Compensation Program Spotlight
Responsive to Stockholder Interests
While we maintain a largely consistent approach to our compensation program from year-to-year, we incorporate industry best practices based upon input from stockholders and our compensation consultant. Examples of changes we’ve made to our program over the last four years as a result of this input are summarized below.
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Proposal 2 | | Advisory Vote to Approve Compensation of the Named Executive Officers | • Adopted clawback policySee pages P32-47 for more information.
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| | • Adopted policy prohibiting tax gross-ups in any new executive arrangementsThe Board recommends a vote FOR the advisory vote on Executive Compensation
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| | • Added cash flow as additional short-term incentive performance measureOur compensation program focuses on key Company results (financial, safety, customer satisfaction, diversity) that are aligned with our strategic goals. • Added “double trigger” for vestingA substantial portion of performance units upon change in controlcompensation is at risk and tied to overall Company performance. • Retained independentThe compensation consultant; annually assess and re-engage
| • Revised executive compensation peer group methodology
• Adjusted dividend equivalent payout to occur at end of three-year performance period
| • Added authorized ROE as an additionalprogram has a long-term incentive performance measure
• Increased CEO’s required holdings of Company stock from 5x to 6x base salary
orientation aligned with stockholder interests.
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At-Risk Compensation
The executive compensation program has been designed so that total direct compensation (“TDC”) is strongly tied to the achievement of our short-term and long-term goals.
• A substantial portion of pay is “at risk” and, generally, the value will only be realized upon strong overall corporate performance.
• Approximately 88% of our CEO’s TDC, and an average of 76% of the other NEOs’ TDC, is tied to Company performance and is not guaranteed.
Governance | |
* Based upon metrics for Allen Leverett |
Performance-Based Pay
At the Company’s 2017 annualThe Board’s Compensation Committee has a long track record of ensuring that total executive compensation incentivizes an appropriate balance between long-term strategies and short-term priorities. By design, a substantial portion of executive pay is “at-risk” and can only be earned by meeting of stockholders, approximately 95 percent of the votes castkey financial and operational goals. These goals are critical to delivering enduring value, and they reflect our focus on the “Say-on-Pay” proposal were voted in support of the non-binding advisory vote on the compensationsustainable decision-making, taking into consideration financial, as well as environmental, social and governance ("ESG") objectives of our named executive officers. The Company’s 2017 compensation program was substantially similar to the 2016 program design and is summarized below.
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| Salary | Annual Incentive | Performance
Unit Plan Equity | Stock Options and Restricted Stock |
When Granted | Reviewed Annually |
Performance Type | Short-Term | Long-Term |
Award Type | Cash | Equity*Performance Units* | Stock Options | Restricted Stock |
Performance Period | Ongoing | 1 yearYear | 3 Years | 3 Year Vesting | 1 or 3 Year Vesting |
How Payout is Determined | | | | | |
Role; responsibilities; market data; committee judgment | Formulaic: • Financial (EPS, cash flow, utility net income) • Operational (safety, customer satisfaction, diversity) | Formulaic: • TSRTotal Shareholder Return (TSR) • Authorized ROE (new in 2017)Return on Equity (ROE)
| Formulaic;Formulaic:
Market dataStock price performance
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* | Performance units are settled in cash. |
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** | Based upon metrics for Kevin Fletcher. |
A comprehensive discussionbroad overview of our executive compensation program, “Compensation Discussionthe Company's 2019 business, financial and Analysis,”operational performance highlights begins on page P-39 of this Proxy Statement.P-33. Performance highlights linked to our executives’ variable compensation components are summarized below.
Compensation Links Pay to Performance
Throughout 2019, we maintained heavy focus on financial discipline and successfully executed our financial plan. The Company’s strong financial performance with respect to earnings per share, cash flow and utility net income exceeded target levels.
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WEC Energy Group | P-12P-9 | 20182020 Proxy Statement |
Our commitment to delivering a clean energy future is evident in our 5-year capital plan, which is comprised of multi-year projects tied to strategic objectives, including:
reshaping our generation fleet with significant investments in low- and no-carbon generation to help meet our carbon emission reduction goals;
upgrading our electric delivery infrastructure through innovative technology developments that help customers manage energy use and reduce environmental impacts; and
modernizing our natural gas infrastructure in the city of Chicago to improve safety and performance, which will also help us achieve our methane reduction goal.
Our executive management team’s successful execution of our financial plan through 2019 resulted in the opportunity to increase our updated 5-year capital plan (2020-2024) by approximately $900 million, which equates to approximately $15 billion of planned investments over the next five years – investments which include capital projects aimed at meeting our greenhouse gas reduction goals.
Our ability to fund this substantial capital plan without issuing additional equity is directly linked with our ability to consistently deliver on our financial plan and meet our earnings per share and cash flow targets, both of which are key financial metrics underlying our short-term incentive compensation.
For more than 15 years, the Compensation Committee has taken a broad perspective on incentive compensation, linking important social metrics to our employees’ performance goals.
Beginning in 2004, incentive compensation has included refreshed annual targets tied to several key social aspects of our corporate strategy, including:
• employee safety • employee and supplier diversity •customer satisfaction
The Compensation Committee sets aggressive performance goals to emphasize a mindset of continuous improvement, which are used to add to or subtract from our executives’ incentive compensation, thereby reinforcing focus on areas tied to our overall corporate strategy.
We are very proud of our employees’ dedication to delivering on these goals over the past year, examples of which are highlighted below.
Named as one of America’s Best Employers for Diversity by Forbes Magazine.
Both of our Wisconsin electric utilities earned PA Consulting's Reliability One Awards for outstanding electric reliability performance in the Midwest.
Peoples Gas earned the Most Trusted Brand Award from Cogent Syndicated Utility Trusted Brand & Customer Engagement Study.
Nearly 22% overall improvement year-over-year in lost-time injuries.
Spent $282.6 million with certified minority-, women-, service-disabled- and veteran-owned businesses.
Received the Above and Beyond Award in recognition of providing employees who serve in a military capacity with additional non-mandated benefits to ease burdens associated with deployment.
Conducted enterprisewide workplace ethics survey to gauge employee perceptions of the company's actions, process and operating style.
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Proposal 3 | | Ratification of Deloitte & Touche LLP as Independent Auditors for 2020 | See pages P62-64 for more information. |
| | The Board recommends a vote FOR ratification of Deloitte & Touche LLP for 2020 |
| | • The Audit Committee annually evaluates the performance of Deloitte & Touche LLP and confirms that retention is in the best interests of the Company and its stockholders. • Deloitte & Touche LLP is an independent firm with significant industry and financial reporting expertise, and fees that are appropriate for the size and scope of the Company. |
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WEC Energy Group | P-10 | 2020 Proxy Statement |
PROXY STATEMENTProxy Statement
This proxy statement is being furnished to stockholders beginning on or about March 22, 2018,25, 2020, in connection with the solicitation of proxies by the WEC Energy Group, Inc. (“WEC Energy Group” or the “Company”) Board of Directors (the “Board”) to be used at the 2020 Annual Meeting of Stockholders to be held on Thursday,Wednesday, May 3, 2018 (the “Meeting”)6, 2020 at 10:00 a.m., Central2:30 p.m. Eastern time, at Concordia University Wisconsin in the R. John Buuck Field House located at 12800 North Lake Shore Drive, Mequon, Wisconsin 53097,New York Stock Exchange, 11 Wall Street, New York, NY 10005, and at all adjournments or postponements of the Meeting,this meeting, for the purposes listed in the Notice of the 20182020 Annual Meeting of Stockholders.
PROPOSAL 1: ELECTION OF DIRECTORS – TERMS EXPIRING IN 20192021
WEC Energy Group’s bylaws require each director to be elected annuallyto hold office for a one-year term. Because thisThis is an uncontested election,election; therefore, our majority vote standard for election of directors will apply. Under this standard, the director nominees will be elected only if the number of votes cast favoring such nominee’s election exceeds the number of votes cast opposing that nominee’s election, as long as a quorum is present. Therefore, presuming a quorum is present, shares not voted, whether by broker non-vote, abstention, or otherwise, have no effect in the election of directors.
Proxies may not be voted for more than 1412 persons in the election of directors.
The Board requires its current and potential directors to have a broad range of skills, education, abilities, experience, and qualifications that will benefit WEC Energy Group and our stockholders. Information regardingActing on the specific criteria and processes used to evaluate director nominees can be found on page P-14.
Factored into the Board’s ongoing succession planning have been discussions related to the fact there will be a number of directors who will be retiring in the course of the next three years, which prompted the Board to actively search for director candidates with specific skills in mind. Effective December 31, 2017, Paul W. Jones retired from the Board. Two new directors were subsequently elected as part of our Board succession plan: William M. Farrow III effective January 1, 2018 and Danny L. Cunningham effective January 10, 2018. The Board elected Mr. Farrow, in part, to address the Board's desire to increase the level of experience in IT and cybersecurity and maintain the presence of an Illinois resident on our Board, given the Company's significant presence there. The Board also elected Mr. Cunningham due to, among other things, his strong background in accounting and risk oversight. Messrs. Cunningham and Farrow were initially recommended to the chairrecommendation of the Corporate Governance Committee, by certain non-management directors.
With respect to Mr. Leverett, at the time of his nomination by the Board in January and as of the issuance of this proxy statement, he continued to make steady progress in his recovery from a stroke that he suffered in October 2017.
The Board’sBoard's nominees for electionare:
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• John F. Bergstrom | • Patricia W. Chadwick | • | Maria C. Green |
Curt S. Culver | Gale E. Klappa |
Danny L. Cunningham | Henry W. Knueppel |
William M. Farrow III | Thomas K. Lane |
Thomas J. Fischer | • Allen L. Leverett |
• Barbara L. Bowles | • Curt S. Culver | • Gale E. Klappa | • Ulice Payne, Jr. |
• William J. BrodskyKevin Fletcher | • Danny L. Cunningham | • Henry W. Knueppel | • Mary Ellen Stanek |
• Albert J. Budney, Jr. | • William M. Farrow III | | |
Each nominee has consented to being nominated and to serve if elected. In the unlikely event that any nominee becomes unable to serve for any reason, the proxies will be voted for a substitute nominee selected by the Board upon the recommendation of the Corporate Governance Committee of the Board. Information regarding each nominee is included
Factored into the Board’s ongoing succession planning have been discussions related to the fact that a number of directors are expected to complete their service on the following pages.Board in 2020 and 2021, which prompted the Board to actively search for director candidates with specific skills in mind. Two new directors were subsequently elected as part of that succession plan: Maria C. Green effective October 1, 2019, and Thomas K. Lane effective January 1, 2020. The Board elected Ms. Green, in part, due to her having served in the role of general counsel and corporate secretary for several public companies where she gained extensive experience in strategic planning, acquisitions, investor relations and corporate sustainability matters. The Board elected Mr. Lane due to, among other things, his strong financial expertise focused within the energy sector, including investment and growth strategies related to power generation and renewable projects.
During 2019, Director Fischer reached retirement age. Following discussion, the Corporate Governance Committee recommended that the Board nominate Mr. Fischer for one more year of service. The Corporate Governance Committee believes that this extension would provide the Board additional continuity as new members join the Board and, in particular, would assist in the transition of Mr. Fischer's responsibilities as Audit Committee Chair to another independent director in May 2020.
Directors Barbara L. Bowles and Albert J. Budney, Jr. will complete their service as directors at the 2020 Annual Meeting of Stockholders, and thus will not serve as nominees for re-election. The Company sincerely thanks them for their many important contributions, leadership and years of dedicated service.
In selecting the 2020 director nominees, the Corporate Governance Committee and the Board determined that the candidates collectively embody a breadth of characteristics germane to executing the duties of the Board, including the general criteria, qualifications, diversity, and independence reported below.
The Board of Directors recommends that you vote “FOR” all of the director nominees.
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WEC Energy Group | P-13P-11 | 20182020 Proxy Statement |
DIRECTOR NOMINEES NOMINATION AND EVALUATION PROCESS
CriteriaNomination Process
Candidates for director nomination may be proposed in a number of ways, including by stockholders, the Corporate Governance Committee, and Processes Usedother members of the Board. The Corporate Governance Committee may pay a third party to Evaluate Nomineesidentify qualified candidates; however, no such firm was engaged with respect to the nominees listed in this proxy statement.
The Corporate Governance Committee will consider director candidates recommended by stockholders provided that the stockholders submitting recommendations comply with requirements and procedures set forth in our bylaws. Stockholders may also recommend director candidates by following the procedures outlined on P-71. No formal stockholder nominations or recommendations for director candidates were received in connection with the 2020 Annual Meeting of Stockholders.
We recently added two new independent Directors to our Board. Ms. Green and Mr. Lane were recommended by the Corporate Governance Committee for election and were elected to the Board effective October 1, 2019 and January 1, 2020, respectively. Ms. Green and Mr. Lane were initially recommended for consideration by the Corporate Governance Committee Chair and the Chairman, respectively, following which the Corporate Governance Committee undertook the evaluation process described immediately below.
Evaluation Process
The Corporate Governance Committee evaluates director nominees incandidates, including those proposed by stockholders, through the contextlens of the Board as a whole with the goal of recommending nominees with diverse backgrounds and experience that, together, can best perpetuate the success of WEC Energy Group’s business and represent stockholder interests. In addition to evaluatingits ongoing director nominees on the basis of the director candidate criteria, Board diversity, and independence as described on page P-66,succession planning process, whereby the Corporate Governance Committee has determined, through the Board succession planning process,ensures that the Board should consistis composed of candidates that collectively possessdirectors who embody certain minimum criteria, and who, as a group, have the following core competencies in orderskills and experiences to effectively carry out its oversight function. By adhering to this philosophy, the Board avoids director candidates with a narrow focus or set of experiences. Core competencies, qualifications, and experienceoversee management's strategy for each director are listed in their respective biographies under the heading "Nominees for Election to the Board of Directors." Just because a core competency is not associated with a director should not be taken as an indicator such director does not posses those particular skills.
Core CompetenciesCEO/Senior Leadership
Directors who have significant senior leadership experience as a CEO or senior executive demonstrate a practical understanding of an organization and its operational processes, enterprise risks, and strategy, and are able to recognize leadership skills in others.
Financial Strategy/Investment Management/Investor Relations
It is important that our directors have expertise in evaluating financial plans, policies, and strategies, including capital structure, debt programs, and equity financings. Directors with an understanding of investments and investment-making policy add significant value in assessing investment approaches and performance.
Audit Oversight/Financial Reporting
Directors with expertise in financial reporting, internal controls, and audit functions are critical to effective oversight of the Company's accurate preparation of financial statements and disclosures, and of compliance with legal and regulatory requirements.
Regulated Industry Knowledge
Our businesses are heavily regulated and directly affected by multiple state and federal regulatory agencies. These regulations significantly influence the Company's operating environment and its financial condition. Directors with experience in highly regulated businesses bring relevant context to discussions on the strategic impact of these regulations.
Extensive Knowledge of the Company's
Business and/or Industry
Directors with leadership and operational experience in our industry bring a practical understanding of the technical nature of the Company's business, which allows for thoughtful deliberation in discussing the intricacies of achieving operational excellence.
Government/Public Policy
Directors who have experience working with government organizations and public policy provide valuable input as management considers the strategic impact of new and changing legislative acts and policies, as well as judicial decisions that affect the utility industry.
Innovation/Technology
The industry in which our Company conducts business is complex and experiencing ongoing transformation. Digital and other technological advances are changing energy policy and markets, as well as creating new sources of risk that challenge the protection of systems and assets against physical and cyber threats. The Company believes all stockholders are well served by the presence of directors with knowledge in these areas.
Risk Management and Oversight
Directors with expertise in risk management and oversight can provide keen insights that are critical to the Company as it manages comprehensive practices and policies used to effectively identify and mitigate risks that arise across every area of the organization.
Talent Management/Executive Compensation
Our Company operates in a highly technical and complex industry which necessitates a strong focus on talent management. Directors with experience in acquiring new talent, establishing a competitive compensation and benefit package, and succession planning are critical to the Company's ability to implement strategies aimed at attracting and retaining human capital.while performing their fiduciary obligations.
Corporate Governance
The Company strives to maintain and promote a framework of practices and policies through which the Board can assure stakeholders of the Company's accountability and transparency. It is important to have directors with strong expertise in corporate governance practices who work alongside management to ensure the Board maintains its focus on stockholder interests.
Customer Service
Providing exceptional customer care is one of the Company's fundamental objectives. Insight from directors who have served in organizations with the same focus assists management as it seeks to continually enhance our processes in order to effectively and efficiently serve the needs of its broad customer base.
Environmental Issues/Corporate Social Responsibility
Our Company is focused on serving its customers and supporting our communities as a responsible corporate citizen, while also balancing the delivery of safe, reliable, and affordable energy with a commitment to protecting the environment and contributing positively to society at large. Directors who have experience assessing business risks and growth opportunities through the lens of ESG factors provide valuable input to strategic decision making.
Strategic Planning
Amid unprecedented business and technological innovation and transformation, the Company must continue to maximize its financial and operational performance. Directors with expertise in strategic planning can help management identify ways to adjust its strategy in response to the changing environment, while maintaining long-term value creation.
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WEC Energy Group | P-14 | 2018 Proxy Statement |
Director Candidate Criteria
The Corporate Governance Committee has established criteria for evaluating director candidates, as set forth in the Company’s Corporate Governance Guidelines, which include: proven integrity; mature and independent judgment; vision and imagination; ability to objectively appraise problems; ability to evaluate strategic options and risks; sound business experience and acumen; relevant technological, political, economic, or social/cultural expertise; social consciousness; achievement of prominence in career; familiarity with national and international issues affecting the Company’s businesses; contribution to the Board’s desired diversity and balance; and, in the case of new directors, availability to serve for five years before reaching the directors’ retirement age of 72.
As stated in its charter, the Corporate Governance Committee reviews these criteria annually; in mid-2017, the Committee completed its review and had no recommended changes. In selecting the 2018 nominees for director, the Corporate Governance Committee determined that the candidates fulfill these criteria.
Director Brodsky.During 2016, Director Brodsky reached retirement age. The Corporate Governance Committee discussed this matter in January 2017 and again in January 2018 and agreed that Director Brodsky's long history living and working in, and deep knowledge of, the metro-Chicago area, as well as his strong strategic relationships, continue to provide special expertise to the Board that is helpful to the successful operations of the Company's Illinois utilities. As a result, upon the recommendation of the Corporate Governance Committee, the Board of Directors approved Director Brodsky's continued service beyond age 72 and nominated him to continue serving as a director for a term expiring in 2019.
Board Diversity
The Corporate Governance Committee does not have a specific policy with regard to the consideration of diversity in identifying director nominees. However, the Corporate Governance Committee strives to cast a wide net and recommend candidates who each bring a unique perspective to the Board in order to contribute to the collective diversity of the Board. As part of its process, in connection with the nomination of directors to the Board, the Corporate Governance Committee considers several factors to ensure the entire Board collectively embraces a wide variety of characteristics, including professional background, experience, skills, and knowledge, as well as the criteria listed above. Each candidate will generally exhibit different and varying degrees of these characteristics. With respect to the Company’s current slate of director nominees, the Company also benefits from the diversity inherent from differences in Board member gender, ethnicity, tenure, and maturity as depicted on the infographic on page P-9.
Director Independence
Prior to nomination, both new and returning directors are evaluated to ensure compliance with the Board’s standards of independence, as described in detail on page P-66. Additionally, the Corporate Governance Committee reviews potential conflicts of interest, including interlocking directorships and substantial business, civic, and/or social relationships with other members of the Board that could impair the prospective Board member’s ability to act independently from the other Board members and management.
The Board has affirmatively determined that Directors Bergstrom, Bowles, Brodsky, Budney, Chadwick, Culver, Cunningham, Farrow, Fischer, Knueppel, Payne, and Stanek have no relationships described in the Board’s standards of independence noted above and otherwise have no material relationships with WEC Energy Group, and are, therefore, independent. The Board had also determined that Paul W. Jones, who retired as a director effective December 31, 2017, was independent. Directors Klappa and Leverett are not independent due to their employment with WEC Energy Group.
Director Stanek. Since 2005, WEC Energy Group has engaged Baird Financial Group primarily to provide consulting services for investments held in the Company’s various benefit plan trusts. The Board reviewed the terms of this engagement, including the approximately $648,750 in fees paid to Baird in 2017 (which are less than one-tenth of 1% of Baird’s total revenue), and Ms. Stanek’s position at Baird, and concluded that such engagement is not material and did not impact Ms. Stanek’s independence.
Director Nominee Evaluation Process
OnceWhen a person has beenis initially identified by the Corporate Governance Committee as a potential candidate, the Corporate Governance Committee may collect and review publicly available information regarding the person to assess whether that person should be considered further. If the Corporate Governance Committee determines that the candidate warrants further consideration, the chair or another member of the Board of Directors contacts the person.prospective director. Generally, if the personindividual expresses a willingness to be considered and to serve on the Board, the Corporate Governance Committee requests additional information from the candidate, reviews the person’shis or her accomplishments and qualifications, and conducts one or more interviews with the candidate. In certain instances, Corporate Governance Committee members may contact one or more references provided by the candidate, or may contact other members of the business community or other persons who may have greater firsthand knowledge of the candidate’s accomplishments.candidate. The Committee will utilize third parties if and as needed to assist with these activities. As a final step, the candidate interviews with members of the Board, following which the Corporate Governance Committee will make a recommendation regarding nomination to the Board for the Board's discussion and final determination.
Director Term Limits
The Board does not believe it is appropriate or necessary to limit the number of terms a director may serve. The Board values the participation and insight of directors who have developed an increased understanding of the governance of the Company and the specific issues it faces doing business in a complex, regulated industry, as well as those directors who bring fresh and varied perspectives, resulting in a Board with a balanced tenure.
DIRECTOR QUALIFICATIONS
The Corporate Governance Committee evaluatesand the Board evaluate director nominees in light of the Board’s current members, with the goal of recommending nominees with diverse backgrounds and experiences who, together with the current directors, can best perpetuate the success of WEC Energy Group’s business and represent stockholder interests. By adhering to a philosophy whereby director nominees are evaluated on the basis of certain minimum qualifications, Board diversity, and core competencies, the Board is able to attract director candidates including those proposed by stockholders, using this criteriathat bring a broad range of perspectives and process. The process is designedexperiences, and who will effectively contribute to provideand complement the Board.
Key factors considered in recommending the 2020 director nominees are listed below:
To be eligible for consideration, the Board with a diversity of experience and stability to allow it to effectively meetbelieves that any proposed candidate must demonstrate certain minimum qualifications, which the many challenges WEC Energy Group faces in today’s challenging economic environment.Corporate Governance Committee reviews annually:
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• Proven integrity • Ability to objectively appraise problems • Relevant technological, political, economic, or social/cultural experience • Familiarity with national and international issues affecting the Company's business | • Mature and independent judgment • Ability to evaluate strategic options and risks • Social consciousness • Contribution to the Board's desired collective diversity
| • Vision and imagination • Sound business experience/acumen • Achievement of prominence in career • Availability to serve for five years before reaching the directors' retirement age of 72 (in the case of new directors) |
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WEC Energy Group | P-15P-12 | 20182020 Proxy Statement |
While the Corporate Governance Committee does not have a specific policy with regard to the consideration of diversity in identifying director nominees, it strives to cast a wide net and recommend candidates who each bring a unique perspective to the Board in order to contribute to a collective diversity - diversity of knowledge, skills, experiences, thought, gender, race/ethnicity, tenure and maturity.
Directors’ qualifications are also evaluated in the context of the Board’s strategic initiatives, financial and operational performance objectives, and material risks. With that in mind, the Corporate Governance Committee and Board have determined through the Board succession planning process that the Board’s composition should consist of candidates that collectively possess a specific set of core competencies as listed in the Proxy Summary on page P-8, in order to effectively carry out its oversight function.
During the fourth quarter of 2019, the Corporate Governance Committee and Board evaluated and affirmed this set of competencies. Each director then performed a self-assessment of his/her level of knowledge in each skill area using the following 3-point scale: “1” Limited knowledge (e.g., no direct experience, primary exposure comes from Board or Committee reports); “2” Intermediate knowledge (e.g., general managerial/oversight experience or broad exposure as a Board or Committee member); “3” Advanced knowledge (e.g., direct experience; subject matter expert). A summary of the Board’s level of knowledge with respect to each of the core competencies was included in the Proxy Summary on page P-8.
DIRECTOR INDEPENDENCE
The guidelines the Board uses in determining director independence are located in Appendix A of the Corporate Governance Guidelines ("Guidelines"), which are available on the Corporate Governance section of the Company’s website at www.wecenergygroup.com/govern/governance.htm. These Guidelines provide that the Board should consist of at least a two-thirds majority of independent directors. The independence standards found in our Guidelines are not only in compliance with the listing standards of the New York Stock Exchange (“NYSE”), but are actually more stringent than the NYSE rules. In order to be deemed independent, the individual must have no material relationship with the Company that would interfere with the exercise of good judgment in carrying out his or her responsibilities as a director.
Prior to initial and annual election, all directors complete a detailed questionnaire that elicits information that is used to ensure compliance with the Board’s and the NYSE’s standards of independence. The Corporate Governance Committee also reviews potential conflicts of interest, including related-party transactions, interlocking directorships, and substantial business, civic and/or social relationships with other members of the Board that could impair the prospective Board member’s ability to act independently from the other Board members and management. The Board also considers whether a director’s immediate family members meet the independence criteria outlined in the Guidelines, as well as whether a director has certain relationships with WEC Energy Group’s affiliates, when determining the director’s independence.
The Board has affirmatively determined that Directors Bowles, Budney, Chadwick, Culver, Cunningham, Farrow, Fischer, Green, Knueppel, Lane, Payne and Stanek are independent. Directors Klappa and Fletcher are not independent due to their employment with the Company. Allen Leverett resigned from the Board in July 2019; he was also not independent due to his employment with the Company.
Director Stanek. Since 2005, WEC Energy Group has engaged Baird Financial Group primarily to provide consulting services for investments held in the Company’s various benefit plan trusts. Baird also provides certain related administrative services. The Board reviewed the terms of this engagement, including the approximately $729,800 in fees paid to Baird in 2019 (which are less than one-tenth of 1% of Baird’s total revenue), and Ms. Stanek’s position at Baird, and concluded that such engagement is not material and did not impact Ms. Stanek’s independence. Ms. Stanek is not involved with and does not consult on the contract with or recommendations made by Baird and receives no direct financial benefit from these services. WEC Energy Group management evaluates Baird’s services against market standards for overall quality and value on a regular basis. Neither the Board nor Ms. Stanek plays a role in the retention of Baird for these services or any related negotiation of commercial terms. In addition, WEC Energy Group’s pension trusts and other benefit accounts do not hold any investments in Baird funds.
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WEC Energy Group | P-13 | 2020 Proxy Statement |
Nominees for Election to the Board of Directors2020 DIRECTOR NOMINEES FOR ELECTION
The following 1412 individuals have been nominated for election to the Board of Directors at the WEC Energy Group Annual Meeting. Biographical information for each director nominee is set forth below. Ages are as of January 18, 2018,16, 2020, the date each person was designated as a nominee of the Board for election at the Meeting.
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| John F. Bergstrom
Age: 71
Director Since: 1987
Board Committees: Audit and Oversight; Compensation (Chair); Executive
Core Competencies: Senior Leadership/CEO Experience; Talent Management/Executive Compensation; Strategic Planning; Customer Service.
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Bergstrom Corporation - Chairman and CEO since 1982. Bergstrom Corporation owns and operates numerous automobile sales and leasing companies.
Director of Advance Auto Parts Inc. since 2008; Director of Associated Banc-Corp since 2010; Director of Kimberly-Clark Corporation since 1987.
Director of WEC Energy Group since 1987; Director of Wisconsin Electric Power Company from 1985 to June 2015.
Specific qualifications and experience
Mr. Bergstrom brings to our Board of Directors 35 years of leadership experience as CEO of Bergstrom Corporation, one of the top 50 automotive dealership groups in America. With significant business operations in WEC Energy Group utilities' service territories and customer service perspective, Mr. Bergstrom brings strong insight with respect to the needs and concerns of WEC Energy Group's large retail customers, as well as perspective on the business environment in the State of Wisconsin, home to WEC Energy Group's corporate headquarters and our largest utility subsidiaries. His deep governance knowledge, which includes over 50 years of combined experience as a director on the boards of other publicly traded U.S. corporations and regional nonprofit entities, including the Green Bay Packers, Inc., is particularly valuable to board and committee discussions focused on executive compensation and succession planning matters, as well as strategic planning initiatives. With a focus on excellence, Mr. Bergstrom has attained the National Association of Corporate Directors (“NACD”) top designation of Board Leadership Fellow, and, in 2017, he was named to the NACD Directorship 100, which recognizes the top one hundred most influential people who effect the work in our nation’s boardrooms.
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| Barbara L. Bowles
Age: 70
Director Since: 1998
Board Committees: Audit and Oversight; Corporate Governance (Chair); Executive
WEC Board: Presiding Director
Core Competencies: Corporate Governance; Financial Strategy/Investment Management/Investor Relations; Audit Oversight/Financial Reporting; Extensive Knowledge of Company's Business and/or Industry.
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Profit Investment Management - Retired Vice Chair. Served as Vice Chair from January 2006 until retirement in December 2007. Profit Investment Management is an investment advisory firm.
The Kenwood Group, Inc. - Retired Chairman. Served as Chairman from 2000 until 2006 when The Kenwood Group, Inc. merged into Profit Investment Management. CEO from 1989 to 2005.
Director of Hospira, Inc. from 2008 to 2015.
Director of WEC Energy Group since 1998; Director of Wisconsin Electric Power Company from 1998 to June 2015.
Specific qualifications and experience
As founder, CEO, and retired Chairman of The Kenwood Group, Inc., a Chicago-based investment advisory firm that managed pension funds for corporations, public institutions, and endowments, Ms. Bowles, who is a Chartered Financial Analyst, brings over 20 years of investment advisory experience to our Board of Directors. Having also served as a portfolio manager and utility analyst for more than 10 years, and as a chief investor relations officer for two Fortune 50 companies, she contributes valuable perspective as to what issues are important to large investors. In the role of Chief Compliance Officer of Profit Investment Management, Ms. Bowles gained a deep understanding of corporate governance issues and concerns, experience she applies to her positions as Chair of WEC Energy Group's Corporate Governance Committee and independent presiding director. She also contributes valuable risk management and financial reporting insights as a member of the Audit and Oversight Committee, expertise she developed from current and past service as a director on the boards of several other public companies where she has served on the audit and finance committees. With utility subsidiaries located in Chicago, the Board of Directors also benefits from the economic and political perspectives Ms. Bowles provides as a result of her involvement in several important non-profit organizations in Chicago.
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WEC Energy Group | P-16 | 2018 Proxy Statement |
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| William J. Brodsky
Age: 73
Director Since: 2015
Board Committee: Finance
Core Competencies: Senior Leadership/CEO Experience; Corporate Governance; Financial Strategy/Investment Management/Investor Relations; Government/Public Policy.
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Cedar Street Asset Management LLC - Chairman since 2016. Cedar Street Asset Management LLC is a Chicago-based portfolio management firm that specializes in investments in international equities.
The Chicago Board Options Exchange - Chairman of the Board from May 2014 to February 2017. Served as Executive Chairman from 2013 to May 2014 and Chairman and CEO from 1997 to 2013.
CBOE Holdings, Inc. - Chairman of the Board from May 2014 to February 2017. Served as Executive Chairman from 2013 to May 2014 and Chairman and CEO from 2010 to 2013. CBOE Holdings, Inc. is the holding company for The Chicago Board Options Exchange, an exchange that focuses on options contracts for individual equities, indexes, and volatility (VIX), and the CBOE Futures Exchange which offers volatility futures.
Director of WEC Energy Group since June 2015; Director of Integrys Energy Group from February 2007 to June 2015.
Specific qualifications and experience
Mr. Brodsky brings to our Board of Directors extensive finance, regulatory, and business management experience gained from nearly 35 years of combined service as CEO of The Chicago Board Options Exchange, CBOE Holdings, Inc., and the Chicago Mercantile Exchange. His over 40 years of experience in the financial markets industry, and recognition as a leading industry advocate in securities, commodities and futures markets policy and regulation, is particularly valuable in his service on the WEC Energy Group Finance Committee where he can apply his keen insights to the Company's financial strategy and investment management matters. Mr. Brodsky's extensive knowledge of the economic and governmental challenges as well as policy issues facing a public company doing business in Illinois is of great value to the Board, as is his extensive past and present experience serving on the boards of numerous highly-visible not-for-profit organizations in the metro Chicago area.
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| Albert J. Budney, Jr.
Age: 70
Director Since: 2015
Board Committee: Corporate Governance
Core Competencies: Senior Leadership/CEO Experience; Extensive Knowledge of Company's Business and/or Industry; Regulated Industry Knowledge; Environmental Issues/Corporate Social Responsibility.
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Niagara Mohawk Holdings, Inc. - Retired President and Director. Niagara Mohawk Holdings, Inc. is a holding company that distributes electricity in areas of New York through its utility subsidiaries.
Director of WEC Energy Group since June 2015; Director of Integrys Energy Group from February 2007 to June 2015.
Specific qualifications and experience
With over 40 years of utility experience in senior leadership positions, Mr. Budney brings to our Board of Directors extensive knowledge in managing the operations of a utility company and the complexities that arise from operating in a highly-regulated industry. He has acquired considerable board experience in utility industry mergers and acquisitions, having served as a director of Niagara Mohawk Holdings when it was acquired by National Grid. Further, he was serving as a director of WPS Resources Corporation when it purchased Peoples Energy Corporation, subsequently changing its name to Integrys Energy Group, and has since been acquired by WEC Energy Group. With respect to environmental issues, Mr. Budney brings to the Board insights he gained while President of Niagara Mohawk Holdings, where the Vice President of Environmental Affairs was among his direct reports. This provided Mr. Budney with experience he applied as a founding member of the Environmental Committee of the Board at Integrys Energy Group. Having also served as the Chair of the Corporate Governance Committee and lead director of Integrys Energy Group, Mr. Budney’s broad knowledge in governance, customer service, and corporate management matters are very valuable to the Board in carrying out its oversight in these areas.
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WEC Energy Group | P-17 | 2018 Proxy Statement |
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| Patricia W. Chadwick Age: 6971 Director Since: 2006 Board Committees: Audit and Oversight; Finance Core Competencies: Financial Strategy/Investment Management/Investor Relations; Audit Oversight/Financial Reporting; Strategic Planning; Extensive Knowledge of Company's Business and/or Industry.
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Ravengate Partners, LLC - President since 1999. Ravengate Partners, LLC provides businesses and not-for-profit institutions with advice about the financial markets, business management, and global economics.
Director of AMICAAmica Mutual Insurance Company since 1992; Director of VOYAVoya Mutual Funds (previously ING Mutual Funds) since 2006; Director of The Royce Funds since 2009.
Director of WEC Energy Group since 2006; Director of Wisconsin Electric Power Company (subsidiary of WEC) from 2006 to June 2015.
SpecificCore competencies, qualifications and experience
Ms. Chadwick, who is a Chartered Financial Analyst, brings to our Board of Directors extensive investment management expertise gained from 30more than 35 years of experience as an investment professional/professional, portfolio manager or principal. As founder and President of Ravengate Partners, a firm that has been educating and advising businesses and not-for-profit institutions about the financial markets independent research, and global economic activitymacro economy since 1999, Ms. Chadwick's insights into what the investment industryindustry’s perspectives is thinking and discussing is of great valuevaluable to the Board as it contemplates itsBoard’s financial planplanning and strategy.strategy discussions. Her knowledge onof capital markets is particularly helpful to WEC Energy Group and its subsidiaries, which operate in a capital intensive industry and must consistently access the capital markets. Ms. Chadwick serves as a director and committee member on the boards of two registered investment companies, VOYAVoya Mutual Funds and The Royce Funds, through which afford her a perspective on current issuesshe has developed extensive governance experience with respect to audit oversight and concerns of today's investors, and she isfinancial reporting. As a board director and Finance Committee member of AMICAAmica Mutual Insurance Company, where she has gained a deep understanding of insurance risk management matters;and oversight matters, which is valuable experience that she applies these to her role on the WEC Energy Group Finance Committee and Audit and Oversight Committee.
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| Curt S. Culver Age: 6567 Director Since: 2004 Board Committees: Corporate Governance; Executive; Finance (Chair) Core Competencies: Senior Leadership/CEO Experience; Risk Management/Oversight; Corporate Governance; Financial Strategy/ Investment Management/Investor Relations.
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MGIC Investment Corporation - Non-Executive Chairman of the Board since March 2015. Served as Chairman from 2005 to February 2015, CEO from 2000 to February 2015, and President from 1999 to 2006. MGIC Investment Corporation is the parent of Mortgage Guaranty Insurance Corporation.
Mortgage Guaranty Insurance Corporation - Non-Executive Chairman of the Board since March 2015. Served as Chairman from 2005 to February 2015, CEO from 1999 to February 2015, and President from 1996 to 2006. Mortgage Guaranty Insurance Corporation is a private mortgage insurance company.
Director of MGIC Investment Corporation since 1999.
Director of WEC Energy Group since 2004; Director of Wisconsin Electric Power Company (subsidiary of WEC) from 2004 to June 2015.
SpecificCore competencies, qualifications and experience
Having served for 15 years as the CEO of Mortgage Guaranty Insurance Corporation and its parent company, MGIC Investment Corporation, Mr. Culver brings to our Board of Directors a strong working knowledge of the strategic, economic and compliancepublic policy issues facing a large, publicly-tradedregulated, publicly-held company headquartered in Milwaukee, Wisconsin. AsHis expertise in risk management and oversight is particularly valuable in his service as chair of the Finance Committee, he provides expertise in the financial markets and risk assessment and management;while his experience in the insurance industry alsoexperience puts him in a position to advise onlead the Committee’s evaluation of the Company's insurance program and its effect on overall risk management.management program. Mr. Culver's broad corporate governance experience, developed from his extensive past and present service on the MGIC boards, as well as those of several highly-visible Milwaukee-area non-profit entities and two private for-profit organizations, is of great value to the Board.Board as it carries out its oversight responsibilities.
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WEC Energy Group | P-18P-14 | 20182020 Proxy Statement |
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| Danny L. Cunningham Age: 6264 Director Since: 2018 Board Committees:Committee: Audit and Oversight Core Competencies: Audit Oversight/Financial Reporting; Risk Management/Oversight; Talent Management/Executive Compensation; Strategic Planning.
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Deloitte & Touche LLP - Retired Partner and Chief Risk Officer. Served as Partner from 2002 to 2015 and as Chief Risk Officer from 2012 to 2015. Deloitte & Touche LLP is an industry-leading audit, consulting, tax and advisory firm.
Director of Enerpac Tool Group Corp. (formerly known as Actuant CorporationCorporation) since 2016.
Director of WEC Energy Group since January 2018.
SpecificCore competencies, qualifications and experience
Mr. Cunningham brings to our Board of Directors more than 30 years of experience serving public audit clients in a broad array of industries, including manufacturing, printing, process, software and financial services, as well as a deep understanding of the business, economic, compliance and governmental environment in which the Company and many of the Company's major customers operate. Mr. Cunningham’s strong expertise in financial reporting, internal controls and audit functions are of great value to the Board as it fulfills its responsibility for oversight of the Company's accurate preparation of financial statements and disclosures, and compliance with legal and regulatory requirements. Having served as chief risk officer at Deloitte & Touche LLP, he gained keen insights into the complexities of risk management, through which he applies his expertise in assessing the effectiveness of the Company's practices and policies to mitigate enterprise-wide risks. Mr. Cunningham’s multi-national experience brings the added diversity of a global perspective to the Board as it evaluates its strategic objectives, while his past service on the boards of several major Milwaukee-area not-for-profit organizations equips him to contribute thoughtful insights on issues impacting the city’s culture, workforce and economic vitality.
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| William M. Farrow III Age: 6264 Director Since: 2018 Board Committees:Compensation; Corporate Governance; Finance Core Competencies: Senior Leadership/CEO Experience; Innovation/Technology; Audit Oversight/Financial Reporting; Risk Management/Oversight .
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Winston and Wolfe, LLC - Chairman and Chief Executive Officer.Officer since 2010. Winston and Wolfe LLC is a privately held technology development and advisory company.
Urban Partnership Bank - RetiredServed as President and CEO.CEO from August 2010 until retirement in January 2018. UPB provides financial services in moderate income communities located in Chicago, Detroit and Cleveland.
Director of CBOE Global Markets Inc. since 2016; Director of Echo Global Logistics Inc. since 2017.
Director of WEC Energy Group since January 2018.
SpecificCore competencies, qualifications and experience
Mr. Farrow brings to our Board of Directors more than 3940 years of senior leadership experience in managing business operations, technology development, enterprise risk and strategy. His extensive professional experience in the banking and financial markets, accompanied by knowledge acquired from his service on the boards of CBOE Global Markets and the Federal Reserve Bank of Chicago, enables him to add significant value to the Board’s oversight of the Company’s financial management strategy.His first-hand experience and perspectives in addressing advances in information technology, as well as the experience he’she has gained as a current board member on the Audit Committee for both CBOE Global Markets and Echo Global Logistics, is particularly valuable to the Board as WEC Energy Group companies address complex risks, including those associated with protecting operating systems and assets against physical and cyber threats. Having spent his career in the City of Chicago, Mr. Farrow is also able to provide the Board with economic and public policy insight as it relates to conducting business in the City,Chicago, which is further enhanced by the strong relationships he has developed with key leaders while serving on the boards of several highly-visible Chicago-area private, not-for-profit and community organizations. This is especially important given the sizable, long-term construction project that is underway by the Company’s Illinois utility subsidiary to modernize the natural gas infrastructure in the Citycity of Chicago, which requires ongoing collaboration with city and state government officials and regulatory agencies.
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WEC Energy Group | P-19P-15 | 20182020 Proxy Statement |
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| Thomas J. Fischer Age: 7072 Director Since: 2005 Board Committees: Audit and Oversight (Chair); Compensation; Executive Core Competencies: Audit Oversight/Financial Reporting; Risk Management/Oversight; Strategic Planning; Extensive Knowledge of Company's Business and/or Industry.
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Fischer Financial Consulting LLC - Principal since 2002. Fischer Financial Consulting LLC provides consulting on corporate financial, accounting, and governance matters.
Director of Enerpac Tool Group Corp. (formerly known as Actuant CorporationCorporation) from 2003 to January 2017; Director of Badger Meter, Inc. since 2003; Director of Regal Beloit Corporation since 2004.
Director of WEC Energy Group since 2005; Director of Wisconsin Electric Power Company (subsidiary of WEC) from 2005 to June 2015.
SpecificCore competencies, qualifications and experience
Mr. Fischer provides our Board of Directors with significant expertise in accounting and auditing matters, including financial reporting and regulatory compliance, risk assessment and management and corporate governance issues. His experience in these areas comes from 33 years of work at Arthur Andersen, a large, international independent accounting firm, where for 22 years, he served as a partner responsible for services provided to large, complex public and private companies and several public utility audits. Since 2002, Mr. Fischer has provided consulting services to companies in the areas of corporate financial, accounting, and governance matters. Mr. Fischer, who is a Certified Public Accountant, brings extensive knowledge and experience to his responsibilities as WEC Energy Group's Audit and Oversight Committee Chair as a result of his past and present service on several other audit committees at public companies based in Wisconsin. His significant expertise is invaluable to WEC Energy Group's Board as it navigates a complex and evolving regulatory compliance landscape.
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| J. Kevin Fletcher Age: 61 Director Since: 2019
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WEC Energy Group - CEO since February 2019; President since October 2018.
Wisconsin Electric Power Company (subsidiary of WEC Energy Group) - Chairman of the Board and Chief Executive Officer since February 2019; President from May 2016 to November 2018; Executive Vice President-Customer Service and Operations from June 2015 to May 2016; Senior Vice President-Customer Operations from October 2011 to June 2015.
Director of WEC Energy Group since February 2019; Director of Wisconsin Electric Power Company since June 2015.
Mr. Fletcher also serves as an executive officer and/or director of several other major subsidiaries of WEC Energy Group.
Core competencies, qualifications and experience
Mr. Fletcher has more than 40 years of experience working in the public utility industry, including 25 years at a senior leadership level. Prior to joining the Company in 2011, Mr. Fletcher served as Vice President-Community and Economic Development at Georgia Power, the largest subsidiary of The Southern Company, a public utility holding company primarily serving the southeastern United States. During his 34-year career with Southern Co., 16 of those years as an officer, Mr. Fletcher held leadership positions in operations, customer service, marketing and sales. When he first joined WEC Energy Group, he served as Senior Vice President-Customer Operations of its utility subsidiaries, with overall responsibility for the planning, engineering, construction, operation and maintenance of the Company’s electric and natural gas distribution systems in Wisconsin and Michigan’s Upper Peninsula. In May 2016, he was appointed to serve as President of the Company’s Wisconsin utility subsidiaries, and assumed responsibilities as President of the Company’s Minnesota and Michigan utility subsidiaries in September 2018. In October 2018, Mr. Fletcher was appointed President of WEC Energy Group, followed by his appointment to CEO in February 2019, whereby he has financial and operational responsibility for all of the Company's utility subsidiaries. He also has held responsibility for the supplier diversity initiative across all of the Company’s utilities. With his extensive experience in business operations, customer service and senior leadership of publicly regulated utilities, Mr. Fletcher contributes substantive insight into the Company’s industry and customers, to the management team and to the Board.
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WEC Energy Group | P-16 | 2020 Proxy Statement |
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| Maria C. Green Age: 67 Director Since: 2019 Board Committee: Corporate Governance
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Ingersoll Rand Inc. - Retired Senior Vice President and General Counsel, having served in those roles from 2015 to June 2019. Ingersoll Rand Inc. is a diversified industrial manufacturer with market-leading brands serving customers in global commercial, industrial and residential markets.
Illinois Tool Works Inc. - Senior Vice President and General Counsel, 2012 to 2015. Illinois Tool Works Inc. produces engineered fasteners and components, equipment and consumable systems, and specialty products.
Director of Tennant Company since May 2019; Director of Littelfuse since February 2020.
Director of WEC Energy Group since October 2019.
Core competencies, qualifications and experience
Ms. Green brings to our Board senior leadership experience accumulated during her 35-year career in law and business, including extensive public company experience in strategic planning, acquisitions, enterprise risk management and shareholder relations. She has substantial experience with respect to corporate sustainability matters, including oversight responsibility for environmental compliance and corporate responsibility reporting, as well as engagement with investors on these matters. Having served in the role of corporate secretary for several public companies, Ms. Green’s deep corporate governance experience is of tremendous value to the Board as it carries out its evolving oversight responsibilities. Ms. Green also contributes valuable insights into the economic, educational and social matters impacting the greater Chicago community, where the Company has two utility subsidiaries. In particular, these insights come from having served for 18 years at Illinois Tool Works, a Fortune 200 global diversified manufacturing company headquartered in the northern suburbs of Chicago, and as a member (and past chairman) of the Chicago Urban League executive committee.
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| Gale E. Klappa Age:67 69 Director Since: 2003 Board Committee: Executive (Chair) Core Competencies: Senior Leadership/CEO Experience; Financial Strategy/Investment Management/Investor Relations; Extensive Knowledge of Company's Business and/or Industry; Strategic Planning.
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WEC Energy Group Inc. –- Executive Chairman since February 2019; Chairman of the Board and Chief Executive OfficerCEO from 2004 to May 2016 and October 2017 to present;February 2019; Non-Executive Chairman of the Board from May 2016 to October 2017; President from 2003 to August 2013.
Wisconsin Electric Power Company –(subsidiary of WEC) - Chairman of the Board from 2004 to May 2016 and January 2018 to present; Chief Executive OfficerFebruary 2019; CEO from 2003 to May 2016 and January 2018 to present;February 2019; President from 2003 to June 2015.
Director of Associated Banc-Corp since 2016;2016 and Director of Badger Meter, Inc. since 2010;2010, both headquartered in Wisconsin; Director of Joy Global Inc. from 2006 to 2017.
Director of WEC Energy Group Inc. since 2003; Director of Wisconsin Electric Power Company (subsidiary of WEC Energy Group) from 2003 to May 2016 and January 2018 to present.
Mr. Klappa also serves as an executive officer and/ora director of several other major subsidiaries of WEC Energy Group.
SpecificCore competencies, qualifications and experience
Mr. Klappa has more than 40 years of experience working in the public utility industry, including more than 25 at a senior executive level. He retired as the Company's CEO in May 2016, at which time he assumed the role of Non-Executive Chairman of the Board. Prior to joining the Company in 2003, Mr. Klappa served in various executive leadership roles at The Southern Company, a public utility holding company primarily serving the southeastern United States. Under his leadership, WEC Energy Group successfully completed its 2015 acquisition of Integrys Energy Group, which nearly doubled the employee and customer population, and increased the Company’s geographic footprint to four states. With his extensive experience in the business operations and C-suite leadership of publicly regulated utilities, his service as a board member for several other public companies, and his contributions to significant economic development initiatives in southeastern Wisconsin, Mr. Klappa has led the Board with a deep understanding of the financial investment decisions and public policy issues facing large public companies in the utility sector.companies. In October 2017, after the Company’s then-CEO Allen Leverett, suffered a stroke. In response,stroke, the Board appointed Mr. Klappa to serve in the role of CEO, while also having him retain his role of Board Chairman. With the appointment of Mr. Fletcher as CEO effective February 2019, Mr. Klappa now serves as Executive Chairman. Mr. Klappa’s deep knowledge of the Company’s industry, customers, stockholders and management team has allowed for strong continuity during Mr. Leverett’s absence.is of great value to the Board.
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WEC Energy Group | P-20P-17 | 20182020 Proxy Statement |
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| Henry W. Knueppel Age:69 71 Director Since: 2013 Board Committees: Audit and Oversight; Corporate Governance Core Competencies: Senior Leadership/CEO Experience; Strategic Planning; Financial Strategy/Investment Management/Investor Relations; Innovation/Technology.
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Regal Beloit Corporation - Retired Chairman of the Board and CEO. Served as CEO from 2005 to 2011 and as Chairman from 2006 to 2011. Regal Beloit Corporation is a leading manufacturer of electric motors, mechanical and electrical motion controls, and power generation products.
Harsco Corporation - Independent, Non-Executive Chairman of the Board from September 2012 until September 2014. Served as Interim Chairman and CEO from February 2012 to September 2012.2012 and Director from 2008 to April 2016. Harsco Corporation is a diversified, worldwide industrial services company.
Director of Regal Beloit Corporation since 1987; Director of Snap-on Incorporated since 2011.
Director of WEC Energy Group since 2013; Director of Wisconsin Electric Power Company (subsidiary of WEC Energy Group) from 2013 to June 2015.
SpecificCore competencies, qualifications and experience
With more than 30 years of senior management experience at Regal Beloit Corporation, including five years as the combined Chairman of the Board and CEO, Mr. Knueppel brings extensive executive management experience to our Board, of Directors.including strategic planning, financial strategy and talent management perspective. Regal Beloit Corporation is a Wisconsin-based manufacturer of electrical motors, mechanical and electrical motion controls, and power generation products, which gives Mr. Knueppel knowledge of key equipment used in the Company's operations. He currently servesHis current and former service on the boards of several large, publicly-tradedpublicly traded industrial companies and provides the Board with perspective on operational and customer service matters the Company faces with ourin serving its large commercial and industrial customers. Mr. Knueppel also brings to the Board a wide range of knowledge and experience in boardcorporate governance, having served for more than 30 years as a director for several publicly-tradedpublicly traded companies, including his role as the independent, nonexecutivenon‑executive chairman of the board of Harsco Corporation.
Corporation.
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| Allen L. LeverettThomas K. Lane
Age: 5163 Director Since: 20162020 Board CommitteeCommittee:: Executive Finance Core Competencies: Regulated Industry Knowledge; Financial Strategy/Investment Management/Investor Relations; Senior Leadership/CEO Experience; Risk Management/Oversight.
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WEC Energy Group, Inc.Capital Partners, LLC - CEOVice Chairman since 2016; Partner from May 20162005 to October 2017; President2016. Energy Capital Partners is a private equity firm that focuses on investing in power generation, midstream gas, electric transmission and energy and environmental services sectors of North America's energy infrastructure.
Director of Summit Midstream Partners, LP since August 2013; Executive Vice President from 2004 through July 2013; Chief Financial Officer ("CFO") from 2003 until 2011. Mr. Leverett also served as the principal executive officer2009; Director of WEC Energy Group’s generation operations from 2011 to May 2016.
Wisconsin Electric Power Company - Chairman of the Board and CEO from May 2016 through December 2017; President from June 2015 to May 2016; Executive Vice President from 2004 through June 2015; CFO from 2003 until 2011.USD Partners, LP since 2014.
Director of WEC Energy Group since January 2016; Director of Wisconsin Electric Power Company from June 2015 to January 2018.2020.
SpecificCore competencies, qualifications and experience
Having workedMr. Lane brings to our Board more than 30 years of broad financial experience focused within the energy sector. His experience in this area includes 17 years in the public utility industryInvestment Banking Division at Goldman Sachs where Mr. Lane held senior-level coverage responsibility for nearly 25 years, Mr. Leverett has developedelectric and gas utilities, independent power companies and midstream energy companies throughout the United States, which provides him with a deep understanding of the complexities inherent to delivering strong financial performance in a regulated industry. For the past 15 years, Mr. Lane has served as a senior executive of Energy Capital Partners, where he has held responsibility for establishing and executing the firm’s investment strategies, which include projects encompassing power generation and renewables, as well as midstream and environmental infrastructure. This experience enables him to add significant value to the Board’s oversight of the Company’s industry, operations, and regulatory environment, while having built extensive leadership experience. Prior to joining the Company, Mr. Leverett served in executive positions at Georgia Power and Southern Company Services, where he held overall responsibility for financiallong-term growth strategy, as does his substantial experience planning and analysis, capital marketsexecuting merger and leasing, treasury, and investor relations. He joinedacquisition strategies. Having testified before the Company in 2003 as Chief Financial Officer and has proceededHouse Energy Subcommittee on energy related matters, Mr. Lane also brings to hold numerous executive positions, including President and CEOthe Board an understanding of the Company’s power generation group, with overall responsibility forformulation of energy policy at the electric generation portfolio, fuel procurement, environmental compliance, and renewable energy development strategy. Following the Company’s acquisition of Integrys Energy Group in June 2015, Mr. Leverett served as PresidentFederal government level. As a member of the Company’s utilities located in Wisconsin, Michigan, and Minnesota through early 2016. Effective May 1, 2016, Mr. Leverett was appointed as Chief Executive Officer of WEC Energy Group Inc. and servedFinance Committee, Mr. Lane’s expertise in that role until October 2017 when he suffered a stroke and took a leave of absence to recover. Mr. Leverett’s experience and insights in running a regulated public company are criticalfinancial management strategy serves as valuable input to the Board as it carries outCompany’s execution of its oversight responsibilities.
financial plan.
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WEC Energy Group | P-21P-18 | 20182020 Proxy Statement |
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| Ulice Payne, Jr. Age: 6264 Director Since: 2003 Board Committees: Compensation;Compensation (Chair); Executive; Finance Core Competencies: Risk Management/Oversight; Corporate Governance; Financial Strategy/Investment Management/Investor Relations.
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Addison-Clifton, LLC - Managing Member since 2004. Addison-Clifton, LLC provides global trade compliance advisory services.
Director of Foot Locker, Inc. since December 2016; Director of Manpower Group since 2007; Trustee of The Northwestern Mutual Life Insurance Company since 2005.from 2005 to 2018.
Director of WEC Energy Group since 2003; Director of Wisconsin Electric Power Company (subsidiary of WEC Energy Group) from 2003 to June 2015.
SpecificCore competencies, qualifications and experience
Mr. Payne brings to our Board of Directors strong businesssenior leadership and public service experience within the localgreater Milwaukee community and State of Wisconsin, having previously servingserved in roles that included the Securities Commissioner for the stateState of Wisconsin, managing partner of the Milwaukee law office of the law firm Foley & Lardner LLP and president and CEO of the Milwaukee Brewers Baseball Club, Inc. In addition, Mr. Payne is and has been involved in numerous Milwaukee-area non-profit entities, making him well-positioned to provide the Board with perspective on the economic and social issues affecting the greater Milwaukee area, as well as a broad spectrum of the Company's customers. As founder and President of Addison-Clifton, LLC, which provides global trade compliance consulting, Mr. Payne understands the importance of providing clients with exceptional customer service, a focus that is critical to execution of WEC Energy Group's strategic initiatives. Mr. Payne also contributes valuable financial and risk assessment insights gained throughout his career, including from his past and present service on the boards of several public companies.companies, for which he has served as a member of the Audit, Finance, and/or Corporate Governance committees.
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| Mary Ellen Stanek Age: 6163 Director Since: 2012 Board Committee: Finance Core Competencies: Financial Strategy/Investment Management/Investor Relations; Senior Leadership/CEO Experience; Risk Management/Oversight; Talent Management/Executive Compensation.
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Baird Financial Group - Managing Director and Director of Asset Management since 2000. Baird Financial Group provides wealth management, capital markets, private equity, and asset management services to clients worldwide.
Baird Advisors - Chief Investment Officer since 2000. Baird Advisors is an institutional fixed income investment advisor.
Baird Funds, Inc. - President since 2000. Baird Funds is a publicly registered investment company.
Trustee of The Northwestern Mutual Life Insurance Company since 2009.
Director of Journal Media Group, Inc. and its predecessor companies from 2002 to April 2016.
Director of WEC Energy Group since 2012; Director of Wisconsin Electric Power Company (subsidiary of WEC Energy Group) from 2012 to June 2015.
SpecificCore competencies, qualifications and experience
Ms. Stanek, who is a Chartered Financial Analyst, brings to our Board of Directors her extensive financial and investment strategy expertise, resulting from over 3540 years of investment management experience. As Managing Director and Director of Asset Management of Baird Financial Group, a position she has held since 2000, Ms. Stanek's expertise in fixed income investments provides the Board and management with invaluable financial strategy insight relative to WEC Energy Group and its subsidiaries, which customarily issue debt securities as a means of raising capital. As a member of the WEC Energy Group Finance Committee, she also offers valuable perspective on insurance risk matters, having served for 15 years as a director of West Bend Mutual Insurance Company. In addition to her recognition as a prominent business leader in Milwaukee's financial community, Ms. Stanek has dedicated significant time to serving on the boards of a large number of Milwaukee-area non-profit organizations, through which she has developed strong relationships with key community leaders and stakeholders. From these experiences, she brings the Board insightful perspectives on issues impacting the culture and viability of the workforce, as well as customer concerns.today’s workforce.
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WEC Energy Group | P-22P-19 | 20182020 Proxy Statement |
Governance
Accountability to stockholders is critical to the Company’s long-term success. We have mechanisms in place to ensure that management and the Board hear, understand, and consider the issues that matter most to our stockholders. This ongoing engagement provides valuable insight into how our stockholders view the Company’s practices and policies, shapes the processes used to evaluate goals and expectations, and identifies emerging issues that may affect our corporate governance and compensation practices.
STOCKHOLDER ENGAGEMENT
Under the Board’s oversight, Company leadership, including the Executive Chairman, regularly engages with investors to discuss business results, strategic direction and corporate governance and compensation practices through a year-round stockholder engagement program, which provides valuable feedback to the Board about its governance practices.
Opportunities for investors to interact with the Company took many forms during 2019:
Proactively communicated with stockholders representing more than 40% of the Company's outstanding common stock about issues of interest, including corporate strategy, financial and operational performance, corporate governance, executive compensation and matters related to environmental, social and governance ("ESG") risks and opportunities. Key take-aways are reported to the Board and are taken into consideration when reviewing and modifying overall governance practices, policies and disclosures.
Investor presentations conducted at analyst meetings and investor conferences across the U.S., Canada, Europe, Asia and Australia.
Access to webcasts of the Annual Meeting of Stockholders and quarterly earnings conference calls, and to timely disclosures including the annual report, news releases, filings with the Securities and Exchange Commission ("SEC") and other significant corporate publications on our Website.
With respect to the Annual Meeting of Stockholders, opportunity to attend and voice opinions, submit stockholder proposals and director nominees, formally nominate director candidates using proxy access as permitted under our bylaws, elect directors by majority vote in uncontested elections, and vote on our executive compensation program ("say-on-pay").
Process for stockholders to directly correspond with individual directors via the Corporate Secretary (see page P-29).
Below is a summary of our yearly corporate governance practices related to stockholder engagement on executive compensation matters and ESG topics.
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SUMMER | FALL | WINTER | SPRING |
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• Review results from the Annual Meeting of Stockholders • Engage with stockholders to discuss voting results • Conduct annual assessment of corporate governance and executive compensation practices to identify potential areas of focus • Discuss voting results, investor feedback, and annual assessment with Board | • Meet with investors to discuss executive compensation practices and ESG topics • Consider enhancements to our practices and disclosures based on investor feedback • Share investor feedback and recommendations for changes in practices and disclosures with Board committees and full Board | • Continue meeting with investors to discuss executive compensation practices and ESG topics • Board approves, as needed, any changes or enhancements to practices and disclosures • Develop disclosures for the proxy statement | • Publish annual disclosure documents (Form 10-K, Annual Report, Proxy Statement) • Hold Annual Meeting of Stockholders |
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WEC Energy Group | P-20 | 2020 Proxy Statement |
CORPORATE GOVERNANCE FRAMEWORK
Corporate Governance Guidelines
For more than 20 years, WEC Energy Group has maintained a formal set of Corporate Governance Guidelines, which have been modified over the years in response to evolving governance best practices and stockholder expectations. To maintain effective guidelines, the Corporate Governance Committee annually reviews the Company’s governance practices, taking into consideration input from stockholders, best practices, industry surveys, rating agency reports, and benchmarking studies, as well as governance guidelines published by institutional investors and proxy advisors.
Key governance practices exercised by the Board, which align with the recommendations contained in the Commonsense Principals 2.0 of Corporate Governance, a governance framework that was first published in 2016 by a group of business and investment leaders, include:
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GOVERNANCE PRINCIPLES | WEC ENERGY GROUP PRACTICES |
Board composition | ü | • 10 out of 12 independent directors (based on director nominees) • Diverse representation of skills and competencies, as well as professional and personal attributes • Comprehensive, ongoing Board succession planning process • Regular Board refreshment and balanced mix of tenure |
Board leadership | ü | • Separate CEO/Chair roles • Presiding independent director with defined duties • Chairman active in stockholder engagement and communications |
Board governance practices | ü | • Expectation that directors will dedicate sufficient time to perform duties; limit on number of outside public company directorships • Annual performance evaluations of Executive Chairman, CEO, Board and Board committees • 100% independent Audit, Compensation, Finance and Governance Committees • Board participation in critical activities, including agenda setting for Board meetings and strategic planning • Complete access for Board members to management and outside advisors • Stock ownership requirements for directors and executives • Regular executive sessions of independent directors at Board and committee meetings • Expectation that directors participate in the annual meeting with stockholders |
Stockholder voting rights | ü | • Annual election of directors with majority voting standard • One-share, one-vote standard (dual class voting is not practiced) • Proxy access provision • Annual "say-on-pay" advisory vote • Special meeting provision |
Executive compensation | ü | • Aligned with long-term performance and business strategy • Utilizes short- and long-term metrics, cash, and equity components; substantial portion is at risk • Public disclosure of peer groups, benchmarks, and performance measurements • Independent compensation consultant • Clawback policies for cash and equity • Prohibition of hedging and pledging of Company securities |
Business Conduct and Ethics
WEC Energy Group’s Code of Business Conduct (“Code”) is the foundation of the Company’s Ethics and Compliance program, as it sets the standards for creating and sustaining a culture of ethics and integrity. The Compliance Officer oversees the management and operations of the program, for which he provides regular update reports to the Board’s Audit and Oversight Committee. All WEC Energy Group directors, executive officers and employees, including the principal executive, financial and accounting officers, have a responsibility to comply with the Code, to seek advice in doubtful situations and to report suspected violations.
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WEC Energy Group | P-21 | 2020 Proxy Statement |
The Code addresses expectations for Company culture, including among other things: non-retaliation for raising concerns; safety; diversity and inclusion; conflicts of interest; confidentiality; fair dealing; protection and proper use of Company resources, assets and information; and compliance with laws, rules and regulations (including insider trading laws). For more information, see the Governance section of our website: www.wecenergygroup.com/govern/codeofbusinessconduct.pdf
The Company has several ways individuals can report concerns and raise questions concerning the Code and other Company policies. As one reporting mechanism, the Company has contracted with an independent service so that individuals can confidentially and anonymously report suspected violations of the Code or other concerns, including those regarding accounting, internal accounting controls or auditing matters. The Company has not provided any waiver to the Code for any director, executive officer or other employee.
Related Party Transactions/Conflicts of Interest
The Code addresses, among other things, how to identify and report potential conflicts of interest, including those from related-party transactions. The Code lists the following as examples of potentially problematic situations: (1) family members who are a supplier, contractor or customer of the Company or work for one; (2) obtaining any financial interest in or participating in any business relationship with any company, individual or concern doing business with WEC Energy Group or any of its subsidiariesthat might influence the individual’s decisions or job performance; (3) participating in any joint venture, partnership or other business relationship with WEC Energy Group or any of its subsidiaries; and (4) serving as an officer or member of the board of any substantial, outside for-profit organization.
Because the Board is mindful of the expectation of its directors to devote the time necessary to carefully fulfill their fiduciary duties, the Corporate Governance Guidelines contain additional requirements for directors seeking to join other boards. For example, all directors must notify the Company’s Corporate Secretary before accepting a nomination for a position on the board of another public company and the CEO must obtain the approval of the full Board before accepting such a position.
To further backstop such discussions and approvals, every year all directors, director nominees and executive officers are required to complete a questionnaire that asks about any business relationship that may give rise to a conflict of interest and all transactions in which the Company or one of its subsidiaries is involved and in which the director, director nominee or executive officer or a relative or affiliate of such director, nominee or executive officer has a direct or indirect material interest.The Corporate Secretary discusses the results of this diligence with the Corporate Governance Committee.
Since January 1, 2019, there have been no related-party transactions, and there are no currently proposed related-party transactions, required to be disclosed pursuant to SEC rules.
RISK OVERSIGHT
The Board has overall responsibility for risk oversight and, in that capacity, oversees the Company's risk environment and associated management practices as part of its evaluation of the Company's ongoing operations and strategic direction. To carry out its oversight function, the Board is organized into five standing committees with specific duties and risk-monitoring responsibilities: Audit and Oversight, Compensation, Corporate Governance, Executive and Finance. With the exception of the Executive Committee, each of the Board’s committees meets regularly throughout the year, and receives regular briefings prepared by management and outside advisors on specific areas of current and emerging risks to the enterprise, as captured through the Company's enterprise risk management framework.
The Company has an Enterprise Risk Steering Committee ("ERSC"), comprised of senior-level management employees whose purpose is to foster an enterprise-wide approach to identifying and managing risk. The Audit Services department conducts an annual enterprise risk assessment, whereby business leaders identify existing, new or emerging issues or changes within their business areas that could have enterprise implications. Risk areas are then mapped to create a cumulative assessment of their significance and likelihood, taking into consideration industry benchmarking information, as appropriate. The mapping also identifies lines of responsibility for managing the risks to ensure accountability and focus. On a regular basis, the ERSC discusses findings of this assessment, holds in-depth discussions with members of management on identified subjects, and tracks progress and status of mitigation efforts. Senior management is tasked with ensuring that these risks and opportunities are appropriately addressed. The results of these risk management efforts are reported to the executive leadership team and are the subject of regular reports to the Board and its committees.
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WEC Energy Group | P-22 | 2020 Proxy Statement |
The committees routinely report to the full Board on matters that fall within the designated areas of responsibility, as described in their respective charters. Examples of risk monitoring activity that have been designated to committees are shown in the chart below. More information on the committees' duties and responsibilities begins on page P-25.
While the Board delegates specified duties to its committees, the Board retains collective responsibility for comprehensive risk oversight, including short- and long-term critical risks that could impact the Company's sustainability. The Board believes that certain risks should be contemplated by the full Board. Examples include the Board's (i) oversight of environmental and social risks, including the potential impact of climate change on the utility sector, (ii) review and approval of mergers and acquisitions, and (iii) review and approval of significant capital projects and investments.
Executive sessions for the non-management directors are generally held at every regularly scheduled board and committee meeting, during which directors have direct access to, and meet as needed with, Company representatives to discuss matters related to risk management. Outside of scheduled meetings, the Board, its committees and individual Board members have full access to senior executives and other key employees, including the CEO, CFO, General Counsel, Chief Audit Officer, Compliance Officer, Chief Information Officer and Controller. They are also free to engage with the leaders of our utility companies and our corporate center departments, including customer service, environmental, external affairs, human resources, investor relations, tax and treasury.
The Board believes that its leadership structure, in combination with management's enterprise risk management program, effectively supports the risk oversight function of the Board.
ENVIRONMENTAL AND SOCIAL GOVERNANCE
The Board is vigilant in its oversight of management’s strategic decision-making as it navigates important developments in the utility industry. This includes oversight of the approach we take in fulfilling environmental and social stewardship matters. The Board is mindful of its responsibility to provide safe, reliable and affordable energy, preserve the Company’s long-term value and make choices that take into account the interests of our stakeholders and well-being of our communities, now and in the future.
Examples of ways in which the Company demonstrated its commitment to strong environmental and social stewardship in 2019 are spotlighted below.
Commitment to delivering a clean energy future:
Met and exceeded our 2030 goal of reducing carbon emissions by 40% below 2005 levels. Given our progress, we are re-evaluating our longer-term carbon reduction goals.
Continued to execute on our generation reshaping plan, retiring the Presque Isle Power Plant, which was an older, less efficient coal-fired generating plant, and constructing 180 MW of natural gas-fueled generation in the Upper Peninsula of Michigan. We have retired 40% of our coal generation since 2014.
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WEC Energy Group | P-23 | 2020 Proxy Statement |
Broke ground on two major solar initiatives in Wisconsin, with Wisconsin Public Service Corporation owning 100 megawatts of each project.
Filed with the Public Service Commission of Wisconsin (“PSCW”) for approval for Wisconsin Electric Power Company (“WE”) to partner with an unaffiliated utility on one additional solar project, where WE will own 100 megawatts of the output from the project.
Received PSCW approval for WE to participate in two renewable energy pilot programs that could add up to a total of 185 megawatts of renewables to WE’s portfolio.
Set a new long-term goal to reduce the rate of methane emissions from our natural gas distribution lines by 30% per mile from a 2011 baseline by 2030. By the end of 2019, we were more than halfway toward achieving that goal.
Commitment to our stakeholders:
Named as one of America’s Best Employers for Diversity by Forbes Magazine.
Conducted enterprisewide workplace ethics survey to gauge employee perceptions of the company's actions, process and operating style.
Received the Above and Beyond Award in recognition of providing employees who serve in a military capacity with additional non-mandated benefits to ease burdens associated with deployment.
Both of our Wisconsin electric utilities earned PA Consulting's Reliability One Awards for outstanding electric reliability performance in the Midwest.
WEC Energy Group was named best in the U.S. by J.D. Power in their 2019 Large Customer Satisfaction study (Top 2 box).
Recognized as second-largest corporate charitable contributor in Wisconsin by Milwaukee Business Journal.
Spent $282.6 million with certified minority-, women-, service-disabled- and veteran-owned businesses.
2019 Priority Sustainability Issues Assessment Project
During 2019, the Company partnered with the Electric Power Research Institute to conduct a rigorous analysis of the Company's sustainability priorities, looking for insights and validation from internal and external stakeholders. Findings from this project are being used to inform our sustainability strategy and disclosures, beginning with our upcoming Corporate Responsibility Report.
2019 Climate Report
In April 2019, the Company issued its first climate report, Pathway to a Cleaner Energy Future, to illustrate the approach we are taking to reduce greenhouse gas emissions and to present an analysis of factors that could affect our future decision-making. We collaborated with the Electric Power Research Institute to evaluate potential climate scenarios and better understand the related risks, opportunities and uncertainties. The report was prepared in conformity with the Task Force on Climate-Related Financial Disclosures (TCFD).
Commitment to Reporting Transparency
We value the importance our stakeholders place on understanding how we manage risks and opportunities associated with sustaining our enterprise. In addition to engaging directly with stakeholders on environmental and social issues, we are committed to continually enhancing our transparency on these matters through a variety of reporting mechanisms, including those noted below. Further, we routinely respond to data verification and survey requests from a substantial number of third party organizations seeking input regarding our ESG performance, programs and policies.
See the Corporate Responsibility section of our website for more details: www.wecenergygroup.com/csr
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WEC Energy Group | P-24 | 2020 Proxy Statement |
BOARD LEADERSHIP
Leadership Structure
Consistent with WEC Energy Group's bylaws and Corporate Governance Guidelines, the Board retains the right to exercise its discretion in combining or separating the offices of the Chief Executive Officer and Chairman of the Board. As part of the Board's executive succession plan, effective February 1, 2019, the Board appointed J. Kevin Fletcher as CEO and named Mr. Klappa as Executive Chairman of the Board, thereby separating the CEO and Chair positions. The Board believes this leadership structure is in the best interests of the Company's stockholders at this time. Separating these positions allows Mr. Fletcher to focus on implementing the Company's operating plans and leading the day-to-day management of our seven customer-facing utilities, and allows Mr. Klappa to lead the board in its oversight, advisory and risk management roles, with added leadership responsibility for Company strategy, capital allocation, investor relations and economic development matters.
Independent Presiding Director
Our Corporate Governance Guidelines detail the specific duties to be performed by the Board’s Independent Presiding Director, a position that is currently held by Director Bowles, Chair of the Corporate Governance Committee. Duties of this role include:
presides at all meetings of the Board at which the Chairman is not present, including executive sessions of the
non-management directors;
serves as liaison between the CEO and the independent directors under most circumstances, although each individual director has full access to the CEO;
has authority to call meetings of the independent directors;
reviews and approves meeting agendas for the Board and its committees;
reviews and approves meeting schedules to assure there is sufficient time for discussion of all agenda items;
reviews all proposed changes to committee charters; and
leads the annual Board evaluation.
The Board expects that Ms. Bowles will continue to serve in this capacity until the 2020 Annual Meeting of Stockholders, when she will complete her service as a director. The Board is committed to appointing a fully independent director to assume this position.
BOARD AND COMMITTEE PRACTICES
Board Meetings
During 2019, the Board met seven times and executed four written unanimous consents. All directors attended more than 75% of the total number of meetings of the Board and Board committees on which he or she served, with average director attendance at more than 94%. Generally, all directors are expected to attend the Company’s Annual Meetings of Stockholders. With the exception of Mr. Leverett, all of the director nominees who were standing for election at the 2019 Annual Meeting of Stockholders held on May 2, 2019 were in attendance.
Executive Sessions
At every regularly scheduled Board and committee meeting, executive sessions are scheduled, and are generally held, for the non-management directors to meet without management present. An executive session of independent directors was held at every regularly scheduled Board meeting in 2019.
Director Orientation and Continuing Education
Management takes seriously its responsibility to onboard new directors and provide ongoing education for existing directors on the unique and complex issues inherent in operating a public company in the regulated utility industry.
Management has created a robust orientation program that introduces new directors to the Company’s organizational structure, businesses, strategies, risks and opportunities, which includes in-house and field programs such as walking tours of the Company's generating facilities and project sites, senior management presentations and individual sessions with senior leaders. These activities assist new directors in developing and/or enhancing their Company and industry knowledge to optimize their service on the Board.
Ongoing opportunities to participate in continuing education are provided to the directors in the form of internally developed materials and presentations, programs presented by third parties and financial support to attend qualifying academic or other independent programs, which help our directors enhance the skills and knowledge needed to carry out their responsibilities. During 2019, management facilitated numerous educational programs in which both Company and third-party experts presented to and discussed with the directors a variety of strategic and industry-related topics. In addition, all of our directors are members of the National Association of Corporate Directors.
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WEC Energy Group | P-25 | 2020 Proxy Statement |
Succession Planning
Board Succession Planning
The Board is regularly engaged in rigorous discussions on Board succession planning, taking into consideration matters such as: current inventory of director skills; diversity, including gender, race/ethnicity, retirement age and tenure; and future competencies needed to support appropriate oversight of the Company's strategic initiatives, financial and operational performance, and enterprise risks. During 2019, these discussions took into consideration (1) the impact of Directors Bowles and Budney completing their service on the Board at the 2020 Annual Meeting of Stockholders, (2) the benefits of Director Fischer continuing service for one additional year and (3) the fact that two other directors are expected to complete their service at the 2021 Annual Meeting of Stockholders.
Two New Director Nominees
The election of Directors Green and Lane, effective October 2019 and January 2020, respectively, strategically replaced and enhanced skills essential for carrying out the Board's evolving oversight responsibilities, and also fulfilled our commitment to retaining the Board's gender diversity. The Board's decision to nominate Director Fischer for one additional year of service beyond retirement age is intended to provide additional continuity as new members join the Board, and in particular, provide valued assistance with the planned rotation of his Audit and Oversight Committee Chair role to an independent director following the 2020 Annual Meeting of Stockholders.
Management Succession Planning
Company leaders have the responsibility to continually develop the talent across the organization through the broadening and deepening of business and leadership knowledge. As an ongoing strategic initiative, succession planning and internal talent development are integral components of our workforce planning process, which includes discussions at all levels of the organization, including with the Board. Throughout 2019, the Board was actively engaged in oversight of the senior and executive management succession planning process and spent considerable time discussing executive management's plans to foster a deep talent bench and plan for senior leadership succession. The Compensation Committee, which has responsibility for reviewing organizational changes that have a significant impact on the Company, as well as reviewing succession plans for executive officers, held numerous discussions throughout 2019 to discuss the Company's recruiting and development programs, which included updates on key talent, as well as workforce demographics across the organization.
Annual Performance Evaluations
CEO Performance
The Compensation Committee, on behalf of the Board, annually evaluates the performance of the CEO and reports the results to the Board. The CEO is evaluated in a number of areas including leadership, vision, financial stewardship, strategy development and execution, management development, effective communication with constituencies, demonstrated integrity and effective representation of the Company in community and industry affairs.
As part of this practice, the Compensation Committee Chair individually obtains from each non-management director his or her input on the CEO’s performance, which is summarized and discussed with the Compensation Committee members and next in executive session with all non-management directors. The Compensation Committee Chair then shares the evaluation results with the CEO. This procedure allows the Board to evaluate the CEO and to communicate the Board’s expectations. The Compensation Committee considers the input of all non-management directors in determining appropriate compensation for the CEO. This process was completed for Mr. Fletcher in December 2019.
Executive Chairman Performance
Under the same process and timing as the CEO evaluation, the Compensation Committee Chair facilitated the annual performance evaluation of Mr. Klappa in his role as Executive Chairman, and thereafter approved a 2020 compensation package for Mr. Klappa in December 2019.
Board Performance
Led by the Independent Presiding Director, the Board annually evaluates its own performance using a framework of questions developed by the National Association of Corporate Directors. In advance of one-on-one interviews scheduled between the Independent Presiding Director and each board director, the directors are instructed to consider several “reflection” questions, in addition to a list of questions that fall within five broad categories: (i) board composition and leadership; (ii) board committees; (iii) board meetings; (iv) overall effectiveness of the Board; and (v) overall effectiveness of the Board with regard to management.
Using this interview process provides each Board member an opportunity to speak candidly. At the conclusion of the individual feedback sessions, the Independent Presiding Director first leads the Corporate Governance Committee, and then the Board, through a group discussion of key takeaways. This evaluation process was conducted in December of 2019. The Corporate Governance Committee and the Board discussed the board evaluation results at their meetings in January 2020. It is standard
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WEC Energy Group | P-26 | 2020 Proxy Statement |
practice for the Corporate Governance Committee to use the results of this process to foster continuous improvement of the Board's governance activities.
Committee Performance
Each committee, except the Executive Committee, conducts an annual performance evaluation of its own activities and reports the results to the Board. During this evaluation, each committee compares its performance against the requirements of its charter and its annual planning calendar; contemplates a series of questions related to the qualifications and performance of committee members; considers the quality and quantity of information provided to the committee in advance of its meetings; and evaluates the effectiveness of the processes the committee uses to carry out its oversight responsibilities. The results of the annual evaluations are used by each committee to identify its strengths and areas where its governance practices can be improved. Each committee may recommend changes to its charter to the full Board based upon the evaluation results.
It is also standard practice for the Corporate Governance Committee annually to conduct a holistic review of all of the Committees' charters and annual planning calendars, taking into consideration evolving and new best practices with respect to risk oversight. Recommendations are routed to the appropriate Committee Chair, as needed, for consideration.
BOARD COMMITTEES
The Board of Directors has the following committees: Audit and Oversight, Compensation, Corporate Governance, Executive and Finance. Each committee, except the Executive Committee, operates under a charter approved by the Board, which can be found on our website at www.wecenergygroup.com/govern/committee-comp.htm. With the exception of the Executive Committee, only independent directors serve on the standing committees.
Directors Barbara Bowles and Albert Budney will complete their service as directors in May 2020, and thus are not serving as nominees for re-election at the 2020 Annual Meeting of Stockholders. Mr. Budney currently serves as a member of the Corporate Governance Committee. Ms. Bowles currently chairs the Corporate Governance Committee, is a member of the Audit and Oversight Committee and the Executive Committee, and also serves as the Independent Presiding Director.
Following the 2020 Annual Meeting of Stockholders, the Board will appoint an independent director to serve as both the Corporate Governance Committee Chair and as the Independent Presiding Director.
The Board will also appoint an independent director to serve as Audit and Oversight Committee Chair immediately following the 2020 Annual Meeting of Stockholders; if re-elected, Director Fischer will remain on the Audit and Oversight Committee to provide continuity during this leadership transition, and he will also remain a member of the Compensation Committee.
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COMMITTEES OF THE BOARD OF DIRECTORSAudit and Oversight |
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Members | Principal Responsibilities; MeetingsKey Responsibilities |
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Audit and OversightThomas J. Fischer, Chair Barbara L. Bowles Patricia W. Chadwick Danny L. Cunningham Henry W. Knueppel
2019 Meetings: 6 | • Oversee the integrity of the financial statements. • Oversee management compliance with legal and regulatory requirements. • Review the Company's environmental and compliance programs. • Review, approve, and evaluate the independent auditors’ services. • Oversee the performance of the internal audit function and independent auditors. • Discuss risk management and major risk exposures and steps taken to monitor and control such exposures. • Establish procedures for the submission and treatment of complaints and concerns regarding the Company’s accounting controls and auditing matters. • Prepare the audit committee report required by the SEC for inclusion in the proxy statement. • Establish procedures for the submission of complaints and concerns regarding WEC Energy Group’s accounting or auditing matters.
•
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The Audit and Oversight Committee conducted six meetingsis a separately designated committee established in 2017.accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The Audit and Oversight Committee consists solely of independent directors who meet the independence requirements of the SEC, NYSE and the Board's Corporate Governance Guidelines. In addition, the Board has determined that all of the members of the Audit and Oversight Committee are financially literate as required by NYSE rules and qualify as audit committee financial experts within the meaning of SEC rules. |
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Thomas J. Fischer, Chair
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WEC Energy Group | P-27 | 2020 Proxy Statement |
John F. Bergstrom
Barbara L. Bowles
Patricia W. Chadwick
Danny L. Cunningham
Henry W. Knueppel
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Compensation | |
Members | Key Responsibilities |
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Ulice Payne, Jr., Chair William M. Farrow III Thomas J. Fischer
2019 Meetings: 7* | • Identify through succession planning potential executive officers.Determine and annually review the Compensation Committee’s compensation philosophy. • ProvideOversee the development of competitive, performance-based executive and director compensation programs. • Review and approve the compensation paid to select employees, including certain senior officers and executive officers (including base salaries, incentive compensation, and benefits). • Establish and administer the CEO and Executive Chairman compensation packages. • Set performance goals forrelevant to the CEO annuallyand Executive Chairman compensation. • Annually evaluate the CEO’sCEO and Executive Chairman performance against such goals, and determine compensation adjustments based on whether these goals have been achieved.adjustments. • Oversee succession planning and assignments to key executive officers. • Prepare the report required by the SEC for inclusion in the proxy statement. • Review the results of the most recent stockholder advisory vote on compensation of the named executive officers ("NEOs"). |
*Included one joint meeting with the Corporate Governance Committee. The Compensation Committee conducted six meetingsconsists solely of independent directors who meet the independence requirements of the SEC, NYSE and the Board's Corporate Governance Guidelines. The Compensation Committee is charged with administering the compensation package of WEC Energy Group’s non-management directors. The Compensation Committee meets with the Corporate Governance Committee annually to review the compensation package of WEC Energy Group’s non-management directors and to determine the appropriate amount of such compensation. The Compensation Committee, which has authority to retain advisers, including compensation consultants, at WEC Energy Group’s expense, retained Frederic W. Cook & Co., Inc. ("FW Cook") to analyze and help develop the Company’s executive compensation program, and to assess whether the compensation program is competitive and supports the Committee’s objectives. FW Cook also assesses and provides recommendations on non-management director compensation, as discussed in 2017more detail on page P-30. FW Cook is engaged solely by the Compensation Committee to provide executive compensation consulting services, and executed twodoes not provide any additional services to the Company. In connection with its retention of FW Cook, the Compensation Committee reviewed FW Cook’s independence, including: (1) the amount of fees received by FW Cook from WEC Energy Group as a percentage of FW Cook’s total revenue; (2) FW Cook’s policies and procedures designed to prevent conflicts of interest; and (3) the existence of any business or personal relationships that could impact independence. After reviewing these and other factors, the Compensation Committee determined that FW Cook is independent and the engagement did not present any conflicts of interest. FW Cook also determined that it was independent from the Company’s management, which was confirmed in a written unanimous consents.statement delivered to the Compensation Committee. For more information regarding our executive and director compensation processes and procedures, please refer to “Compensation Discussion and Analysis” beginning on page P-33 and to "Director Compensation" beginning on page P-30, respectively. |
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John F. Bergstrom, Chair
Thomas J. Fischer
Ulice Payne, Jr.
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Corporate Governance | |
Members | Key Responsibilities |
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Barbara L. Bowles, Chair Albert J. Budney, Jr. Curt S. Culver William M. Farrow III Maria C. Green Henry W. Knueppel
2019 Meetings: 5* | • Establish and annually review the Corporate Governance Guidelines to verify that the Board is effectively performing its fiduciary responsibilities to stockholders. • Establish and annually review director candidate selection criteria. • Identify and recommend candidates to be named as nominees of the Board for election as directors. • Lead the Board in its annual review of the Board’s performance. |
• *Included one joint meeting with the Compensation Committee.
The Corporate Governance Committee conducted four meetings in 2017consists solely of independent directors who meet the independence requirements of the NYSE and executed one written unanimous consent.the Board's Corporate Governance Guidelines. |
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WEC Energy Group | P-28 | 2020 Proxy Statement |
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Executive | |
The Board also has an Executive Committee, which may exercise all powers vested in the Board except action regarding dividends or other distributions to stockholders, filling Board vacancies, and other powers which by law may not be delegated to a committee or actions reserved for a committee comprised of independent directors. The members of the Executive Committee are Gale E. Klappa (Chair), Barbara L. Bowles, ChairCurt S. Culver, Thomas J. Fischer, and Ulice Payne, Jr. The Executive Committee did not meet in 2019. |
Albert J. Budney, Jr.
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Finance | |
Members | Key Responsibilities |
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Curt S. Culver, Chair HenryPatrica W. KnueppelChadwick
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FinanceWilliam M. Farrow III Thomas K. Lane Ulice Payne, Jr. Mary Ellen Stanek
2019 Meetings: 3 | • Review and monitor the Company’s current and long-range financial policies and strategies, including our capital structure and dividend policy. • Authorize the issuance of corporate debt within limits set by the Board. • Discuss policies and financial programs with respect to risk assessment andfinancial risk management. • Approve the Company’s financial plan, including the capital budget. •
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The Finance Committee conducted five meetings in 2017consists solely of independent directors who meet the independence requirements of the NYSE and executed one written unanimous consent. |
Curt S. Culver, Chair
William J. Brodsky
Patrica W. Chadwick
William M. Farrow III
Ulice Payne, Jr.
Mary Ellen Stanek the Board's Corporate Governance Guidelines. |
Executive Committee. The Board also has an Executive Committee, which may exercise all powers vested inCOMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the Board except action regarding dividends or other distributions to stockholders, filling Board vacancies, and other powers which by law may not be delegated to a committee or actions reserved for a committee comprised of independent directors. Thepersons who served as members of the ExecutiveCompensation Committee are Gale E. Klappa (Chair), John F. Bergstrom, Barbara L. Bowles, Thomas J. Fischer, Allen L. Leverett, and Ulice Payne, Jr. The Executiveduring 2019 was an officer or employee of the Company during 2019 or at any time in the past nor had reportable transactions with the Company.
During 2019, none of our executive officers served as a member of the Compensation Committee met twice in 2017.or as a director of another entity, one of whose executive officers served on the Compensation Committee or as a director of the Company.
COMMUNICATIONS WITH THE BOARD
Correspondence may be sent to the numberdirectors, including the non-management directors, in care of committee meetings listed in the preceding table,Corporate Secretary, Margaret C. Kelsey, at the Company’s principal business office, 231 W. Michigan Street, PO Box 1331, Milwaukee, Wisconsin 53201. All communications received as set forth above will be opened by the Corporate Secretary for the sole purpose of confirming the contents represent a message to the Company’s directors. Pursuant to instructions from the Board, met nine times in 2017all communication, other than advertising, promotion of a product or service, or patently offensive material, will be forwarded promptly to the addressee.
Where to find more information on governance
You can find our Corporate Governance Guidelines, Code of Business Conduct, and executed three written unanimous consents. With the exceptionother corporate governance materials, including WEC Energy Group’s Restated Articles of Mr. Leverett, all directors attended more than 75% of the total number of meetings of theIncorporation, Bylaws, Board committee charters and Board committeescontact information, on which he or she served. Leading up to October when Mr. Leverett suffered a stroke and took a leavethe Corporate Governance section of absence to recover, his attendance rate was 100%;our website at year-end, it was 55.6%. The average Board meeting attendance duringwww.wecenergygroup.com/govern/governance.htm. You can request copies of these materials from the year, which reflects Mr. Leverett’s attendance to October, is over 92%.Corporate Secretary at the address provided above in “Communications with the Board."
Generally, all directors are expected to attend the Company’s Annual Meetings of Stockholders. All directors attended the Annual Meeting of Stockholders held on May 4, 2017.
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WEC Energy Group | P-23P-29 | 20182020 Proxy Statement |
DIRECTOR COMPENSATION
Consistent with its charter, the Compensation Committee seeks to maintain a competitive director compensation program that enables the Company to attract and retain key individuals and to motivate them to help the Company achieve the Company’sits short- and long-term goals. As such, the committee is responsible for reviewing key market-based trends in director compensation and benefits packages and for recommending changes to the Board, as appropriate, that will attract and retain quality directors. The Committee’s charter authorizes it to engage consultants or advisors in connection with its review and analysis of director compensation. The Compensation Committee used Frederic W.FW Cook & Co., Inc. ("FW Cook") during 20172019 for this purpose. Directors who are also serve as executivesemployees of the Company do not receive additional compensation for service as a director.
20172019 Compensation of the Board of Directors
The following table describes the components of the non-management director compensation program during 2017.2019. The Compensation Committee believes that this program:
is equitable based upon the work required of directors serving an entity of the Company’s size and scope, and
ties the majority of director compensation to stockholder interests because the value of the equity awards fluctuates depending upon the Company’s stock price.
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Compensation Element | 20172019 Non-Management Director Compensation Program |
Annual Cash Retainer | |
Ÿ Non-Management Director Fee | $100,000 which may be deferred at the director’s option |
Ÿ Additional if Non-Executive Chair
| $125,000, which may be deferred at the director’s option |
Annual Equity Retainer | |
Ÿ Non-Management Director
| $125,000 in restricted stock which vests one year from grant date |
Ÿ Additional if Non-Executive Chair
| $125,000135,000 in restricted stock, which vests one year from grant date |
Annual Committee Chair Fees | |
Ÿ Audit and Oversight | $20,000 paid in $5,000 quarterly increments |
Ÿ Compensation | $15,000 paid in $3,750 quarterly increments |
Ÿ Corporate Governance | $10,00015,000 paid in $2,500$3,750 quarterly increments |
Ÿ Finance | $10,00015,000 paid in $2,500$3,750 quarterly increments |
Board and Committee Meeting Fees | None |
Stock Ownership Guideline | Ownership of common stock or deferred stock units that have a value equivalentequal to five times the annual cash retainer for non-management directors to be satisfied within five years of joining the Board |
Insurance is also provided by the Company for director liability coverage, fiduciary and employee benefit liability coverage, and travel accident coverage for director travel on Company business. The premiums paid for this insurance are not included in the amounts reported in the table below.located on the next page.
The Company reimburses directors for all out-of-pocket travel expenses. These reimbursed amounts are also not reflected in the table below.located on the next page.
DeferredDeferred Compensation Plan.Non-management directors may defer all or a portion of their cash fees pursuant to the Directors’ Deferred Compensation Plan. Effective January 1, 2017, directorsDirectors have two investment options in the plan - the Company's phantom stock measurement fund or a prime rate fund. The value of the phantom stock measurement fund appreciates or depreciates based upon market performance of the Company's common stock, and it also grows through the accumulation of reinvested dividend equivalents. Deferral amounts are credited in the name of each participating director to accounts on the books of WEC Energy Group that are unsecured and are payable only in cash following termination ofat the director’s service to WEC Energy Group.time elected by the director. Deferred amounts will be paid out of general corporate assets or the assets of the Wisconsin Energy Corporation 2014 Rabbi Trust discussedaddressed later in this proxy statement.statement.
Legacy Charitable Awards Program.Directors elected prior to January 1, 2007 participate in a Directors’ Charitable Awards Program under which the Company intends to contribute up to $100,000 per year for 10 years to one or more charitable organizations chosen by each participating director, including employee directors, following the director’s death. Charitable donations under the program will be paid out of general corporate assets. Directors derive no financial benefit from the program, and all income tax deductions accrue solely to the Company. The tax deductibility of these charitable donations mitigatesmay mitigate the net cost to the Company. The Directors’ Charitable Awards Program has been eliminated for any new directors elected after January 1, 2007. Current Directors already participating as of that datein the program are Messrs. Bergstrom, Culver, Fischer, Klappa, and Payne, and Mmes. Bowles and Chadwick.
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WEC Energy Group | P-24P-30 | 20182020 Proxy Statement |
Director Compensation Table. The following table summarizes the total compensation received during 2019 by each director serving as a non-management director of WEC Energy Group’s non-management directors during 2017. Messrs. Cunningham and Farrow were elected to the BoardGroup in 2019.
January 2018, and did not receive any compensation during 2017.
| | Name | Fees Earned or Paid In Cash | (1) Stock Awards | Option Awards | Non-Equity Incentive Plan Compensation | Change in Pension Value and Nonqualified Deferred Compensation Earnings |
All Other Compensation | Total | Fees Earned or Paid In Cash | (1) Stock Awards | Option Awards | Non-Equity Incentive Plan Compensation | Change in Pension Value and Nonqualified Deferred Compensation Earnings |
All Other Compensation | Total |
($) | John F. Bergstrom(2) | 115,000 | 125,000 | — | 20,608 | 260,608 | 107,500 | 286,873 (3) | — | 23,374 | 417,747 |
Barbara L. Bowles | 110,000 | 125,000 | — | 26,639 | 261,639 | 115,000 | 135,000 | — | 21,947 | 271,947 |
William J. Brodsky(2) | 100,000 | 125,000 | — | 225,000 | 100,000 | 286,873 (3) | — | 386,873 |
Albert J. Budney, Jr. | 100,000 | 125,000 | — | 225,000 | 100,000 | 135,000 | — | 235,000 |
Patricia W. Chadwick | 100,000 | 125,000 | — | 28,924 | 253,924 | 100,000 | 135,000 | — | 20,608 | 255,608 |
Curt S. Culver | 110,000 | 125,000 | — | 20,711 | 255,711 | 115,000 | 135,000 | — | 22,730 | 272,730 |
Danny L. Cunningham | | 100,000 | 135,000 | — | — | — | 235,000 |
William M. Farrow III | | 100,000 | 135,000 | — | 235,000 |
Thomas J. Fischer | 120,000 | 125,000 | — | 20,608 | 265,608 | 120,000 | 135,000 | — | 23,374 | 278,374 |
Paul W. Jones (2)
| 100,000 | 430,512(3)
| — | 530,512 | |
Gale E. Klappa (4) | — | — | — | — | — | |
Maria C. Green | | 25,000 | — | 25,000 |
Henry W. Knueppel | 100,000 | 125,000 | — | 225,000 | 100,000 | 135,000 | — | 235,000 |
Allen L. Leverett (4) | | — | — |
Ulice Payne, Jr. | 100,000 | 125,000 | — | 15,141 | 240,141 | 107,500 | 135,000 | — | 16,710 | 259,210 |
Mary Ellen Stanek | 100,000 | 125,000 | — | 225,000 | 100,000 | 135,000 | — | 235,000 |
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(1) | Other than Mr. Brodsky (4,837Bergstrom (0 shares), Mr. Budney (4,837 shares), Mr. JonesBrodsky (0 shares), Ms. Green (0) and Mr. Klappa (7,456Leverett (11,755 shares), each director held 6,932 shares2,037 shares of restricted stock as of the close of business on December 31, 2017.2019. |
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(2) | Mr. Jones retired effective December 31, 2017,Messrs. Bergstrom and is not standing for re-electionBrodsky completed their service as directors at the Annual Meeting of Stockholders held on May 3, 2018.2, 2019. |
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(3) | In connection with Mr. Jones' retirement fromconsideration of their exemplary service to the Board, and in consideration of his exemplary service and contributions helping the Company exceed its goals for cost savings and integration following the acquisition of Integrys Energy Group, effective December 31, 2017, the Compensation Committee accelerated the vesting of 4,8371,996 shares of restricted stock previously awarded to Mr. Jones.each of Messrs. Bergstrom and Brodsky. The incremental fair value associated with theeach acceleration was $305,512,$151,873, which is included in the reported amount.amounts. |
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(4) | On October 12, 2017,Mr. Leverett resigned from the Board, appointed Mr. Klappa as CEO of WEC Energy Group untileffective July 18, 2019. Mr. Leverett is able to resume his duties. Alldid not receive any director compensation that Mr. Klappa received as a non-management director during 2017 is reported in the "Summary Compensation Table" on2019. |
page P-46. While serving as Chairman of the Board and CEO, Mr. Klappa will not recieve any non-management director compensation.
Fees Earned or Paid in Cash.The amounts reported in the Fees Earned or Paid in Cash column include annual cash-based retainers for each non-management director and applicable annual committee chair fees earned during 20172019 regardless of whether such retainers and fees were paid in cash or deferred.
Stock Awards.On January 3, 2017,2, 2019, each current non-management director received his or her 20172019 annual equity retainer in the form of restricted stock equal to a value of $125,000.
$135,000. The amounts reported in the Stock Awards column reflect the aggregate grant date fair value, as computed in accordance with Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) Topic 718, excluding estimated forfeitures, of the restricted stock awarded. Each reported restricted stock award vests in full one year from the grant date.
All Other Compensation.All amounts reported in the All Other Compensation column represent costs attributed to the director for the Directors’ Charitable Awards Program. See “Legacy Charitable Awards Program” above for additional information.
20182020 Compensation of the Board of Directors
In December 2017,2019, the Compensation Committee completed its annual review of director compensation and determined that, based upon research provided by FW Cook, total non-management director compensation wasdelivered in cash based retainers and in equity, as well as the Compensation Committee Chair fee, were below market median. As a result, the Compensation Committee recommended and the Board approved an increase of $10,000$15,000 in total non-management director compensation to be delivered entirelyas $10,000 in cash-based retainers and $5,000 in equity. As a result, the annual cash-based retainer was increased from $100,000 to $110,000 and the value of the annual restricted stock equity award was increased from $125,000$135,000 to $135,000$140,000 effective January 1, 2018.2020. In addition, the Board approved the recommendation to increase the annual Compensation Committee recommended and the Board approved increasing the annual chair fees for the Corporate Governance and Finance Committees from $10,000Chair fee to $15,000 each, effective January 1, 2018. The$20,000. The Compensation Committee concluded that it was appropriate for all other committee chair fees to remain unchanged from the approved 20172019 levels.
Director Payne recused himself from the discussions and decision regarding the increase in the Compensation Committee Chair fee.
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WEC Energy Group | P-25P-31 | 20182020 Proxy Statement |
PROPOSAL 2: RATIFICATION OF DELOITTE & TOUCHE LLP
AS INDEPENDENT AUDITORS FOR 2018
The Audit and Oversight Committee of the Board of Directors has sole authority to select, evaluate, and, where appropriate, terminate and replace the independent auditors. The Audit and Oversight Committee has appointed Deloitte & Touche LLP as the Company’s independent auditors for the fiscal year ending December 31, 2018. The Audit and Oversight Committee believes that stockholder ratification of this matter is important considering the critical role the independent auditors play in maintaining the integrity of the Company’s financial statements. If stockholders do not ratify the selection of Deloitte & Touche LLP, the Audit and Oversight Committee will reconsider the selection.
Deloitte & Touche LLP has served as the independent auditors for the Company for the last 16 fiscal years beginning with the fiscal year ended December 31, 2002. The members of the Audit and Oversight Committee and the other members of the Board believe that the continued retention of Deloitte & Touche LLP to serve as the Company’s independent external auditor is in the best interests of the Company and our stockholders.
Ratification of Deloitte & Touche LLP as the Company's independent auditors requires the affirmative vote of a majority of the votes cast in person or by proxy at the Meeting. Presuming a quorum is present, shares not voted, whether by abstention or otherwise, have no effect on the outcome of this matter.
Representatives of Deloitte & Touche LLP are expected to be present at the Meeting. They will have an opportunity to make a statement if they so desire and are expected to respond to appropriate questions that may be directed to them. Information concerning Deloitte & Touche LLP can be found in the following pages.
The Board of Directors recommends that you vote “FOR”
the ratification of Deloitte & Touche LLP as independent auditors for 2018.
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WEC Energy Group | P-26 | 2018 Proxy Statement |
INDEPENDENT AUDITORS’ FEES AND SERVICES
Pre-Approval Policy. The Audit and Oversight Committee has a formal policy delineating its responsibilities for reviewing and approving, in advance, all audit, audit-related, tax, and other services of the independent auditors. As such, the Audit and Oversight Committee is responsible for the audit fee negotiations associated with the Company’s retention of independent auditors.
The Audit and Oversight Committee is committed to ensuring the independence of the auditors, both in appearance as well as in fact. In order to assure continuing auditor independence, the Audit and Oversight Committee periodically considers whether there should be a regular rotation of the independent external audit firm. In addition, the Audit and Oversight Committee is directly involved in the selection of Deloitte & Touche LLP’s lead engagement partner.
Under the pre-approval policy, before engagement of the independent auditors for the next year’s audit, the independent auditors will submit (1) a description of all services anticipated to be rendered, as well as an estimate of the fees for each of the services, for the Audit and Oversight Committee to approve, and (2) written confirmation that the performance of any non-audit services is permissible and will not impact the firm’s independence. Annual pre-approval will be deemed effective for a period of twelve months from the date of pre-approval, unless the Audit and Oversight Committee specifically provides for a different period. A fee level will be established for all permissible, pre-approved non-audit services. Any additional audit service, audit-related service, tax service, and other service must also be pre-approved.
The Audit and Oversight Committee delegated pre-approval authority to the Committee’s Chair. The Audit and Oversight Committee Chair is required to report any pre-approval decisions at the next scheduled Audit and Oversight Committee meeting. Under the pre-approval policy, the Audit and Oversight Committee may not delegate to management its responsibilities to pre-approve services performed by the independent auditors.
Under the pre-approval policy, prohibited non-audit services are services prohibited by the Securities and Exchange Commission or by the Public Company Accounting Oversight Board (United States) to be performed by the Company’s independent auditors. These services include: bookkeeping or other services related to the accounting records or financial statements of the Company; financial information systems design and implementation; appraisal or valuation services, fairness opinions or contribution-in-kind reports; actuarial services; internal audit outsourcing services; management functions or human resources; broker-dealer, investment advisor or investment banking services; legal services and expert services unrelated to the audit; services provided for a contingent fee or commission; and services related to planning, marketing or opining in favor of the tax treatment of a confidential transaction or an aggressive tax position transaction that was initially recommended, directly or indirectly, by the independent auditors. In addition, the Audit and Oversight Committee has determined that the independent auditors may not provide any services, including personal financial counseling and tax services, to any officer or other employee of the Company who serves in a financial reporting oversight role or to the chair of the Audit and Oversight Committee or to an immediate family member of these individuals, including spouses, spousal equivalents, and dependents.
Fee Table.The following table shows the fees, all of which were pre-approved by the Audit and Oversight Committee, for professional audit services provided by Deloitte & Touche LLP for the audit of the annual financial statements of the Company and its subsidiaries for fiscal years 2017 and 2016, and fees for other services rendered during those periods. No fees were paid to Deloitte & Touche LLP pursuant to the “de minimus” exception to the pre-approval policy permitted under the Securities Exchange Act of 1934, as amended.
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| 2017 | | 2016 |
Audit Fees (1) | $ | 5,064,125 |
| | $ | 4,886,950 |
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Audit-Related Fees (2) | — |
| | — |
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Tax Fees (3) | 20,000 |
| | — |
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All Other Fees (4) | 7,095 |
| | 7,946 |
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Total | $ | 5,091,220 |
| | $ | 4,894,896 |
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(1) | Audit Fees consist of fees for professional services rendered in connection with the audits of: (1) the annual financial statements of the Company and its subsidiaries, (2) the effectiveness of internal control over financial reporting, and (3) with other non-recurring audit work. This category also includes reviews of financial statements included in Form 10-Q filings of the Company and its subsidiaries and services provided in connection with statutory and regulatory filings or engagements. |
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(2) | Audit-Related Fees consist of fees for professional services that are reasonably related to the performance of the audit or review of the Company’s financial statements and are not reported under “Audit Fees.” |
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(3) | Tax Fees consist of fees for professional services rendered with respect to federal and state tax compliance and tax advice. This can include preparation of tax returns, claims for refunds, payment planning, and tax law interpretation. No such services were received from Deloitte & Touche LLP in 2016. |
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(4) | All Other Fees consist of costs for certain employees to attend accounting/tax seminars hosted by Deloitte & Touche LLP plus the subscription cost for the use of a Deloitte & Touche LLP accounting research tool. |
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WEC Energy Group | P-27 | 2018 Proxy Statement |
AUDIT AND OVERSIGHT COMMITTEE REPORT
The Audit and Oversight Committee, which is comprised solely of independent directors, oversees the integrity of the financial reporting process on behalf of the Board of WEC Energy Group, Inc. In addition, the Audit and Oversight Committee oversees compliance with legal and regulatory requirements. The Audit and Oversight Committee operates under a written charter approved by the Board, which can be found in the “Governance” section of the Company’s Website at wecenergygroup.com.
The Audit and Oversight Committee is also directly responsible for the appointment, compensation, retention, and oversight of the Company’s independent auditors, as well as the oversight of the Company’s internal audit function.
In order to assure continuing auditor independence, the Audit and Oversight Committee periodically considers whether there should be a regular rotation of the independent external audit firm. For 2018, the Audit and Oversight Committee has appointed Deloitte & Touche LLP to remain as the Company’s independent auditors, subject to stockholder ratification. The members of the Audit and Oversight Committee and other members of the Board believe that the continued retention of Deloitte & Touche LLP to serve as the Company’s independent external auditor is in the best interests of the Company and its stockholders.
The Audit and Oversight Committee is directly involved in the selection of Deloitte & Touche LLP’s lead engagement partner in conjunction with a mandated rotation policy and is also responsible for audit fee negotiations with Deloitte & Touche LLP.
Management is responsible for the Company’s financial reporting process, the preparation of consolidated financial statements in accordance with generally accepted accounting principles, and the system of internal controls and procedures designed to provide reasonable assurance regarding compliance with accounting standards and applicable laws and regulations. The Company’s independent auditors are responsible for performing an independent audit of the Company’s consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States) (the “PCAOB”) and issuing a report thereon.
The Audit and Oversight Committee held six meetings during 2017. Meetings are designed to facilitate and encourage open communication among the members of the Audit and Oversight Committee, management, the internal auditors, and the Company’s independent auditors, Deloitte & Touche LLP. During these meetings, we reviewed and discussed with management, among other items, the Company’s unaudited quarterly and audited annual financial statements and the system of internal controls designed to provide reasonable assurance regarding compliance with accounting standards and applicable laws.
We have reviewed and discussed with management and the Company’s independent auditors the Company’s audited consolidated financial statements and related footnotes for the fiscal year ended December 31, 2017, and the independent auditor’s report on those financial statements. Management represented to us that the Company’s financial statements were prepared in accordance with generally accepted accounting principles. Deloitte & Touche LLP presented the matters required to be discussed with the Audit and Oversight Committee by PCAOB Auditing Standard No. 1301, Communications with Audit Committees. This review included a discussion with management and the independent auditors about the quality of the Company’s accounting principles, the reasonableness of significant estimates and judgments, and the disclosures in the Company’s financial statements, as well as the disclosures relating to critical accounting policies.
In addition, we received the written disclosures and the letter relative to the auditors’ independence from Deloitte & Touche LLP, as required by applicable requirements of the PCAOB regarding Deloitte & Touche LLP’s communications with the Audit and Oversight Committee concerning independence. The Audit and Oversight Committee discussed with Deloitte & Touche LLP its independence and also considered the compatibility of non-audit services provided by Deloitte & Touche LLP with maintaining its independence.
Based on these reviews and discussions, the Audit and Oversight Committee recommended to the Board that the audited financial statements be included in WEC Energy Group’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017 and filed with the Securities and Exchange Commission.
Respectfully submitted to WEC Energy Group stockholders by the Audit and Oversight Committee of the Board. |
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| The Audit and Oversight Committee |
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| Thomas J. Fischer, Committee Chair |
| John F. Bergstrom |
| Barbara L. Bowles |
| Patricia W. Chadwick |
| Danny L. Cunningham |
| Henry W. Knueppel |
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WEC Energy Group | P-28 | 2018 Proxy Statement |
PROPOSAL 3: ADVISORY VOTE TO APPROVE COMPENSATION
OF THE NAMED EXECUTIVE OFFICERS
Pursuant to Section 14A of the Securities Exchange Act, of 1934, the Company seeks your advisory vote on the approval of the compensation paid to our named executed officers (commonly referred to as "Say-on-Pay") as described in the Compensation Discussion and Analysis and the related tables included in this proxy statement. Approval, on a non-binding, advisory basis, of the compensation of the named executed officers requires the affirmative vote of a majority of the votes cast in person or by proxy at the Meeting.2020 Annual Meeting of Stockholders. Presuming a quorum is present, shares not voted, whether by broker non-vote, abstention, or otherwise, have no effect on the outcome of this matter. Because your vote is advisory, it will not be binding on the Board or the Company. However, the Compensation Committee will review the voting results and take them into consideration when making future decisions regarding executive compensation.
As described in the Compensation Discussion and Analysis on pages P-30P-33 through P-45P-47 of this proxy statement, the Compensation Committee has structured the Company’s executive compensation program with the following objectives in mind:
offer a competitive, performance-based plan;
enable the Company to attract and retain key individuals;
reward achievement of the Company’s short-term and long-term goals; and
align with the interest of the Company’s stockholders and customers.
As described in this proxy statement, the Company believes that the compensation paid to our named executed officers in 20172019 was well-tailored to achieve these objectives, tying a significant portion of total pay to performance and aligning the interests of the named executed officers with those of stockholders and customers. We encourage you to carefully review the Compensation Discussion and Analysis and related tables included above,in this proxy statement, which describe in greater detail WEC Energy Group’s compensation philosophy and programs, as well as the 20172019 compensation levels, in connection with approval of the following resolution:
“RESOLVED, that the stockholders approve, on an advisory basis, the compensation paid to the Company’s named executive officers as disclosed in the Proxy Statement for the 20182020 Annual Meeting.Meeting of Stockholders.”
The Board of Directors recommends that you vote “FOR”
the advisory vote on Executive Compensation.
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WEC Energy Group | P-29P-32 | 20182020 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSISCompensation Discussion and Analysis
The following discussion provides an overview and analysis of our executive compensation program, including the role of the Compensation Committee of our Board, the elements of our executive compensation program, the purposes and objectives of these elements, and the manner in which we established the compensation of our named executive officers ("NEOs") for fiscal year 2017.2019.
References to “we,” “us,” “our,” "Company," and “WEC Energy Group” in this discussion and analysis mean WEC Energy Group, Inc. and its management, as applicable.
EXECUTIVE SUMMARY
Overview
The primary objective of our executive compensation program is to provide a competitive, performance-based plan that enables the Company to attract and retain key individuals and to reward them for achieving both the Company’s short-term and long-term goals without creating an incentive for our NEOs to take excessive risks. Our program has been designed to provide a level of compensation that is strongly dependent upon the achievement of short-term and long-term goals that are aligned with the interests of our stockholders and customers. To that end, a substantial portion of pay is at risk, and generally, the value will only be realized upon strong corporate performance.
2017We also value the input of our stockholders and recognize the increasing investor desire for companies to link ESG factors to compensation. ESG initiatives are firmly entrenched in our executive compensation program. In fact, since 2004 our performance metrics have included customer satisfaction, supplier and workforce diversity, and safety.
2019 Business Highlights
We completed our second full year of combined utility operations as WEC Energy Group in 2017 following our acquisition of Integrys Energy Group in June 2015. During 2017,2019, we madecontinued to make excellent progress in our continued efforts to integrate our employees, mergestreamline and improve business processes, and consolidate IT infrastructure across our IT infrastructure.companies. At the same time, the Company achieved solid results and continued to create long-term value for our stockholders and customers by focusing on the following:
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| • | World-class reliability | | • | Operating efficiency | | • | Employee safety |
| • | Financial discipline | | • | Exceptional customer care | | | |
Commitment to Stockholder Value Creation. Financially, WEC Energy Group again delivered solid earnings growth, generated strong cash flow, and increased the dividend for the 1416th consecutive year. In January 2017,2019, the Board raised the quarterly dividend 5.1%6.8% to $0.5200$0.59 per share, equivalent to an annual rate of $2.08$2.36 per share. In January 2018,2020, the Board again increased the quarterly dividend 7.2% to $0.5525$0.6325 per share, which is equivalent to an annual rate of $2.21$2.53 per share, in line with our plan to maintain a dividend payout ratio of 65% to 70% of earnings. TheOverall, the Company also turned in aggregate above targetstrong performances in customer satisfaction, supplier diversity and network reliability during 2017.2019. Our employees demonstrated their resiliency as we responded to severe storms that hit Wisconsin in July 2019, impacting more than 290,000 customers in our Wisconsin service areas.
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WEC Energy Group | P-30P-33 | 20182020 Proxy Statement |
Specific Company achievements during 20172019 include:
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20172019 Financial Highlights
• WEC Energy Group delivered solid earnings growth again, generated strong cash flow, and increased the dividend for the 1416th consecutive year. • We achieved fully diluted earnings per share and adjusted earnings per share of $3.79 and $3.14, respectively.$3.58. (2) • Each of our regulated utility subsidiaries earned its allowed rate of return, with our Wisconsin utilities earning their fully allowed rate of return. • We returned approximately $656.5$744.5 million to WEC Energy Group stockholders through dividends. • Our common stock traded at anset 48 new all-time high of $70.09 on November 15, 2017.trading highs during the year. • In January 2018,2020, the Board raised the quarterly dividend to $0.5525$.6325 per share, which is equivalent to an annual dividend rate of $2.21$2.53 per share.
| | (1) For 2017, excludes a one-time $0.65 per share gain related to a revaluation of our deferred taxes as a result of the Tax Cuts and Jobs Act of 2017. For 2016 2015, and 2014,2015, excludes costs of $0.01 $0.30, and $0.06$0.30, per share, respectively, related to our acquisition of Integrys.Integrys Energy Group. See Appendix A on P-76P-72 for a full GAAP reconciliation and an explanation of why we believe the presentation of adjusted earnings per share is relevant and useful to investors. |
20172019 Performance Highlights
WEC Energy Group was recognized in 2017 by Corporate Responsibility Magazine as one of the 50 best corporate citizens in America.
PA Consulting Group named We Energies the most reliable utility in the United States in 2017, and in the Midwest for the seventhninth year in a row.
Our utilities continued to balance the delivery of safe, reliable, and affordable energy with a commitment to protecting the environment.
At the Company's request, the Wisconsin Public Service CommissionCorporation (“WPSC”) also was recognized for its outstanding reliability performance as a midsize utility.
Set a new long-term goal to reduce the rate of Wisconsin approvedmethane emissions from our natural gas distribution lines by 30% per mile from a base rate freeze2011 baseline by 2030.
Continued to execute on our generation reshaping plan, retiring the Presque Isle power plant, which is an older, less efficient coal fired generating plant, and constructing 180 megawatts of natural gas-fueled generation in the Upper Peninsula of Michigan.
Named as one of America’s Best Employers for our Wisconsin utilities, keeping base rates flat through 2019 for our Wisconsin customers.Diversity by Forbes Magazine.
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• | Wisconsin Public Service Corporation was named asSpent $282.6 million with qualified minority-, women-, service-disabled- and veteran-owned businesses, the best midsize utilityhighest spending with diverse suppliers in the Midwest for business customer satisfaction.Company’s history.(2)
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Peoples Gas Light and Coke Company was named as a 2019 Most Trusted Utility Brand by the Cogent Syndicated Utility Trusted Brand & Customer Engagement study.
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• | All major utility subsidiaries either met or exceeded our overall customer satisfaction targets.(2) |
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• | Minnesota Energy Resources Corporation received the Governor’s Safety Award, which recognizes companies with incident rates that are 51% to 90% better than the industry average.(2)
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• | Announced an advanced metering infrastructure program, which consists of an integrated system of smart meters, communication networks, and data management systems that enable two-way communication between utilities and customers.(2)
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AnnouncedContinued to grow the Company’s non-utility energy infrastructure segment, either investing or agreeing to invest in three different wind farms for a plan to reshape our generation fleet to provide a clean, reliable future. Our plan includes retiringcumulative total of approximately 1,800 MWs of coal generation by 2020 and adding additional natural gas-fired generating units and renewable generation, including utility-scale$698 million.
Broke ground on two major solar projects.
Completed the acquisition of Bluewater Natural Gas Holding, LLC, which owns underground natural gas storage facilities in Michigan.
Received approval from the Michigan Public Service Commission to construct and operate approximately 180 MWs of natural gas-fired generation located in the Upper Peninsula of Michigan.
Announced that Wisconsin Public Service Corporation, along with two other unaffiliated utilities, agreed to purchase the Forward Wind Energy Center, which consists of 86 wind turbines locatedinitiatives in Wisconsin, with WPSC owning 100 megawatts of each project.
Filed with the PSCW for approval for Wisconsin Electric Power Company ("WE") to partner with an unaffiliated utility on one additional solar project, where WE will own 100 megawatts of the output from the project.
Received PSCW approval for WE to participate in two renewable energy pilot programs that could add up to a total capacity of 129 MWs. The aggregate purchase price is $174 million,185 megawatts of which Wisconsin Public Services’ proportionate share is 44.6%, or approximately $78 million.renewables to WE's portfolio.
(2)This measure is a component of our short-term incentive compensation program.
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WEC Energy Group | P-31P-34 | 20182020 Proxy Statement |
Long-Term Stockholder Returns
Over the past decade, WEC Energy Group has consistently delivered among the best total returns in the industry and did so again in 2017.2019.
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(1) The Five-Year Cumulative Return Chart shows a comparison of the cumulative total return, assuming reinvestment of dividends, over the last five years had $100 been invested at the close of business on December 31, 2012.2014. For information about the Custom Peer Index Group, see page F-92"Performance Graph" in the Company's 20172019 Annual Report. | Source: Bloomberg; assumes all dividends are reinvested and returns are compounded daily. |
Key Compensation Program Changes
We continually look for ways to refine our executive compensation program to more effectively align executive pay with performance and reflect best compensation practices. For 2017, based upon feedback we received from stockholders during our investor outreach efforts, the Compensation Committee amended and restated the Performance Unit Plan to provide for an Additional Performance Measure in addition to the performance measure of total stockholder return. Performance units will continue to vest in an amount between 0% and 175% of the target award based upon WEC Energy Group’s comparative total stockholder return over a three-year performance period. However, the vesting percentage may be adjusted based upon the Company's performance against the Additional Performance Measure(s). The Compensation Committee selected performance against the weighted average authorized return on equity of all WEC Energy Group’s utility subsidiaries as the Additional Performance Measure for the 2017 performance unit awards. In order to achieve our financial goals, it is important that the Company’s utilities earn at or close to their authorized return on equity.
For additional information about the performance units and Additional Performance Measures, see “Long-Term Incentive Compensation” starting on page P-39.
Consideration of 20172019 Stockholder Advisory Vote and Stockholder Outreach
At the 20172019 Annual Meeting of Stockholders, the Company’s stockholders approved the compensation of our named executive officers with almost 95%92.5% of the votes cast. The Compensation Committee considered this outcome as well as the feedback received during meetings we again held with a numbermany of our institutional stockholders. During 2017,2019, we talkedcommunicated with 30 stockholders representing approximately 45%42% of the Company’s outstanding common stock about our environmental, social, governance and compensation practices. InThe Compensation Committee is always looking for ways to refine our compensation program. However, in light of the significant stockholder support our executive compensation program received in 2017,2019 and the payout levels under our performance-based program for 2017, and the changes previously made to the program in 2016,2019, the Compensation Committee continues to believebelieves that the current compensation program is competitive, aligned with our financial and operational performance goals, and in the best interests of the Company, stockholders, and customers.
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WEC Energy Group | P-32P-35 | 20182020 Proxy Statement |
COMPONENTS OF OUR EXECUTIVE COMPENSATION PROGRAM
We have three primary elements of total direct compensation: (1) base salary; (2) annual incentive awards; and (3) long-term incentive awards consisting of a mix of performance units, stock options, and restricted stock. The Compensation Committee again retained Frederic W. Cook & Co., Inc. ("FW Cook") as its independent compensation consultant to advise the Compensation Committee with respect to our executive compensation program. The Compensation Committee generally relied onupon the recommendations of FW Cook as it developed the 20172019 program.
On January 27, 2016, the Board appointed Allen Leverett to serve as our CEO effective upon Gale Klappa’s retirement on
May 1, 2016. Mr. Klappa continued to serve as the Non-Executive Chairman of the Company’s Board. As we first reported in a Current Report on Form 8-K filed on October 12, 2017, Mr. Leverett suffered a stroke. The Board, acting pursuant to the Company’s Bylaws, appointed Mr. Klappa to act as CEO while Mr. Leverett recovers from the stroke and until such time as he is able to re-assume those responsibilities. For the remainder of 2017, we continued to compensate Mr. Leverett pursuant to the Company's standard medical leave policy.
For information about Mr. Klappa’s 2017 compensation, see page P-42.
As shown in the charts below, 88%81% of Mr. Leverett’s 2017Fletcher's 2019 total direct compensation and an average of 76%78% of the other NEO’s (other than Mr. Klappa) 2017NEOs’ 2019 total direct compensation is tied to Company performance and is not guaranteed.
The other NEO's
In addition to the components of total direct compensation mix does not include Mr. Klappa’sidentified above, our retirement programs are another important component of our compensation as his compensation was based upon his service as CEO for less than a quarter of the year and under very unusual circumstances, and would significantly change the reported NEO mix in a way we believe would not be representative of the Company's executive compensation program. If Mr. Klappa is included in the calculation of the other NEOs total compensation mix, the amounts reported in the chart above would change as follows: Annual Base Salary (38%); Annual Cash Incentive (29%); and Long-Term Equity Incentive (33%).
To the extent feasible, we believe it is important that the Company’s compensation program not dilute the interests of current stockholders. Therefore, we currently use open marketopen-market purchases to satisfy our benefit plan obligations, including the exercise of stock options and vestingawarding of restricted stock.
In addition to the components of total direct compensation identified above, our retirement programs are another important component of our compensation program.
This Compensation Discussion and Analysis contains a more detailed discussion of each of the above components for 2017,2019, including FW Cook'sCook’s recommendations with respect to each component.
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WEC Energy Group | P-33 | 2018 Proxy Statement |
Compensation Governance and Practices
The Compensation Committee annually reviews and considers the Company’s compensation policies and practices to ensure our executive compensation program aligns with our compensation philosophy. Highlighted below is an overview of our current compensation practices.
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WEC Energy Group | P-36 | 2020 Proxy Statement |
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What We Do |
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• Our compensation program focuses on key Company results (financial, safety, customer satisfaction, diversity) that are aligned with our strategic goals.
• A substantial portion of compensation is at risk and tied to Company performance.
• The compensation program has a long-term orientation aligned with stockholder interests. • We include ESG metrics in our compensation program.
• The Compensation Committee retains an independent compensation consultant to help design the Company’s compensation program and determine competitive levels of pay.
• The Compensation Committee's independent compensation consultant reviews competitive employment market data from two general industry surveys and a comparison group of companies similar to WEC Energy Group.
• We have implemented a clawback policy that provides for the recoupment of incentive-based compensation. (page P-43)u P-45
• Annual incentive-based compensation contains multiple, pre-established performance metrics aligned with stockholder and customer interests. (page P-36)
u P-39
| | • The Performance Unit Plan award payouts (including dividend equivalents) are based on stockholder return as compared to an appropriate peer group and Additional Performance Measure(s), selected by the Compensation Committee.u P-41 (page P-39)
• The Performance Unit Plan requires a separation from service following a change in control for award vesting to occur. (page P-41) u P-44
• Equity award and other benefit plan obligations are satisfied through open marketopen-market purchases of WEC Energy Group common stock.
• Meaningful stock ownership levels are required for senior executives. (page P-43) u P-45
• Ongoing engagement with investors takes place to ensure that compensation practices are responsive to stockholder interests.
• We prohibit hedging and pledging of WEC Energy Group common stock. (page P-43)u P-46
• We prohibit entry into any new arrangements that obligate the Company to pay directly or reimburse individual tax liability for benefits provided by the Company. (page P-44) u P-47
• We prohibit repricing of stock options without stockholder approval.
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Competitive Benchmarking
As a general matter, we believe the labor market for WEC Energy Group executive officers is consistent with that of general industry. Although we recognize our business is focused on the energy services industry, our goal is to have an executive compensation program that will allow us to be competitive in recruiting the most qualified candidates to serve as executive officers of the Company, including individuals who may be employed outside of the energy services industry. Further, in order to retain top performing executive officers, we believe our compensation practices must be competitive with those of general industry.
To confirm that our annual executive compensation is competitive with the market, FW Cook reviewed the2019 general industry executive compensation survey data obtained from Willis Towers Watson's 2017 Executive Compensation Data Bank as well as similar data fromWatson and Aon Hewitt.
FW Cook also analyzed the compensation data from a peer group of 18 companies similar to WEC Energy Group in size and business model. The methodology used by FW Cook to determine the peer group of companies is described below.
FW Cook started with U.S. companies in the Standard & Poor’s database, and then limited those companies to the same line of business as WEC Energy Group as indicated by the Global Industry Classification Standards. This list of companies was then further limited to companies with revenues between $2.45$2.5 billion and $22$24 billion (approximately one- thirdone-third to three times the size of WEC Energy Group’s revenues), and that were within a reasonable size range in various other measures such as operating income, total assets, total employees, and market capitalization. From this list, FW Cook selected companies similar in overall size to WEC Energy Group with consideration given to companies that met one or more of the following criteria:
Diversified, technically sophisticated utility operations (e.g., multiple utilities, electric utilities);
Minimal non-regulated business; and/or
Operates in the Midwest.
These criteria resulted in a comparison group of 18 companies with median revenues and market capitalization of approximately $8.7$10.6 billion and $15.2$17 billion, respectively.
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WEC Energy Group | P-34P-37 | 20182020 Proxy Statement |
The comparison group utilized for purposes of 20172019 compensation includes the same companies as the previous year’s comparison group, except that Dominion Resourcesand was removed based upon FW Cook’s recommendation that it no longer meets the applicable criteria. The comparison group consistedcomprised of the 18 companies listed below.
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• Alliant Energy Corporation | • Consolidated Edison, Inc. | • FirstEnergy Corp. | • SCANA Corporation |
• Ameren Corporation | • DTE Energy Co. | • NiSource Inc. | • The Southern Company |
• American Electric Power Company | • Edison International | • PG&E Corporation | • Xcel Energy Inc. |
• CMS Energy Corporation | • Entergy Inc. | • PPL Corp. | |
• CenterPoint Energy | • Eversource Energy | • Pinnacle West Capital Corp. | |
The Compensation Committee approved this revised comparison group.
DETERMINATION OF MARKET MEDIAN
In order to determine the “market median” for our NEOs, FW Cook recommended that the survey data from Willis Towers Watson and Aon Hewitt receive a 75% weighting and the comparison group of 18 companies receive a 25% weighting. The Compensation Committee agreed with this recommendation. The survey data received a higher weighting because we consider the labor market for our executives to be consistent with that of general industry. Using this methodology, FW Cook recommended, and the Compensation Committee approved, the appropriate market median for each of our NEOs.
The comparison of each component of compensation with the appropriate market median when setting the compensation levels of our NEOs generally drives the allocation of cash versus non-cash compensation and short-term versus long-term incentive compensation.
ANNUAL BASE SALARY
The annual base salary component of our executive compensation program provides each executive officer with a fixed level of annual cash compensation. We believe that providing annual cash compensation through a base salary is an established market practice and is a necessary component of a competitive compensation program.
Based upon the market data analyzed by FW Cook, we generally target base salaries to be within (plusat or minus) 15% ofnear the market median for each NEO. However, the Compensation Committee may, in its discretion, adjustset base salaries outside of this 15% bandat a different amount when the Compensation Committee deems it appropriate.
Actual salary determinations are made taking into consideration factors such as the relative levels of individual experience, performance, responsibility, market compensation data and contribution to the results of the Company’s operations. At the beginning of each year, our CEO develops a list of goals for WEC Energy Group and our employees to achieve during the upcoming year. At the end of the year, our CEO measures the performance of the Company against each stated goal and reports the results to the Board. The Compensation Committee then takes the Company’s performance into consideration when establishing our CEO’s compensation for the upcoming year. Our CEO undertakes a similar process with the other NEOs, who develop individual goals related to the achievement of the Company’s goals developed by our CEO. At the end of the year, each officer’s performance is measured against these goals. Compensation recommendations and determinations for the upcoming year for each executive officer also take into consideration the level of such performance. Upon separation of the offices of CEO and Chairman, the Compensation Committee began establishing the Chairman's salary.
The2019 Salary Determination Process
Mr. Klappa, who was CEO until February 1, 2019, developed the 2019 goals with significant input from Mr. Fletcher who assumed the CEO role on that date. Mr. Klappa and Mr. Fletcher continue to work together to establish the Company’s goals.
Regarding 2019 salaries, in recognition of Mr. Fletcher’s appointment to President and Chief Executive Officer of WEC Energy Group, the Compensation Committee increased Mr. Leverett’shis annual base salary to $1,161,000$1,004,000. Also, in connection with Mr. Klappa’s appointment to Executive Chairman, he entered into a written agreement with the Company for 2017,his 2019 compensation, which was within our targeted rangeapproved by the Compensation Committee. Pursuant to the terms of the market median.letter agreement, Mr. Klappa’s 2019 annual base salary was set at $1,000,000, effective February 1, 2019.
With respect to each other NEO (other than Mr. Klappa),the 2019 salaries of the remaining NEOs, in December 2016,2018, Mr. LeverettKlappa, who was CEO at the time, recommended an annual base salarysalaries to the Compensation Committee based upon a review of the market compensation data provided by FW Cook and the other factors described above. The Compensation Committee approved the recommendations, which represented an average increase in annual base salary of approximately 3%4.5% for Messrs. KeyesLauber, Kuester and Fletcher,Garvin, and Ms. Martin, and an increase in annual base salary of approximately 16% for Mr. Lauber.
Upon his appointment as Executive Vice President and Chief Financial Officer, Mr. Lauber’s base salary was previously increased effective April 1, 2016, but was set belowKelsey. After taking these adjustments into account, the target range because of how significant such an increase would have been in order to bring his salary within the range. As we previously reported, the Compensation Committee’s intent was to continue increasing Mr. Lauber’s salary in multiple steps to move it within the target range. As a result, effective July 1, 2017, the Compensation Committee increased Mr. Lauber’s annual base salary by an additional 16% to provide an aggregate base salary of $496,165 in 2017. The annual base salary of each NEO was within our targeted range ofat or near the market median as discussed above.median.
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WEC Energy Group | P-35P-38 | 20182020 Proxy Statement |
ANNUAL CASH INCENTIVE COMPENSATION
We provide annual cash incentive compensation through our Short-Term Performance Plan (“STPP”). The STPP provides for annual cash awards to NEOs based upon the achievement of pre-established stockholder-, customer-, and employee- focused objectives. All payments under the STPP are at risk. Payments are made only if performance goals are achieved, and awards may be less or greater than targeted amounts based upon actual performance. Payments under the STPP are intended to reward achievement of short-term goals that contribute to stockholder and customer value, as well as individual contributions to successful operations.
20172019 Target Awards. Each year, the Compensation Committee approves a target level of compensation under the STPP for each of our NEOs. This target level of compensation is expressed as a percentage of base salary.
Effective February 1, 2019, the target award level for Mr. Fletcher was increased to 125% of base salary in recognition of his appointment to President and Chief Executive Officer of WEC Energy Group. Therefore, Mr. Fletcher’s STPP payout level reflects a 90% target level for January 2019 and a 125% target level for February through the remainder of 2019. Also effective February 1, 2019, Mr. Klappa’s target award level was set at 100% of base salary in recognition of Mr. Fletcher succeeding Mr. Klappa as CEO and Mr. Klappa’s appointment to Executive Chairman. Therefore, Mr. Klappa’s STPP payout level reflects a 120% target level for one month and a 100% target level for the remainder of the year.
The year-end 20172019 target awards for each NEO (other than Mr. Klappa)Messrs. Fletcher and Klappa, who are discussed above) are set forth in the chart below.
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Executive Officer | Target STPP Award as a Percentage of Base Salary |
Mr. Leverett | 125% |
Mr. Lauber | 80% |
Mr. KeyesKuester | 85% |
Ms. Kelsey | 75% |
Ms. MartinMr. Garvin | 70% |
Mr. Fletcher | 70%65% |
The target award levels of each officer named in the tableNEO above reflect median incentive compensation practices as indicated by the market data. The Compensation Committee increased Mr. Leverett's and Mr. Lauber’s targets to move them into the median target range for their positions. Mr. Klappa did not participate in the STPP in 2017.
For 2017,2019, the possible payout for any NEO ranged from 0% of the target award to 210% of the target award, based upon performance.
20172019 Financial Goals under the STPP. The Compensation Committee adopted the 20172019 STPP with a continued principal focus on financial results. In December 2016,2018, the Compensation Committee approved WEC Energy Group’s earnings per share (75% weight) and cash flow (25% weight) as the primary performance measures to be used in 2017. For those officers whose positions primarily relate to utility operations in Wisconsin, including Mr. Fletcher, the Compensation Committee approved WEC Energy Group’s earnings per share (25% weight) and cash flow (25% weight), as well as aggregate net income of WEC Energy Group’s Wisconsin utility operations (50% weight), as the primary performance measures to be used in 2017.2019. We believe earnings per share and cash flow are key indicators of financial strength and performance, and are recognized as such by the investment community. Utility net income is an important financial measure as it is an indicator of the return on equity earned by our utilities, and in order to meet our earnings per share targets it is important that our utilities earn at or close to their allowed rates of return.
In January 2017,2019, the Compensation Committee approved the performance goals under the STPP for WEC Energy Group’s earnings per share as set forth in the chart below.
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Earnings Per Share Performance Goal | Earnings Per Share CAGR | Payout Level |
$2.96 | 4.3% | 25% |
$2.98 | 4.7% | 50% |
$3.00 | 5.0% | 100% |
$3.06 | 6.1% | 135% |
$3.12 | 7.1% | 200% |
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Earnings Per Share Performance Goal | Earnings Per Share CAGR | Payout Level |
$3.38 | 3.0% | 25% |
$3.41 | 4.0% | 50% |
$3.45 | 5.2% | 100% |
$3.48 | 6.1% | 135% |
$3.52 | 7.3% | 200% |
If the Company’s performance falls between these levels, the payout level with respect to earnings per share is determined by interpolating on a straight line basis the appropriate payout level.
The Company’s growth plan, which has been communicated to the public, calls for a long-term compound annual growth rate (“CAGR”) in earnings per share of 5.0% to 7.0% off of a 2015 base of $2.72 per share.. At the time the Compensation Committee was establishing targets for 2017, we believed2019, this CAGR was measured off a 2018 base of $3.28 per share, which represented the mid-point of the original 2018 annual earnings guidance. We believe that this CAGR, plus our continued growth in dividends, would supportsupports a premium valuation as compared to the Company’s peers. Therefore,In order to further motivate management, the Compensation Committee tied the target (100%) payout level to achievement of the low end of the target CAGR range (5.0%), and the above target payout level to the mid-point of the target range (6.1%). The Compensation Committee tied the maximum payout level (200%) to achievement of a 7.1% CAGR. The Compensation Committee determined that the Company’s CAGRtarget and maximum payout levels should exceed the low and high endends of the 5.0% to 7.0% CAGR growth plan. Therefore, the target range to achieve the(100%) and maximum payout level.levels (200%) were tied to 5.2% and 7.3% CAGRs, respectively. The Compensation Committee tied the above-target payout level to achievement of a 6.1% CAGR.
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WEC Energy Group | P-36P-39 | 20182020 Proxy Statement |
In January 2017,2019, the Compensation Committee approved the performance goals under the STPP for WEC Energy Group’s cash flow as set forth in the chart below ($ in millions).
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Cash Flow | Payout Level |
$1,750 | 25% |
$1,800 | 50% |
$1,850 | 100% |
$1,900 | 135% |
$2,000 | 200% |
If the Company'sCompany’s performance falls between these levels, the payout level with respect to cash flow is determined by interpolating on a straight linestraight-line basis the appropriate payout level.
The Compensation Committee used a different process to establishbased the cash flow targets for 2017, basing the performance level goals on WEC Energy Group’s funds from operations (“FFO”). FFO is calculated by taking “cash provided by operating activities” and eliminating certain accruals and other items related to capital spending. Generally accepted accounting principles (GAAP) requireGAAP requires these items to be recorded as part of cash from operations, but management views them as related to the Company’s capital expenditure program. The Compensation Committee believes that basing the cash flow performance goals on FFO provides a more accurate measurement of the cash generated by the Company’s operations that is available for capital investment, which is the Company’s primary driver for earnings growth. FFO is not a measure of financial performance under GAAP, and the Company's calculation may differ from similarly titled measures used by other companies or securities rating agencies.
In January 2017, the Compensation Committee approved the performance goals under the STPP for the Wisconsin utilities’ net income (based upon WEC Energy Group's earnings per share performance goals) as set forth in the chart below ($ in millions).
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Net Income | Weighted Return on Equity | Payout Level |
$550 | 9.81% | 25% |
$556 | 9.91% | 50% |
$562 | 10.01% | 100% |
$570 | 10.15% | 135% |
$580 | 10.32% | 200% |
20172019 Financial Performance under the STPP. In January 2018,2020, the Compensation Committee reviewed our actual performance for 20172019 against the financial and operational performance goals established under the STPP, subject to final audit.
WEC Energy Group’s 20172019 financial performance satisfied the maximum payout level established for earnings per share and cash flow, and net income for the Wisconsin utilities.flow. WEC Energy Group’s GAAP earnings per share and adjusted earnings per share were $3.79$3.58 for 2019, and $3.14, respectively, for 2017. Our adjusted earnings exclude a one-time $0.65 per share gain related to a revaluation of our deferred taxes as a result of the Tax Cuts and Jobs Act of 2017. WEC Energy Group’sits cash flow, based on FFO, was $2,113.0 million, and the Wisconsin utilities’ net income was $582.6 million for 2017. Net income is measured against the net income from WEC Energy Group’s Wisconsin segment excluding contributions to the Wisconsin utilities’ charitable foundations and net costs related to the coal plant closings we announced in 2017.$2,396 million. Our adjusted earnings per share, cash flow and net income areresult is not measuresa measure of financial performance under GAAP.
By satisfying the maximum payout level with respect to these financial measures, the NEOs earned 200% of the target award from the financial goal component of the STPP.
20172019 WEC Energy Group Operational Goals and Performance under the STPP. SimilarThe Compensation Committee recognizes the importance of integrating ESG initiatives into the Company’s compensation program. Therefore, similar to prior years, in December 20162018 and January 2017,2019, the Compensation Committee also approved operational performance measures and targets under the STPP. AnnualSTPP that promote certain of the Company's ESG priorities. The Compensation Committee identified commitment to customer satisfaction, supplier and workforce diversity, and safety as critical to the success of the Company. For that reason, annual incentive awards could be increased or decreased by up to 10% of the actual award based upon WEC Energy Group’s performance in the operational areas of customer satisfaction (5% weight), safety (2.5% weight), and supplier and workforce diversity (2.5% weight).
The Compensation Committee recognizesmeasures customer satisfaction levels based upon the importanceresults of strong operational resultssurveys that an independent third party conducts of customers who had direct contact with our utilities during the year, which measure (i) customers’ satisfaction with the respective utility overall, and (ii) customers’ satisfaction with respect to the successparticular transactions with the applicable utility. Safety is measured based upon performance against the number of lost time injuries and OSHA recordable incidents. In the Company and has identified these three operational areas in particular as being critical to that success.
For 2017,past few years, safety was also measured against the number of Near Miss/Unsafe Condition ("NMUC"(“NMUC”) Reports have been added to the measures used to determine the Company's safety performance.filed. Although NMUC reporting is designedcontinues to proactively identify and take action on potentialbe an important tool to mitigate safety risks, before an incident occurs (unsafe conditions);the reports do not measure the severity of the unsafe condition. The Company continues to track NMUC reports as well as other initiatives aimed at identifying and rectifying safety concerns but does not tie NMUC metrics themselves to learn from near-miss incidents that have occurred, but did not result in an injury or damage.
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WEC Energy Group | P-37 | 2018 Proxy Statement |
The operational performance measures are based upon recommendations from management and take into consideration both current yearcurrent-year performance and our longer-term objective of achieving top quartile performance.performance of all of our principal utilities. The Compensation Committee reviews management's recommendations and may make adjustments to the performance measures if it feelsdetermines changes are necessary. The following table provides the operational goals approved by the Compensation Committee for 2017,2019, as well as WEC Energy Group’s performance against these goals:
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Operational Measure | Below Goal | Goal | Above Goal | Final Result |
Customer Satisfaction Percentage of "Highly Satisfied": | -5.00% | 0.00% | +5.00% | |
Company | <68.6% | 68.6% - 74.7% | >74.7% | 78.0% |
Transaction | <76.0% | 76.0% - 81.4% | >81.4% | 80.7% |
Safety: | -2.50% | 0.00% | +2.50% | |
Lost Time Injury - Incidents | >67 | 39 - 67 | <39 | 63 |
OSHA Recordable - Incidents | >206 | 135 - 206 | <135 | 225 |
Near Miss / Unsafe Condition Reports | <14,590 | 14,590 - 18,910 | >18,910 | 22,927 |
Diversity: | -2.50% | 0.00% | +2.50% | |
Supplier ($ in Millions) | <155.4 | 155.4 - 180.2 | >180.2 | 248.9 |
Workforce - Assessment | Not Met | Met | Exceeded | Met |
WEC Energy Group’s performance with respect to operational goals generated a 3.75% increase to the compensation awarded under the STPP for 2017. The Compensation Committee measured customer satisfaction levels based upon the results of surveys that an independent third party conducted of customers who had direct contact with our utilities during the year, which measured (1) customers’ satisfaction with the respective utility overall, and (2) customers’ satisfaction with respect to the particular transactions with the applicable utility. Overall, our utilities exceeded target-level performance with respect to the first customer satisfaction measure; and WEC Energy Group exceeded the supplier diversity goal.
2017 Wisconsin Utilities Operational Goals and Performance under the STPP. For those officers whose positions primarily relate to utility operations in Wisconsin, STPP awards could be increased or decreased by up to 10% based upon performance in the operational areas of customer satisfaction (5% weight), safety (2.5% weight), and supplier diversity (1.25% weight) for WEC Energy Group’s Wisconsin utility operations, as well as WEC Energy Group’s performance in the operational area of workforce diversity (1.25% weight). The following table provides the operational goals approved by the Compensation Committee for 2017 for WEC Energy Group’s Wisconsin utility operations, as well as the Company’s performance against these goals:
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Operational Measure | Below Goal | Goal | Above Goal | Final Result |
Customer Satisfaction Percentage of "Highly Satisfied": | -5.00% | 0.00% | +5.00% | |
Company | <72.0% | 72.0% - 78.0% | >78.0% | 80.8% |
Transaction | <79.1% | 79.1% - 85.1% | >85.1% | 82.9% |
Safety: | -2.50% | 0.00% | +2.50% | |
Lost Time Injury - Incidents | >25 | 13 - 25 | <13 | 23 |
OSHA Recordable - Incidents | >105 | 65 - 105 | <65 | 118 |
Near Miss / Unsafe Condition Reports | <13,100 | 13,100 - 15,750 | >15,750 | 22,927 |
Diversity: | -2.50% | 0.00% | +2.50% | |
Supplier ($ in Millions) | <90.0 | 90.0 - 104.0 | >104.0 | 132.8 |
Workforce - Assessment | Not Met | Met | Exceeded | Met |
The Wisconsin utilities' performance with respect to operational goals generated a 3.75% increase to the compensation awarded under the STPP for 2017. The Compensation Committee measured customer satisfaction levels based upon the results of surveys that an independent third party conducted of customers who had direct contact with our Wisconsin utilities during the year, which measured (1) customers’ satisfaction with the specific Wisconsin utility overall, and (2) customers’ satisfaction with respect to their particular transactions with their specific utility. Our Wisconsin utilities exceeded target-level performance with respect to the first customer satisfaction measure; those utilities also exceeded target-level performance with respect to supplier diversity.
The Compensation Committee retains the right to exercise discretion in adjusting awards under the STPP when it deems appropriate, but did not factor individual contributions into determining the amount of the awards for the NEOs for 2017. Because the Company’s performance against the financial and operational goals resulted in significant STPP awards in 2017, the Compensation Committee determined that no further adjustments based upon individual contributions or otherwise were appropriate.
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WEC Energy Group | P-38P-40 | 20182020 Proxy Statement |
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Operational Measure | Below Goal | Goal | Above Goal | Final Result |
Customer Satisfaction Percentage of "Highly Satisfied": | -5.00% | 0.00% | +5.00% | |
Company | <77.1% | 77.1% - 80.0% | >80.0% | 80.5% |
Transaction | <80.9% | 80.9% - 83.5% | >83.5% | 82.7% |
Safety: | -2.50% | 0.00% | +2.50% | |
Lost Time Injury - Incidents | >54 | 33 - 54 | <33 | 43 |
OSHA Recordable - Incidents | >182 | 128 - 182 | <128 | 197 |
Diversity: | -2.50% | 0.00% | +2.50% | |
Supplier ($ in Millions) | <221.9 | 221.9 - 250.8 | >250.8 | 282.6 |
Workforce - Assessment | Not Met | Met | Exceeded | Met |
Based on the operational results listed in the table above, WEC Energy Group’s performance with respect to operational goals generated a 2.5% increase to the compensation awarded under the STPP for 2019 for financial results.
Based upon the Company’s performance against the financial and operational goals established by the Compensation Committee, Mr. LeverettFletcher received annual incentive cash compensation under the STPP of $2,956,922$2,433,884 for 2017.2019. This represented 255%249% of his annual base salary. Messrs. Klappa, Lauber, Keyes,Kuester, and Fletcher,Garvin, and Ms. Martin,Kelsey, each received annual cash incentive compensation for 20172019 under the STPP equal to 163%207%, 153%162%, 172%, 143%, and 143%152% of their respective annual base salaries, representing 203.75%202.50% of the target award for each officer.
The Compensation Committee retains the right to exercise discretion in adjusting awards under the STPP when it deems appropriate. In light of Mr. Garvin's significant individual contributions and commitment to advancing the Company's legislative and regulatory matters in all four state jurisdictions, the Compensation Committee increased Mr. Garvin's 2019 total award.
LONG-TERM INCENTIVE COMPENSATION
The Compensation Committee administers our 1993 Omnibus Stock Incentive Plan, amended and restated effective January 1, 2016, which is a stockholder-approved, long-term incentive plan designed to link the interests of our executives and other key employees to creating long-term stockholder value. It allows for various types of awards tied to the performance of our common stock, including stock options, stock appreciation rights, and restricted stock. The Compensation Committee also administers the WEC Energy Group Performance Unit Plan, under which the Compensation Committee may award performance units. The Compensation Committee primarily uses (1) performance units, including dividend-equivalents, (2) stock options, and
(3) restricted stock to deliver long-term incentive opportunities.
Performance Units. Each year, the Compensation Committee makes annual grants of performance units under the Performance Unit Plan. The performance units are designed to provide a form of long-term incentive compensation that aligns the interests of management with those of a typical utility stockholder who is focused not only on stock price appreciation but also on dividends. Payouts are based upon the Company’s level of “total stockholder return” (stock price appreciation plus reinvested dividends) in comparison to a peer group of companies over a three-year performance period, and beginning with the 2017 grants may be adjusted based upon the Company’s performance against anone or more Additional Performance Measure(s).Measures. The performance units are settled in cash.
Selection of Additional Performance Measure(s). “Additional Performance Measure” is defined as the performance criterion or criteria (if any) that the Compensation Committee selects, in its sole discretion, based upon the attainment of specific levels of performance by WEC Energy Group. Performance units will continue to vest in an amount between 0% and 175% of the target award based upon WEC Energy Group’s comparative total stockholder return over a three-year performance period. However, the vesting percentage may be adjusted based upon WEC Energy’s performance against the Additional Performance Measure(s). The Additional Performance Measure(s), if any, must be selected by the Compensation Committee at the beginning of the three-year performance period. For each year during the performance period, the Compensation Committee will select the target(s) for the Additional Performance Measure(s) and the potential adjustment to the vesting percentage for that year based upon achievement of the Additional Performance Measure(s) relative to the selected target(s). The actual adjustment, if any, to the vesting percentage based upon the Additional Performance Measure(s) will be determined annually. In no event will any adjustment cause the vesting percentage over the three-year performance period to be less than zero.
Short-Term Dividend Equivalents. We increase the number of unvested performance units as of any date that we declare a cash dividend on our common stock by the amount of short-term dividend equivalents a participant is entitled to receive. Short-term dividend equivalents are calculated by multiplying (a) the number of unvested performance units held by a plan participant as of the related dividend record date by (b) the amount of cash dividend payable by the Company on a share of common stock; and (c) dividing the result by the closing price for a share of the Company's common stock on the dividend payment date. In
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WEC Energy Group | P-41 | 2020 Proxy Statement |
effect, short-term dividend equivalents are credited and accumulated as reinvested dividends on each performance unit so that the performance units and accumulated dividends will be paid out at the end of the three-year performance period, rather than paying out the dividend equivalents annually on unearned performance units.
Short-term dividend equivalents are treated as additional unvested performance units and are subject to the same vesting, forfeiture, payment, termination, and other terms and conditions as the original performance units to which they relate. In addition, outstanding short-term dividend equivalents are treated as unvested performance units for purposes of calculating future short-term dividend equivalents.
Stock Options. Each year, the Compensation Committee also makes annual stock option grants as part of our long-term incentive program. These stock options have an exercise price equal to the fair market value of our common stock on the date of grant and expire on the 10th anniversary of the grant date. Since management benefits from a stock option award only to the extent our stock price appreciates above the exercise price of the stock option, stock options align the interests of management with those of our stockholders in attaining long-term stock price appreciation.
Restricted Stock. The Compensation Committee also awards restricted stock as part of the long-term incentive plan, consistent with market practice. Similar to performance units, restricted stock aligns the interests of management with a typical utility stockholder who is focused on stock price appreciation and dividends.
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WEC Energy Group | P-39 | 2018 Proxy Statement |
Aggregate 20172019 Long-Term Incentive Awards. InGenerally, when establishing the target value of long-term incentive awards and the appropriate mix of performance units, stock options, and restricted stock for each NEO, in 2017 (other than Mr. Klappa, who did not receive long-term incentive awards in 2017), the Compensation Committee reviewedreviews the market compensation data and analysis provided by FW Cook. Based upon FW Cook’s analysis, for 2019 the Compensation Committee determined that the long-term incentive awards would be weighted 65% performance units, 20% stock options, and 15% restricted stock. These targetstock for Messrs. Fletcher, Lauber, and Garvin, and Ms. Kelsey. Target values also were presented to and approved by the Compensation Committee in December 2016.2018.
With respect to Messrs. Klappa and Kuester, after consultation with FW Cook, the Compensation Committee determined that their long-term incentive awards would be weighted 80% restricted stock and 20% stock options. At the time, there had not yet been a determination as to the duration of Messrs. Klappa’s and Kuester’s tenure with the Company other than it would likely be shorter than the other executive officers. Since the vesting percentage of performance units is based upon WEC Energy Group’s total stockholder return over a three-year period, the Compensation Committee determined that performance units would not accurately reflect the contributions of Messrs. Klappa and Kuester to the success of the Company over a shorter period of time.
Based upon the market data provided by FW Cook, we customarily target the long-term incentive award to be within (plusat or minus) 20% ofnear the market median value of long-term incentive compensation. Allcompensation for each executive officer’s position. Other than Mr. Kuester, all of the NEO’sNEOs’ long-term incentive awards were within this target range for 2017.2019. The value of Mr. Kuester’s 2019 long-term incentive award was set at the same level as his 2018 award, consistent with the commitment the Company made to Mr. Kuester when he agreed to return to the Company.
20172019 Stock Option Grants. In December 2016,2018, the Compensation Committee approved the grant of stock options to each of our NEOs (other than Mr. Klappa) and established an overall pool of options that were granted to approximately 200 other employees. The option grants to the NEOs were made effective January 3, 2017,2, 2019, the first trading day of 2017.2019. The options were granted with an exercise price equal to the average of the high and low prices reported on the NYSE for shares of WEC Energy Group common stock on the grant date. The options were granted in accordance with our standard practice of making annual stock option grants effective on the first trading day of each year, and the timing of the grants was not tied to the timing of any release of material information.
These stock options have a term of 10 years and vest 100% on the third anniversary of the date of grant. The vesting of the stock options may be accelerated in connection with a change in control or an executive officer’s termination of employment under certain circumstances. See “Potential Payments upon Termination or Change in Control” beginning on page P-57 for additional information. Subject to the limitations of the 1993 Omnibus Stock Incentive Plan, the Compensation Committee has the power to amend the terms of any option (with the participant’s consent). However, the Committee may not reduce the exercise price of existing options or cancel outstanding options and grant replacement options having a lower exercise price without stockholder approval.
For purposes of determining the appropriate number of options to grant to a particular NEO, the value of an option was determined based upon the Black-Scholes option pricing model. We use the Black-Scholes option pricing model for purposes of the compensation valuation. The following table provides the number of options granted to each NEO in 2017:2019:
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WEC Energy Group | P-42 | 2020 Proxy Statement |
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Executive Officer | Options Granted |
Mr. LeverettFletcher | 130,64044,825 |
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Mr. Klappa | 33,180 |
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Mr. Lauber | 17,32030,560 |
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Mr. KeyesKuester | 29,80051,550 |
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Ms. MartinKelsey | 21,06520,147 |
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Mr. FletcherGarvin | 17,34514,931 |
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For financial reporting purposes, the stock options granted on January 3, 20172, 2019 had a grant date fair value of $7.91$8.60 per option for Messrs. Leverett, Lauber, Keyes, and Fletcher, and a grant date fair value of $6.40 for Ms. Martin. Ms. Martin is considered to be “retirement eligible.” Therefore, her options are presumed to have a shorter expected life, which results in a lower option value.option.
20172019 Restricted Stock Awards. In December 2016,2018, the Compensation Committee also approved the grant of restricted stock to each of our NEOs (other than Mr. Klappa) and established an overall pool of restricted stock that was granted to approximately 200 other employees. The grants to the NEOs were also made effective January 3, 2017. The2, 2019 . Other than the shares granted to Messrs. Klappa and Kuester, the restricted stock vests in three equal annual installments beginning on January 3, 2018.2, 2020. The shares of restricted stock granted to Messrs. Klappa and Kuester vest in full on the one year anniversary of the grant date, reflecting the shorter tenure the Committee expected for Messrs. Klappa and Kuester as compared to the other NEOs.
The vesting of the restricted stock may be accelerated in connection with a termination of employment due to a change in control, death or disability, or by action of the Compensation Committee. Messrs. Klappa’s and Kuester’s restricted stock also fully vested if they resigned for “good reason,” defined as a material diminution in their authority, duties or responsibilities, including, but not limited to, the Company’s appointment of a successor Chief Executive Officer. See “Potential Payments upon Termination or Change in Control” beginning on page P-57 for additional information. Tax withholding obligations related to vesting may be satisfied, at the option of the executive officer, by withholding shares otherwise deliverable upon vesting or by cash. The NEOs have the right to vote the restricted stock and to receive cash dividends when the Company pays a dividend to our stockholders.
For purposes of determining the appropriate number of shares of restricted stock to grant to a particular NEO, the Compensation Committee used a value of $57.043$73.86 per share. This value was based upon the volume weightedvolume-weighted price of WEC Energy Group’s common stock for the ten trading days beginning on December 5, 2016,November 30, 2018, and ending on December 16, 2016.14, 2018. The Compensation Committee uses the volume-weighted price in order to minimize the impact of day-to-day volatility in the stock market.
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WEC Energy Group | P-40 | 2018 Proxy Statement |
The measurement period is customarily early- to mid-December for annual awards in order to shorten the timeframe between the calculation of the awards and the actual grant date. The following table provides the number of shares of restricted stock granted to each NEO in January 2017:2019:
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Executive Officer | Restricted Stock Granted |
Mr. LeverettFletcher | 12,9753,909 |
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Mr. Klappa | 15,434 |
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Mr. Lauber | 1,7192,665 |
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Mr. KeyesKuester | 2,95823,977 |
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Ms. MartinKelsey | 2,0911,757 |
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Mr. FletcherGarvin | 1,7221,302 |
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20172019 Performance Units. In 2017,2019, the Compensation Committee granted performance units to each of our NEOs (other than Mr. Klappa)Messrs. Klappa and Kuester) and approved a pool of performance units that were granted to approximately 200 other employees. With respect to the 20172019 performance units, the amount of the benefit that ultimately vests will be dependent upon the Company’s total stockholder return over a three-year period ending December 31, 2019,2021, as compared to the total stockholder return of the custom peer group described below. Total stockholder return is the calculation of total return (stock price appreciation plus reinvestment of dividends) based upon an initial investment of $100 and subsequent $100 investments at the end of each quarter during the three-year performance period. However, the vesting percentage may be adjusted based upon WEC Energy Group’s performance against the Additional Performance Measure. For the 20172019 performance unit awards, the Compensation Committee selected performance against the weighted average authorized return on equity of all WEC Energy Group’s utility subsidiaries.subsidiaries as the Additional Performance Measure.
Upon vesting, the performance units will be settled in cash in an amount determined by multiplying the number of performance units that have vested by the closing price of the Company’s common stock on the last trading day of the performance period.
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WEC Energy Group | P-43 | 2020 Proxy Statement |
The 20172019 performance unit peer group against which WEC Energy Group's performance will be measured includes:originally included: |
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• Alliant Energy Corporation | • DTE Energy Co. | • Great Plains Energy, Inc.FirstEnergy Corp. | • SCANA Corporation |
• Ameren Corporation | • Duke Energy Corp. | • NiSource Inc. | • The Southern Company |
• American Electric Power Company | • Edison International | • OGE Energy Corp. | • Xcel Energy Inc. |
• CMS Energy Corporation | • Eversource Energy | • PG&E Corporation | |
• Consolidated Edison, Inc. | • FirstEnergy Corp.Evergy, Inc. | • Pinnacle West Capital Corp. | |
The peer group is chosen by the Compensation Committee, based upon management’s recommendation and with the concurrence of FW Cook. This peer group was chosen because we believe these companies are similar to WEC Energy Group in terms of business model and long-term strategies, with a primary focus on regulated utility operations rather than a non-regulated business model. There is significant overlap between the performance unit peer group and the comparison group developed by FW Cook for purposes of benchmarking compensation levels. However, there are several companies that are different among the two groups because FW Cook places significant weight on the financial metrics of the companies included in its comparison group, whereas we focus more on operational measures for the performance unit peer group.
In January 2019, the Compensation Committee determined that SCANA Corporation should be removed from the custom peer group for the outstanding 2017-2019 performance unit awards, and should not be included in any future peer groups. On January 2, 2019, SCANA Corporation was acquired by Dominion Energy, Inc. As a result, SCANA Corporation is no longer a public company. This action is consistent with the Compensation Committee’s past decisions to adjust the peer group to account for the impact of mergers and acquisitions.
The required percentile ranking for total stockholder return and the applicable vesting percentage are set forth in the chart below.
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Performance Percentile Rank | Vesting Percent |
< 25th Percentile | 0% |
25th Percentile | 25% |
Target (50th Percentile) | 100% |
75th Percentile | 125% |
90th Percentile | 175% |
If the Company’s rank is between the benchmarks identified above, the vesting percentage will be determined by interpolating on a straight line basis the appropriate vesting percentage. Unvested performance units generally are immediately forfeited upon a NEO’s cessation of employment with WEC Energy Group prior to completion of the three-year performance period. However, the performance units will vest immediately at the target 100% rate upon the termination of the NEO’s employment (1) by reason of disability or death or (2) after a change in control of WEC Energy Group. In addition, a prorated number of performance units (based upon the target 100% rate) will vest upon the termination of employment of the NEO by reason of retirement prior to the end of the three-year performance period.
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WEC Energy Group | P-41 | 2018 Proxy Statement |
ForIn response to feedback we received from stockholders, the Compensation Committee amended the Performance Unit Plan, effective January 1, 2017, to provide for an Additional Performance Measure. Similar to the performance unit awards,units awarded in 2017 and 2018, the Additional Performance Measure for the 2019 performance unit awards is the weighted average authorized return on equity (“ROE”) of all WEC Energy Group’s utility subsidiaries. In order for WEC Energy Group to meet its earnings per share targets, it is important that our utilities earn at or close to their allowed rates of return. The Company’s performance against this measure may increase or decrease the vesting percentage of the performance units up to 10% over the three yearthree-year performance period. For the 2017, 2018, and 2019 performance awards, the ROE targets and potential adjustments were set as follows:follows for 2019:
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If Actual Annual Authorized ROE is | The Annual Adjustment is | ROE Ranges |
≤ 20 bp below the Authorized ROE | + 3.33% | ≥ 9.76%9.70% |
21 - 30 bp below the Authorized ROE | 0% | 9.66%9.69% - 9.75%9.60% |
> 30 bp below the Authorized ROE | (3.33)% | < 9.66%9.60% |
WEC Energy Group'sGroup’s utility subsidiaries achieved a weighted average authorized ROE of 10.25%10.34% for 2017.2019. This resulted in a 3.33% increase in the vesting percentage of the performance units awarded in January 2019, January 2018 and January 2017.
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WEC Energy Group | P-44 | 2020 Proxy Statement |
For purposes of determining the appropriate number of performance units to grant to a particular NEO, the Compensation Committee used a value of $57.043$73.86 per unit, the same value used for the restricted stock granted in January 2017.2019.
The following table provides the number of performance units granted to each NEO effective January 3, 2017,2, 2019, at the 100% target level:
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Executive Officer | Performance Units Granted |
Mr. LeverettFletcher | 56,22516,941 |
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Mr. Klappa | — |
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Mr. Lauber | 7,45511,550 |
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Mr. KeyesKuester | 12,825— |
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Ms. MartinKelsey | 9,0657,614 |
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Mr. FletcherGarvin | 7,4655,643 |
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20172019 Payouts under Previously Granted Long-Term Incentive Awards. In 2015,2017, the Compensation Committee granted performance unit awards to participants in the Performance Unit Plan, including the NEOs.Plan. The terms of the performance units granted in 20152017 were substantially similar to those of the performance units granted in 20172019 described above, except that the 2015 performance units did not have an Additional Performance Measure.above. The required percentile ranks for total stockholder return and related vesting schedule were identical to that of the 20172019 performance units.
Payouts under the 20152017 performance units were based upon our total stockholder return for the three-year performance period ended December 31, 20172019 against the same group of peer companies used for the 2019 performance unit awards. The peer group for the 2017 performance unit awards exceptoriginally included Great Plains Energy, Inc., which combined with Westar Energy, Inc. on June 4, 2018 in a merger of equals that the 2015 peer group included Avista, but did not include Edison International. However, in December 2017,created Evergy, Inc. As a result, the Compensation Committee determined that Avistareplaced Great Plains Energy, Inc. with Evergy, Inc. in the 2017 peer group. Also, as stated above, SCANA Corporation should bewas removed from the custom2017 - 2019 peer group for the 2015 performance unit award. On July 19, 2017, Hydro One Limited and Avista announced that they had entered into an agreement whereby Hydro One will purchase Avista. Upon this announcement, there was a significant increase in Avista’s stock price, which we believe was not the result of ongoing operating performance. This action is consistent with the Compensation Committee’s past decisions to adjust the peer group to account for the impact of mergers and acquisitions.groups.
Accounting for this change, ourOur total stockholder return was at the 5694th percentile of the peer group for the three-year performance period ended December 31, 2017,2019, resulting in the performance units vesting at a level of 105.6%175%. The cumulative three-year impact of the Company’s performance against the Additional Performance Measure was a 10% increase in the vesting percentage of the performance units for a total vesting level of 185%. The actual payouts were determined by multiplying the number of vested performance units by the closing price of our common stock ($66.43)92.23) on December 29, 2017,31, 2019, the last trading day of the performance period. The actual payout to each NEO (other than Mr.Messrs. Klappa and Kuester, and Ms. Kelsey, who did not have any 20152017 performance units outstanding) is reflected in the “Option Exercises and Stock Vested for Fiscal Year 2017”2019” table.
Mr. Klappa’s 2017 Compensation
In recognition of his service and leadership while Mr. Leverett recovers from his stroke, the Compensation Committee approved a payment of $2,000,000 for Mr. Klappa’s service as CEO in 2017. The Compensation Committee based this determination on input from FW Cook regarding the appropriate pay level for Mr. Klappa under the circumstances. Mr. Klappa also received compensation for his service as a non-management director in 2017, including service as Non-Executive Chairman of the Board. He did not, however, participate in management incentive compensation programs. See the "Summary Compensation Table" for additional information on Mr. Klappa’s director compensation.
For information about Mr. Klappa’s 2018 compensation, see "Other Information" on page P-48.
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WEC Energy Group | P-42 | 2018 Proxy Statement |
COMPENSATION RECOUPMENT POLICY
Accountability is a fundamental value of WEC Energy Group. To reinforce this value through the Company’s executive compensation program, the Compensation Committee has adopted a clawback policy that provides for the recoupment of incentive-based compensation in the event WEC Energy Group is required to prepare an accounting restatement due to material noncompliance with any financial reporting requirement under the securities laws (other than restatements permitted as a result of changes in accounting principles or interpretation). Pursuant to the policy, the Compensation Committee will recover from any current or former executive officer who has received incentive-based compensation during the three-year period preceding the date on which WEC Energy Group is required to prepare the accounting restatement, any portion of the incentive-based compensation paid in excess of what would have been paid to the executive officer under the restated financial results. The Company may also recover incentive-based compensation if an executive officer’s employment is terminated for cause, or the executive officer violates a noncompetition or other restrictive covenant.
STOCK OWNERSHIP GUIDELINES
The Compensation Committee believes that an important adjunct to the long-term incentive program is significant stock ownership by officers who participate in the program, including the NEOs. Accordingly, the Compensation Committee has implemented stock ownership guidelines requiring officers who participate in the long-term incentive program to hold an amount of Company common stock and other equity-related Company securities that varies depending upon such officer's level.
In addition to shares owned outright, holdings of each of the following are included in determining compliance with our stock ownership guidelines: restricted stock; WEC Energy Group phantom stock units held in the Executive Deferred Compensation Plan; WEC Energy Group stock held in the WEC Energy Group's 401(k) plans; performance units at target; and shares held in a brokerage account, jointly with an immediate family member or in a trust.
Effective January 1, 2017, theThe guidelines require each executive officer, including the NEOs, to acquire (generally within five years of appointment as an executive officer) and hold common stock and other equity-related securities of the Company having a minimum fair market
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WEC Energy Group | P-45 | 2020 Proxy Statement |
value ranging from 250% to 600% of base salary. The Compensation Committee believes these stock ownership guidelines discourage unreasonable risk takingrisk-taking by Company officers.
The Compensation Committee annually reviews whether executive officers are in compliance with these guidelines. The last review was completed in October 2017.2019. The Compensation Committee determined that Mr. Leverett isall NEOs are in compliance, with the ownership guidelines, and all of the other NEOs, including Mr. Klappa who is again subject to the ownership guidelines, are inor making sufficient progress towards compliance, with these guidelines.
PROHIBITION ON HEDGING AND PLEDGING
WEC Energy Group'sGroup’s Corporate Securities Trading Policy prohibits the use of any strategies or products, including derivatives and short-selling techniques, to hedge against potential changes in the value of WEC Energy Group’s common stock. The policy, which is applicable to all directors and active employees of the Company, including the NEOs, also prohibits the holding of WEC Energy Group securities in a margin account, as well as the pledging of WEC Energy Group securities as collateral for a loan.
LIMITED TRADING WINDOWS
Officers, including the NEOs, other keyidentified employees, and the Company’s directors may only transact in WEC Energy Group securities during approved trading windows after satisfying mandatory pre-clearance requirements.
RETIREMENT PROGRAMS
We also maintain retirement plans in which our NEOs participate: a defined benefit pension plan of the cash balance type, a supplemental executive retirementpension plan, individual letter agreements with some of the NEOs, a 401(k) plan, and a 401(k)non-qualified retirement savings plan. We believe our retirement plans are a valuable benefit in the attraction and retention of our employees, including the NEOs. We believe that providing a foundation for long-term financial security for our employees, beyond their employment with the Company, is a valuable component of our overall compensation program which will inspire increased loyalty and improved performance. For more information about our retirement plans, see "Pension Benefits at Fiscal Year-End 2017"2019" and "Retirement Plans."
Mr. Klappa had previously retired as Chairman of the Board and CEO of WEC Energy Group effective May 1, 2016. For information regarding certain payments made to Mr. Klappa in connection with such retirement, see “Pension Benefits at Fiscal Year-End 2017.”
OTHER BENEFITS, INCLUDING PERQUISITES
We provide our executive officers, including the NEOs, with employee benefits and a limited number of perquisites. Except as specifically noted elsewhere in this proxy statement, the employee benefits programs in which executive officers participate
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WEC Energy Group | P-43 | 2018 Proxy Statement |
(which (which provide benefits such as medical coverage, retirement benefits, and annual contributions to a qualified savings plan)plan, and moving and relocation costs) are generally the same programs offered to substantially all of the Company’s salariedmanagement employees.
The perquisites made available to executive officers include financial planning, membership in a service that provides health care and safety management when traveling outside the United States, reimbursement for expenses related to annual physical exam costs not covered by insurance, and limited spousal travel for business purposes. The Company also pays periodic dues and fees for club memberships for certain of the NEOs and other designated officers.
We customarily review market data regarding executive perquisite practices on an annual basis. Following our acquisition of Integrys Energy Group, the Compensation Committee undertook a thorough review of WEC Energy Group’s perquisite practices with FW Cook. At that time, FW Cook recommended to the Compensation Committee that the Company retain our current package of perquisites. For 2017,2019, the Compensation Committee again reviewed our package of perquisites with FW Cook and decided not to make any changes. WEC Energy Group has a legacy group of executives who are still eligible for gross-ups. We reimburse those executives for taxes paid on income attributable to the financial planning benefits provided to the executives only if the executive uses the Company’s identified preferred provider, AYCO. We believe the use of the preferred financial adviser provides administrative benefits and eases communication between Company personnel and the financial adviser.
We pay periodic dues and fees for certain club memberships as we have found that the use of these facilities helps foster better customer and community relationships. Officers, including the NEOs, are expected to use clubs for which the Company pays dues primarily for business purposes. We do not pay any additional expenses incurred for personal use of these facilities, and officers are required to reimburse the Company to the extent that it pays for any such personal use. The total annual club dues are included in the "Summary Compensation Table." We do not permit personal use of the airplane utilized byavailable to the Company. We do allow spousal travel if an executive’s spouse is accompanying the executive on business travel and the airplane is not fully utilized by Company personnel. There is no incremental cost to the Company for this travel, other than the reimbursement for taxes paid on imputed income attributable to the executives for this perquisite, as the airplane cost is the same regardless of whether or not an executive’s spouse travels. Any tax reimbursement is subject to the Company'sCompany’s Tax Gross-Up Policy discussed below.
In addition, each of our executive officers is eligible to participate in an officer life insurance benefit. If an executive officer chooses to participate, upon such officer’s death while employed by the Company, a benefit is paid to his or her designated beneficiary in an amount equal to the value of three times the officer’s base salary at the time of death.
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WEC Energy Group | P-46 | 2020 Proxy Statement |
TAX GROSS-UP POLICY
The Compensation Committee adopted a formal policy that prohibits entry into any contract, agreement, or arrangement with any officer of the Company that obligates the Company to pay directly or reimburse the officer for any portion of the officer’s individual tax liability for benefits provided by the Company. Excluded from this policy are (1) agreements or arrangements entered into prior to December 2014 when the policy was adopted, (2) agreements or arrangements entered into prior to, and assumed by the Company in connection with, any merger or acquisition, or (3) plans or policies applicable to Company employees generally.
This policy formalizesformalized the Compensation Committee’s policy that had been in place since July 2011 to eliminate tax gross-ups on perquisites provided by the Company to its officers (except to officers who were already receiving gross-ups as of July 2011). Of the NEOs, Messrs. Leverett and Lauber and Ms. Martin,Garvin were receiving gross-ups from the Company prior to July 2011.
In light of Mr. Klappa’s retirementand Mr. Kuester's retirements in May 2016 and January 2013, respectively, and subsequent return to the Company as executive Chairman of the Board and CEO of WEC Energy Group effective May 1, 2016, and his subsequent re-appointment as CEOofficers in 2017 and 2018, respectively, both Mr. Klappa isand Mr. Kuester were deemed a new employeeemployees for benefits purposes and isare not eligible to receive gross-ups as CEO.gross-ups.
SEVERANCE BENEFITS AND CHANGE IN CONTROL
Several years ago, the Compensation Committee determined that it would no longer offer severanceMessrs. Klappa, Lauber, Kuester, and change in control benefits in employment agreements. Therefore, Messrs. Lauber and Keyes, and Ms. Martin,Garvin have not entered into an employment agreement that provides for theseseverance and change in control benefits. However, they are eligible to participate in the Company’s Severance Pay Plan. Prior to that time,Mr. Fletcher and Ms. Kelsey each of Messrs. Leverett and Fletcher entered into an employment agreementagreements with the Company, which includesinclude severance and change in control provisions. For a discussion of the severance and change in control benefits available under these agreements, and to our executive officers generally, see “Potential Payments upon Termination or Change in Control.”
In addition, our supplemental pension plan provides that in the event of a change in control, each NEO (other than Mr. Klappa)participants will be entitled to a lump sum payment of amounts due under the plan if employment is terminated within 18 months of the change in control.
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WEC Energy Group | P-44 | 2018 Proxy Statement |
IMPACT OF PRIOR COMPENSATION
The Compensation Committee does not believe it is appropriate to consider the amounts realized or realizable from prior incentive compensation awards when establishing future levels of short-term and long-term incentive compensation.
SECTION 162(m) OF THE INTERNAL REVENUE CODE
In the past, certain components of the Company’s compensation program were designed to ensure the deductibility of compensation based on tax regulations in effect at the time the compensation was awarded, including Section 162(m). Section 162(m) of the Internal Revenue Code limits the deductibility of certain executives’ compensation that exceeds $1 million$1,000,000 per year. For tax years prior to 2018, compensation over $1 million$1,000,000 per year could be deducted by the Company if such compensation was performance-based under Section 162(m) and issued through a plan that had been approved by stockholders. AlthoughStarting with compensation awarded in 2018, the Compensation Committee historically took into considerationTax Cuts and Jobs Act of 2017 eliminated the provisions of Section 162(m), it believes that maintaining tax deductibility is only one consideration among many in the design of an effective executive compensation program. With respect to 2017 compensation for the NEOs, the stock option grants under the 1993 Omnibus Stock Incentive Plan have been structured to qualify as performance-based compensation exception under Section 162(m). The remaining components of the 2017 for compensation program do not qualify for tax deductibility under Section 162(m).
The recently enacted tax reform legislation has raised some questions as to whether performance-based compensation granted in 2018 and thereafter may continue to be deducted. The Compensation Committee does not anticipate that the tax law changes, if applicable, will have a significant impact on the Company’s executive compensation program as the Committee continues to believe that a significant portion of the executives’ compensation should be at risk and based upon performance against Company goals.over $1,000,000.
COMPENSATION COMMITTEE REPORT
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-KS‑K with management and, based on such review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement.
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| The Compensation Committee |
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| John F. Bergstrom,Ulice Payne, Jr, Committee Chair
William M. Farrow III Thomas J. Fischer Ulice Payne, Jr.
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WEC Energy Group | P-45P-47 | 20182020 Proxy Statement |
EXECUTIVE COMPENSATION TABLESExecutive Compensation Tables
The following table summarizes total compensation awarded to, earned by, or paid to WEC Energy Group’s Chief Executive Officer ("CEO"), Chief Financial Officer ("CFO"), and each of the other individuals identified in the table below (the “NEOs”).
SUMMARY COMPENSATION TABLE
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Name and Principal Position | Year |
Salary | Bonus | (5) Stock Awards | (6) Option Awards | (7) Non-Equity Incentive Plan Compensation | Change in Pension Value and Nonqualified Deferred Compensation Earnings | (9)(10) All Other Compensation | Total | Total Without Change in Pension Value |
| ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) |
Allen L. Leverett(1) President
| 2017 | 1,161,000 |
| — | 4,034,706 |
| 1,033,362 |
| 3,018,251 |
| 4,224,896 |
| 170,022 |
| 13,642,237 |
| 9,437,265 |
|
2016 | 941,667 |
| — | 2,939,251 |
| 769,144 |
| 2,162,593 |
| 4,549,812 |
| 140,512 |
| 11,502,979 |
| 6,963,294 |
|
2015 | 799,155 |
| — | 2,762,955 |
| 481,762 |
| 1,680,500 |
| 925,639 |
| 132,014 |
| 6,782,025 |
| 5,858,590 |
|
Gale E. Klappa(1) Chairman of the Board and Chief Executive Officer | 2017 | 2,225,000(2) |
| — | 250,012 |
| — |
| — |
| 2,529,057 |
| 27,102 |
| 5,031,171 |
| 2,593,579 |
|
2016 | 589,043 |
| — | 7,427,755 |
| 816,752 |
| 1,179,632 |
| 925,719 |
| 210,435 |
| 11,149,336 |
| 10,250,269 |
|
2015 | 1,324,739 |
| — | 5,388,193 |
| 809,646 |
| 3,454,116 |
| 2,573,492 |
| 276,582 |
| 13,826,768 |
| 11,260,113 |
|
Scott J. Lauber(3) Executive Vice President and Chief Financial Officer | 2017 | 467,321 |
| — | 534,890 |
| 137,001 |
| 764,441 |
| 93,343 |
| 66,124 |
| 2,063,120 |
| 1,977,525 |
|
2016 | 351,784 |
| — | 158,886 |
| 38,371 |
| 513,010 |
| 65,818 |
| 38,116 |
| 1,165,985 |
| 1,103,685 |
|
J. Patrick Keyes Executive Vice President, Strategy | 2017 | 562,792 |
| — | 920,228 |
| 235,718 |
| 885,736 |
| 122,780 |
| 73,214 |
| 2,800,468 |
| 2,682,669 |
|
2016 | 546,400 |
| — | 889,965 |
| 215,067 |
| 904,320 |
| 111,973 |
| 73,034 |
| 2,740,759 |
| 2,630,909 |
|
2015 | 531,002 |
| — | 1,121,231 |
| 201,993 |
| 911,839 |
| 90,080 |
| 71,410 |
| 2,927,555 |
| 2,837,539 |
|
Susan H. Martin(4) Executive Vice President | 2017 | 530,450 |
| — | 650,451 |
| 134,816 |
| 771,436 |
| 108,918 |
| 64,827 |
| 2,260,898 |
| 2,156,824 |
|
2016 | 515,000 |
| — | 587,165 |
| 106,358 |
| 779,035 |
| 102,117 |
| 113,108 |
| 2,202,783 |
| 2,103,032 |
|
2015 | 475,000 |
| — | 824,278 |
| 87,032 |
| 741,831 |
| 86,748 |
| 58,343 |
| 2,273,232 |
| 2,186,678 |
|
J. Kevin Fletcher(3) President - WE, WG and WPS | 2017 | 436,800 |
| — | 535,648 |
| 137,199 |
| 633,095 |
| 1,198,310 |
| 44,062 |
| 2,985,114 |
| 1,800,225 |
|
2016 | 411,345 |
| — | 336,818 |
| 81,425 |
| 606,866 |
| 671,274 |
| 39,869 |
| 2,147,597 |
| 1,482,133 |
|
|
| | | | | | | | | | | | | | | | | | |
| | | | | | | (7) | | | |
Name and Principal Position | Year |
Salary | Bonus | (4) Stock Awards | (5) Option Awards | (6) Non-Equity Incentive Plan Compensation | Change in Pension Value and Nonqualified Deferred Compensation Earnings | (8)(9) All Other Compensation | Total | Total Without Change in Pension Value |
| ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) |
J. Kevin Fletcher President and Chief Executive Officer | 2019 | 975,939 |
| — | 1,421,449 |
| 385,495 |
| 2,433,884 |
| 3,958,141 |
| 87,193 |
| 9,262,101 |
| 5,349,308 |
|
2018 | 504,733 |
| — | 521,122 |
| 109,816 |
| 792,078 |
| 739,652 |
| 52,100 |
| 2,719,501 |
| 2,023,895 |
|
2017 | 436,800 |
| — | 535,648 |
| 137,199 |
| 633,095 |
| 1,198,310 |
| 44,062 |
| 2,985,114 |
| 1,800,225 |
|
Gale E. Klappa(1) Executive Chairman | 2019 | 1,039,231 |
| — | 1,052,213 |
| 285,348 |
| 2,147,112 |
| 3,319,763 |
| 360,277 |
| 8,203,944 |
| 5,012,243 |
|
2018 | 1,425,000 |
| — | 3,763,383 |
| 793,166 |
| 3,541,124 |
| 158,568 |
| 181,752 |
| 9,862,993 |
| 9,862,993 |
|
2017 | 2,225,000 |
| — | 250,012 |
| — |
| — |
| 2,529,057 |
| 27,102 |
| 5,031,171 |
| 2,593,579 |
|
Scott J. Lauber Senior Executive Vice President and CFO | 2019 | 624,904 |
| — | 969,107 |
| 262,816 |
| 1,012,500 |
| 179,895 |
| 93,413 |
| 3,142,635 |
| 2,983,624 |
|
2018 | 574,711 |
| — | 858,790 |
| 229,716 |
| 952,418 |
| 22,857 |
| 76,186 |
| 2,714,678 |
| 2,714,678 |
|
2017 | 467,321 |
| — | 534,890 |
| 137,001 |
| 764,441 |
| 93,343 |
| 66,124 |
| 2,063,120 |
| 1,977,525 |
|
Frederick D. Kuester(2) Senior Executive Vice President | 2019 | 804,846 |
| — | 1,634,632 |
| 443,330 |
| 1,385,606 |
| 1,321,225 |
| 151,184 |
| 5,740,823 |
| 4,448,830 |
|
2018 | 638,481 |
| — | 1,476,294 |
| 297,827 |
| 1,267,350 |
| 33,485 |
| 266,998 |
| 3,980,435 |
| 3,980,435 |
|
| | | | | | | | | |
Margaret C. Kelsey(2) Executive Vice President, General Counsel and Corporate Secretary
| 2019 | 540,651 |
| — | 638,867 |
| 173,264 |
| 821,263 |
| 162 |
| 123,830 |
| 2,298,037 |
| 2,298,037 |
|
2018 | 515,000 |
| — | 596,445 |
| 159,538 |
| 746,535 |
| 41 |
| 88,223 |
| 2,105,782 |
| 2,105,782 |
|
| | | | | | | | | |
Robert M. Garvin Executive Vice President - External Affairs | 2019 | 457,956 |
| 50,000(3) | 473,476 |
| 128,407 |
| 602,869 |
| 95,348 |
| 79,102 |
| 1,887,158 |
| 1,795,310 |
|
2018 | 441,462 |
| — | 477,354 |
| 127,639 |
| 594,226 |
| 75,976 |
| 74,203 |
| 1,790,860 |
| 1,717,450 |
|
2017 | 428,604 |
| — | 437,987 |
| 112,203 |
| 578,855 |
| 80,450 |
| 66,394 |
| 1,704,493 |
| 1,624,043 |
|
Note: In order to show the effect that the year-over-year change in pension value had on total compensation, as determined under applicable SEC rules, we have included an additional column to show total compensation minus the change in pension value. The amounts reported in the Total Without Change in Pension Value column may differ substantially from the amounts reported in the Total column required under SEC rules and are not a substitute for total compensation. Total Without Change in Pension Value represents total compensation, as determined under applicable SEC rules, minus the change in pension value reported in the Change in Pension Value and Nonqualified Deferred Compensation Earnings column. The change in pension value is subject to many external variables, such as interest rates, that are not related to Company performance. Therefore, we do not believe a year-over-yearthat total compensation minus the change in pension value isprovides helpful in evaluating compensationadditional information for comparative purposes.
| |
(1) | On January 27, 2016,Mr. Klappa served as CEO of WEC Energy Group until February 1, 2019, which is also the Board appointed Allen Leverett to serveeffective date of Mr. Fletcher's appointment as our CEO effective upon Gale Klappa’s retirement on May 1, 2016CEO. |
Mr. Klappa continued to serve as the Non-Executive Chairman of the Company’s Board. As we first reported in a Current Report on Form 8-K filed on October 12, 2017, Mr. Leverett suffered a stroke. The Board appointed Mr. Klappa to act as CEO while Mr. Leverett recovers from the stroke and until such time as Mr. Leverett is able to re-assume those responsibilities.
| |
(2) | IncludesMr. Kuester, who was named Senior Executive Vice President effective March 1, 2018, and Ms. Kelsey, who was named Executive Vice President, General Counsel and Corporate Secretary effective January 1, 2018, became named executive officers in 2018. Therefore, no information has been provided for 2017 Board of Director fees earned by Mr. Klappa in his role as a non-management director and Non-Executive Chairman of the Board in the amount of $225,000.for either officer. |
| |
(3) | Reflects the adjustment made by the Compensation Committee to Mr. Lauber, who was named Executive Vice PresidentGarvin's 2019 STPP award to recognize Mr. Garvin's significant individual contributions and CFO effective April 1, 2016,commitment to advancing the Company's legislative and Mr. Fletcher, who was named President of the Wisconsin utilities effective May 1, 2016, became named executive officersregulatory matters in 2016. Therefore, no information has been provided for 2015 for either officer.all four state jurisdictions. |
| |
(4) | Ms. Martin held the title of Executive Vice President, General Counsel and Corporate Secretary through December 31, 2017. As we previously reported, Ms. Martin intends to retire in early 2018. As part of this transition, effective January 1, 2018, Ms. Martin holds the title of Executive Vice President. |
| |
(5)
| The amounts reported for Mr. Klappa in 2017 relate to the grant of restricted stock he received on January 3, 2017 for his service as a non-management director and Non-Executive Chairman of the Board. The amounts reported reflect the aggregate grant date fair value, as computed in accordance with FASB ASC Topic 718 excluding estimated forfeitures, of performance units and/or restricted stock awarded to each NEO in the respective year for which such amounts are reported. The amounts reported for the performance units are based upon the probable outcome as of the grant date of associated performance and market conditions, and are consistent with our estimate, as of the grant date, of aggregate compensation cost to be recognized over the three-year performance period. The actual value received by the executives from these awards may range from $0 to greater than the reported amounts, depending upon the Company’s performance and the executive’s number of additional years of service with the Company. |
The value of the performance unit awards as of the grant date, assuming achievement of the highest level of performance and excluding any performance units resulting from short-term dividend equivalents and the Additional Performance Measure, for each of Messrs. Leverett,
|
| | |
WEC Energy Group | P-46 | 2018 Proxy Statement |
Fletcher, Lauber, Keyes, and Fletcher,Garvin, and Ms. Martin,Kelsey, is $5,736,862, $760,647, $1,308,597, $761,697,$2,021,184, $1,378,021, $673,228, and $924,951,$908,432, respectively, for the 20172019 awards. The value of the performance unit awards as of the grant date, assuming achievement of the highest level of performance and excluding any performance units resulting from short-term dividend equivalents and the Additional Performance Measure, for each of Messrs. Leverett,Fletcher, Lauber Keyes, and Fletcher,,and Garvin, and Ms. Martin,Kelsey, is $4,179,276, $225,903, $1,265,486, $479,001,$741,084, $1,221,145, $678,700, and $835,068,$847,963, respectively, for the 20162018 awards. See “Option Exercises and Stock Vested For Fiscal Year 2017”2019” for the amount of the actual payout with respect to the 20152017 award of performance units. Mr. Klappa’s 2015 and 2016 grants of performance units vested pursuant to the terms of the Company’s Performance Unit Plan upon his retirement on May 1, 2016. Not included are the performance unit awards resulting from short-term dividend equivalents and/or the Additional Performance Measure that may increase or, in the case of the Additional Performance Measure, decrease these amounts.
|
| | |
WEC Energy Group | P-48 | 2020 Proxy Statement |
| |
(6)(5)
| The amounts reported reflect the aggregate grant date fair value, as computed in accordance with FASB ASC Topic 718 excluding estimated forfeitures, of options awarded to each NEO in the respective year for which such amounts are reported. The actual value received by the executives from these awards may range from $0 to greater than the reported amounts, depending upon Company performance. In accordance with FASB ASC Topic 718, we made certain assumptions in our calculation of the grant date fair value of the stock options. See “Stock Options” in Note 1(l) -- Stock-Based Compensation, in the Notes to Consolidated Financial Statements in our 20172019 Annual Report on Form 10-K for a description of these assumptions. For 2017,2019, the assumptions made in connection with the valuation of the stock options are the same as described in Note 1(l), except that the expected life. |
| |
(6) | Consists of the options is 7.6 years for Messrs. Leverett, Lauber, Keyes, and Fletcher, and 4.9 years for Ms. Martin. The change in the expected life of the options as set forth in Note 1(l) resulted from the fact that Ms. Martin is “retirement eligible” as of the grant date, and Messrs. Leverett, Lauber, Keyes, and Fletcher were not, whereas the assumption described in Note 1(l) is a weighted average of all option holders.annual incentive compensation earned under WEC Energy Group’s STPP. |
| |
(7) | Consists of the annual incentive compensation and short-term dividend equivalents earned under WEC Energy Group’s STPP. The amounts earned for each award for 2017 are shown below. |
|
| | | | | | |
Name | Annual Incentive Award | Short-Term Dividend Equivalents | Total |
($) | ($) | ($) |
Allen L. Leverett | 2,956,922 |
| 61,329 |
| 3,018,251 |
|
Gale E. Klappa | — |
| — |
| — |
|
Scott J. Lauber | 760,250 |
| 4,191 |
| 764,441 |
|
J. Patrick Keyes | 860,017 |
| 25,719 |
| 885,736 |
|
Susan H. Martin | 756,554 |
| 14,882 |
| 771,436 |
|
J. Kevin Fletcher | 622,986 |
| 10,109 |
| 633,095 |
|
In conjunction with performance units granted prior to January 1, 2016, certain officers, including the NEOs, and employees were eligible to receive dividend equivalents under the STPP in an amount equal to the number of performance units at the target 100% rate held by each such officer or employee on the dividend declaration date multiplied by the amount of cash dividends paid by the Company on a share of our common stock on such date. The short-term dividend equivalents vested at the end of each year only if the Company achieved the performance target or targets for that year established by the Compensation Committee in the same manner as the performance targets are established under the STPP for the annual incentive awards.
In 2015, the Compensation Committee determined that short-term dividend equivalents should no longer vest annually on unearned performance units and, therefore, would no longer be issued under the STPP. Therefore, the Compensation Committee amended and restated the Company’s Performance Unit Plan effective January 1, 2016, to provide for short-term dividend equivalents. For a more detailed discussion of how Short-Term Dividend Equivalents are earned under the Performance Unit Plan, see “Short-Term Dividend Equivalents” in the Compensation Discussion and Analysis.
| |
(8)
| The amounts reported for 2017, 2016,2019, 2018, and 20152017 reflect the aggregate change in the actuarial present value of each applicable NEO’s accumulated benefit under all defined benefit plans from December 31, 2018 to December 31, 2019, December 31, 2017 to December 31, 2018, and December 31, 2016 to December 31, 2017, December 31, 2015 to December 31, 2016, and December 31, 2014 to December 31, 2015, respectively. For 2017, 2016, and 2015, theThe amounts reported for all three years also include above-market earnings on compensation that is deferred by the NEOs into the Prime Rate Fund under WEC Energy Group’s Executive Deferred Compensation Plan. Above-market earnings represent the difference between the interest rate used to calculate earnings under the Plan and 120% of the applicable federal long-term rate prescribed by the Internal Revenue Code. The amounts earned for 20172019 are shown below. |
| | Name | Change in Pension Value | Non-Qualified Deferred Compensation Earnings | Total | Change in Pension Value | Non-Qualified Deferred Compensation Earnings | Total |
($) |
| ($) | ($) | ($) |
Allen L. Leverett | 4,204,972 |
| 19,924 |
| 4,224,896 |
| |
J. Kevin Fletcher | | 3,912,793 |
| 45,348 |
| 3,958,141 |
|
Gale E. Klappa | 2,437,592 |
| 91,465 |
| 2,529,057 |
| 3,191,701 |
| 128,062 |
| 3,319,763 |
|
Scott J. Lauber | 85,595 |
| 7,748 |
| 93,343 |
| 159,011 |
| 20,884 |
| 179,895 |
|
J. Patrick Keyes | 117,799 |
| 4,981 |
| 122,780 |
| |
Susan H. Martin | 104,074 |
| 4,844 |
| 108,918 |
| |
J. Kevin Fletcher | 1,184,889 |
| 13,421 |
| 1,198,310 |
| |
Frederick D. Kuester | | 1,291,993 |
| 29,232 |
| 1,321,225 |
|
Margaret C. Kelsey | | — |
| 162 |
| 162 |
|
Robert M. Garvin | | 91,848 |
| 3,500 |
| 95,348 |
|
The pension values reported represent only WEC Energy Group’s obligation of the aggregate change in the actuarial present value of each NEO’s accumulated benefit under all defined benefit plans. Messrs. Leverett,Fletcher, Klappa, and FletcherKuester are entitled to receive pension benefits from prior employers. To the extent such prior employers are unable to pay their pension obligations, WEC Energy Group may be obligated to
pay the total amount.
All Other Compensation for Messrs. Leverett,Fletcher, Klappa, Lauber, Keyes, and Fletcher,Garvin, and Ms. Martin,Kelsey, for 20172019 also consists of:
Employer matching of contributions into the WEC Energy Group 401(k) plan in the amount of $10,350$11,200 for each NEO;
“Make-whole” payments under the Executive Deferred Compensation Plan that provides a match at the same level as the WEC Energy Group 401(k) plan (4% for up to 7% of wages) for all deferred salary and bonus not otherwise eligible for a match in the amounts of $115,273$59,053 for Mr. Leverett, $27,293Fletcher, $32,415 for Mr. Klappa, $51,854 for Mr. Lauber, $44,863$17,758 for Ms. Kelsey, and $30,862 for Mr. Keyes, $29,471 for Mr. Fletcher, and $39,528 for Ms. Martin;Garvin; and
The following table shows additional data regarding incentive plan awards to the NEOs in 2017.2019.
The following table reflects the number and value of exercisable and unexercisable options as well as the number and value of other equity awards held by the NEOs at fiscal year-end 2017.2019.