| GeneralRestricted Equity Incentives
| | | The Committee approves long-term incentive compensation for our officers who◾
| | | 75% of annual grants are in positions to make positive contributions to our long-term performanceperformance-based, and to create shareholder value. The Committee believes restricted stock units accomplish our long-term executive compensation program objectives because they: 25% are time-based RSUs | | | align the interests◾
| | | Incentivize creation of management directly with those of our shareholders; focus management’s efforts on performance that will create long-term shareholder value and sustain increases in the price of our common stock and our ability to pay dividends;
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| ◾ | | | TABLE OF CONTENTS
provide a competitive long-term incentive opportunity;
offer clear, transparent accounting; and
provide a retention incentive for key employees because the restricted stock units vest over time and will be forfeited in whole or in part if an officer’s employment terminates prior to vesting.
Equity awards, which are made under our shareholder-approved LTIP, are generally targeted near the median range of awards granted to officers at our peer group companies. While our NEOs are eligible for equity awards under the LTIP, none of them has any right to be granted awards.
The Committee grants equity incentives generally effective within the first few business days in March of each year and uses a mix of time-based restricted stock units (25% for 2021) and performance-based restricted stock units (75% for 2021) that are paid on the basis of the attainment of performance goals and satisfaction of other standard criteria. Restricted stock units generally “cliff” vest in three years from the respective dates of grant, subject to satisfaction of the award terms, such as continued employment through the vesting date. Accumulated dividend equivalents on performance-based restricted stock units are paid in cash at the same time as the vesting of the earned performance-based restricted stock units, if any. Dividend and/or dividend equivalents accrued on all time-based restricted stock units are reinvested during the vesting period and are subject to the same restrictions as the associated restricted stock unit.
Performance-based restricted stock units can be earned at the end of the performance period from 0% to 200% of the target number of restricted stock units granted, depending on actual performance. The performance is measured over a three-year performance period beginning on January 1 of the grant year and ending on December 31 of the second year following the grant year. Performance is measured on a calendar year basis to align with Evergy’s fiscal year. Accordingly, at the end of any given calendar year, the performance objective related to performance-based units may be satisfied, but the performance-based units will not vest, if at all, until the following March, subject to satisfaction of the award terms.
The 2021 performance-based restricted stock units contained two performance objectives. (1) Evergy’s TSR relative to the companies included in the EEI index of electric utility companies over the three-year performance period (67% performance-based weighting) and, (2) Evergy’s 3-year cumulative adjusted EPS measure relative to the Company’s long-term financial plan (33% performance-based weighting). Cumulative adjusted EPS was added in 2021 to support achievement of our long-term strategic plan and because of its alignmentAlign compensation with shareholder value creation.interests
| | | Specific performance targets, as shown below, were set by◾
| | | Annual grants have three year “cliff” vesting | | | | | | ◾ | | | Build stock ownership and create forfeitable retention incentive | | | | | | ◾ | | | Attract and retain talent | | | Other Compensation Components | | | Deferred Compensation | | | ◾ | | | Unfunded, non-qualified plan that allows all officers to defer the Committee; if actual performance falls between the specified performance levels, linear interpolation will be used to determine payouts. To appropriately balance absolute total shareholder performancereceipt of certain cash compensation | | | ◾ | | | Attract and relative performance, any payout related to the relative TSR measure for the performance period would be capped at 100% achievement if Evergy’s absolute TSR performance is negative.retain talent | ◾ | | | Provide compensation deferrals in a tax-efficient manner | | | Three Year TSR versus Companies in the EEI Index
| | | 67%
| | | 30th
Percentile
| | | 50th
Percentile
| | | 70th
Percentile
| | | 90th
Percentile
| |
EPS goals will be disclosed in arrears upon award payout and are tied to the Company’s long-term strategic plan. Equity incentives granted to each currently serving NEO in 2021 are shown below. For 2021, 25% of the NEOs’ annual long-term incentive award was in the form of time-based RSUs and, to incentivize performance and align the NEOs’ interests with those of shareholders, 75% was in the form of performance-based RSUs.
| Mr. Campbell | | | 1,062,500 | | | 19,565 | | | 3,187,500 | | | 58,694 | | | Mr. Andrews | | | 358,750 | | | 6,606 | | | 1,076,250 | | | 19,818 | | | Mr. Bryant | | | 315,200 | | | 5,804 | | | 945,600 | | | 17,412 | | | Mr. Caisley | | | 154,000 | | | 2,836 | | | 462,000 | | | 8,508 | | | Mr. Greenwood | | | 198,750 | | | 3,660 | | | 596,250 | | | 10,980 | |
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(1)
| The number of units is calculated using the average closing price of our common stock for the calendar month immediately preceding the grant date that occurs on or around the first business day in March, or $54.3079 per share for 2021. |
2019 Performance Shares
In early 2019, performance shares were awarded to NEOs for the 2019 to 2021 performance period. The performance objective for the 2019 performance shares was TSR relative to the companies included in the EEI index of electric utility companies over the three-year performance period. Payouts for the 2019 performance shares were earned according to the following schedule:
| Three Year TSR versus Companies in the EEI Index
| | | 100%
| | | 30th
Percentile
| | | 50th
Percentile
| | | 70th
Percentile
| | | 90th
Percentile
| |
In March 2022, a payout equal to 110.1% of target number of shares granted was earned for the performance period. As a result, our NEOs earned the number of shares noted in the table below. Mr. Campbell and Mr. Andrews did not have 2019 RSU grants, and accordingly do not appear in the table.
| Mr. Bryant | | | 10,161 | | | 11,187 | | | 767,558 | | | 62,266 | | | Mr. Caisley | | | 3,512 | | | 3,867 | | | 265,295 | | | 21,625 | | | Mr. Greenwood | | | 10,161 | | | 11,187 | | | 767,558 | | | 62,566 | |
| Mr. Bassham(2) | | | 30,442 | | | 33,517 | | | 2,299,577 | | | 187,447 | |
(1)
| The number of units is calculated using the closing price of our common stock on December 31, 2021, or $68.61, which was the last day of the performance period. |
(2)
| See “Note Regarding Transitions – Former CEO and CFO Transition” on page 37 for additional information. |
Deferred Compensation
The Company’s DCP allows all officers, including NEOs, to defer the receipt of up to 50% of base salary and 100% of any cash incentive award. The earnings rate on deferral amounts is annually determined by the Committee and based on the Company’s weighted average cost of capital. A discussion of the DCP begins on page 30.Retirement Benefits | | | Our NEOs participate in one of our tax-qualified, noncontributory defined benefit plans,◾ Pension plan*
◾ 401(k) plan | | | ◾ Provide competitive total rewards package
◾ Attract and participate in other retirement plans depending on whether they were previously an officer of Great Plains Energy (Messrs. Bassham, Bryant, and Caisley) or Westar Energy, Inc. (“Westar Energy”) (Messrs. Greenwood and Somma). Messrs. Campbell and Andrews participateretain talent | | | Change-in-Control Benefits | | | ◾ | | | Payments in the Company’s 401(k) Plan,event of (i) change-in-control and are eligible to participate(ii) qualifying termination of employment | | | ◾ | | | Facilitate smooth transitions | | | ◾ | | | Attract and retain talent | | | Executive Severance Benefits | | | ◾ | | | Payments in the DCP.event of termination of employment without Cause | | | Legacy Great Plains Energy NEOs◾
| | | NEOs thatAlign executive interests with shareholder interests
| | | ◾ | | | Facilitate smooth transitions | | | ◾ | | | Attract and retain talent | | | Other Benefits | | | ◾ | | | Financial planning services / health physicals | | | ◾ | | | Provide competitive total rewards package | | | | | | ◾ | | | Standard benefits, such as medical, life insurance and disability | | | ◾ | | | Attract and retain talent | | *
| The pension plans were officers of Great Plains Energy participate in a defined benefit plan sponsored byclosed to new hires at Kansas City Power & Light Company (“KCP&L”), which became the Evergy Retirement Plan on June 4, 2018 (the “Evergy Retirement Plan”), as of January 1, 2014 and was available to all KCP&L non-union employees hired or rehired on or before December 31, 2013. Benefits under the Evergy Retirement Plan are based on each employee’s years of service and the average annual base salary over a specified period.Evergy also has an unfunded Supplemental Executive Retirement Plan (“KCP&L SERP”) for executives who were formerly officers of Great Plains Energy. This unfunded plan provides the difference between the amount that would have been payable under the KCP&L Pension Plan (now the Evergy Retirement Plan) in the absence of Internal Revenue Service (“IRS”) tax code limitations and the amount actually payable under the KCP&L Pension Plan (now the Evergy Retirement Plan). It also provides a slightly higher benefit accrual rate than the KCP&L Pension Plan.
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Legacy Westar Energy as of May 31, 2018.
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Cash Compensation Cash compensation for our NEOs includes a market-competitive base salary and performance-based short-term incentives. The Committee believes that, in general, cash compensation should comprise an increasingly smaller percent of total compensation as officers move to higher levels of responsibility. NEOs who were officers of Westar Energy participated in a defined benefit plan sponsored by Westar Energy. That plan was merged with the Evergy Retirement Plan on November 30, 2019, and was available to all Westar Energy employees hired or rehired on or before May 30, 2018.
NEOs who were officers of Westar Energy also participate in a Retirement Benefit Restoration Plan (the “Westar Restoration Plan”). This unfunded plan provides the difference between the amount that would have been payable under the Westar Pension Plan (now the Evergy Retirement Plan) in the absence of IRS tax code limitations and the amount actually payable under the Westar Pension Plan (now the Evergy Retirement Plan).
Change-in-Control Severance Agreements
The Committee believes that change-in-control severance agreements help ensure the continued service, dedication and objectivity of our officers, including our NEOs, in the event of a transaction that would result in a change-in-control of the Company. These agreements support the objective assessment and execution of potential changes in Evergy’s strategy and enhance retention by reducing concerns about employment continuity. We believe these change-in-control arrangements also create incentives for our officer team to build shareholder value and to obtain the highest value possible should we engage in a transaction, despite the risk of losing employment and potentially not having the opportunity to otherwise vest in equity awards. These agreements provide for payments and other benefits if the officer’s employment terminates for a qualifying event or circumstance, such as being terminated without “Cause” or leaving employment for “Good Reason,” as these terms are defined in the agreements. All the agreements require a double trigger so that both a change-in-control and a termination (actual or constructive) of the executive’s employment must occur to trigger benefits. The agreements do not provide for a “gross up” payment to cover any excise taxes that could be payable in connection with payments and benefits received under the agreement.
Additional information, including a quantification of benefits that would have been received by NEOs had termination occurred on December 31, 2021, is found under the heading “Potential Payments Upon Termination or Change-in-Control” starting on page 62.Executive Severance PlanCompensation | Summary and Analysis of Executive Compensation | Evergy 2023 Proxy Statement 39 |
TABLE OF CONTENTS Base Salary The Committee reviewed market data in December 2021, and based in part on the market data, the Committee approved the following annual base salaries for 2022. | Mr. Campbell
Pursuant to our Executive Severance Plan (“Severance Plan”), Evergy’sPresident and Chief Executive Officer
| | | $1,030,000 | | | Mr. Andrews
Executive Vice President and Chief Financial Officer | | | $717,500 | | | Mr. Bryant
Executive Vice President and Chief Operating Officer and any | | | $630,000 | | | Mr. Caisley
Senior Vice President, Public Affairs and Chief Customer Officer | | | $515,000 | | | Ms. Humphrey
Senior Vice President, General Counsel and Corporate Secretary | | | $530,500 | | | Former Named Executive Officer | | | | | | Mr. Greenwood(1)
Former Executive Vice President and Chief Strategy Officer | | | $— | |
(1)
| Mr. Greenwood departed on July 1, 2022, and the Committee did not set compensation for him. He received salary for the portion of the year he was employed based on prior year base salary of $530,000. |
Annual Incentive Plan Our AIP is a “short-term incentive plan” and is based upon a mix of financial and operational metrics that the Committee believes drive the creation of shareholder value and customer satisfaction. Because of their extensive knowledge of the Company and its operations, management recommends objectives in the AIP to the Committee. The Committee reviews management’s recommendations and provides input and feedback, as appropriate, and final recommendations are reviewed and approved by the Committee. As part of the review, the Committee analyzes risks associated with AIP. In establishing final objectives and targets, the Committee seeks to ensure that: incentives are aligned with the strategic goals approved by the Board; targets are sufficiently ambitious, but strike an acceptable balance between risk and reward; and incentive payments, assuming target levels are met, will be consistent with the compensation objectives established by the Committee. The 2022 AIP provided for financial, safety, operational and customer experience objectives. Financial objectives had a weighting of 65%, safety had a weighting of 12.5%, operations had a weighting of 15%, and customer experience had a weighting of 7.5%. Two modifiers, one related to DE&I and one related to Key Performance Indicators, were also included and could each affect the weighted payout by plus or minus 10%. Executive Compensation | Summary and Analysis of Executive Compensation | Evergy who is appointed by2023 Proxy Statement 40 |
TABLE OF CONTENTS The AIP provides for 100% payout for target performance for each objective, 50% for threshold performance, 150% for stretch performance, and 200% for maximum or superior performance. Objective performance is interpolated between performance levels. Objective performance achievement that is less than threshold achievement results in a zero payment for that objective. Additional information and results for the 2022 AIP are described below. | 1. Financial | | | Adjusted EPS | | | 32.5% | | | $3.33 | | | $3.53 | | | $3.68 | | | $3.83 | | | $3.75 | | | 56.3% | | | Adjusted NFOM (Non-Fuel Operating and Maintenance Expense for Incentive Compensation) | | | 32.5% | | | $1,069.2 | | | $1,030.5 | | | $1,004.8 | | | $979.0 | | | $1,046.5 | | | 25.8% | | | 2. Safety | | | DART (Days Away, Restricted, or Transferred Rate) | | | 9.375% | | | 12.5% | | | 0.77 | | | 0.61 | | | 0.45 | | | 0.28 | | | 0.46 | | | 13.8% | | | PVAR (Preventable Vehicle
Accident Rate) | | | 3.125% | | | 1.19 | | | 1.08 | | | 0.97 | | | 0.86 | | | 1.07 | | | 3.3% | | | | | | | | | Safety payout reduced by 50% of performance in the event of a fatality. | | | 3. Operations | | | SAIDI (System Average Interruption
Duration Index) | | | 3.750% | | | 7.5% | | | 105.00 | | | 99.00 | | | 93.00 | | | 88.00 | | | 105.41 | | | 0.0% | | | SAIFI (System Average Interruption
Frequency Index) | | | 3.750% | | | 1.06 | | | 1.01 | | | 0.96 | | | 0.91 | | | 1.11 | | | 0.0% | | | Commercial Availability Factor | | | 7.5% | | | 83% | | | 89% | | | 92% | | | 94% | | | 89% | | | 7.5% | | | 4. Customer
Experience | | | Residential Customer Satisfaction | | | 2.250% | | | 7.5% | | | 735.9 | | | 740.9 | | | 745.4 | | | 749.9 | | | 740.0 | | | 2.0% | | | Business Customer Satisfaction | | | 1.500% | | | 8.88 | | | 8.92 | | | 8.95 | | | 8.97 | | | 8.89 | | | 0.9% | | | Residential On-line Accounts | | | 1.500% | | | 1,113,280 | | | 1,136,000 | | | 1,153,040 | | | 1,170,336 | | | 1,144,289 | | | 1.9% | | | Outage Notification Enrolled | | | 1.500% | | | 715,000 | | | 750,000 | | | 777,750 | | | 805,000 | | | 1,225,689 | | | 3.0% | | | Call Center Survey | | | 0.750% | | | 4.10 | | | 4.25 | | | 4.35 | | | 4.47 | | | 4.31 | | | 1.0% | | | | | | Weighted Achievement % | | | 100.0% | | | | | | 115.5% | |
| Diversity, Equity, and Inclusion | | | Committee discretionary adjustment Improvement across these pillars:
1. Marketplace (Supplier Diversity) 2. Workplace (Development & Engagement) 3. Workforce (Talent Pipeline)
| | | +/-10% | | | Percentage points additive to the Evergy Board is entitledresults of objectives 1-4 above.
No modifications were applied in respect of this modifier to certain benefits if the eligible officer’s employment is terminated by Evergy without cause (as definedweighted payout for 2022. The Committee noted sufficient progress along these pillars. | | | Key Performance Indicators | | | Committee discretionary adjustment associated with other strategic performance indicators | | | +/-10% | | | Percentage points additive to the results of objectives 1-4 above.
No modifications were applied in respect of this modifier to the weighted payout for 2022. The Committee determined that there were no additional outcomes not already reflected in the plan), otherAIP results. | |
Overview of Changes for 2022 from 2021. For 2022, the Committee made a few changes to the AIP scorecard. Those changes included removing the “Site Clock Resets at the Wolf Creek Nuclear Operating Facility” measure and placing an increased safety measure weight on the “Days Away, Restricted, or Transferred” (“DART”) rate. The “Customer Experience” basket of measures were also modified. The “Brand Advocacy Score” was changed back to “Residential Customer Satisfaction”, a measure the Committee has previously utilized, and the “Call Center Survey” measure was added. Other changes included adjusting the DE&I modifier to apply to the pillars of strategic focus for the Company’s DE&I efforts – marketplace, workplace, and the workforce. Each of the elements of the 2022 AIP scorecard are discussed below. Financial Metric 1: Adjusted EPS for Incentive Compensation. This metric remained consistent from 2021 to 2022, ensuring alignment with executives’ interests and shareholder interests. The goals established for 2022 were calculated based on the mid-point of the Company’s publicly-disclosed earnings guidance. Threshold was set $0.20 per share below target, target was set at a level that equated to the mid-point of the range and superior was set $0.30 per share above target, with stretch being set at the mid-point between target and superior. Adjusted EPS for incentive compensation in 2022 was $3.75, resulting in a weighted payout of 56.3%. Adjusted EPS for incentive compensation is a financial measure that is not calculated in accordance with GAAP. “Adjusted EPS for incentive compensation” is calculated as EPS attributable to Evergy without (1) non-regulated energy Executive Compensation | Summary and Analysis of Executive Compensation | Evergy 2023 Proxy Statement 41 |
TABLE OF CONTENTS marketing margin related to a February 2021 winter weather event, (2) non-regulated energy marketing incentive compensation related to a February 2021 winter weather event, (3) executive transition costs, (4) in-voluntary severance costs, (5) advisor expenses, (6) losses related to equity investments subject to a restriction on sale, (7) mark-to-market unrealized gains on economic hedges, (8) the deferral of revenues to be refunded to customers for the return on investment of a previously retired power plant that was related to years prior to 2022, (9) an impairment loss on a previously retired power plant and regulatory disallowances, (10) the deferral of revenues to be refunded to customers for certain transmission formula rate revenues related to years prior to 2022, (11) prefunding the charitable trust, (12) short-term incentive compensation expense above or below the amount of budget, and (13) the tax benefits attributable to these items. See Appendix B to this proxy statement for a reconciliation of this measure to EPS attributable to Evergy, the most directly comparable measure computed in accordance with GAAP. Our calculation of Adjusted EPS for purposes of determining executive compensation may differ from similarly titled financial measures that we publicly disclose. Financial Metric 2: Total Adjusted NFOM Expense for Incentive Compensation. Total adjusted non-fuel operating and maintenance (“NFOM”) expense impacts the Company’s financial results, and realizing NFOM expense savings is a key component of the Company business strategy. The Company’s primary subsidiaries are fully-integrated, regulated electric utilities, and prices are generally set by regulators. The Company’s regulators generally allow the Company to recover in rates, prudently-incurred costs to provide utility service, plus a reasonable return on invested capital. Accordingly, NFOM expenses, which are manageable, impact the Company’s financial results, and the Company’s business plan seeks to realize NFOM expense savings. Considering the importance of effectively managing NFOM on Evergy’s overall financial performance, the Company weighted this metric as 32.5% of the AIP for 2022. “Adjusted non-fuel operating and maintenance expense for incentive compensation” is a financial measure that is not calculated in accordance with GAAP. Adjusted non-fuel operating and maintenance expense for incentive compensation, as used by the Company, is calculated as operating and maintenance expense less (1) non-regulated energy marketing incentive compensation related to a February 2021 winter weather event, (2) executive transition costs, (3) in-voluntary severance costs, (4) advisor expenses, and (5) short-term incentive compensation expenses. The target amount of adjusted NFOM expense as defined above, was set at the 2022 budget. Actual adjusted NFOM expense for incentive compensation resulted in a 25.8% weighted payout for this metric. See Appendix B to this proxy statement for a reconciliation of this measure to operating and maintenance expense, the most directly comparable measure computed in accordance with GAAP. Safety Metric 1 – DART. The DART rate is intended to incentivize maintaining a safety-conscious work environment and measures the percentage of working days that were missed due to injuries. This performance metric is valued at 75% of the overall safety metric, which is weighted at 12.5% of the AIP scorecard. The DART rate threshold was set at a 0.77 DART rate, target was set at a 0.61 DART rate, stretch was set at a 0.45 DART rate, and superior was set at a 0.28 DART rate. The overall safety performance weighted at 12.5% would be reduced by 50% of performance in the event of a fatality. The targets for 2022 were set based on industry benchmarks. The Company DART rate of 0.46 in 2022 resulted in a 13.8% weighted payout for this metric. Safety Metric 2 – PVAR. The Preventable Vehicle Accident Rate (“PVAR”) is intended to incentivize proactively maintaining a safe work environment with vehicles and is a measure of preventable vehicle accidents. This performance metric is valued at 25% of the overall safety metric, which is weighted at 12.5% of the AIP scorecard. The PVAR threshold was set at a 1.19 PVAR rate, target was set at a 1.08 PVAR rate, stretch was set at a 0.97 PVAR rate, and superior was set at a 0.86 PVAR rate. The Company PVAR rate was 1.07 in 2022, resulting in a 3.3% weighted payout for this metric. Operations Metric 1 –SAIDI. System average interruption duration index (“SAIDI”) is an objective system reliability metric created by the Institute of Electrical and Electronics Engineers (“IEEE”) that measures, in minutes, the average outage duration for each customer that experienced an outage. The Committee used recent historical performance to establish target performance, with the superior goal within top quartile benchmarked performance. Driven primarily by weather challenges during the year, the Company’s SAIDI result in 2022 was 105.41 minutes, resulting in no payout for this metric. Operations Metric 2 – SAIFI. System average interruption frequency index (“SAIFI”) is an objective system reliability metric created by the IEEE that measures the average outage interruptions per customer annually. The Committee used recent historical performance to establish target performance with stretch and superior performance requiring steady improvement. Driven primarily by weather challenges during the year, the Company achieved a SAIFI result of 1.11 outage interruptions per customer, resulting in no payout for this metric. Operations Metric 3 – Commercial Availability Factor. Commercial Availability Factor is a measure of our generating fleet being available to the market when market prices are favorable. This measure supports the Company’s initiative of keeping costs affordable for our customers. The Committee used industry benchmarks to set performance levels. The target goal was Executive Compensation | Summary and Analysis of Executive Compensation | Evergy 2023 Proxy Statement 42 |
TABLE OF CONTENTS set at 2nd quartile performance, superior was set at 1st quartile performance and stretch was set at the midpoint between target and superior. The Company’s Commercial Availability Factor was 89%, resulting in a 7.5% weighted payout for this metric. Customer satisfaction and the customer experience is important to the Company, and for 2022, the Committee refined the customer experience metric to include five measures as discussed below. The Customer Experience metric had a weighting of 7.5% of the AIP scorecard. Customer Experience Metric 1 – Residential Customer Satisfaction. Residential Customer Satisfaction is a measure of residential customer satisfaction factoring in power quality and reliability, price, billing and payment, corporate citizenship, communications, and customer care as computed by J.D. Power. The Residential Customer Satisfaction target for 2022 was based on maintaining 2021 absolute score performance while litigating general rate reviews in our Missouri jurisdiction. While the Company’s performance in Residential Customer Satisfaction improved relative to peer utilities in the JD Power survey, reflecting an overall downward trend in survey scores in the industry, the Company’s absolute score for this metric was slightly below target performance, resulting in a 2.0% weighted payout. Customer Experience Metric 2 – Business Customer Satisfaction. The Business Customer Satisfaction metric is a measure based on internally sourced surveys conducted with our large industrial and commercial customers. Threshold performance was set at the midpoint of 2020 and 2021 performance at 8.88, on a scale of 0 to 10, with target, stretch, and superior performance all requiring steady improvement. The Company achieved a score of 8.89, just below target, resulting in a 0.9% weighted payout. Customer Experience Metric 3 – Residential Online Accounts. Residential Online Accounts is a measure of how many residential customers have registered an online account. This measure is important to the Company’s strategy of providing customers with more information and conducting more efficient interactions with customers. Target performance required a 5% improvement from 2021 results. The Company had 1,144,289 residential customers registered with an online account at the end of 2022, resulting in a 1.9% weighted payout. Customer Experience Metric 4 – Outage Notification Enrolled. Outage Notification Enrolled is a measure of how many customers are enrolled to receive alerts regarding outage notifications impacting their area. This measure was chosen because of the reliance on successfully implementing a functionality in the Company’s customer information system that allowed the option for all customers, and the importance of keeping customers safe and informed. Threshold performance was set at a 15% improvement, target at 20% improvement, stretch at 25% improvement, and superior at a 30% improvement over 2021 results. The Company had 1,225,689 customers enrolled to receive outage notifications at the end of 2022, resulting in a 3.0% weighted payout. Customer Experience Metric 5 – Call Center Surveys. Call Center Surveys is an internally sourced survey targeting customers that have interacted directly with one of our two contact centers. The measure is scored on a scale of 1-5, with 5 being the highest score of satisfaction with the call center interaction. Target performance was set slightly higher than 2021 actual results. The Company achieved a score of 4.31, resulting in a 1.0% weighted payout. Modifiers. With respect to the DE&I and Key Performance Indicators modifiers, the Committee noted sufficient progress along all pillars, and for the strategic business plan performance indicators, the Committee determined that there were no additional outcomes not already reflected in the AIP results. The Company made progress in advancing priority initiatives in its DE&I efforts and advanced the core elements of our strategy. Thus, the Committee elected not to modify the payments as determined under the scorecard. The Committee will continue to monitor progress in these areas. Executive Compensation | Summary and Analysis of Executive Compensation | Evergy 2023 Proxy Statement 43 |
TABLE OF CONTENTS Targets and awards earned by each NEO for the 2022 AIP are shown below. | Mr. David A. Campbell
President
and Chief Executive Officer | | | 1,030,000 | | | 125% | | | 115.5% | | | 1,487,063 | | | Mr. Kirkland B. Andrews
Executive Vice President
and Chief Financial Officer | | | 717,500 | | | 100% | | | 115.5% | | | 828,713 | | | Mr. Kevin E. Bryant
Executive Vice President
and Chief Operating Officer | | | 630,000 | | | 80% | | | 115.5% | | | 582,120 | | | Mr. Charles A. Caisley
Senior Vice President, Public Affairs
and Chief Customer Officer | | | 515,000 | | | 65% | | | 115.5% | | | 386,694 | | | Ms. Heather A. Humphrey
Senior Vice President, General Counsel
and Corporate Secretary | | | 530,500 | | | 65% | | | 115.5% | | | 398,244 | |
| Mr. Greg A. Greenwood(1)
Executive Vice President
and Chief Strategy Officer | | | 530,000 | | | 80% | | | — | | | — | |
(1)
| Mr. Greenwood did not receive a 2022 AIP award due to his termination. |
Equity Compensation General The Committee approves long-term incentive compensation for our officers who are in positions to make positive contributions to our long-term performance and to create shareholder value. The Committee believes RSUs accomplish our long-term executive compensation program objectives because they: align the interests of management directly with those of our shareholders; focus management’s efforts on performance that will create long-term shareholder value and sustain increases in the price of our common stock and our ability to pay dividends; provide a competitive long-term incentive opportunity; offer clear, transparent accounting; and provide a retention incentive for key employees because the RSUs vest over time and will be forfeited in whole or in part if an officer’s employment terminates prior to vesting. Equity awards, which are made under our shareholder-approved LTIP, are generally targeted near the median range of awards granted to officers at our peer group companies. While our NEOs are eligible for equity awards under the LTIP, none of them has any right to be granted awards. The Committee grants equity incentives generally effective within the first few business days in March of each year and uses a mix of time-based RSUs (25% for 2022) and performance-based RSUs (75% for 2022) that are paid on the basis of the attainment of performance goals and satisfaction of other standard criteria. RSUs generally “cliff” vest in three years from the respective dates of grant, subject to satisfaction of the award terms, such as continued employment through the vesting date. Accumulated dividend equivalents on performance-based RSUs are paid in cash at the same time as the vesting of the earned performance-based RSUs, if any. Dividend and/or dividend equivalents accrued on all time-based RSUs are reinvested during the vesting period and are subject to the same restrictions as the associated restricted stock unit. Executive Compensation | Summary and Analysis of Executive Compensation | Evergy 2023 Proxy Statement 44 |
TABLE OF CONTENTS Performance-based RSUs can be earned at the end of the performance period from 0% to 200% of the target number of RSUs granted, depending on actual performance. The performance is measured over a three-year performance period beginning on January 1 of the grant year and ending on December 31 of the second year following the grant year. Performance is measured on a calendar year basis to align with Evergy’s fiscal year. Accordingly, at the end of any given calendar year, the performance objective related to performance-based units may be satisfied, but the performance-based units will not vest, if at all, until the following March, subject to satisfaction of the award terms. The 2022 performance-based RSUs contained three performance objectives. (1) Evergy’s TSR relative to the companies included in the EEI Index over the three-year performance period (60% performance-based weighting), (2) Evergy’s 3-year cumulative adjusted EPS relative to the Company’s long-term financial plan (33.3% performance-based weighting) and, (3) an environmental component that focuses on renewable energy generation (6.7% performance-based weighting). The environmental objective was added in 2022 to align with our stated environmental targets and our long-term business strategy. Specific performance targets, as shown below, were set by the Committee; if actual performance falls between the specified performance levels, linear interpolation will be used to determine payouts. All performance objectives described below are tied to the Company’s long-term strategic plan. To appropriately balance absolute TSR performance and relative performance, any payout related to the relative TSR measure for the performance period would be capped at 100% achievement if Evergy’s absolute TSR performance is negative. | Three Year Relative TSR versus Companies in a situation that is governed by a change-in-control severance agreement.the EEI Index | | | 60.0% | | | 25th
Percentile | | | 50th
Percentile | | | 70th
Percentile | | | 90th
Percentile | |
The EPS targets shown below are based on September 2021 Investor Day EPS targets. | Targets are percentage annual growth/ dollar amount of 3-yr cumulative EPS | | | 33.3% | | | 5.5%/
$11.03 | | | 7.0%/
$11.35 | | | 7.75%/
$11.52 | | | 8.5%/
$11.68 | |
The environmental component targets below will account for up to 100 megawatts deviation from the current 3-year plan of 190 megawatts of solar and 300 megawatts of wind additions by year-end 2024 and an additional 500 megawatts of wind additions by year-end 2025 for a total of 990 megawatts of renewable energy generation by year-end 2025. | Additional information, includingwind and solar generation (either new development or PPA buy-ins) | | | 6.7% | | | 340
megawatts under construction by year-end 2024 | | | 340-640 megawatts in-service by year-end 2024 | | | 700 megawatts under contract with 490 megawatts or more placed in service by year-end 2024 | | | 890 megawatts under construction, with 490 megawatts of the 890 megawatts placed in-service by year-end 2024 | |
Executive Compensation | Summary and Analysis of Executive Compensation | Evergy 2023 Proxy Statement 45 |
TABLE OF CONTENTS Shown below are equity incentives granted to each of our NEO in 2022. For 2022, 25% of the NEOs’ annual long-term incentive award was in the form of time-based RSUs and, to incentivize performance and align the NEOs’ interests with those of shareholders, 75% was in the form of performance-based RSUs. | Mr. Campbell | | | 1,158,750 | | | 18,393 | | | 3,476,250 | | | 55,179 | | | Mr. Andrews | | | 367,725 | | | 5,837 | | | 1,103,175 | | | 17,511 | | | Mr. Bryant | | | 322,875 | | | 5,125 | | | 968,625 | | | 15,375 | | | Mr. Caisley | | | 193,125 | | | 3,066 | | | 579,375 | | | 9,197 | | | Ms. Humphrey | | | 198,950 | | | 3,158 | | | 596,850 | | | 9,474 | |
| Mr. Greenwood(2) | | | 198,750 | | | 3,155 | | | 596,250 | | | 9,465 | |
(1)
| The number of units is calculated using the average closing price of our common stock for the calendar month immediately preceding the grant date that occurs on or around the first business day in March, or $63.00 per share for 2022. |
(2)
| Mr. Greenwood’s 2022 RSU’s were prorated at the time of his departure. As a quantificationresult, 357 time-based shares vested on July 1, 2022 and 1,053 performance-based shares will vest on March 1, 2025, subject to performance. |
2020 Performance-Based RSUs In early 2020, performance-based RSUs were awarded to NEOs for the 2020 to 2022 performance period. The performance objective for the 2020 performance-based RSUs was TSR relative to the companies included in the EEI Index over the three-year performance period. Payouts for the 2020 performance-based RSUs were earned according to the following schedule: | Three Year TSR versus Companies in the EEI Index | | | 100% | | | 30th
Percentile | | | 50th
Percentile | | | 70th
Percentile | | | 90th
Percentile | |
In March 2023, a payout equal to 83.1% of the target number of shares granted was earned for the performance period. As a result, our NEOs earned the number of shares noted in the table below. Mr. Campbell and Mr. Andrews did not have 2020 RSU grants, and accordingly do not appear in the table. | Mr. Bryant | | | 10,525 | | | 8,746 | | | 550,403 | | | 57,352 | | | Mr. Caisley | | | 3,324 | | | 2,762 | | | 173,828 | | | 18,112 | | | Ms. Humphrey | | | 7,386 | | | 6,138 | | | 386,250 | | | 40,250 | |
| Mr. Greenwood(2) | | | 8,230 | | | 5,309 | | | 334,112 | | | 34,814 | |
(1)
| The value realized on vesting is calculated using the closing price of benefits that would have been received by the applicable executives had termination occurredour common stock on December 31, 2021, is found under2022, or $62.93, which was the heading “Executive Severance Plan” startinglast day of the performance period. |
(2)
| Mr. Greenwood forfeited 1,841 of the 8,230 shares granted upon his termination. See “Note Regarding Transitions – Former CSO Transition” on page 6436 for additional information. |
Deferred Compensation The Company’s DCP allows all officers, including NEOs, to defer the receipt of up to 50% of base salary and 100% of any cash incentive award. The earnings rate on deferral amounts is annually determined by the Committee and for 2022 was based on the Company’s weighted average cost of capital. A discussion of the DCP begins on page 59. No Employment Agreements
AllExecutive Compensation | Summary and Analysis of the Company’s executive officers, including the NEOs, are employed at will.
Perquisites and Generally Available Employee Benefits
Our NEOs are eligible to receive modest perquisites provided by or paid for by Evergy. These perquisites are generally consistent with those offered to executives at our peer group companies, and the Committee believes that they are important for retention and recruitment. The Committee also believes thatExecutive Compensation | Evergy in general, benefits from these perquisites because the perquisites help promote the financial and physical health of our NEOs, thereby allowing them to focus on their jobs.2023 Proxy Statement 46
As shown in the Summary Compensation Table on page 52, all NEOs are eligible for comprehensive financial planning services and executive health physicals. The NEOs are also eligible for employment benefits that are generally available to all employees, such as participation in a 401(k) plan and medical and life insurance. This year, as part of the recruitment of Mr. Campbell and Mr. Andrews, the Company reimbursed certain housing and relocation expenses.Committee Consideration of Compensation Program Risk
The Committee reviewed an analysis conducted by Meridian that analyzed the risks associated with Evergy’s compensation programs, including those for executive officers. This analysis concluded that the risks associated with Evergy’s compensation programs are not likely to have a material adverse effect on Evergy, and instead encourage overall balanced performance that supports sustainable shareholder value. Among the items the Committee considered were:
|
Executive Compensation | Summary and Analysis of Executive Compensation | Evergy 2022 Proxy Statement 48
TABLE OF CONTENTS Retirement Benefits Our NEOs participate in one of our tax-qualified, noncontributory defined benefit plans, and participate in other retirement plans depending on whether they were previously an officer of Great Plains Energy (Messrs. Bryant and Caisley and Ms. Humphrey) or Westar Energy (Mr. Greenwood). Messrs. Campbell and Andrews participate in the Company’s 401(k) Plan, and are eligible to participate in the DCP. Legacy Great Plains Energy NEOs NEOs that were officers of Great Plains Energy participate in a defined benefit plan sponsored by Kansas City Power & Light Company (“KCP&L”), which became the Evergy Retirement Plan on June 4, 2018 (the “Evergy Retirement Plan”), and was available to all KCP&L non-union employees hired or rehired on or before December 31, 2013. Benefits under the Evergy Retirement Plan are based on each employee’s years of service and the average annual base salary over a specified period. Evergy also has an unfunded Supplemental Executive Retirement Plan (“KCP&L SERP”) for executives who were formerly officers of Great Plains Energy. This unfunded plan provides the difference between the amount that would have been payable under the KCP&L Pension Plan (now the Evergy Retirement Plan) in the absence of Internal Revenue Service (“IRS”) tax code limitations and the amount actually payable under the KCP&L Pension Plan (now the Evergy Retirement Plan). It also provides a slightly higher benefit accrual rate than the KCP&L Pension Plan. Legacy Westar Energy NEOs NEOs who were officers of Westar Energy participate in a defined benefit plan sponsored by Westar Energy. That plan was merged with the Evergy Retirement Plan on November 30, 2019, and was available to all Westar Energy employees hired or rehired on or before May 30, 2018. NEOs who were officers of Westar Energy also participate in a Retirement Benefit Restoration Plan (the “Westar Restoration Plan”). This unfunded plan provides the difference between the amount that would have been payable under the Westar Pension Plan (now the Evergy Retirement Plan) in the absence of IRS tax code limitations and the amount actually payable under the Westar Pension Plan (now the Evergy Retirement Plan). Change-in-Control Severance Agreements The Committee believes that change-in-control severance agreements help ensure the continued service, dedication and objectivity of our officers, including our NEOs, in the event of a transaction that would result in a change-in-control of the Company. These agreements support the objective assessment and execution of potential changes in Evergy’s strategy and enhance retention by reducing concerns about employment continuity. We believe these change-in-control arrangements also create incentives for our officer team to build shareholder value and to obtain the highest value possible should we engage in a transaction, despite the risk of losing employment and potentially not having the opportunity to otherwise vest in equity awards. These agreements provide for payments and other benefits if the officer’s employment terminates for a qualifying event or circumstance, such as being terminated without “Cause” or leaving employment for “Good Reason,” as these terms are defined in the agreements. All the agreements require a double trigger so that both a change-in-control and a termination (actual or constructive) of the executive’s employment must occur to trigger benefits. The agreements do not provide for a “gross up” payment to cover any excise taxes that could be payable in connection with payments and benefits received under the agreement. Additional information, including a quantification of benefits that would have been received by NEOs had termination occurred on December 31, 2022, is found under the heading “Potential Payments Upon Termination or Change-in-Control” starting on page 60. Pursuant to our Executive Severance Plan (“Severance Plan”), Evergy’s Chief Executive Officer, Chief Financial Officer, President and Chief Operating Officer and any Vice President of Evergy who is appointed by the Evergy Board is entitled to certain benefits if the eligible officer’s employment is terminated by Evergy without Cause (as defined in the plan), other than in a situation that is governed by a change-in-control severance agreement. Additional information, including a quantification of benefits that would have been received by the applicable executives had termination occurred on December 31, 2022, is found under the heading “Executive Severance Plan” starting on page 62. No Employment Agreements All of the Company’s executive officers, including the NEOs, are employed at will. |
TABLE OF CONTENTS
The annual incentive plans for all employees (including officers) contain a diverse arrayExecutive Compensation | Summary and Analysis of measures that focus on the fundamental aspects of our business.
The performance measures for all incentive compensation programs are directly tied to Evergy’s annual and long-term financial results and/or business plans.
The maximum amount payable to non-officer employees under our annual incentive plan are modest and balanced.
The design and administration of Evergy’s Energy Partners’ incentive plan includes appropriate risk mitigators, including a mixture of formulaic funding and the discretionary allocation of individual payments by an independent oversight committee, funding based on multiple metrics and a mandatory deferral of 30% of the award. For the 2021 plan year, 70% of the award is paid in March 2022, 20% in MarchExecutive Compensation | Evergy 2023 and 10% in March 2024.Proxy Statement 47
|
TABLE OF CONTENTS Perquisites and Generally Available Employee Benefits Our NEOs are eligible to receive modest perquisites provided by or paid for by Evergy. These perquisites are generally consistent with those offered to executives at our peer group companies, and the Committee believes that they are important for retention and recruitment. The Committee also believes that Evergy, in general, benefits from these perquisites because the perquisites help promote the financial and physical health of our NEOs, thereby allowing them to focus on their jobs. As shown in the Summary Compensation Table on page 51, all NEOs are eligible for comprehensive financial planning services up to a maximum of $17,670 and executive health physicals through two company selected providers. The NEOs are also eligible for employment benefits that are generally available to all employees, such as participation in a 401(k) plan and medical and life insurance. Committee Consideration of Compensation Program Risk The Committee reviewed an analysis conducted by Meridian that analyzed the risks associated with Evergy’s compensation programs, including those for executive officers. This analysis concluded that the risks associated with Evergy’s compensation programs are not likely to have a material adverse effect on Evergy, and instead encourage overall balanced performance that supports sustainable shareholder value. Among the items the Committee considered were: The AIPs for all employees (including officers) contain a diverse array of measures that focus on the fundamental aspects of our business. The performance measures for all incentive compensation programs are directly tied to Evergy’s annual and long-term financial results and/or business plans. The maximum amount payable to non-officer employees under our AIP are modest and balanced. The design and administration of Evergy’s Energy Partners’ incentive plan includes appropriate risk mitigators, including a mixture of formulaic funding and the discretionary allocation of individual payments by an independent oversight committee, funding based on multiple metrics and a mandatory deferral of 30% of the award. For the 2022 plan year, 70% of the award is paid in March 2023, 20% in March 2024 and 10% in March 2025. The officer compensation program design provides a balanced mix of cash and equity, annual and long-term incentives and diverse performance objectives. Evergy currently does not grant stock options. Evergy (for non-officers) and the Committee (for officers) have the ability to adjust cash and equity incentive program payouts if the payouts are not justified by performance. Evergy has the ability to “clawback” officer annual incentive compensation and LTIP performance awards in the event of a restatement of or other inaccuracy in our financial statements. Officers are subject to share ownership and retention guidelines.
The Board oversees Evergy’s enterprise risk management and mitigation programs, including the possible impacts of variables on the earnings of Evergy, which are important aspects of Evergy’s incentive compensation plans.
The officers’ annual incentive plan and LTIP performance grants have a “stretch” performance level to flatten the steepness of the performance payout curve and further reinforce the appropriate behavioral incentives.
Under the LTIP performance awards in the event of a restatement of or other inaccuracy in our financial statements.
Officers are subject to share ownership and retention guidelines. All NEOs have met or are on track to meet these requirements. The Board oversees Evergy’s ERM and mitigation programs, including the possible impacts of variables on the earnings of Evergy, which are important aspects of Evergy’s incentive compensation plans. The officers’ AIP and LTIP performance grants have a “stretch” performance level to flatten the steepness of the performance payout curve and further reinforce the appropriate behavioral incentives. Under the relative TSR performance-based RSUs, any payout is capped at target or 100% if TSR performance is negative even if a greater award is prescribed by the performance objectives. Tax and Accounting Implications In addition to our executive compensation objectives and design principles, we consider tax and accounting implications when designing and administering our compensation programs. One such consideration is Internal Revenue Code Section 162(m), which limits our ability to deduct compensation paid to each covered officer for tax purposes to $1 million annually. Section 162(m) was amended and expanded under the federal tax bill enacted at the end of 2017. Beginning in 2018, covered employees include the principal executive officer, principal financial officer and next three highest paid named executive officers, and once an individual becomes a covered employee, that individual will remain a covered employee for all future years. As a result, beginning in 2018, compensation paid to our covered employees in excess of $1 million, including annual and long-term incentive and equity awards, is not deductible for tax purposes unless it qualifies for transition relief applicable to certain binding written performance-based compensation arrangements in place as of November 2, 2017. No assurance can be given that any future compensation will qualify for the transition relief. Although the Committee considers tax deductibility in making its compensation decisions, the Committee does not believe that compensation decisions should be determined solely by the amount of compensation that is deductible for federal income tax purposes. As a result, the Committee retains the discretion to authorize payments that may not be deductible. The Committee also considers the accounting consequences of its compensation decisions. Executive Compensation | Summary and Analysis of Executive Compensation | Evergy 2023 Proxy Statement 48 |
TABLE OF CONTENTS Compensation Governance Practices We believe our 20212022 executive compensation decisions demonstrate our commitment to paying for performance and such decisions are further supplemented by sound compensation policies and practices, including: • | Independent Committee. The Committee was comprised of fivefour directors at the end of 2021,2022, each of whom is independent under the NYSENasdaq listing standards, including the enhanced independence standards for members of the compensation committee, and a “non-employee director” under the Exchange Act. |
• | Independent Consultant. For 2021,2022, the Committee directly retained Meridian, an independent compensation consultant, to evaluate, and provide advice with respect to, our executive compensation program. |
Executive Compensation | Summary and Analysis of Executive Compensation | Evergy 2022 Proxy Statement 49
|
TABLE OF CONTENTS
• | Executive Sessions. Time is allocated at each regular Committee meeting for the Committee to meet in executive session without the presence of management. The Committee at times will include its independent compensation consultant or other advisors for all or a part of these sessions. |
• | Board Oversight of Succession. The Committee and Board regularly review succession plans for our executive officers, including our NEOs. |
• | Stock Ownership Guidelines. We have significant stock ownership and holding guidelines for all of our executive officers, to be achieved within five years of their initial appointment as an executive. Our Chief Executive Officer is expected to hold Evergy common stock equal to at least six times base salary within that period. Other executive officers, including the other NEOs, are expected to hold Evergy common stock equal to either two or three times their base salaries, as applicable. |
• | Clawback Policy. We have the ability to recover cash incentive compensation and equity awards from senior executives in the event of a restatement of or other inaccuracy in our financial statements. |
• | Risk Assessment of Compensation Plans. We annually conduct or review a risk assessment to evaluate whether our compensation program creates any risks that may have a material adverse effect on us. |
• | “Double Trigger” Change-in-Control Agreements. Our Change-in-Control Severance Agreements have a “double trigger” that requires both a change-in-control and qualifying termination of employment prior to the payment of severance benefits, if any. |
• | No Tax “Gross-Ups” in Change-in-Control Agreements. The Change-in-Control Severance Agreements that govern future transactions do not contain any excise tax gross-up features. |
• | No Employment Agreements. We do not have employment agreements with any of our executive officers, including the NEOs. |
• | Standardized Equity Grant Schedule. Our annual equity grants occur in early March, which is after we release financial results for the prior fiscal year. In addition, equity incentives that are expressed as a dollar target are converted into equity awards using an average closing price of our stock over the preceding month, which minimizes the ability to use equity grants for speculative purposes. |
• | Generally No Dividend Payments for Unvested Awards. Dividend and/or dividend equivalents are generally not paid on unvested performance awards, unless and until such awards vest. In addition, for time-based equity incentives, dividends that are reinvested in the form of additional time-based equity incentives are forfeited if the incentive does not vest. |
• | No Stock Options. We do not currently grant stock options. |
• | No Repricing or Backdating. If we were to grant stock options in the future, our LTIP prohibits the repricing of stock options without shareholder approval. We also do not backdate equity awards. |
• | Alignment with Shareholder Interests. A significant portion of each executive officer’s compensation depends on our performance in an effort to align the economic interests of our executive officers with the interests of our shareholders. |
• | Short Selling, Hedging and Pledging. Our insider trading policy prohibits all directors, executive officers and employees from engaging in short sales and hedging transactions relating to our common stock, and from pledging the same as collateral. |
Executive Compensation | Summary and Analysis of Executive Compensation | Evergy 20222023 Proxy Statement 5049 |
TABLE OF CONTENTS | Compensation Committee Report | |
The Compensation and Leadership Development Committee of the Board reviewed and discussed with management the Compensation Discussion and Analysis contained in this proxy statement and, based on these reviews and discussions, recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement and incorporated by reference into the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021.2022. March 4, 20221, 2023 Compensation and Leadership Development
Committee
Mollie Hale Carter,Sandra A.J. Lawrence, Chair
B. Anthony Isaac
Senator Mary L. Landrieu
Sandra A.J. Lawrence
Sandra J. Price Executive Compensation | Compensation Committee Report | Evergy 20222023 Proxy Statement 5150 |
TABLE OF CONTENTS | Executive Compensation Tables | |
The following tables and narrative show the compensation awarded to and earned by our NEOs. We have omitted the column entitled “Option Awards” because our NEOs did not receive option awards during the years presented. Summary Compensation Table | Name and
Principal Position | | Year | | Salary ($) | | Bonus
($)(1) | | Stock
Awards ($)(2) | | Non-Equity
Incentive Plan
Compensation
($)(3) | | Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings ($)(4) | | All Other
Compensation
($)(5)(6) | | Total ($) | | Name and
Principal Position | | Year | | Salary ($) | | Bonus
($)(1) | | Stock
Awards ($)(2) | | Non-Equity
Incentive Plan
Compensation
($)(3) | | Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings ($)(4) | | All Other
Compensation
($)(5)(6) | | Total ($) | | | Mr. David A. Campbell
President and Chief Executive Officer | | | 2021 | | | 980,769 | | | 1,250,000 | | | 7,306,661 | | | 1,487,500 | | | — | | | 113,152 | | | 11,138,082 | | Mr. David A. Campbell
President and Chief Executive Officer | | | 2022 | | | 1,029,423 | | | — | | | 4,314,667 | | | 1,487,063 | | | — | | | 57,164 | | | 6,888,316 | | | Mr. Kirkland B. Andrews
Executive Vice President and Chief Financial Officer | | | 2021 | | | 592,308 | | | 1,200,000 | | | 4,146,489 | | | 833,000 | | | — | | | 125,131 | | | 6,896,928 | | | 2021 | | | 980,769 | | | 1,250,000 | | | 7,306,661 | | | 1,487,500 | | | — | | | 113,152 | | | 11,138,082 | | | Mr. Kevin E. Bryant
Executive Vice President and Chief Operating Officer | | | 2021 | | | 615,000 | | | — | | | 1,306,248 | | | 585,480 | | | 146,165 | | | 102,974 | | | 2,755,867 | | Mr. Kirkland B. Andrews
Executive Vice President and Chief Financial Officer | | | 2022 | | | 717,163 | | | — | | | 1,369,255 | | | 828,713 | | | — | | | 138,262 | | | 3,053,393 | | | 2020 | | | 570,000 | | | — | | | 1,166,622 | | | 701,328 | | | 317,206 | | | 87,692 | | | 2,842,848 | | | 2021 | | | 592,308 | | | 1,200,000 | | | 4,146,489 | | | 833,000 | | | — | | | 125,131 | | | 6,896,928 | | | 2019 | | | 520,000 | | | — | | | 568,339 | | | 505,440 | | | 365,574 | | | 94,350 | | | 2,053,703 | | Mr. Kevin E. Bryant
Executive Vice President and Chief Operating Officer | | | 2022 | | | 629,712 | | | — | | | 1,202,233 | | | 582,120 | | | 24,379 | | | 94,023 | | | 2,532,467 | | | Mr. Charles A. Caisley(7)
Senior Vice President — Public Affairs and Chief Customer Officer | | | 2021 | | | 462,154 | | | — | | | 1,275,428 | | | 386,750 | | | 156,470 | | | 59,082 | | | 2,339,884 | | | 2021 | | | 615,000 | | | — | | | 1,306,248 | | | 585,480 | | | 146,165 | | | 102,974 | | | 2,755,867 | | | Mr. Greg A. Greenwood
Executive Vice President and Chief Strategy Officer | | | 2021 | | | 530,000 | | | — | | | 823,720 | | | 504,560 | | | 204,873 | | | 83,325 | | | 2,146,478 | | | 2020 | | | 570,000 | | | — | | | 1,166,622 | | | 701,328 | | | 317,206 | | | 87,692 | | | 2,842,848 | | | 2020 | | | 520,000 | | | 8,000 | | | 912,247 | | | 639,808 | | | 704,166 | | | 80,208 | | | 2,864,429 | | Mr. Charles A. Caisley
Senior Vice President,
Public Affairs and Chief Customer Officer | | | 2022 | | | 514,711 | | | — | | | 719,171 | | | 386,694 | | | 9,983 | | | 67,698 | | | 1,698,257 | | | 2019 | | | 520,000 | | | — | | | 568,339 | | | 505,440 | | | 541,670 | | | 73,079 | | | 2,208,528 | | | 2021 | | | 462,154 | | | — | | | 1,275,428 | | | 386,750 | | | 156,470 | | | 59,082 | | | 2,339,884 | | | Former Named Executive Officers | | Ms. Heather A. Humphrey
Senior Vice President, General Counsel and Corporate Secretary | | | 2022 | | | 530,202 | | | — | | | 740,810 | | | 398,244 | | | 18,115 | | | 74,675 | | | 1,762,046 | | | Mr. Terry Bassham(8)
Former President and Chief Executive Officer | | | 2021 | | | 18,269 | | | — | | | — | | | — | | | — | | | 25,494 | | | 43,763 | | | 2021 | | | 515,000 | | | — | | | 904,985 | | | 398,412 | | | 115,796 | | | 81,351 | | | 2,015,544 | | | 2020 | | | 950,000 | | | — | | | 5,812,071 | | | 1,461,100 | | | 629,210 | | | 147,075 | | | 8,999,456 | | | 2020 | | | 500,000 | | | — | | | 818,653 | | | 499,850 | | | 393,642 | | | 73,549 | | | 2,285,694 | | | 2019 | | | 950,000 | | | — | | | 2,768,830 | | | 1,154,250 | | | 750,052 | | | 170,843 | | | 5,793,975 | | Former Named Executive Officer | | | Mr. Anthony D. Somma(9)
Former Executive Vice President and Chief Financial Officer | | | 2021 | | | 97,058 | | | — | | | — | | | — | | | — | | | 3,045,040 | | | 3,142,098 | | Mr. Greg A. Greenwood(6)
Executive Vice President and Chief Strategy Officer | | | 2022 | | | 288,952 | | | 834 | | | 740,107 | | | — | | | 319,352 | | | 1,258,876 | | | 2,608,121 | | | 2020 | | | 515,000 | | | — | | | 963,787 | | | 633,656 | | | 682,894 | | | 54,087 | | | 2,849,424 | | | 2021 | | | 530,000 | | | — | | | 823,720 | | | 504,560 | | | 204,873 | | | 83,325 | | | 2,146,478 | | | 2019 | | | 495,000 | | | — | | | 541,080 | | | 481,140 | | | 425,081 | | | 49,280 | | | 1,991,581 | | | 2020 | | | 520,000 | | | 8,000 | | | 912,247 | | | 639,808 | | | 704,166 | | | 80,208 | | | 2,864,429 | |
(1)
| Mr. Campbell was hired as Evergy’s new President and Chief Executive Officer on January 4, 2021. Mr. Andrews was hired as Evergy’s new Executive Vice President and Chief Financial Officer on February 22, 2021.2021 (the “CFO Transition”). The amounts shown in this column for Mr. Campbell and Mr. Andrews reflect inducement cash bonuses granted pursuant to the offer letter for each. The bonuses must be repaid to the Company if either one resigns from the Company before the first anniversary of his start date, subject to standard exceptions. |
(2)
| The amounts shown in this column generally reflect the aggregate grant date fair values of equity awards granted each year, computed in accordance with the FASB ASC Topic 718. See note 10 to the consolidated financial statements included in our 2022 Annual Report, on Form 10-K for the fiscal year ended December 31, 2021, for a discussion of the assumptions used in calculating these amounts. The amounts shown exclude the effect of estimated forfeitures, as required by SEC rules. The number of time-based restricted stock, restricted stock unitsRSUs and performance-based restricted stock unitsRSUs awarded in 2021,2022, together with their grant date values, is disclosed in the Grants of Plan-Based Awards during 20212022 on page 5453. These amounts do not reflect actual compensation realized by the NEOs and are not a guarantee of the amount that the NEOs will receive from the long-term incentives. The actual compensation will be based on our common stock price at vesting and the performance level achieved with respect to the performance-based restricted stock unitsRSUs for the applicable performance period. The amounts shown in this column for 20212022 reflect the values at the grant dates of Evergy time-based restricted stock, restricted stock unitsRSUs and Evergy performance-based restricted stock unitsRSUs based upon achieving the target level of performance, which was considered the probable outcome as of the grant date. The 2021 amounts shown for Mr. Andrews include $125,883 of common stock awarded for service as an independent non-employee director. See footnote 6 below for further information. |
Executive Compensation | Executive Compensation Tables | Evergy 20222023 Proxy Statement 5251 |
TABLE OF CONTENTS The following table shows the aggregate grant date fair value of 20212022 performance-based equityRSUs assuming maximum levels of performance. For Mr. Campbell and Mr. Andrews, the amounts reflect inducement equity awards valued at $3 million and $2.6 million, respectively, granted pursuant to the offer letter for each. See “Discretionary Cash or Stock Awards” above for additional information, including a forfeiture summary. Mr. Bassham retired on January 4, 2021, and Mr. Somma departed Evergy on March 4, 2021. Accordingly, neither received a 2021 time-based restricted stock unit or performance-based restricted stock unit award. | Mr. Campbell | | | 6,713,0286,395,688
| | | Mr. Andrews | | | 2,266,6502,029,664
| | | Mr. Bryant | | | 1,991,4681,782,086
| | | Mr. Caisley | | | 973,0881,066,006
| | | Ms. Humphrey | | | 1,098,112 | | | Former Named Executive Officer | | | | | | Mr. Greenwood | | | 1,255,8201,097,070
| |
(3)
| The amounts shown in this column are cash awards earned under the Evergy incentive plans. |
(4)
| The amounts shown in this column include the aggregate of the increase in actuarial values of each of the officer’s benefits under our pension plans, KCP&L SERP or Westar Restoration Plan, as applicable, and the above-market earnings on compensation that is deferred on a non-tax qualified basis. These values do not represent cash received by the NEOs in the indicated years. Year-over-year changes in pension value are driven in part by changes in actuarial assumptions. Following are the amounts of these items attributable to each NEO for 2021:2022: |
| Name | | Change in
Pension
Value
($) | | Change in
SERP
($) | | Above Market
Earnings on
Deferred
Compensation
($) | | Name | | Change in
Pension
Value
($)(b) | | Change in
SERP
($)(c) | | Above Market
Earnings on
Deferred
Compensation
($) | | | Mr. Campbell(a) | | | — | | | — | | | — | | Mr. Campbell(a) | | | — | | | — | | | — | | | Mr. Andrews(a) | | | — | | | — | | | — | | Mr. Andrews(a) | | | — | | | — | | | — | | | Mr. Bryant | | | 37,400 | | | 88,131 | | | 20,634 | | Mr. Bryant | | | — | | | — | | | 24,379 | | | Mr. Caisley | | | 41,352 | | | 110,032 | | | 5,086 | | Mr. Caisley | | | — | | | — | | | 9,983 | | | Mr. Greenwood | | | 63,256 | | | 89,582 | | | 52,035 | | Ms. Humphrey | | | — | | | — | | | 18,115 | | | Former Named Executive Officers | | Former Named Executive Officer | | | Mr. Bassham | | | — | | | — | | | 76,412 | | Mr. Greenwood | | | 113,871 | | | 138,262 | | | 67,309 | | | Mr. Somma | | | 24,520 | | | — | | | 8,956 | | |
(a)
| The pension plans were closed to new hires at Kansas City Power & Light CompanyKCP&L as of January 1, 2014 and Westar Energy Inc. as of May 31, 2018. Since Messrs. Campbell and Andrews’ employment began after those dates, they were not eligible to participate in the pension. |
(5) (b)
| The actuarial values under our pension plans decreased by $273,899 for Mr. Bryant, $202,520 for Mr. Caisley, and $199,670 for Ms. Humphrey. Since this is not an increase in value, it is represented as zero above. |
(c)
| The actuarial values under our Supplemental Executive Retirement Plan decreased by $311,100 for Mr. Bryant, $88,972 for Mr. Caisley, and $238,805 for Ms. Humphrey. Since this is not an increase in value, it is represented as zero above. |
(5)
| These amounts include the value of perquisites and personal benefits that are not available on a non-discriminatory basis to all employees, as well as other compensation items discussed in this footnote. The amounts in this column consist of, as applicable for each NEO: (A) employer match of employee contributions to our 401(k) plans; (B) employer match applying the 401(k) matching formula to deferred amounts above the IRS limits to our DCP, as described in the “Nonqualified Deferred Compensation” section of this proxy; (C) executive financial planning services; (D) parking; (E) matched charitable donations; (F) executive health physicals; (G) reimbursement for transition expenses pursuant to the offer lettersletter for Mr. CampbellAndrews; (H) severance pay for Mr. Greenwood in connection with his termination by the Company without Cause; and (I) for Mr. Andrews; and (H) cash payments pursuant to the Westar CIC Agreement. See “Note Regarding Transitions—Former CEO and CFO Transition” on page 37 for additional information.Greenwood, compensation received as a consultant. All amounts shown are in dollars. |
| Name | | (A) | | (B) | | (C) | | (D) | | (E) | | (F) | | (G) | | (H) | | Total | | Name | | (A) | | (B) | | (C) | | (D) | | (E) | | (F) | | (G) | | (H) | | (I) | | Total | | | Mr. Campbell | | | 29,000 | | | — | | | 12,500 | | | 3,180 | | | — | | | — | | | 68,422 | | | — | | | 113,152 | | Mr. Campbell | | | 30,500 | | | — | | | 17,234 | | | 3,180 | | | 3,750 | | | 2,500 | | | — | | | — | | | — | | | 57,164 | | | Mr. Andrews | | | 29,000 | | | — | | | — | | | 2,280 | | | — | | | — | | | 68,851 | | | — | | | 100,131 | | Mr. Andrews | | | 30,500 | | | — | | | 11,860 | | | — | | | — | | | 2,520 | | | 93,382 | | | — | | | — | | | 138,262 | | | Mr. Bryant | | | 17,400 | | | 61,580 | | | 17,670 | | | 1,524 | | | 4,800 | | | — | | | — | | | — | | | 102,974 | | Mr. Bryant | | | 18,300 | | | 54,629 | | | 17,670 | | | 1,524 | | | 1,900 | | | — | | | — | | | — | | | — | | | 94,023 | | | Mr. Caisley | | | 17,400 | | | 35,882 | | | 830 | | | 1,380 | | | 1,200 | | | 2,390 | | | — | | | — | | | 59,082 | | Mr. Caisley | | | 18,300 | | | 35,805 | | | 10,963 | | | 1,380 | | | 1,250 | | | — | | | — | | | — | | | — | | | 67,698 | | | Mr. Greenwood | | | 13,050 | | | 39,591 | | | 17,760 | | | — | | | 11,055 | | | 1,869 | | | — | | | — | | | 83,325 | | Ms. Humphrey | | | 18,300 | | | 37,435 | | | 15,560 | | | 1,380 | | | 2,000 | | | — | | | — | | | — | | | — | | | 74,675 | | | Former Named Executive Officers | | Former Named Executive Officer | | | Mr. Bassham | | | 7,824 | | | — | | | 17,670 | | | — | | | — | | | — | | | — | | | — | | | 25,494 | | Mr. Greenwood | | | 13,725 | | | 17,676 | | | 17,645 | | | — | | | 4,200 | | | 1,546 | | | — | | | 1,183,129 | | | 20,953 | | | 1,258,876 | | | Mr. Somma | | | 7,398 | | | 8,917 | | | 1,775 | | | 570 | | | 2,175 | | | — | | | — | | | 3,024,205 | | | 3,045,040 | | |
(6)
| Mr. Andrews served as a non-employee directorGreenwood’s date of Evergy untiltermination was July 1, 2022, and his appointment as Executive Vice President and Chief Financial Officer on February 2, 2021. In connection with his service as a non-employee directorannual salary was prorated for the days he was employed in 2021 until February 22, 2021, Mr. Andrews received the following standard director fees:2022. |
| Mr. Andrews | | | 25,000 | | | 125,883 | | | — | | | — | | | 150,883 | |
Executive Compensation | Executive Compensation Tables | Evergy 20222023 Proxy Statement 5352 |
TABLE OF CONTENTS (a)
| The amount represents cash retainers for service on the Board and its committees. As discussed in “Election to Defer Compensation” above, directors may elect to (i) convert all or part of their cash retainers into DSUs, or (ii) defer receipt of all or part of their cash retainer. The value of director fees paid in cash is included in the “All Other Compensation” column of the Summary Compensation Table. |
(b)
| The amount shown is the aggregate grant date fair value of equity granted in 2021 computed in accordance with the FASB ASC Topic 718. The amounts reflect the value of equity retainers issued by the Company in 2021, and, as discussed in “Election to Defer Compensation” above, may have been deferred by the director for receipt in a subsequent year. The value of stock awards is included in the “Stock Awards”column of the Summary Compensation Table. |
(c)
| The amounts shown represent the above-market earnings during 2021 on nonqualified deferred compensation. |
(d)
| The amounts shown reflect matches by the Company for qualifying charitable contributions made by the directors. |
(7)
| In connection with a realignment of duties and to award special achievement in August 2021, Mr. Caisley received a $600,000 LTIP time-based award that will cliff vest in three years, in addition to a base salary adjustment from $434,000 to $500,000 effective in August 2021. Mr. Caisley was not a NEO in 2019 or 2020. |
(8)
| Mr. Bassham’s retirement date was January 4, 2021 and his annual salary was pro-rated for the days he was employed in 2021. For Mr. Bassham in 2020, the “Stock Awards” column includes 24,676 legacy 2018 performance shares awarded by Great Plains Energy that were modified in December 2020 in connection with his retirement. In accordance with SEC disclosure rules, the incremental fair value of the awards of $1,134,083 was reported in this table. See footnote (d) to the table “Option Exercises and Stock Vested” for additional information regarding the 2021 vesting. |
(9)
| Mr. Somma’s departure date was March 4, 2021 and his annual salary was pro-rated for the days employed in 2021. |
The following table provides information with respect to plan-based awards made by Evergy in 2021.2022. We omitted the “All Other Option Awards: Number of Securities Underlying Options” and “Exercise or Base Price of Option Awards” columns because no options were granted in 2021. Mr. Bassham retired on January 4, 2021, and Mr. Somma departed on March 4, 2021. Accordingly, neither received a 2021 incentive award grant.2022. Grants of Plan-Based Awards | | | | | | Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards | | Estimated Future Payouts
Under Equity Incentive Plan
Awards | | | All Other
Stock
Awards:
Number
of
Shares
of Stock
or Units
(#) | | Grant Date
Fair Value
of Stock
Awards
($) | | | | | | | Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards | | Estimated Future Payouts
Under Equity Incentive Plan
Awards | | | All Other
Stock
Awards:
Number
of
Shares
of Stock
or Units
(#) | | Grant Date
Fair Value
of Stock
Awards
($) | | | Name | | Grant Date | | Threshold
($) | | Target
($) | | Maximum
($) | | Threshold
(# of
shares) | | Target
(# of
shares) | |
Maximum
(# of
shares) | | Name | | Grant Date | | Threshold
($) | | Target
($) | | Maximum
($) | | Threshold
(# of
shares) | | Target
(# of
shares) | |
Maximum
(# of
shares) | | | Mr. Campbell | | | January 4, 2021(1) | | | 625,000 | | | 1,250,000 | | | 2,500,000 | | | — | | | — | | | — | | | — | | | — | | Mr. Campbell | | | February 14, 2022(1) | | | 643,750 | | | 1,287,500 | | | 2,575,000 | | | — | | | — | | | — | | | — | | | — | | | January 4, 2021(2) | | | — | | | — | | | — | | | — | | | — | | | — | | | 54,054 | | | 2,903,419 | | | March 1, 2022(2) | | | — | | | — | | | — | | | 16,554 | | | 55,179 | | | 110,358 | | | — | | | 3,197,844 | | | March 2, 2021(3) | | | — | | | — | | | — | | | 17,608 | | | 58,694 | | | 117,388 | | | — | | | 3,356,514 | | | March 1, 2022(3) | | | — | | | — | | | — | | | — | | | — | | | — | | | 18,393 | | | 1,116,823 | | | March 2, 2021(4) | | | — | | | — | | | — | | | — | | | — | | | — | | | 19,565 | | | 1,046,728 | | Mr. Andrews | | | February 14, 2022(1) | | | 358,750 | | | 717,500 | | | 1,435,000 | | | — | | | — | | | — | | | — | | | — | | | Mr. Andrews | | | January 4 , 2021(5) | | | — | | | — | | | — | | | — | | | — | | | — | | | 2,342 | | | 125,883 | | | March 1, 2022(2) | | | — | | | — | | | — | | | 5,253 | | | 17,511 | | | 35,022 | | | — | | | 1,014,832 | | | February 22, 2021(1) | | | 350,000 | | | 700,000 | | | 1,400,000 | | | — | | | — | | | — | | | — | | | — | | | March 1, 2022(3) | | | — | | | — | | | — | | | — | | | — | | | — | | | 5,837 | | | 354,423 | | | February 22, 2021(6) | | | — | | | — | | | — | | | — | | | — | | | — | | | 48,390 | | | 2,533,860 | | Mr. Bryant | | | February 14, 2022(1) | | | 252,000 | | | 504,000 | | | 1,008,000 | | | — | | | — | | | — | | | — | | | — | | | March 2, 2021(3) | | | — | | | — | | | — | | | 5,945 | | | 19,818 | | | 39,636 | | | — | | | 1,133,325 | | | March 1, 2022(2) | | | — | | | — | | | — | | | 4,613 | | | 15,375 | | | 30,750 | | | — | | | 891,043 | | | | | | March 2, 2021(4) | | | — | | | — | | | — | | | — | | | — | | | — | | | 6,606 | | | 353,421 | | | March 1, 2022(3) | | | — | | | — | | | — | | | — | | | — | | | — | | | 5,125 | | | 311,190 | | | Mr. Bryant | | | February 15, 2021(1) | | | 246,000 | | | 492,000 | | | 984,000 | | | — | | | — | | | — | | | — | | | — | | Mr. Caisley | | | February 14, 2022(1) | | | 167,400 | | | 334,800 | | | 669,600 | | | — | | | — | | | — | | | — | | | — | | | March 2, 2021(3) | | | — | | | — | | | — | | | 5,224 | | | 17,412 | | | 34,824 | | | — | | | 995,734 | | | March 1, 2022(2) | | | — | | | — | | | — | | | 2,579 | | | 9,197 | | | 18,394 | | | — | | | 533,0003 | | | March 2, 2021(4) | | | — | | | — | | | — | | | — | | | — | | | — | | | 5,804 | | | 310,514 | | | March 1, 2022(3) | | | — | | | — | | | — | | | — | | | — | | | — | | | 3,066 | | | 186,168 | | | Mr. Caisley | | | February 15, 2021(1) | | | 162,500 | | | 325,000 | | | 650,000 | | | — | �� | | — | | | — | | | — | | | — | | Ms. Humphrey | | | February 14, 2022(1) | | | 172,400 | | | 344,800 | | | 689,600 | | | — | | | — | | | — | | | — | | | — | | | March 2, 2021(3) | | | — | | | — | | | — | | | 2,552 | | | 8,508 | | | 17,016 | | | — | | | 486,544 | | | March 1, 2022(2) | | | — | | | — | | | — | | | 2,842 | | | 9,474 | | | 18,948 | | | — | | | 549,056 | | | March 2, 2021(4) | | | — | | | — | | | — | | | — | | | — | | | — | | | 2,836 | | | 151,726 | | | March 1, 2022(3) | | | — | | | — | | | — | | | — | | | — | | | — | | | 3,158 | | | 191,754 | | | August 12, 2021 | | | — | | | — | | | — | | | — | | | — | | | — | | | 9,459 | | | 637,158 | | Former Named Executive Officer | | | Mr. Greenwood | | | February 15, 2021(1) | | | 212,000 | | | 424,000 | | | 848,000 | | | — | | | — | | | — | | | — | | | — | | Mr. Greenwood | | | February 14, 2022(1) | | | 212,000 | | | 424,000 | | | 848,000 | | | — | | | — | | | — | | | — | | | — | | | March 2, 2021(3) | | | — | | | — | | | — | | | 3,294 | | | 10,980 | | | 21,960 | | | — | | | 627,910 | | | March 1, 2022(2) | | | — | | | — | | | — | | | 2,840 | | | 9,465 | | | 18,930 | | | — | | | 548,535 | | | March 2, 2021(4) | | | — | | | — | | | — | | | — | | | — | | | — | | | 3,660 | | | 195,810 | | | March 1, 2022(3) | | | — | | | — | | | — | | | — | | | — | | | — | | | 3,155 | | | 191,572 | |
(1)
| Reflects potential payments under our 2021 annual incentive plan,2022 AIP, measured at the grant date. The actual amounts earned for 20212022 are reported as Non-Equity Incentive Plan Compensation in the Summary Compensation Table. |
(2)
| Consists of three substantially equal awards granted on January 4, 2021, which will vest annually over three years assuming continued employment at the applicable vesting date. These inducement restricted stock awards were granted to Mr. Campbell pursuant to his offer letter dated December 3, 2020 and appointment as Evergy’s new President and Chief Executive Officer on January 4, 2021. See footnote (2)(a) to the “Outstanding Equity Awards at Fiscal Year End” table below. |
(3)
| Consists of performance-based restricted stock unitsRSUs under the LTIP, for the 2021-20232022-2024 performance period that vest on March 2, 2024.1, 2025. Performance-based restricted stock unitsRSUs are payable in common stock, cash, or a combination of stock and cash after the end of the performance period. Two-thirds60% of actual paymentsRSUs paid depend on the three-year TSR compared to the EEI Index, and the remainder one-third is subject to33.3% of RSUs paid depend on Evergy’s cumulative adjusted earnings per share (EPS)EPS over the three years.years, and the remaining 6.7% of RSUs paid is dependent on an environmental measure based on adding renewable generation consistent with the plan. The awards can range from 0% to 200% of the target amount. Dividend equivalents will be paid in cash after the end of the period on the number of shares earned. The grant date fair value, which is calculated in accordance with ASC Topic 718 (excluding the effect of estimated forfeitures), is $59.03 per share for the two-thirds subject to TSR and $53.50 per share for the one-third subject to adjusted EPS and reflects the target number of shares.shares and is $56.11 per share for the 60% subject to TSR and $60.72 per share for the 40% measured according to adjusted EPS and environmental factors. |
(4) (3)
| Consists of time-based restricted stock unitsRSUs under the LTIP that vest on March 2, 2024.1, 2025. The grant date fair value, which is calculated in accordance with ASC Topic 718 (excluding the effect of estimated forfeitures) is $53.50$60.72 per share. |
Executive Compensation | Executive Compensation Tables | Evergy 2022 Proxy Statement 54
|
TABLE OF CONTENTS
(5)
| Mr. Andrews received this award as a director, before he transitioned to CFO. The amount shown is the aggregate grant date fair value of equity granted in 2021 computed in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification(“ASC”) Topic 718. The amount reflects the value of equity retainers issued by the Company in 2021. |
(6)
| Consists of time-based restricted stock units under the LTIP granted as an inducement to Mr. Andrews pursuant to his offer letter dated January 30, 2021 and appointment as Evergy’s new Executive Vice President and Chief Financial Officer on February 22, 2021. These RSUs vest one-third per year on the anniversary of his start date of February 22, 2021, assuming continued employment at the applicable vesting date. See footnote (2)(b) to the “Outstanding Equity Awards at Fiscal Year End” table below. |
Narrative Analysis of Summary Compensation Table
and Grants of Plan-Based Awards Table See the “Compensation Discussion and Analysis” portion of this proxy statement for further information regarding the information disclosed in the Summary Compensation Table and the Grants of Plan-Based Awards Table. Executive Compensation | Executive Compensation Tables | Evergy 20222023 Proxy Statement 5553 |
TABLE OF CONTENTS Outstanding Equity Awards at Fiscal Year-End The following table provides information regarding the outstanding equity awards held by each of the NEOs as of December 31, 2021.2022. There are no outstanding options. Mr. Somma departed on March 4, 2021 and did not hold any equity awards as of December 31, 2021. | | | | Stock Awards | | | | | Stock Awards | | | Name | | Number of
Shares or Units
of Stock That
Have Not
Vested (#)(1)(2) | | Market Value of
Shares or Units
of Stock
That Have Not
Vested ($)(2)(3) | | Equity
Incentive Plan
Awards: Number of
Unearned Shares,
Units or Other Rights
That Have Not
Vested (#)(4) | | Equity
Incentive Plan
Awards: Market or
Payout Value of
Unearned Shares, Units or Other Rights
That Have Not
Vested ($)(3)(4) | | Name | | Number of
Shares or Units
of Stock That
Have Not
Vested (#)(1)(2) | | Market Value of
Shares or Units
of Stock
That Have Not
Vested ($)(2)(3) | | Equity
Incentive Plan
Awards: Number of
Unearned Shares,
Units or Other Rights
That Have Not
Vested (#)(4) | | Equity
Incentive Plan
Awards: Market or
Payout Value of
Unearned Shares,
Units or Other Rights
That Have Not
Vested ($)(3)(4) | | | Mr. Campbell | | | 56,283 | | | 3,861,605 | | | 58,694 | | | 4,026,995 | | Mr. Campbell | | | 58,098 | | | 3,656,111 | | | 113,873 | | | 7,166,028 | | | Mr. Andrews | | | 56,914 | | | 3,904,885 | | | 19,818 | | | 1,359,713 | | Mr. Andrews | | | 47,775 | | | 3,006,458 | | | 37,329 | | | 2,349,114 | | | Mr. Bryant | | | 24,717 | | | 1,695,819 | | | 27,937 | | | 1,916,758 | | Mr. Bryant | | | 24,202 | | | 1,523,042 | | | 32,787 | | | 2,063,286 | | | Mr. Caisley | | | 18,909 | | | 1,297,353 | | | 11,832 | | | 811,794 | | Mr. Caisley | | | 20,199 | | | 1,271,131 | | | 17,705 | | | 1,114,176 | | | Mr. Greenwood | | | 21,676 | | | 1,487,208 | | | 19,210 | | | 1,317,998 | | Ms. Humphrey | | | 17,576 | | | 1,106,078 | | | 20,143 | | | 1,267,599 | | | Former Named Executive Officers | | Former Named Executive Officer | | | Mr. Bassham | | | 48,988 | | | 3,361,040 | | | 11,796 | | | 809,324 | | Mr. Greenwood | | | 5,309 | | | 334,095 | | | 5,922 | | | 372,671 | |
(1)
| Includes reinvested dividends and/or dividend equivalents on restricted stock and stock unitsRSUs that carry the same restrictions. |
(2)
| Reflects time-based restricted stock and time-based restricted stock unitsRSUs granted by Evergy, that were not vested as of December 31, 2021.2022. The following table provides the grant and vesting dates and number of unvested shares (including reinvested dividend shares) for each of the outstanding grants as of December 31, 2021.2022. Also included are Evergy performance-based restricted stock units,RSUs, which, as of December 31, 2021,2022, were earned but not yet vested. RSAsRestricted stock awards (“RSAs”) for Mr. Campbell, granted by Evergy on January 4, 2021, follow the terms of his award agreements and provide for a cash payment to Mr. Campbell at the time of a dividend payment. Mr. Greenwood’s RSUs have been prorated to take into account his July 1, 2022 date of termination. |
| Mr. Campbell | | | January 4, 2021 | | | December 31, 2023 (a) | | | 36,03618,018
| | | March 2, 2021 | | | March 2, 2024 | | | 20,24721,002
| | | March 1, 2022 | | | March 1, 2025 | | | 19,078 | | | Mr. Andrews | | | February 22, 2021 | | | February 22, 2023 (b) | | | 50,07817,314
| | | February 22, 2021 | | | February 22, 2024 (b) | | | 17,315 | | | March 2, 2021 | | | March 2, 2024 | | | 6,8367,091
| | | March 1, 2022 | | | March 1, 2025 | | | 6,054 | | | Mr. Bryant | | | March 1, 20193, 2020 | | | March 1, 20223, 2023 | | | 11,187
| | | March 1, 2019
| | | March 1, 2022
| | | 3,7548,746
| | | March 3, 2020 | | | March 3, 2023 | | | 3,7693,910
| | | March 2, 2021 | | | March 2, 2024 | | | 6,0066,230
| | | March 1, 2022 | | | March 1, 2025 | | | 5,316 | | | Mr. Caisley | | | March 1, 20193, 2020 | | | March 1, 20223, 2023 | | | 3,867
| | | March 1, 2019
| | | March 1, 2022
| | | 1,2982,762
| | | March 3, 2020 | | | March 3, 2023 | | | 1,1901,235
| | | March 2, 2021 | | | March 2, 2024 | | | 2,9353,044
| | | August 12, 2021 | | | August 12, 2024 | | | 9,619
| | | Mr. Greenwood
| | | March 1, 2019
| | | March 1, 2022
| | | 11,1879,978
| | | March 1, 20192022 | | | March 1, 20222025 | | | 3,7543,180
| | | Ms. Humphrey | | | March 3, 2020 | | | March 3, 2023 | | | 6,138 | | | March 3, 2020 | | | March 3, 2023 | | | 2,9482,743
| | | March 2, 2021 | | | March 2, 2024 | | | 3,7883,818
| | | December 15, 2021 | | | December 15, 2024 | | | 1,602 | | | March 1, 2022 | | | March 1, 2025 | | | 3,276 | | | Former Named Executive Officers(c) | | | Officer | | | | | | | | | Mr. BasshamGreenwood(d)(c) | | | March 1, 2019
| | | March 1, 2022
| | | 33,517
| | | March 1, 2019
| | | March 1, 2022
| | | 11,247
| | | March 3, 2020 | | | March 3, 2023 | | | 4,2245,309
| |
Executive Compensation | Executive Compensation Tables | Evergy 2022 Proxy Statement 56
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TABLE OF CONTENTS
(a)
| Mr. Campbell was granted an inducement equity award of restricted stock awardsRSAs under the long-term incentive planLTIP valued at $3 million in three substantially equal RSA awards with the number of RSAs calculated based on the closing price of Evergy common stock upon signing his offer letter, which was 54,054 RSAs. The first RSA award vested on December 31, 2021.2021 and the second RSA vested on December 31, 2022. Assuming continued employment through each applicable vesting date, the second RSA award vests on December 31, 2022, and the third RSA award vests on December 31, 2023. |
Executive Compensation | Executive Compensation Tables | Evergy 2023 Proxy Statement 54 |
TABLE OF CONTENTS (b)
| Mr. Andrews was granted an inducement equity award of RSUs under the long-term incentive planLTIP valued at $2.6 million with the number of RSUs calculated based on the closing price of Evergy common stock upon signing his offer letter. The first RSU vested on February 22, 2022. Assuming continued employment through each applicable vesting date, the RSUssecond RSU will vest in one-third increments on each of the first three anniversaries of the grant date, February 22, 2021.2023 and the third RSU vests on February 22, 2024. |
(c)
| The June 2018 restricted stock unit award granted toReflects the prorated portion of Mr. Somma by the Westar Energy BoardGreenwood’s 2020 through 2022 performance-based RSUs that were earned but unvested as of Directors prior to the merger vested in connection with Mr. Somma’s departure, whereas the 2019 and 2020 grants were forfeited, and Mr. Somma had no outstanding equity awards at fiscal year-end 2021.December 31, 2022. |
(d)
| In March 2018, the Great Plains Energy Board of Directors granted equity awardsTotals may not add due to Mr. Bassham that were scheduled to vest on March 1, 2021. Those Great Plains Energy award agreements did not include provisions for the treatment of the award upon a qualifying retirement and therefore the awards would be forfeited upon termination of employment. Evergy’s current form of award agreement, however, does provide for treatment of awards upon a qualifying retirement: if a grant recipient attains the age of 60 and has been employed by Evergy (or one of its predecessor companies) for ten or more years, a grant recipient will be entitled to pro rata vesting of equity awards.rounding. |
On December 16, 2020, in connection with Mr. Bassham’s retirement on January 4, 2021, in order to acknowledge the substantial contributions of Mr. Bassham to Evergy and its predecessor companies, and as an inducement for ensuring a smooth transition to a new president and chief executive officer of Evergy, the Committee recommended and the independent directors determined to fully vest Mr. Bassham’s 2018 grants at the time the grants would otherwise vest, following his retirement. Performance shares will vest based on actual satisfaction of performance conditions that were established on the grant date.
(3)
| The value of the shares is calculated by multiplying the number of shares by the closing market price ($68.61) as of December 31, 2021.2022, which was $62.93. |
(4)
| Reflects, at target, performance-based restricted stock unitsRSUs granted by Evergy in 20202021 and 2021.2022. The following table summarizes the number of performance-based restricted stock unitsRSUs for each of the outstanding grants, at target, as of December 31, 2021.2022. |
| Mr. Campbell | | | 2021-2023 | | | 58,694 | | | 2022-2024 | | | 55,179 | | | Mr. Andrews | | | 2021-2023 | | | 19,818 | | | Mr. Bryant2022-2024
| | | 2020-2022
| | | 10,52517,511
| | | Mr. Bryant | | | 2021-2023 | | | 17,412 | | | Mr. Caisley2022-2024
| | | 2020-2022
| | | 3,32415,375
| | | Mr. Caisley | | | 2021-2023 | | | 8,508 | | | Mr. Greenwood2022-2024
| | | 2020-2022
| | | 8,2309,197
| | | Ms. Humphrey | | | 2021-2023 | | | 10,98010,669
| | | 2022-2024 | | | 9,474 | | | Former Named Executive Officers(b)Officer | | | | | | | | | Mr. BasshamGreenwood(b)
| | | 2020-20222021-2023
| | | 11,7964,869
| | | 2022-2024 | | | 1,053 | |
(a)
| The number of shares actually earned for each applicable performance period is determined shortly following the end of the performance period based on achievement of the performance objectives. |
(b)
| As reported onMr. Greenwood’s shares were prorated upon termination in accordance with terms of the Company’s Form 8-K/A filed with the SEC on August 27, 2020 and as amended on December 22, 2020, in connection with Mr. Bassham’s retirement, the Board determined that neither immediate vesting nor immediate forfeiture would occur with respect to any incentive equity grants held by Mr. Bassham. Rather, the 2018 grants vested in full in March 2021, and the 2019 and 2020 grants will vest on a pro rata basis, in each case at the time the grants would otherwise vest. Any performance-based grants vest based on actual satisfaction of performance conditions that were established on the grant dates for each incentive. Mr. Bassham did not receive a 2021 grant. Mr. Somma’s 2020 grants were forfeited, and he did not receive a 2021 grant.Severance Plan. |
Executive Compensation | Executive Compensation Tables | Evergy 20222023 Proxy Statement 5755 |
TABLE OF CONTENTS Option Exercises and Stock Vested The following table provides information regarding the vesting of stock awards, restricted stock or restricted stock unitsRSUs held by each of the NEOs during 2021.2022. The market value of the shares is based on our closing stock price on the date of vesting (or the trading day immediately preceding the date of vesting in instances where the date of vesting was not a trading day). We have omitted the “Option Awards” columns because our NEOs do not have options. | Name | | Number of Shares
Acquired on
Vesting (#) | | Value Realized
on Vesting
($) | | Name | | Number of Shares
Acquired on
Vesting (#) | | Value Realized
on Vesting
($) | | | Mr. Campbell(a) | | | 18,018 | | | 1,236,215 | | Mr. Campbell(a) | | | 18,018 | | | 1,133,873 | | | Mr. Andrews(b) | | | 2,342 | | | 125,883 | | Mr. Andrews(b) | | | 16,692 | | | 1,017,878 | | | Mr. Bryant(c) | | | 11,188 | | | 603,704 | | Mr. Bryant(c) | | | 14,940 | | | 909,547 | | | Mr. Caisley(c) | | | 3,637 | | | 196,253 | | Mr. Caisley(c) | | | 5,165 | | | 314,445 | | | Mr. Greenwood(d) | | | 6,135 | | | 381,290 | | Ms. Humphrey(c) | | | 12,053 | | | 733,787 | | | Former Named Executive Officers | | | | | | | | Former Named Executive Officer | | | | | | | | | Mr. Bassham(c) | | | 38,384 | | | 2,081,002 | | Mr. Greenwood(d) | | | 19,337 | | | 1,203,311 | | | Mr. Somma(e) | | | 5,522 | | | 294,753 | | |
(a)
| The firstsecond tranche of RSAs granted as an inducement to Mr. Campbell pursuant to his offer letter vested on December 31, 2021.2022. |
(b)
| The first tranche of RSUs granted as an inducement to Mr. Andrews received this award as a director, before he transitionedpursuant to CFO.his offer letter vested on February 22, 2022. |
(c)
| In 2018,2019, Messrs. Bryant, Caisley, Greenwood and BasshamMs. Humphrey were awarded performance based restricted stock unitsperformance-based RSUs by Great Plains EnergyEvergy for the 20182019 to 20202021 performance period. Messrs. SommaCampbell and GreenwoodAndrews were not employees of Great Plains EnergyEvergy at the time of the grants in 20182019 and therefore did not participate in the program. The 2018 performance shares,2019 performance-based RSUs, which achieved a 66.4%110.1% payout and vested in March 2021,2022, are reflected in the table. |
(d)
| The third tranche of the June 2018 restricted stock unit award granted to Mr. Greenwood by the Westar Energy Board of Directors prior to the merger vested in June 2021. |
(e)
| Reflects the final installmentvesting of the June 2018 restricted stock unit awardperformance and time-based RSUs that vested in March 2022 in addition to time-based RSUs granted in 2020, 2021, and 2022 that vested due to Mr. Somma by the Westar Energy Board of Directors prior to the merger, which vested in connection with Mr. Somma’s departure from the CompanyGreenwood’s termination on March 4, 2021, whereas the 2019 and 2020 grants were forfeited.July 1, 2022. See “Note Regarding Transitions —– Former CEO and CFO Transitions”CSO Transition” on page 3736. |
Executive Compensation | Executive Compensation Tables | Evergy 20222023 Proxy Statement 5856 |
TABLE OF CONTENTS Certain of our NEOs participate in our tax-qualified, noncontributorynon-contributory defined benefit plans, and may participate in other retirement plans depending on whether they were previously an officer of Great Plains Energy or Westar Energy. Messrs. Campbell and Andrews are not eligible for pension benefits since they were employed after closure of the pension plans in 2014 and 2018 respectively. Accordingly, neither appears in the table below. The following table sets forth, at December 31, 2021,2022, the present value of accumulated benefits payable to each of our NEOs under the applicable plans. Additional information about the plans and assumptions follows the table. | Name | | Plan Name | | Number of
Years of
Credited
Service
(#) | | Present
Value of
Accumulated
Benefit
($) | | Payments
During
Last
Fiscal
Year
($) | | Name | | Plan Name | | Number of
Years of
Credited
Service
(#) | | Present
Value of
Accumulated
Benefit
($) | | Payments
During
Last
Fiscal
Year
($) | | | Mr. Bryant | | | Evergy Retirement Plan | | | 18.0 | | | 681,044 | | | — | | Mr. Bryant | | | Evergy Retirement Plan | | | 19.0 | | | 407,145 | | | — | | | KCP&L SERP | | | 18.5 | | | 853,904 | | | — | | | KCP&L SERP | | | 19.5 | | | 542,804 | | | — | | | Mr. Caisley | | | Evergy Retirement Plan | | | 14.0 | | | 560,535 | | | — | | Mr. Caisley | | | Evergy Retirement Plan | | | 15.0 | | | 358,015 | | | — | | | KCP&L SERP | | | 14.0 | | | 451,532 | | | — | | | KCP&L SERP | | | 15.0 | | | 362,560 | | | — | | | Mr. Greenwood | | | Westar Pension Plan | | | 29.0 | | | 1,701,009 | | | — | | Ms. Humphrey | | | Evergy Retirement Plan | | | 15.9 | | | 437,301 | | | — | | | Westar Retirement Restoration Plan | | | 29.0 | | | 1,485,472 | | | — | | | KCP&L SERP | | | 15.9 | | | 533,085 | | | — | | | Former Named Executive Officers | | Former Named Executive Officers | | | Mr. Bassham | | | Evergy Retirement Plan | | | 15.5 | | | — | | | 868,946 | | Mr. Greenwood(1) | | | Westar Pension Plan | | | 30.0 | | | 1,814,790 | | | — | | | KCP&L SERP | | | 15.5 | | | — | | | 2,525,245 | | | Westar Retirement Restoration Plan | | | 30.0 | | | 1,623,734 | | | — | | | Mr. Somma(1) | | | Westar Pension Plan | | | 22.7 | | | 1,507,833 | | | — | | | | Westar Retirement Restoration Plan | | | 26.7 | | | — | | | 1,584,668 | | |
(1)
| The Westar Pension Plan or Retirement Restoration Plan did not require payout to Mr. SommaGreenwood upon departure. Mr. Somma was required to take a distribution of $1,584,668 pursuant to the Westar Retirement Restoration Plan at the time of his departure.termination. |
Evergy Retirement Plan The Evergy Retirement Plan is a funded, tax-qualified, noncontributorynon-contributory defined benefit pension plan that resulted from the merger of previous standalone company plans. The Evergy Metro Plan of Benefits is for Evergy Metro non-union employees hired or rehired on or before December 31, 2013. In 2007, Evergy Metro non-union employees who participated in the plan were given a one-time election to remain in their existing Retirement Plan and 401(k) Plan (“Old Retirement Plan”) or choose a new retirement program that includes a slightly reduced benefit accrual formula under the Evergy Retirement Plan paired with an enhanced benefit under the Evergy 401(k) Plan (“Current Retirement Plan”). Mr. BasshamBryant, Mr. Caisley, and Mr. BryantMs. Humphrey elected to participate in the Current Retirement Plan. Benefits under the Evergy Retirement Plan are based on the participant’s years of service and the average annual base salary over a specified period. Evergy Metro participants who elected to remain in the Old Retirement Plan and retire after they reach 65, or whose age and years of service at or after age 52 add up to 85 (the “Rule of 85”), are entitled under the Evergy Retirement Plan to a total monthly annuity for the rest of their life (a “single life” annuity) equal to 50% of their average base monthly salary for the period of 36 consecutive months in which their earnings were highest. This reflects an accrual rate of 1.67% per year, capped at 30 years of service. The 50% single life annuity will be proportionately reduced if years of credited service are less than 30. Participants may also elect to retire and receive an unreduced benefit at age 62 with at least 5 years of credited service, in which case the benefit is based on their average base monthly salary for the period of 48 consecutive months in which their earnings were highest. Participants may also elect early retirement benefits if they retire between the ages of 55 and 62; in such a case the benefit is reduced by 3% for each year that commencement precedes age 62. Participants may elect other annuity options, such as joint and survivor annuities or annuities with payments guaranteed for a period of time. The present value of each annuity option is the same; however, the monthly amounts payable under these options are less than the amount payable under the single life annuity option. Participants also may elect to receive their retirement benefits in a lump sum equal to the actuarial equivalent of a single life pension under the Evergy Metro Plan of Benefits. Participants such as Mr. BasshamBryant, Mr. Caisley, and Mr. Bryant,Ms. Humphrey, who elected the Current Retirement Plan, retained the benefit they accrued as of December 31, 2007, under the old formula with the old early retirement reductions. Participants in the Current Retirement Plan earn a benefit equal to 1.25% of their final average base earnings (averaged over 48 consecutive months), multiplied by the years of credited service earned after 2007. There is no cap on the years of credited service that can be Executive Compensation | Executive Compensation Tables | Evergy 2022 Proxy Statement 59
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TABLE OF CONTENTS
earned. Participants under the Current Retirement Plan may begin receiving their retirement benefit at age 55, but with a 5% per year reduction for each year before age 62. There is no Rule of 85 for post-2007 accrued benefits; however, Executive Compensation | Executive Compensation Tables | Evergy 2023 Proxy Statement 57 |
TABLE OF CONTENTS participants may receive post-2007 accrued benefits (subject to the 5% per year reduction if they retire at or after age 55 and before age 62) when they start receiving pre-2008 accrued benefits. Participants in the Current Retirement Plan may elect to receive their accrued benefits in the form of one of the annuities described in the preceding paragraph or in a lump sum. The Evergy Kansas Central Plan of Benefits is for generally all of Evergy Kansas Central’s employees hired or rehired on or before May 30, 2018, including NEOs who were formally officers of Westar Energy. Mr. Greenwood and Mr. Somma areis fully vested in theirhis plan benefits. The Evergy Kansas Central Plan of Benefits uses two formulas to calculate benefits, a final average earnings formula for union employees hired prior to January 1, 2012 and for non-union employees hired prior to January 1, 2002, and a cash balance formula for union employees hired (or re-hired) after December 31, 2011 and for non-union employees hired (or re-hired) after December 31, 2001. “Final average earnings” generally means the average annual earnings of an employee measured over the sixty (60) consecutive months that produce the highest monthly average within one hundred twenty (120) consecutive months immediately preceding the employee’s termination or retirement date. Earnings related to restricted stock unitsRSUs and dividend and/or dividend equivalents are not included in the calculation of final average earnings. Mr. Greenwood is accruingaccrued benefits calculated under the final average earnings formula. Under the final average earnings formula, the accrued benefit for each non-union plan participant equals: (1)
| 1.5% times the participant’s final average earnings plus 0.4% times the final average earnings in excess of covered compensation (certain wages subject to Social Security taxes) multiplied by credited service up to twenty (20) years; plus |
(2)
| 0.8% times the final average earnings plus 0.4% times the final average earnings in excess of covered compensation multiplied by credited service in excess of twenty (20) years up to a maximum of thirty-five (35) years. |
Pension benefits accrued under the final average earnings formula are calculated as a monthly annuity generally for the participant’s lifetime. The normal form of benefit for a married participant is a 50% joint and survivor annuity, which provides reduced monthly payments during the participant’s lifetime and lifetime payments to the spouse following the participant’s death in the amount of 50% of the reduced payments. Full benefits may be received when a participant reaches retirement age of 62 or age 60 with thirty-five (35) years of service. Benefits are reduced if a participant elects to receive payments before attaining such age and years of service. The Evergy Kansas Central Plan of Benefits also allows final average earning participants to elect a lump sum payment in lieu of a monthly annuity. In general, the lump sum payment is equivalent to the present value of the accrued benefit. We calculated the amounts in the Present Value of Accumulated Benefit column in the Pension Benefits table above based on the same assumptions used for financial reporting purposes with respect to the Evergy Retirement Plan in our 20212022 consolidated financial statements. For each NEO we calculated the present value of their accrued pension benefit as of December 31, 2021,2022, using a discount rate of 3.10%5.72% and use of the Pension Protection Act mortality and lump sum interest rate tables. Benefits were assumed to commence at the later of the age of such officer as of December 31, 2021,2022, or the earliest unreduced retirement age (62) and be paid in a lump sum 90% of the time and a life annuity 10% of the time. KCP&L SERP The KCP&L SERP is unfunded and provides out of general assets an amount substantially equal to the difference between the amount that would have been payable under the KCP&L Pension Plan in the absence of tax laws limiting pension benefits and earnings that may be considered in calculating pension benefits, and the amount actually payable under the KCP&L Pension Plan. For participants under the Old Retirement Plan, it adds an additional one-third percent of highest average annual base salary for each year of credited service when the executive was eligible for supplemental benefits, up to a maximum of thirty (30) years, and also makes up the difference (if any) between using a 36-month earnings averaging period and the averaging period used for the participant’s benefits under the KCP&L Pension Plan. Participants under the Current Retirement Plan receive this same benefit; however, there is no cap on the years of credited service for benefits accrued after 2007. Participants may elect the timing of the receipt of their benefits, as well as the form of their benefits (a lump sum payment or a variety of annuity options, all of which have the same present value). Mr. Bassham and Mr. Bryant have elected to receive their benefits in a lump sum upon separation from service. For participants, such as Mr. Bassham and Mr. Bryant, who areis a “specified employees” under Internal Revenue Code Section 409A and who elect payment on separation of service, payment of benefits accrued prior to 2005 will be made, or commence, when they separate from service; payment of benefits accrued after 2004 will be made, or commence, on the first business day of the seventh calendar month following their separation from service. Mr. Bassham retired on January 4, 2021, and his benefits were paid in accordance with his elections. Executive Compensation | Executive Compensation Tables | Evergy 20222023 Proxy Statement 6058 |
TABLE OF CONTENTS The present value of the accumulated benefits under the KCP&L SERP with respect to each of the participant NEOs is based on the following assumptions: retirement at the later of the age of such officer as of December 31, 2021,2022, or age 62, full vesting of accumulated benefits, a discount rate of 3.07%5.73% and use of the Pension Protection Act mortality and lump sum interest rate tables. Westar Restoration Plan The Westar Restoration Plan replaces benefits lost under the Westar Pension Plan because of limitations imposed by the Internal Revenue Code on annual compensation that can be used in calculating pension benefits. Mr. Greenwood participates, and Mr. Somma participated in the Westar Restoration Plan. Under the terms of the Westar Restoration Plan, the benefit payable will be a monthly amount that is equal to the difference between the monthly amount that is payable to the participant under the Westar Pension Plan and the monthly amount that would be payable if the Westar Pension Plan were not subject to such limitations. The amount payable under the Westar Restoration Plan will be determined in the form of a straight life annuity over the lifetime of the participant and will commence on the participant’s normal retirement date. We calculated the present value of the benefits as of December 31, 20212022 using a discount rate of 3.07%5.73% and use of a Pension Protection Act mortality and lump sum interest rate tables. For this purpose, benefits were assumed to commence at the earliest unreduced retirement age (62). Mr. Somma was required to takeGreenwood departed the Company on July 1, 2022, therefore, the present value above is a distributionlump sum value as of $1,584,668 pursuant to the Westar Retirement Restoration Plan at the timedate of his departure.termination. Nonqualified Deferred Compensation | Name | | Executive
Contributions in
Last FY
($)(1) | | Registrant
Contributions in
Last FY
($)(2) | | Aggregate
Earnings in
Last FY
($)(3) | | Aggregate
withdrawals/
distributions
($) | | Aggregate
Balance at
Last FYE
($)(4) | | Name | | Executive
Contributions in
Last FY
($)(1) | | Registrant
Contributions in
Last FY
($)(2) | | Aggregate
Earnings in
Last FY
($)(3) | | Aggregate
Withdrawals/
Distributions
($)(1) | | Aggregate
Balance at
Last FYE
($)(4) | | | Mr. Campbell | | | — | | | — | | | — | | | — | | | — | | Mr. Campbell | | | — | | | — | | | — | | | — | | | — | | | Mr. Andrews | | | — | | | — | | | — | | | — | | | — | | Mr. Andrews | | | — | | | — | | | — | | | — | | | — | | | Mr. Bryant | | | 36,900 | | | 61,580 | | | 26,972 | | | — | | | 525,576 | | Mr. Bryant | | | 44,100 | | | 54,629 | | | 37,302 | | | — | | | 702,355 | | | Mr. Caisley | | | 46,308 | | | 35,882 | | | 6,660 | | | — | | | 198,004 | | Mr. Caisley | | | 51,500 | | | 35,805 | | | 15,288 | | | — | | | 339,261 | | | Mr. Greenwood | | | 63,600 | | | 39,591 | | | 68,054 | | | — | | | 1,612,736 | | Ms. Humphrey | | | 63,660 | | | 37,435 | | | 27,903 | | | (179,747) | | | 561,995 | | | Former Named Executive Officers | | | | | | | | | | | | | | | | | Former Named Executive Officer | | | | | | | | | | | | | | | | | | Mr. Bassham | | | — | | | — | | | 101,620 | | | (2,723,812) | | | 0 | | Mr. Greenwood | | | 229,039 | | | 17,678 | | | 103,254 | | | (102,994) | | | 2,017,406 | | | Mr. Somma | | | 1,981 | | | 8,917 | | | 11,744 | | | (264,829) | | | 0 | | |
(1)
| The entire amount shown for each NEO is included in the 20212022 salary and non-equity incentive plan compensation information shown for such person in the Summary Compensation Table. To provide consistency with the Summary Compensation Table, this table shows deferrals of compensation earned in 20212022 (whether paid in 20212022 or 2022)2023). Mr. Campbell Mr. Andrews, and Mr. Bassham, who retired on January 4, 2021,Andrews did not participate in the Non-Qualified Deferred Compensation Plan in 2021.2022. The amounts of 20212022 salary deferred are: Mr. Bryant $36,900;$44,100; Mr. Caisley $46,308;$51,500; Ms. Humphrey $63,660; and Mr. Greenwood $63,360 and Mr. Somma, $1,981.$229,039. The amounts of 20212022 deferred non-equity incentive award compensation paid in 2023 are: Mr. Bryant $35,129;$40,748; Mr. Caisley $38,675,$38,664; Ms. Humphrey $47,793; and Mr. Greenwood $378,420. Mr. Somma did not defer any non-equity incentive award compensation in 2021. Messrs. Bassham$157,693. Ms. Humphrey and Mr. SommaGreenwood received payments of their respective deferred compensation in the amounts shown. |
(2)
| The entire amount shown in this column for each NEO is included in the amount shown for each NEO in the “All Other Compensation” column in the Summary Compensation Table. |
(3)
| Only the above-market earnings are reported in the Summary Compensation Table. The above-market earnings were: Mr. Bryant, $20,634;$24,379; Mr. Caisley, $5,086;$9,983; Ms. Humphrey $18,115; and Mr. Greenwood, $52,035; Mr. Bassham, $76,412; and Mr. Somma, $8,956.$67,309. |
(4)
| The following amounts reported in this column were reported as compensation to the NEOs in the Summary Compensation Table for previous years: Mr. Bassham, $341,529Bryant, $154,243 (2021) and $157,090 (2020) and $341,529 (2019); Mr. Bryant, $157,090Caisley, $125,951 (2021); Ms. Humphrey, $69,321 (2021) and $199,776 (2020) and $97,060 (2019); Mr. Greenwood, $595,037 (2020) and $455,798 (2019); and Mr. Somma, $110,916Greenwood, $533,646 (2021) and $595,037 (2020) and $127,432 (2019). |
Our DCP is a nonqualified and unfunded plan. It allows officers, including our NEOs, to defer the receipt of compensation. All participants can defer up to 50% of their January 1 base salary and up to 100% of awards under the annual incentive plan.AIP. In each year they participated, Mr. Bassham, Mr. Bryant and Mr. Caisley received a matching contribution in an amount equal to 100% of the first 6% of the base salary and annual incentive planAIP deferred, reduced by the amount of the matching contribution made for the year to the participant’s 401(k) account. Mr. Greenwood and Mr. Somma received a matching contribution in an amount equal to 75% of the first 6% of the base salary, bonus and incentive pay deferred, reduced by the amount of the matching contribution made for the year to the participant’s 401(k) account. An earnings rate is applied to the deferral amounts. This rate is determined annually by the Committee and for 2022 is based on Evergy’s weighted average cost of capital. The rate was set at 6.7%6.6% for 20212022 and this interest rate applies to all deferral amounts, compounded daily. Prior to rendering the services to which deferred compensation relates, participants must elect to have the deferred compensation paid either at a specified date or upon separation from service. For participants, such as our NEOs, who are “specified Executive Compensation | Executive Compensation Tables | Evergy 2022 Proxy Statement 61
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employees” under Internal Revenue Code Section 409A and who elect payment on separation of service, payment will be made, or commence, on or after the first business day of the seventh calendar month following their separation from service. Mr. Campbell and Mr. Andrews elected not to participate in the DCP. Executive Compensation | Executive Compensation Tables | Evergy 2023 Proxy Statement 59 |
TABLE OF CONTENTS Potential Payments Upon Termination or Change-in-Control In 2019, the Committee implemented change-in-control agreements that reflect current market practices. For information on why the Committee believes change-in-control agreements are necessary and in the best interests of shareholders, see “Compensation Discussion and Analysis — Summary and Analysis of Executive Compensation — Change-in-Control Severance Agreements” above. Payments under Evergy Change-in-Control Severance Agreements The change-in-control agreements that Evergy entered into with its officers, including its NEOs, specify the benefits payable in the event their employment is terminated within two years of a “Change-in-Control” or within a “protected period.” Generally, a “Change-in-Control” occurs if: any person becomes the beneficial owner of at least 35% of our outstanding voting securities; a change occurs in the majority of our Board; a merger, consolidation, reorganization or similar transaction is consummated (unless our shareholders continue to hold at least 60% of the voting power of the surviving entity); or a complete liquidation, complete dissolution or an agreement for the sale or disposition of substantially all of our assets occurs or is approved by our shareholders (unless our shareholders continue to hold at least 60% of the voting power after such disposition or sale). A “protected period” starts when: we enter into an agreement that, if consummated, would result in a Change-in-Control; we, or another person, publicly announces an intention to take or to consider taking actions which, if consummated, would constitute a Change-in-Control; any person becomes the beneficial owner of 10% or more of our outstanding voting securities; or our Board, or our shareholders, adopt a resolution approving any of the foregoing matters or approving a Change-in-Control. The protected period ends when the Change-in-Control transaction is consummated, abandoned, or terminated. Our Change-in-Control arrangements are “double trigger,” meaning that benefits are only paid if we experience a Change-in-Control and the NEO’s employment is terminated by the Company other than for “Cause” or by the NEO for “Good Reason” within two years of a Change-in-Control or protected period. “Cause” includes: fraud, embezzlement or material misappropriation of any funds, confidential information or property; indictment for or the conviction of, or the entering of a guilty plea or plea of no contest with respect to, a felony, or the equivalent thereof, or a misdemeanor involving fraud, embezzlement, theft, misappropriation or failure to be truthful; any willful action or omission that (i) (a) would constitute grounds for immediate dismissal under any Evergy employment policy, (b) is a material violation of such policy and (c) in the determination of the Committee, could result in damage, liability or reputational harm to Evergy, including use of illegal drugs while on the premises of Evergy, or (ii) is a violation of sexual harassment laws or the internal sexual harassment policy of Evergy; gross negligence or willful misconduct in performance of duties or in following reasonable instructions of the Board; or any material breach or violation of any material provision of the restrictive covenants contained in the agreement. An employee has “Good Reason” to terminate employment if: there is any material and adverse reduction or diminution in position, authority, duties or responsibilities below the level provided at any time during the 90-day period before the “protected period;” Executive Compensation | Executive Compensation Tables | Evergy 2022 Proxy Statement 62
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there is any reduction in annual base salary after the start of the “protected period” (unless such reduction is in connection with a company-wide reduction); there is any material reduction in benefits below the level provided at any time during the 90-day period prior to the “protected period;” the employee is required to be based at any office or location that is more than 70 miles from where the employee was based immediately before the start of the “protected period;” or Evergy fails to require any successor to all or substantially all of the Company’s business or assets to assume expressly and agree to perform under the change-in-control agreements. Executive Compensation | Executive Compensation Tables | Evergy 2023 Proxy Statement 60 |
TABLE OF CONTENTS The change-in-control agreements do not provide to any officer a gross-up payment in connection with any excise taxes that may be imposed on payments and benefits received by the officer. Any change-in-control benefits payable under the agreement are subject to execution of an agreement by the officer releasing claims against Evergy as well as the officer’s compliance with certain covenants contained in the agreement, including confidentiality, non-competition, non-solicitation, non-disparagement and assistance to Evergy with respect to any disputes. Under the change-in-control agreements, in the event of a triggering event, as described above and subject to other terms in the change-in-control agreements, an officer, including each NEO, would be entitled to accrued but unpaid compensation and other benefits, as well as a cash amount equal to the aggregate sum of (i) two times the officer’s highest annual base salary in effect during the twelve-month period prior to the date of termination (three times for Mr. Campbell), plus (ii) two times the officer’s five-year average short-term bonus (three times for Mr. Campbell), plus (iii) the value of any unvested portion of employer contributions made on behalf of the officer under Evergy’s DCP, plus (iv) the premium cost to cover the officer and, if applicable, his or her beneficiaries under Evergy’s health and welfare plans for two years. The following table sets forth our payment obligations under the Evergy change-in-control agreements and other compensatory plans if, following a change-in-control, we terminate a currently serving NEO without “Cause” or the NEO leaves for “Good Reason.” The table does not include amounts that are due to the currently serving NEOs, such as accrued salary and amounts due under retirement and deferred compensation plans except as noted. The amounts shown in the table assume that the termination took place on December 31, 2021.2022. Mr. Bassham retiredGreenwood’s employment terminated on January 4, 2021, and Mr. Somma departed on March 4, 2021.July 1, 2022. See “Note Regarding Transitions — Former CEO and CFOCSO Transition” on page 3736 for additional information regarding payments to Mr. Somma pursuant to the Westar CIC Agreement and to Mr. BasshamGreenwood upon his retirement.termination from the Company.Potential Payments Upon Termination or Change-in-Control | Benefit(1)(2) | | Mr.
Campbell
($) | | Mr.
Andrews
($) | | Mr.
Bryant
($) | | Mr.
Caisley
($) | | Mr.
Greenwood
($) | | Benefit(1)(2) | | Mr.
Campbell
($) | | Mr.
Andrews
($) | | Mr.
Bryant
($) | | Mr.
Caisley
($) | | Ms.
Humphrey
($) | | | Two Times Salary | | | — | | | 1,400,000 | | | 1,230,000 | | | 1,000,000 | | | 1,060,000 | | Two Times Salary | | | — | | | 1,435,000 | | | 1,260,000 | | | 1,030,000 | | | 1,061,000 | | | Three Times Salary | | | 3,000,000 | | | — | | | — | | | — | | | — | | Three Times Salary | | | 3,090,000 | | | — | | | — | | | — | | | — | | | Two Times Bonus | | | — | | | 1,400,000(3) | | | 851,521 | | | 372,530 | | | 1,070,368 | | Two Times Bonus | | | — | | | 1,400,000(3) | | | 1,123,488 | | | 536,282 | | | 873,520 | | | Three Times Bonus | | | 3,750,000(3) | | | — | | | — | | | — | | | — | | Three Times Bonus | | | 3,750,000(3) | | | — | | | — | | | — | | | — | | | Annual Bonus | | | 1,250,000 | | | 700,000 | | | 492,000 | | | 325,000 | | | 424,000 | | Annual Bonus | | | 1,287,500 | | | 717,500 | | | 504,000 | | | 334,750 | | | 344,825 | | | Retirement Benefit Enhancement(4) | | | 87,000 | | | 58,000 | | | 260,673 | | | 196,370 | | | 611,828 | | Retirement Benefit Enhancement(4) | | | 91,500 | | | 61,000 | | | 242,951 | | | 197,290 | | | 254,823 | | | Performance Share (Units) Vesting(5) | | | 4,026,995 | | | 1,359,713 | | | 2,613,904 | | | 1,052,752 | | | 2,015,144 | | Performance Share (Units) Vesting(5) | | | 7,166,028 | | | 2,349,114 | | | 2,725,624 | | | 1,323,355 | | | 1,732,400 | | | Restricted Stock (Units) Vesting(6) | | | 3,861,605 | | | 3,904,885 | | | 928,261 | | | 1,032,058 | | | 719,650 | | Restricted Stock (Units) Vesting(6) | | | 3,656,111 | | | 3,006,458 | | | 972,639 | | | 1,097,303 | | | 719,828 | | | Health and Welfare(6) | | | 107,860 | | | 75,005 | | | 76,337 | | | 77,989 | | | 56,290 | | Health and Welfare(6) | | | 108,565 | | | 77,710 | | | 77,117 | | | 78,819 | | | 77,698 | | | Accrued Vacation | | | 47,115 | | | 21,538 | | | 50,264 | | | 31,731 | | | 11,466 | | Accrued Vacation | | | 69,327 | | | 35,875 | | | 35,135 | | | 33,673 | | | 29,586 | | | Total | | | 16,130,575 | | | 8,919,141 | | | 6,502,960 | | | 4,088,430 | | | 5,968,746 | | Total | | | 19,219,031 | | | 9,082,657 | | | 6,940,954 | | | 4,631,472 | | | 5,093,680 | |
(1)
| The NEOs receive two times (three times for CEO) their highest annual base salary during the twelve-month period prior to the date of termination. |
(2)
| The NEOs receive two times (three times for CEO) their average annualized annual incentive compensation awards. |
(3)
| As Mr. Campbell and Mr. Andrews dodid not havereceive any bonus payout prior to 2022, it is not possible to calculate their historical average bonus information,for purposes of determining their cash severance benefit. Therefore the 2021 target bonus was assumed for this calculation. |
Executive Compensation | Executive Compensation Tables | Evergy 2022 Proxy Statement 63
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(4)
| For Mr. Bryant Mr. Caisley, and Mr. Greenwood,Caisley, the amounts reflect the present value of the benefit arising from an additional two years of service credited in both the Evergy, Inc. Retirement Plan and the SERP or Retirement Restoration Plan upon a change-in-control. For Mr. Campbell and Mr. Andrews, the amounts reflect additional years of all non-elective and/or matching contributions that would have been in contributed in the applicable 401(k) Plan. Mr. Campbell receives the value of three additional years, and Mr. Andrews receives the value of two additional years. |
(5)
| In the event of a “change-in-control” and termination of employment without causeCause or for good reason, the LTIP provides that all performance-based restricted stock unitsRSUs and performance share grants are deemed to have been fully earned. The amounts shown reflect the aggregate target number of performance shares,performance-based RSUs, valued at the $68.61$62.93 closing price of our stock on December 31, 2021,2022, plus accrued cash dividends. |
(6)
| In the event of a change-in-control and termination of employment without causeCause or for good reason, the LTIP provides that all restrictions on restricted stock and restricted stock unitRSU grants are removed. The amounts shown reflect the aggregate number of restricted stock (unit) grants outstanding as of December 31, 2021,2022, plus reinvested dividends carrying the same restrictions, valued at the $68.61$62.93 closing price of our stock on December 31, 2021.2022. |
(7)
| The amounts include medical, accident, disability and life insurance for two years following termination and are estimated based on the current premiums for medical coverage and premiums for private insurance coverage for the individuals, as well as for financial advisory services for one year. |
Executive Compensation | Executive Compensation Tables | Evergy 2023 Proxy Statement 61 |
TABLE OF CONTENTS Pursuant to our Severance Plan, Evergy’s Chief Executive Officer, Chief Financial Officer, President and Chief Operating Officer and any Vice President of Evergy who is appointed by the Evergy Board is entitled to certain benefits if the eligible officer’s employment is terminated by Evergy without causeCause (as defined in the plan), other than in a situation that is governed by a change-in-control severance agreement. Subject to the terms of the Severance Plan, if an eligible officer’s employment is terminated by Evergy without cause,Cause, the officer would be entitled to accrued but unpaid compensation and other benefits, as well as a cash amount equal to the aggregate sum of: one (or two for the Chief Executive Officer) times the officer’s annual base salary in effect on the date of termination; plus one (or two for the Chief Executive Officer) times the officer’s target annual incentive award with respect to the fiscal year in which the termination occurs; plus the pro rata portion of the officer’s target annual incentive award for the fiscal year in which the termination occurs, to the extent not theretofore paid; plus twelve (12) (or twenty-four (24) for the Chief Executive Officer) times Evergy’s monthly COBRA premium cost to cover the officer, and if applicable his or her beneficiaries, under Evergy’s health, vision and dental plans. In addition to the cash lumpaggregate sum payment described above, an officer will vest in a pro rata portion of any outstanding time-based and performance-based long-term incentive awards (e.g., equity awards). Performance-based long-term incentive awards will only vest pro rata following completion of the applicable performance period. The officer is also eligible to receive outplacement counseling services during the twelve-month period following termination, up to a $25,000 limit. Any benefits payable under the Severance Plan are subject to execution of an agreement by the officer releasing claims against Evergy as well as the officer’s compliance with certain covenants contained in the severance plan, including confidentiality, non-solicitation of employees, non-disparagement, and assistance to Evergy with respect to any disputes. Evergy may amend or terminate the Severance Plan, in whole or in part, at any time and in any way except that, without the consent of the officer, no amendment that materially reduces an officer’s rights or potential benefits under the severance plan may become effective before the 90th calendar day after such amendment or termination is approved by the administrator. Executive Compensation | Executive Compensation Tables | Evergy 2022 Proxy Statement 64
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The following table sets forth our payment obligations under the Severance Plan. The table does not include amounts that are due to the NEOs, such as accrued salary and bonus and amounts due under retirement and deferred compensation plans, and also excludes the optional use of outplacement counseling services. The amounts shown in the table assume that the termination took place on December 31, 2021.2022. Potential Severance Plan Payments as of December 31, 20212022 | Benefit | | Mr.
Campbell
($) | | Mr.
Andrews
($) | | Mr.
Bryant
($) | | Mr.
Caisley
($) | | Mr.
Greenwood ($) | | Benefit | | Mr.
Campbell
($) | | Mr.
Andrews
($) | | Mr. Bryant
($) | | Mr.
Caisley
($) | | Ms.
Humphrey
($) | | | Salary | | | 2,000,000 | | | 700,000 | | | 615,000 | | | 500,000 | | | 530,000 | | Salary | | | 2,060,000 | | | 717,500 | | | 630,000 | | | 515,000 | | | 530,500 | | | Bonus | | | 2,500,000 | | | 700,000 | | | 492,000 | | | 325,000 | | | 424,000 | | Bonus | | | 2,575,000 | | | 717,500 | | | 504,000 | | | 334,750 | | | 344,825 | | | Performance Share Unit Vesting(1) | | | 1,117,997 | | | 377,491 | | | 1,431,771 | | | 529,161 | | | 1,213,197 | | Performance Share (Unit) Vesting(1) | | | 3,222,966 | | | 1,068,616 | | | 1,563,540 | | | 685,510 | | | 1,014,594 | | | Restricted Stock (Unit) Vesting(2) | | | 1,200,782 | | | 1,171,953 | | | 515,846 | | | 274,950 | | | 439,188 | | Restricted Stock (Unit) Vesting(2) | | | 1,893,349 | | | 1,765,795 | | | 564,741 | | | 536,185 | | | 402,086 | | | COBRA(3) | | | 28,414 | | | 28,264 | | | 28,033 | | | 28,264 | | | 18,872 | | COBRA(3) | | | 56,829 | | | 28,264 | | | 28,033 | | | 28,264 | | | 28,414 | | | Accrued Vacation | | | 76,923 | | | 53,846 | | | 52,038 | | | 38,462 | | | 50,962 | | Accrued Vacation | | | 79,231 | | | 55,192 | | | 53,308 | | | 43,577 | | | 44,888 | | | Total | | | 6,924,116 | | | 3,031,554 | | | 3,134,688 | | | 1,695,837 | | | 2,676,219 | | Total | | | 9,887,375 | | | 4,352,867 | | | 3,343,622 | | | 2,143,286 | | | 2,365,307 | |
(1)
| Under the Severance Plan, a pro-rata portion of any performance-based long-term incentive will vest following completion of the performance period. The amounts shown reflect the pro rata portion of these incentives, at target, valued at the $68.61$62.93 closing price of our stock on December 31, 2021,2022, and excludes accrued cash dividends |
(2)
| Under the Severance Plan, a pro-rata portion of any time-based long-term incentive will vest. The amounts shown reflect the pro rata portion of these incentives, plus reinvested dividends carrying the same restrictions, valued at the $68.61$62.93 closing price of our stock on December 31, 2021.2022. |
(3)
| The CEO is entitled to a cash amount equal to 24 months of COBRA and other currently serving NEOs are entitled to a cash amount equal to 12 months. |
Executive Compensation | Executive Compensation Tables | Evergy 2023 Proxy Statement 62 |
TABLE OF CONTENTS Under the terms of Mr. Greenwood’s Release and Severance Agreement, he was eligible to receive $1,183,129 in severance pay upon his termination on July 1, 2022 which was distributed in accordance with the Severance Plan. Retirement Upon retirement, each NEO would receive a lump sum cash payment of all earned and unpaid salary, accrued but unused vacation, retirement benefits and deferred compensation, among other benefits. Please refer to the “Pension Benefits” section of this proxy statement for information regarding retirement benefits and the “Non-qualified Deferred Compensation” section of this proxy statement for information on deferred compensation. Restricted stock unitsRSUs granted by Evergy vest on a pro rata basis (based on actual performance in the case of performance-based restricted stock units)RSUs) on the scheduled vesting date in the case of retirement. Retirement means an officer’s separation from service (i) after reaching age 60 and having ten years of service and (ii) the officer having provided a minimum of six-months’ advance notice of retirement.
Death or Disability In the event of death or disability, the NEO or their beneficiary would receive a lump sum cash payment of all accrued and unpaid salary, unused vacation and the retirement benefits and deferred compensation discussed above. Restricted stock unitsRSUs granted by Evergy vest in full (at target in the case of performance-based restricted stock units)RSUs) upon death or disability. NEOs or their beneficiaries are eligible for a pro-ratedprorated portion of annual incentive planAIP awards.
Resignation or Termination In the event of resignation or termination not covered by the severance plan, the NEO would receive a lump sum cash payment of all accrued and unpaid salary, unused vacation and the retirement benefits and deferred compensation discussed above. The NEO would also be entitled to continue health insurance benefits, at his or her own cost, as mandated by COBRA, or to elect retiree medical coverage if eligible to do so. All outstanding equity and annual incentive awards would be terminated unless the Board took other action in its sole discretion. As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(v) of Regulation S-K of the Exchange Act, we are providing the following information about the relationship between executive compensation actually paid and certain financial performance of the Company. For further information concerning the Company's pay-for-performance philosophy and how the Company aligns executive compensation with the Company's performance, refer to “Compensation Discussion and Analysis.” Executive Compensation | Executive Compensation Tables | Evergy 20222023 Proxy Statement 6563 |
TABLE OF CONTENTS Pay versus Performance Table
The following table provides information with respect to pay versus performance that depicts the relationship between compensation “actually paid” to NEOs and “financial performance” over the last three fiscal years (2022, 2021, and 2020). | 2022 | | | 6,888,316 | | | 5,917,556 | | | | | | | | | 2,330,857 | | | 1,572,392 | | | 104 | | | 120 | | | 765,000,000 | | | 14th percentile rank | | | 2021 | | | 11,138,082 | | | 14,514,047 | | | 120,175 | | | (2,145,521) | | | 3,462,946 | | | 4,230,234 | | | 110 | | | 118 | | | 891,900,000 | | | 86th percentile rank | | | 2020 | | | | | | | | | 8,999,456 | | | 5,338,893 | | | 2,710,599 | | | 1,873,812 | | | 88 | | | 99 | | | 630,000,000 | | | 47th percentile rank | |
(1)
| The dollar amounts reported in this column are the amounts of total compensation reported for Mr. Campbell (CEO-1) for each corresponding year in the “Total” column of the Summary Compensation Table for each year during which he served as Chief Executive Officer. The values for Mr. Campbell shown in this column in 2021 include an inducement cash bonus and equity award, both received pursuant to his offer letter. Specifically, Mr. Campbell received an inducement cash bonus of $1,250,000 and an inducement equity award of RSAs under the LTIP valued at $3,000,000. |
(2)
| The dollar amounts reported in this column are the amounts of total compensation reported for Terry Bassham, Evergy’s former President and Chief Executive Officer (CEO-2), for each corresponding year in the “Total” column of the Summary Compensation Table for each year during which he served as Chief Executive Officer. |
(3)
| The dollar amounts reported in this column represent the average of the amounts reported for the Company's NEOs as a group (excluding the Chief Executive Officer) in the “Total” column of the Summary Compensation Table in each applicable year. The names of each of the NEOs included for purposes of calculating the average amounts in each applicable year are as follows: (i) 2022: Mr. Andrews, Mr. Bryant, Mr. Caisley, Ms. Humphrey, and Mr. Greenwood; (ii) 2021: Mr. Andrews, Mr. Bryant, Mr. Caisley, Mr. Greenwood, and Tony Somma, former Executive Vice President and Chief Financial Officer; (iii) 2020: Mr. Bryant, Mr. Greenwood, Ms. Humphrey, and Mr. Somma. |
Executive Compensation | Executive Compensation Tables | Evergy 2023 Proxy Statement 64 |
TABLE OF CONTENTS (4)
| In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to the total compensation reported in the table above for each year to determine compensation actually paid: |
| Reported Summary Compensation Table Totals | | | 2,330,857 | | | 6,888,316 | | | 3,462,946 | | | 11,138,082 | | | 120,175 | | | 2,710,599 | | | 8,999,456 | | | Calculations/Adjustments | | | | | | Deduction for Amounts Reported under the “Stock Awards” and “Option Awards” Columns in the Summary Compensation Table for Applicable fiscal year (“FY”) | | | 954,315 | | | 4,314,667 | | | 1,510,377 | �� | | 7,306,661 | | | 0 | | | 965,327 | | | 5,812,071 | | | Deduction for Change in the Actuarial Present Values reported under the “Change in Pension Value” and “Change in SERP” amounts Column of the Summary Compensation Table for Applicable FY | | | 50,409 | | | 0 | | | 90,855 | | | 0 | | | 0 | | | 512,322 | | | 529,208 | | | Increase based on ASC 718 for the Fair Value of Awards Granted during Applicable FY that Remain Unvested as of Applicable FY End | | | 781,549 | | | 4,122,554 | | | 2,117,444 | | | 9,200,902 | | | 0 | | | 640,409 | | | 3,103,464 | | | Increase based on ASC 718 for the Fair Value of Awards Granted during Applicable FY that Vested during Applicable FY | | | 4,770 | | | 0 | | | 0 | | | 1,236,215 | | | 0 | | | 0 | | | 0 | | | Increase/deduction for Awards Granted during Prior FY that were Outstanding and Unvested as of Applicable FY End | | | (444,733) | | | (1,025,593) | | | 347,084 | | | 0 | | | 1,271,479 | | | (187,423) | | | (1,015,362) | | | Increase/deduction for Awards Granted during Prior FY that Vested During Applicable FY | | | (98,739) | | | (102,342) | | | 3,500 | | | 0 | | | (38,248) | | | 17,272 | | | 230,844 | | | Deduction based on ASC 718 Fair Value for Awards Granted during Prior FY that were Forfeited during Applicable FY | | | (184,311) | | | 0 | | | (259,629) | | | 0 | | | (3,533,976) | | | 0 | | | 0 | | | Increase for Dividends or Other Earnings Paid during Applicable FY prior to Vesting Date | | | 55,073 | | | 349,288 | | | 48,842 | | | 245,509 | | | 35,048 | | | 42,081 | | | 191,327 | | | Increase for Incremental Fair Value of Options/SARs Modified during Applicable FY | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | Increase for Service Cost and, if applicable, Prior Service Cost for Pension Plans | | | 134,685 | | | 0 | | | 111,279 | | | 0 | | | 0 | | | 128,523 | | | 170,443 | | | Total Adjustments per Fiscal Year | | | (758,765) | | | (970,761) | | | 767,288 | | | 3,375,965 | | | (2,265,697) | | | (836,787) | | | (3,660,563) | | | Compensation Actually Paid per Fiscal Year | | | 1,572,392 | | | 5,917,556 | | | 4,230,234 | | | 14,514,047 | | | (2,145,521) | | | 1,873,812 | | | 5,338,893 | |
(a)
| The 2022 Summary Compensation Table Average Total Compensation for the Other NEOs includes the following one-time payments related to Mr. Greenwood’s CSO Transition: $1.18 million of cash severance to be paid in connection with his termination by the Company without Cause pursuant to the Executive Severance Plan. |
(b)
| The 2021 Summary Compensation Table Average Total Compensation for the Other NEOs includes the following one-time payments related to the CFO Transition: (i) Mr. Andrews: a cash bonus of $1.2 million and an award of RSUs valued at $2.6 million granted as an inducement to join the Company as Chief Financial Officer and to compensate him for forfeited awards at his prior employer; and (ii) Mr. Somma: a cash payment of $2.92 million in connection with his Termination without Cause after a change-in-control pursuant to the Westar Energy amended and restated change in control agreement. |
(c)
| The 2021 Compensation Actually Paid to Mr. Bassham reflects the forfeiture of nearly forty-percent of his 2019 RSU grants and over seventy-percent of his 2020 RSU grants in connection with his retirement on January 4, 2021, in accordance with the terms of the applicable award agreements. |
Executive Compensation | Executive Compensation Tables | Evergy 2023 Proxy Statement 65 |
TABLE OF CONTENTS (5)
| The dollar amounts reported in these columns represent the amount of “compensation actually paid” to our Chief Executive Officer and the average amount of “compensation actually paid” to our NEOs as a group (excluding our Chief Executive Officer) in each applicable year, as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual amount of compensation earned by or paid to our Chief Executive Officer or other NEOs during the applicable year. Refer to the table above entitled “Calculation of Compensation Actually Paid” for the adjustments made to the total compensation reported for each year to determine the compensation actually paid as reported in accordance with the requirements of Item 402(v) of Regulation S-K. Assumptions made in the valuation of performance-based RSUs that vest based on Evergy’s relative TSR reflected in the calculation of Compensation Actually Paid are as follows: |
| 2019 grant | | | 49% | | | 3.86% | | | 0.10% | | | 2020 grant | | | 36% | | | 3.86% | | | 0.13% | |
| 2020 grant | | | 18% | | | 3.34% | | | 0.39% | | | 2021 grant | | | 37% | | | 3.34% | | | 0.73% | |
| 2021 grant | | | 23% | | | 3.90% | | | 4.68% | | | 2022 grant | | | 21% | | | 3.90% | | | 4.35% | |
(6)
| The 2021 Summary Compensation Table amounts for Mr. Bassham and Mr. Somma include the change in pension value and above market earnings on deferred compensation which were not included in the Summary Compensation Table previously. |
(7)
| Cumulative TSR is calculated by dividing the sum of the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and the difference between the Company's share price at the end and the beginning of the measurement period by the Company's share price at the beginning of the measurement period. |
(8)
| Represents the weighted peer group TSR, weighted according to the respective companies' stock market capitalization at the beginning of each period for which a return is indicated. The peer group used in this measurement is the S&P 500 Electric Utility Index. |
(9)
| The dollar amounts reported represent the amount of net income reflected in the Company's audited financial statements for the applicable year. |
(10)
| The Company Selected Measure represents the percentile rank of the Company’s TSR relative to the companies included in the EEI Index for each fiscal year. |
Executive Compensation | Executive Compensation Tables | Evergy 2023 Proxy Statement 66 |
TABLE OF CONTENTS Financial Performance Measures
As described in more detail in “Compensation Discussion and Analysis,” the Company’s executive compensation program reflects a pay for performance philosophy. The metrics that the Company uses for both AIP and LTIP awards are selected to support achievement of our business strategy without encouraging excessive risk-taking. Pay for performance is one of the primary objectives of our compensation program. The most important financial measures used by the Company to link executive compensation actually paid to the Company's NEOs, for the most recently completed fiscal year, to the Company's performance are as follows: TSR versus companies in the EEI Index Adjusted EPS Adjusted NFOM (Non-Fuel Operating and Maintenance Expense for Incentive Compensation) Three Year Cumulative Adjusted EPS
In addition, the Company considers additional non-financial measures, including those relating to safety, operations, customer experience, environmental factors, and DE&I. These measures are intended to support our short- and long-term strategic plans and align with the creation of shareholder value. See “Compensation Discussion and Analysis” for a description of these measures. Analysis of Pay versus Performance Table
As described in more detail in the section “Compensation Discussion and Analysis,” the Company’s executive compensation program reflects a pay for performance philosophy. While the Company utilizes several performance measures to align executive compensation with Company performance, all of those Company measures are not presented in the Pay versus Performance table above. Further, the Company generally seeks to incentivize long-term performance and, therefore, does not specifically align the Company’s performance measures with compensation that is actually paid (as computed in accordance with Item 402(v) of Regulation S-K) for a particular year. In accordance with Item 402(v) of Regulation S-K, the Company is providing a graphical description below of the following “Pay vs. Performance” relationships over each of the years shown in the Pay versus Performance Table: 1.
| The following graph compares the CEOs’ and average other NEOs’ compensation actually paid versus the Company’s cumulative TSR. |
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| The following graph compares the Company’s TSR versus the peer group’s cumulative TSR. |
3.
| The following graph compares the CEOs’ and average other NEOs’ compensation actually paid versus the Company’s net income. |
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| The following graph compares the CEOs’ and average other NEOs’ compensation actually paid versus the Company’s Relative TSR Rank (Company selected measure). |
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As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K of the Exchange Act, we determined the ratio of the annual total compensation of our CEO compared to the annual total compensation of our median employee. To identify the median employee, we compiled a list of all employees who were employed full-time, part-time or seasonally on October 1, 2021.2022. We reviewed annual total cash compensation for each employee on the list as of December 31, 20212022 to identify the “median employee.” Annual total cash compensation included, among other items, earned wages, overtime, short-term incentive and recognition payments, as applicable. Our “median employee” is a union employee with an annual base salary of $90,649$105,557 for 2021,2022, and annual total compensation, calculated in the same manner as is done for Mr. Campbell, of $133,369$126,186 for 2021.2022. The calculation for annual total compensation does not represent the amount of cash compensation realized by our median employee in 20212022 and does not represent the amount of compensation that the employee will receive. Rather, SEC rules require that we include in this amount any change in the present value of estimated accrued pension benefits, even though no pension benefits were paid to or received by the median employee during 2021.2022. Year-over-year changes in pension value are driven by two primary factors: additional service/benefit accruals (which increases the value) and changes in actuarial pension assumptions. Mr. Campbell had total annual compensation of $11,138,082$6,888,316 for 2022 as reflected in the Summary Compensation Table. As a result, for 2021,2022, we estimate that the ratio of Mr. Campbell’s total annual compensation to that of our median employee was approximately 84:1. Due to the special inducement awards of restricted stock and cash bonus awarded to Mr. Campbell for fiscal 2021 in connection with his appointment as CEO, the fiscal 2021 pay ratio is materially higher than our CEO pay ratio in fiscal 2020. If we were to exclude these special awards of restricted stock and cash bonus to Mr. Campbell for fiscal 2021, our CEO compensation would have been $6,984,663 and the resulting CEO pay ratio would have been 52:55:1.
Because the SEC rules for identifying the median of the annual total compensation of our employees and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices, the pay ratio reported by other companies may not be comparable to the pay ratio for Evergy, as other companies have different employee populations and compensation practices and may utilize different methodologies, estimates and assumptions in calculating their pay ratios. Executive Compensation | Executive Compensation Tables | Evergy 20222023 Proxy Statement 6670 |
TABLE OF CONTENTS Proposal
3 | | | | | | Approval of the Evergy, Inc. Amended and Restated
Long-Term Incentive Plan.
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| | | The Board recommends a vote FOR approval of the amended Long-Term Incentive Plan.
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APPROVAL OF THE AMENDED LONG-TERM INCENTIVE PLAN
Item 3 on the Proxy Card
A summary of the principal features of the LTIP, as amended, is provided below. This summary does not discuss every aspect of the LTIP. We urge you to read the full text of the Amended LTIP contained in Appendix C of this Proxy Statement. We will provide without charge a copy of the LTIP (as proposed to be amended or as in its current form) to any shareholder who requests a copy.
Overview
Our shareholders initially approved our LTIP in 1992 (as the Great Plains Energy Incorporated Long-Term Incentive Plan), and approved amendments in 2002, 2007, 2011 and 2016. Our LTIP was amended most recently in 2018 in connection with the merger of Great Plains Energy Incorporated into the Company. The LTIP’s purposes are to encourage directors, officers and certain other employees of the Company to acquire and increase an equity interest in the growth and performance of the Company, to provide an incentive to enhance the value of the Company for the benefit of its shareholders and customers, and to aid in attraction and retention. The Board believes that the LTIP has been successful, but that it should be amended to extend the term, to increase the maximum number of shares of the Company’s common stock available for awards issues under the LTIP and to make other changes as described below to reflect current practices in equity plan design and other changes the Board believes will be beneficial with respect to ongoing administration of the LTIP. The Board approved the amended LTIP on February 15, 2022 (the “Amended LTIP”), and directed that it be submitted to our shareholders for approval. If approved, the Amended LTIP will be effective as of May 3, 2022, and will expire on May 3, 2032. If not approved, the existing LTIP will continue in its current form.
Principal Changes to the LTIP
The principal changes that the amendments will make to the current LTIP are:
Extension of LTIP Term. The Amended LTIP extends the term of the LTIP from May 3, 2026 until May 3, 2032.
Increase the Maximum Number of Shares Available for Awards. Currently, the aggregate number of shares of the Company’s common stock available for awards granted under the LTIP is 4,784,800, all of which may be subject to incentive stock option treatment. The Amended LTIP increases the number shares available for awards by 5,780,000 shares, such that the maximum number of shares available for awards under the Amended LTIP shall be 10,564,800. As of March 2, 2022, simple dilution arising from the LTIP was 0.88%. Simple dilution was calculated as the total overhang (outstanding grants pursuant to the LTIP) of 2,010,011 shares (assuming performance-based awards vest at target) plus 967,491 shares that remained available for issuance under the LTIP divided by the total common shares outstanding as of March 2, 2022 of approximately 229,323,829 shares. With the approval of the share increase pursuant to the Amended LTIP, simple dilution would be 3.40. The Committee believes that the proposed share increase represents a reasonable amount of potential equity dilution to accommodate the Company’s long-term strategic priorities and executive retention goals. Furthermore, in evaluating the proposed share increase, the Committee considered the Company’s historic share repurchase activities.
Delegation of Authority to Grant Awards. The Amended LTIP gives the Committee greater flexibility to delegate to executive officers of the Company its authority to grant awards to individuals who are not directors or executive officers and to cancel or suspend such awards.
Annual Grant Limit for Awards to Non-Employee Directors. The Amended LTIP prohibits an individual non-employee director from receiving awards with a grant date fair value in excess of $750,000 during any calendar year. This limitation is in addition to the limit on the number of shares which may be granted to an individual in any calendar year.
Annual Grant Limit for Awards to Participants. The Amended LTIP increases the maximum number of shares that may be granted to an individual in any calendar year from 299,050 to 500,000.
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Limitation on Payment of Dividends and Dividend Equivalents. The Amended LTIP provides that dividends or dividend equivalents will not be paid unless and until the underlying award has vested.
Minimum Vesting Requirement. The Amended LTIP clarifies that all awards granted to individuals who are not non-employee directors are subject to a one-year minimum vesting period, but up to five percent (5%) of the shares available for awards under the Amended LTIP may be granted with a shorter vesting period. The Amended LTIP provides that awards for which vesting is accelerated on account of the recipient’s death, disability, or separation from service is an allowable exception to this rule. This universal minimum vesting requirement in the Amended LTIP replaces redundant minimum vesting provisions appearing throughout the LTIP.
Extending the Post-Termination Exercise Period of Options and SARs. The Amended LTIP allows options and SARs to be exercised up to three months after the holder’s terminations of service. Currently, the three-month post-termination exercise period applies only to retirements. The Amended LTIP also tolls the three-month post-termination exercise period if the holder is barred from cashless exercising the option or SAR due to registration requirements under the Securities Act of 1933, as amended, or other securities-related restrictions/blackouts.
Clarify that Non-Employee Directors May Convert Cash Fees to Deferred Share Units. The Amended LTIP clarifies that non-employee directors may elect to convert cash fees into director deferred share units.
Revisions to Permitted Transfer Provisions. The Amended LTIP clarifies that awards may not be transferred to a financial institution and provides more robust language relating to transfers of awards for estate and tax planning (as permitted by the Company).
Removal of Obsolete Code Section 162(m) Provisions. The Amended LTIP removes outdated references to Internal Revenue Code Section 162(m) (“Code Section 162(m)”) and removes legacy Code Section 162(m) restrictions on the Committee’s ability to make upward adjustments to performance goal achievement or waive vesting conditions.
Allow Clawback of Awards Pursuant to Company Policy. The Amended LTIP allows for clawback of awards pursuant to a policy or other agreement the Company adopts.
The Board of Directors unanimously recommends a vote FOR approval of the proposal.
A summary of the principal features of the Amended LTIP is provided below. Where the current LTIP differs from the Amended LTIP, the change is described. This summary does not discuss every aspect of the Amended LTIP. We urge you to read the full text of the Amended LTIP contained in Appendix C of this proxy statement.
Summary of the Amended LTIP
Available Shares
The LTIP currently provides for a maximum of 4,784,800 shares of our common stock to be issued, all of which may be subject to incentive stock option treatment. The Amended LTIP increases the number of shares available for awards by 5,780,000 shares, such that the maximum number of shares available for awards under the Amended LTIP shall be 10,564,800. On March 2, 2022, there were approximately 967,491 shares of our common stock available to be issued under the LTIP, assuming outstanding performance-based awards vest at target. On March 2, 2022, the closing price of our common stock was $61.81 per share.
Eligibility
Any director, officer or any person employed on a regularly scheduled basis by Evergy, Inc. or any of our subsidiaries is eligible to receive LTIP awards. At December 31, 2021, we had 4,930 employees.
Granting of LTIP Awards
Under the Amended LTIP, awards may be granted by the “Committee,” which includes the Compensation and Leadership Development Committee (or any successor committee that is vested with oversight of long-term compensation plans) or the independent members of the Board, composed in each case of not less than two directors, each of whom is both a “non-employee director” within the meaning of Rule 16b-3(b)(3) under the Exchange Act, or any other committee of the Board to whom the Board has delegated its authority under the Amended LTIP. In addition, a committee (comprised of two or more directors who need not be non-employee directors) may make LTIP awards to individuals who are not directors or
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executive officers of the Company. In no event may the Committee reprice outstanding Options or SARs (including underwater stock options or SARS) unless such a repricing is approved by the Company’s shareholders or would not be deemed to be a repricing under New York Stock Exchange rules.
Administration of the Amended LTIP
The LTIP is administered by the Committee for, and on behalf of, the Board. Currently, the Committee has all of the powers (other than amending or terminating the LTIP) respecting the LTIP. The Amended LTIP gives the Committee greater flexibility to delegate to executive officers of the Company its authority to grant awards to individuals who are not directors or executive officers and to cancel or suspend such awards.
Annual Limitations on Awards
The LTIP currently does not include a dollar amount limitation on awards. The Amended LTIP prohibits non-employee directors from receiving awards with a grant date fair value in excess of $750,000 during any calendar year. This limitation is in addition to the limit described below on the number of shares which may be granted to an individual in any calendar year.
The LTIP limits the maximum number of shares with respect to which a LTIP award or awards (other than a substitute award) may be granted to any participant in any single calendar year. The current limit is 299,050 shares. The Amended LTIP increases the maximum number of shares that may be granted to an individual in any calendar year to 500,000 shares. This limit would automatically and proportionately increase or decrease in the event of a stock split or stock dividend and as provided in the Amended LTIP.
Vesting of LTIP Awards
Notwithstanding any other provisions in the Amended LTIP, the Amended LTIP clarifies that all awards granted to individuals who are not non-employee directors are subject to a one-year minimum vesting period, but up to five percent (5%) of the shares available for awards under the LTIP may be granted with a shorter vesting period. The Amended LTIP provides that awards for which vesting is accelerated on account of the recipient’s death, disability, or separation from service is an allowable exception to this rule. This universal minimum vesting requirement in the Amended LTIP replaces redundant minimum vesting provisions appearing throughout the current LTIP.
Performance Criteria
Under the current LTIP, performance-based awards may be subject to the achievement of one or more of the following performance goals, which shall be calculated on a GAAP or non-GAAP basis and based on the attainment of one or any combination of the following metrics, which may be established on an absolute or relative basis for the Company as a whole or any of its subsidiaries, operating divisions or other operating units, and which may be measured in the aggregate or on a per share basis:
1.
| Earnings measures, including net earnings on either a last in, first out (“LIFO”), first in, first out (“FIFO”) or other basis; |
2.
| Operating measures, including operating income, operating earnings, operating margin, funds from operations and operating measures determined on an absolute basis or relative to another performance measure such as total adjusted debt; |
3.
| Income or loss measures, including net income or net loss; |
4.
| Cash flow measures, including cash flow or free cash flow and measures based on all operations or a designated segment of operations; |
6.
| Measures based on expense levels, including measures such as non-fuel operating and maintenance determined either on a Company-wide basis or in respect of any one or more subsidiaries or business units; |
7.
| Operating and maintenance cost management and productivity measures including System Average Interruption Duration Index (SAIDI), System Average Interruption Frequency Index (SAIFI) and measures based on an Equivalent Availability Factor (EAF) for coal and nuclear divisions; |
8.
| Return measures, including shareholder return, return on assets, investments, equity, or sales, and whether determined on an absolute basis or relative to another performance measure or industry peer group (e.g., Edison Electric Institute (EEI) index); |
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9.
| Growth or rate of growth in any of the performance measures set forth in the Amended LTIP; |
10.
| Share price (including attainment of a specified per-share price during the award period; growth measures and total shareholder return or attainment by the shares of a specified price for a specified period of time); |
11.
| Strategic business criteria, consisting of one or more objectives based on meeting specified revenue, market share, market penetration, geographic business expansion goals, objectively identified project milestones, production volume levels, and cost targets; |
12.
| Accomplishment of, or goals related to, mergers, acquisitions, divestitures, dispositions, public offerings or similar extraordinary business transactions; |
13.
| Achievement of business or operational goals such as market share and/or business development and/or customer objectives; |
14.
| Achievement of credit ratings or certain credit quality levels; |
15.
| Achievement of goals based on or related to safety, including safety training, safety audits, Days Away, Restricted or Transferred (DART), and Occupational Safety and Health Administration (OSHA) incident ratings; and/or |
16.
| Achievement of goals based on or related to customer satisfaction results, indices or surveys. |
Applicable incentive goals may be applied on a pre-tax or post-tax basis. The Committee may, when the applicable incentive goals are established, provide that the formula for such goals may include or exclude items to measure specific objectives, such as losses from discontinued operations, extraordinary gains or losses, the cumulative effect of accounting changes, acquisitions or divestitures, foreign exchange impacts, mark-to-market gains and losses from energy contracts, and any unusual, nonrecurring gain or loss. The incentive goals may also include other incentive goals established by the Committee.
The Amended LTIP does not change these performance criteria.
Types of LTIP Awards
Types of awards available under the Amended LTIP are Restricted Stock, RSUs, Options, SARs, Bonus Shares, Performance Shares, Director Shares and Director Deferred Share Units. Dividend equivalents are also permitted to be granted in connection with LTIP awards other than for Options or SARs. Except as described below, LTIP awards are paid in shares of our common stock. Shares may be newly-issued, issued out of treasury shares or purchased by the Company in open-market transactions.
The Committee has broad powers and discretion with respect to all types of LTIP awards. For example, except as noted below under the various types of LTIP awards, the Committee determines the vesting, exercise and payment conditions or restrictions on LTIP awards and generally has the discretion to accelerate the vesting, exercisability or payment of a LTIP award. For Restricted Stock and RSU awards the restriction period and performance-based requirements (if any) are set at the discretion of the Committee, and the restriction period can be up to 10 years.
Restricted Stock. Restricted Stock are shares of our common stock that cannot be sold, transferred, pledged or hypothecated until the service-based or performance-based requirements are met. The holders of the restricted stock may vote the shares, and any dividends paid on the Restricted Stock are subject to the same restrictions.
RSUs. RSUs are rights to receive shares of our common stock (or cash, at the Committee’s discretion) at some future date upon satisfaction of certain service-based or performance-based requirements. RSUs represent an unfunded, unsecured obligation of the Company. Holders of RSUs have no voting rights with respect to the underlying common stock unless and until the common stock is paid. Unless otherwise provided in an award agreement, dividend equivalents are credited either in the form of additional RSUs or deferred cash, and will be paid at the same time as the RSUs are paid.
Options. Options give the holder the right to purchase shares of our common stock, which may include provisions for the Options to qualify as “incentive stock options” under Section 422 of the Internal Revenue Code. The per share Option exercise price is set by the Committee, and must be at least 100 percent (100%) of the fair market value of a share of our common stock on the date of grant. Each Option shall become exercisable within the Option Period set by the Committee, not to exceed 10 years from its date of grant. At the time of exercise, the Option Price is payable in any manner allowed under applicable law and as permitted by the Committee, which may include, among other methods, the payment of cash or check or Company stock, or through a “net exercise” arrangement under which the Company will reduce the number of shares issued upon exercise by the largest number of whole shares that has a fair market value on the exercise date that does not exceed the aggregate Option Price, with the remainder of the Option Price paid in cash. Any proceeds we receive from the exercise of Options will be used for general corporate purposes. The Options are exercisable either in full or in part, with a partial exercise not affecting the exercisability of the balance of the Options. The Options are not transferable by the holder other than by will, the laws of descent or pursuant to a proper domestic relations order.
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An Option lapses upon the first occurrence of one of the following circumstances: (i) 10 years from the date of grant; (ii) except as may otherwise be provided for in an award agreement, three months following the holder’s termination (other than in connection with a change in control), (iii) the expiration of the term of the Option as set forth in an award agreement, or (iv) 12 months from the date on which a holder is classified as disabled as defined in the Company’s Long-Term Disability Plan. If, however, the holder dies within the Option period and prior to the lapse of the Option, the Option will lapse unless it is exercised within the Option period or 12 months from the date of the holder’s death, whichever is earlier, by the holder’s legal representative or representatives or by the person or persons entitled to do so under the holder’s will or, if the holder shall fail to make the disposition of such Option or dies intestate, by the person or persons entitled to receive the Option under the applicable laws of descent and distribution. A holder or a transferee of a holder has no rights as a shareholder with respect to any shares of common stock covered by an Option, until the date the Option is exercised.
Under the Amended LTIP, Options cease to be exercisable at the earliest of (i) the holder’s purchase of the common stock to which the Option relates or (ii) the lapse of the Option.
Under the current LTIP, the three-month post-termination exercise period applies only in the context of a participant’s retirement. As noted above, the Amended LTIP allows Options to be exercised up to three months after the holder’s terminations of service. The Amended LTIP tolls the three-month post-termination exercise period if the holder is barred from implementing a cashless exercise of the Option due to a registration requirement under the Securities Act of 1933, as amended, or other securities law requirements.
Stock Appreciation Rights. SARs give the holder the right to receive, as of a specified date, an amount equal to the number of shares with respect to which the SAR is exercised, multiplied by the excess of the fair market value of one share of stock on the exercise date over the strike price. In no event may the compensation payable under a SAR be greater than the excess of the fair market value of a share of our stock on the SAR’s exercise date over the fair market value of a share of our stock on the date of grant of the SAR. SARs do not include any feature for compensation deferral, other than deferral of income recognition until the SAR is exercised. The granting of a SAR shall impose no obligation on the holder to exercise such SAR.
Each SAR shall become exercisable in such manner and within such period or periods not to exceed 10 years from its grant date, as set forth in an award agreement.
Under the Amended LTIP, a SAR will lapse upon the first occurrence of one of the following circumstances: (i) 10 years from the date of grant; (ii) except as may otherwise be provided for in a SAR agreement, three months following the holder’s termination (other than in connection with a change in control), (iii) the expiration of the term of the SAR as set forth in an award agreement, or (iv) 12 months from the date on which a holder is classified as disabled as defined in the Company’s Long-Term Disability Plan. If, however, the holder dies within the period during which the SAR is exercisable and before the lapse thereof, the SAR shall lapse unless it is exercised within such SAR exercise period or twelve months from the date of the holder’s death, whichever is earlier, by the holder’s legal representative or representatives or by the person or persons entitled to do so under the holder’s will or, if the holder shall fail to make testamentary disposition of such SAR or shall die intestate, by the person or persons entitled to receive said SAR under the applicable laws of descent and distribution.
Under the current LTIP, the three-month post-termination exercise period applies only in the context of a participant’s retirement. As noted above, the Amended LTIP allows SARs to be exercised up to three months after the holder’s terminations of service. The Amended LTIP tolls the three-month post-termination exercise period if the holder is barred from exercising the SAR due to a registration requirement under the Securities Act of 1933, as amended, or other securities law requirements.
Performance Shares. A Performance Share is the right to receive a payment subject to satisfaction of the terms and conditions established by the Committee. Payments will normally be made in shares of common stock; however, the Committee has the discretion to authorize payment in cash or a combination of cash and common stock.
The Committee may also grant dividend equivalents related to the Performance Shares, which are payable when and to the extent payment is made on the underlying Performance Shares. Unless otherwise provided in a Performance Share award agreement, if the award agreement provides for the payment of dividend equivalents, the dividend equivalents will be equal to the dividends paid during the entire award period for which the Performance Shares relate and not just that period of time after the Performance Shares were granted. Payment of dividend equivalents may be made in cash or shares of stock.
The performance goals to be achieved for each award period and the amount of the award to be distributed upon satisfaction of those performance goals shall be conclusively determined by the Committee. When the Committee determines whether a performance goal has been satisfied for any award period, the Committee, where the Committee deems appropriate, may make such determination using calculations which alternatively include and exclude one, or more than one event or transaction that is either of an “unusual nature” or “infrequency of occurrence” as determined under GAAP, and the Committee may determine whether a performance goal has been satisfied for any award period taking into account the alternative which the Committee deems appropriate under the circumstances. Except in the event of a change in control, no payment of Performance Shares will be made before the end of the performance period. However, the Committee has the discretion to either accelerate
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payment, or to make or prorate payment at the end of the performance period, where the holder retired, became disabled or died during the performance period, or in other special circumstances. The Amended LTIP did not make any material modifications specifically to Performance Shares.
Bonus Shares. Bonus Shares are shares that are awarded without cost and without restriction in recognition of past performance (whether determined by reference to another employee benefit plan or otherwise) or as an incentive to become an employee, as permitted by applicable law. The Amended LTIP did not make any material modifications specifically to Bonus Shares.
Director Shares and Director Deferred Share Units. We may pay compensation to our non-employee directors in the form of shares of common stock or in cash. Each non-employee director may elect to have his/her non-employee director equity fees paid on a deferred basis. Non-employee directors may also elect to have their non-employee director cash fees converted into Director Deferred Share Units and paid on a deferred basis. Any such election must be made prior to the calendar year in which services related to the compensation are to be performed. In the absence of any election made by a non-employee director, all non-employee director equity fees will be paid on a current basis through the issuance of Director Shares and all non-employee director cash fees will be paid on a current basis through cash payments to the non-employee director. Dividends paid on our common stock will be converted into additional Director Deferred Share Units. On the January 31 following the non-employee director’s termination of service on our Board, all of his or her Director Deferred Share Units will be converted into an equal number of shares of common stock and distributed to the person.
The Amended LTIP clarifies that non-employee directors may elect to convert cash fees, not just equity fees, into Director Shares or Director Deferred Share Units.
Other Award Types and Award Features
Performance Awards. The Amended LTIP provides that all of the types of LTIP awards discussed above may be issued, granted, become vested or payable, as the case may be, upon the achievement of certain performance goals. These are referred to under the Amended LTIP as “Performance Awards.” The objective performance goals established by the Amended LTIP are listed under “Performance Goals”.
The Amended LTIP eliminates the restrictions on adjustments related to the outdated references to Code Section 162(m) and makes clear that the Committee may adjust upwards or downwards the amount payable pursuant to such awards or waive or amend the criteria necessary for the achievement of the applicable performance goals.
Substitute Awards. The Amended LTIP would provide that Substitute Awards may be granted by the Committee in replacement of stock and stock-based awards held by current and former employees or non-employee directors of, another business that is, or whose stock is, acquired by the Company or a Subsidiary of the Company, in order to partially or fully preserve the economic value of all or a portion of the replaced award, on such terms and conditions (including price) as the Committee determines. The Amended LTIP further provides that shares issued pursuant to a Substitute Award will not count against the overall share limit of the Amended LTIP.
Other Stock-Based Awards. The Amended LTIP would allow for grants of “other stock-based awards” which would be awards of our shares or payments of cash that are valued in whole or in part by reference to, or are otherwise based on, our shares, other property, or achievement of performance metrics or measures but not specifically one of the other types of delineated awards under the Amended LTIP. At this time, the Committee has no plans to grant a LTIP award other than those described above under “Summary of the Amended LTIP-Type of Award” but, if the Amended LTIP is approved, will have the ability to do so in the future.
Dividend Equivalents. The Committee has the ability to grant a participant rights to receive dividend equivalents with respect to certain types of LTIP awards other than an Option or SAR. The dividend equivalents may be granted currently or on a deferred basis. The Committee may provide that the dividend equivalents (if any) shall be deemed to have been reinvested in additional shares of stock or otherwise reinvested and may provide that the dividend equivalents are subject to the same vesting or performance conditions as the underlying LTIP award. Dividend equivalents credited in connection with a LTIP award must be subject to restrictions and risk of forfeiture to the same extent as the LTIP award with respect to which the dividend equivalents have been credited. The Amended LTIP provides that dividends or dividend equivalents will not be paid unless and until the underlying award has vested.
Fractional Shares. No fractional shares will be issued or delivered under the Amended LTIP or any LTIP award. The Committee will determine whether cash, other securities, or other property shall be paid or transferred in lieu of any fractional Shares or whether any fractional Shares or any rights thereto shall be canceled, terminated, or otherwise eliminated. The Committee may determine, in its discretion, whether any fractional Share shall be eliminated by rounding up or down.
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Nontransferability and Permitted Transfers. The Amended LTIP clarifies that awards may not be transferred to a financial institution and provides more robust language relating to transfers of awards for estate and tax planning (as permitted by the Company).
In the event of a participant’s death, a participant’s rights and interests in all awards granted under the Amended LTIP shall, to the extent not otherwise prohibited by the Amended LTIP, be transferable by testamentary will or the laws of descent and distribution, and payment of any amounts due under the Amended LTIP shall be made to, and exercise of any Options or SARs may be made by, the participant’s legal representatives, heirs, or legatees. If, in the opinion of the Committee, a person entitled to payments or to exercise rights with respect to the Amended LTIP is disabled from caring for his or her affairs because of a mental condition, physical condition, or age, payment due such person may be made to, and such rights shall be exercised by, such person’s guardian, conservator, or other legal personal representative upon furnishing the Committee with evidence satisfactory to the Committee of such status.
Pursuant to conditions and procedures established by the Committee from time to time, the Committee may permit awards to be transferred without consideration other than nominal consideration to, exercised by, and paid to certain persons or entities related to a participant, including members of the participant's immediate family or trusts whose beneficiaries or beneficial owners are members of the participant's immediate family. Notwithstanding the foregoing, Incentive Stock Options shall only be transferable to the extent permitted in Section 422 of the Internal Revenue Code, or such successor provision thereto, and the treasury regulations thereunder.
Other Important Features of the LTIP
Change in Control. The Amended LTIP provides eligible LTIP award holders with certain benefits following a change in control. Within two years of a change in control of the Company (as defined under the Amended LTIP and as described below), if a participant’s employment is terminated other than for “Cause” or if a participant voluntarily resigns for “Good Reason” (as those terms are defined in the Amended LTIP), then (i) all stock options and SARs then outstanding shall become fully exercisable; (ii) all restrictions (other than restrictions imposed by law) and conditions of all Restricted Stock, RSU and Other Stock-Based Awards then outstanding shall be deemed satisfied as of the date of the change in control; and (iii) all Performance Share Awards shall be deemed to have been fully earned at target as of the date of the change in control, subject to the limitation that any LTIP award which has been outstanding less than the six month anniversary of the LTIP award’s date of grant on the date of participant’s termination of employment shall not be afforded such treatment.Generally, a “change in control” will occur when: a person or group of persons acquires 35 percent or more of our common stock; there is a change in the majority of our Board (other than where a director’s appointment is approved by the other directors); a corporate event such as a merger or reorganization occurs where more than 40 percent of our voting common stock is, after the transaction, held by individuals who were not our shareholders before the transaction; or a liquidation or sale of all or substantially all of our assets occurs. No change in control occurs in connection with transactions where our shareholders essentially have the same ownership as they did before the transaction. For the exact definition of change in control, please refer to the Amended LTIP.
Clawback. The Amended LTIP allows for clawback of LTIP awards pursuant to Company policy, any agreement or plan, or any law, government regulation or stock exchange listing requirement. Under the current LTIP, the Company can only clawback LTIP awards pursuant to policies the Company is required to adopt by law, government regulation or stock exchange listing requirement.
Internal Revenue Code Section 409A. The Amended LTIP is intended to meet the requirements of Section 409A of the Internal Revenue Code, and all payments that are subject to this section will be paid in a manner that will meet such requirements.
Change in Capital Structure. In the event of a stock split, subdivision, consolidation, combination, reclassification or recapitalization involving our common stock, the Committee will, if determined to be necessary, adjust the shares of common stock as to which LTIP awards may be granted under the Amended LTIP, and the shares of common stock then included in each outstanding LTIP award.
Amendments. Our Board may at any time alter, amend, suspend or terminate the Amended LTIP. However, shareholder approval is required for any action that increases the number of shares of common stock which may be issued under the Amended LTIP, or that extends the period for granting Incentive Stock Options, or that modifies the eligibility requirements, or otherwise requires shareholder approval. No modification that adversely affects outstanding LTIP awards will be effective without the consent of the holders of such LTIP awards.
Proposal 3 - Approval of Amended Long-Term Incentive Plan | Evergy 2022 Proxy Statement 73
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New Plan Benefits Table
No benefits or amounts have been awarded or received under the Amended LTIP. Because the amounts to be awarded under the Amended LTIP, and the persons to whom the LTIP awards may be granted, cannot easily be predicted, LTIP awards cannot be determined at this time. See our “Summary Compensation Table” and “Grants of Plan-Based Awards” table for information about LTIP awards under the current LTIP during 2021.
Federal Income Tax Consequences
Based on current provisions of the Internal Revenue Code and the existing regulations thereunder, the anticipated U.S. federal income tax consequences of LTIP awards granted under the Amended LTIP are as described below. The following discussion is not intended to be a complete discussion of applicable law and is based on the U.S. federal income tax laws as in effect on the date hereof. State tax consequences may in some cases differ from those described below.
Restricted Stock. The recognition of income from a LTIP award of restricted stock for federal income tax purposes depends on the restrictions imposed on the shares. Generally, taxation will be deferred until the first taxable year the shares are no longer subject to substantial risk of forfeiture. At the time the restrictions lapse, the participant will recognize ordinary income equal to the then fair market value of the shares. The participant may, however, make an election to include the value of the shares in gross income in the year that the restricted stock is granted. Generally, the Company will be entitled to deduct the fair market value of the shares transferred to the participant as a business expense in the year the participant includes the compensation associated with the restricted stock in income.
RSUs. Generally, no taxes are due when a LTIP award of RSUs is made, but the LTIP award becomes taxable when it vests. In addition, we are entitled to a deduction at the time and in the amount the recipient recognizes income. A participant may not make an Internal Revenue Code Section 83(b) election for the RSUs. Rules relating to the timing of payment of deferred compensation under Internal Revenue Code Section 409A are applicable to RSUs, and any violation of Internal Revenue Code Section 409A could trigger interest and penalties applicable to the participant.
Incentive Stock Options (“ISOs”). ISOs are defined by Section 422 of the Internal Revenue Code. A participant who is granted an ISO does not recognize taxable income either on the date of grant or on the date of exercise. Upon the exercise of an ISO, the difference between the fair market value of the shares received and the option price is, however, a tax preference item potentially subject to the alternative minimum tax.
Upon disposition of shares acquired from the exercise of an ISO, long-term capital gain or loss is generally recognized in an amount equal to the difference between the amount realized on the sale or disposition and the exercise price. However, if the participant disposes of the shares within two years of the date of grant or within one year of the date of the transfer of the shares to the participant (a “Disqualifying Disposition”), then the participant will recognize ordinary income, as opposed to capital gain, at the time of disposition. In general, the amount of ordinary income recognized will be equal to the lesser of (a) the amount of gain realized on the disposition, or (b) the difference between the fair market value of the shares received on the date of exercise and the exercise price. Any remaining gain or loss is treated as a short-term or long-term capital gain or loss, depending on the period of time the shares have been held.
The Company is not entitled to a tax deduction upon either the exercise of an ISO or the disposition of shares acquired pursuant to the exercise of an ISO, except to the extent that the participant recognizes ordinary income in a Disqualifying Disposition. For alternative minimum taxable income purposes, on the later sale or other disposition of the shares, generally only the difference between the fair market value of the shares on the exercise date and the amount realized on the sale or disposition is includable in alternative minimum taxable income.
If a participant pays the exercise price, in whole or in part, with previously acquired shares, the exchange should not affect the ISO tax treatment of the exercise. Upon the exchange, and except as otherwise described herein, no gain or loss is recognized by the participant upon delivering previously acquired shares to us as payment of the exercise price. The shares received by the participant, equal in number to the previously acquired shares exchanged therefore, will have the same basis and holding period for long-term capital gain purposes as the previously acquired shares. The participant, however, will not be able to utilize the prior holding period for the purpose of satisfying the ISO statutory holding period requirements. Shares received by the participant in excess of the number of previously acquired shares will have a basis of zero and a holding period which commences as of the date the shares are transferred to the participant upon exercise of the ISO. If the exercise of any ISO is effected using shares previously acquired through the exercise of an ISO, the exchange of the previously acquired shares will be considered a disposition of the shares for the purpose of determining whether a Disqualifying Disposition has occurred.
Nonqualified Stock Options (“NQSOs”). A participant receiving a NQSO does not recognize taxable income on the date of grant of the NQSO. In general, the participant must recognize ordinary income at the time of exercise of the NQSO in the amount of the difference between the fair market value of the shares on the date of exercise and the option price. The ordinary income recognized will constitute compensation for which tax withholding generally will be required. The amount of ordinary income recognized by a participant will be deductible by us in the year that the participant recognizes the income if we comply with the applicable withholding requirements.
Proposal 3 - Approval of Amended Long-Term Incentive Plan | Evergy 2022 Proxy Statement 74
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Shares acquired upon the exercise of a NQSO will have a tax basis equal to their fair market value on the exercise date or other relevant date on which ordinary income is recognized, and the holding period for the shares generally will begin on the date of exercise or such other relevant date. Upon subsequent disposition of the shares, the participant will recognize long-term capital gain or loss if the participant has held the shares for more than one year prior to disposition, or short-term capital gain or loss if the participant has held the shares for one year or less.
If a participant pays the exercise price, in whole or in part, with previously acquired shares, the participant will recognize ordinary income in the amount by which the fair market value of the shares received exceeds the exercise price. The participant will not recognize gain or loss upon delivering the previously acquired shares to us. Shares received by a participant, equal in number to the previously acquired shares of common stock exchanged therefore, will have the same basis and holding period for long-term capital gain purposes as the previously acquired shares. Shares received by a participant in excess of the number of such previously acquired shares will have a basis equal to the fair market value of the additional shares as of the date ordinary income is recognized. The holding period for the additional shares will commence as of the date of exercise or such other relevant date.
SARs. To the extent that the requirements of the Internal Revenue Code are met, there are no immediate tax consequences to a participant when a SAR is granted. When a participant exercises the right to the appreciation in fair market value of shares represented by a SAR, payments made in shares are normally includable in the participant’s gross income for regular income tax purposes. The Company will be entitled to deduct the same amount as a business expense in the same year. The includable amount and corresponding deduction each equal the fair market value of the shares payable on the date of exercise.
Bonus Shares, Performance Shares, Director Shares and Director Share Units and Other Stock-Based Awards. Any payments, or the fair market value of any shares of stock or other property a participant receives in connection with a Bonus Share, Performance Share, Director Share, Director Share Unit or an Other Stock-Based Award are includable in income in the year received or made available to the participant without substantial limitations or restrictions. Generally, the Company will be entitled to deduct the amount the participant includes in income as a business expense in the year of payment or in the year of related performance if paid by March 15 of the following year.
Dividend Equivalents. All payment of dividend equivalents, whether paid in cash or Shares, will be includable in income in the year received or made available to the participant without substantial limitations or restrictions. The Company will be entitled to deduct the same amount as a business expense in the same year.
Equity Compensation Plan Information.
The following table provides information, as of December 31, 2021, regarding the number of common shares to be issued upon exercise of outstanding options, warrants and rights, their weighted average exercise price, and the number of shares of common stock remaining available for future issuance. The table excludes shares issued or issuable under Great Plains Energy’s defined contribution savings plans.
| Equity compensation plans approved by security holders(3)
| | | | | | | | | | | | Evergy, Inc. Long-Term Incentive Plan
| | | 930,845(1)
| | | $ —(2)
| | | 1,296,632
| | | Equity compensation plans not approved by security holders
| | | —
| | | —
| | | —
| | | Total
| | | 930,845(1)
| | | $—(2)
| | | 1,296,632
| |
(1)
| Includes 253,046 RSUs with time-based requirements, 513,715 RSUs with performance measures at target performance levels, 36,036 restricted share awards and director deferred share units for 128,048 shares of Evergy common stock outstanding at December 31, 2021. |
(2)
| The RSUs, RSAs and director deferred share units have no exercise price and therefore are not reflected in the weighted-average exercise price. |
(3)
| The Evergy Kansas Central, Inc. Long-Term Incentive and Share Award Plan Agreement will not be used for future awards. As of December 31, 2021, there were approximately 312,568 units outstanding that were deferred pursuant to the Evergy Kansas Central, Inc. non-employee deferred compensation program. Deferred units will continue to receive deferred dividend equivalents in the form of additional deferred units until payouts pursuant to elections begin. |
Proposal 3 - Approval of Amended Long-Term Incentive Plan | Evergy 2022 Proxy Statement 75
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Proposal
4
| | | | | | Ratification of the Appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for 2022.2023. | | ☑ | | | The Board recommends a vote FOR ratification of the appointment of Deloitte & Touche LLP for 2022.2023. |
Deloitte & Touche LLP (“Deloitte & Touche”) has acted as the independent registered public accounting firm for Evergy and its predecessor companies since 2002. The Audit Committee is directly responsible for the appointment, compensation, retention and oversight of the independent registered public accounting firm retained to audit our financial statements. The Audit Committee has selected Deloitte & Touche as our independent registered public accounting firm for 20222023 and has directed that management submit such selection to shareholders for ratification at the 20222023 Annual Meeting. Shareholder ratification of the selection of Deloitte & Touche as our independent registered public accounting firm is not required by our By-laws or otherwise. However, we are submitting the selection of Deloitte & Touche to the shareholders for ratification as a matter of good corporate governance. If our shareholders fail to ratify the selection, the Audit Committee will reconsider whether or not to retain Deloitte & Touche. Even if the selection is ratified, the Audit Committee in its discretion may appoint a different independent registered public accounting firm at any time during the year if it is determined that such a change would be in the best interests of the Company and our shareholders. Representatives from Deloitte & Touche are expected to be present at the 20222023 Annual Meeting, with the opportunity to make statements if they wish to do so, and are expected to be available to respond to appropriate questions. | Information Regarding Audit Matters | |
Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services The Audit Committee has adopted policies and procedures for the pre-approval of all audit services, audit-related services, tax services and other services to be provided by the independent registered public accounting firm for Evergy and its subsidiaries. Under these policies and procedures, the Audit Committee may pre-approve certain types of services, up to the aggregate fee levels it sets. Any proposed service within a pre-approved type of service that would cause the applicable fee level to be exceeded cannot be provided unless the Audit Committee either amends the applicable fee level or specifically approves the proposed service. The Audit Committee, as well, may specifically approve audit, audit-related, tax or other services on a case-by-case basis. Pre-approval is generally provided for up to one year unless the Audit Committee specifically provides for a different period. Evergy provides quarterly updates to the Audit Committee regarding actual fees spent with respect to pre-approved services. The Chair of the Audit Committee may pre-approve audit, audit-related, tax and other services provided by the independent registered public accounting firm as required between meetings and report such pre-approval at the next Audit Committee meeting. Fees Paid to Deloitte & Touche The following table sets forth the aggregate fees billed by Deloitte & Touche for audit services rendered in connection with the consolidated financial statements and reports for 20212022 and 2020,2021, and for other services rendered during 20212022 and 20202021 to Evergy and its subsidiaries. All such services were pre-approved by the Audit Committee. Out-of-pocket costs incurred in connection with these services are also shown. | Fee Category | | 2021 | | 2020 | | Fee Category | | 2022 | | 2021 | | | Audit Fees | | | $ 4,107,300 | | | $ 4,305,000 | | Audit Fees | | | $ 4,318,000 | | | $ 4,107,300 | | | Audit-Related Fees | | | $152,202 | | | $51,964 | | Audit-Related Fees | | | $76,854 | | | $152,202 | | | Tax Fees | | | $128,166 | | | $109,707 | | Tax Fees | | | $68,434 | | | $128,166 | | | All Other Fees | | | $1,895 | | | $1,895 | | All Other Fees | | | $3,790 | | | $1,895 | | | Total Fees: | | | $4,389,563 | | | $4,468,566 | | Total Fees: | | | $4,467,078 | | | $4,389,563 | |
Proposal 3 - Ratification of Appointment of Deloitte & Touche LLP | Executive Compensation Tables | Evergy 2023 Proxy Statement 71 |
TABLE OF CONTENTS Audit Fees: Consist of fees billed for professional services rendered for the audits of the annual consolidated financial statements and reviews of the interim condensed consolidated financial statements included in quarterly reports. Audit fees also include: services provided by Deloitte & Touche in connection with statutory and regulatory filings or engagements; audit Proposal 4 - Ratification of Appointment of Deloitte & Touches LLP | Evergy 2022 Proxy Statement 76
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reports on the effectiveness of internal control over financial reporting and other attest services, except those not required by statute or regulation; services related to filings with the SEC, including comfort letters, consents and assistance with and review of documents filed with the SEC; and accounting research in support of the audit. Audit-Related Fees: Consist of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of consolidated financial statements of the Company and are not reported under “Audit Fees.” These services include consultation concerning financial accounting and reporting standards. Tax Fees: Consist of fees billed for tax compliance and related support of tax returns and other tax services, including assistance with tax audits, and tax research and planning. All Other Fees: Consist of fees for technical accounting training and subscription fees for an accounting research tool. Rotation of Lead Audit Partner: The Deloitte & Touche lead audit partner for the Company rotates every five years. Proposal 43 - Ratification of Appointment of Deloitte & TouchesTouche LLP | Executive Compensation Tables | Evergy 20222023 Proxy Statement 7772 |
TABLE OF CONTENTS The Audit Committee is currently comprised of four independent directors. Each member has the accounting or related financial management experience required under the NYSENasdaq listing standards. Our Board has determined that all four members of the Committee possess the qualifications of an audit committee financial expert as determined under Regulation S-K Item 407(d) of the Securities Exchange Act of 1934 and have designated Mr. Hyde,Keglevic, Mr. Keglevic,Hyde, Ms. Murtlow, and Mr. Soderstrom as those experts. The Audit Committee operates under a written charter that was last amended on February 15,December 14, 2022. A copy of the Audit Committee’s charter is available from the Company’s Corporate Secretary and made available on the Company’s investor relations website at investors.evergy.com. As required by the charter, the Audit Committee periodically reviews the charter and recommends any changes to the Board for approval. Under the Audit Committee’s charter, the Audit Committee has the responsibility to, among other tasks, monitor and provide oversight of management’s preparation of the Company’s financial statements and management’s performance in establishing and maintaining an appropriate system of internal controls related to the financial reporting process. The Audit Committee also periodically reviews and discusses the Company’s policies, processes and frameworks with respect to risk assessment and risk management, and oversees the Company’s internal audit function. The Audit Committee also has the responsibility to review the qualifications, independence, and performance of the Company’s independent registered public accounting firm. The Audit Committee oversees the engagement of the independent registered public accounting firm, including fees. The Audit Committee has adopted policies and procedures for the pre-approval of all audit services, audit-related services, tax services and other services to be provided by the independent registered public accounting firm for the Company and its subsidiaries. Under these policies and procedures, the Audit Committee may pre-approve certain types of services, up to the aggregate fee levels it sets. Any proposed service within a pre-approved type of service that would cause the applicable fee level to be exceeded cannot be provided unless the Audit Committee either amends the applicable fee level or specifically approves the proposed service. The independent registered public accounting firm is responsible for auditing the Company’s consolidated financial statements and expressing an opinion as to whether they are presented fairly, in all material respects, in conformity with accounting principles generally accepted in the United States of America. The independent registered public accounting firm is also responsible for expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. This opinion is based on an audit conducted by the independent registered public accounting firm in accordance with the standards of the Public Company Accounting Oversight Board (“PCAOB”). During 2021,2022, the Company’s independent registered public accounting firm was Deloitte & Touche LLP. Deloitte & Touche has acted as the independent registered public accounting firm for the Company and the Company’s predecessors since 2002. In performing its functions, the Audit Committee acts only in an oversight capacity and relies necessarily on the work and assurances provided to it by management and on opinions made to it by the Company’s independent registered public accounting firm in its report. Accordingly, the oversight provided by the Audit Committee should not be considered as providing an independent basis for determining that management has established and maintained appropriate internal controls related to the financial reporting process, that the financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, or that the audit of the Company’s financial statements and effectiveness of the Company’s internal control over financial reporting by the independent registered public accounting firm has been carried out in accordance with the standards of the PCAOB. In connection with its function to oversee and monitor the Company’s financial reporting process, the Audit Committee’s activities in 20212022 included the following: reviewed and discussed the audited financial statements and the report on internal control over financial reporting with management, the Company’s chief audit executive and Deloitte & Touche, including a discussion of the reasonableness of significantcritical accounting judgments and estimates, the overall quality and adequacy of the Company’s internal controls over financial reporting, and the organizational structure and responsibilities of the Company’s internal audit function; discussed with Deloitte & Touche the matters required to be discussed by SEC regulations and by the applicable standards adopted by the PCAOB; and received the written disclosures and the letter from Deloitte & Touche required by applicable requirements of the PCAOB regarding Deloitte & Touche’s communications with the Audit Committee concerning independence and discussed with Deloitte & Touche its independence from management and the Company and its subsidiaries. Audit Committee Report | Evergy 20222023 Proxy Statement 7873 |
TABLE OF CONTENTS During 20212022 at each of its regularly scheduled meetings, the Audit Committee met in separate private sessions with either the chief executive officer or the senior members of the Company’s financial management team, the Company’s chief audit executive, and if applicable, the Company’s independent registered public accounting firm. An executive session with only the members of the Audit Committee in attendance was also held at each of these meetings. The Committee’s agenda is established by the Audit Committee’s chair, in consultation with the Company’s corporate secretary. Based on the reviews and discussions referred to above, the Audit Committee recommended to the Board that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021,2022, for filing with the SEC. | | | Audit Committee | | | | | | | | Paul M. Keglevic, Chair
Thomas D. Hyde Chair
Paul M. Keglevic
Ann D. Murtlow
S. Carl Soderstrom Jr. |
February 23, 202222, 2023 Audit Committee Report | Evergy 20222023 Proxy Statement 7974 |
TABLE OF CONTENTS | Security Ownership of Directors, Management and Beneficial Owners | |
The following table shows, as of March 3, 2022,7, 2023, beneficial ownership of Company common stock by (i) each NEO, (ii) each director and director nominee, (iii) all directors and executive officers as a group, and (iv) each shareholder who the Company knows is a beneficial owner of more than 5% of the outstanding shares of the Company’s common stock (based on SEC filings). We have no knowledge of any person (as defined by the SEC) who owns beneficially more than 5% of our common stock, except as described below. Except as noted below, we believe that the persons listed have sole voting and investment power with respect to the securities listed. The address for each person listed is Evergy, Inc., 1200 Main, Kansas City, MO 64113.64105. Security Ownership of Directors and Executive Officers | Name | | Beneficially
Owned
Shares
(#) | | Share
Equivalents to
be Settled in
Stock
(#) | | Total Share
Interest
(#) | | Percent Of
Class
(%) | | Name | | Beneficially
Owned
Shares
(#) | | Share
Equivalents to
be Settled in
Stock
(#) | | Total Share
Interest
(#) | | Percent Of
Class
(%) | | | Named Executive Officers | | | | | | | | | | | | | | Named Executive Officers | | | | | | | | | | | | | | | David A. Campbell | | | 63,661(1) | | | 38,640(2) | | | 102,301(2) | | | * | | David A. Campbell | | | 55,436(1) | | | 59,495(3) | | | 114,931(3) | | | * | | | Kirkland B. Andrews | | | 32,610 | | | 46,059(2) | | | 78,669(2) | | | * | | Kirkland B. Andrews | | | 43,436(2) | | | 36,694(3) | | | 80,130(3) | | | * | | | Kevin E. Bryant | | | 45,835 | | | 14,901(2) | | | 60,736(2) | | | * | | Kevin E. Bryant | | | 55,493 | | | 17,017(3) | | | 72,510(3) | | | * | | | Charles A. Caisley | | | 25,651 | | | 16,811(2) | | | 42,462(2) | | | * | | Charles A. Caisley | | | 29,247(4) | | | 19,576(3) | | | 48,823(3) | | | * | | | Greg A. Greenwood | | | 41,850 | | | 9,890(2) | | | 51,740(2) | | | * | | Heather A. Humphrey | | | 67,554 | | | 12,012(3) | | | 79,566(3) | | | * | | | Terry Bassham | | | 28,772 | | | 4,224(2) | | | 32,996(2) | | | * | | Greg A. Greenwood | | | 43,483 | | | — | | | 43,483(3)(8) | | | * | | | Anthony D. Somma | | | — | | | — | | | — | | | * | | Directors and Nominees | | | | | | | | | | | | | | | Directors and Nominees | | | | | | | | | | | | | | Thomas D. Hyde | | | 3,173 | | | 34,969(5) | | | 38,142 | | | * | | | Mollie Hale Carter | | | 39 | | | 108,357(3) | | | 108,396 | | | * | | B. Anthony Isaac | | | 47,277 | | | — | | | 47,277 | | | * | | | Thomas D. Hyde | | | 3,173 | | | 29,327(3) | | | 32,500 | | | * | | Paul M. Keglevic | | | — | | | 7,546(5) | | | 7,546 | | | * | | | B. Anthony Isaac | | | 43,450 | | | — | | | 43,450 | | | * | | Mary L. Landrieu | | | 2,857 | | | 2,323(5) | | | 5,180 | | | * | | | Paul M. Keglevic | | | — | | | 5,142(3) | | | 5,142 | | | * | | Sandra A.J. Lawrence | | | 480 | | | 65,658(5) | | | 66,138 | | | * | | | Mary L. Landrieu | | | 705 | | | 2,240(3) | | | 2,945 | | | * | | Ann D. Murtlow | | | 3,302 | | | 19,614(5) | | | 22,916 | | | * | | | Sandra A.J. Lawrence | | | 1,185 | | | 63,293(3) | | | 64,478 | | | * | | Sandra J. Price | | | — | | | 16,842(5) | | | 16,842 | | | * | | | Ann D. Murtlow | | | 3,302 | | | 16,777(3) | | | 20,079 | | | * | | Mark A. Ruelle | | | 98,898(6) | | | 17,681(5) | | | 116,579 | | | * | | | Sandra J. Price | | | — | | | 14,104(3) | | | 14,104 | | | * | | James Scarola | | | 2,152 | | | — | | | 2,152 | | | * | | | Mark A. Ruelle | | | 98,898 | | | 12,797(3) | | | 111,695 | | | * | | S. Carl Soderstrom Jr. | | | 21,788 | | | — | | | 21,788 | | | * | | | James Scarola(4) | | | — | | | — | | | — | | | * | | C. John Wilder | | | 6,607,473(7) | | | 9,460(5) | | | 6,616,933 | | | * | | | S. Carl Soderstrom Jr. | | | 19,636 | | | — | | | 19,636 | | | * | | All Evergy Directors and Executive Officers as a Group (19 persons) | | * | | | John A. Stall | | | 7,736 | | | — | | | 7,736 | | | * | | | | C. John Wilder | | | 6,607,473(5) | | | 4,989(3) | | | 6,612,462(5) | | | * | | | | All Evergy Directors and Executive Officers as a Group (22 persons) | | | 7,616,420 | | | * | | |
(1)
| Amount includes 36,03618,018 shares of restricted stockRSUs that will vest on December 31, 2023 and 10,000 and 7,850 shares of directly held common stock purchased on March 3, 2021 and held directly.September 23, 2021, respectively. |
(2)
| Amount includes 10,000 and 7,875 shares of directly held common stock purchased on March 3, 2021 and September 23, 2021, respectively. |
(3)
| Amounts reflect restricted stock unitsRSUs that settle in shares upon vesting. |
(3) (4)
| Includes 419 and 60 shares of Evergy common stock held indirectly through ownership of spouse and child, respectively. |
(5)
| Includes equity that was deferred pursuant to a non-employee director deferred compensation plan that will settle in stock on a 1-for-1 basis and be distributed following termination of service on the Board pursuant to elections made by the director. |
(4) (6)
| New director nominee at 2022 Annual Meeting.Includes 18,317 shares of Evergy common stock held indirectly through living trust of spouse. |
(5) (7)
| Includes 130,887 shares of Evergy common stock owned by Mr. Wilder directly. Also includes 2,269,447 shares of Evergy common stock and a warrant to purchase 3,950,000 shares of Evergy common stock, in each case owned by BEP Special Situations V LLC. Mr. Wilder may be deemed to beneficially own such shares as he is the manager of Bluescape Resources GP Holdings LLC, which is the managing member of Bluescape Energy Partners IV GP LLC (“Main Fund”), and Main Fund is acting as the manager of BEP Special Situations V LLC. Mr. Wilder disclaims beneficial ownership of such shares except to the extent of his pecuniary interest therein. |
(8)
| To the Company’s knowledge. The amount of shares shown held by Mr. Greenwood is as of the date of his termination. |
Security Ownership | Evergy 20222023 Proxy Statement 8075 |
TABLE OF CONTENTS Security Ownership of Certain Beneficial Owners | Name and Address | | Beneficial Ownership of
Common Stock
(Based on Schedule 13G/A Filing) | | Percentage of
Class (%)(3) | | Name and Address | | Beneficial Ownership of
Common Stock
(Based on Schedule 13G/A Filing) | | Percentage of
Class (%)(4) | | | Vanguard Group(1)
100 Vanguard Blvd.
Malvern, PA 19355
| | | 28,830,566 | | | 12.7% | | Vanguard Group(1)
100 Vanguard Blvd.
Malvern, PA 19355 | | | 29,243,403 | | | 12.7% | | | BlackRock, Inc.(2)
55 East 52nd Street
New York, NY 10055 | | | 17,176,489 | | | 7.5% | | BlackRock, Inc.(2)
55 East 52nd Street
New York, NY 10055 | | | 18,736,351 | | | 8.2% | | | State Street Corporation(3)
State Street Financial Center
1 Lincoln Street
Boston, MA 02111 | | | 12,539,247 | | | 5.5% | | State Street Corporation(3)
State Street Financial Center
1 Lincoln Street
Boston, MA 02111 | | | 14,278,985 | | | 6.2% | |
(1)
| Based on information provided in Schedule 13G/A filed by The Vanguard Group (“Vanguard”) and its affiliated reporting persons on February 9, 2022.2023. The Vanguard Schedule 13G/A states that as of December 31, 2021,30, 2022, the reporting persons collectively held sole voting power with respect to 0 shares, shared voting power with respect to 448,224410,246 shares, sole dispositive power with respect to 27,821,30128,206,888 shares, shared dispositive power with respect to 1,009,2651,036,515 shares and an aggregate beneficial ownership of 28,830,56629,243,403 shares. |
(2)
| Based on information provided in Schedule 13G/A filed by BlackRock, Inc. (“BlackRock”) and its affiliated reporting persons on February 3, 2022.2023. The BlackRock Schedule 13G/A states that as of December 31, 2022, the reporting persons collectively held sole voting power with respect to 14,967,41817,212,864 shares, shared voting power with respect to 0 shares, sole dispositive power with respect to 17,176,48918,736,351 shares, shared dispositive power with respect to 0 shares and an aggregate beneficial ownership of 17,176,48918,736,351 shares. |
(3)
| Based on information provided in Schedule 13G/A filed by State Street Corporation (“State Street”) and its affiliated reporting persons on February 11, 2022.2023. The State Street Schedule 13G/A states that as of December 31, 2021,2022, the reporting persons collectively held sole voting power with respect to 0 shares, shared voting power with respect to 11,205,88412,299,244 shares, sold dispositive power with respect to 0 shares, shared dispositive power with respect to 12,517,69914,250,821 shares and an aggregate beneficial ownership of 12,539,24714,278,985 shares. |
(4)
| The percentage is based on approximately 229,323,829229,583,134 shares of our common stock outstanding as of March 3, 2022.2023. |
Security Ownership | Evergy 20222023 Proxy Statement 8176 |
TABLE OF CONTENTS | Frequently Asked Questions | |
What is a proxy? What is a proxy statement? A proxy is the person that you legally designate to vote your common stock. If you designate someone as your proxy in a written document, that document also is called a proxy or a proxy card. A proxy statement is a document that SEC rules require that we make available when we ask you to vote your common stock at, or provide a proxy for, an annual meeting of shareholders. Why did you provide me this proxy statement? We provided you this proxy statement because you were a holder of our common stock as of the close of business on March 1, 20222023 (the “Record Date”), and our Board is soliciting your proxy to vote at the 20222023 Annual Meeting. We mailed to many of our shareholders a notice regarding the internet availability of proxy materials (the “Notice”) and elected to provide those shareholders access to this notice of annual meeting and proxy statement and our 2021 annual report2022 Annual Report electronically via the internet. If you received a Notice by mail, you will not receive a printed copy of the proxy materials unless you request a printed copy. The Notice explains how to access the proxy statement and our 2021 annual report2022 Annual Report and how to vote. If you would like to receive a printed copy of our proxy materials, you should follow the instructions included in the Notice. What will I be voting on and how does the Board recommend that I vote on these matters? The Board recommends that you vote as follows for the proposals identified below: | ☑ FOR | | | The election of the 1211 nominees named in this proxy statement as directors | | | ☑ FOR | | | An advisory non-binding resolution approving the 20212022 compensation of our named executive officers as disclosed in the proxy statement (a “say on pay resolution”) | | | ☑ FOR | | | Approval of the Evergy, Inc. Amended and Restated Long-Term Incentive Plan
| | | ☑ FOR
| | | The ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for 20222023 | |
Who is entitled to vote on these matters? You are entitled to vote if you owned our common stock as of the close of business on the Record Date. On that day, 229,323,829229,583,134 shares of our common stock were outstanding and eligible to be voted. Shares held by us in our treasury account are not considered to be outstanding and will not be considered present or voted at the annual meeting. Each share of common stock is entitled to one vote. A quorum is required to conduct business at the annual meeting. A quorum exists when a majority of the shares of common stock that are outstanding and entitled to vote at the meeting are represented in person or by proxy. If no quorum exists at the start of the annual meeting, the meeting may be adjourned to solicit additional proxies in order to achieve a quorum. Abstentions or withhold votes and broker non-votes will be counted to determine whether there is a quorum present. What is the difference between a shareholder of record and a “street name” holder? If your shares are registered directly in your name with Computershare Trust Company, N.A., our transfer agent, you are a “shareholder of record,” or “registered holder,” with respect to those shares. If your shares are held in a brokerage account or by a bank or other nominee, you are considered the “beneficial owner” of those shares, and your shares are held in “street name.” How many votes are needed to elect the director nominees? We have a majority voting standard so that, in an uncontested election, a director nominee is elected to the Board only if the number of shares voted “for” a director nominee exceeds 50% of the number of votes cast with respect to that director nominee. Votes cast for a director nominee will include a shareholder’s direction to withhold authority but will exclude abstentions. An election is considered “contested” when a shareholder solicits proxies to elect individuals nominated by the shareholder to our Board. In a contested election, director nominees are elected by a plurality of the votes cast, rather than a majority of the votes cast. Frequently Asked Questions | Evergy 20222023 Proxy Statement 8277 |
TABLE OF CONTENTS Prior to being nominated, each incumbent director nominee is required to deliver to our Corporate Secretary an irrevocable letter of resignation that will take effect if the nominee fails to receive the vote required for election. If a standing director is not re-elected, our Nominating, Governance, and Sustainability Committee will recommend to the Board whether to accept or reject the resignation. The Board will publicly disclose its decision regarding the resignation following certification of the voting results. Cumulative voting is not allowed with respect to the election of our directors. Your broker is not permitted to vote your shares on this matter if no instructions are received from you. How many votes are needed to approve the say on pay resolution? The say on pay resolution is advisory and is not binding on the Company, the Board or the Compensation and Leadership Development Committee. The Compensation and Leadership Development Committee will, however, consider the outcome of the vote on this resolution when making future executive compensation decisions. The affirmative vote of the holders of a majority of shares present in person or by proxy at the annual meeting and entitled to vote on the matter is required to approve (on a non-binding advisory basis) the say on pay resolution. Abstentions will have the same effect as votes against the proposal. Your broker is not entitled to vote your shares on this matter if no instructions are received from you. How many votes are needed to approve the Evergy, Inc. Amended and Restated Long-Term Incentive Plan? Approval of the Evergy, Inc. Amended and Restated Long-Term Incentive Plan requires the affirmative vote of the holders of a majority of shares present in person or by proxy at the annual meeting and entitled to vote on the matter. Abstentions will have the same effect as votes against approving the Evergy, Inc. Amended and Restated Long-Term Incentive Plan. Your broker is not entitled to vote your shares on this matter if no instructions are received from you.
How many votes are needed to ratify the appointment of Deloitte & Touche?
Ratification requires the affirmative vote of the holders of a majority of shares present in person or by proxy at the annual meeting and entitled to vote on the matter. Abstentions will have the same effect as votes against ratification. Shareholder ratification of the appointment is not required, but your views are important to the Audit Committee and the Board. If shareholders do not ratify the appointment, our Audit Committee will reconsider the appointment. Even if the appointment is ratified, our Audit Committee in its discretion may direct the appointment of a different registered public accounting firm at any time during the year if it is determined that such a change would be in the best interests of the Company and our shareholders. Your broker is entitled to vote your shares on this matter if no instructions are received from you. Who can attend the 20222023 Annual Meeting? Shareholders of record may attend the 20222023 Annual Meeting, which we are conducting “virtually” via a live audio webcast and using online shareholder tools. Like last year,We are holding the 2023 Annual Meeting virtually, as we believe that using this format is prudent for the health and safety of our shareholders and employees during the COVID-19 pandemic, and will facilitatehosting a virtual meeting enables greater shareholder attendance and participation. This format empowers shareholders to participate from any location, at no cost to shareholders. We have designed the virtual format to enhance shareholder access and participation and protect shareholder rights. We encourage questions. Shareholders may submit a question online duringto ensure that our shareholders who attend the 2022virtual 2023 Annual Meeting following the instructions below. During the 2022 Annual Meeting, we will answerbe afforded comparable rights and opportunities to participate as many shareholder questions as time permits.they would at an in-person meeting.
We believe in transparency. Following the 2022 Annual Meeting, we will post to our investor relations website a replay and a transcript of the 2022 Annual Meeting (including the question and answer session), as well as final voting results.
We facilitate your participation. We will offer live technical support for all shareholders during the 2022 Annual Meeting.
• | We encourage questions. Shareholders may submit a question online during the 2023 Annual Meeting, following the instructions below. During the 2023 Annual Meeting, we will answer as many shareholder questions as time permits. |
• | We believe in transparency. Following the 2023 Annual Meeting, we will post to our investor relations website a replay and a transcript of the 2023 Annual Meeting (including the question and answer session), as well as final voting results. In addition, a list of shareholders entitled to vote at the 2023 Annual Meeting will be made available during the meeting at the website referenced below. |
• | We facilitate your participation. We will offer live technical support for all shareholders during the 2023 Annual Meeting. |
How do shareholders attend the 20222023 Annual Meeting? Attend the 2022 Annual Meeting online, including to vote and/or submit questions, at www.virtualshareholdermeeting.com/EVRG2022.
• | Attend the 2023 Annual Meeting online, including to vote and/or submit questions, at www.virtualshareholdermeeting.com/EVRG2023. |
The 20222023 Annual Meeting will begin at 10:00 a.m. Central Daylight Time, with log-in beginning at 9:45 a.m. on May 3, 2022.2, 2023. Shareholders will need to use the 16-digit control number on their notice of internet availability, proxy card or voting instruction form, or in the instructions received via email in order to log into www.virtualshareholdermeeting.com/EVRG2022• | Shareholders will need to use the 16-digit control number on their notice of internet availability, proxy card or voting instruction form, or in the instructions received via email in order to log into www.virtualshareholdermeeting.com/EVRG2023. |
Frequently Asked Questions | Evergy 20222023 Proxy Statement 8378 |
TABLE OF CONTENTS We encourage you to access the 20222023 Annual Meeting prior to the start time. Please allow ample time for online check-in, which will begin at 9:45 a.m. Central Daylight Time on May 3, 2022.2, 2023. If you encounter any difficulties accessing the virtual meeting during the check-in or meeting time, please call the technical support number that will be posted on the virtual shareholder meeting log-in page. Please note that if you do not have your control number and you are a registered owner, operators will be able to provide your control number to you. However, if you are a beneficial owner (and thus hold your shares in an account at a bank, broker or other holder of record), you will need to contact that bank, broker or other holder of record to obtain your control number prior to the 20222023 Annual Meeting. Voting During the Meeting Shareholders should follow the instructions at www.virtualshareholdermeeting.com/EVRG2022EVRG2023 to vote during the 20222023 Annual Meeting. Voting online during the meeting will replace any previous votes you submitted via telephone, internet or mail prior to the meeting. May I ask questions? Yes. We will answer your questions at the end of the 20222023 Annual Meeting. We may impose certain procedural requirements, such as limiting repetitive or follow-up questions, so that more shareholders will have an opportunity to ask questions. You may submit questions ahead of the meeting at investors.evergy.com/contact-us, and during the 20222023 Annual Meeting at www.virtualshareholdermeeting.com/EVRG2022EVRG2023. During the 20222023 Annual Meeting we will answer as many shareholder questions as time reasonably permits. When will the 20232024 annual meeting be held? Our By-laws provide that the annual meeting of shareholders will be held on the first Tuesday of May. Therefore, the 20232024 annual meeting will be held on May 2, 2023,7, 2024, unless changed by the Board. How can I propose someone to be a nominee for election to the Board? The Nominating, Governance, and Sustainability Committee of the Board will consider candidates for director suggested by shareholders, using the process described in the “Director Nominating Process” section on page 18. How can I nominate a director or submit a proposal for the 20232024 annual meeting? Business Proposals for Inclusion in Next Year’s Proxy Statement (Rule 14a-8): SEC rules permit shareholders to submit proposals for inclusion in our proxy statement if the shareholder and the proposal meet the requirements specified in Rule 14a-8 of the Exchange Act. To be considered for inclusion in our proxy statement for the 20232024 annual meeting, we must receive notice of the proposal on or before November 23, 2022.2023. Shareholder proposals should be addressed to: Evergy, Inc., 1200 Main Street, Kansas City, Missouri 64105, Attention: Corporate Secretary. Director Nominees for Inclusion in the 20232024 Proxy Statement (Proxy Access): Our By-Laws permit an eligible shareholder, or a group of up to 20 eligible shareholders, who have continuously owned at least 3% of our outstanding shares for at least three years as of the date the shareholder(s) notify us of the intent to utilize our “proxy access” By-law provision. “Proxy access” can be used to nominate up to 25% of the total number of directors who are members of the Board as of the date that the shareholder(s) notify us of the intent to utilize “proxy access.” Director nominations submitted under this By-law provision must be delivered to us no earlier than February 2, 2023,January 3, 2024, and no later than March 4, 2023.February 2, 2024. Your notice must comply with the requirements in our By-laws. Consistent with standard market practice, proxy access is only available to eligible shareholders who acquired our shares in the ordinary course of business and not with the intent to change or influence control at Evergy, and who do not presently have such intent. Director Nominees and Other Business Proposals for Consideration at Next Year’s Annual Meeting: Our By-laws also set forth the procedures that a shareholder must follow to nominate a candidate for election as a director or to propose other business for consideration at shareholder meetings, in each case, not submitted for inclusion in the 20232024 proxy statement (either under proxy access or Rule 14a-8), but instead to be presented directly at shareholder meetings. In each case, director nominations or proposals for other business for consideration at the 20232024 annual meeting submitted under these By-law provisions must be delivered to us no earlier than February 2, 2023,January 3, 2024, and no later than March 4, 2023,February 2, 2024, in order to be raised at the 20232024 annual meeting. The notice regarding the director nomination or proposal must comply with the requirements in our By-laws. Frequently Asked Questions | Evergy 2023 Proxy Statement 79 |
TABLE OF CONTENTS How can I vote? If you were a shareholder of record on the Record Date, you may: Frequently Asked Questions | Evergy 2022 Proxy Statement 84
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vote via the internet by following the voting instructions on the proxy card or Notice; vote by calling the toll-free number on the proxy card or Notice; vote by completing and returning your proxy card in the enclosed envelope; or vote during the virtual shareholder meeting. We encourage you to vote as soon as possible even if you plan to attend the meeting. Voting through the internet or by the toll-free telephone number saves time and postage costs. If your shares are held by a broker or other nominee, you will receive instructions from the broker or other nominee that you must follow in order to vote your shares. What if I do not specify a choice for a matter when returning a proxy? If a properly signed proxy is returned by a shareholder of record without shareholder directions by the close of voting, the shares will be voted as recommended by the Board. What shares are included on the proxy card? You may receive more than one proxy card or Notice depending on how you hold your shares and how your shares are registered. If you hold shares through someone else, such as a bank or broker, you may also receive proxy materials from them asking how you want to vote. If you participate in our Dividend Reinvestment and Direct Stock Purchase Plan, or our 401(k) savings plan, and the account names are exactly the same on each, you will receive one proxy card or Notice for all shares of common stock held in or credited to your accounts as of the Record Date. If the names on your accounts are different, you will receive more than one proxy card or Notice. We encourage you to have all accounts registered in the same name and address whenever possible. For shareholders in our 401(k) savings plan, the proxy card or Notice covers all shares for which the shareholder has the right to give voting instructions to Empower Retirement, trustee of that plan. The proxy card, when properly executed, will be voted as directed. If voting instructions are not received by the proxy tabulator by 11:59 p.m. on April 28, 2022,27, 2023, your shares will not be voted. Any shares that you own in street name are not included in the total number of shares that are listed on your proxy card. Your broker or other nominee will send you directions on how to vote shares held in street name. You should complete and return all proxy cards and all voting instruction cards delivered to you to vote all shares owned by you. Can I change my vote or revoke my proxy? You may change your vote or revoke your proxy at any time before the close of voting by written notice to the Corporate Secretary; submission of a proxy bearing a later date; or casting your vote online during the annual meeting. If your shares are held in street name, you must contact your broker or other nominee to change your vote or revoke your proxy. Will my shares held in street name be voted if I do not provide instructions? NYSE rules allowNew York Stock Exchange Rule 452* allows brokers, banks, and other nominees to vote shares on certain “routine” matters for which their customers do not provide voting instructions. The ratification of the appointment of Deloitte & Touche is considered a “routine” matter on which your broker, bank or other nominee can vote your shares without your instructions. The proposals relating to the election of directors, and the say on pay resolution and the approval of the Amended and Restated Long-Term Incentive Plan are not “routine” proposals. Therefore, if you do not instruct your broker, bank, and other nominee how to vote, your shares will not be voted on those proposals, which is referred to as “broker non-votes.” Therefore, it is important street name holders provide voting instructions to their brokers, banks, and other nominees. Broker non-votes will have no effect on the results of the election of directors or the say on pay resolution.
*NYSE Rule 452 is applicable to all brokers, banks, or other nominees registered with the NYSE and, accordingly, applies to the voting of all shares held in a customer’s account on such customer’s behalf, including shares of a Nasdaq listed company. Frequently Asked Questions | Evergy 2023 Proxy Statement 80 |
TABLE OF CONTENTS Is my vote confidential? We have a policy of voting confidentiality. Your vote will not be disclosed to the Board or our management, except as may be required by law and in other limited circumstances. Frequently Asked Questions | Evergy 2022 Proxy Statement 85
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Who pays for soliciting proxies for the annual meeting? We will pay the costs of this solicitation. Proxies may be solicited in person, through the mail, by telephone, facsimile, e-mail or other electronic means by our directors, officers, and employees without additional compensation. We have retained Innisfree M&A Incorporated to assist us in the solicitation of votes for a fee of $17,500 plus a charge of $5.50 per holder for telephone solicitations and reimbursement of reasonable out-of-pocket expenses. We will also reimburse brokers, banks, nominees, and fiduciaries for their costs in sending proxy materials to holders of our shares. Are you “householding” for your shareholders with the same address? Yes. Shareholders of record who receive printed copies of proxy materials and share the same last name and household mailing address with multiple accounts will receive a single copy of our proxy materials unless we are instructed otherwise. Each such registered shareholder will continue to receive a separate proxy card. Any shareholder who would like to receive separate copies of our proxy materials, or who received multiple copies and would like to receive combined mailings, may call us at 1-800-245-5275, or write us at Evergy, Inc., Attn: Investor Relations, P.O. Box 418679, Kansas City, Missouri 64141-9679. Shareholders who hold their shares in street name should contact their broker or other nominee regarding combined mailings. Can I elect electronic delivery of annual shareholder reports, proxy statements and proxy cards? Yes. You can elect to receive future annual shareholder reports, proxy statements and proxy cards electronically via the internet. To sign up for electronic delivery, please follow the instructions on the proxy card or the Notice to vote using the internet and, when prompted, indicate that you agree to receive or access shareholder communications electronically in future years. Frequently Asked Questions | Evergy 20222023 Proxy Statement 8681 |
TABLE OF CONTENTS GAAP to Non-GAAP Financial Metric Reconciliation Adjusted Earnings and Adjusted Earnings Per Share Effective in the third quarter of 2022, the calculation of adjusted earnings (non-GAAP) and adjusted EPS (non-GAAP) excludes the revenues collected from customers for the return on investment of the retired Sibley Station in the current period and the 2022 deferral of the cumulative amount of revenues collected since December 2018 to be refunded to customers. Effective in the fourth quarter of 2022, the calculation of adjusted earnings (non-GAAP) and adjusted EPS (non-GAAP) excludes the transmission revenues collected from customers in the current period and the 2022 deferral of the cumulative amount of transmission revenues collected since 2018 through Evergy Kansas Central's transmission formula rate to be refunded to customers as a result of a December 2022 Federal Energy Regulatory Commission order. Management believes that this is a representative measure of Evergy's recurring earnings, assists in the comparability of results and is consistent with how management reviews performance. Evergy's adjusted earnings (non-GAAP) and adjusted EPS (non-GAAP) for 2021 have been recast, as applicable, to conform to the current year presentation. Adjusted earnings (non-GAAP) and adjusted earnings per shareEPS (non-GAAP) exclude (i) the income or costs resulting from non-regulated energy marketing margins related to a February 2021 winter weather event andevent; (ii) gains or losses related to equity investments subject to a restriction on sale that can createsale; (iii) the revenues collected from customers for the return on investment of the retired Sibley Station in the current period and the 2022 deferral of the cumulative amount of revenues collected since December 2018 for future refunds to period volatility, as well ascustomers; (iv) the estimated impairment loss on Sibley Unit 3 and other regulatory disallowances; (v) the mark-to-market impacts of economic hedges related to Evergy Kansas Central's non-regulated 8% ownership share of Jeffrey Energy Center; (vi) the transmission revenues collected from customers through Evergy Kansas Central's transmission formula rate to be refunded to customers in accordance with a December 2022 Federal Energy Regulatory Commission order; and (vii) costs resulting from executive transition, voluntary severance, advisor expenses, and COVID-19 vaccine incentives and the revaluation of deferred tax assets and liabilities from a change in the Kansas corporate income tax rate.incentives. This information is intended to enhanceaid an investor’s overall understanding of results. Management believes that adjusted earnings (non-GAAP) provides a meaningful basis for evaluating Evergy’s operations across periods because it excludes certain items that management does not believe are indicative of Evergy’s ongoing performance.performance or that can create period to period earnings volatility. Adjusted earnings (non-GAAP) and adjusted earnings per shareEPS (non-GAAP) are used internally to measure performance against budget and in reports for management and the Evergy Board of Directors.Board. Adjusted earnings (non-GAAP) and adjusted earnings per shareEPS (non-GAAP) are financial measures that are not calculated in accordance with GAAP and may not be comparable to other companies’ presentations or more useful than the GAAP information provided elsewhere in this report. The following tables providetable provides a reconciliation between net income attributable to Evergy, Inc. and diluted earnings per common share as determined in accordance with GAAP and adjusted earnings (non-GAAP) and adjusted earnings per shareEPS (non-GAAP). | Net income attributable to Evergy, Inc. | | | $879.7 | | | $3.83 | | | $618.3 | | | $2.72 | | | Non-GAAP reconciling items: | | | | | | | | | | | | | | | Non-regulated energy marketing margin related to a February 2021 winter weather event, pre-tax(a) | | | (94.5) | | | (0.41) | | | | | | | | | Non-regulated energy marketing costs related to a February 2021 winter weather event, pre-tax(b) | | | 7.9 | | | 0.03 | | | | | | | | | Executive transition costs, pre-tax(c) | | | 10.8 | | | 0.05 | | | | | | | | | Severance costs, pre-tax(d) | | | 2.8 | | | 0.01 | | | 66.3 | | | 0.29 | | | Advisor expenses, pre-tax(e) | | | 11.6 | | | 0.05 | | | 32.3 | | | 0.14 | | | COVID-19 vaccine incentive, pre-tax(f) | | | 1.2 | | | 0.01 | | | | | | | | | Restricted equity investment gains, pre-tax(g) | | | (27.7) | | | (0.12) | | | | | | | | | Income tax expense (benefit)(h) | | | 20.8 | | | 0.09 | | | (25.2) | | | (0.11) | | | Kansas corporate income tax change(i) | | | | | | | | | 13.8 | | | 0.06 | | | Adjusted earnings (non-GAAP) | | | $812.6 | | | $3.54 | | | $705.5 | | | $3.10 | |
Appendix A | Evergy 2023 Proxy Statement A-1 |
TABLE OF CONTENTS | Net income attributable to Evergy, Inc. | | | $752.7 | | | $3.27 | | | $879.7 | | | $3.83 | | | Non-GAAP reconciling items: | | | | | | | | | | | | | | | Non-regulated energy marketing margin related to a February 2021 winter weather event, pre-tax(a) | | | 2.1 | | | 0.01 | | | (94.5) | | | (0.41) | | | Sibley Station return on investment, pre-tax(b) | | | 51.4 | | | 0.22 | | | (12.4) | | | (0.05) | | | Mark-to-market impact of Jeffrey Energy Center economic hedges, pre-tax(c) | | | (11.2) | | | (0.05) | | | | | | | | | Non-regulated energy marketing costs related to a February 2021 winter weather event, pre-tax(d) | | | 1.3 | | | 0.01 | | | 7.9 | | | 0.03 | | | Executive transition costs, pre-tax(e) | | | 2.2 | | | 0.01 | | | 10.8 | | | 0.05 | | | Severance costs, pre-tax(f) | | | 2.3 | | | 0.01 | | | 2.8 | | | 0.01 | | | Advisor expenses, pre-tax(g) | | | 5.4 | | | 0.02 | | | 11.6 | | | 0.05 | | | COVID-19 vaccine incentive, pre-tax(h) | | | — | | | — | | | 1.2 | | | 0.01 | | | Sibley impairment loss and other regulatory disallowances, pre-tax(i) | | | 34.9 | | | 0.15 | | | — | | | — | | | Restricted equity investment losses (gains), pre-tax(j) | | | 16.3 | | | 0.07 | | | (27.7) | | | (0.12) | | | Transmission formula rate refund, pre-tax(k) | | | 25.0 | | | 0.11 | | | (9.9) | | | (0.05) | | | Income tax expense (benefit)(l) | | | (28.6) | | | (0.12) | | | 25.7 | | | 0.11 | | | Adjusted earnings (non-GAAP) | | | $853.8 | | | $3.71 | | | $795.2 | | | $3.46 | |
(a)
| Reflects non-regulated energy marketing margins related to athe February 2021 winter weather event andthat are included in operating revenues on the consolidated statements of comprehensive income. |
(b)
| Reflects revenues collected from customers for the return on investment of the retired Sibley Station in the current period and the 2022 deferral of the cumulative amount of revenues collected since December 2018 that are included in operating revenues on the consolidated statements of comprehensive income. |
(c)
| Reflects mark to market gains or losses related to forward contracts for natural gas and electricity entered into as economic hedges against fuel price volatility related to Evergy Kansas Central's non-regulated 8% ownership share of Jeffrey Energy Center that are included in operating revenues on the consolidated statements of comprehensive income. |
(d)
| Reflects non-regulated energy marketing incentive compensation costs related to athe February 2021 winter weather event andthat are included in operating and maintenance expense on the consolidated statements of comprehensive income. |
(c) (e)
| Reflects costs associated with executive transition including inducement bonuses, severance agreements and other transition expenses of which $10.5 million is included in operating and maintenance expense and $0.3 million is included in other expense in 2021 on the consolidated statements of comprehensive income. |
(d)
| Reflects severance costs incurred associated with certain voluntary severance programs at the Evergy Companies andthat are included in operating and maintenance expense on the consolidated statements of comprehensive income. |
(e) (f)
| Reflects advisor expensesseverance costs incurred associated with strategic planning andcertain severance programs that are included in operating and maintenance expense on the consolidated statements of comprehensive income. |
(f) (g)
| Reflects incentive compensation costsadvisor expenses incurred associated with employees becoming fully vaccinated against COVID-19 andstrategic planning that are included in operating and maintenance expense on the consolidated statements of comprehensive income. |
(g) (h)
| Reflects gainsincentive compensation costs incurred associated with employees becoming fully vaccinated against COVID-19 that are included in operating and maintenance expense on the consolidated statements of comprehensive income. |
(i)
| Reflects the impairment loss on Sibley Unit 3 and costs related to certain meter replacements that were disallowed in the 2022 Evergy Metro and Evergy Missouri West rate cases that are included in Sibley Unit 3 impairment loss and other regulatory disallowances on the consolidated statements of comprehensive income. |
(j)
| Reflects losses (gains) related to equity investments which were subject to a restriction on sale andthat are included in investment earnings on the consolidated statements of comprehensive income. |
(h) (k)
| Reflects transmission revenues collected from customers in the current period and the 2022 deferral of the cumulative amount of transmission revenues collected since 2018 through Evergy Kansas Central's Transmission Formula Rate to be refunded to customers in accordance with a December 2022 Federal Energy Regulatory Commission order that are included in operating revenues on the consolidated statements of comprehensive income. |
(l)
| Reflects an income tax effect calculated at a statutory rate of approximately 22% in 2021 and 26% in 2020,, with the exception of certain non-deductible items. |
(i)
| Reflects the revaluation of Evergy Kansas Central’s, Evergy Metro’s and Evergy Missouri West’s deferred income tax assets and liabilities from the Kansas corporate income tax rate change and are included in income tax expense on the consolidated statements of comprehensive income. |
Appendix A | Evergy 20222023 Proxy Statement A-1A-2 |
TABLE OF CONTENTS GAAP to Non-GAAP Financial Metric Reconciliation Reconciliation of adjusted earnings per shareEPS for incentive compensation (non-GAAP) to earnings per diluted share attributable to Evergy, Inc. | Year Ended December 31
| | | | | | Earnings per diluted share attributable to Evergy, Inc.
| | | $3.833.27 | | | Non-GAAP reconciling items: | | | | | | Non-regulated energy marketing margin related to a February 2021 winter weather event, pre-tax | | | (0.41)$0.01
| | | Sibley return on investment, pre-tax | | | $0.22 | | | Mark-to-market impact of Jeffrey Energy Center economic hedges, pre-tax | | | ($0.05) | | | Non-regulated energy marketing costs related to a February 2021 winter weather event, pre-tax | | | 0.03$0.01
| | | Executive transition costs, pre-tax
| | | 0.05$0.01
| | | Severance costs, pre-tax | | | $0.01 | | | Advisor expenses, pre-tax
| | | 0.05$0.02
| | | COVID-19 vaccine incentive,Sibley impairment loss and other regulatory disallowances, pre-tax
| | | 0.01$0.15
| | | Restricted equity investment gains,loss, pre-tax
| | | (0.12)$0.07
| | | Transmission formula rate refund, pre-tax | | | $0.11 | | | Pre-funding charitable trust, pre-tax | | | $0.04 | | | Incentive compensation expenses, pre-tax | | | 0.11$0.12
| | | Incentive compensation expenses at target, pre-tax | | | (0.11)($0.10)
| | | Income tax benefit | | | 0.09($0.14)
| | | Adjusted earnings per shareEPS for incentive compensation (non-GAAP) | | | $3.543.75 | |
Reconciliation of adjusted non-fuel operating and maintenance expense for incentive compensation (non-GAAP) to operating and maintenance expense | Operating and maintenance expense | | | $1,107.51,085.3 | | | Non-GAAP reconciling items: | | | | | | Non-regulated energy marketing costs related to a February 2021 winter weather event | | | (7.9)(1.3)
| | | Executive transition costs
| | | (10.5)(2.2)
| | | Severance costs | | | (2.7)(2.3)
| | | Advisor expenses | | | (11.6)(5.4)
| | | COVID-19 vaccine incentive
| | | (1.2)
| | | Short-term incentive compensation expenses
| | | (24.5)(27.6)
| | | Adjusted non-fuel operating and maintenance expense for incentive compensation (non-GAAP) | | | $1,049.11,046.5 | |
Appendix B | Evergy 20222023 Proxy Statement B-1 |
TABLE OF CONTENTS EVERGY, INC.
LONG-TERM INCENTIVE PLAN
(As Amended and Restated Effective May 3, 2022)
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EVERGY, INC.
LONG-TERM INCENTIVE PLAN
(As Amended and Restated effective May 3, 2022)
SECTION ONE.
| PURPOSE OF PLAN |
The purposes of this Evergy, Inc. Long-Term Incentive Plan (the “Plan”) are to encourage officers, employees and non-employee directors of the Company to acquire proprietary and vested interest in the growth and performance of the Company, to generate an increased incentive to enhance the value of the Company for the benefit of its customers and shareholders, and to aid in the attraction and retention of exceptionally qualified individuals upon whom the Company’s success largely depends.
This Plan is amended and restated as of the New Effective Date. All existing elections under this Plan prior to the New Effective Date shall continue in effect without change and apply as elections under the Plan.
The following definitions are applicable herein:
“Act” means the Securities Act of 1933, as it may be amended from time to time.
“Award” means the award to a Participant of Bonus Shares, Director Shares, Dividend Equivalents, Restricted Stock, Restricted Stock Units, Stock Options, Stock Appreciation Rights, Performance Shares, Other Stock-Based Awards or Director Deferred Share Units.
“Award Agreement” means a written or electronic agreement or instrument between the Company and a Participant which evidences an Award and sets forth such applicable terms, conditions and limitations (including treatment as a Performance Award) as the Committee establishes for the Award.
“Award Period” means that period established by the Committee during which any performance or continuous service goals specified with respect to earning any Award are to be measured.
“Board” means the Board of Directors of the Company.
“Bonus Shares” means Shares that are awarded to a Participant without cost and without restriction in recognition of past or expected future performance (whether determined by reference to another employee benefit plan of the Company or otherwise) or as an incentive to become an employee of the Company or a Subsidiary as permitted by applicable law.
“Cause” means unless otherwise defined in a Participant’s employment agreement or change in control severance agreement with the Company, in which case such definition will apply, (i) the material misappropriation of any of the Company’s funds or property; (ii) the conviction of, or the entering of a guilty plea or plea of no contest with respect to, a felony, or the equivalent thereof; (iii) commission of an act of willful damage, willful misrepresentation, willful dishonesty, or other willful conduct that can reasonably be expected to have a material adverse effect on the business, reputation, or financial situation of the Company; or (iv) gross negligence or willful misconduct in performance of a Participant’s duties; provided, however, “cause” shall not exist under clause (iv), above, with respect to an act or failure to act unless (A) the Participant has been provided written notice describing in sufficient detail the acts or failure to act giving rise to the Company’s assertion of such gross negligence or misconduct, (B) been provided a reasonable period to remedy any such occurrence and (C) failed to sufficiently remedy the occurrence.
“Clawback Law” has the meaning ascribed in Section Sixteen N.
“Clawback Policy” has the meaning ascribed in Section Sixteen N.
“Code” means the Internal Revenue Code of 1986, as amended. Reference in the Plan to any section of the Code shall be deemed to include any successor provisions to such section and any regulations promulgated thereunder.
“Committee” means (i) the Compensation and Leadership Development Committee (or any successor committee that is vested with oversight of long-term compensation plans) or the independent members of the Board, composed in each case of not less than two directors, each of whom is a “non-employee director” (within the meaning of Rule 16b-3(b)(3) under the Exchange Act) or (ii) any other committee of the Board to whom the Board has delegated its authority under this Plan.
“Common Stock” means the common stock, without par value, of the Company, or such other class of shares or other securities as may be subject to the Plan as a result of an adjustment made pursuant to the provisions of Section Sixteen G.
“Company” means Evergy, Inc. and its successors, including any successor company as provided in Section Sixteen H.
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“Date of Grant” means, unless the Committee otherwise specifies a later Date of Grant in the Committee’s applicable granting resolution, the date on which an Award is granted by the Committee.
“Director” means a member of the Board, a member of the board of directors of any Subsidiary, or any honorary, advisory or emeritus director of the Company or any Subsidiary.
“Director Deferred Share Unit” means, pursuant to Section Thirteen of this Plan, a Non-Employee Director’s right to receive a payment following the Non-Employee Director’s termination from service as a Director, in cash or Shares, of an amount equal to the Fair Market Value of one Share.
“Director Equity Payment Fees” means any fees payable to a Non-Employee Director in the form of Common Stock for his or her service as a Director of the Company or any of its Subsidiaries.
“Director Shares” means, pursuant to Section Thirteen of the Plan, Shares issued to a Director, as payment for serving as a Director.
“Disability” means that a Participant is classified as disabled as defined in the Company’s Long-Term Disability Plan.
“Dividend Equivalent” means a right granted appurtenant to an Award to receive payments equal to dividends or property paid with respect to Shares underlying such Award, at such time and on such terms and conditions as set forth in the Award Agreement.
“Eligible Employee” means any officer of, or any person employed by, the Company or any Subsidiary during any portion of an Award Period. Solely for purposes of Substitute Awards, the term Eligible Employee includes any current or former Employee of an Acquired Entity (as defined in the definition of Substitute Awards) who holds Acquired Entity Awards (as defined in the definition of Substitute Awards) immediately prior to the Acquisition Date (as defined in the definition of Substitute Awards).
“Employee” means a common-law employee of the Company or any Subsidiary.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Executive Officer” means (i) the president of the Company, any vice president of the Company, including any vice president of the Company in charge of a principal business unit, division or function (such as sales, administration, or finance), any other officer who performs a policy making function or any other Person who performs similar policy making functions for the Company, (ii) Executive Officers (as defined in part (i) of this definition) of subsidiaries of the Company who perform policy making functions for the Company, and (iii) any Person designated or identified by the Board as being an “executive officer” for purposes of the Act or the Exchange Act, including any Person designated or identified by the Board as being a Section 16 Person.
“Fair Market Value” means, as of any date, the value of a Share or Shares determined in good faith by the Committee in its sole discretion. Such determination shall be conclusive and binding on all persons. For this purpose, the Committee may adopt such formulas as in its opinion shall reflect the true fair market value of such Share or Shares from time to time and may rely on such independent advice with respect to such fair market value determination as the Committee shall deem appropriate. To the extent that Shares are readily tradable on an established securities market, the fair market value of the Shares may be determined based upon the first sale on the day of determination, the closing market price on the trading day before or the trading day of the day of determination, the arithmetic mean of the high and low prices on the trading day before or the trading day of determination or any other reasonable method using actual transactions in such Shares as reported by such market. To the extent that Shares are not readily tradable on an established market, the fair market value of a Share or Shares as of a valuation date means a value determined by the reasonable application of a reasonable valuation method. The determination whether a valuation method is reasonable, or whether an application of a valuation method is reasonable, is made based on the facts and circumstances as of the valuation date.
“Good Reason” means, without a Participant’s written consent and unless otherwise defined in a Participant’s employment agreement or change in control severance agreement with the Company (in which case such definition will apply), any of the following:
(1)
| Any material and adverse reduction or material and adverse diminution in a Participant’s position (including status, offices, titles and reporting requirements), authority, duties or responsibilities held, exercised or assigned at any time during the 90-day period immediately preceding the Change in Control; |
(2)
| Any reduction in a Participant’s annual base salary as in effect immediately preceding the Change in Control or as the same may be increased from time to time; or |
(3)
| A Participant being required by the Company to be based at any office or location that is more than 70 miles from the location where the Participant was employed immediately preceding the Change in Control. |
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Provided, however, notwithstanding the occurrence of any of the events set forth above in this definition, Good Reason shall not include for the purpose of this definition (1) an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Participant, or (2) any reduction in the Participant’s base annual salary or reduction in benefits received by the Participant where such reduction is in connection with a company-wide reduction in salaries or benefits.
“Incentive Stock Option” means an incentive stock option within the meaning of Section 422 of the Code.
“New Effective Date” has the meaning ascribed in Section Three A.
“Non-Employee Director” means a Director who is not employed as an Employee by the Company or any Subsidiary. Solely for purposes of Substitute Awards, the term Non-Employee Director includes any current or former non-employee director of an Acquired Entity (as defined in the definition of Substitute Awards) who holds Acquired Entity Awards (as defined in the definition of Substitute Awards) immediately prior to the Acquisition Date (as defined in the definition of Substitute Awards).
“Option” or “Stock Option” means either a non-qualified stock option or an Incentive Stock Option granted under Section Eight.
“Option Period” or “Option Periods” means the period or periods during which an Option is exercisable.
“Option Price” means the price at which a Share may be purchased by a Participant pursuant to an Option.
“Original Effective Date” has the meaning ascribed in Section Three A.
“Other Stock-Based Award” means any award of Shares or payment of cash that is valued in whole or in part by reference to, or is otherwise based on, Shares, other property, or achievement of performance metrics or measures.
“Participant” means an Eligible Employee or Non-Employee Director who has been granted an Award under the Plan.
“Plan” means the Evergy, Inc. Long-Term Incentive Plan.
“Performance Award” means any Award that will be issued or granted, or become vested or payable, as the case may be, upon the achievement of certain performance goals (as described in Section Twelve B) to a Participant pursuant to Section Twelve.
“Performance Shares” means an Award granted under Section Ten.
“Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including “group” as defined in Section 13(d) thereof.
“Restricted Stock” means an Award granted under Section Seven.
“Restricted Stock Unit” or “RSU” means an Award granted under Section Seven evidencing the Participant’s right to receive a Share (or, at the Committee’s discretion, a cash payment equal to the Fair Market Value of a Share) at some future date and that is subject to those restrictions set forth therein and the Award Agreement.
“Section 16 Person” means a Person who is subject to obligations under Section 16 of the Exchange Act with respect to transactions involving equity securities of the Company.
“Share” means a share of Common Stock.
“Stock Appreciation Right” or “SAR” means a right granted as an Award under the Plan to receive, as of the date specified in the Award Agreement and with respect to each SAR exercised, an amount equal to the excess of (a) the Fair Market Value of a Share on the Exercise Date, over (b) the SAR’s Strike Price.
“Strike Price” means the per-Share price used as the baseline measure for the value of a SAR, as specified in the Award Agreement.
“Subsidiary” means any corporation of which 50 percent or more of its outstanding voting stock or voting power is beneficially owned, directly or indirectly, by the Company.
“Substitute Award” means an Award granted under the Plan in substitution for stock or stock-based awards (“Acquired Entity Awards”) held by current and former employees or former non-employee directors of another corporation or entity who become Employees or Non-Employee Directors as the result of a merger or consolidation of the employing corporation or other entity (the “Acquired Entity”) with the Company or a Subsidiary, or the acquisition by the Company or a Subsidiary of property or stock of, or other ownership interest in, the Acquired Entity immediately prior to such merger, consolidation, or acquisition (“Acquisition Date”) as agreed to by the parties to such corporate transaction and as may be set forth in the definitive purchase agreement. The limitations of Section Five on the number of Shares reserved or available for grants, and
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the limitations under Section Eight C and Section Nine C with respect to the Option Price and Strike Price, shall not apply to Substitute Awards. Any issuance of a Substitute Award which relates to an Option or a SAR shall be completed in conformity with the rules under Code Section 409A relating to the substitutions and assumptions of stock rights by reason of a corporate transaction.
“Termination” means resignation or discharge from employment with the Company or any one of its Subsidiaries, except in the event of death, disability, or retirement.
SECTION THREE.
| EFFECTIVE DATE, DURATION AND SHAREHOLDER APPROVAL |
The Plan originally became effective on May 5, 1992 (as the Great Plains Energy Incorporated Long-Term Incentive Plan) (the “Original Effective Date”). The Plan has been amended and restated numerous times with the most recent amendment and restatement being effective June 4, 2018 in connection with the merger of Great Plains Energy Incorporated into the Company. Subject to approval by the Company’s shareholders, this amended and restated Plan shall become effective upon approval by the Company’s shareholders on May 3, 2022 (the “New Effective Date”) and, except as expressly specified otherwise, applies only with respect to Awards granted after such date.
B.
| Period for Grants of Awards. |
Awards may be granted until May 3, 2032.
C.
| Termination of the Plan. |
The Plan shall continue in effect until all matters relating to the payment of Awards and administration of the Plan have been settled.
SECTION FOUR.
| ADMINISTRATION |
The Plan shall be administered by the Committee for, and on behalf of, the Board. The Committee shall have all of the powers (other than amending or terminating this Plan as provided in Section Fifteen) respecting the Plan, including, but not limited to those specific powers set forth below. All questions of interpretation and application of the Plan, or of the terms and conditions pursuant to which Awards are granted, exercised or forfeited under the provisions hereof, shall be subject to the determination of the Committee. Any such determination shall be final and binding upon all parties affected thereby.
B.
| Specific Committee Powers. |
Without limitation, the Committee shall have full power and authority and sole discretion as follows:
(i)
| to determine when, to whom and in what types and amounts Awards should be granted; |
(ii)
| subject to the limitations set forth in Section Five A, to grant Awards to Eligible Employees and Non-Employee Directors in any number, and to determine the terms and conditions applicable to each Award; |
(iii)
| to determine, as to all or part of any Award as to any Participant, at the time the Award is granted or thereafter, that the exercisability or vesting of an Award shall be accelerated upon a Participant’s death, disability, retirement, Change in Control, termination of employment following a Change in Control, or other special circumstances determined by the Committee; |
(iv)
| to determine that Awards shall continue to become exercisable or vested in full or in installments after a Participant’s termination of employment, to extend the period for exercise of Options or SARs following a termination of employment (but not beyond ten (10) years from the Date of Grant of the Option or SARs) or to provide that any Restricted Stock Award, Restricted Stock Unit Award, or Performance Share Award shall in whole or in part not be forfeited upon Participant’s death, disability, retirement, Change in Control, termination of employment following a Change in Control or other special circumstances determined by the Committee; |
(v)
| to determine the benefit payable under any Dividend Equivalent, and to determine whether any vesting conditions have been satisfied; |
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(vi)
| subject to Section Five C, to determine, no later than the Date of Grant of Restricted Stock Units, whether the payment of dividend equivalents thereon shall be paid at the time any underlying Shares are vested; |
(vii)
| to determine whether, to what extent, and under what circumstances an Award may be settled in, or the exercise price of an Award may be paid in, cash, Shares, other Awards, or other property; |
(viii)
| subject to Section Sixteen J (Code Section 409A), to determine whether, to what extent and under what circumstances cash, Shares, other Awards, other property and other amounts payable with respect to an Award (other than with respect to an Option or a SAR for which no additional deferral opportunity beyond the deferral inherent in such Option or SAR is permitted under this Plan) will be deferred, either at the election of the Participant, or, if and to the extent specified in the Award Agreement, automatically or at the election of the Committee; |
(ix)
| subject to Section Sixteen J (Code Section 409A), to grant Awards in replacement of Awards previously granted under this Plan or any other compensation plan of the Company, provided that any such replacement grant that would be considered a repricing shall be subject to shareholder approval; |
(x)
| to make, amend, suspend, waive and rescind rules and regulations relating to the Plan; |
(xi)
| to appoint such agents as the Committee may deem necessary or advisable to administer the Plan; |
(xii)
| with the consent of the Participant, to amend any Award Agreement at any time; provided that the consent of the Participant shall not be required for any amendment (a) that, in the Committee’s determination, does not materially adversely affect the rights of the Participant, or (b) which is necessary or advisable (as determined by the Committee) to carry out the purpose of the Award as a result of any new applicable law or change in an existing applicable law, or (c) to the extent the Award Agreement specifically permits amendment without consent; |
(xiii)
| to impose such additional terms and conditions upon the grant, exercise or retention of Awards as the Committee may, before or concurrently with the grant thereof, deem appropriate, including limiting the amount or percentage of Awards which may from time to time be exercised by a Participant, and including requiring the Participant to enter into restrictive covenants; |
(xiv)
| without the consent of the Participant, to make adjustments in the terms and conditions of, and the criteria in, Awards in recognition of unusual or nonrecurring events (including events described in Section Sixteen G) affecting the Company or the financial statements of the Company, or in response to changes in applicable laws, regulations or accounting principles; |
(xv)
| to correct any defect or supply any omission or reconcile any inconsistency, and to construe and interpret the Plan, the rules and regulations, the Award Agreements or any other instrument entered into or relating to an Award under the Plan, and to make all determinations, including factual determinations, necessary or advisable for the administration of the Plan; |
(xvi)
| to cause the forfeiture of any Award or recover any Shares, cash or other property attributable to an Award for violations of any Company ethics policy or pursuant to any Clawback Policy or any Clawback Law; and |
(xvii)
| to take any other action with respect to any matters relating to the Plan for which it is responsible and to make all other decisions and determinations as may be required under the terms of the Plan or as the Committee may deem necessary or advisable for the administration of the Plan. |
Notwithstanding the general administrative powers discussed above but to the extent not inconsistent with applicable law (including without limitation applicable state laws), the Committee may, by resolution: (1) delegate to a special committee consisting of two or more directors, who may also be officers of the Company, any of the authority of the Committee under the Plan, including the right to grant, cancel or suspend Awards; or (2) authorize one or more Executive Officers to do one or more of the following with respect to Eligible Employees who are not directors or Executive Officers of the Company: (A) designate Eligible Employees to be recipients of Awards, (B) determine the number of Shares subject to such Awards to be received by such Eligible Employees and (C) cancel or suspend Awards to such Employees; provided that (x) any resolution of the Committee authorizing such officer(s) must specify the total number of Shares subject to Awards that such officer(s) may so award and (y) the Committee may not authorize any officer to designate himself or herself as the recipient of an Award. The acts of such delegates shall be treated hereunder as acts of the Committee and such delegates shall report regularly to the Committee regarding the delegated duties and responsibilities and any Awards so granted.
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SECTION FIVE.
| GRANT OF AWARDS AND LIMITATION OF NUMBER OF SHARES AWARDED; GENERAL TERMS |
A.
| Share Limitations and Share Counting. |
The Committee may, from time to time, grant Awards to one or more Eligible Employees or Non-Employee Directors, provided that:
(i)
| From the Original Effective Date, the maximum number of Shares available for Awards under this Plan may not exceed 10,564,800 Shares (inclusive of 5,780,000 Shares authorized by shareholders in 2022) (increased, proportionately, in the event of any stock split or stock dividend with respect to the Shares in accordance with Section Sixteen G) (the “Maximum Limitation”);
|
(ii)
| Shares tendered with respect to the payment of any Option Price, Shares withheld for any taxes, Shares repurchased by the Company using Option Price proceeds, and all Shares underlying any portion of a SAR or Option that is settled in Shares (regardless of the actual number of net Shares delivered upon exercise) shall count against the Maximum Limitation; |
(iii)
| To the extent that an award lapses or the rights of the Participant to whom it was granted terminate, any Shares subject to such Award shall not be counted as having been granted under the Plan and shall not be reduced from the Maximum Limitation; |
(iv)
| Any Share required to satisfy Substitute Awards shall not count against the Maximum Limitation; |
(v)
| The maximum grant date fair value (determined in accordance with ASC Topic 718) of all Awards granted to any individual for his or her services as a Non-Employee Director during any calendar year shall not exceed $750,000; |
(vi)
| Shares delivered by the Company under the Plan may be authorized but unissued Shares, Shares held in the treasury of the Company or Shares purchased on the open market (including private purchases) in accordance with applicable securities laws; |
(vii)
| The maximum number of Shares with respect to which an Award or Awards (other than a Substitute Award) may be granted to any Participant in any single calendar year shall not exceed 500,000 Shares (increased, proportionately, in the event of any stock split or stock dividend with respect to the Shares in accordance with Section Sixteen G); and |
(viii)
| The maximum number of Shares that may be subject to grants of Incentive Stock Options is the Maximum Limitation. |
In determining the size of the Awards, the Committee shall assess the performance of the Eligible Employees (which may include continuous service) against criteria to be established by the Committee, from time to time, based on the Company’s performance (such as shareholder and customer-related factors) and shall take into account a Participant’s responsibility level, potential, cash compensation level, and the Fair Market Value of the Common Stock at the time of Awards, as well as such other considerations as it deems appropriate.
Except with respect to an Award of Restricted Stock, a participant or a transferee of a Participant shall have no rights as a shareholder with respect to any Shares covered by an Award until the date the Award is exercised, becomes vested or is settled, as the case may be, except as provided in Section Sixteen A.
C.
| Rights to Dividends and Dividend Equivalents. |
Subject to the provisions of the Plan and to the extent expressly provided in the applicable Award Agreement, the recipient of an Award other than an Option or SAR may, if so determined by the Committee, be entitled to receive, currently or on a deferred basis credited to an account maintained on the books of the Company, dividends or Dividend Equivalents with respect to the number of Shares covered by the Award, as determined by the Committee in its sole discretion. The Committee may provide that the Dividend Equivalents (if any) shall be deemed to have been reinvested in additional Shares or otherwise reinvested. Notwithstanding the foregoing, to the extent any Award provides for the payment of dividends or crediting of dividend equivalents, in no event will such dividends or dividend equivalents attributable to unvested Awards be paid unless and before the underlying Award has become vested pursuant to its terms.
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Solely with respect to Performance Shares granted under Section Ten, and unless otherwise provided in an Award Agreement (i) if the Award Agreement provides for the payment of Dividend Equivalents, such Dividend Equivalents will be equal to the dividends paid during the entire Award Period for which the Performance Shares relate and not just that period of time after the Performance Shares were granted and (ii) at the end of an Award Period and provided the Performance Shares have not been forfeited in accordance with the terms of this Plan, the Participant shall be paid in a lump sum cash payment, or, if specified by the Committee, in an equivalent number of Shares based on the value of the Performance Shares otherwise vesting as of the payment date, the aggregate amount of such hypothetical dividend equivalents.
D.
| Grant Vesting Limitations. |
Notwithstanding any other provision of the Plan to the contrary, but subject to any adjustment pursuant to Section Sixteen G and Section Fourteen of the Plan and the remaining provisions of this Section Five D, Awards made under the Plan on or after the New Effective Date shall not vest, be settled or become exercisable before the first anniversary of such Award’s Date of Grant. Notwithstanding the foregoing, (i) the foregoing limitation shall not apply to Awards to Non-Employee Directors, (ii) with respect to Awards to Employees, the Committee may grant Awards relating to an amount of Shares in the aggregate not in excess of five percent (5%) of the Maximum Limitation without respect to such minimum vesting requirement and (iii) nothing in this Section Five D shall preclude or limit any Award or other arrangement (or any action by the Committee) from providing for accelerated vesting of such Award in connection with or following a Participant’s death, Disability, termination of employment or other “separation from service” within the meaning of Code Section 409A, including a retirement.
Eligible Employees and Non-Employee Directors of the Company and its Subsidiaries (including officers or salaried full-time employees who are members of the Board) shall be eligible to receive Awards. Subject to the provisions of the Plan, the Committee shall from time to time select from such eligible persons those to whom Awards shall be granted and determine the amount of such Awards. In no event shall the existence of this Plan create an obligation or duty of the Committee or the Company to grant an Award to any person under this Plan.
SECTION SEVEN.
| RESTRICTED STOCK AND RESTRICTED STOCK UNITS |
A.
| Grant of Restricted Stock. |
The Committee may grant an Award of one or more Shares of Restricted Stock to any Eligible Employee or Non-Employee Director.
A Restricted Stock Award made pursuant to this Section Seven shall be in the form of Shares, restricted as provided herein. The Restricted Stock shall be issued in the name of the Participant and shall, to the extent certificated, bear a restrictive legend or, to the extent uncertificated, contain instructions, prohibiting sale, transfer, pledge or hypothecation of the Restricted Stock until the expiration of the restriction period, or shall be placed in escrow or other custodial arrangements prohibiting such sale, transfer, pledge or hypothecation.
The Committee may also impose such other restriction and conditions on the restricted stock as it deems appropriate.
Upon issuance to the Participant of Restricted Stock, the Participant shall have the right to vote the Restricted Stock.
B.
| Restricted Stock Agreement. |
Each Restricted Stock award shall be evidenced by an Award Agreement between the Company and the Participant containing the terms and conditions as may be determined by the Committee, including, without limitation, provisions relating to the vesting of the Restricted Stock and any special vesting conditions or rights associated with the Award.
C.
| Grant of Restricted Stock Units. |
The Committee may grant an Award of one or more Restricted Stock Units to any Eligible Employee or Non-Employee Director. Such grant of Restricted Stock Units may be made in connection with or separate from a grant of Restricted Stock.
The Company shall establish an account (“RSU Account”) on its books for each Participant who receives a grant of Restricted Stock Units. Restricted Stock Units shall be credited to the Participant RSU Account as of the Date of Grant of such Restricted Stock Units. RSU Accounts shall be maintained for recordkeeping purposes only and the Company
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shall not be obligated to segregate or set aside assets representing securities or other amounts credited to RSU Accounts. The obligation to make distributions of securities or other amounts credited to RSU Accounts shall be an unfunded, unsecured obligation of the Company.
The Committee may also impose such other restrictions and conditions on the Restricted Stock Units as it deems appropriate.
A Participant shall have no voting rights with respect to any Shares underlying the Restricted Stock Units unless and until such time as the Shares underlying the RSUs are issued.
Except as otherwise provided in an Award Agreement but in all cases subject to Section Five C, whenever dividends are paid or distributions are made with respect to Shares, Dividend Equivalents shall be credited to RSU Accounts on all Restricted Stock Units credited thereto, as of the record date for such dividend or distribution. Such Dividend Equivalents shall be credited to the RSU Account either (i) in the form of additional Restricted Stock Units (in a number determined by dividing the aggregate value of such Dividend Equivalents by the Fair Market Value of a Share at the payment date of such dividend or distribution) or (ii) deferred cash. Any additional RSUs or deferred cash amounts shall be subject to the same restrictions and other terms as apply to the RSUs with respect to which such Dividend Equivalents are credited and in no event will the payment of such property or deferred cash be made before the underlying RSUs are payable.
The Company shall settle an RSU Account by delivering to the holder thereof (which may be the Participant or his or her beneficiary, as applicable) either (i) if settled through the issuance of Shares, a number of Shares equal to the whole number of Shares underlying the Restricted Stock Units then credited to the Participant RSU Account (or a specified portion in the event of any partial settlement); provided that any fractional Shares underlying Restricted Stock Units remaining in the RSU Account on the settlement date shall be distributed in cash in an amount equal to the Fair Market Value of a Share as of the settlement date multiplied by the remaining fractional Restricted Stock Unit, or (ii) if settled through a payment of cash, a payment in an amount equal to the Fair Market Value of the Restricted Stock Units then credited to the Participant RSU Account and then eligible to be settled (or a specified portion in the event of any partial settlement). Subject to any deferral election made by the Participant, the “settlement date” for all Restricted Stock Units credited to the Participant’s RSU Account and that otherwise have not been forfeited shall be when restrictions applicable to an Award of Restricted Stock Units have lapsed in accordance with the terms of the Award Agreement; provided, however, to the extent an RSU is subject to Code Section 409A, no settlement shall be made on account of a disability unless such disability meets the definition of “disability” as defined in Code Section 409A(a)(2)(C)(i)), and no settlement shall be made on account of a retirement or termination of employment unless such retirement or termination of employment constitutes a “separation from service” (as provided in Code Section 409A(a)(2)(A)(i)).
D.
| Restricted Stock Unit Agreement. |
Each Restricted Stock Unit award shall be evidenced by an Award Agreement between the Company and the Participant containing the terms and conditions as may be determined by the Committee, including, without limitations, provisions relating to the vesting of the Restricted Stock Units and any special vesting conditions or rights associated with the Award.
Subject to Section Five D, at the time Restricted Stock or Restricted Stock Units are granted, the Committee shall establish a restriction period applicable to such Award which shall not be more than ten years. The restriction period and the restrictions imposed may be based on the achievement of specific performance goals, time-based restrictions following the achievement of specific performance goals, restrictions based on the occurrence of a specified event, and/or restrictions under applicable securities laws. Each Restricted Stock Award or Restricted Stock Unit Award may have a different restriction period or one or more different types of restrictions at the discretion of the Committee.
Unless a Restricted Stock Unit Award is specifically amended to comply with the conditions under Code Section 409A to avoid the additive income taxes imposed thereunder, any payment relating to a Restricted Stock Unit shall be made as soon as practicable following the end of the Award Period but in no event will any payment relating to Restricted Stock Units be made later than the last day of the applicable 2 ½ month period set forth in Treasury Regulations § 1.409A-1(a)(4).
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Except as otherwise provided for in this Plan or the Award Agreement or determined by the Committee, upon the termination of employment of a Participant holding Restricted Stock or RSUs for any reason during the period of time in which some or all of the Shares are subject to restrictions, all Shares of Restricted Stock and all RSUs held by the Participant and still subject to restriction will be forfeited by the Participant and, in the case of Shares of Restricted Stock, reacquired by the Company; provided that in the event of a Participant’s retirement, Disability, death, or in cases of special circumstances, the Committee may, in its discretion, waive in whole or in part any or all of the remaining restrictions or conditions with respect to the Participant’s Shares of Restricted Stock or RSUs.
Upon completion of the restriction period and satisfaction of any other restrictions required by the Award, all restrictions on the Restricted Stock and RSUs will expire and, in the case of Restricted Stock, all applicable restrictions thereon will be removed and, in the case of Restricted Stock Units, the underlying Shares will be issued to the Participant.
SECTION EIGHT.
| STOCK OPTIONS |
The Committee may grant an Award of one or more Options to any Eligible Employee or Non-Employee Director.
B.
| Stock Option Agreement. |
Each Option granted under the Plan shall be evidenced by an Award Agreement between the Company and the Participant containing such terms and conditions as may be determined by the Committee, including, without limitations, provisions to qualify Incentive Stock Options as such under Section 422 of the Code; provided, however, that each Stock Option shall be subject to the following terms and conditions: (i) the Options are exercisable either in total or in part with a partial exercise not affecting the exercisability of the balance of the Option; (ii) every Share purchased through the exercise of an Option shall be paid for in full at the time of the exercise; (iii) each Option shall cease to be exercisable, as to any Share, at the earliest of (a) the Participant’s purchase of the Shares to which the Option relates, or (b) the lapse of the Option; and (iv) Options shall not be transferable by the Participant other than by will or the laws of descent and distribution or, if permitted by the Company, pursuant to a domestic relations order validly issued and approved by a court of proper jurisdiction. Non-Employee Directors shall be ineligible to receive Incentive Stock Options.
The Option Price per Share shall be set by the grant, but, except with respect to the issuance of a Substitute Award, shall not be less than 100 percent of the Fair Market Value at the Date of Grant.
At the time of an exercise of an Option, the Option Price shall be payable in any manner allowed under applicable law and as permitted by the Committee, including, but not limited to:
(i)
| Cash or certified bank check; |
(ii)
| By delivery to the Company Shares then owned by the Participant, the Fair Market Value of which equals the purchase price of the Shares purchased pursuant to the Option, properly authorized or endorsed for transfer to the Company; provided, however, that Shares used for this purpose must have been held by the Holder for such minimum period of time as may be established from time to time by the Committee; and provided further that the Fair Market Value of any Shares delivered in payment of the purchase price upon exercise of the Options shall be the Fair Market Value as of the exercise date, which shall be the date of delivery of the Shares used as payment of the Option Price; |
In lieu of actually surrendering to the Company the Shares then owned by the Participant, the Committee may, in its discretion permit the Participant to submit to the Company a statement affirming ownership by the Participant of such number of Shares and request that such Shares, although not actually surrendered, be deemed to have been surrendered by the Participant as payment of the exercise price;
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(iii)
| For any Participant other than an Executive Officer or except as otherwise prohibited by the Committee, by payment through a broker in accordance with procedures permitted by Regulation T of the Federal Reserve Board; |
(iv)
| By a “net exercise” arrangement pursuant to which the Company will not require a payment of the Option Price but will reduce the number of Shares issued upon the exercise by the largest number of whole Shares that has a Fair Market Value on the date of exercise that does not exceed the aggregate Option Price. With respect to any remaining balance of the aggregate Option Price, the Company will accept a cash payment from the Participant; or |
(v)
| Any combination of the consideration provided in the foregoing subsections (i), (ii), (iii) and (iv). |
E.
| Other Terms and Conditions. |
Each Option shall become exercisable in such manner and within such Option Period not to exceed ten years from its Date of Grant, as set forth in the Stock Option Agreement.
An Option will lapse upon the first occurrence of one of the following circumstances: (i) ten years from the Date of Grant; (ii) except as may otherwise be provided for in the Award Agreement, three months following the Participant’s Termination (other than in connection with a Change in Control as provided in Section Fourteen), (iii) the expiration of the term of the Option as set forth in the Award Agreement, or (iv) twelve months from the date on which a Participant is classified as disabled as defined in the Company’s Long-Term Disability Plan. If, however, the Participant dies within the Option Period and prior to the lapse of the Option, the Option shall lapse unless it is exercised within the Option Period or twelve months from the date of the Participant’s death, whichever is earlier, by the Participant’s legal representative or representatives or by the person or persons entitled to do so under the Participant’s will or, if the Participant shall fail to make testamentary disposition of such Option or shall die intestate, by the person or persons entitled to receive said Option under the applicable laws of descent and distribution.
If the exercise of the Option following the Participant’s Termination for any reason (including the inability of the Participant to utilize a particular form of payment of the Option Price as set forth above in Section Eight D) would be prohibited at any time because the issuance of Shares would violate the registration requirements under the Act or any other state or federal securities law or the rules of any securities exchange or interdealer quotation system, then the Option shall terminate on the earlier of (a) the expiration of the term of the Option in accordance with the immediately preceding paragraph in this Section Eight F, or (b) the expiration of a period after the Participant’s Termination that is three months after the end of the period during which the exercise of the Option would be in violation of such registration or other securities law requirements.
G.
| Early Disposition of Common Stock. |
If a Participant shall engage in a disqualifying disposition (as such term or successor term is then used under the Code) with respect to any Shares purchased pursuant to an Incentive Stock Option (presently within one year from the date the Shares were acquired or within two years from the Date of Grant of the Option), then, to provide the Company with the opportunity to claim the benefit of any income tax deduction which may be available to it under the circumstances, the Participant shall, within ten days of such disposition, notify the Company of the dates of acquisition and disposition of such Shares, the number of Shares so disposed and the consideration, if any, received therefore.
H.
| Individual Dollar Limitations. |
The aggregate Fair Market Value (determined at the time of Award) of the Shares, with respect to which an Incentive Stock Option is exercisable for the first time by a Participant during any calendar year (whether under this Plan or another plan or arrangement of the Company) shall not exceed $100,000 (or such other limit as may be in effect under the Code on the date of Award). In the event the foregoing results in a portion of an Option designated as an Incentive Stock Option exceeding the $100,000 limitation, only such excess shall be treated as a non-qualified stock option.
I.
| No Obligation to Exercise Option. |
The granting of an Option shall impose no obligation on the Participant to exercise such Option.
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K.
| No Repricing of Options Unless Repricing Subject to Shareholder Approval. |
In no event may the Committee, without shareholder approval (i) amend an Option to reduce its Option Price, (ii) cancel an Option and regrant an Option with an Option Price lower than the original Option Price of the cancelled Option, (iii) cancel an Option in exchange for cash or another Award, or (iv) take any other action (whether in the form of an amendment, cancellation, or replacement grant) that has the effect of “repricing” an Option, as defined under the rules of the established stock exchange or quotation system on which the Shares are then listed or traded if such stock exchange’s or quotation system’s rules define what constitutes a repricing shareholder.
SECTION NINE.
| STOCK APPRECIATION RIGHTS |
A.
| Grant of Stock Appreciation Rights. |
The Committee, at any time and from time to time, may grant SARs to any Eligible Employee or Non-Employee Director either alone or in addition to other Awards granted under the Plan. The Committee may impose such conditions or restrictions on the exercise of any SAR as it shall deem appropriate. In no event may the compensation payable under a SAR be greater than the excess of the Fair Market Value of the Share on the date the SAR is exercised over the Fair Market Value of the Share on the date of grant of the SAR. The SAR shall not include any feature for the deferral of compensation other than the deferral of recognition of income until the exercise of the SAR.
Each SAR shall be evidenced by an Award Agreement in such form as the Committee may approve, which shall contain such terms and conditions not inconsistent with the provisions of the Plan as shall be determined from time to time by the Committee.
The Strike Price of a SAR shall be determined by the Committee in its sole discretion; provided that, except with respect to a Substitute Award, the Strike Price shall not be less than 100 percent of the Fair Market Value of a Share on the Date of Grant of the SAR.
Except as may otherwise be provided by the Committee in an Award Agreement, SARs shall be exercised by the delivery of a written notice to the Company, setting forth the number of Shares with respect to which the SAR is to be exercised. Payments made in connection with the exercise of a SAR shall be made on or as soon as administratively practicable following the exercise date. Any payment by the Company in respect of a SAR may be made in cash, Shares, other property, or any combination thereof, as the Committee, in its sole discretion, shall determine.
E.
| Other Terms and Conditions. |
Each SAR shall become exercisable in such manner and within such period or periods not to exceed ten years from its Date of Grant, as set forth in the Award Agreement.
A SAR will lapse upon the first occurrence of one of the following circumstances: (i) ten years from the Date of Grant; (ii) except as may otherwise be provided for in the SAR Agreement, three months following the Participant’s Termination (other than in connection with a Change in Control as provided in Section Fourteen), (iii) the expiration of the term of the SAR as set forth in the Award Agreement, or (iv) twelve months from the date on which a Participant is classified as disabled as defined in the Company’s Long-Term Disability Plan. If, however, the Participant dies within the period during which the SAR is exercisable and before the lapse thereof, the SAR shall lapse unless it is exercised within such SAR exercise period or twelve months from the date of the Participant’s death, whichever is earlier, by the Participant’s legal representative or representatives or by the person or persons entitled to do so under the Participant’s will or, if the Participant shall fail to make testamentary disposition of such SAR or shall die intestate, by the person or persons entitled to receive said SAR under the applicable laws of descent and distribution.
If the exercise of a SAR following the Participant’s Termination for any reason would be prohibited at any time because the issuance of Shares would violate the registration requirements under the Act or any other state or federal securities law or the rules of any securities exchange or interdealer quotation system, then the SAR shall terminate on the earlier
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of (a) the expiration of the term of the SAR in accordance with the immediately preceding paragraph in this Section Nine F, or (b) the expiration of a period after the Participant’s Termination that is three months after the end of the period during which the exercise of the SAR would be in violation of such registration or other securities law requirements.
G.
| No Obligation to Exercise SAR. |
The granting of a SAR shall impose no obligation on the Participant to exercise such SAR.
H.
| No Repricing of SARs Unless Repricing Subject to Shareholder Approval. |
In no event may the Committee, without shareholder approval (i) amend a SAR to reduce its Strike Price, (ii) cancel a SAR and regrant a SAR with a Strike Price lower than the original Strike Price of the cancelled SAR, (iii) cancel a SAR in exchange for cash or another Award, or (iv) take any other action (whether in the form of an amendment, cancellation, or replacement grant) that has the effect of “repricing” a SAR, as defined under the rules of the established stock exchange or quotation system on which the Shares are then listed or traded if such stock exchange’s or quotation system’s rules define what constitutes a repricing.
SECTION TEN.
| PERFORMANCE SHARES |
A.
| Grant of Performance Shares. |
The Committee may grant an Award of one or more Performance Shares to any Eligible Employee or Non-Employee Director.
A Performance Share is the right to receive a payment from the Company with respect to such Performance Share subject to satisfaction of such terms and conditions as the Committee may determine. Performance Shares shall be credited to a Performance Share account to be maintained for each Participant. Each Performance Share shall be deemed to be equivalent of one Share. Unless specifically provided in an Award Agreement, the Award of Performance Shares under the Plan shall not entitle the participant to any interest in or to any dividend, voting, or other rights of a shareholder of the Company.
A grant of Performance Shares may be made by the Committee during the term of the Plan, even if the applicable Award Period extends beyond the term of the Plan.
The Participant shall be entitled to receive payment for each Performance Share of an amount based on the achievement of performance measures for such Award Period as determined by the Committee. During or before the Award Period, the Committee shall have the right to establish requirements or other criteria for measuring such performance.
B.
| Performance Share Agreement. |
Each Performance Share shall be evidenced by an Award Agreement in such form as the Committee may approve, which shall contain such terms and conditions not inconsistent with the provisions of the Plan as shall be determined from time to time by the Committee.
C.
| Form and Timing of Payment. |
Unless a Performance Share Award Agreement is specifically amended to comply with the conditions under Code Section 409A to avoid the additive income taxes imposed thereunder, any payment relating to Performance Shares shall be made as soon as practicable following the end of the Award Period but in no event will any payment relating to Performance Shares be made later than the last day of the applicable 2 ½ month period set forth in Treasury Regulations § 1.409A-1(a)(4).
The payment to which a Participant shall be entitled at the end of an Award Period shall be a dollar amount equal to the number of Performance Shares earned, multiplied by the Fair Market Value of a Share on the payment date. Payment shall normally be made in Shares. The Committee, however, in its sole discretion, may authorize payment in such combinations of cash and Shares or all in cash as it deems appropriate.
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Except as provided in Section Fourteen (Change in Control) or in special circumstances as otherwise determined by the Committee including, without limitation, a Participant’s retirement, Disability or death, (i) upon the termination of employment of a Participant holding Performance Shares for any reason before some or all of the Performance Shares have been paid, all Performance Shares (other than any vested Performance Shares for which a valid deferral election has been made and which are scheduled to be paid in the future) which have not been paid will be forfeited by the Participant. In special circumstances as otherwise determined by the Committee including, without limitation, the Participant’s retirement, Disability or death, the Committee may, in its sole discretion, (i) accelerate payment with respect to some or all of the Performance Shares, (ii) provide that the payout of any Performance Shares will be pro-rated for service during the Award Period and paid at the end of the Award Period, or (iii) provide that a Participant is entitled to a full payout (or less than full payout) at the end of the Award Period of all Performance Shares based on the level of achievement of the established performance goals.
SECTION ELEVEN.
| BONUS SHARES AND OTHER STOCK-BASED AWARDS |
A.
| Grant of Bonus Shares and Other Stock-Based Awards. |
Subject to the terms of the Plan, the Committee may grant Bonus Shares to any Eligible Employee or Non-Employee Director, in such amount and upon such terms and at any time and from time to time as shall be determined by the Committee. Subject to the terms of the Plan, the Committee may also grant to an Eligible Employee or Non-Employee Director, in such amount and upon such terms and at any time and from time to time as shall be determined by the Committee any Other Stock-Based Award.
A Bonus Share Award may be evidenced by an Award Agreement or other form of communication as the Committee may approve. An Other Stock-Based Award shall be evidenced by an Award Agreement in such form as the Committee may approve, which shall contain such terms and conditions not inconsistent with the provisions of the Plan as shall be determined from time to time by the Committee.
SECTION TWELVE.
| PERFORMANCE AWARDS |
A.
| Terms of Performance Awards. |
The Committee may grant one or more Performance Awards to any Eligible Employee or Non-Employee Director.
Except as provided in Section Fourteen (Change in Control), Performance Awards will be issued or granted, or become vested or payable, only after the end of the relevant Award Period. The established performance goals for each Award Period and the amount payable upon satisfaction of those performance goals shall be conclusively determined by the Committee. When the Committee determines whether a performance goal has been satisfied for any Award Period, the Committee may make such determination using calculations which include or exclude an event or transaction that is either of an unusual nature or of a type that indicates infrequency of occurrence (under generally accepted accounting principles (United States) (“GAAP”) and as described in Financial Accounting Standards Board Accounting Standards Subtopic 225-20 (or any successor provision) or in management’s discussion and analysis of financial condition and results of operations appearing in the Company’s Annual Report on Form 10-K for the applicable fiscal year). The Committee also may establish performance goals that are determined using GAAP or other non-GAAP financial measures and may include or exclude mark-to-market gains and losses on energy contracts, any unusual or non-recurring items, including the charges or costs associated with restructurings of the Company, discontinued operations, and the cumulative effects of accounting changes and, further, may take into account changes in applicable tax laws or accounting principles or such other items and factors as the Committee may determine reasonable and appropriate under the circumstances (including any factors that could result in the Company’s paying non-deductible compensation to an Employee or Non-Employee Director).
If an Award is subject to this Section Twelve, then the lapsing of restrictions thereon, or the vesting thereof, and the distribution of cash, Shares or other property pursuant thereto, as applicable, shall be subject to the achievement of one or more objective performance goals established by the Committee and which may be based on the attainment of one or any combination of performance metrics as determined by the Committee (the “Performance Measures”). While not
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intended to be exhaustive, the Committee may establish Performance Measures calculated on a GAAP or non-GAAP basis, on an absolute or relative basis for the Company as a whole or any of its subsidiaries, operating divisions or other operating units, and/or in a manner that may be measured in the aggregate or on a per Share basis. Performance Measures may include, but are not limited to:
1.
| Earnings measures, including net earnings on either a LIFO, FIFO or other basis; |
2.
| Operating measures, including operating income, operating earnings, operating margin, funds from operations and operating measures determined on an absolute basis or relative to another Performance Measure such as total adjusted debt; |
3.
| Income or loss measures, including net income or net loss; |
4.
| Cash flow measures, including cash flow or free cash flow and measures based on all operations or a designated segment of operations; |
6.
| Measures based on expense levels, including measures such as non-fuel operating and maintenance expense determined either on a Company-wide basis or in respect of any one or more subsidiaries or business units; |
7.
| Operating and maintenance cost management and productivity measures including System Average Interruption Duration Index (SAIDI), System Average Interruption Frequency Index (SAIFI) and measures based on an Equivalent Availability Factor (EAF) for coal and nuclear divisions; |
8.
| Return measures, including shareholder return, return on assets, investments, equity, or sales, and whether determined on an absolute basis or relative to another performance measure or industry peer group (e.g., Edison Electric Institute (EEI) index); |
9.
| Growth or rate of growth in any of the Performance Measures set forth herein; |
10.
| Share price (including attainment of a specified per-share price during the Award Period; growth measures and total shareholder return or attainment by the Shares of a specified price for a specified period of time); |
11.
| Strategic business criteria, consisting of one or more objectives based on meeting specified revenue, market share, market penetration, geographic business expansion goals, objectively identified project milestones, production volume levels, and cost targets; |
12.
| Accomplishment of, or goals related to, mergers, acquisitions, divestitures, dispositions, public offerings or similar extraordinary business transactions; |
13.
| Achievement of business or operational goals such as market share and/or business development and/or customer objectives; |
14.
| Achievement of credit ratings or certain credit quality levels; |
15.
| Achievement of goals based on or related to safety, including safety training, safety audits, Days Away, Restricted or Transferred (DART), and OSHA incident ratings; and/or |
16.
| Achievement of goals based on or related to customer satisfaction results, indices or surveys; |
provided that applicable Performance Measures may be applied on a pre- or post-tax basis; and provided further that the Committee may, when the applicable Performance Measures are established, provide that the formula for such Performance Measures may include or exclude items to measure specific objectives, including but not limited to losses from discontinued operations, extraordinary gains or losses, the cumulative effect of accounting changes, acquisitions or divestitures, foreign exchange impacts, mark-to-market gains and losses from energy contracts, and any unusual, nonrecurring gain or loss. In addition to the foregoing Performance Measures, the Performance Measures may also include any other performance goal(s) established by the Committee.
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In addition to any adjustment that may be permissible as provided in Section Sixteen G (Changes in Capital Structure) and Section Fourteen (Change in Control), but in all cases subject to Section Five D (Grant Vesting Limitations), with respect to any Award that is subject to this Section Twelve, the Committee may adjust upwards or downwards the amount payable pursuant to such Award or waive or amend the criteria necessary for the achievement of the applicable performance goals.
SECTION THIRTEEN.
| DIRECTOR SHARES AND DIRECTOR DEFERRED SHARE UNITS |
A.
| Election to Receive Award of Director Shares or Director Deferred Share Units. |
Each Non-Employee Director may elect to have his/her Director Equity Payment Fees paid on a deferred basis. Non-Employee Directors may also elect to have their Non-Employee Director cash fees converted into Director Deferred Share Units and paid on a deferred basis. Any election to have Director Equity Payment Fees or Non-Employee Director cash fees converted into Director Deferred Share Units and paid on a deferred basis shall be made in accordance with Section Thirteen B below. In the absence of any election made by a Non-Employee Director, all Director Equity Payment Fees will be paid on a current basis through the issuance of Director Shares and all Non-Employee Director cash fees will be paid on a current basis through cash payments to the Non-Employee Director.
B.
| Timing of Election to Convert Director Equity Payment Fees or Non-Employee Director Cash Fees. |
Each Non-Employee Director that desires to convert all or a portion of his or her Director Equity Payment Fees (or Non-Employee Director cash fees) into Director Deferred Share Units shall make such conversion election on a form provided by or on behalf of the Company (the “Election Form”) and file such Election Form with the Plan Administrator before the first day of the calendar year in which services related to the Director Equity Payment Fees or Non-Employee Director cash fees to be converted and deferred are to be performed. Such Election Form shall remain in effect for subsequent calendar years until a written notice to revise the Election Form is delivered to the Plan Administrator before the first day of the calendar year in which the services related to the Director Equity Payment Fees or Non-Employee Director cash fees subject to the revision are performed. As of each December 31st, the election becomes irrevocable with respect to Director Equity Payment Fees Non-Employee Director cash fees payable with respect to services performed in the immediately following calendar year.
Subject to the rules in Treasury Regulation § 1.409A-2(a)(7) relating to whether a service provider has previously been eligible to participate in the same type of nonqualified deferred compensation arrangement as described in this Section Thirteen, notwithstanding the preceding paragraph, an election made by an individual in the calendar year in which he or she first becomes a Non-Employee Director may be made pursuant to an Election Form delivered to the Company within thirty (30) days after the date on which he or she becomes a Non-Employee Director and shall be effective with respect to Director Equity Payment Fees earned from and after the date such Election Form is delivered to the Company.
C.
| Director Equity Payment Fees Conversion Into Director Deferred Share Units. |
Any Director Equity Payment Fees that are to be converted into Director Deferred Share Units shall be so converted on each day the Director Equity Payment Fees would otherwise have been payable to the Director. The number of Director Deferred Share Units to be granted to a Non-Employee Director shall be equal to the number of Shares that otherwise would have been payable on such day to the Director.
D.
| Director Deferred Share Units Account. |
The Company will create and maintain on its books a Director Deferred Share Unit Account for each Non-Employee Director who has made an election to convert Director Equity Payment Fees into Director Deferred Share Units. The Company will credit to such account the number of Director Deferred Share Units earned pursuant to the Non-Employee’s Director’s conversion election.
As of the date any dividend is paid to holders of Shares, each Director Deferred Share Unit Account, regardless of whether the Non-Employee Director is then a Director, will be credited with additional Director Deferred Share Units equal to the number of Shares that could have been purchased with the amount which would have been paid as dividends on a number of Shares (including fractions of a share to three decimals) equal to the number of Director Deferred Share Units credited to such Director Deferred Share Unit Account as of the record date applicable to such dividend. The number of additional
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Director Deferred Share Units to be credited will be calculated to three decimals by dividing the amount which would have been paid as dividends by the Fair Market Value of one Share as of the applicable dividend payment date. In the case of dividends paid in property other than cash, the amount of the dividend shall be deemed to be the fair market value of the property at the time of the payment of the dividend, as determined in good faith by the Committee. Any additional Director Deferred Share Units credited under this Section Thirteen E will (i) be subject to the same vesting conditions (if any) as the underlying Director Deferred Share Units credited to the Director Deferred Share Unit Account and to which such dividends relate and (ii) be distributed at the same time(s) provided below in Section Thirteen F as the rest of the Director Deferred Share Unit Account.
F.
| Distribution of Director Deferred Share Units Credited on or After January 1, 2014. |
1.
| Distribution Timing. Distribution of a Director’s Director Deferred Share Units credited to the Director’s Director Deferred Share Unit Account will be made or commence on the January 31st next following the date of the Non-Employee Director’s termination from service as a Director for any reason.
|
2.
| Termination (Other Than Death). Distribution of amounts payable to a Non-Employee Director upon termination from service as a Director (other than by reason of death), shall be made in a single lump sum or in substantially equal annual installments over a fixed period of 5 or 10 years, as elected by the Non-Employee Director. The entitlement to a series of installment payments will be deemed as the entitlement to a series of separate payments. In the event of installment distributions, each subsequent installment shall be made on the January 31st of the applicable anniversary date of the first installment. If a Non-Employee Director does not make a valid distribution election or fails to elect the form of distribution, then the manner of payment shall be a single lump sum.
|
3.
| Death. Distribution of amounts payable to a Non-Employee Director upon death will be made to his or her beneficiaries in a single lump sum or in substantially equal annual installments over a fixed period of 5 or 10 years, as elected by the Non-Employee Director. The entitlement to a series of installment payments will be deemed as the entitlement to a series of separate payments. In the event of installment distributions, subsequent installments shall be made on the annual anniversary date of the date of the first installment. If the Non-Employee Director has commenced receiving distributions in installments and dies before completing the receipt of all distributions, the remaining amount in his or her Director Deferred Share Unit Account will be distributed to his or her beneficiary as if the director had not died. If the Non-Employee Director has commenced receiving distributions in installments and dies before completing the receipt of all distributions, and the Non-Employee Director has elected a single lump sum distribution upon death, the remaining amount in his or her Director Deferred Share Unit Account will be distributed in a single lump sum. If a Non-Employee Director does not make a valid distribution election or fails to elect the form of distribution upon death, then the manner of payment shall be the same as upon termination from service as a Director other than by reason of death.
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4.
| Change In Control. All Director’s Director Deferred Share Units credited to the Director’s Director Deferred Share Unit Account will be distributed in a single lump sum upon the date of a change in the ownership or effective control of the Company, or in the ownership of a substantial portion of the assets of the Company (as defined in Treasury Regulation § 1.409A-3(i)(5)).
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5.
| Distribution in Kind. At the time of distribution, a Director’s Director Deferred Share Units shall be converted into an equal amount of Shares and all whole Shares shall be distributed, in kind, to the Non-Employee Director, or to his or her beneficiaries in the event of his death.
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6.
| Distribution Elections. The Election Form under Section Thirteen B above by which a Non-Employee Director elects to convert his or her Director Equity Payment Fees into Director Deferred Share Units shall specify whether the Director Deferred Share Units to which the Election Form applies shall be distributed in a single lump sum or in installments upon termination from service as a Director. Any election regarding the form of distribution will remain in effect for subsequent calendar years until a written notice to revise the Election Form is delivered to the Plan Administrator. Any subsequently filed Election Form will be prospective only and must be submitted to the Plan Administrator before the first day of the calendar year in which the services related to the Director Equity Payment Fees subject to the revised Election Form are performed. As of each December 31st, the election becomes irrevocable with respect to Director Equity Payment Fees payable with respect to services performed in the immediately following calendar year. If no election is made with respect to a lump sum or installment distribution upon a Director’s termination from service, the Director will be presumed to have elected a lump sum distribution.
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G.
| Distribution of Director Deferred Share Units Credited Before January 1, 2014. |
On the January 31st next following the date the Non-Employee Director’s service on the Board terminates for any reason, all of a Director’s Director Deferred Share Units credited to the Non-Employee’s Director Deferred Share Unit Account shall be converted into an equal amount of Shares and all whole Shares shall be distributed, in kind, to the Non-Employee Director, or to his or her beneficiaries in the event of his death, in a single lump sum.
H.
| Subsequent Deferral Elections. |
A Non-Employee Director shall be entitled to change the time and form of distribution under Sections Thirteen F. and G., except in the event of a change in control under Section Thirteen F.4., if:
1.
| Such election does not take effect until at least 12 months after the date on which the election is made; and |
2.
| Any election related to a payment, other than in the case of death, defers payment for a period of at least five years from the date such payment would otherwise have been made but for such subsequent deferral election. |
A Non-Employee Director may only choose a form of distribution permitted under Section Thirteen. For the avoidance of doubt, (i) no subsequent deferral election made within the 12-month period ending on the date of a Non-Employee Director’s termination of service shall be effective and (ii) upon a Non-Employee Director’s termination of service, no additional subsequent deferral elections may be made.
I.
| Separately Identifiable Amounts. |
Director Deferred Share Units deferred in separate calendar years after December 31, 2013, and Director Deferred Share Units deferred in calendar years before January 1, 2014, will be treated as separately identifiable amounts. A Non-Employee Director may change the time and form of payment with respect to each separately identifiable amount.
J.
| Director Deferred Share Unit Status. |
Except for purposes of the Company’s Director Stock Ownership guidelines, Director Deferred Share Units are not, and do not constitute, Shares, and no right as holder of Shares devolves upon a Non-Employee Director by reason of having Director Share Units credited to his or her account.
SECTION FOURTEEN.
| CHANGE IN CONTROL |
Except where the Committee expressly provides otherwise that no accelerated vesting or exercisability shall occur in connection with a termination following a Change in Control, in the event that, within the period commencing on a Change in Control (as defined below) of the Company and ending on the second anniversary of the Change in Control, a Participant’s employment with the Company or one of its affiliates is terminated other than for Cause, or the Participant voluntarily resigns for Good Reason, then (i) all Stock Options and SARs then outstanding shall become fully exercisable; (ii) all restrictions (other than restrictions imposed by law) and conditions of all Restricted Stock Awards, Restricted Stock Unit Awards and Other Stock-Based Awards then outstanding shall be deemed satisfied as of the date of the Participant’s termination of employment; and (iii) all Performance Share Awards shall be deemed to have been fully earned at target as of the date of the Participant’s termination of employment, subject to the limitation that any Award which has been outstanding less than the six month anniversary of the Award’s Date of Grant on the date of the Participant’s termination of employment shall not be afforded such treatment.
For purposes of this Plan, a “Change in Control” means the occurrence of one of the following events, whether in a single transaction or a series of related transactions:
1.
| any Person (as such term is defined in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the Beneficial Owner (as such term is defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its affiliates other than in connection with the acquisition by the Company or its affiliates of a business) representing 35 percent or more of either the then outstanding Shares of the Company or the combined voting power of the Company’s then outstanding securities; or |
2.
| the following individuals cease for any reason to constitute a majority of the number of directors then serving: individuals who, on the date hereof, constitute the Board and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Company, as such terms are used in Rule 14a-11 of Regulation 14A under the Exchange Act) whose appointment or election by the Board or nomination for election by |
Appendix C | Evergy 2022 Proxy Statement C-18
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the Company’s shareholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors on the date hereof or whose appointment, election or nomination for election was previously so approved; or
3.
| the consummation of a merger, consolidation, reorganization or similar corporate transaction of the Company, whether or not the Company is the surviving corporation in such transaction, other than (A) a merger, consolidation, or reorganization that would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof), in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of the Company, at least 60 percent of the combined voting power of the voting securities of the Company or such surviving entity or any parent thereof outstanding immediately after such merger, consolidation or reorganization, or (B) a merger, consolidation or reorganization effected to implement a recapitalization of the Company (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities Beneficially Owned by such Person any securities acquired directly from the Company or its affiliates other than in connection with the acquisition by the Company or its affiliates of a business) representing 20 percent or more of either the then outstanding Shares of the Company or the combined voting power of the Company’s then outstanding securities; or |
4.
| the occurrence of a complete liquidation or dissolution of the Company or the sale or disposition by the Company of all or substantially all of the Company’s assets, other than a sale or disposition of all or substantially all of the Company’s assets to an entity, at least 60 percent of the combined voting power of the voting securities of which are owned by Persons in substantially the same proportions as their ownership of the Company immediately prior to such sale. |
Notwithstanding the foregoing, no “Change in Control” shall be deemed to have occurred if there is consummated any transaction or series of integrated transactions immediately following which the record holders of the Common Stock immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in an entity which owns all or substantially all of the assets of the Company immediately following such transaction or series of transactions.
SECTION FIFTEEN.
| AMENDMENT OF PLAN |
The Board may at any time and from time to time alter, amend, suspend or terminate the Plan in whole or in part, except (i) no such action may be taken without shareholder approval which increases the number of Shares which may be issued pursuant to the Plan (except as provided in Section Sixteen G (Changes in Capital Structure)), extends the period for granting Incentive Stock Options under the Plan, modifies the requirements as to eligibility for participation in the Plan, or requires shareholder approval under any law or regulation in effect at the time such amendment is proposed for adoption; (ii) no such action may be taken without the consent of the Participant to whom any Award shall theretofore have been granted, which materially and adversely affects the rights of such Participant concerning such Award, except as such termination or amendment of the Plan is required by statute, or rules and regulations promulgated thereunder; and (iii) no such action may be taken if the proposed amendment must be in the discretion of the Committee to comply with the disinterested administration requirements of Rule 16b-3 under the Exchange Act.
SECTION SIXTEEN.
| MISCELLANEOUS PROVISIONS |
A.
| Nontransferability and Permitted Transfers. |
Except as provided below, no right or interest of any Participant in an Award granted pursuant to the Plan shall be assignable or transferable during the lifetime of the Participant, either voluntarily or involuntarily, or be subjected to any lien, directly or indirectly, by operation of law, or otherwise, including execution, levy, garnishment, attachment, pledge, or bankruptcy. In the event of a Participant’s death, a Participant’s rights and interests in all Awards shall, to the extent not otherwise prohibited hereunder, be transferable by testamentary will or the laws of descent and distribution, and payment of any amounts due under the Plan shall be made to, and exercise of any Options or SARs may be made by, the Participants’ legal representatives, heirs, or legatees. If, in the opinion of the Committee, a person entitled to payments or to exercise rights with respect to the Plan is disabled from caring for his or her affairs because of a mental condition, physical condition, or age, payment due such person may be made to, and such rights shall be exercised by, such person’s guardian, conservator, or other legal personal representative upon furnishing the Committee with evidence satisfactory to the Committee of such status. “Transfers” shall not be deemed to include transfers to the Company or “cashless exercise” procedures with third parties who provide financing for the purpose of (or who otherwise facilitate) the exercise of Awards consistent with applicable laws and the authorization of the Committee.
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Pursuant to conditions and procedures established by the Committee from time to time, the Committee may permit Awards to be transferred without consideration other than nominal consideration to, exercised by, and paid to certain persons or entities related to a Participant, including members of the Participant’s immediate family or trusts whose beneficiaries or beneficial owners are members of the Participant’s immediate family (a “Permitted Transferee”). Notwithstanding the foregoing, Incentive Stock Options shall only be transferable to the extent permitted in Section 422 of the Code, or such successor provision thereto, and the treasury regulations thereunder.
No benefit provided under this Plan shall be subject to alienation or assignment by a Participant (or by any person entitled to such benefit pursuant to the terms of this Plan), nor shall it be subject to attachment or other legal process of whatever nature. Any attempted alienation, assignment or attachment shall be void and of no effect whatsoever.
Neither this Plan, any Award Agreement nor any action taken hereunder shall be construed as giving any right to be retained as an officer or Employee of the Company or any of its Subsidiaries.
The Company shall be authorized to withhold under the Plan the amount of withholding taxes due in respect of an Award or payment hereunder and to take such other actions as may be necessary in the opinion of the Company to satisfy all obligations for the payment of taxes.
The Committee in its sole discretion may provide that when taxes are to be withheld in connection with the exercise of an Option or an SAR, or upon the lapse of restrictions on an Award, or upon payment of Performance Shares or any other benefit or right under this Plan (the Exercise Date, date such restrictions lapse or the date of such payment of Performance Shares or any other benefit or right occurs hereinafter referred to as the “Tax Date”), the Participant may elect to make payment for the withholding of federal, state and local taxes, including Social Security and Medicare (“FICA”) taxes by one or a combination of the following methods:
(i)
| payment of an amount in cash equal to the amount to be withheld; |
(ii)
| requesting the Company to withhold from those Shares that would otherwise be received upon exercise of the Option or the SAR payable in Shares, or upon the lapse of restrictions on an Award or upon payment of Performance Shares or any other benefit or right paid in Shares, a number of Shares having a Fair Market Value on the Tax Date equal to the amount to be withheld; or |
(iii)
| withholding from any compensation otherwise due to the Participant. |
The Committee in its sole discretion may provide that the maximum amount of tax withholding upon exercise of an Option or a SAR payable in Shares, or upon the lapse of restrictions on an Award, or upon payment of Performance Shares or any other benefit or right paid in Shares to be satisfied by withholding Shares pursuant to clause (iii) above shall not exceed the minimum amount of taxes, including FICA taxes, required to be withheld under federal, state and local law. An election by Participant under this subsection is irrevocable. Any fractional Share amount and any additional withholding not paid by the withholding or surrender of Shares must be paid in cash. If no timely election is made, the Participant must deliver cash to satisfy all tax withholding requirements. Notwithstanding the foregoing, the Committee has the continuing authority to require a Participant to pay withholding taxes in cash regardless of the Participant’s prior election to satisfy such withholding taxes in Shares.
Any Grantee who makes a disqualifying disposition (as referenced in Section Eight G, or an election under Section 83(b) of the Code with respect to a Restricted Stock Award shall remit to the Company an amount sufficient to satisfy all resulting tax withholding requirements, if any, in the same manner as set forth above.
D.
| Government and Other Regulations. |
The obligation of the Company to make payment of Awards in Common Stock or otherwise shall be subject to all applicable laws, rules, and regulations, and to such approvals by any government agencies as may be required. Except as required by law, the Company shall be under no obligation to register under the Act, any of the Shares issued, delivered or paid in settlement under the Plan. If Common Stock granted under the Plan may in certain circumstances be exempt from registration under the Act, the Company may restrict its transfer in such manner as it deems advisable to ensure such exempt status.
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Each person who is or at any time serves as a member of the Committee shall be indemnified and held harmless by the Company against and from (i) any loss, cost liability, or expenses that may be imposed upon or reasonably incurred by such person in connection with or resulting from any claim, action, suit, or proceeding to which such person may be a party or in which such person may be involved by reason of any action or failure to act under the Plan; and (ii) any and all amounts paid by such person in satisfaction of judgment in any such action, suit or proceeding relating to the Plan. Each person covered by this indemnification shall give the Company an opportunity, at its own expense, to handle and defend the same before such person undertakes to handle and defend it on such person’s own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Restated Articles of Consolidation or By-Laws of the Company or any of its Subsidiaries, as a matter of law, or otherwise, or any power that the Company may have to indemnify such person or hold such person harmless.
Each member of the Committee shall be fully justified in relying or acting in good faith upon any report made by the independent public accountants of the Company and its Subsidiaries and upon any other information furnished in connection with the Plan. In no event shall any person who is or shall have been a member of the Committee be liable for any determination made or other action taken or any omission to act in reliance upon any such report or information or for any action taken, including the furnishing of information, or failure to act, if in good faith.
G.
| Changes in Capital Structure. |
If, without the receipt of consideration therefore by the Company, the Company shall at any time (i) increase or decrease the number of its outstanding Shares or (ii) change in any way the rights and privileges of such Shares such as, but not limited to, the payment of a stock dividend or any other distribution upon such Shares payable in Stock, or through a stock split, subdivision, consolidation, combination, reclassification or recapitalization involving the Shares, such that any adjustment is determined by the Committee to be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, then in relation to the Stock that is affected by one or more of the above events, the numbers, rights and privileges of (i) the Shares as to which Awards may be granted under the Plan, and (ii) the Shares then included in each outstanding Award granted hereunder, shall be increased, decreased or changed in like manner as if they had been issued and outstanding, fully paid and non-assessable at the time of such occurrence.
In the case of any such substitution or adjustment affecting an Option or an SAR, such substitution or adjustments shall be made in a manner that is in accordance with the substitution and assumption rules set forth in Treasury Regulations 1.424-1 and the applicable guidance relating to Code Section 409A.
In the event the Company becomes party to a merger, consolidation, sale of substantially all of its assets or any other corporate reorganization in which the Company will not be the surviving corporation or in which the holders of the Common Stock will receive securities of another corporation, then such company shall assume the rights and obligations of the Company under this Plan.
All matters relating to the Plan or to Awards granted hereunder shall be governed by the laws of the State of Missouri, without regard to the principles of conflict of laws.
(i)
| This Plan and each Award is intended to meet or to be exempt from the requirements of Code Section 409A, and shall be administered, construed, and interpreted in a manner that is in accordance with and in furtherance of such intent. Any provision of this Plan that would cause an Award to fail to satisfy Code Section 409A or, if applicable, an exemption from the requirements of that Section, shall be amended (in a manner that as closely as practicable achieves the original intent of this Plan) to comply with Code Section 409A or any such exemption on a timely basis, which may be made on a retroactive basis, in accordance with regulations and other guidance issued under Code Section 409A. |
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(ii)
| If an Award provides for payments or benefits that (i) constitute a “deferral of compensation” within the meaning of Code Section 409A, and (ii) are triggered upon a termination of employment, then to the extent required to comply with Section 409A, the phrases “termination of employment,” “separation from service,” or words and phrases of similar import, shall be interpreted to mean a “separation from service” within the meaning of Code Section 409A. |
(iii)
| If a Participant was a “specified employee,” then to the extent required in order to comply with Code Section 409A, all payments or benefits paid or provided under any Award that constitute a “deferral of compensation” within the meaning of Code Section 409A, that are provided as a result of a “separation from service” within the meaning of Section 409A and that would otherwise be paid or provided during the first six (6) months following such separation from service shall be accumulated through and paid or provided on the first business day that is more than six (6) months after the date of the separation from service (or, if the Participant dies during such six (6) month period, within ninety (90) days after the Participant’s death). |
(iv)
| To the extent that any Award is subject to Code Section 409A, any substitution of such Award may only be made if such substitution is made in a manner permitted and compliant with Code Section 409A. |
(v)
| In no event will the Company or any Subsidiary have any liability to any Participant with respect to any penalty or additional income tax imposed under Code Section 409A even if there is a failure on the part of the Company or Committee to avoid or minimize such Section’s penalty or additional income tax. |
K.
| Relationship to Other Benefits. |
No payment under the Plan shall be taken into account in determining any benefits under any pension, retirement, profit sharing or group insurance plan of the Company or any Subsidiary, except as may be required by Federal law and regulation or to meet other applicable legal requirements.
The expenses of the Plan shall be borne by the Company and its Subsidiaries if appropriate.
The titles and headings of the sections in the Plan are for convenience of reference only, and in the event of any conflict, the text of the Plan, rather than such titles or headings, shall control.
Notwithstanding any other provisions in this Plan, the Company may cancel any Award, require reimbursement of any Award by a Participant, and effect any other right of recoupment of equity or other compensation provided under the Plan in accordance with (i) (a) any Company policy that may be adopted and/or modified from time to time, (b) any agreement between a Participant and the Company, or (c) any other plan or program in which a Participant participates and in each case that addresses compensation recoupment (a “Clawback Policy”) or (ii) any law, government regulation or stock exchange listing requirement (“Clawback Law”). In addition, a Participant may be required to repay to the Company previously paid compensation, whether provided pursuant to the Plan or an Award Agreement, in accordance with any Clawback Policy or Clawback Law. By accepting an Award, the Participant agrees to be bound by any Clawback Policy, as in effect or as may be adopted and/or modified from time to time by the Company in its discretion and any Clawback Law.
No fractional Shares shall be issued or delivered under the Plan or any Award, and the Committee shall determine whether cash, other securities, or other property shall be paid or transferred in lieu of any fractional Shares or whether any fractional Shares or any rights thereto shall be canceled, terminated, or otherwise eliminated. The Committee may determine, in its discretion, whether any fractional Share shall be eliminated by rounding up or down.
Appendix C | Evergy 2022 Proxy Statement C-22
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