common Stock held in a Participant’s Common Stock Account
3.5 “Code” means the Internal Revenue Code of 1986, as amended from time to time, or any successor statute thereto.
3.6 “Common Stock” means common stock, par value $0.01 per share, of the Company.
3.7 “Common Stock Account” means the account established with, and maintained by, the Custodian for the purpose of holding Common Stock purchased pursuant to this Plan.
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3.8 “Company” means NorthWestern Corporation, a Delaware corporation, and its successors and assigns.
3.9 “Custodian” means the agent selected by the Company to hold Common Stock purchased under the Plan.
3.10 “Disability” means disability as defined under any qualified, defined benefit plan sponsored by the Company or any Subsidiary in which an Eligible Employee is a participant on the date such Eligible Employee terminates employment with the Company or any Subsidiary.
3.11 “Eligible Compensation” means the sum of the types and amounts of compensation determined from time to time by the Administrator in its sole discretion to be eligible to be taken into account under the Plan, provided that no such determination shall include or exclude any type or amount of compensation contrary to the requirements of Section 423 of the Code and any regulations promulgated thereunder.
3.12 “Eligible Employee” means all employees of the Company and its Subsidiaries that have been designated as eligible to participate in the Plan pursuant to and in accordance with rules prescribed by the Administrator from time to time, which rules, however, shall neither permit nor deny participation in the Plan contrary to the requirements of the Code (including, but not limited to, Section 423(b)(3), (4), (5), and (8) thereof) and the regulations promulgated thereunder.
3.13 “Fair Market Value” means the average of the high and low sales prices of a share of Common Stock as reported on the New York Stock Exchange Composite Tape on the date in question or, if the Common Stock shall not have been traded on such date, the average of the high and low sales prices on the first day prior thereto on which the Common Stock was so traded or, if the Common Stock was not so traded, such other amount as may be determined in good faith by the Board of Directors in its sole discretion.
3.14 “Investment Date” means, for each month during the Plan Year, the fifteenth day of such month, or if the fifteenth day is not a day on which the Custodian is open for business, the next such day of such month on which the Custodian is open for business, or such other day of each month as may be determined by the Board of Directors in its sole discretion.
3.15 “Participant” means an Eligible Employee who has met the requirements of Section 4 and has elected to participate in the Plan pursuant to Section 5.1.
3.16 “Payroll Deduction Account” means the bookkeeping entry established by the Company for each Participant pursuant to Section 5.3.
3.17 “Plan” means the NorthWestern Energy Employee Stock Purchase Plan as set forth herein and as amended from time to time.
3.18“Plan Year” means a calendar year.
3.19 “Subsidiary” means any corporation designated by the Administrator which constitutes a “subsidiary” of the Company, within the meaning of Code Section 424(f).
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Section 4ELIGIBILITY.
4.1General Rule. Subject to Section 4.3, each Eligible Employee shall be eligible to participate in the Plan beginning on the later of (a) the Eligible Employee’s date of hire by the Company or any Subsidiary and (b) the date such employee becomes an Eligible Employee. An Eligible Employee who has met the requirements of this Section 4.1 and who ceases to be an Eligible Employee shall again become eligible to participate in the Plan when he or she again becomes an Eligible Employee.
4.2Leave of Absence. Unless the Administrator otherwise determines, a Participant on a paid leave of absence shall continue to be a Participant in the Plan so long as such Participant is on such paid leave of absence. Unless otherwise determined by the Administrator, a Participant on an unpaid leave of absence shall not be entitled to participate in any offering commencing after such unpaid leave has begun but shall not be deemed to have terminated employment for purposes of the Plan. A Participant who, upon failing to return to work following a leave of absence, is deemed not to be an employee, shall not be entitled to participate in any offering commencing after such termination of employment, and such Participant’s Payroll Deduction Account shall be paid out in accordance with Section 7.1.
4.3Common Stock Account. As a condition to participation in this Plan, each Eligible Employee shall be required to hold shares purchased hereunder in a Common Stock Account and such employee’s decision to participate in the Plan shall constitute the appointment of the Custodian as custodial agent for the purpose of holding such shares. Such Common Stock Account will be governed by, and subject to, the terms and conditions hereof and of a written agreement between the Company and the Custodian.
Section 5PARTICIPATION AND PAYROLL DEDUCTIONS.
5.1Enrollment. Each Eligible Employee may elect to participate in the Plan for a Plan Year by completing a Company-specified enrollment form. Upon completing the enrollment process, an Eligible Employee shall commence participation in the Plan on the next practicable relevant pay date. Each Eligible Employee shall be advised of the purchase price (expressed as a percentage of Fair Market Value) determined under Section 6.2(b) before enrolling in the Plan.
5.2Amount of Deduction. When enrolling, the Eligible Employee shall specify a payroll deduction amount which shall be withheld from such Eligible Employee’s regular paychecks, including bonus paychecks, for the Plan Year; provided, however, that the Administrator may determine and specify, from time to time, (a) the range of permissible amounts of Eligible Compensation an Eligible Employee may specify to be withheld and (b) the maximum amount, if any, of Eligible Compensation that may be deducted for an Eligible Employee in any Plan Year, and provided further, that no such determination shall be contrary to the requirements of Code Section 423 and the regulations promulgated thereunder.
5.3Payroll Deduction Accounts. Each Participant’s payroll deduction shall be credited, as soon as practicable following the relevant pay date, to a Payroll Deduction Account, pending the purchase of Common Stock in accordance with the provisions of the Plan. All such amounts shall be assets of the Company and may be used by the Company for any corporate purpose. No interest shall accrue or be paid on amounts credited to a Payroll Deduction Account.
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5.4Subsequent Plan Years. Unless otherwise specified prior to the beginning of any Plan Year by completing a Company-specified change in participation form, a Participant shall be deemed to have elected to participate in each subsequent Plan Year for which the Participant is eligible to the same extent and in the same manner as at the end of the prior Plan Year.
5.5Changes in Participation.
(a) At any time during a Plan Year, a Participant may cease participation in the Plan by completing a Company-specified change in participation form. Such cessation will become effective as soon as practicable following completion of such process, whereupon no further payroll deductions will be made, and the Company shall pay to such Participant an amount equal to the balance in the Participant’s Payroll Deduction Account as soon as practicable thereafter. To the extent still an Eligible Employee, any Participant who ceased to participate may elect to participate again as of any subsequent pay period in any calendar quarter after the quarter in which such Participant ceased to participate.
(b) At any time during a Plan Year (but not more than once in any calendar quarter), a Participant may increase or decrease the percentage of Eligible Compensation subject to payroll deduction within the limits approved by the Administrator pursuant to Section 5.2 by completing a Company-specified change in participation form. Such increase or decrease shall become effective with the first pay period following the completion of such process to which it may be applied practically. Notwithstanding any increase in the Eligible Compensation subject to pay deduction pursuant to this Section 5.5(b), in no event may the amount of Eligible Compensation deducted for an Eligible Employee for any Plan Year exceed the maximum amount authorized to be deducted pursuant to Section 5.2.
(c) Notwithstanding anything herein to the contrary, in the event the Board of Directors determines under Section 5.2(b) to change the purchase price of a share of Common Stock, each Participant shall be advised in advance of the effective date of such change and afforded the opportunity to make a change in participation under Section 5.5(a) or 5.5(b) before such change in the purchase price takes effect.
Section 6OFFERINGS.
6.1Maximum Number of Shares. The Plan will be implemented by making offerings of Common Stock on each Investment Date until the maximum number of shares of Common Stock available under the Plan have been issued pursuant to the exercise of options.
6.2Grant and Exercise of Options.
(a) Subject to Section 6.3, on each Investment Date, each Participant shall be deemed, subject to Section 6.4, to have been granted an option to purchase, and shall be deemed, without any further action, to have exercised such option and purchased the number of shares of Common Stock determined by dividing the amount credited to the Participant’s Payroll Deduction Account on such date by the purchase price (as determined in paragraph (b) below). All such shares shall be credited to the Participant’s Common Stock Account.
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(b) The purchase price for each share of Common Stock shall be expressed as a percentage of Fair Market Value on the Investment Date and shall be determined from time to time by the Board of Directors, but in no event shall such purchase price be less than 85 percent of the Fair Market Value of such share on the Investment Date.
6.3Oversubscription of Shares. If the total number of shares for which options are exercised on any Investment Date exceeds the maximum number of shares available for the applicable offering, the Company shall make a proportional allocation of the shares available for delivery and distribution among the Participants in as nearly a uniform manner as shall be practicable, and the balance of all amounts credited to the Payroll Deduction Accounts shall be applied to the next offering in a manner consistent with the requirements of Code Section 423 and the regulations thereunder.
6.4Limitations on Grant and Exercise of Options.
(a) No option granted under this Plan shall permit a Participant to purchase stock under all employee stock purchase plans (as defined by Code Section 423(b)) of the Company and any Subsidiary in an amount which, in the aggregate, would exceed $25,000 based on the Fair Market Value of such stock (determined at the time the option is granted) for each calendar year in which the option is outstanding at any time.
(b) No employee who would own, immediately after the option is granted, stock possessing five percent (5%) or more of the total combined voting power or value of all classes of stock of the Company or any Subsidiary (a “5% Owner”) shall be granted an option. For purposes of determining whether an employee is a 5% Owner, the rules of Code Section 424(d) shall apply in determining the stock ownership of an individual and stock which the employee may purchase under outstanding options shall be treated as stock owned by the employee.
Section 7DISTRIBUTIONS OF COMMON STOCK ACCOUNT.
7.1Termination of Employment. If a Participant’s employment with the Company and its Subsidiaries terminates for any reason during a Plan Year, shares credited to the Participant’s Common Stock Account may be withdrawn by the Participant from the Plan or may be sold by the Participant through the Plan. Shares not otherwise withdrawn from or sold through the Plan will be distributed to the Participant as soon as practicable following termination.
7.2During Employment. Prior to the Participant’s termination of employment with the Company and its Subsidiaries, a Participant may withdraw some or all of the whole shares credited to the Participant’s Common Stock Account or may sell through the Plan some or all of the whole shares credited to the Participant’s Common Stock Account, subject to the provisions of Section 11.3.
7.3Death. In the event of a Participant’s death, all shares credited to the Participant’s Common Stock Account may be withdrawn from the Plan or sold through the Plan by:
(a) the Participant’s Beneficiary, or
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(b) if the Company is maintaining procedures pursuant to Section 0 pursuant to which a Participant may designate a Beneficiary and no Beneficiary has been so designated or if the Company is not maintaining procedures pursuant to Section 13.5 pursuant to which a Participant may designate a Beneficiary, the Participant’s spouse or, if the Participant is not survived by a spouse, the Participant’s estate, and any amount credited to the Participant’s Payroll Deduction Account shall be distributed to such Beneficiary, spouse or estate, as applicable, as soon as practicable after the Company receives notice of the Participant’s death. Shares not otherwise withdrawn from or sold through the Plan will be distributed to the Participant’s Beneficiary, spouse or estate (determined in accordance with clauses (a) and (b) of this Section 7.3) as soon as practicable. Whether a person is a spouse will be determined using the eligibility standards for U.S. Social Security benefits.
7.4Sales through the Plan. Subject to the provisions of Section 11.3, a Participant, a former Participant who has terminated employment with the Company and its Subsidiaries, or, in the event of the Participant’s death, a Participant’s Beneficiary, spouse or estate (determined in accordance with Section 7.3) may sell shares of Common Stock acquired under the Plan pursuant to procedures established from time to time by the Administrator.
Section 8.DIVIDENDS ON SHARES. All Cash Dividends shall be distributed as elected by Participant as part of the Company-specified enrollment process. During such enrollment form, Participant shall be entitled to elect whether to (a) receive a cash distribution of all or a portion of the Cash Dividends, or (b) reinvest all or a portion of the Cash Dividends in shares of Common Stock purchased at 100 percent of Fair Market Value on the date such dividend is paid, subject to any limitations specified by the Company. All non-cash distributions paid on Common Stock held in a Participant’s Common Stock Account shall be paid to the Participant (or, in the event of the Participant’s death, the Participant’s Beneficiary, spouse or estate, determined in accordance with Section 7.3) as soon as practicable. At any time during a Plan Year (but not more than once in any calendar quarter), a Participant may change his or her election with respect to the distribution of Cash Dividends by completing a Company-specified change in participation form. Such change shall become effective as of the next record date for payment of dividends; provided that the Participant submits the change in participation form as specified by the Company at least 10 days prior to the next record date for payment of dividends
Section 9.RIGHTS AS A STOCKHOLDER. No Participant shall have any rights of a shareholder with respect to any shares of Common Stock until such shares have been purchased in accordance with Section 6. When a Participant purchases Common Stock pursuant to the Plan or when Common Stock is credited to a Participant’s Common Stock Account, the Participant shall have all of the rights and privileges of a stockholder of the Company with respect to the shares so purchased or credited, whether or not certificates representing shares shall have been issued.
Section 10.OPTIONS NOT TRANSFERABLE. Neither a Participant’s Payroll Deduction Account nor any options granted under the Plan to a Participant may be transferred, pledged or otherwise disposed of in any way (other than by will or the laws of descent and distribution) by a Participant and such options are exercisable during the Participant’s lifetime only by the Participant. Any attempt at such assignment, transfer, pledge or other disposition shall be without effect.
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Section 11COMMON STOCK.
11.1Reserved Shares. There shall be reserved for issuance and purchase under the Plan an aggregate of 500,000 shares of Common Stock, subject to adjustment as provided in Section 12. Shares subject to the Plan may be shares now or hereafter authorized but unissued, treasury shares, or shares purchased on the open market.
11.2Restrictions on Exercise. In its sole discretion, the Board of Directors may require as conditions to the exercise of any option that shares of Common Stock reserved for issuance upon the exercise of an option shall have been duly listed on any recognized national securities exchange, and that either a registration statement under the Securities Act of 1933, as amended, with respect to said shares shall be effective, or the Participant shall have represented at the time of purchase, in form and substance satisfactory to the Company, that it is the Participant’s intention to purchase the shares for investment only and not for resale or distribution.
11.3Restriction on Sale of Common Stock Purchased Under the Plan. The Plan is intended to provide shares of Common Stock for investment and not for resale. However, the Company does not intend to restrict or influence the conduct of any employee’s affairs. An employee, therefore, may sell shares of Common Stock that are purchased under the Plan at any time, subject to compliance with any applicable federal or state securities laws. THE EMPLOYEE ASSUMES THE RISK OF ANY MARKET FLUCTUATIONS IN THE PRICE OF THE SHARES OF COMMON STOCK.
Section 12.ADJUSTMENT UPON CHANGES IN CAPITALIZATION. In the event of a subdivision or consolidation of the outstanding shares of Common Stock, or the payment of a stock dividend thereon, the number of shares reserved or authorized to be reserved under this Plan shall be increased or decreased, as the case may be, equitably by the Board of Directors. In the event of any other change affecting the Common Stock, such adjustments shall be made equitably by the Board of Directors to give proper effect to such event, subject to the limitations of Code Section 424.
Section 13ADMINISTRATION.
13.1 The Plan shall be administered by the Board of Directors, which may to the extent permitted by law, but need not, delegate some or all of its authority under the Plan to an Administrator. Any delegation hereunder shall be subject to the restrictions and limits that the Board of Directors specifies at the time of such delegation or thereafter. Nothing in the Plan shall be construed as obligating the Board of Directors to delegate authority under this Plan, and the Board of Directors may at any time rescind the authority delegated to an Administrator appointed hereunder or appoint a new Administrator. At all times, an Administrator appointed under this Section 13.1 shall serve in such capacity at the pleasure of the Board of Directors.
13.2 The Board of Directors (and the Administrator, to the extent that the Board of Directors delegates its authority under the Plan pursuant to Section 13.1) shall have full power and authority to construe and interpret the Plan, to prescribe, amend and rescind rules and regulations relating to it, and to make all other determinations necessary or advisable in administering the Plan. All determinations by the Board of Directors (or the Administrator, as the case may be) in carrying out and administering the Plan and in construing and interpreting the Plan shall be final, binding and conclusive for all purposes and upon all persons interested.
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In the event of any disagreement between the Board of Directors and the Administrator, the Board of Director’s determination on such matter shall be final and binding on all interested persons, including the Administrator.
13.3 No member of the Board of Directors or the Administrator shall be liable for anything whatsoever in connection with the administration of the Plan, except such person’s own willful misconduct. Under no circumstances shall (a) any member of the Board of Directors be liable for any act or omission of any other member of the Board of Directors or the Administrator, or (b) the Administrator be liable for any act or omission of any member of the Board of Directors. In the performance of its functions with respect to the Plan, the Board of Directors and the Administrator shall be entitled to rely upon information and advice furnished by the Company’s officers, the Company’s accountants, the Company’s counsel and any other party the Board of Directors or the Administrator deems necessary, and no member of the Board of Directors or the Administrator shall be liable for any action taken or not taken in reliance upon any such advice.
13.4 The Company shall pay all the costs of administration of the Plan.
13.5 The Company may maintain procedures pursuant to which a Participant may designate a Beneficiary.
13.6 Notwithstanding the provisions of Section 13.2, the Board of Directors (or any duly appointed Administrator) may establish procedures from time to time relating to the review and determination of claims for benefits under the Plan. Such claims procedures may include appointment of one or more committees, which may be composed of such officers of the Company or other individuals as the Board of Directors (or Administrator, as the case may be) shall determine, to act with respect to any claim for benefits under the Plan. Any such committee shall have such authority as is determined by the Board of Directors (or Administrator, as the case may be), which may include the exclusive discretionary right to interpret the Plan, including those provisions arising under or in connection with the administration of the Plan, including without limitation, the authority to make factual determinations.
Section 14AMENDMENT AND TERMINATION.
14.1Amendment. Subject to the provisions of Code Section 423, the Board of Directors (and the Administrator, to the extent the Board of Directors delegates its authority under this Section 14.1) may amend the Plan in any respect; provided, however, that the Plan may not be amended in any manner that will retroactively impair or otherwise adversely affect the rights of any person to benefits under the Plan which have accrued prior to the date of such action, and no amendment shall increase the maximum number of shares of Common Stock that may be purchased under the Plan unless such increase is approved by the shareholders of the Company in accordance with Code Section 423. The Board of Directors may delegate to the Administrator its authority under this Section 14.1 to amend any of the following Sections of the Plan and any other provision of the Plan for which approval by the Board of Directors (or a committee thereof) is not required under applicable law or the rules of any national securities exchange on which the Common Stock is traded: Sections 4.3, 5.4, 5.5(a), 5.5(b), 7.3, 11.3, 16, 17, 18 and 19.
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14.2Termination. The Plan will terminate on the Investment Date that Participants become entitled to purchase a number of shares greater than the number of shares remaining available for purchase. In addition, the Plan may be terminated at any prior time, at the sole discretion of the Board of Directors.
Section 15.GOVERNMENTAL AND OTHER REGULATIONS. The Plan and the grant and exercise of options to purchase shares hereunder, and the Company’s obligation to sell and deliver shares upon the exercise of options to purchase shares, shall be subject to all applicable Federal, state and foreign laws, rules and regulations, and to such approvals by any regulatory or governmental agency as, in the opinion of counsel to the Company, may be required.
Section 16.NO EMPLOYMENT RIGHTS. The Plan does not create, directly or indirectly, any right for the benefit of any employee or class of employees to purchase any shares from the Company (other than as expressly provided in, and subject to the terms and conditions of, the Plan), or create in any employee or class of employees any right with respect to continuation of employment by the Company or any Subsidiary, and it shall not be deemed to interfere in any way with the Company’s or any Subsidiary’s right to terminate, or otherwise modify, an employee’s employment at any time.
Section 17.WITHHOLDING. As a condition to receiving shares hereunder, the Company may require the Participant to make a cash payment to the Company of, or the Company may withhold from any shares distributable under the Plan, an amount necessary to satisfy all Federal, state, city or other taxes required to be withheld in respect of such payments pursuant to any law or governmental regulation or ruling.
Section 18.OFFSETS. To the extent permitted by law, the Company shall have the absolute right to withhold any amounts payable to any Participant under the terms of the Plan to the extent of any amount owed for any reason by such Participant to the Company or any Subsidiary and to set off and apply the amounts so withheld to payment of any such amount owed to the Company or any Subsidiary, whether or not such amount shall then be immediately due and payable and in such order or priority as among such amounts owed as the Company, in its sole discretion, shall determine.
Section 19.NOTICES, ETC. All elections, designations, requests, notices, instructions and other communications from a Participant to the Administrator or the Company required or permitted under the Plan shall be in Company-specified form, and if required to be in writing shall be mailed by first-class mail or delivered to such Company-specified location and shall be deemed to have been given and delivered only upon actual receipt thereof at such location.
Section 20.CAPTIONS, ETC. The captions of the sections and paragraphs of this Plan have been inserted solely as a matter of convenience and in no way define or limit the scope or intent of any provision of the Plan. References to sections herein are to the specified sections of this Plan unless another reference is specifically stated. Wherever used herein, a singular number shall be deemed to include the plural unless a different meaning is required by the context.
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Section 21.EFFECT OF PLAN. The provisions of the Plan shall be binding upon, and inure to the benefit of, all successors of the Company and each Participant, including, without limitation, such Participant’s estate and the executors, administrators or trustees thereof, heirs and legatees, and any receiver, trustee in bankruptcy or representative of creditors of such Participant.
Section 22.GOVERNING LAW.The internal laws of the State of Delaware shall govern all matters relating to this Plan except to the extent superseded by the laws of the United States.
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ANNUAL MEETING GUIDELINES
In the interest of an orderly and constructive meeting, the following guidelines will apply to NorthWestern’s annual meeting:
The annual meeting is open only to our stockholders and our invited guests. Stockholders attending the annual meeting should present evidence of NorthWestern Corporation (NYSE: NWE) stock ownership to gain entrance. You may be asked to provide photo identification, such as a driver’s license, in order to gain admittance to the annual meeting.
The business of the meeting will be set forth in the agenda, which you will receive at the meeting entrance. If you wish to change your vote or have not voted, a ballot will be distributed to you to cast your vote.
Stockholder questions and comments related to our business will be addressed only during the question and answer portion of the agenda at the end of the annual meeting.
Stockholders will be recognized on a rotation basis, and their questions or remarks must be relevant to the meeting, pertinent to matters properly before the meeting, and briefly stated with a time limit of three minutes.
Although personal grievances, claims and political statements are not appropriate subjects for the annual meeting, you may submit in writing any of these to an usher or company representative, and we will respond in writing.
The use of cameras or sound recording equipment is prohibited, except by those employed by the company to provide a record of the proceedings. The use of cell phones and other personal communication devices also is prohibited during the annual meeting.
No firearms or weapons will be allowed in the meeting room.
No banners or signs will be allowed in the meeting room.
We reserve the right to inspect all items entering the meeting room. Handbags, briefcases and packages may be inspected.
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NORTHWESTERN CORPORATION 3010 W. 69TH STREET SIOUX FALLS, SD 57108 |
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