DEF 14A 1 a2234806zdef14a.htm DEF 14A

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.           )

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Definitive Proxy Statement

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Definitive Additional Materials

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Soliciting Material under §240.14a-12

 

NRG ENERGY, INC.

(Name of Registrant as Specified In Its Charter)

 

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2018 Annual Meeting of Stockholders and Proxy Statement

March 15, 2018

Fellow Stockholders:

We are pleased to invite you to attend NRG Energy, Inc.'s Annual Meeting of Stockholders, which will be held at 9 a.m., Eastern Time, on Thursday, April 26, 2018, at the Hyatt Regency Princeton, 102 Carnegie Center, Princeton, New Jersey 08540. Details regarding admission to the meeting and the business to be conducted are more fully described in the accompanying Notice of Annual Meeting of Stockholders and Proxy Statement.

Your vote is important. Whether or not you plan to attend the Annual Meeting, we hope you will vote as soon as possible. Information about voting methods is set forth in the accompanying Notice of Annual Meeting of Stockholders and Proxy Statement.

On behalf of everyone at NRG, I thank you for your ongoing interest and investment in NRG Energy, Inc. We are committed to acting in your best interests. If you have any questions with respect to voting, please call our proxy solicitor, MacKenzie Partners, Inc. at (800) 322-2885 (toll free).

Sincerely,

GRAPHIC

LAWRENCE S. COBEN
Chairman of the Board

THIS PROXY STATEMENT AND PROXY CARD ARE
BEING DISTRIBUTED ON OR ABOUT MARCH 15, 2018.


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NRG Energy, Inc.
804 Carnegie Center, Princeton, New Jersey 08540

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

When: Thursday, April 26, 2018, 9:00 a.m. Eastern Time

Where: Hyatt Regency Princeton, 102 Carnegie Center, Princeton, New Jersey 08540

We are pleased to invite you to join our Board of Directors and senior leadership at the NRG Energy, Inc. 2018 Annual Meeting of Stockholders.

ITEMS OF BUSINESS:

1.
To elect twelve directors.

2.
To approve, on a non-binding advisory basis, NRG Energy, Inc.'s executive compensation.

3.
To ratify the appointment of KPMG LLP as NRG Energy, Inc.'s independent registered public accounting firm for the 2018 fiscal year.

4.
To vote on a stockholder proposal regarding disclosure of political expenditures, if properly presented at the meeting.

5.
To transact such other business as may properly come before the Annual Meeting and any adjournment or postponement.

RECORD DATE:

You are entitled to vote if you were a stockholder of record at the close of business on March 1, 2018.

Voting Information

HOW TO VOTE:

Even if you plan to attend the Annual Meeting in person, please vote right away using one of the following advance voting methods. Make sure to have your proxy card or voting instruction form in hand and follow the instructions in the card or form.

Via the Internet:

You may vote at www.proxyvote.com, from anywhere in the world, 24 hours a day, 7 days a week, up until 11:59 p.m. Eastern Time on April 25, 2018.

By phone:

If you live in the United States, you may vote 24 hours a day, 7 days a week, up until 11:59 p.m. Eastern Time on April 25, 2018, by calling (800) 690-6903 from a touch-tone phone.

By mail:

If you received a paper copy of the materials, you may mark, sign, date and mail your proxy card or voting instruction card in the enclosed, postage-paid address envelope, as soon as possible as it must be so that it is received by the Company prior to April 26, 2018, the Annual Meeting date.

In person:

You can vote by a ballot that will be provided to you at the Annual Meeting. However, if you are a beneficial owner of shares held in street name (through a bank, broker or other nominee), you must bring a legal proxy from your bank, broker or other nominee to vote in person.

By Order of the Board of Directors

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BRIAN E. CURCI,
Corporate Secretary


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2018 ANNUAL MEETING OF STOCKHOLDERS

PROXY STATEMENT

PROXY STATEMENT HIGHLIGHTS

  1

PROXY STATEMENT

 
5

GOVERNANCE OF THE COMPANY

 
6

PROPOSALS TO BE VOTED ON

 
15

    Proposal No. 1 Election of Directors

 
15

    Director Compensation

 
22

    Proposal No. 2 Advisory Vote to Approve NRG's Executive Compensation

 
25

    Proposal No. 3 Ratification of Independent Registered Public Accounting Firm for the 2018 Fiscal Year

 
26

    Proposal No. 4 Stockholder Proposal Regarding Disclosure of Political Expenditures

 
27

EXECUTIVE OFFICERS

 
30

STOCK OWNERSHIP OF DIRECTORS, NAMED EXECUTIVE OFFICERS AND CERTAIN BENEFICIAL OWNERS

 
32

CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS

 
36

EXECUTIVE COMPENSATION

 
37

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

 
56

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

 
56

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

 
56

AUDIT COMMITTEE REPORT

 
57

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 
58

    Audit and Nonaudit Fees

 
58

    Audit Fees

 
58

    Audit-Related Fees

 
58

    Tax Fees

 
58

    All Other Fees

 
58

    Policy on Audit Committee Pre-Approval

  58

QUESTIONS AND ANSWERS

 
59

    What is the purpose of the Annual Meeting?

 
59

    Who is entitled to vote at the Annual Meeting?

 
59

    How many votes do I have?

 
59

    What are the recommendations of the board of directors?

 
59

    How many votes must be present to hold the Annual Meeting?

 
59

    What vote is required to approve each proposal?

 
59

    What are abstentions and broker non-votes and how are they treated?

 
60

    How do I vote?

 
60

    May I change my vote?

 
61

    What should I bring to the Annual Meeting if I attend in person?

 
61

    How can I vote at the Annual Meeting if I attend in person?

 
61

    What happens if I do not provide instructions as to how to vote?

 
62

    Where can I obtain the list of stockholders entitled to vote?

 
62

    Who pays the cost of solicitation of proxies?

 
62

    Who is the Company's transfer agent?

 
62

    Why did I receive a one-page notice in the mail regarding the Internet availability of proxy materials instead of a full set of proxy materials?

 
62

    Where can I find directions to the Annual Meeting?

 
62

    What is "householding"?

 
62

    How can I request additional materials?

 
62

    Whom should I call if I have questions about the Annual Meeting?

 
62

STOCKHOLDER PROPOSALS AND DIRECTOR NOMINATIONS FOR THE 2019 ANNUAL MEETING OF STOCKHOLDERS

 
63

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Proxy Statement Highlights

This summary highlights information contained elsewhere in this Proxy Statement. This summary does not contain all of the information that you should consider, and you should read the entire Proxy Statement before voting. For more complete information regarding NRG Energy, Inc.'s 2017 performance, please review NRG Energy, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2017.

Roadmap of Voting Matters

Stockholders are being asked to vote on the following matters at the 2018 Annual Meeting of Stockholders:

PROPOSAL


BOARD
RECOMMENDATION

 

 

 

Proposal 1. Election of Directors (page 15)

   

The Board of Directors (Board) and the Governance and Nominating Committee believe that the 12 director nominees possess the necessary qualifications, attributes, skills and experiences to provide advice and counsel to the Company's management and effectively oversee the business and the long-term interests of our stockholders.

 

FOR
each Director nominee

Proposal 2. Approval, on a non-binding advisory basis, of NRG Energy, Inc.'s executive compensation (Say on Pay Proposal) (page 25)

 

 

The Company seeks a non-binding advisory vote to approve the compensation of its named executive officers as described in the Compensation Discussion and Analysis beginning on page 37 and the compensation tables and respective narrative discussion. The Board values stockholders' opinions, and the Compensation Committee will take into account the outcome of the Say on Pay Proposal when considering future executive compensation decisions.

 

FOR

Proposal 3. Ratification of the appointment of KPMG LLP as NRG, Energy, Inc.'s independent registered public accounting firm for the 2018 fiscal year (KPMG LLP Appointment Proposal) (page 26)

 

 

The Audit Committee and the Board believe that the retention of KPMG LLP as the Company's independent registered public accounting firm for the 2018 fiscal year is in the best interests of the Company and its stockholders. As a matter of good corporate governance, stockholders are being asked to ratify the Audit Committee's selection of KPMG LLP.

 

FOR

Proposal 4. Stockholder Proposal, if properly presented (Political Expenditures Stockholder Proposal) (page 27)

 

 

Stockholder proposal for preparation of a report on political expenditures.

 

AGAINST

Corporate Governance Highlights

We are committed to maintaining the highest standards of corporate governance, which promote the long-term interests of our stockholders, strengthen Board and management accountability and help build public trust in the Company. The Governance of the Company section beginning on page 6 describes our corporate governance framework, which includes the following highlights:

Annual election of directors

 

Regular executive sessions of independent directors

Majority voting for directors

 

Risk oversight by full Board and committees

12 director nominees of which 11 are independent

 

Commitment to sustainability

Adopted proxy access for stockholders to nominate directors

 

Anti-hedging and anti-pledging policies

Independent Audit, Compensation, and Governance Committees

   

|       ​ ​       Proxy Statement Highlights

 

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Stockholder Engagement

Stockholder feedback is important to our Board's decision-making process and has driven recent changes to our governance and compensation practices, including changes to our 2017 compensation program, the adoption of proxy access in 2016, and the disclosure of our political contribution policy. In early 2018, we initiated a broad stockholder outreach program to discuss NRG's long-term strategy and sustainability goals, as well as to review and seek feedback on our sustainability, governance, and compensation practices. An overview of the topics discussed and feedback that we heard are further described under "Stockholder Engagement" beginning on page 9.

Director Skills, Experience, and Background

As discussed in more detail under "Governance of the Company" beginning on page 6, the Governance and Nominating Committee is responsible for assessing with the Board, on an ongoing basis, the appropriate skills, experience, and background that we seek in Board members in the context of our business and the existing composition of the Board.

This assessment includes numerous factors such as independence; understanding of and experience in the retail and wholesale competitive energy market, customer expertise, finance, and operations; executive leadership; age; and gender and ethnic diversity. The Board also assesses whether a nominee's background, experience, personal characteristics, or skills will advance the Board's goal of creating and sustaining a Board that can support and oversee management's execution of the Company's strategic priorities.

Over the past few years, the Board has been evaluating the need for board refreshment and has been focused on identifying individuals whose skills and experiences will enable them to make meaningful contributions to the Company in light of the Company's evolving strategy and direction. With the implementation of the Transformation Plan, the Board conducted an assessment of the skills and experiences that we consider important for our directors and determined to realign the Board's composition by reducing the size of the Board from thirteen (13) to twelve (12) members and engaging two new independent directors with relevant expertise in conjunction with the retirement of three independent directors. In this search, the Committee prioritized diversity and customer expertise.

Our directors represent a diverse mix of skills, experiences and viewpoints that are relevant to our Company and facilitate effective oversight. See "Proposal No. 1 Election of Directors" for the biographies of our director nominees which list the specific skills, experiences and viewpoints each director brings to our Board.

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Proxy Statement Highlights         ​ ​          |

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Director Nominees

                                        COMMITTEE MEMBERSHIPS1,2
                     
NAME, PRIMARY OCCUPATION       AGE       DIRECTOR SINCE       INDEPENDENT      

OTHER PUBLIC
COMPANY
BOARDS
      A       C       G&N       F       N       NSC

Lawrence S. Coben (Chairman of the Board)

        59         2003       YES         1                                              

Former Chairman and Chief Executive Officer, Tremisis Energy Corporation LLC

                                                                                     

E. Spencer Abraham

        65         2012       YES         4                                     ·        

Chairman and Chief Executive Officer, The Abraham Group

                                                                                     

Kirbyjon H. Caldwell

        64         2009       YES         0                       ·               ·      

Senior Pastor, Windsor Village United Methodist Church

                                                                                     

Matthew Carter, Jr.

        58         2018       YES         1       ·                       ·       ·        

Former President and Chief Executive Officer, Inteliquent, Inc.

                                                                                     

Heather Cox

        47         2018       YES         0               ·       ·               ·        

Former Executive Vice President, Chief Technology & Digital Officer, United Services Automobile Association

                                                                                     

Terry G. Dallas

        67         2012       YES         0                               ·       ·       ·

Former Executive Vice President and Chief Financial Officer, Unocal Corporation

                                                                                     

Mauricio Gutierrez

        47         2016       NO         1                                       ·        

President and Chief Executive Officer, NRG Energy, Inc.

                                                                                     

William E. Hantke

        70         2006       YES         1                                     ·        

Former Executive Vice President and Chief Financial Officer, Premcor, Inc.

                                                                                     

Paul W. Hobby

        57         2006       YES         0                                     ·       ·

Managing Partner, Genesis Park, L.P.

                                                                                     

Anne C. Schaumburg

        68         2005       YES         1       ·       ·                       ·        

Former Managing Director of Credit Suisse First Boston

                                                                                     

Thomas H. Weidemeyer

        70         2003       YES         2                                     ·        

Former Director, Senior Vice President and Chief Operating Officer of United Parcel Service, Inc.

                                                                                     

C. John Wilder

        59         2017       YES         1                               ·       ·        

Executive Chairman of Bluescape Energy Partners

                                                                                     
  1   Chair    · Member        
  2   The committee memberships listed below were approved by the Board effective March 19, 2018.
  A =   Audit Committee   F =   Finance and Risk Management Committee
  C =   Compensation Committee   N =   Nuclear Oversight Committee
  G&N =   Governance and Nominating Committee   NSC =   Nuclear Oversight Subcommittee

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Questions and Answers

Please see the Questions and Answers section beginning on page 59 for important information about the proxy materials, voting and the 2018 Annual Meeting of Stockholders. Additional questions may be directed to our proxy solicitor, MacKenzie Partners, Inc. at (800) 322-2885 or proxy@mackenziepartners.com.

Learn More About Our Company

You can learn more about the Company, view our governance materials and much more by visiting our website, www.nrg.com.

Please also visit our 2018 Annual Meeting of Stockholders website at www.proxyvote.com to easily access the Company's proxy materials or vote through the Internet.

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Proxy Statement Highlights         ​ ​          |


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Proxy Statement

We are providing these proxy materials to you in connection with the solicitation of proxies by the Board of NRG Energy, Inc. for the 2018 Annual Meeting of Stockholders (Annual Meeting) and for any adjournment or postponement of the Annual Meeting. The Annual Meeting will be held on Thursday, April 26, 2018, at 9 a.m. Eastern Time at the Hyatt Regency Princeton, 102 Carnegie Center, Princeton, NJ 08540. In this Proxy Statement, "we," "us," "our," "NRG" and the "Company" refer to NRG Energy, Inc.

You are receiving this Proxy Statement because you own shares of our common stock, par value $0.01 per share, that entitle you to vote at the Annual Meeting. By use of a proxy, you can vote whether or not you attend the Annual Meeting. This Proxy Statement describes the matters on which we would like you to vote and provides information on those matters.

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting

of Stockholders to be held on Thursday, April 26, 2018

Each of the Notice of Annual Meeting, this Proxy Statement and our Annual Report on Form 10-K for the fiscal year ended
December 31, 2017 (Annual Report on Form 10-K) is available at
www.proxyvote.com. If you would like to receive,
without charge, a paper copy of our Annual Report on Form 10-K, including the financial statements
and the financial statement schedules, please send your request to Investor Relations,
804 Carnegie Center, Princeton, New Jersey 08540.

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GRAPHIC
Governance of the Company

Corporate Governance Guidelines and Charters

The Board has adopted Corporate Governance Guidelines (Guidelines) that, along with the Amended and Restated Certificate of Incorporation, the Fourth Amended and Restated Bylaws (Bylaws) and the charters of the committees of the Board (Committees), provide the framework for the governance of the Company. The Board's Governance and Nominating Committee is responsible for periodically reviewing the Guidelines and recommending any proposed changes to the Board for approval. The Guidelines are available on the Governance section of the Company's investor relations website at http://investors.nrg.com, along with the charters of all of the Committees and the Company's Code of Conduct. The Guidelines, the charters of all of the Committees and the Code of Conduct are also available in print to any stockholder upon request. Stockholders who desire to receive such items in print may request them from the Company's Corporate Secretary by writing to NRG Energy, Inc., 804 Carnegie Center, Princeton, New Jersey 08540.

Director Independence

Under the Guidelines and the New York Stock Exchange (NYSE) listing standards, a majority of the Board must be composed of independent directors. The Board determines the independence of our directors by applying the independence principles and standards established by the NYSE. These provide that a director is independent only if the Board affirmatively determines that such director does not have a direct or indirect material relationship with the Company, which may include commercial, industrial, consulting, legal, accounting, charitable, familial and other business, professional and personal relationships.

The Board conducts a review of the independence of the Company's directors on an annual basis. In its most recent review, the Board considered, among other things:

Any employment relationships between the Company and its directors (other than Mauricio Gutierrez) or their immediate family members;
Any affiliations of the Company's directors or their immediate family members with the Company's independent registered public accounting firm, compensation consultants, legal counsel and other consultants and advisors;
Any transactions that would require disclosure as a related person transaction or that qualify for review under our related person transactions policy;

Any transactions made in the ordinary course of business with a company in which a director serves on the board or as a member of the executive management team; and

Any transactions involving payments made by the Company to educational institutions.

In addition, because the Company provides retail electricity services through certain of its subsidiaries, the Board also considered instances where certain of our directors either received electricity services from the Company or serve as directors of businesses that received electricity services from the Company.

The Board has determined that all of the Company's directors are independent under the Guidelines and the NYSE listing standards, with the exception of Mauricio Gutierrez, our President and Chief Executive Officer.

Each of the Audit, Compensation, and Governance and Nominating Committees is made up solely of independent directors. In accordance with the Guidelines and NYSE listing standards, all members of the Audit and Compensation Committees meet additional independence standards applicable to audit and compensation committee members, respectively.

6

 

Governance of the Company         ​ ​          |

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Board Structure and Leadership

Chairman of the Board: Lawrence S. Coben

 

Majority voting for directors

Number of directors: 12

 

Separate Chairman and Chief Executive Officer (CEO)

Number of regular meetings in 2017: 5

 

Regular executive sessions of independent directors

Number of special meetings in 2017: 14

 

Each committee led by an independent director

Annual election of directors

 

Active engagement by all directors


All directors stand for election annually. Each director will hold office until his or her successor has been elected and qualified or until the director's earlier death, resignation or removal.

As of the 2017 Annual Meeting of Stockholders, there were 13 members of the Board. During the 2017 fiscal year, no director attended less than 75% of the total number of Board meetings and meetings of the Committees on which he or she served.

The Guidelines provide that non-executive directors meet in executive session regularly following Board meetings. The Company's Non-Executive Chairman, Mr. Coben, presides at these sessions. Also, pursuant to the Company's Bylaws, Mr. Coben has been designated as an "alternate member" of all Committees to replace any absent or disqualified members of a Committee.

Directors are encouraged to attend the annual meetings of stockholders. All of the directors attended the 2017 Annual Meeting of Stockholders.

Our CEO, Mr. Gutierrez, and Chairman, Mr. Coben, work closely together in complementary roles. Mr. Gutierrez focuses on the day-to-day operations of the Company and establishes the Company's strategic plan. Mr. Coben leads the Board's responsibilities for reviewing, approving and monitoring fundamental financial and business strategies and major corporate actions, assessing major risks facing the Company and management, and overseeing succession planning, most notably at the CEO level, and he presides over the Board and its Committees as they perform their broad and varied oversight functions. The Board believes that these complementary roles provide the appropriate governance structure for the Company at this time.

Since December 2003, NRG's governance structure has been led by a separate CEO and Chairman of the Board. Irrespective of the Company's current practice, the Board believes that an effective board leadership structure is highly dependent on the experience, skills and personal interaction between persons in leadership roles. As stated in the Guidelines, the Board believes that it is in the best interest of the Company for the Board to make a determination regarding separation of the roles of Chairman and CEO based upon the present circumstances.

Effective March 6, 2018, Evan Silverstein, Barry Smitherman and Walter Young retired from the Board and the Board agreed to reduce its size to twelve members. With the retirements of Messrs. Silverstein, Smitherman and Young,

the Board appointed Matthew Carter, Jr. and Heather Cox to serve as independent directors effective March 6, 2018.

Governance Practices

The Board has taken a proactive approach in applying leading governance practices, which is evidenced by the Board's recommendation, and our stockholders' subsequent approval, of the majority voting standard for the election of directors at the 2009 Annual Meeting of Stockholders, the declassification of our Board at the 2012 Annual Meeting of Stockholders and the adoption of proxy access following the 2016 Annual Meeting of Stockholders. Furthermore, as described in the Guidelines, the Board follows a series of governance practices that it believes foster effective Board oversight and accountability to you, our stockholders. These practices include:

Executive and director stock ownership guidelines to align interests with our stockholders;

Ongoing succession planning for the CEO and other senior management;

Annual performance evaluations of the Board and each of its standing Committees, as well as periodic peer review for individual directors;

Director orientation and continuing education program, including Company site visits and information sessions with Company management;

Access to and engagement of outside advisors and consultants to assist the Board and the Committees in the performance of their duties, as appropriate; and

Active engagement with our stockholders regarding governance practices and other matters.

Proxy Access

Following our 2016 Annual Meeting of Stockholders at which a non-binding proxy access stockholder proposal received the affirmative vote of majority of shares present, we engaged with the stockholder who submitted the proposal. Our Board determined that the best course of action for the Company and our stockholders was to amend our Bylaws to include proxy access. In December 2016, our Board adopted amendments to our Bylaws to implement proxy access. Under the proxy access provisions

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in our Bylaws, a stockholder (or group of up to 20 stockholders) continuously owning at least 3% of our outstanding common stock for a period of at least three years prior to the date of the nomination may nominate and include in our proxy materials for the following annual meeting director nominees constituting up to 20% of the Board. To do so, the stockholder must submit the information required by Article II, Section 15 of our Bylaws to the Company's Corporate Secretary as described further under "Director Nominees for Inclusion in the Proxy Materials for the 2019 Annual Meeting of Stockholders (Proxy Access)."

RISK OVERSIGHT

The Board has responsibility for overall risk oversight of the Company.

Board Committees, especially the Finance and Risk Management Committee, play an important role.

Risk oversight includes understanding the material risks to the business and what steps management is taking or should be taking to manage those risks, as well as understanding and determining the appropriate risk appetite for the Company.

To define the Company's risk appetite, the Board reviews and approves the annual business plan, budget and long-term plan, strategic initiatives, acquisitions and divestitures, and capital allocation plan.

The Board performs its risk oversight function in several ways. The Board monitors, reviews and reacts to strategic and corporate risks through reports by management, including the Enterprise Risk Management team, which is further described below, and through the Committees of the Board. Several Committees of the Board have responsibilities for addressing risk, however, the Board primarily conducts this oversight function through the Finance and Risk Management Committee. The Finance and Risk Management Committee is responsible for company-wide enterprise risk management. The Company's Financial Risk Management Committee, a committee comprised of senior management and key personnel in and around the finance, commercial operations and risk functions, reports to the Board's Finance and Risk Management Committee on a regular basis.

The table below summarizes the significant role the various Board Committees play in carrying out the risk oversight function.

COMMITTEE   RISK OVERSIGHT FOCUS AREA
Audit Committee   Reviews and evaluates our policies with respect to risk assessment and risk management.

 

 

Oversees financial risks, which includes reviewing the effectiveness of our internal controls, conducting a detailed review of the financial portions of our Securities and Exchange Commission (SEC) reports, approving the independent auditor and the annual audit plan, and receiving and considering periodic reports from the Company's independent auditor, our internal auditor and our corporate compliance officer.
Compensation Committee   Oversees risks related to our compensation policies and practices, with input from management and the Compensation Committee's independent outside compensation consultant, Pay Governance LLC (Pay Governance).
Finance and Risk Management Committee   Oversees risks related to our capital structure, liquidity, financings and other capital markets transactions as well as risks related to our trading of fuel, transportation, energy and related products and services, regulatory compliance, and information technology systems and cybersecurity matters and the Company's management of the risks associated with such activities.
Governance and Nominating Committee   Oversees our strategies and efforts to manage our environmental, economic and social impacts, including our environmental, climate change and sustainability policies and programs.
Nuclear Oversight Committee and Subcommittee   Oversees risks related to our ownership and operation, directly or indirectly, of interests in nuclear power plant facilities.

The Chairs of each of the Committees regularly report to the Board on all matters reviewed by their respective Committees, thereby providing the Board with the opportunity to identify and discuss any risk-related issues or request additional information from management or the Committees that may assist the Board in its risk oversight role. To this end, risk-related issues presented to the Committees and the Nuclear Oversight Subcommittee are routinely presented to the full Board to ensure proper oversight.

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Oversight of Risks Related to Compensation Policies

As described above, the Compensation Committee is responsible for overseeing risks related to our compensation policies and practices. The Company's Enterprise Risk Management team is responsible for assisting the Compensation Committee with its oversight and analysis of these risks. To assist the Compensation Committee with determining whether the Company's compensation policies and practices subject the Company to unnecessary risk or could potentially motivate employees to take excessive risk, the Company's Enterprise Risk Management team conducted a review of these policies and practices for the 2017 fiscal year and reported to the Compensation Committee its findings as follows:

base salaries are a sufficient component of total compensation to discourage risk taking;

earnings goals under the Company's Second Amended and Restated Annual Incentive Plan for Designated Corporate Officers (AIP) are based upon its audited financial statements and the Company believes that the goals are attainable without the need to take inappropriate risks or make material changes to the Company's business or strategy;

named executive officers who receive payment under the AIP and the Company's Amended and Restated Long-Term Incentive Plan (LTIP) may be required to reimburse the Company for all or a portion of the payment (commonly referred to as a clawback) if the Company has to prepare an accounting restatement because it is in material noncompliance with any financial reporting requirements or in the case of fraud, embezzlement or other serious misconduct, which discourages risk taking;

the Company uses awards under the LTIP that are typically based upon total stockholder return over three-year periods, such as the Relative Performance Stock Unit (RPSU) awards and the previously issued Market Stock Unit (MSU) awards, which mitigates short-term risk taking;

because incentive compensation has a large equity component, value is best realized through long-term appreciation of stockholder value, especially when coupled with the stock ownership guidelines, which expose the Company's named executive officers to loss of the value of the retained equity if stock appreciation is jeopardized; and

the use of incentive compensation components that are paid or vest over an extended period mitigates against unnecessary or excessive risk taking.

Furthermore, the Enterprise Risk Management team has continued to evaluate and review new or amended compensation policies or practices and has reported its findings to the Compensation Committee, which are consistent with the principles identified above.

As a result of the review, management and the Compensation Committee have concluded that the Company's compensation policies and practices are not reasonably likely to have a material adverse effect on the Company.

Stockholder Engagement

Stockholder feedback is important to our Board's decision-making process and has driven recent changes to our governance and compensation practices, including changes to our 2017 compensation program, the adoption of proxy access in 2016, and the disclosure of our political contribution policy.

In early 2018, we initiated a broad stockholder outreach program to discuss NRG's long-term strategy and sustainability goals, as well as to review and seek feedback on our sustainability, governance, and compensation practices. We reached out to and had discussions with stockholders representing approximately 37% of our shares outstanding. An overview of the topics discussed and feedback that we heard from such stockholders is summarized below.

FOCUS AREAS   KEY DISCUSSION TOPICS
Strategy  

Appreciated learning more about our progress on the Transformation Plan, which is further described in this section below, and the plan's alignment with long-term shareholder value

 

Some sought to better understand the Company's capital allocation priorities

Sustainability  

Recognized NRG's position as a leader on sustainability issues and related disclosure initiatives

 

Appreciated that NRG's sustainability priorities have remained consistent following the implementation of the Transformation Plan

 

Wanted to better understand how our Board oversees environmental, social and governance matters

Governance  

Some investors expressed an interest in disclosure regarding how our Board's skills align with the Company's business strategy

 

Discussed how diversity is considered in the Board refreshment process

Compensation  

Appreciation for our responsiveness to stockholder feedback including the adoption of relative total stockholder return-based long-term incentives with above-median target

NRG Transformation Plan

NRG is in the process of executing its Transformation Plan, which is designed to significantly strengthen earnings and cost competitiveness, lower risk and volatility, and create significant shareholder value. The three-part, three-year plan is comprised of the following targets: (i) operations and cost excellence; (ii) portfolio optimization; and (iii) capital structure and allocation enhancement. NRG

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expects to complete the Transformation Plan by the end of 2020 with significant implementation by the end of 2018. For additional information regarding the Transformation Plan, please see the section entitled "Executive Compensation—Executive Summary" beginning on page 38.

Director Nominee Selection Process

The Governance and Nominating Committee is responsible for identifying individuals that the Committee believes are qualified to become Board members in accordance with criteria set forth in the Guidelines. These criteria include an individual's business experience and skills, independence, judgment, integrity, and ability to commit sufficient time and attention to the activities of the Board. The Committee does not assign specific weights to particular criteria and no particular criterion is necessarily applicable to all Board members. While the Company does not have a formal diversity policy, the Guidelines, since their adoption in 2004, provide that the Committee will consider diversity criteria in the context of the perceived needs of the Board as a whole and seek to achieve a diversity of backgrounds and perspectives on the Board.

The Governance and Nominating Committee's process for identifying and evaluating director nominees includes consultation with all directors, solicitation of proposed nominees from all directors, the engagement of one or more professional search firms, if deemed appropriate, interviews with prospective nominees by the Committee (and other directors, if deemed appropriate) and recommendations regarding qualified candidates to the full Board.

As further described under "Stockholder Recommendations for Director Candidates" on page 64, the Governance and Nominating Committee also considers director candidates recommended by stockholders.

Board Committees

The Board has the following five standing Committees: Audit, Compensation, Governance and Nominating, Finance and Risk Management and Nuclear Oversight, which includes the Nuclear Oversight Subcommittee. The membership and the functions of each Committee are described below. Each of the Committees has adopted a charter that describes each such Committee's roles and responsibilities. The charters of all of the Committees are available on the Governance section of the Company's investor relations website at http://investors.nrg.com.

AUDIT COMMITTEE

Members:  William E. Hantke (Chair), Terry G. Dallas and Thomas H. Weidemeyer; effective March 19, 2018, the members will be William E. Hantke (Chair), Matthew Carter, Jr. and Anne Schaumburg

Number of meetings in 2017:  4

Audit Committee Financial Experts:  William E. Hantke and Terry G. Dallas

Primary Responsibilities:  appoints, retains, oversees, evaluates, and compensates the independent auditors; reviews the annual audited and quarterly consolidated financial statements; and reviews major issues regarding accounting principles and financial statement presentations

Independence:  all members

The Audit Committee represents and provides assistance to the Board with respect to matters involving the accounting, auditing, financial reporting, internal controls, and legal compliance functions of the Company and its subsidiaries, including assisting the Board in its oversight of the integrity of the Company's financial statements, the qualifications, independence, and performance of the Company's independent auditors, the performance of the Company's internal audit function, the Company's compliance with legal and regulatory requirements, and effectiveness of the Company's legal and regulatory compliance functions. Among other things, the Audit Committee:

appoints, retains, oversees, evaluates, and compensates the independent auditors;

reviews the annual audited and quarterly consolidated financial statements;

reviews major issues regarding accounting principles and financial statement presentations;

reviews earnings press releases and earnings guidance provided to analysts and rating agencies;

reviews with the independent auditors the scope of the annual audit, and approves all audit and permitted nonaudit services provided by the independent auditors;

considers the adequacy and effectiveness of the Company's internal control and reporting system;

with the advice and assistance of the Finance and Risk Management Committee, reviews in a general manner the processes by which the Company assesses and manages risk, provided, however, the Audit Committee is not required to duplicate the work of the Finance and Risk Management Committee;

reviews periodically the Company's tax policies and any pending audits or assessments;

reports regularly to the Board regarding its activities and prepares and publishes required annual Audit Committee reports;

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establishes procedures for the receipt, retention, and treatment of complaints and concerns regarding accounting, internal accounting controls, or auditing matters;

oversees the internal audit and corporate compliance functions; and

annually evaluates the performance of the Audit Committee and the adequacy of its charter.

COMPENSATION COMMITTEE

Members:  E. Spencer Abraham, Kirbyjon H. Caldwell and William E. Hantke; effective March 19, 2018, the members will be E. Spencer Abraham (Chair), Heather Cox and Anne Schaumburg

Number of meetings in 2017:  5

Primary Responsibilities:  oversees the Company's
overall compensation structure, policies, and programs


Independence:  all members

Among other things, the Compensation Committee:

reviews and recommends to the Board annual and long-term goals and objectives relevant to the compensation of the President and CEO, evaluates the performance of the President and CEO in light of those goals and objectives, and either as a committee with the Chairman of the Board or together with the other independent directors, determines and approves the President and CEO's compensation;

reports to the Board its review of annual and long-term goals and objectives relevant to the compensation of the Chief Financial Officer (CFO), the Executive Vice Presidents and any other officer designated by the Board, the evaluation of those officers' performance in light of those goals and objectives, the determination and approval of compensation levels based on such evaluations and the review and approval of employment arrangements, severance arrangements and benefits plans;
reviews and recommends to the Board the compensation, incentive compensation and equity-based plans that are subject to Board approval;

reviews and approves stock incentive awards for executive officers other than the President and CEO;

makes recommendations regarding, and monitors compliance by officers and directors with, the Company's stock ownership guidelines;

reviews and recommends to the Board the compensation of directors for service on the Board and its committees;

oversees the evaluation of management and annually reviews the Company's senior management succession plans;
reviews and approves employment agreements and severance arrangements, benefit plans not otherwise subject to Board approval, and corporate goals and objectives for officers other than the President and CEO;

reviews and discusses with management the Compensation Discussion and Analysis (CD&A) to be included in the Company's proxy statement or annual report on Form 10-K, and based on such review and discussions, recommends to the Board that the CD&A be included in the Company's proxy statement or annual report on Form 10-K, as applicable;

evaluates any conflicts of interest and the independence of any outside advisors engaged by the Compensation Committee;

reviews and oversees the Company's overall compensation strategy, structure, policies, programs, risk profile and any stockholder advisory votes on the Company's compensation practices and assesses whether the compensation structure establishes appropriate incentives for management and employees;

annually evaluates the performance of the Compensation Committee and the adequacy of its charter; and

performs such other responsibilities as may be delegated to it by the Board from time to time that are consistent with its purpose.

The Compensation Committee may delegate to one or more subcommittees such power and authority as the Compensation Committee deems appropriate. No subcommittee shall consist of fewer than two members, and the Compensation Committee may not delegate to a subcommittee any power or authority that is required by any law, regulation or listing standard to be exercised by the Compensation Committee as a whole.

The Compensation Committee has the authority to retain at the expense of the Company such outside counsel, experts, and other advisors as it determines appropriate to assist it in the full performance of its functions, including sole authority to retain and terminate any compensation consultant used to assist the Compensation Committee in the evaluation of directors, or, if applicable, CEO or senior executive compensation, and to approve the consultant's fees and other retention terms.

Pay Governance, the Compensation Committee's independent compensation consultant for fiscal year 2017, assisted with executive pay decisions and worked with the Compensation Committee to formulate the design of the executive compensation program for 2017. For 2017, Pay Governance billed the Company approximately $135,000 for compensation consultation services.

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GOVERNANCE AND NOMINATING COMMITTEE

Members:  Thomas H. Weidemeyer (Chair), E. Spencer Abraham and Kirbyjon H. Caldwell; effective March 19, 2018, the members will be Thomas H. Weidemeyer (Chair), Kirbyjon H. Caldwell and Heather Cox

Number of meetings in 2017:  6

Primary Responsibilities:  recommends director candidates to the Board for election at the Annual Meeting of Stockholders, periodically reviews the Guidelines and recommends changes to the Board, and provides guidance to the Board with respect to governance related matters

Independence:  all members

Among other things, the Governance and Nominating Committee:

identifies and reviews the qualifications of potential nominees to the Board consistent with criteria approved by the Board, and assesses the contributions and independence of incumbent directors in determining whether to recommend them for re-election;

establishes and reviews procedures for the consideration of Board candidates recommended by the Company's stockholders;

makes recommendations to the Board concerning the structure, composition, and functioning of the Board and its committees;

reviews and assesses the channels through which the Board receives information, and the quality and timeliness of information received;

reviews and recommends to the Board retirement and other tenure policies for directors;

reviews and approves Company policies applicable to the Board, the directors and officers subject to Section 16 of the Securities Exchange Act of 1934, as amended (Exchange Act);

reviews and reports to the Board regarding potential conflicts of interests of directors;

recommends to the Board director candidates for the annual meeting of stockholders, and candidates to be elected by the Board as necessary to fill vacancies and newly created directorships;

oversees the Company's strategies and efforts to manage its environmental, economic and social impacts, including, but not limited to, the Company's environmental, climate change and sustainability policies and programs;

oversees the evaluation of the Board, each of its committees and management;

monitors directorships in other public companies held by directors and senior officers of the Company;
annually evaluates the performance of the Governance and Nominating Committee and the appropriateness of its charter;

reviews the Company's political contribution policy and the Company's memberships in trade associations or other business associations that engage in lobbying activities or make independent expenditures relating to political campaigns or initiatives;

reviews the Company's charitable giving policy;

oversees the orientation process for new director programs for the continuing education of directors; and

performs such other responsibilities as may be delegated to it by the Board from time to time that are consistent with its purpose.

FINANCE AND RISK MANAGEMENT COMMITTEE

Members:  Terry G. Dallas, Paul W. Hobby, Anne C. Schaumburg and C. John Wilder; effective March 19, 2018, the members will be Paul W. Hobby (Chair), Matthew Carter, Jr., Terry G. Dallas and C. John Wilder

Number of meetings in 2017:  7

Primary Responsibilities:  assists the Board in fulfilling its responsibilities with respect to the oversight of trading, power marketing and risk management issues at the Company, and reviews and approves certain financial development transactions

Independence:  all members

The Finance and Risk Management Committee consists of at least three directors, a majority of which are independent as defined under the listing standards of the NYSE and as affirmatively determined by the Board. No member of the Finance and Risk Management Committee may be removed except by majority vote of the independent directors of the Board then in office.

Among other things, the Finance and Risk Management Committee:

reviews, reports and makes recommendations to the Board on management recommendations or proposals regarding the Company's and its subsidiaries' (a) capital structure, (b) liquidity, (c) need for credit or debt or equity financing, (d) amounts, timing and sources of capital market transactions, and (e) financial hedging and derivative activities;

reviews and approves, or authorizes officers to approve, the pricing and other terms and conditions of transactions relating to debt or equity financings, financial hedging and derivatives activities, and other similar financial activities, in each case which have been reviewed and approved by the Board;

reviews and approves, or authorizes officers to approve, repurchases, early redemption or other similar actions with respect to the Company's securities;

reviews and approves, or authorizes officers to approve, the pricing and other terms and conditions of financing

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    transactions related to mergers, acquisitions, tender offers, and reorganizations which have been reviewed and approved by the Board;

reviews and approves, or authorizes officers to approve, the pricing and other terms and conditions of securities offerings which have been reviewed and approved by the Board;

approves determinations of the fair market value of assets and investments of the Company for purposes of the Company's note indentures, senior secured credit agreement or other similar financing documents where fair market value is required to be determined by the Board or by a Committee of the Board;

reviews with management, on a periodic basis, contributions to employee benefit retirement plans of the Company, investment performance, funding, asset allocation policies and other similar performance measures of the employee benefit retirement plans of the Company;

oversees the Company's policies and procedures established by management to assess, monitor, manage and control the Company's material risk exposures, including operational, business, financial and commodity market (including marketing and trading of fuel, transportation, energy and related products and services, and hedging of generation portfolio obligations), strategic, credit, liquidity and reputational risks;

oversees matters related to the security of and risks related to information technology systems and procedures, including the Company's cybersecurity program and cyber-related risks;

advises and assists the Audit Committee in its review of the processes by which management and the Committee assess the Company's exposure to risk;

approves as appropriate, the Company's power marketing and trading transactions, limits, policies, practices and procedures, and counterparty credit limit and policies, and approves exceptions to policies, as necessary;

annually evaluates the performance of the Finance and Risk Management Committee and the appropriateness of its charter;

reviews and approves transactions exceeding the CEO's individual authority limits under the Company's risk management policies; and

performs such other responsibilities as may be delegated to it by the Board from time to time that are consistent with its purpose.

NUCLEAR OVERSIGHT COMMITTEE AND SUBCOMMITTEE

Committee Members:  Lawrence S. Coben (Chair) and all other Board members

Sub Committee Members:  Paul W. Hobby (Chair), E. Spencer Abraham and Terry G. Dallas; effective March 19, 2018, the sub committee members will be Kirbyjon H. Caldwell (Chair), Terry G. Dallas and Paul W. Hobby

Number of Committee meetings in 2017:  1

Number of Subcommittee meetings in 2017:  0

Primary Responsibilities:  assists the Board in fulfilling its responsibilities with respect to the oversight of the Company's ownership and operation, directly or indirectly, of its interests in nuclear power plant facilities

Committee Independence:  all members except the CEO

Subcommittee Independence:  all members

The Nuclear Oversight Committee consists of all of the members of the Board, all of whom are citizens of the United States and meet the requirements of applicable law to serve on the Committee, a majority of which are independent as defined under the listing standards of the NYSE and as affirmatively determined by the Board. The Nuclear Oversight Committee formed the Nuclear Oversight Subcommittee to review and report to the Board and the Nuclear Oversight Committee on matters not expressly reserved for review by the Board. In this capacity, the Nuclear Oversight Subcommittee meets when and as appropriate under the circumstances with Company management regarding the Company's nuclear operating facilities and the Chair of the Subcommittee subsequently reports to the Board and the Nuclear Oversight Committee on such matters during regularly scheduled Board meetings. The Nuclear Oversight Subcommittee did not meet in 2017 since all matters involving operation of the Company's nuclear power plant facilities during 2017 were reviewed and considered by the Nuclear Oversight Committee.

Anti-Hedging and Anti-Pledging Policies

The Company prohibits executive officers, directors and employees from directly or indirectly engaging in any kind of hedging transaction that could reduce or limit their economic risk with respect to their holdings, ownership or interest in the Company's securities, including prepaid variable forward contracts, equity swaps, collars, puts, calls and options. The Company also prohibits executive officers, directors and employees from directly or indirectly engaging in any transaction in which the Company's securities are being pledged.

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Communication with Directors

Stockholders and other interested parties may communicate with the Board by writing to the Corporate Secretary, NRG Energy, Inc., 804 Carnegie Center, Princeton, New Jersey 08540. Communications intended for a specific director or directors should be addressed to their attention to the Corporate Secretary at the address provided above. Communications received from stockholders are forwarded directly to Board members as part of the materials mailed in advance of the next


scheduled Board meeting following receipt of the communications. The Board has authorized the Corporate Secretary, in his or her discretion, to forward communications on a more expedited basis if circumstances warrant or to exclude a communication if it is illegal, unduly hostile or threatening, or similarly inappropriate. Advertisements, solicitations for periodical or other subscriptions, and other similar communications generally will not be forwarded to the directors.

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GRAPHIC
Proposal No. 1
Election of Directors

The Board of Directors is comprised of 12 members, each of whom will stand for election at the Annual Meeting. Each director will hold office until his or her successor has been elected and qualified or until the director's earlier death, resignation or removal. Each of the nominees for director named in this Proxy Statement have been recommended and nominated by the Governance and Nominating Committee.

The persons named as proxies on the proxy card intend to vote the proxies for the election of the nominees to the Board listed below. Each nominee listed below has consented to being named in this Proxy Statement and to serve as a director if elected. The biography for each director includes the specific experience, qualifications, attributes and skills that led the Board to conclude that the nominee should serve as a director. Each biography also includes the board committees that such director nominee will serve on effective March 19, 2018. The Board believes that each of the director nominees has valuable individual skills and experiences that, taken together, provide the Company with the variety and depth of knowledge, judgment and vision necessary to provide effective oversight of the Company.

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E. SPENCER ABRAHAM

GRAPHIC


AGE: 65
BOARD COMMITTEES:

COMPENSATION (CHAIR)

NUCLEAR OVERSIGHT

Secretary Abraham has been a director of NRG since December 2012. Previously, he served as a director of GenOn Energy, Inc. from January 2012 to December 2012. He is Chairman and Chief Executive Officer of The Abraham Group, an international strategic consulting firm based in Washington, D.C. which he founded in 2005. Prior to that, Secretary Abraham served as Secretary of Energy under President George W. Bush from 2001 through January 2005 and was a U.S. Senator for the State of Michigan from 1995 to 2001. Secretary Abraham serves on the boards of the following public companies: Occidental Petroleum Corporation, PBF Energy and Two Harbors Investment Corp., as well as chairman of the board of Uranium Energy Corp. He also serves on the board of C3 IoT, a private company. Secretary Abraham previously served as the non-executive chairman of AREVA, Inc., the U.S. subsidiary of the French-owned nuclear company, and as a director of Deepwater Wind LLC, International Battery, Green Rock Energy, ICx Technologies, PetroTiger and Sindicatum Sustainable Resources. He also previously served on the advisory board or committees of Midas Medici (Utilipoint), Millennium Private Equity, Sunovia and Wetherly Capital.

Secretary Abraham's nearly two decades at the highest levels of domestic and international policy and politics give him the experience necessary to provide a significant contribution to the Board. As a former U.S. Senator and former U.S. Secretary of Energy who directed key aspects of the country's energy strategy, Secretary Abraham provides the Board unique insight into industry, public policy and regulatory-related issues.

 

KIRBYJON H. CALDWELL

GRAPHIC


AGE: 64
BOARD COMMITTEES:

GOVERNANCE AND NOMINATING

NUCLEAR OVERSIGHT

NUCLEAR OVERSIGHT SUBCOMMITTEE (CHAIR)

Pastor Caldwell has been a director of NRG since March 2009. He was a director of Reliant Energy, Inc. from August 2003 to March 2009. Since 1982, he has served as Senior Pastor at the 16,000-member Windsor Village United Methodist Church in Houston, Texas. Pastor Caldwell was also a director of United Continental Holdings, Inc. (formerly Continental Airlines, Inc.) from 1999 to September 2011. Pastor Caldwell is also on the Board of Trustees of Baylor College of Medicine.

As a result of his six years of service as a director of Reliant Energy, Inc., Pastor Caldwell brings valuable experience and insight regarding the energy industry and is able to share with the Board suggestions about how similarly-situated companies effectively assess and undertake business considerations and opportunities. Pastor Caldwell also provides the Board with valuable insight regarding the Company's retail business, as well as additional viewpoints from the perspective of a large publicly traded company stemming from his prior position on the board of United Continental Holdings. The Board also values his customer experience as part of his oversight roles at Reliant and Continental, as well as his leadership and community involvement in the Houston area, where the Company has a significant wholesale and retail presence. Finally, Pastor Caldwell, as a result of his principal occupation, offers a different point of view on a Board that is otherwise constituted by directors with business and finance experience.

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MATTHEW CARTER, JR.

GRAPHIC


AGE: 58
BOARD COMMITTEES:

AUDIT

FINANCE AND RISK MANAGEMENT

NUCLEAR OVERSIGHT

Mr. Carter has been a director of NRG since March 2018. Mr. Carter served as President and Chief Executive Officer and a director of Inteliquent, Inc., a publicly traded provider of voice telecommunications services, from June 2015 until February 2017 when Inteliquent, Inc. was acquired. He served as President of the Sprint Enterprise Solutions business unit of Sprint Corporation, a publicly traded telecommunications company, from September 2013 until January 2015 and, previous to that position, served as President, Sprint Global Wholesale & Emerging Solutions at Sprint Nextel Corporation. Mr. Carter also serves as a director of USG Corporation. He previously served as a director of Apollo Education Group, Inc. from 2012 to 2017 and Inteliquent, Inc. from June 2015 to February 2017 and has significant marketing, technology and international experience, including previous management oversight for all of Inteliquent, Inc.'s operations.

Mr. Carter's experience as a chief executive officer brings valuable management expertise and significant operational, marketing and technology experience to the Board.

 

LAWRENCE S. COBEN

GRAPHIC


AGE: 59
BOARD COMMITTEES:

CHAIRMAN OF THE BOARD

NUCLEAR OVERSIGHT (CHAIR)

Dr. Coben has served as Chairman of the Board since February 2017, and has been a director of NRG since December 2003. He was Chairman and Chief Executive Officer of Tremisis Energy Corporation LLC until December 2017. Dr. Coben was Chairman and Chief Executive Officer of Tremisis Energy Acquisition Corporation II, a publicly held company, from July 2007 through March 2009 and of Tremisis Energy Acquisition Corporation from February 2004 to May 2006. From January 2001 to January 2004, he was a Senior Principal of Sunrise Capital Partners L.P., a private equity firm. From 1997 to January 2001, Dr. Coben was an independent consultant. From 1994 to 1996, Dr. Coben was Chief Executive Officer of Bolivian Power Company. Dr. Coben serves on the board of Freshpet, Inc. and served on the advisory board of Morgan Stanley Infrastructure II, L.P. from September 2014 through December 2016. Dr. Coben is also Executive Director of the Sustainable Preservation Initiative and a Consulting Scholar at the University of Pennsylvania Museum of Archaeology and Anthropology.

Dr. Coben's experience as a chief executive officer and investor in the energy industry brings a valuable cross section of skills to the Board. Along with his focus on sustainability, Dr. Coben brings to the Board significant managerial, strategic, and financial expertise, particularly as it relates to Company financings, transactions and development initiatives.

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HEATHER COX

GRAPHIC


AGE: 47
BOARD COMMITTEES:

COMPENSATION

GOVERNANCE AND NOMINATING

NUCLEAR OVERSIGHT

Ms. Cox has been a director of NRG since March 2018. Ms. Cox was Executive Vice President, Chief Technology & Digital Officer of United Services Automobile Association, Inc. from October 2016 to March 2018. Ms. Cox served as Chief Executive Officer, Financial Technology Division and Head of Citi FinTech of Citigroup, Inc. from November 2015 to September 2016, and as Chief Client Experience, Digital and Marketing Officer, Global Consumer Bank of Citigroup, Inc. from April 2014 to November 2015. Prior to that, Ms. Cox served at Capital One Financial Corporation for six years, most recently as Executive Vice President, US Card Operations, Capital One from August 2011 to August 2014. Ms. Cox also served in various managerial and executive roles at E*Trade Bank for ten years.

Ms. Cox is able to provide the Board with significant insight based on her digital innovation, technology and customer service experience.

 

TERRY G. DALLAS

GRAPHIC


AGE: 67
BOARD COMMITTEES:

FINANCE AND RISK MANAGEMENT

NUCLEAR OVERSIGHT

NUCLEAR OVERSIGHT SUBCOMMITTEE

Mr. Dallas has been a director of NRG since December 2012. Previously, he served as a director of GenOn Energy, Inc. from December 2010 to December 2012. Mr. Dallas served as a director of Mirant Corporation from 2006 until December 2010. Mr. Dallas was also the former Executive Vice President and Chief Financial Officer of Unocal Corporation, an oil and gas exploration and production company prior to its merger with Chevron Corporation, from 2000 to 2005. Prior to that, Mr. Dallas held various executive finance positions in his 21-year career with Atlantic Richfield Corporation, an oil and gas company with major operations in the United States, Latin America, Asia, Europe and the Middle East.

Mr. Dallas is an "audit committee financial expert" as defined by the SEC rules. Mr. Dallas' experience as chief financial officer of a petroleum company provides the Board a perspective of someone with direct responsibility for financial and accounting issues as well as an understanding of issues involving fossil fuels and a cyclical commodity-based industry with long-lived capital intensive investments. In addition, Mr. Dallas' service on the boards of GenOn Energy, Inc. and Mirant Corporation enable him to contribute additional perspectives from the energy industry.

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MAURICIO GUTIERREZ

GRAPHIC


AGE: 47
BOARD COMMITTEES:

NUCLEAR OVERSIGHT

Mr. Gutierrez has served as President and CEO of NRG since December 2015 and as a director of NRG since January 2016. Prior to December 2015, Mr. Gutierrez was the Executive Vice President and Chief Operating Officer of NRG from July 2010 to December 2015. Mr. Gutierrez also served as the Interim President and Chief Executive Officer of NRG Yield, Inc. from December 2015 to May 2016 and Executive Vice President and Chief Operating Officer of NRG Yield, Inc. from December 2012 to December 2015. Mr. Gutierrez has also served on the board of NRG Yield, Inc. since its formation in December 2012. Mr. Gutierrez has been with NRG since August 2004 and served in multiple executive positions within NRG including Executive Vice President—Commercial Operations from January 2009 to July 2010 and Senior Vice President—Commercial Operations from March 2008 to January 2009. Prior to joining NRG in August 2004, Mr. Gutierrez held various commercial positions within Dynegy, Inc.

Mr. Gutierrez's knowledge of the Company's assets, operations and businesses bring important experience and skills to our Board. As CEO of the Company, Mr. Gutierrez also provides our Board with management's perspective regarding the Company's day-to-day operations and overall strategic plan. His extensive energy industry and leadership experience enables Mr. Gutierrez to provide essential guidance to our Board.

 

WILLIAM E. HANTKE

GRAPHIC


AGE: 70
BOARD COMMITTEES:

AUDIT (CHAIR)

NUCLEAR OVERSIGHT

Mr. Hantke has been a director of NRG since March 2006. Mr. Hantke served as Executive Vice President and Chief Financial Officer of Premcor, Inc., a refining company, from February 2002 until December 2005. Mr. Hantke was Corporate Vice President of Development of Tosco Corporation, a refining and marketing company, from September 1999 until September 2001, and he also served as Corporate Controller from December 1993 until September 1999. Prior to that position, he was employed by Coopers & Lybrand as Senior Manager, Mergers and Acquisitions from 1989 until 1990. He also held various positions from 1975 until 1988 with AMAX, Inc., including Corporate Vice President, Operations Analysis and Senior Vice President, Finance and Administration, Metals and Mining. He was employed by Arthur Young from 1970 to 1975 as Staff/Senior Accountant. Mr. Hantke was Non-Executive Chairman of Process Energy Solutions, a private alternative energy company until March 31, 2008 and served as director and Vice-Chairman of NTR Acquisition Co., an oil refining start-up, until January 2009. Mr. Hantke has served on the board of PBF Energy Inc. since February 2016.

Mr. Hantke joined the Board following the Company's acquisition of Texas Genco, LLC, in which he served on the board of directors, and as a result brings historical and present context to the Company's ongoing business endeavors in the Texas region. Furthermore, Mr. Hantke's extensive experience in executive management positions in the independent refining industry, considered by many to be a similar industry to the Independent Power Production (IPP) sector, and as a director of public and nonpublic boards enables him to provide the Board significant managerial, strategic, and financial oversight. As a result, his fellow directors have elected him as Chair of the Company's Audit Committee. Mr. Hantke is an "audit committee financial expert" as defined by the SEC rules.

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PAUL W. HOBBY

GRAPHIC


AGE: 57
BOARD COMMITTEES:

FINANCE AND RISK MANAGEMENT (CHAIR)

NUCLEAR OVERSIGHT

NUCLEAR OVERSIGHT SUBCOMMITTEE

Mr. Hobby has been a director of NRG since March 2006. Mr. Hobby is the Managing Partner of Genesis Park, L.P., a Houston-based private equity business specializing in technology and communications investments which he founded in 1999. Mr. Hobby routinely provides management and governance services to Genesis Park portfolio companies, and is currently serving as Chairman of Texas Monthly. He previously served as the Chief Executive Officer of Alpheus Communications,  Inc., a Texas wholesale telecommunications provider from 2004 to 2011, and as Former Chairman of CapRock Services Corp., the largest provider of satellite services to the global energy business from 2002 to 2006. From November 1992 until January 2001, he served as Chairman and Chief Executive Officer of Hobby Media Services and was Chairman of Columbine JDS Systems, Inc. from 1995 until 1997. Mr. Hobby is former Chairman of the Houston Branch of the Federal Reserve Bank of Dallas and the Greater Houston Partnership and is former Chairman of the Texas Ethics Commission. He was an Assistant U.S. Attorney for the Southern District of Texas from 1989 to 1992, Chief of Staff to the Lieutenant Governor of Texas, Bob Bullock and an Associate at Fulbright & Jaworski from 1986 to 1989.

Mr. Hobby joined the Board following the Company's acquisition of Texas Genco, LLC in which he served on its board of directors, and as a result brings historical and present context to the Company's ongoing business endeavors in the Texas region. The Board also values his entrepreneurial, financial and M&A expertise in evaluating the Company's growth initiatives, as well as his involvement in the Houston and greater Texas community.

 

ANNE C. SCHAUMBURG

GRAPHIC


AGE: 68
BOARD COMMITTEES:

AUDIT

COMPENSATION

NUCLEAR OVERSIGHT

Ms. Schaumburg has been a director of NRG since April 2005. From 1984 until her retirement in January 2002, she was Managing Director of Credit Suisse First Boston and a Senior Banker in the Global Energy Group. From 1979 to 1984, she was in the Utilities Group at Dean Witter Financial Services Group, where she last served as Managing Director. From 1971 to 1978, she was at The First Boston Corporation in the Public Utilities Group. Ms. Schaumburg is also a director of Brookfield Infrastructure Partners L.P.

Ms. Schaumburg brings extensive financial and M&A experience and expertise to the Board which is valuable to the review of the Company's financings, transactions, and overall financial oversight. In addition, Ms. Schaumburg is able to provide the Board with essential insight into the financial services industry and financial markets.

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THOMAS H. WEIDEMEYER

GRAPHIC


AGE: 70
BOARD COMMITTEES:

GOVERNANCE AND NOMINATING (CHAIR)

NUCLEAR OVERSIGHT

Mr. Weidemeyer has been a director of NRG since December 2003. Until his retirement in December 2003, Mr. Weidemeyer served as Director, Senior Vice President and Chief Operating Officer of United Parcel Service, Inc., the world's largest transportation company and President of UPS Airlines. Mr. Weidemeyer became Manager of the Americas International Operation in 1989, and in that capacity directed the development of the UPS delivery network throughout Central and South America. In 1990, Mr. Weidemeyer became Vice President and Airline Manager of UPS Airlines and, in 1994, was elected its President and Chief Operating Officer. Mr. Weidemeyer became Senior Vice President and a member of the Management Committee of United Parcel Service, Inc. that same year, and he became Chief Operating Officer of United Parcel Service, Inc. in January 2001. Mr. Weidemeyer also serves as a director of The Goodyear Tire & Rubber Co., Waste Management, Inc. and Amsted Industries Incorporated.

Mr. Weidemeyer's executive management experience with a logistics company involving extensive supply chain management brings not only financial and accounting experience, but important skills highly valued both by the Company itself and by its Board of Directors. In addition, Mr. Weidemeyer's service on other boards gives him a direct insight into best practices that is valuable to our Board.

 

C. JOHN WILDER

GRAPHIC


AGE: 59
BOARD COMMITTEES:

FINANCE AND RISK MANAGEMENT

NUCLEAR OVERSIGHT

Mr. Wilder has been a director of NRG since February 2017. Mr. Wilder has served as the Executive Chairman and a member of Investment Committees of three investment vehicles: (i) Bluescape Resources Company; (ii) Parallel Resource Partners; and (iii) Bluescape Energy Partners since 2007. Mr. Wilder served as Executive Chairman and director of Exco Resources, Inc. from September 2015 to November 2017. Mr. Wilder is on the advisory boards of the McCombs School of Business at the University of Texas at Austin and the A.B. Freeman School of Business at Tulane University. Mr. Wilder is a Trustee of Texas Health Resources and is a past member of the National Petroleum Council, a Secretary of Energy Appointment.

Mr. Wilder's extensive energy industry experience along with his prior leadership positions make him a valuable member of our Board. Mr. Wilder provides his insight and expertise to the financial, transactional, regulatory and operational matters of the Company.

The Board recommends a vote "FOR" the election to the Board of each of the foregoing nominees. Proxies received by the Board will be voted "FOR" each of the nominees unless a contrary vote is specified.

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GRAPHIC
Director Compensation

The total annual compensation received by our directors for their service as Board members and chairs of the committees of the Board, if applicable, is described in the chart below.

COMPENSATION ELEMENT

  COMPENSATION AMOUNT

Annual Retainer

  $100,000

Annual Equity Retainer

  $125,000

Annual Chairperson Retainer

  $160,000

Audit Committee Chair Retainer

  $35,000

Other Committee Chair Retainer

  $20,000

Employee Directors

  No fees


A non-employee director who is newly appointed to the Board, other than in connection with an annual meeting of stockholders, will receive the Annual Equity Retainer and a pro rata portion of the Annual Retainer upon appointment.

Directors receive approximately 45% of their total annual compensation in the form of cash and the remaining 55% in the form of vested Deferred Stock Units (DSUs). Directors may however elect to receive the cash portion of their annual compensation as DSUs. Each DSU is equivalent in value to one share of NRG's common stock and represents the right to receive one such share of common stock payable at the time elected by the director or immediately if no such election is made, or in the event the director does not make an election with respect to payment in a particular year, in accordance with his or her prior deferral election. In the event that a director's service with the Company is terminated for any reason, other than cause, DSU awards are payable in accordance with such director's deferral election. If a director's service with the Company is terminated for cause, the award is forfeited. In connection with the grants of the DSUs, each non-employee director also receives dividend equivalent rights (DERs) which become exercisable proportionately with the DSUs to which they relate. Similar to its competitive assessment on behalf of the named executive officer compensation, Pay Governance performed a review of director compensation. Results of the review were shared with the Compensation Committee who made a recommendation to the full Board for final approval. The Compensation Committee and Board did not make any changes to director compensation for 2017.

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Director Compensation
Fiscal Year Ended December 31, 2017

NAME

  FEES EARNED OR PAID IN CASH   STOCK AWARDS1   TOTAL  

E. Spencer Abraham

  $ 100,000   $ 128,450   $ 228,450  

Kirbyjon H. Caldwell

  $ 100,000   $ 128,894   $ 228,894  

Lawrence S. Coben2

  $ 228,000   $ 209,262   $ 437,262  

Terry G. Dallas

  $ 100,000   $ 129,542   $ 229,542  

William E. Hantke

  $ 117,500   $ 143,598   $ 261,098  

Paul W. Hobby

  $ 110,000   $ 135,002   $ 245,002  

Anne C. Schaumburg

  $ 100,000   $ 128,133   $ 228,133  

Evan J. Silverstein3

  $ 110,000   $ 138,683   $ 248,683  

Barry T. Smitherman4

  $ 130,000   $ 250,018   $ 380,018  

Thomas H. Weidemeyer

  $ 110,000   $ 135,002   $ 245,002  

C. John Wilder5

  $ 33,000   $ 380,897   $ 413,897  

Walter R. Young6

  $ 110,000   $ 135,002   $ 245,002  

Howard E. Cosgrove7

  $ 0   $ 5,228   $ 5,228  

Edward R. Muller8

  $ 0   $ 878   $ 878  

1

  Reflects the grant date fair value of DSUs awarded in 2017 determined in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 Compensation-Stock Compensation, the full amount of which is recorded as a compensation expense in the income statement for fiscal year 2017. The grant date fair value was based on the closing price of the Company's common stock, as reported on the NYSE, on the date of grant, which was $16.76 per share of common stock on June 1, 2017. Also includes the grant date fair value of DERs payable in connection with DSUs paid to directors during the fiscal year ended December 31, 2017.

2

  On March 14, 2017, Mr. Coben received a $48,000 cash payment for his services as Chairman between February 13, 2017 and May 31, 2017.

3

  Effective March 6, 2018, Mr. Silverstein retired as a director.

4

  On February 13, 2017, Mr. Smitherman was elected to the Board. Mr. Smitherman received (i) $30,000 for his service between February 2017 through May 2017 and (ii) $100,000 prospectively for his services from June 2017 through May 2018. Mr. Smitherman's grant date fair value is based on the closing prices of the Company's common stock on the dates of grant, which are $16.75 and $16.76 for grant dates February 13, 2017 and June 1, 2017, respectively. Effective March 6, 2018, Mr. Smitherman retired as a director.

5

  On February 13, 2017, Mr. Wilder was elected to the Board. Mr. Wilder received $33,000 for his service between February 2017 through May 2017. Mr. Wilder elected to receive the cash portion of his Annual Retainer for the period of service from June 2017 through May 2018 in the form of DSUs that are payable in common stock upon his termination of service as a Board member. Mr. Wilder's grant date fair value is based on the closing prices of the Company's common stock on the dates of grant, which are $16.75 and $16.76 for grant dates February 13, 2017 and June 1, 2017, respectively.

6

  Effective March 6, 2018, Mr. Young retired as a director.

7

  On February 13, 2017, Mr. Cosgrove resigned as chairman of the Board and as a director.

8

  On February 13, 2017, Mr. Muller resigned as vice chairman of the Board and as a director.

|       ​ ​       Director Compensation

 

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The following table sets forth the aggregate number of stock awards (DSUs, restricted stock units (RSUs) and DERs) and option awards (non-qualified stock options (NQSOs)) held by each of the non-employee directors as of December 31, 2017.

NAME

 
STOCK
AWARDS
 
OPTION
AWARDS
 

E. Spencer Abraham

    32,476      

Kirbyjon H. Caldwell

    52,749      

Lawrence S. Coben

    87,460      

Terry G. Dallas

    41,606      

William E. Hantke

    10,420      

Paul W. Hobby

         

Anne C. Schaumburg

    57,376      

Evan J. Silverstein1

    34,812      

Barry T. Smitherman1

         

Thomas H. Weidemeyer

    34,876      

C. John Wilder

    14,655      

Walter R. Young1

         

Howard E. Cosgrove

    60,453      

Edward R. Muller

        378,344  

1

  Effective March 6, 2018, Messrs. Silverstein, Smitherman and Young retired as directors.


All DSUs held by the directors are payable upon termination of service as a Board member, other than the DSUs held by the following directors:

    (i)
    Mr. Dallas, who holds 39,661 DSUs and 1,945 associated DERs, of which 14,878 DSUs and 101 DERs are payable upon his termination of service as a Board member, 6,196 DSUs and 461 DERs are payable on January 15, 2021, 6,195 DSUs and 461 DERs are payable on January 15, 2022, 6,196 DSUs and 461 DERs are payable on January 15, 2023 and 6,196 DSUs and 461 DERs are payable on January 15, 2024;

    (ii)
    Mr. Hantke, who holds 10,211 DSUs and 209 associated DERs, of which 4,543 DSUs and 135 DERs are payable on June 1, 2018, and 3,543 DSUs and 69 DERs are payable on June 1, 2019, and 2,125 DSUs and 5 DERs are payable on June 1, 2020;

    (iii)
    Messrs. Hobby, Smitherman and Young elected to convert their DSUs to shares of NRG common stock immediately on the date of grant; and


    (iv)
    Mr. Cosgrove who holds 57,943 DSUs and 2,510 associated DERs, of which 26,337 DSUs and 1,058 DERs are payable in the year following his resignation from the Board, 23,485 DSUs and 1,293 DERs are payable in the second year following his resignation from the Board, and 5,080 DSUs and 125 DERs are payable in the third year following his resignation from the Board, and 3,041 DSUs and 34 DERs are payable in the fourth year following his resignation.

Director Stock Ownership Guidelines

Directors are required to retain all stock received as compensation for the duration of their service on the Board, although they may sell shares as necessary to cover tax liability associated with the conversion of DSUs to common stock. Exceptions to these requirements may be made by the Board under special circumstances. No exceptions to such requirements were made for 2017.

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GRAPHIC
Proposal No. 2
Advisory Vote to Approve NRG's Executive
Compensation

Under Section 14A of the Exchange Act, the stockholders of the Company are entitled to vote at this year's Annual Meeting to approve the compensation of the Company's named executive officers, as disclosed in this Proxy Statement pursuant to Item 402 of Regulation S-K (Regulation S-K) of the rules and regulations under the Securities Act of 1933, as amended (Securities Act). Currently, this vote is conducted every year. The next vote will occur at the 2019 Annual Meeting of Stockholders.

As described more fully in the CD&A beginning on page 37, the Company's executive compensation program is designed to attract, retain and reward top executive talent. The intent of the Company's compensation program is to reward the achievement of the Company's annual goals and objectives while supporting the Company's long-term business strategy.

This proposal, commonly known as a "say on pay" proposal, gives stockholders the opportunity to express their views on the Company's named executive officers' compensation. This vote is not intended to address any specific item of

compensation, but rather the overall compensation of the named executive officers as described in this Proxy Statement. Accordingly, the Board recommends that stockholders vote in favor of the following resolution:

"RESOLVED, that the compensation paid to the Company's named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED."

The say on pay vote is advisory and therefore not binding on the Company, the Board or the Compensation Committee. However, the Board and the Compensation Committee value the opinions of the stockholders and to the extent there is a significant number of votes against the named executive officer compensation as disclosed in this Proxy Statement, stockholders' concerns will be considered and the Board and the Compensation Committee will evaluate actions necessary to address those concerns.

The Board recommends a vote "FOR" the approval of the Company's executive compensation as disclosed in this Proxy Statement. Proxies received by the Board will be voted "FOR" the approval of the Company's named executive officer compensation unless a contrary vote is specified.

|       ​ ​       Proposal No. 2 Advisory Vote to Approve NRG's Executive Compensation

 

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Table of Contents

GRAPHIC
Proposal No. 3
Ratification of Independent Registered Public
Accounting Firm for the 2018 Fiscal Year

The Audit Committee is directly responsible for the appointment, compensation, retention and oversight of the independent registered public accounting firm retained to audit the Company's consolidated financial statements. To execute this responsibility, the Audit Committee engages in a thorough annual evaluation of (i) the independent registered public accounting firm's qualifications, performance and independence, (ii) whether the independent registered public accounting firm should be rotated, and (iii) the advisability and potential impact of selecting a different independent registered public accounting firm.

The Audit Committee appointed the firm of KPMG LLP, an independent registered public accounting firm, to audit the consolidated financial statements of the Company and its subsidiaries for the 2018 fiscal year at a meeting held in February. KPMG LLP has been retained as the Company's independent registered public accounting firm continuously

since May 2004. In accordance with SEC rules and KPMG LLP policies, audit partners are subject to rotation requirements to limit the number of consecutive years an individual partner may provide audit services to the Company. For lead and concurring review audit partners, the maximum number of consecutive years of service in that capacity is five years. The Audit Committee is involved in the selection of KPMG LLP's lead audit partner.

The Audit Committee and the Board believe that the continued retention of KPMG LLP to serve as the Company's independent registered public accounting firm for the 2018 fiscal year is in the best interests of the Company and its stockholders. If the stockholders do not ratify the appointment of KPMG LLP, the Audit Committee will reconsider its selection. Representatives of KPMG LLP are expected to attend the Annual Meeting where they will be available to respond to questions and, if they desire, to make a statement.

The Board recommends a vote "FOR" the ratification of the appointment of KPMG LLP as the Company's independent registered public accounting firm for the 2018 fiscal year. Proxies received by the Board will be voted "FOR" ratification unless a contrary vote is specified.

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Proposal No. 3 Ratification of Independent Registered Public Accounting Firm for the 2018 Fiscal Year         ​ ​          |

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GRAPHIC
Proposal No. 4
Stockholder Proposal Regarding Disclosure of
Political Expenditures

The Company is not responsible for the content of this stockholder proposal or supporting statement.

The following proposal and supporting statement were submitted by the Comptroller of the City of New York, Scott M. Stringer, on behalf of the New York City Teachers' Retirement System and the New York City Police Pension Fund, Municipal Building, One Centre Street, Eighth Floor North, New York, New York 10007, which are the beneficial owners of 234,464 shares and 133,101 shares, respectively, of the Company's common stock, and each of which intends to hold such shares of the Company's common stock through the date of the Annual Meeting:

Proposal

Resolved: The shareholders of NRG Energy, Inc. ("NRG Energy") hereby request that the Company prepare and periodically update a report, to be presented to the pertinent board of directors committee and posted on the Company's website, that discloses monetary and non-monetary expenditures that NRG Energy makes on political activities, including:

expenditures that NRG Energy cannot deduct as an "ordinary and necessary" business expense under section 162(e) of the Internal Revenue Code (the "Code") because they are incurred in connection with (a) influencing legislation; (b) participating or intervening in any political campaign on behalf of (or in opposition to) any candidate for public office; or (c) attempting to influence the general public, or segments thereof, with respect to elections, legislative matters, or referenda;

contributions to, or expenditures in support of or opposition to, political candidates, political parties, or political committees;

dues, contributions or other payments made to tax-exempt "social welfare" organizations and "political committees" operating under sections 501(c)(4) and 527 of the Code, respectively, or to tax-exempt entities that write model legislation and operate under section 501(c)(3) of the Code; and

the portion of dues or other payments made to a tax-exempt entity such as a trade association that is used for an expenditure or contribution and that would not be deductible under section 162(e) of the Code if made directly by the Company.

The report shall identify all recipients and the amount paid to each recipient from Company funds.

Stockholder Supporting Statement

As long-term shareholders, we support transparency and accountability in corporate spending on political activities.

NRG Energy's current political contribution policy requires "complete and accurate disclosures" only "where required" (http://investors.nrg.com/phoenix.zhtml?c=121544&p=irol-govHighlights, viewed November 9, 2017). The Company therefore does not currently disclose potentially significant contributions that may be channeled anonymously into the political process through trade associations and non-profit groups that need not disclose contributions. Such payments may far surpass the contributions that must be publicly reported.

Disclosure is consistent with public policy and in the best interest of NRG Energy shareholders. The Supreme Court's 2010 Citizens United decision—which liberalized rules for corporate participation in election-related activities—recognized the importance of disclosure to shareholders, saying: "[D]isclosure permits citizens and shareholders to react to the speech of corporate entities in a proper way."

In our view, in the absence of a system of transparency and accountability, company assets could be used for policy objectives that may be inimical to the long-term interests of, and may pose risks to, shareholders.

NRG Energy currently lags many utility companies that publicly disclose political spending, including AES Corporation, AGL Resources, American Electric Power, Dominion Resources, Edison International, Entergy, Exelon, and PPL Corporation.

Given the vagaries of the political process and the uncertainty that political spending will produce any return for shareholders, we believe that companies should ensure board oversight and be fully transparent by disclosing corporate assets spent in this area.

Board of Directors' Statement in Opposition

The Board recommends a vote "AGAINST" this stockholder proposal for the following reasons:

This is the third consecutive year we have received this proposal from the Comptroller of the City of New York. At our 2017 Annual Meeting of Stockholders, this proposal received the support of only 30.3% of the shares present in person or represented by proxy, down from 41.6% of the shares present in person or represented by proxy at our 2016 Annual Meeting of Stockholders. The Board believes that this result indicates that our stockholders agreed that

|       ​ ​       Proposal No. 4 Stockholder Proposal Regarding Disclosure of Political Expenditures

 

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the report requested by this proposal is unnecessary due to our system of reporting of political expenditures, and would be an unproductive use of time.

In addition, during our 2018 outreach program, we solicited feedback from shareholders representing approximately 37% of our outstanding shares on this stockholder proposal. Of those stockholders that we spoke with, substantially all believe the company provided adequate disclosures and oversight related to political contributions and did not believe additional disclosure was necessary.

The Board of Directors believes the report requested by this proposal is unnecessary because a system of reporting and accountability for political expenditures already exists and the Company publicly discloses its participation in the political process in support of its business interests, as required by law. The Company is committed to complying and does comply with all applicable laws concerning political expenditures, disclosure, and reporting.

Current law limits the amounts of political expenditures that are permissible (other than to trade associations or organizations formed under Section 501(c)(4) of the Code), restricts the organizations or entities that can receive corporate funding, and establishes a clear accountability system enforced by regulatory agencies in the U.S. In most jurisdictions, campaign finance information for corporate contributions (other than to trade associations or organizations formed under Section 501(c)(4) of the Code) is now easily accessible to the public through the Internet. The Company also contributes to certain trade associations or organizations formed under Section 501(c)(4) of the Code as further discussed below.

The Company has disclosed in its Political Contribution Policy (Policy) the mechanisms and means which govern participation in public policy processes (including political expenditures criteria, management and Board oversight mechanisms). Stockholders and interested parties can access the Policy under the heading "Governance" under the "Investors" Section of our website at www.nrg.com. The Company also requires all of its employees to annually review its policies and procedures pertaining to political contributions in the Company's Code of Conduct. The Code of Conduct is also available to the public under the heading "Governance" on our website at www.nrg.com.

Political Action Committee Contributions—As set forth in more detail in the Company's Political Contribution Policy, contributions made by the NRG Energy, Inc. Political Action Committee (NRG PAC) are funded entirely by the voluntary contributions of our employees and no corporate funds are used. Contributions of funds from the NRG PAC are made in accordance with the NRG PAC budget as approved by the NRG PAC board. The NRG PAC maintains its own board of directors comprised of employee representatives from across the Company. The NRG PAC board votes on an annual budget for political expenditures and such expenditures are monitored by the NRG PAC treasurer. The NRG PAC files monthly reports of receipts and

disbursements with the Federal Election Commission (FEC), as well as pre-election and post-election reports. These publicly available reports identify the names of candidates supported and amounts contributed by the NRG PAC. In addition, all political contributions to federal candidates over $200 are publicly disclosed by the FEC.

Corporate Contributions—Contributions of funds from any of the Company's state political action committee and all other Company contributions may be made only if permitted under applicable law and with prior written consent of the Company's Chief Compliance Officer and the Vice President—Governmental Affairs. The Company's corporate contributions made directly to political candidates or campaigns (excluding contributions to trade or business associations as further discussed below) have been, and are expected to continue to be, de minimus. With respect to contributions to a political candidate or campaign (excluding contributions to trade or business associations), the average individual contribution and the aggregate annual contributions made by the Company in 2017 were $1,559 and $95,100, respectively.

Business and Trade Associations—The Company is also a member of various business and trade associations that engage generally in education and advocacy efforts on a number of industry issues. The Company's Policy provides additional information regarding criteria for, and oversight of, the Company's participation in these associations. The political activity of such associations is not necessarily representative of a position of the Company, and the benefits that the Company receives from these trade or business associations are primarily expertise and the ability to gain insight on industry- setting standards. Payments made to business or trade associations are subject to the Company's Political Contribution Policy and are reviewed annually by the Governance and Nominating Committee.

Board Committee Oversight—The Company's political activities are reviewed annually by the Governance and Nominating Committee. The Company believes this oversight process ensures accountability and transparency for the Company's corporate political activities.

The Board believes it is in the best interests of the Company's stockholders for the Company to be an effective participant in the political process. Laws and policies enacted at the federal, state and local levels can have a significant impact on the Company and its customers, employees and stockholders. The Company actively encourages public policy that furthers its ability to provide reliable and affordable power to its customers in the markets served by the Company, while adhering to the Company's relentless commitment to safety. The Company's active participation in public policy is appropriate to ensure that public officials are informed about key issues that affect the interests of the Company's customers, employees, stockholders and the communities the Company serves.

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Proposal No. 4 Stockholder Proposal Regarding Disclosure of Political Expenditures         ​ ​          |

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The Board further believes that the report requested by the proposal would be an unproductive use of time.The Board believes existing disclosure of the Company's current policies and practices with regard to political expenditures, together with applicable federal, state and local reporting requirements, provide appropriate transparency of the

Company's political participation. Undertaking the additional obligations required by the stockholder proposal would result in the use of valuable Company resources, unproductive consumption of time, and undue expense to the Company with little, if any, corresponding benefit for stockholders.

For the foregoing reasons, the Board unanimously recommends a vote "AGAINST" this proposal. Proxies received by the Board will be voted "AGAINST" this proposal unless a contrary vote is specified.

|       ​ ​       Proposal No. 4 Stockholder Proposal Regarding Disclosure of Political Expenditures

 

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GRAPHIC
Executive Officers

Our executive officers are elected by the Board annually to hold office until their successors are elected and qualified. The biographical information for each of the executive officers is provided below.

Mauricio Gutierrez
Age 47
President and Chief Executive Officer

For biographical information for Mauricio Gutierrez, see "Nominees for Director."

Kirkland Andrews
Age 50
Executive Vice President and Chief Financial Officer

Mr. Andrews has served as Executive Vice President and CFO of NRG since September 2011. Mr. Andrews is a director of NRG Yield, Inc. and also served as Executive Vice President and Chief Financial Officer of NRG Yield, Inc. from December 2012 through November 2016. Prior to joining NRG, he served as Managing Director and Co-Head Investment Banking, Power and Utilities—Americas at Deutsche Bank Securities from June 2009 to September 2011. Prior to this, he served in several capacities at Citigroup Global Markets Inc., including Managing Director, Group Head, North American Power from November 2007 to June 2009, and Head of Power M&A, Mergers and Acquisitions from July 2005 to November 2007. In his banking career, Mr. Andrews led multiple large and innovative strategic, debt, equity and commodities transactions.

David Callen
Age 46
Senior Vice President and Chief Accounting Officer

Mr. Callen has served as Senior Vice President and Chief Accounting Officer since February 2016 and Vice President and Chief Accounting Officer from March 2015 to February 2016. In this capacity, Mr. Callen is responsible for directing NRG's financial accounting and reporting activities. Mr. Callen also has served as Vice President and Chief Accounting Officer of NRG Yield, Inc. since March 2015. Prior to this, Mr. Callen served as the Company's Vice President, Financial Planning & Analysis from November 2010 to March 2015. He previously served as Director, Finance from October 2007 through October 2010, Director, Financial Reporting from February 2006 through October 2007, and Manager, Accounting Research from September 2004 through February 2006. Prior to NRG, Mr. Callen was an auditor for KPMG LLP in both New York City and Tel Aviv Israel from October 1996 through April 2001.

John Chillemi
Age 50
Executive Vice President, National Business Development

Mr. Chillemi has served as Executive Vice President, National Business Development of NRG since December 2015. In this role, Mr. Chillemi is responsible for all wholesale generation development activities for NRG across the nation. Prior to December 2015, Mr. Chillemi was Senior Vice President and Regional President, West since the acquisition of GenOn in December 2012. Mr. Chillemi served as the Regional President in California and the West for GenOn from December 2010 to December 2012, and as President and Vice President of the West at Mirant Corporation from 2007 to December 2010. Mr. Chillemi has also served as a director of NRG Yield, Inc. since May 2016. Mr. Chillemi has 30 years of power industry experience, beginning with Georgia Power in 1986.

Effective March 16, 2018, Mr. Chillemi will be stepping down from his position as Executive Vice President, National Business Development. Mr. Chillemi will remain with the Company in an advisory role for several months to support the transition of certain development projects for the Company.

Brian Curci
Age 40
Senior Vice President, General Counsel and Corporate Secretary (effective March 16, 2018)

Effective March 16, 2018, Mr. Curci will serve as Senior Vice President, General Counsel and Corporate Secretary of NRG. Mr. Curci, currently Deputy General Counsel, has served in various roles in over ten years with NRG, including as Corporate Secretary since October 2011. Prior to NRG, Mr. Curci was a corporate associate with the law firm Saul Ewing LLP in Philadelphia.

David R. Hill
Age 54
Executive Vice President and General Counsel

Mr. Hill has served as Executive Vice President and General Counsel since September 2012. Mr. Hill also has served as Executive Vice President and General Counsel of NRG Yield, Inc. since December 2012. Prior to joining NRG, Mr. Hill was a partner and co-head of Sidley Austin LLP's global energy practice group from February 2009 to August 2012. Prior to this, Mr. Hill served as General Counsel of the U.S. Department of Energy (DOE) from August 2005 to January 2009 and, for the three years prior to that, as Deputy General Counsel for Energy Policy of the DOE. Before his federal government service, Mr. Hill was a partner in major law firms in Washington, D.C. and Kansas City, Missouri, and handled a variety of regulatory, litigation and corporate matters.

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Effective March 16, 2018, Mr. Hill will be stepping down from his position as Executive Vice President and General Counsel. Mr. Hill will remain with the Company in an advisory role for several months to support the transition of certain regulatory and government affairs matters.

Elizabeth Killinger
Age 47
Executive Vice President and President, Retail

Ms. Killinger has served as Executive Vice President and President, Retail of NRG since February 2016. Ms. Killinger was Senior Vice President and President, NRG Retail from June 2015 to February 2016 and Senior Vice President and President, NRG Texas Retail from January 2013 to June 2015. Ms. Killinger has also served as President of Reliant, a subsidiary of NRG, since October 2012. Prior to that, Ms. Killinger was Senior Vice President of Retail Operations and Reliant Residential from January 2011 to October 2012. Ms. Killinger has been with the Company and its predecessors since 2002 and has held

various operational and business leadership positions within the retail organization. Prior to joining the Company, Ms. Killinger spent a decade providing strategy, management and systems consulting to energy, oilfield services and retail distribution companies across the U.S. and in Europe.

Christopher Moser
Age 47
Executive Vice President, Operations

Mr. Moser has served as Executive Vice President, Operations of NRG since January 2018. Mr. Moser previously served as Senior Vice President, Operations of NRG, with responsibility for Plant Operations, Commercial Operations, Business Operations and Engineering and Construction, beginning in March 2016. From June 2010 to March 2016, Mr. Moser served as Senior Vice President, Commercial Operations. In this capacity, he was responsible for the optimization of the Company's wholesale generation fleet.

|       ​ ​       Executive Officers

 

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Table of Contents

GRAPHIC
Stock Ownership of Directors, Named
Executive Officers and Certain Beneficial Owners

Stock Ownership of Directors and Executive Officers

The following table sets forth information concerning beneficial ownership of the Company's common stock as of March 1, 2018, for: (a) each director and the nominees for director; (b) named executive officers set forth in the Summary Compensation Table (NEOs); and (c) the directors and executive officers as a group. The percentage of beneficial ownership is based on 317,666,137 shares of common stock outstanding as of March 1, 2018. The percentage of beneficial ownership also includes any shares that such person has the right to acquire within 60 days of March 1, 2018. Unless otherwise indicated, each person has sole voting and dispositive power with respect to the shares set forth in the following table.

Except as noted below, the address of the beneficial owners is NRG Energy, Inc., 804 Carnegie Center, Princeton, New Jersey 08540.

DIRECTORS AND EXECUTIVE OFFICERS

  COMMON STOCK1  
PERCENT OF
CLASS
 

Mauricio Gutierrez

    216,560     2

Kirkland Andrews

    190,035     3

John Chillemi

    43,530     4

David R. Hill

    63,929     5

Elizabeth Killinger

    91,837     6

Lawrence S. Coben

    89,959     7

E. Spencer Abraham

    39,198     8

Kirbyjon H. Caldwell

    52,789     9

Matthew Carter, Jr.

       

Heather Cox

       

Terry G. Dallas

    31,152     10

William E. Hantke

    54,592     11

Paul W. Hobby

    61,075      

Anne C. Schaumburg

    62,381     12

Thomas H. Weidemeyer

    63,578     13

C. John Wilder

    22,729     14

All Directors and Executive Officers as a group (18 people)

    1,208,429     15

  Less than one percent of outstanding common stock.

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1

  The number of shares beneficially owned by each person or entity is determined under the rules of the SEC, and the information is not necessarily indicative of beneficial ownership for any other purpose. Under such rules, each person or entity is considered the beneficial owner of any: (a) shares to which such person or entity has sole or shared voting power or dispositive power and (b) shares that such person or entity has the right to acquire within 60 days through the exercise of stock options or similar rights.

2

  Includes 12,409 DERs. Excludes 290,085 RSUs, 318,056 relative performance stock units (RPSUs) and 217,625 MSUs. DERs become exercisable proportionately with the RSUs, RPSUs or MSUs to which they relate. Each DER is the right to receive one share of NRG common stock and becomes exercisable proportionately with the RSUs, RPSUs or MSUs to which they relate. Each RSU represents the right to receive one share of NRG common stock upon vesting. Each RPSU represents the potential to receive common stock based upon NRG achieving a certain level of total shareholder return relative to NRG's peer group over a three-year performance period. Each MSU represents the potential to receive common stock after the completion of three years of service from the date of grant based on absolute NRG stock price change (plus dividends) versus the baseline.

3

  Includes 2,764 DERs. Excludes 68,573 RSUs, 81,082 RPSUs and 46,824 MSUs.

4

  Includes 2,041 DERs and 15,495 shares that may be acquired at or within 60 days of March 1, 2018 pursuant to the exercise of options. Excludes 50,660 RSUs, 59,902 RPSUs and 34,593 MSUs.

5

  Includes 2,153 DERs. Excludes 53,622 RSUs, 63,667 RPSUs and 36,414 MSUs.

6

  Includes 2,419 DERs and 18,700 shares that may be acquired at or within 60 days of March 1, 2018, pursuant to the exercise of options. Excludes 57,269 RSUs, 63,692 RPSUs and 26,532 MSUs.

7

  Includes 85,773 DSUs and 1,734 DERs, payable in the event Dr. Coben ceases to be a member of the Board.

8

  Includes 31,214 DSUs and 1,297 DERs, payable in the event Secretary Abraham ceases to be a member of the Board.

9

  Includes 51,110 DSUs and 1,679 DERs, payable in the event Mr. Caldwell ceases to be a member of the Board.

10

  Includes 1,992 DERs. Includes 14,878 DSUs, payable in the event Mr. Dallas ceases to be a member of the Board. Also includes 14,282 shares held indirectly in trusts. Excludes 24,783 DSUs issued to Mr. Dallas that will be exchanged for common stock on a one-for-one basis on the following schedule: (a) 6,196 on January 15, 2021; (b) 6,195 on January 15, 2022; (c) 6,196 on January 15, 2023; and (d) 6,196 on January 15, 2024.

11

  Includes 219 DERs. Excludes 10,211 DSUs issued to Mr. Hantke that will be exchanged for common stock on a one-for-one basis on the following schedule: (a) 4,543 on June 1, 2018; (b) 3,543 on June 1, 2019; and (c) 2,125 on June 1, 2020.

12

  Includes 56,063 DSUs and 1,345 DERs, payable in the event Ms. Schaumburg ceases to be a member of the Board.

13

  Includes 34,876 DSUs, payable in the event Mr. Weidemeyer ceases to be a member of the Board.

14

  Includes 14,619 DSUs and 50 DERs, payable in the event Mr. Wilder ceases to be a member of the Board. Excludes 9,007,214 shares held by BEP Special Situations 2 LLC (Special Situations). Mr. Wilder may be deemed to beneficially own the shares held by Special Situations as he is manager of Bluescape Resources GP Holdings LLC, which is acting as the manager of Bluescape Energy Partners III GP LLC, which is acting as the general partner of Bluescape Energy Recapitalization and Restructuring Fund III LP (Main Fund), and Main Fund is acting as a managing member of Special Situations. Mr. Wilder disclaims beneficial ownership of the shares held by Special Situations except to the extent of any indirect pecuniary interest therein.

15

  Consists of the total holdings of directors, named executive officers, and all other executive officers as a group.

|       ​ ​       Stock Ownership of Directors, Named Executive Officers and Certain Beneficial Owners

 

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Table of Contents

Stock Ownership of Principal Stockholders

The following table sets forth information for each person known to the Company to own more than five percent of the Company's common stock, as of the date of their most recent Schedule 13D or Schedule 13G filing, as applicable, with the SEC. Percentage of beneficial ownership is based on 317,666,137 shares of common stock outstanding as of March 1, 2018. Unless otherwise indicated, each person has sole investment and voting power with respect to the shares set forth in the following table.

PRINCIPAL STOCKHOLDER  
COMMON
STOCK1
 
PERCENT OF
CLASS
 
The Vanguard Group, Inc.
100 Vanguard Blvd.
Malvern, Pennsylvania 19355
    34,712,451     10.9 %1
BlackRock, Inc.
55 East 52nd Street
New York, New York 10022
    17,929,089     5.64 %2

1

  Based upon information set forth in the Schedule 13G filed on February 9, 2018 by The Vanguard Group, Inc. (Vanguard). Vanguard has sole voting power over 354,542 shares and sole dispositive power over 34,337,145 shares. Vanguard has shared voting power over 43,900 shares and shared dispositive power over 375,306 shares. Vanguard Fiduciary Trust Company (VFTC), a wholly-owned subsidiary of Vanguard, is the beneficial owner of 329,310 shares as a result of VFTC serving as investment manager of collective trust accounts. Vanguard Investments Australia, Ltd. (VIA), a wholly-owned subsidiary of Vanguard, is the beneficial owner of 69,132 shares as a result of VIA serving as investment manager of Australian investment offerings.

2

  Based upon information set forth in the Schedule 13G filed on January 25, 2018 by Blackrock, Inc. Blackrock, Inc. has sole voting power over 16,120,585 shares and sole dispositive power over 17,929,086 shares.

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Director and Executive Officer Ownership of NRG Yield Common Stock

NRG currently holds, in the aggregate, 55.1% of the voting interest in NRG Yield, Inc. (NRG Yield) through its ownership of NRG Yield's Class B common stock and Class D common stock. Please see the "Certain Relationships and Related Persons Transactions" beginning on page 36 for more information regarding the sale of NRG's voting interest in NRG Yield. The following table sets forth information concerning beneficial ownership of NRG Yield's Class A common stock and Class C common stock as of March 1, 2018, for: (a) each of our directors and the nominees for director; (b) our NEOs; and (c) our directors and executive officers as a group. Percentage of beneficial ownership is based on 34,586,250 shares of NRG Yield Class A common stock and 64,730,519 shares of Class C common stock outstanding as of March 1, 2018, and percentage of combined voting power is based on 78,399,694 votes represented by NRG Yield's outstanding Class A, Class B, Class C and Class D common stock in the aggregate as of March 1, 2018. Unless otherwise indicated, each person has the sole investment and voting power with respect to the shares of NRG Yield Class A and Class C common stock set forth in the following table.

Except as noted below, the address of the beneficial owners is NRG Energy, Inc., 804 Carnegie Center, Princeton, New Jersey 08540.

  CLASS A COMMON STOCK   CLASS C COMMON STOCK  
COMMON STOCK  
   

NAME OF BENEFICIAL OWNER

 
NUMBER1
% OF CLASS  
NUMBER1
% OF CLASS  
% OF COMBINED
VOTING POWER
2
 

Mauricio Gutierrez

    6,000         6,000          

Kirkland Andrews

    5,000         5,000          

John Chillemi

                     

David R. Hill

    3,500         2,500          

Elizabeth Killinger

    300         300          

Lawrence S. Coben

                     

E. Spencer Abraham

                     

Kirbyjon H. Caldwell

                     

Matthew Carter, Jr.

                     

Heather Cox

                     

Terry G. Dallas

                     

William E. Hantke

                     

Paul W. Hobby

    3,000         3,000          

Anne C. Schaumburg

    2,500         2,500          

Thomas H. Weidemeyer

                     

C. John Wilder

                     

All Directors and Executive Officers as a group (18 people)

    20,300         19,610          

  Less than one percent of outstanding common stock or combined voting power of NRG Yield.

1

  The number of shares beneficially owned by each person or entity is determined under the rules of the SEC, and the information is not necessarily indicative of beneficial ownership for any other purpose. Under such rules, each person or entity is considered the beneficial owner of any: (a) shares to which such person or entity has sole or shared voting power or dispositive power and (b) shares that such person or entity has the right to acquire within 60 days through the exercise of stock options or similar rights.

2

  Represents the voting power of all of the classes of common stock voting together as a single class. Each holder of Class A or Class B common stock is entitled to one vote for each share held. Each holder of Class C or Class D common stock is entitled to 1/100th of one vote for each share held. Holders of shares of Class A, Class B, Class C and Class D common stock vote together as a single class on all matters presented to NRG Yield's stockholders for their vote or approval, except as otherwise required by applicable law.

|       ​ ​       Stock Ownership of Directors, Named Executive Officers and Certain Beneficial Owners

 

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Table of Contents

GRAPHIC
Certain Relationships and Related
Person Transactions

Interest in NRG Yield

NRG formed NRG Yield to own and operate a portfolio of contracted generation assets and thermal infrastructure assets that have historically been owned and/or operated by NRG and its subsidiaries. Through our ownership of Class B common stock and Class D common stock of NRG Yield, we hold, in the aggregate, 55.1% of the voting interest in NRG Yield's stock.

In connection with NRG Yield's initial public offering, NRG entered into a Management Services Agreement, dated as of July 22, 2013 (Management Services Agreement) with NRG Yield pursuant to which we have agreed to provide or arrange for other service providers to provide management and administration services to NRG Yield. As part of the services provided, certain executive officers of NRG also serve as executive officers of NRG Yield. These executive officers are not required to dedicate a specific amount of time to fulfilling NRG's obligations to NRG Yield and are not separately compensated for their services to NRG Yield. Under the Management Services Agreement, NRG Yield pays a base management fee to NRG. The base management fee is adjusted for inflation annually at an inflation factor based on year-over-year CPI. The base management fee is also increased in connection with the completion of any future acquisitions by NRG Yield in an amount equal to 0.05% of the enterprise value of the acquired assets as of the acquisition closing date. NRG Yield also reimburses NRG for any out-of-pocket fees, costs and expenses incurred in the provision of the management and administration services. For the year ended December 31, 2017, NRG Yield incurred a total of approximately $12 million consisting of management fees of approximately $8.5 million and reimbursement for expenses, under the Management Services Agreement.

On February 6, 2018, NRG and Global Infrastructure Partners (GIP) entered into a purchase and sale agreement for GIP to purchase NRG's ownership in NRG Yield, Inc. and NRG's renewables platform for cash proceeds of $1.375 billion, subject to certain adjustments. The purchase and sale agreement includes the sale of NRG's ownership in NRG Yield's Class B and Class D common stock and NRG's renewable energy development and operations platforms.

The transaction is expected to close in the second half of 2018 and is subject to various customary closing conditions, approvals and consents.

Review, Approval or Ratification of Transactions with Related Persons

The Board has adopted written policies and procedures to address potential or actual conflicts of interest and the appearance that decisions are based on considerations other than the best interests of NRG that may arise in connection with transactions with certain persons or entities (Related Person Policy). The Related Person Policy operates in conjunction with our Code of Conduct and is

applicable to all "Related Person Transactions," which are all transactions, arrangements or relationships in which:

the aggregate amount involved will or may be expected to exceed $50,000 in any calendar year;

the Company is a participant; and

any Related Person (as that term is defined below) has or will have a direct or indirect interest.

A "Related Person" is:

any person who is, or at any time during the applicable period was, a director of the Company or a nominee for director or an executive officer;

any person who is known to the Company to be the beneficial owner of more than 5% of the outstanding common stock;

any immediate family member of any of the persons referenced in the preceding two bullets, which means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law of the director, nominee for director, executive officer or more than 5% beneficial owner of common stock, and any person (other than a tenant or employee) sharing the household of such director, nominee for director, executive officer or more than 5% beneficial owner of common stock; and

any firm, corporation or other entity in which any of the foregoing persons is a partner or principal or in a similar position or in which such person has a 10% or greater beneficial ownership interest.

A Related Person Transaction is subject to review and approval or ratification by the Governance and Nominating Committee. If the aggregate amount involved is expected to be less than $500,000, the transaction may be approved or ratified by the Chair of the Governance and Nominating Committee. As part of its review of each Related Person Transaction, the Governance and Nominating Committee will take into account, among other factors it deems appropriate, whether the transaction is on terms no less favorable than the terms generally available to an unaffiliated third-party under the same or similar circumstances and the extent of the Related Person's interest in the transaction. This Related Person Policy also provides that certain transactions, based on their nature and/or monetary amount, are deemed to be pre-approved or ratified by the Governance and Nominating Committee and do not require separate approval or ratification.

Transactions involving ongoing relationships with a Related Person will be reviewed and assessed at least annually by the Governance and Nominating Committee to ensure that such Related Person Transactions remain appropriate and in compliance with the Governance and Nominating Committee's guidelines. The Governance and Nominating Committee's activities with respect to the review and approval or ratification of all Related Person Transactions are reported periodically to the Board.

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GRAPHIC
Executive Compensation

COMPENSATION DISCUSSION AND ANALYSIS

EXECUTIVE SUMMARY

  38

    Key Governance Features of Our Executive Compensation Program

 
39

    Realized Pay in 2017

 
39

EXECUTIVE COMPENSATION PROGRAM

 
40

    2017 Named Executive Officers

 
40

    Goals and Objectives of the Program

 
41

THE COMPENSATION PROCESS

 
41

    Compensation Consultant

 
41

    Compensation Peer Group Analysis

 
42

ELEMENTS OF COMPENSATION

 
42

    Base Salary

 
43

    Annual Incentive Compensation

 
43

        Overview

 
43

        AIP Bonus Opportunity

 
44

        2017 AIP Bonus Performance Criteria

 
44

        2017 Bonuses

 
44

    Long-Term Incentive Compensation

 
45

        Range of LTIP Compensation

 
45

        Relative Performance Stock Units

 
45

        Market Stock Units

 
45

        Restricted Stock Units

 
46

    Clawbacks

 
46

    Benefits

  46

    Potential Severance and Change-in-Control Benefits

 
46

OTHER MATTERS

 
47

    Stock Ownership Guidelines

 
47

    Tax and Accounting Considerations

 
47

COMPENSATION TABLES

 
48

    Summary Compensation Table for Fiscal Year Ended December 31, 2017

 
48

    Grants of Plan-Based Awards for Fiscal Year Ended December 31, 2017

 
49

        2017 Annual Incentive Plan

 
49

        2017 Long-Term Equity Incentives

 
50

        Relative Performance Stock Units

 
50

        Restricted Stock Units

 
50

    Outstanding Equity Awards at Fiscal Year-End for Fiscal Year Ended December 31, 2017

 
51

    Option Exercises and Stock Vested for Fiscal Year Ended December 31, 2017

 
52

    Pension Benefits for Fiscal Year Ended December 31, 2017

 
52

EMPLOYMENT AGREEMENTS

 
52

SEVERANCE AND CHANGE-IN-CONTROL

 
53

CEO PAY RATIO

 
55

|       ​ ​       Executive Compensation

 

37

Table of Contents

Executive Summary

The objectives of our executive compensation program are to align executive pay with stockholder value and to motivate executives to achieve our corporate goals. This CD&A describes the elements, implementation, and 2017 results of our executive compensation program.

At our 2017 Annual Meeting of Stockholders, we received 95% support for our say on pay proposal. As a result, we believe that our stockholders understand that our pay practices demonstrate our commitment to pay for performance and that our compensation plans are designed to recognize the performance of the Company. We achieved many of our operational and financial goals in 2017, including exceeding our Adjusted Free Cash Flow and Corporate Debt to Corporate EBITDA Ratio targets, despite the challenges in the markets in which we operate.

In addition, during 2017, we announced a three-year, three-part plan, referred to as our Transformation Plan, which was designed to significantly strengthen earnings and cost competitiveness, lower risk and volatility, and create significant shareholder value. In connection with our business strategy and incentive programs, the execution of our Transformation Plan produced the following results:

The #1 performing stock of the S&P 500 for 2017 with a 134% value increase.

Completed refinancings and $604 million of planned corporate debt reduction resulting in incremental annual interest savings of $55 million.

Realized $150 million of cost savings for 2017, and $221 million of working capital improvements.

Announced $3 billion of asset sales representing approximately 90% of our asset sale target under our Transformation Plan.

On track to achieve our targeted 3.0x net debt to Adjusted EBITDA target.

Demonstrated another strong year with respect to safety in 2017, achieving top decile performance in our industry, matching the second best safety year in our history.

The achievements in 2017 resulted in payouts under the AIP as described in more detail in the section of this CD&A entitled "Annual Incentive Compensation", and our LTIP, as described in more detail in the section of this CD&A entitled "Long-Term Incentive Compensation."

Consistent with the objectives of our compensation program, the accomplishment of our corporate goals and the market performance of our common stock over the three-year performance period directly impacted our compensation decisions and pay outcomes for 2017 as described below.

Our Compensation Committee approved modest increases to base salary for NEOs for 2017.

The Compensation Committee approved modest increases, ranging from 2%-4%, to NEO 2017 base salary

compensation for NEOs other than the CEO. The Compensation Committee evaluated the level of Mr. Gutierrez's base salary by comparing it to compensation benchmark data provided by Pay Governance, the Compensation Committee's independent advisor. Following such evaluation at the end of Mr. Gutierrez's first year as CEO, Mr. Gutierrez received a 9.3% increase in base salary for 2017.

Due to the increase in TSR during the performance period ending January 2, 2018, our NEOs received a payout at 108% of target upon the vesting of their MSUs in 2018.

Our compensation program ties a significant portion of our NEOs' overall compensation to the achievement of increases in TSR through our long-term compensation program. In accordance with the intended design of our long-term compensation program, there was no payout of stock for MSU awards for the performance period ending January 2, 2017 (vesting January 2, 2017) as a result of the decline in TSR during the performance period. However, there was an 8% increase in TSR over the three-year performance period ending January 2, 2018 (vesting January 2, 2018) and, as a result, MSUs vesting as of such date vested at 8% above target. In each case, MSUs represented two-thirds of long-term compensation value granted to our NEOs in 2014 and 2015.

The AIP performance metrics were exceeded during 2017, which resulted in payments to our NEOs at levels greater than target.

Our Adjusted Free Cash Flow exceeded target, and our Corporate Debt to Corporate EBITDA Ratio greatly exceeded the maximum; however, Adjusted EBITDA did not meet target. Due to the achievement of the AIP performance metrics, our NEOs received AIP bonuses at levels above target.

Performance-based equity was redesigned for 2017 to measure NRG's TSR performance relative to the TSR of a comparator group.

Consistent with market practice, in 2017, we shifted performance-based equity from MSUs to RPSUs. For each of the January 2017 and January 2018 grants, NEOs received two-thirds of their equity awards in RPSUs in lieu of MSUs. The quantity of shares received by NEOs upon the vesting of an RPSU will be a function of the Company's performance ranked against the Performance Peer Group (as defined in Elements of Compensation—Relative Performance Stock Units). The Compensation Committee evaluated this comparator group for an appropriate mix of industry-specific and market-influenced constituents, with a strong mathematical correlation to the Company's stock performance. RPSU awards granted in 2018 were updated to limit the maximum award value that an NEO may receive to 6 times the fair market value of the target award, determined as of the date of grant.

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Key Governance Features of Our Executive Compensation Program

Over the past several years, we have modified our compensation programs and practices to incorporate several key governance features, adhering to the compensation best practices described in the table below.

ü    WHAT WE DO:

 

X    WHAT WE DON'T DO:

Pay for Performance, including

delivering a majority of long-term incentive compensation using performance-based equity

requiring above-median performance for vesting of long-term incentive compensation awards at target and

using quantitative metrics to determine annual incentive compensation awards

 

No excise tax gross-ups upon a change-in-control and no tax gross-ups on perquisites or benefits

Target our peer group median for total direct compensation

 

No pledging or hedging of the Company's stock by NEOs or directors

Require a double trigger for the vesting of equity upon a change in control

 

No employment agreements for executive officers with the exception of our CEO

Include clawback policies in our compensation plans

 

No guaranteed bonus payments for our NEOs

Maintain robust stock ownership guidelines for our NEOs

 

No supplemental executive retirement plans

Provide market-level retirement benefits and limited perquisites

 

No re-pricing of underwater stock options and no grants below 100% of fair market value

Engage an independent compensation consultant to advise us on matters surrounding our compensation plans

   

Prevent undue risk taking in our compensation practices and engage in robust risk monitoring

   

Effective for 2018, expanded our performance-based pay cap beyond our annual incentive to include performance equity

   

Realized Pay in 2017

NEO compensation for 2017 consisted of (i) salary, earned and paid during the 2017 fiscal year, (ii) short-term incentive compensation pursuant to our AIP earned during the 2017 fiscal year, (iii) RSU awards that were granted in January 2015 and vested at the end of the following three-year period, (iv) approximately one-third of RSUs that were granted in January 2017 and vested on the one-year anniversary of the grant date and (v) MSU awards that were granted in January 2015, whose realized value in 2017 was based upon the Company's TSR performance over the three-year performance period following the grant date.

The Compensation Committee believes that in 2017, the Company's compensation of its NEOs was well aligned with our stock performance and our stockholder interests. Over the three-year performance period ending January 2, 2018, there was an 8% increase in TSR. As a result, MSU awards that vested on January 2, 2018, were paid at 8% above target.

The chart below illustrates our NEOs' realized pay for performance periods concluding at the end of 2017 versus target compensation.

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GRAPHIC

1

  Target Total Direct Compensation (TDC) includes: 2017 Base Salary, 2017 Target AIP Award, 2015 Target LTIP Award (includes RSUs and MSUs at grant-date fair value), and approximately one-third of RSUs granted on January 3, 2017 (at grant-date fair value). Reflects Base Salary, Target AIP and approximately one-third of RSUs granted on January 3, 2017 for Mr. Gutierrez as Chief Executive Officer during the 2016 and 2017 fiscal years and Target Long-Term Incentive Compensation for Mr. Gutierrez as Chief Operating Officer for a portion of the 2015 fiscal year, resulting in a higher amount of realized pay in comparison to target pay than other NEOs.

2

  Realized TDC includes: 2017 Base Salary, 2017 Realized AIP Award, 2015 Realized LTIP Award (including RSUs at vesting-date value and MSUs that vested at 108% of target at vesting-date value), and 2017 Realized LTIP Award (approximately one-third of the RSUs granted on January 3, 2017 at vesting-date value).

Executive Compensation Program

2017 Named Executive Officers

This CD&A describes our executive compensation program for our NEOs in 2017. For 2017, the NEOs were:

  NEO   2017 TITLE

Mauricio Gutierrez

  President and Chief Executive Officer

Kirkland Andrews

  Executive Vice President and Chief Financial Officer

John Chillemi1

  Executive Vice President, National Business Development

David R. Hill2

  Executive Vice President and General Counsel

Elizabeth Killinger

  Executive Vice President and President, NRG Retail

1

  Effective March 16, 2018, Mr. Chillemi will be stepping down from his position as Executive Vice President, National Business Development. Mr. Chillemi will remain with the Company in an advisory role for several months to support the transition of certain development projects for the Company.

2

  Effective March 16, 2018, Mr. Hill will be stepping down from his position as Executive Vice President and General Counsel. Mr. Hill will remain with the Company in an advisory role for several months to support the transition of certain regulatory and government affairs matters.

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Goals and Objectives of the Program

Our Compensation Committee designs and implements an executive compensation program that:

closely aligns our executive compensation with stockholder value creation, avoiding plans that encourage executives to take excessive risk, while driving long-term value to stockholders;

supports the Company's long-term business strategy, while rewarding our executive team for their individual accomplishments;

allows us to recruit and retain a top-tier executive team in a competitive industry and to motivate our executive team to achieve superior performance for a sustained period; and

provides a competitive compensation opportunity while adhering to market standards for compensation.

The Compensation Committee is responsible for the development and implementation of NRG's executive compensation program. The intent of our executive compensation program is to reward the achievement of NRG's annual goals and objectives and the creation of long-term stockholder value.

The Compensation Committee is committed to aligning executives' compensation with performance. The Compensation Committee's objectives are achieved through the use of both short-term and long-term incentives. The Company currently targets pay at the median of our Compensation Peer Group (defined below). In addition, through the AIP, the NEOs are rewarded for achieving annual corporate and individual goals. Our long-term incentive compensation program is designed to reward our NEOs for long-term TSR.

The Compensation Process

Compensation Consultant

Pursuant to its charter, the Compensation Committee is authorized to engage, at the expense of the Company, a compensation consultant to provide independent advice, support, and expertise to assist the Compensation Committee in overseeing and reviewing our overall executive compensation strategy, structure, policies and programs, and to assess whether our compensation structure establishes appropriate incentives for management and other key employees.

Pay Governance, the Compensation Committee's independent compensation consultant since fiscal year 2015, assisted with executive and director pay decisions and worked with the Compensation Committee to formulate the design of the executive compensation program for 2017.

Pay Governance reported directly to the Compensation Committee and provided no other remunerated services to the Company. Pay Governance also provides services to the Compensation Committee of NRG Yield, our majority-owned subsidiary, relating to its director compensation and executive pay decisions in 2017, and the design of its director compensation and executive compensation programs for 2018. Pay Governance does not provide services for any of our other affiliates. In accordance with SEC rules and requirements, the Company has affirmatively determined that no conflicts of interest exist between the Company and Pay Governance (or any individuals working on the Company's account on behalf of Pay Governance).

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Compensation Peer Group Analysis

Our 2017 Compensation Peer Group

The Compensation Committee, with support from its advisors, identifies the best possible comparator group within relevant industries. The Compensation Committee performed a review of potential peer companies, considering factors such as industry, scope of operations, market value and relevance from a talent competition standpoint. In addition, a peer of peer analysis was conducted to confirm the appropriateness of potential peer companies and to assess companies that NRG's peers use in their own peer groups. The Compensation Committee then considered the overall reasonableness of the list of potential peer companies as a whole.

The Compensation Committee aims to compare our executive compensation program to a consistent compensation peer group year-to-year, but given the dynamic nature of our industry and the companies that comprise it, we annually examine the list for opportunities for improvement. In light of NRG's focus on its core generation and retail businesses, and with the assistance of Pay Governance, the Compensation Committee identified a new peer group for compensation benchmarking purposes in 2017 (Compensation Peer Group). The updated Compensation Peer Group for 2017 is identified below.

COMPANY   NYSE TICKER   COMPANY   NYSE TICKER

The AES Corporation

  AES   First Solar, Inc.   FSLR

American Electric Power Co., Inc.

  AEP   NextEra Energy, Inc.   NEE

Calpine Corporation

  CPN   Public Service Enterprise Group, Inc.   PEG