NorthWestern Corporation (NYSE:NWE) Files An 8-K Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
Item 5.02 Departure of Directors or Certain Officers; Election of
Directors; Appointment of Certain Officers; Compensatory
Arrangements of Certain Officers.
(e) Short-Term Incentive Compensation Plan
On December 7, 2016, the Board of Directors (the “Board”) of
NorthWestern Corporation d/b/a NorthWestern Energy (NYSE: NWE) (the
“Company”), based on the recommendation of the Human Resources
Committee (the “Committee”) of the Board, established the
Company’s 2017 Annual Incentive Plan for officers and other
eligible employees of the Company (the “2017 AI Plan”).
NorthWestern Corporation d/b/a NorthWestern Energy (NYSE: NWE) (the
“Company”), based on the recommendation of the Human Resources
Committee (the “Committee”) of the Board, established the
Company’s 2017 Annual Incentive Plan for officers and other
eligible employees of the Company (the “2017 AI Plan”).
The 2017 AI Plan provides for a payment of incentive compensation
to officers and other eligible employees for the performance period
of January 1, 2017, through December 31, 2017. To be eligible to
receive a payout under the 2017 AI Plan, employees must be employed
on December 31, 2017, and have been employed actively for at least
one full quarter of the plan year.
to officers and other eligible employees for the performance period
of January 1, 2017, through December 31, 2017. To be eligible to
receive a payout under the 2017 AI Plan, employees must be employed
on December 31, 2017, and have been employed actively for at least
one full quarter of the plan year.
A target incentive level for each participating employee is set by
position and is expressed as a percentage of base salary. The
short-term incentive target opportunities under the 2017 AI Plan
for the Company’s principal executive officer, principal financial
officer and the other remaining named executive officers in the
Company’s proxy statement filed for its 2016 annual meeting of
shareholders (the “2016 Proxy Statement”) are as follows:
position and is expressed as a percentage of base salary. The
short-term incentive target opportunities under the 2017 AI Plan
for the Company’s principal executive officer, principal financial
officer and the other remaining named executive officers in the
Company’s proxy statement filed for its 2016 annual meeting of
shareholders (the “2016 Proxy Statement”) are as follows:
|
Name
|
Title
|
Short-Term Incentive Target Opportunity (as a
percentage of base salary) |
|
Robert C. Rowe (1)
|
President and Chief Executive Officer
|
50%
|
|
Brian B. Bird
|
Vice President and Chief Financial Officer
|
50%
|
|
Heather H. Grahame
|
Vice President and General Counsel
|
45%
|
|
Curtis T. Pohl
|
Vice President – Retail Operations
|
40%
|
|
Bobbi L. Schroeppel
|
Vice President – Customer Care, Communications and
Human Resources |
35%
|
|
(1) Mr. Rowe, a member of the Board, abstains from voting
on all Board matters concerning executive compensation. The Board, with Mr. Rowe abstaining, increased Mr. Rowe’s short-term incentive target opportunity to 50% in 2017, from 80% in 2016. The target opportunities did not change for the Company’s other executives. |
The performance measures for the 2017 AI Plan are substantially the
same as under the Company’s 2016 Annual Incentive Plan, with the
exception of the addition of a third safety performance metric.
With respect to the safety component in the plan (weighted 15%),
the Board kept the lost time incident rate (5%) and total
recordable incident rate (5%) metrics that were used in 2016, but
also added a safety training completion performance metric (5%) for
2017.
same as under the Company’s 2016 Annual Incentive Plan, with the
exception of the addition of a third safety performance metric.
With respect to the safety component in the plan (weighted 15%),
the Board kept the lost time incident rate (5%) and total
recordable incident rate (5%) metrics that were used in 2016, but
also added a safety training completion performance metric (5%) for
2017.
Payouts of awards to plan participants from the performance pool
(as discussed below) will be determined based on a combination of:
(as discussed below) will be determined based on a combination of:
|
(i)
|
individual performance ratings that evaluate achievement
against established goals and objectives as well as overall job performance; and |
|
(ii)
|
company performance based on the achievement of the following
specified performance metrics during 2017: |
|
a.
|
Financial Performance, weighted at 55%, based on achieving
targeted net income; |
|
b.
|
Safety, weighted at 15%, using three equally weighted
measurements, two based on OSHA definitions lost time incident target rate and total recordable incident rate and the third based on completion of safety training; |
|
c.
|
Reliability, weighted at 15%, consisting of two electric
system reliability indices (each weighted at 5%), which measure the total duration of interruption for the average |
customer on our system during a predefined period of time, and two
natural gas system reliability indices (each weighted at 2.5%),
which measure damage per 1,000 locates and leaks per 100 miles on
our system during a predefined period of time; and
natural gas system reliability indices (each weighted at 2.5%),
which measure damage per 1,000 locates and leaks per 100 miles on
our system during a predefined period of time; and
|
d.
|
Customer Satisfaction, weighted at 15%, consisting of
performance as determined by an independent survey conducted by J.D. Power Associates (5%) and, operational performance (5%) and reputational perception (5%) to a separate independent survey conducted by Flynn Wright. |
No awards will be paid out under the 2017 AI Plan unless at least
90% of the net income target is met. In the event that a
work-related fatality occurs during the year, the lost time
incident rate portion of of safety performance metric will be
forfeited for all employees unless it is determined by the
Committee that no actions on the part of the employee or the
Company contributed to the incident. In calculating performance
against target, the Board may make adjustments either positively or
negatively for one-time events and extraordinary non-budgeted
items.
90% of the net income target is met. In the event that a
work-related fatality occurs during the year, the lost time
incident rate portion of of safety performance metric will be
forfeited for all employees unless it is determined by the
Committee that no actions on the part of the employee or the
Company contributed to the incident. In calculating performance
against target, the Board may make adjustments either positively or
negatively for one-time events and extraordinary non-budgeted
items.
A Performance Pool will be created and funded based on the level of
achievement of the four company performance factors described
above. The Performance Pool then will be allocated to each officer
using total target incentive dollars at the end of the performance
period for eligible employees in each functional unit, division or
department, as adjusted based on the performance funding level
achieved. The Performance Pool will be divided into a Fixed Pool
and a Discretionary Pool.
achievement of the four company performance factors described
above. The Performance Pool then will be allocated to each officer
using total target incentive dollars at the end of the performance
period for eligible employees in each functional unit, division or
department, as adjusted based on the performance funding level
achieved. The Performance Pool will be divided into a Fixed Pool
and a Discretionary Pool.
Fifty percent of the Performance Pool will be allocated to the
Fixed Pool. Each Eligible Employee that has a performance rating of
met expectations or exceeded expectations will receive a
distribution from the Fixed Pool calculated as follows:
Fixed Pool. Each Eligible Employee that has a performance rating of
met expectations or exceeded expectations will receive a
distribution from the Fixed Pool calculated as follows:
Employee’s target incentive amount x performance funding level
achieved x 50%
achieved x 50%
As part of the Fixed Pool calculation, the maximum percentage
that can be attributed to the performance funding level achieved
is 150%.
that can be attributed to the performance funding level achieved
is 150%.
The remaining 50% of the Performance Pool will be allocated to the
Discretionary Pool. Allocations of the Discretionary Pool will be
based on the recommendation of an employee’s supervisor. In no
case will the total payouts in a given performance pool exceed the
total dollars available for that performance pool.
Discretionary Pool. Allocations of the Discretionary Pool will be
based on the recommendation of an employee’s supervisor. In no
case will the total payouts in a given performance pool exceed the
total dollars available for that performance pool.
Awards will be paid out to employees as soon as practicable after
year-end results are known, but no later than March 31, 2018. The
actual incentive amounts paid under the 2017 AI Plan will be based
on the Company’s actual results during 2017 in relation to the
established performance objectives, and these payments may be
greater or less than the target amounts that have been established.
year-end results are known, but no later than March 31, 2018. The
actual incentive amounts paid under the 2017 AI Plan will be based
on the Company’s actual results during 2017 in relation to the
established performance objectives, and these payments may be
greater or less than the target amounts that have been established.
For further information regarding the 2017 AI Plan, see the copy of
the plan that is filed as Exhibit 99.1 hereto and incorporated
herein by reference.
the plan that is filed as Exhibit 99.1 hereto and incorporated
herein by reference.
(e) Executive Retirement/Retention Program
On December 7, 2016, the Board, based on the recommendation of the
Committee, also approved grants of performance-based restricted
share units to each of the Company’s nine executive officers under
the Company’s Executive Retirement/Retention Program (the
“Program”). These grants are made under the NorthWestern
Corporation Amended and Restated Equity Compensation Plan (the
“Equity
Committee, also approved grants of performance-based restricted
share units to each of the Company’s nine executive officers under
the Company’s Executive Retirement/Retention Program (the
“Program”). These grants are made under the NorthWestern
Corporation Amended and Restated Equity Compensation Plan (the
“Equity
Compensation Plan”) and are the sixth annual grants made under the
Program which was first established in December 2011.
Program which was first established in December 2011.
The purpose of the Program is to reward the Company’s executives
when they retire for their years of service with the Company and to
provide the Company’s executives an incentive to continue their
employment with, and to advance the interests of, the Company. The
Company does not provide its executives with a traditional
supplemental executive retirement plan, or SERP. As described in
more detail below, executives receive these awards only if the
Company satisfies a financial performance measure and they remain
employed with the Company through the vesting period.
when they retire for their years of service with the Company and to
provide the Company’s executives an incentive to continue their
employment with, and to advance the interests of, the Company. The
Company does not provide its executives with a traditional
supplemental executive retirement plan, or SERP. As described in
more detail below, executives receive these awards only if the
Company satisfies a financial performance measure and they remain
employed with the Company through the vesting period.
Summary of Program Provisions
Under the terms of the grants, each participant received an award
of restricted share units (“RSUs”) based upon a percentage of the
participant’s base salary divided by the fair market value of the
Company’s common stock as of the grant date. Each of the
Company’s executive officers received awards under the Program.
The awards for the Company’s principal executive officer,
principal financial officer and the other named executive
officers>in the 2016 Proxy Statement are set forth in the table
below.
of restricted share units (“RSUs”) based upon a percentage of the
participant’s base salary divided by the fair market value of the
Company’s common stock as of the grant date. Each of the
Company’s executive officers received awards under the Program.
The awards for the Company’s principal executive officer,
principal financial officer and the other named executive
officers>in the 2016 Proxy Statement are set forth in the table
below.
|
Named Executive Officer
|
Program Target Opportunity (as a percentage of base
salary) |
Number of
RSUs Awarded
(1) |
||
|
Robert C. Rowe
(2)
President Chief Executive Officer
|
|
50%
|
|
6,505
|
|
Brian B. Bird
Vice President Chief Financial Officer
|
|
25%
|
|
2,250
|
|
Heather H. Grahame
Vice President General Counsel
|
|
20%
|
|
1,576
|
|
Curtis T. Pohl
Vice President – Distribution
|
|
20%
|
|
1,223
|
|
Bobbi L. Schroeppel Vice President – Customer Care,
Communications and Human Resources |
15%
|
|
||
|
(1) Based on a grant date fair value of $45.78, which was
calculated using the closing stock price of $55.70 on December 7, 2016, less the present value of expected dividends, calculated using a 1.8% five-year Treasury rate and assuming quarterly dividends of $0.52 for the five-year vesting period. |
||||
|
(2) Mr. Rowe, a member of the Board, abstains from voting
on all Board matters concerning executive compensation. |
Vesting of the RSUs to each participant is conditioned on the
Company achieving net income that exceeds the Company’s net income
for 2016 for three of the five calendar years 2017 through 2021.
For purposes of the award, net income means net income, as
reflected in the Company’s audited consolidated financial
statements. In determining whether the performance measure has been
satisfied, the Board may make discretionary adjustments either
positively or negatively for one-time events and extraordinary
non-budgeted items.
Company achieving net income that exceeds the Company’s net income
for 2016 for three of the five calendar years 2017 through 2021.
For purposes of the award, net income means net income, as
reflected in the Company’s audited consolidated financial
statements. In determining whether the performance measure has been
satisfied, the Board may make discretionary adjustments either
positively or negatively for one-time events and extraordinary
non-budgeted items.
Vesting of the RSUs also generally is contingent upon the
participant remaining in the continuous employ of the Company
through the end of the performance period; however, as discussed
below, vesting also would occur earlier upon the death or
disability of the participant, or upon a change of control of the
Company. Upon vesting, RSUs will be credited to an account for the
participant. The participant’s account will be credited for the
payment of cash or stock dividends related to the vested RSUs for
dividends declared after the date that the RSUs become vested and
until the RSUs are paid. Cash dividend equivalents will be credited
as additional vested RSUs.
participant remaining in the continuous employ of the Company
through the end of the performance period; however, as discussed
below, vesting also would occur earlier upon the death or
disability of the participant, or upon a change of control of the
Company. Upon vesting, RSUs will be credited to an account for the
participant. The participant’s account will be credited for the
payment of cash or stock dividends related to the vested RSUs for
dividends declared after the date that the RSUs become vested and
until the RSUs are paid. Cash dividend equivalents will be credited
as additional vested RSUs.
If the participant retires before vesting, a pro rata portion of
the RSUs (based on the number of months of service during the
performance period) will vest and will be paid as described in the
following paragraph. If the participant dies or becomes disabled
prior to vesting, the RSUs will become vested and will be paid as
soon as practicable after such death or disability. Upon a change
of control, the performance measure will be deemed satisfied and
awards will be deemed vested, but will not be paid until the
participant’s departure from the Company as described in the
following paragraph.
the RSUs (based on the number of months of service during the
performance period) will vest and will be paid as described in the
following paragraph. If the participant dies or becomes disabled
prior to vesting, the RSUs will become vested and will be paid as
soon as practicable after such death or disability. Upon a change
of control, the performance measure will be deemed satisfied and
awards will be deemed vested, but will not be paid until the
participant’s departure from the Company as described in the
following paragraph.
Following the participant’s departure from the Company, except as
described above in the event of death or disability, payout of the
earned and vested RSUs will be made in equal annual installments
over a five-year period. Payout will be made in shares of common
stock of the Company, with one RSU vested and earned equal to one
share of the Company’s common stock. Awards under the Program may
be canceled by the Board at any time.
described above in the event of death or disability, payout of the
earned and vested RSUs will be made in equal annual installments
over a five-year period. Payout will be made in shares of common
stock of the Company, with one RSU vested and earned equal to one
share of the Company’s common stock. Awards under the Program may
be canceled by the Board at any time.
The terms of the awards are governed by the Form of NorthWestern
Corporation Executive Retirement/Retention Program Restricted Share
Unit Award Agreement (the “Award Agreement”) and the Equity
Compensation Plan. For further information regarding the Award
Agreement, see the copy of the Award Agreement that is filed as
Exhibit 99.2 hereto and incorporated herein by reference. For
further information regarding the Equity Compensation Plan, see
Appendix A of the Company’s 2014 Proxy Statement, dated March 7,
2014 (Commission File No. 1-10499), which is incorporated herein by
reference.
Corporation Executive Retirement/Retention Program Restricted Share
Unit Award Agreement (the “Award Agreement”) and the Equity
Compensation Plan. For further information regarding the Award
Agreement, see the copy of the Award Agreement that is filed as
Exhibit 99.2 hereto and incorporated herein by reference. For
further information regarding the Equity Compensation Plan, see
Appendix A of the Company’s 2014 Proxy Statement, dated March 7,
2014 (Commission File No. 1-10499), which is incorporated herein by
reference.
Item 9.01 Financial Statements and Exhibits.
|
EXHIBIT NO.
|
DESCRIPTION OF DOCUMENT
|
|
99.1*
|
2017 Annual Incentive Plan
|
|
99.2*
|
Form of NorthWestern Corporation Executive
Retirement/Retention Program Restricted Share Unit Award Agreement |
* filed herewith
About NorthWestern Corporation (NYSE:NWE)
NorthWestern Corporation, doing business as North-Western Energy, provides electricity and natural gas. The Company provides electricity and natural gas to over 701,000 customers in Montana, South Dakota and Nebraska. It generates and distributes electricity in South Dakota; distributes natural gas in South Dakota and Nebraska, and generates and distributes electricity and distributed natural gas in Montana. The Company’s segments are Electric operations, Natural gas operations and All other, which primarily consists of unallocated corporate costs. The Company’s regulated electric utility business in Montana includes generation, transmission and distribution. Its service territory covers approximately 107,600 square miles, representing over 73% of Montana’s land area. Its regulated natural gas utility business in Montana includes production, storage, transmission and distribution. The Company distributes natural gas to approximately 191,500 customers in over 105 Montana communities. NorthWestern Corporation (NYSE:NWE) Recent Trading Information
NorthWestern Corporation (NYSE:NWE) closed its last trading session down -1.10 at 56.19 with 467,346 shares trading hands.