DEF 14A 1 d671968ddef14a.htm DEF 14A 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.     )

 

 

Filed by the Registrant  ☒                             Filed by a Party other than the Registrant  ☐

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  Preliminary Proxy Statement
  Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
  Definitive Proxy Statement
  Definitive Additional Materials
  Soliciting Material Pursuant to §240.14a-12

Entergy Corporation

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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LOGO


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Our Mission

We exist to operate a world-class energy business that creates sustainable value for our four stakeholders – customers, employees, communities and owners. This is our mission.

 

 

LOGO

For our Customers, we create value by delivering top-quartile customer satisfaction by anticipating customer needs and exceeding their expectations while keeping rates reasonable. For our Employees, we create value by attaining top-quartile organizational health scores and top-decile safety performance; and providing a rewarding, engaging, diverse and inclusive work environment with fair compensation and benefits and opportunities for career advancement. For our Communities, we create value by achieving top-decile corporate social responsibility performance through economic development, philanthropy, volunteerism and advocacy and by operating our business safely and in a socially and environmentally responsible way. For our Owners, we create value by delivering top-quartile shareholder returns through the relentless pursuit of opportunities to optimize our business.

 

LOGO

  

For the 11th straight year, Entergy was named one of the nation’s Top 10 utilities in economic development by Site Selection magazine for directly supporting projects that resulted in nearly $4.25 billion of capital investment and the creation of 4,688 jobs in its service territory.

LOGO

  

For the 3rd consecutive year, Entergy was recognized as one of the most community-minded companies in the United States by Points of Light, the world’s largest organization dedicated to volunteer service. Entergy was ranked first in integration, which measures how closely a company ties community stewardship to the success of its business operations.


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March 22, 2019

 

Fellow Shareholders:

 

I hope you will join Entergy’s Board of Directors, executive management team and employees at our 2019 Annual Meeting of Shareholders in The Woodlands, Texas. Each year, we conduct our annual meeting in a location in our service territory to give us the opportunity to connect with shareholders we might not

     LOGO  

otherwise meet, showcase our operations, and celebrate our connections to the customers and communities we serve. I look forward to coming to The Woodlands. The attached Notice of Annual Meeting of Shareholders and Proxy Statement will serve as your guide to the business to be conducted at the meeting.

Our 2018 letter to stakeholders that is included in both the Annual Report and our Integrated Report discusses Entergy’s 2018 performance, strategy and outlook for the future. At the Annual Meeting, I plan to share some of the 2018 highlights included in the letter in addition to conducting the official business of the meeting. I look forward to discussing 2018 results and the opportunities we see in front of us today, as we continue to execute on our business strategy with decisions and investments that will serve our customers and our shareholders well into the future.

We also are continuing our commitment to provide you with information about the Company in a manner that is easy to access and understand. Our Proxy Statement is a good example, providing a summary at the beginning that highlights our business and executive compensation programs and using charts and other graphic depictions where helpful. This year we also have continued our efforts to eliminate redundancy and make the presentation of information more reader-friendly.

The Compensation Discussion and Analysis that begins on page 40 describes our executive compensation programs and shows how our senor management’s compensation remains linked to performance and supports our long-term strategy. You will also find discussions of the qualifications of our director candidates and why we believe they are the right people to represent you starting on page 9.

Your vote is important to us and our business. Prior to the meeting, I encourage you to sign and return your proxy card, or use telephone or Internet voting, so that your shares will be represented and voted at the meeting. Instructions on how to vote can be found beginning on page 94.

I hope to see you at the meeting. Thank you for being a shareholder and for your support of Entergy.

Sincerely,

 

 

LOGO

Leo P. Denault

Chairman of the Board and Chief Executive Officer


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March 22, 2019

 

Dear Fellow Shareholders:

 

On behalf of Entergy’s Board of Directors, I invite you to the 2019 Annual Meeting of Shareholders. As the 2019 Annual Meeting approaches, it is my privilege as your Lead Director to reflect on the past year and share directly with you some highlights of the work of our Board.

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Strategy Oversight

Over the course of the year Entergy’s senior management remained steadfast in its focus on executing Entergy’s long term strategy, with important milestones achieved in reducing risk and investing in our core utility business. The Board is vigilant in its oversight of this long-term strategy. We play an essential role in determining Entergy’s strategic priorities and are actively engaged in directing this strategy through discussions of Entergy’s strategic imperatives at our regularly scheduled Board meetings and annually at our multi-day Board Retreat, which is devoted entirely to learning about the important issues affecting our Company and industry and assessing the Company’s strategic plans.

Each of our committees has a key role to play in providing this oversight. For example, to ensure that Entergy has the financial ability to execute on its strategic plan, the Finance Committee monitors Entergy’s capital needs and financing plans. With the Company’s corporate strategy and business priorities in mind, the Personnel Committee determines the appropriate compensation structures and levels for our senior leaders to incentivize them to achieve these goals. In response to increased investor interest in understanding accountability for sustainability oversight, we revised our Corporate Governance Committee Charter to encompass oversight of Entergy’s sustainability strategy and practices.

Board Composition and Refreshment

Appropriate Board composition is critical to our Board’s ability to carry out its responsibilities. We are keenly aware that our shareholders, regulators and other stakeholders are highly interested in board composition and refreshment, including diversity, broadly defined. The Corporate Governance Committee periodically reviews the skill sets represented by our Board against those needed to ensure oversight of the Company’s business and strategic priorities necessary to drive long-term value. With this information, we engaged a nationally recognized search firm to identify candidates with the backgrounds, skills and experiences that match these needs and complement the other directors on our Board. This year, as a result of this process, we are pleased to welcome Lisa Hyland to our Board. With her strong engineering background and deep executive experience in a capital-intensive industry, Lisa brings a background and skill set that will be very valuable as the Company executes on its capital investment plan. We plan to continue to identify and evaluate potential director candidates with a view toward adding an additional member to the Board later in 2019.

Succession Planning and Talent Development

Our Board recognizes that one of our most important responsibilities is to oversee the development of executive talent and ensure continuity in our senior leadership. The Personnel Committee takes the lead in overseeing succession planning and assignments to key leadership positions, and regularly reports to the full Board during executive sessions. Our Board conducts an annual in-depth review of senior leader development and succession planning to assure that our processes support Entergy’s strategic objectives. We also interact frequently with high potential executives and employees – not just in Board meetings but in less formal settings – so that we get a chance to know and assess our future senior leaders firsthand.


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The Board remains focused on our oversight responsibilities and will continue to communicate with you about our efforts. We value our shareholders’ views and believe that regular, transparent communication is an essential component of Entergy’s success.

We hope you will find the Proxy Statement informative and look forward to seeing you at the meeting. Thank you for your investment in and support of Entergy.

Sincerely,

 

 

LOGO

Stuart L. Levenick

Lead Director


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LOGO

   Entergy Corporation

639 Loyola Avenue

New Orleans, LA 70113

 

  

 

 

Notice of Annual Meeting of Shareholders

 

  WHEN

  Friday, May 3, 2019

  10:00 a.m. Central Time

  

ITEMS OF BUSINESS

To vote on the following proposals:

 

  

1.

  

Election of 10 directors proposed by our Board of Directors for a term of one year as set forth in the attached Proxy Statement.

 

  WHERE

  The Woodlands

  Waterway Marriott

  1601 Lake Robbins Drive

  The Woodland, Texas 77380

  

2.

  

Ratification of the appointment of Deloitte & Touche LLP as Independent Registered Public Accountants for 2019.

 

  

3.

  

An advisory vote to approve the compensation paid to our Named Executive Officers.

 

  RECORD DATE

  March 4, 2019

  

4.

  

Approval of the Entergy Corporation 2019 Omnibus Incentive Plan.

 

  

5.

  

Such other business as may properly come before the meeting

By Order of the Board of Directors

 

 

LOGO

Marcus V. Brown

Executive Vice President and General Counsel

March 22, 2019

Important Notice Regarding the Availability of Proxy Materials for Entergy’s 2019 Annual Meeting. Entergy‘s Proxy Statement, its 2018 Annual Report and other materials are electronically available to our shareholders on our website at http://www.entergy.com/investor_relations/2018_publications.aspx.

 

 

Your vote is important to us. On or about March 22, 2019, we will mail to our shareholders a Notice containing instructions on how to access this Proxy Statement and our Annual Report and vote by Internet or telephone. If you receive a Notice by mail, you will not receive a printed copy of the proxy materials in the mail. If you receive a Notice by mail and would like to receive a printed copy of our proxy materials, you can obtain a copy of such materials by following the instructions contained in the Notice. For more information, see “Frequently Asked Questions Regarding Meeting Attendance and Voting.”

 


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TABLE OF CONTENTS

 

Letter from Our Chairman and Chief Executive Officer            

Letter from Our Lead Director

           
Notice of Annual Meeting of Shareholders            

Proxy Summary

     1  

2019 Annual Meeting Information

     1  

Summary of Matters to be Voted on at The Annual Meeting

     1  

Director Nominees

     2  

Our Board of Directors

     3  

Corporate Governance Highlights

     4  

Our Business

     5  

2018 Performance and Strategic Accomplishments

     5  

Shareholder Outreach

     5  

Executive Compensation Highlights

     6  

Board of Directors

     9  

Proposal 1 – Election of Directors

     9  

Summary of Director Qualifications

     10  

Our 2019 Director Nominees

     11  

Identifying Director Candidates

     16  

Shareholder Nominations and Recommendations of Director Candidates

     17  

Director Orientation and Continuing Education

     17  

Corporate Governance at Entergy

     18  

Entergy’s Board of Directors

     18  

Director Independence

     18  

Structure of Our Board

     19  

Our Board’s Governance Role

     22  

Sustainability

     26  

Public Policy Engagement and Political Participation

     28  

Shareholder Engagement

     29  

Corporate Governance Policies

     31  
2018 Non-Employee Director Compensation      33  

2018 Compensation Changes

     33  

Cash Compensation Paid to Non-Employee Directors

     33  

Equity-Based Compensation

     33  

Other Benefits

     34  

2018 Non-Employee Director Compensation Table

     34  

Audit Matters

     36  
Proposal 2 – Ratification of Appointment of Deloitte & Touche LLP as Independent Registered Public Accountants for 2019      36  

Audit Committee Report

     36  

Independent Registered Public Accountants

     37  

Audit Committee Guidelines for Pre-Approval of Independent Auditor Services

     38  

Executive Officer Compensation

     39  
Proposal 3 – Advisory Vote to Approve Named Executive Officer Compensation      39  

Compensation Discussion and Analysis

     40  

CD&A Highlights

     41  

What We Pay and Why

     47  

Compensation Policies and Practices

     59  
Personnel Committee Report      62  
Personnel Committee Interlocks and Insider Participation      62  
Annual Compensation Risk Assessment      62  
Executive Compensation Tables      63  

2018 Summary Compensation Table

     63  

2018 Grants of Plan-Based Awards

     66  

2018 Outstanding Equity Awards at Fiscal Year-End

     67  

2018 Option Exercises and Stock Vested

     69  

2018 Pension Benefits

     70  

2018 Potential Payments Upon Termination or Change of Control

     74  

Pay Ratio Disclosure

     80  
Proposal 4 – Approval of the Entergy Corporation 2019 Omnibus Incentive Plan      81  
Why You Should Vote in Favor of the Plan      81  
Plan Highlights      82  
Summary of The Entergy Corporation 2019 Omnibus Incentive Plan      83  

Equity Plan Information

     90  

Entergy Share Ownership

     91  

Directors and Executive Officers

     91  

Beneficial Owners of More Than Five Percent of Entergy Common Stock

     92  

Section 16(a) Beneficial Ownership Reporting Compliance

     92  

Other Important Information

     92  

Shareholder Proposals for Our 2020 Annual Meeting

     92  

Director Nominee Recommendations

     93  

How To Obtain Our Annual Report on Form 10-K

     93  
Frequently Asked Questions Regarding Meeting Attendance and Voting      94  

Appendix A

     A-1  

Reconciliation of GAAP and Non-GAAP Financial Measures

     A-1  

Appendix B

     B-1  

2019 Entergy Corporation Omnibus Incentive Plan

     B-1  
 

 

 

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PROXY SUMMARY

This summary highlights information generally 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 your shares. For more complete information regarding the Company’s 2018 performance, please review our Annual Report on Form 10-K for the year ended December 31, 2018. In this Proxy Statement, we refer to Entergy Corporation as “Entergy,” the “Company,” “we” or “us.”

2019 Annual Meeting Information

 

     
DATE & TIME   LOCATION   RECORD DATE

Friday, May 3, 2019

10:00 a.m. Central Time

 

The Woodlands Waterway Marriott

1601 Lake Robbins Drive

The Woodlands, Texas 77380

 

 

Record holders as of March 4, 2019

are entitled to notice of, and to vote at,

the Annual Meeting

 

For additional information about the 2019 Annual Meeting of Shareholders, including any adjournment or postponement of the meeting and voting (the “Annual Meeting”), see Frequently Asked Questions Regarding Meeting Attendance and Voting beginning on page 94.

Summary of Matters to be Voted on at The Annual Meeting

The following table summarizes the items that will be brought for a vote of our shareholders at the Annual Meeting, along with the voting recommendations of our Board of Directors (the “Board”) and the required vote for approval:

 

  Proposal No.  

 

 

Description of Proposal

 

 

 Required Vote 

for Approval

 

 

  Board’s Recommendation  

 

1

 

To elect 10 director nominees

 

For more information see page 9.

  For each director, majority of votes cast  

FOR

Each

Nominee

     

2

 

Ratification of Independent Registered

Public Accountants

 

For more information see page 36.

 

Majority of shares present

and entitled to vote

  FOR
     

3

 

Advisory Vote to Approve Named Executive Officer Compensation

 

For more information see page 39.

 

Majority of shares present

and entitled to vote

  FOR
     

4

 

To approve the Entergy Corporation 2019 Omnibus Incentive Plan

 

For more information see page 81.

 

Majority of shares present

and entitled to vote

  FOR

In addition, a shareholder has notified us of his intent to propose a resolution at the meeting requesting that, beginning in 2019, Entergy annually publish a report of actually incurred corporate costs and associated actual and significant benefits accruing to shareholders and the climate from Entergy’s climate-related activities that are voluntary and exceed government regulatory requirements, to be prepared at reasonable cost and omitting proprietary information. This shareholder proposal is referred to as the “Floor Proposal.” The Floor Proposal was not submitted under Rule 14a-8 under the

 

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  PROXY SUMMARY

 

 

 

Securities Exchange Act of 1934 (the “Exchange Act”), and the shareholder did not seek to have the Floor Proposal included in this Proxy Statement. Accordingly, the Floor Proposal may be presented at the meeting, but is not included in this Proxy Statement. If the Floor Proposal is presented at the Annual Meeting, the proxy holders will have, and intend to exercise, discretionary voting authority under Rule 14a-4(c) under the Exchange Act to vote AGAINST the Floor Proposal.

You may vote in the following ways:

 

LOGO

  LOGO   LOGO   LOGO

Using the Internet at

www.proxyvote.com

 

Calling 1-800-690-6903  if

in the United States and

Canada

 

Mailing your signed and

dated proxy card
or voting instruction form

 

Attending the Annual

Meeting

For telephone and Internet voting, you will need the 16-digit control number included on your notice, on your proxy card or in the voting instruction form that accompanied your proxy materials. Internet and telephone voting is available through 11:59 p.m. Eastern Time on Wednesday, May 1, 2019 for shares held in Entergy’s qualified employee savings plans (the “Savings Plans”) and through 11:59 p.m. Eastern Time on Thursday, May 2, 2019 for all other shares.

Director Nominees

You are being asked to vote on the election of these 10 director nominees, each of whom is currently serving on the Board. The following table provides summary information about each of our director nominees as well as their committee memberships as of the date of this proxy statement. The table below also discloses the Board’s determination as to the independence of each nominee under the listing standards of the New York Stock Exchange (“NYSE”), relevant rules of the Securities and Exchange Commission (the “SEC”) and the Board’s categorical standards for director independence. Each director is elected annually. Additional information about each director’s background and experience can be found beginning on page 11.

 

  Name    Age    Director
Since
   Primary Occupation    Independent   

Committee

Memberships

  John R.

  Burbank

   55    2018    Former President, Corporate Development and Strategy, Nielsen Holdings plc    Yes   

•  Finance

•  Personnel

  Patrick J.

  Condon

   70    2015    Retired Audit Partner, Deloitte & Touche LLP    Yes   

•  Audit (Chair)

•  Nuclear

  Leo P.   Denault

  (Chairman)

   59    2013    Chairman of the Board and Chief Executive Officer, Entergy Corporation    No   

•  Executive (Chair)

  Kirkland H.

  Donald

   65    2013    Former President and Chief Executive Officer, Systems Planning and Analysis, Inc.    Yes   

•  Finance

•  Nuclear (Chair)

 

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  Name    Age    Director
Since
   Primary Occupation    Independent   

Committee

Memberships

  Philip L.   Frederickson    62    2015    Former Executive Vice President, ConocoPhillips    Yes   

•  Audit

•  Executive

•  Finance (Chair)

  Alexis M.   Herman    71    2003   

Chair and Chief Executive Officer,

New Ventures, LLC

   Yes   

•  Corporate
Governance

•  Personnel

  M. Elise

  Hyland

   59    2019    Former Senior Vice President, EQT Corporation and Senior Vice President and Chief Operating Officer, EQT Midstream Services, LLC    Yes    *

  Stuart L.   Levenick

  (Lead Director)

   66    2005    Former Group President and Executive Office Member, Caterpillar Inc.    Yes   

•  Corporate
Governance

•  Executive

•  Nuclear

  Blanche L.

  Lincoln

   58    2011    Founder and Principal, Lincoln Policy Group    Yes   

•  Audit

•  Corporate Governance
(Chair)

  Karen A.   Puckett    58    2015   

Former President and Chief Executive

Officer, Harte Hanks, Inc.

   Yes   

•  Audit

•  Personnel (Chair)

*

Ms. Hyland joined the Board in March 2019, and if elected, will be assigned to Board committees at the Board’s organizational meeting immediately following the Annual Meeting.

Our Board of Directors

Board Composition

The Entergy Board includes a diverse group of leaders in their respective fields. We believe their varied backgrounds, skills and experiences contribute to an effective and well-balanced Board that is able to provide valuable insight to, and effective oversight of, our senior executive team. Key characteristics of our Board are:

 

 

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Tenure Independence Gender Diversity

 

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Refreshment

We are committed to Board refreshment and a robust director nominee selection process. On an ongoing basis, the Corporate Governance Committee considers emerging business needs and desired skills when evaluating potential candidates. In 2018, we continued an intensive search process initiated in 2017 to identify director candidates with the skills, backgrounds and experiences that we believe should be represented on the Board. This search process resulted in the election of Ms. Hyland, former Senior Vice President, EQT Corporation, effective March 2019. Ms. Hyland brings to the Board her extensive senior executive and operations experience in a capital-intensive industry, as well as her experience in finance and strategic planning.

Corporate Governance Highlights

The Board is committed to sound and effective corporate governance practices and continuously monitors best practices and actively seeks input from our shareholders on these issues. Below are highlights of our key corporate governance and Board policies:

 

  Changes Since 2018

  Annual Meeting

 

    Modified Corporate Governance Committee Charter to assign responsibility for oversight of the Company’s sustainability strategies and practices to the Corporate Governance Committee

    Created a new sustainability and environmental policy organization to determine and coordinate the Company’s sustainability strategies, policies and practices, including sustainability reporting

 

Corporate Governance Highlights   Board of Directors Highlights

  Annual election of directors

 

  Majority voting for directors

 

  Proxy access right for our shareholders

 

  Regular executive sessions of independent directors

 

  Year-round shareholder outreach program

 

  No poison pill; Board policy requires shareholder approval for adoption

 

  Disclosure of corporate political contributions and oversight of lobbying and political activity

 

  Limits on the number of public-company boards on which our directors may serve

 

  No supermajority voting provisions

 

  Maintain executive stock ownership requirements, which support mandatory stock retention requirements and aligns executives interests with shareholders

 

  Prohibit short selling, hedging, pledging and margin transactions involving Entergy securities

 

  Independent Lead Director with broad authority when role of Chairman and Chief Executive Officer are combined

 

  Resignation policy for directors who do not receive majority vote

 

  Mandatory director retirement at 74

 

  9 out of 10 directors are independent and all committee members are independent

 

  Continued refreshment of the Board with 5 new Board members since 2015

 

  Robust and active director succession and nomination process serves to identify talented and diverse Board members.

 

  The Board and its committees conduct annual self-assessments and individual peer assessments

 

  Director education program

 

  Stock ownership policy for directors of five times annual cash retainer by fifth anniversary of service

 

  Deep engagement with Company personnel through off-site Board Retreat and management presentations to the Board

 

  Led by the Audit Committee, the Board is broadly focused on risk assessment, management and mitigation

 

 

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Our Business

We are an integrated energy company engaged primarily in electric power production and retail distribution operations. Entergy owns and operates power plants with approximately 30,000 megawatts of electric generating capacity, including nearly 9,000 megawatts of nuclear power. Entergy delivers electricity to 2.9 million utility customers in Arkansas, Louisiana, Mississippi and Texas. Entergy has annual revenues of $11 billion and more than 13,000 employees.

2018 Performance and Strategic Accomplishments

The following items highlight our 2018 performance and recent accomplishments. For more information about these accomplishments and their relationship to our executive compensation programs, please see “Compensation Discussion and Analysis” on page 40 of this Proxy Statement.

 

Financial Performance

 

  As-reported GAAP EPS of $4.63, up $2.43 from 2017

 

  Operational EPS of $7.31, up $0.11 from 2017 and above original guidance range

 

  Utility, Parent & Other adjusted EPS of $4.71, up $0.14 from 2017, in line with guidance and growth expectations

 

  Total shareholder return of 10.6%, ranking 6th out of 20 companies in PHLX

 

  Increased dividend for 4th straight year

 

 

Sustainability

 

  Named to Dow Jones Sustainability North America Index, with top scores in policy influence, climate strategy, water-related risks and corporate citizenship and philanthropy

 

  Prepared climate strategy and scenario analysis report and announced new climate commitment to reduce our CO2 emission rate to 50% below 2000 levels by 2030

 

  Continued investment in our workforce, resulting in improvements in safety and organizational health, and invested $18 million in our communities

 

Investing in the Utility

 

  Continued execution on portfolio transformation strategy, with nearly 3,000 MW of new generation under construction and an additional approximately 1,270 MW under contract for purchase

 

  Continued investment in renewables projects, with 1,000 MW of renewable resources completed in 2018 or in various stages of development

 

  Invested approximately $900 million in transmission capital projects

 

  Continued execution on AMI, with installation of advanced meters beginning in early 2019

 

 

 

Exiting the Wholesale Business

 

  Received final regulatory approvals and, in January 2019, completed the sale of the previously shut down Vermont Yankee Nuclear Power Station

 

  Entered into agreements to sell the Pilgrim Nuclear Power Station and Palisades Power Plant after the plants are shut down in 2019 and 2022, respectively, and filed for NRC approval of Pilgrim sale

 

 

 

See Appendix A for reconciliation of non-GAAP financial measures to GAAP results.

Shareholder Outreach

Each year we conduct a vigorous shareholder outreach program to share our approach to corporate governance and obtain your insights and feedback on matters of mutual interest. During 2018, we contacted shareholders owning approximately 48% of our outstanding shares of common stock, resulting in substantive engagements with the holders of approximately 27% of our outstanding

 

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shares. In these engagements, we discussed topics that included industry and business developments, corporate strategy, director refreshment and other corporate governance issues, environmental and social issues, including the climate strategy and scenario analysis report that we published contemporaneously with the issuance of this proxy statement, and proxy statement disclosures. The perspectives provided by our shareholders informed our decision making and helped to guide our actions in continuing to enhance our environmental, social and governance disclosures and our disclosures related to our Board of Directors.

Executive Compensation Highlights

Following is a summary of key features of our executive compensation programs and policies and pay outcomes for 2018. For additional information, see the Compensation, Discussion and Analysis beginning on page 40.

Executive Compensation Best Practices

 

What We Do

 

 

What We Don’t Do

 

 Executive compensation programs are highly correlated to performance and focused on long-term value creation

 Double trigger for severance payments or equity acceleration in the event of a change in control

 Clawback policy

 Maximum payout capped at 200% of target under our Annual Incentive Plan and Long-Term Performance Unit Program for members of the Office of the Chief Executive

 Minimum vesting periods for equity based awards

 Long-term compensation mix weighted more toward performance units than service-based equity awards

 All long-term performance units settled in shares of Entergy stock

 Rigorous stock ownership requirements

 Executives required to hold substantially all equity compensation received from the Company until stock ownership guidelines are met

 Annual Say-on-Pay vote

 

 

×  No 280G tax “gross up” payments in the event of a change in control

×  No tax “gross up” payments on any executive perquisites, other than relocation benefits

×  No option repricing or cash buy-outs for underwater options

×  No agreements providing for severance payments to executive officers that exceed 2.99 times annual base salary and annual incentive awards without shareholder approval

×  No unusual or excessive perquisites

×  No new officer participation in the System Executive Retirement Plan

×  No grants of supplemental service credit to newly-hired officers under any of the Company’s non-qualified retirement plans

Our Pay for Performance Philosophy

Entergy’s executive compensation programs are based on a philosophy of pay for performance that is embodied in the design of our annual and long-term incentive plans. We target total direct compensation (“TDC”) for our executive officers at market median and place a substantial portion of that compensation “at risk,” subject to achieving both short-term and long-term performance goals. Approximately 86% of the annual target TDC of our Chief Executive Officer and, on average, approximately 71% of the annual target TDC of our other Named Executive Officers (in each case excluding non-qualified supplemental retirement income) is equity or performance-based compensation. Only the base salary portion of annual target TDC is fixed.

 

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  PROXY SUMMARY  

 

 

FY 2018 CEO Compensation Mix

 

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Ø Base Salary

  Provides a base level of competitive cash compensation for executive talent

  Salary level based on experience, job scope, market data and individual performance

  Only fixed element of compensation

 

 

Ø Annual Incentive

  Motivates and rewards executives for performance on key financial measures during the year

  Payout based on success in meeting consolidated operational earnings per share (“EPS”), consolidated operational operating cash flow (“OCF”) targets and Personnel Committee judgement

  100% performance based

  Ensures that significant portion of annual compensation is at-risk

 

 

 

Ø Long-Term Performance Units

  Focuses our executive officers on building long-term shareholder value and growing earnings and increases our executive officers’ ownership of our common stock and encourages retention

  Performance Units are paid 100% in stock and are earned based on total stockholder return (“TSR”) relative to peers and for performance periods beginning in 2018, utility earnings growth

 

 

Ø Time-Based Equity

  Stock Options and Restricted Stock reward executives for absolute value creation, provide competitive compensation, retain executive talent and increase our executive officers’ ownership in our common stock

  Awarded based on job scope, market data, individual performance and Company performance

 

2018 Incentive Compensation Outcomes

Annual Incentive Plan

The 2018 Entergy Achievement Multiplier (“EAM”), which is the performance metric used to determine the maximum funding available for awards under the plan, was determined based in equal part on our success in achieving our consolidated operational EPS and consolidated operational OCF goals set at the beginning of the year. These goals were approved by the Personnel Committee based on the Company’s financial plan and the Board’s overall goals for the Company and were consistent with the Company’s published earnings guidance.

 

  v

2018 Annual Incentive Plan Payout. For 2018, the Personnel Committee, based on a recommendation of the Finance Committee, determined that management exceeded its consolidated operational EPS goal of $6.55 per share by $2.08 per share, but fell short of its consolidated operational OCF goal of $3.000 billion by approximately $180 million. Based on the targets and ranges previously established by the Personnel Committee, these results resulted in a calculated EAM of 134%.

 

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  PROXY SUMMARY

 

 

 

 

      

After considering individual performance, including not only the role played by each of the Named Executive Officers in advancing the Company’s strategies and delivering the strong financial results achieved in 2018, but also each such individual’s degree of accountability for certain operational and regulatory challenges the Company experienced in 2018, the Personnel Committee approved payouts ranging from 115% to 122% of target for each of the Named Executive Officers.

Long-Term Performance Unit Program

Performance under our Long-Term Performance Unit Program for the 2016 – 2018 period was measured over a three-year period by assessing Entergy’s total shareholder return in relation to the total shareholder return of the companies included in the Philadelphia Utility Index. Payouts for the 2016 – 2018 performance period were based solely on the Company’s relative performance and were not subject to adjustment by the Personnel Committee.

 

  v

Long-Term Performance Unit Program Payout. For the three-year performance period ending in 2018, the Company’s TSR was 9th out of the 20 companies in the Philadelphia Utility Index, resulting in a payout of 111% of target for our executive officers. Payouts were made in shares of Entergy stock which are required to be held by our executive officers until they satisfy our executive stock ownership guidelines.

 

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BOARD OF DIRECTORS

Proposal 1 – Election of Directors

Our Board is presenting 10 nominees for election as directors at our Annual Meeting. Each nominee currently serves as a director of the Company, and other than Ms. Hyland, each was elected by our shareholders at our 2018 Annual Meeting of Shareholders. The number of directors constituting our Board is currently set at 10. The Corporate Governance Committee is actively engaged in the process of recruiting an additional director and has engaged an outside search firm to assist it in identifying qualified candidates.

Each director elected will serve until the next annual meeting and until his or her successor is duly elected and qualified. Each director nominee has consented to being named in this Proxy Statement and to serve as a director if elected. If any nominee is unable to stand for election for any reason, the shares represented at our Annual Meeting by proxy may be voted for another candidate proposed by our Board. Proxies cannot be voted for a greater number of directors than the 10 nominees identified in this Proxy Statement. If you sign and properly submit your proxy card, but do not give instructions with respect to voting for directors, your shares will be voted for the 10 persons recommended by the Board of Directors.

The biographies of each of the nominees below contain information regarding the person’s service as a director, business experience, and director positions held. Below is a summary regarding the experience, qualifications and attributes of each nominee that caused our Corporate Governance Committee and Board to determine that the person should serve as a director. The Board also believes that all of the nominees have personal traits such as candor, integrity, commitment, and collegiality that are essential to an effective board of directors. Each of our director nominees is committed to working with, and participating in, their communities and the communities we serve. The non-employee director nominees collectively also satisfy the Corporate Governance Committee’s goal of geographic diversity, with the 10 nominees residing in seven states, including nominees with strong ties to the states of Arkansas, Louisiana and Texas where we have significant operations.

 

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  BOARD OF DIRECTORS  

 

 

 

The following chart displays information about the skills and experience our Board members bring to their service:

 

                     

Summary of Director Qualifications

    Burbank     Condon     Denault     Donald     Frederickson     Herman     Hyland     Levenick     Lincoln     Puckett

Technology and Transformation

Our industry is undergoing transformational change as a result of advances in technology and changing customer expectations about the products and services they want and need to power their lives. This creates opportunities for companies whose leadership is able to understand those changes and what they mean for their customers and other stakeholders. Directors with experience managing consumer-facing businesses and operations that have been impacted by transformational change can provide the Board with critical insights and perspective on these issues and challenges.

                         

Executive Experience

Directors who hold or have held significant executive or leadership positions within large organizations provide the Company with unique insights. These individuals generally possess extraordinary leadership qualities as well as the ability to identify and develop those qualities in others. Their experiences developing talent and solving problems in large, complex organizations prepare them well for the responsibilities of Board service.

                       

Finance and Accounting

Accurate financial reporting and robust auditing are critical to our success. We seek to have at least one director who qualifies as an audit committee financial expert, and we expect all of our directors to be literate in finance and financial reporting processes.

                         

Government/Legal/Public Policy

Our businesses are heavily regulated and are directly affected by governmental actions. As such, we seek to have directors with experience in government, law and public policy to provide insight and understanding of effective strategies in these areas.

                                   

Operations

As a capital – intensive company, we seek to have directors with deep experience in a significant operations role with a large business to develop, implement and assess our capital plan and our business strategy

                               

Regulated Utility/Nuclear

Due to the complexity of our business, we believe it is important to have directors with experience in the utility industry or in nuclear power operations to enable the Board to provide effective oversight of our operations.

                               

Risk Management

Managing risk in a rapidly changing environment is critical to our success. Directors should have a sound understanding of the most significant risks facing the Company and the experience and leadership to provide effective oversight of risk management processes.

                     

Other Public Boards

Directors who have served on other public company boards are able to draw on lessons learned on their other boards, as they seek to develop and implement best practices for the Company.

                       

 

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Our 2019 Director Nominees

The following pages contain information concerning each of the nominees for director, including each nominee’s age as of March 22, 2019, period served as a director, position (if any) with the Company, business experience and qualifications, directorships of other publicly-owned corporations (if any) and other professional affiliations.

 

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John R. Burbank

 

Southport, Connecticut

Age 55

Director Since 2018

 

 

  

 

Entergy Board Committees

 

  Finance

 

  Personnel

    
       

 

Professional Experience

 

  Former President, Corporate Development and Strategy, Nielsen Holdings plc (a global information, data and measurement company) – 2017 – 2019
  President, Strategic Initiatives, Nielsen Holdings plc – 2011-2017
  Director, Change Labs, LTD
  Trustee, March of Dimes

Skills and Attributes

Mr. Burbank brings to the Board his extensive management experience in consumer-facing businesses that have been and continue to be disrupted by technological change. Accordingly, he brings valuable insights and perspective on the potential impact of technological change on our industry and our company. Mr. Burbank also brings the benefit of his extensive senior management experience leading strategic investments and corporate development and strategy at Nielsen Holdings plc.

 

 

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Patrick J. Condon

 

Frankfort, Illinois

Age 70

Director Since 2015

 

 

  

 

Entergy Board Committees

 

  Audit (Chair)

 

  Nuclear

    
       

 

Professional Experience

 

  Retired Audit Partner of Deloitte & Touche LLP (international public accounting firm) – 2002-2011
  Former Audit Partner of Arthur Andersen LLP (international public accounting firm)
  Former Director, Cloud Peak Energy, Inc. and Roundy’s, Inc.

Skills and Attributes

As a retired audit partner of a “Big Four” accounting firm, Mr. Condon brings his many years of experience in auditing and accounting to the Board. As leader of Arthur Andersen’s utility group, Mr. Condon acquired in-depth knowledge of the utility industry. The Board also benefits from his regional and national leadership experience gained at Deloitte & Touche LLP and his current and prior service to community and charitable organizations and on other public company boards.

 

 

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Leo P. Denault

 

New Orleans, Louisiana

Age 59

Director Since 2013

 

 

  

 

Entergy Board Committees

 

  Executive (Chair)

    
       

 

Professional Experience

 

  Chairman of the Board of Directors of Entergy Corporation since February 2013
  Chief Executive Officer of Entergy Corporation and Entergy Services, Inc. since February 2013
  Executive Vice President and Chief Financial Officer of Entergy Corporation – 2004-2013
  Director, Edison Electric Institute
  Director, Institute of Nuclear Power Operations
  Director, Atlanta Center Regional Governing Board of the World Association of Nuclear Operations

Skills and Attributes

As our Chairman and Chief Executive Officer and former Executive Vice President and Chief Financial Officer, Mr. Denault brings to the Board his leadership skills, his extensive senior executive experience in the utility industry and his deep knowledge of the Company.

 

 

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Admiral Kirkland H.

Donald, USN (Ret.)

 

Mount Pleasant, South Carolina

Age 65

Director Since 2013

 

  

 

Entergy Board Committees

 

  Finance

 

  Nuclear (Chair)

    
       

 

Professional Experience

 

  Former President and Chief Executive Officer of Systems Planning and Analysis, Inc. (developer of national defense and homeland security programs) – 2014-2015
  Former Executive Vice President, Chief Operating Officer and Director of Systems Planning and Analysis, Inc. – 2013-2014
  Admiral (retired) U.S. Navy
  Former Director, Naval Nuclear Propulsion – 2004-2013
  Director, Huntington Ingalls Industries, Inc.
  Director, Battelle Memorial Institute
  Director, CyberCore Technologies
  Director, Naval Submarine League
  Executive Advisor to NexPhase Capital Partners (private equity firm, formerly Moelis Capital Partners) since January 2013
  Committee on Foreign Investment in the United States (“CFIUS”) Security Monitor, LANXESS Corporation
  CFIUS Voting Trustee, Broadcom Limited
  Member, Board of Managers, Robbins Gioia LLC

Skills and Attributes

Mr. Donald brings to the Board deep nuclear expertise and valuable leadership and risk-management experience gained through his distinguished military career in the United States Navy’s nuclear program and through his business and senior management experience since retiring from the Navy.

 

 

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Philip L. Frederickson

 

Horseshoe Bay, Texas

Age 62

Director Since 2015

 

 

  

 

Entergy Board Committees

 

  Audit

 

  Executive

 

  Finance (Chair)

    
       

 

Professional Experience

 

  Former Executive Vice President, Planning, Strategy and Corporate Affairs of ConocoPhillips (international oil and gas company) – 2006-2008
  Former Executive Vice President, Commercial of ConocoPhillips – 2002-2006
  Former Director, Sunoco Logistics Partners L.P., Rosetta Resources Inc. and Williams Partners LP

Skills and Attributes

Mr. Frederickson brings to the Board his extensive senior management, operating and leadership experience gained through his business career at ConocoPhillips and its predecessor, Conoco Inc., where he held a variety of senior management positions in operations, strategy and business development. In addition to his diverse senior-level management experience, Mr. Frederickson brings his experience leading strategic change both at ConocoPhillips and on the other public company boards on which he has served. His strong ties to the State of Texas also enable him to provide insight into the issues and concerns of our service territories.

 

 

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Alexis M. Herman

 

McLean, Virginia

Age 71

Director Since 2003

 

 

  

 

Entergy Board Committees

 

  Corporate Governance

 

  Personnel

    
       

 

Professional Experience

 

  Chair and Chief Executive Officer of New Ventures, LLC (corporate consultants) since 2001
  Former Secretary of Labor of the United States of America
  Former White House Assistant to the President of the United States of America
  Lead Director, Cummins, Inc.
  Director, Coca-Cola Company and MGM Resorts International
  Co-Chair of the Presidential Leadership Scholar Program and Trustee for the National Urban League
  Chair, Toyota Motor Corporation North American Diversity Advisory Board and Member, Global Advisory Board
  President, Dorothy I. Height Education Foundation

Skills and Attributes

Secretary Herman brings to the Board a combination of high-level U.S. government service, experience as a strategic advisor to numerous U.S. and international companies and broad public policy expertise, as well as her public company board experience, including her service as Lead Independent Director to another public company. Through her service on other boards, Ms. Herman has also gained experience addressing the strategic issues of companies impacted by changing consumer demands and technological change.

 

 

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M. Elise Hyland

 

Pittsburgh, Pennsylvania

Age 59

Director Since 2019

 

 

  

 

Entergy Board Committees

 

*

    
       

 

*

Ms. Hyland was elected to the Board effective March 4, 2019. If she is reelected, Ms. Hyland will be assigned to Board committees at the Board’s organizational meeting immediately following the Annual Meeting.

 

Professional Experience

 

  Former Senior Vice President, EQT Corporation and Senior Vice President and Chief Operating Officer, EQT Midstream Services, LLC (a petroleum and natural gas exploration and pipeline company) – 2017-2018
  Executive Vice President of Midstream Operations and Engineering, EQT Midstream Services, LLC – 2013-2017
  President of Commercial Operations, EQT Midstream Services, LLC – 2010-2013
  President of Equitable Gas Company, a previously owned entity of EQT – 2007-2010
  Director of Marathon Oil Corporation
  Former Director, EQT Midstream Partners LP

Skills and Attributes

Ms. Hyland brings to the Board her extensive senior executive and operations experience in a capital-intensive industry, gained through her career at EQT Corporation and EQT Midstream Services, LLC. This experience, combined with her experience in finance and strategic planning, will enable her to contribute valuable insights as we grow our utility business and execute on our capital plan.

 

 

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Stuart L. Levenick

 

Peoria, Illinois

Age 66

Director Since 2005

 

 

  

 

Entergy Board Committees

 

  Corporate Governance

 

  Executive

 

  Nuclear

    
       

 

Professional Experience

 

  Lead Director of Entergy Corporation since May 2016
  Former Group President and Executive Office Member of Caterpillar Inc. (a manufacturer of construction and mining equipment) – 2004-2015
  Former Executive Director of U.S. Chamber of Commerce, Washington, D.C.
  Former Executive Director and Past Chairman of Association of Equipment Manufacturers, Washington, D.C.
  Lead Independent Director, W. W. Grainger, Inc.
  Director, Finning International, Inc.

 

Skills and Attributes

Mr. Levenick brings to the Board his extensive senior executive experience at a major manufacturing company, as well as his experience as a public company director, including as Lead Independent Director of another public company. This experience enables him to contribute valuable operational and financial expertise and offers an informed perspective on leadership development, management and business issues arising out of evolving customer needs and desires in response to technological change.

 

 

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Blanche Lambert Lincoln

 

Arlington, Virginia

Age 58

Director Since 2011

 

 

  

 

Entergy Board Committees

 

  Audit

 

  Corporate  Governance (Chair)

    
       

 

Professional Experience

 

  Founder and Principal of Lincoln Policy Group (a consulting firm) since July 2013
  Special Policy Advisor for Alston & Bird LLP (legislative and public policy services) – 2011-2013
  Former United States Senator for the State of Arkansas –1999-2011
  Former United States Representative for the State of Arkansas – 1993-1997
  Former Chair, U.S. Senate Committee on Agriculture, Nutrition and Forestry
  Former Member, U.S. Senate Committee on Finance, Committee on Energy and Natural Resources, and Special Committee on Aging
  Former Member of the U.S. House Committee on Energy and Commerce, Committee on Agriculture and Committee on Natural Resources (formerly House Committee on Merchant Marine and Fisheries)
  Director, Rayonier, Inc.
  Trustee of the Center for the Study of the Presidency and Congress
  Director, Hope Enterprise Corporation

Skills and Attributes

As a former member of the U.S. Senate and House of Representatives, Ms. Lincoln brings to the Board her extensive background and experience in governmental, public policy and legislative affairs, providing her with a unique and valuable perspective on many of the critical issues and opportunities facing the Company. Her strong ties to the State of Arkansas also provide the Board with insight into the issues and concerns of our service territories.

 

 

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Karen A. Puckett

 

Houston, Texas

Age 58

Director Since 2015

 

 

  

 

Entergy Board Committees

 

  Audit

 

  Personnel (Chair)

    
       

 

Professional Experience

 

  Former President and Chief Executive Officer, Harte Hanks, Inc. (marketing services company) – 2015 – 2018
  Former President-Global Markets of CenturyLink, Inc. (a telecommunications company) – 2014-2015
  Former Executive Vice President and Chief Operating Officer of CenturyLink, Inc. – 2009-2014
  Former President and Chief Operating Officer of CenturyTel, Inc. – 2000-2009
  Former Director of Harte Hanks, Inc.

Skills and Attributes

Ms. Puckett brings to the Board her extensive management, operations and business experience acquired through her senior leadership positions in a rapidly changing and highly regulated industry and her deep experience with technology-driven innovation. Ms. Puckett’s ties to the State of Louisiana also enable her to offer insight into the issues and concerns of our service territories.

 

 

The Board of Directors unanimously recommends that the shareholders vote FOR the election of each nominee.

 

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  BOARD OF DIRECTORS  

 

 

 

Identifying Director Candidates

Our Corporate Governance Committee is charged with reviewing the composition of the Board and refreshing the Board as appropriate through the recommendations it makes to the Board. This is an ongoing process through which the Board has added 5 new directors since 2015. These directors have brought to the Board, among other things, deep finance and accounting experience, nuclear expertise, operational experience and senior leadership experience in companies or industries undergoing transformational change.

The Corporate Governance Committee has not established any minimum qualifications that must be met by director candidates or identified any set of specific qualities or skills that it believes our directors must possess. The Corporate Governance Committee’s policy regarding consideration of potential director nominees acknowledges that choosing a Board member involves a number of objective and subjective assessments, many of which are difficult to quantify or categorize. However, the Corporate Governance Committee follows these core principles:

 

   

Seeks to nominate candidates with superior credentials, sound business judgment and the highest ethical character.

   

Takes into account the candidate’s relevant experience with businesses or other organizations of comparable size to the Company and seeks to identify candidates whose experience and contributions will add to the collective experience of the Board.

   

Believes the Board should reflect a diversity of backgrounds and experiences in various areas, including age, gender, race, geography and specialized experience, and candidates are assessed to determine the extent to which they would contribute to that diversity.

Director Recruitment Process

 

 

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Sources of Candidates Independent Search Firm Shareholders Independent Directors Our People In-Depth Review Consider Skills Needed Screen Qualifications Consider Diversity Review Independence and Potential Conflicts Meet with Directors Recommend Selected Candidate for Appointment Review by Full Board Select Director(s) 5 New Directors Since 2015

In 2017, in anticipation of three upcoming director retirements in 2018, the Corporate Governance Committee commenced the process illustrated above to identify and evaluate prospective director candidates. The committee engaged Russell Reynolds Associates, a director and executive search firm, to assist it in identifying potential director candidates. The Corporate Governance Committee, with Russell Reynolds’ assistance, sought to identify candidates with backgrounds and qualifications that would add to the collective knowledge and expertise of the Board, while also reflecting an appropriate diversity of backgrounds and experiences. The committee considered candidates identified by Russell Reynolds and other candidates identified by our directors. The Corporate Governance Committee envisioned a thoughtful and deliberate multi-year process of Board refreshment in which the Board would address needs arising not only as a result of the loss of the experiences and backgrounds represented by the retiring directors, but also as a result of technological and other changes affecting the utility industry.

Initially, the Corporate Governance Committee sought to identify a director who would help us to both respond to, and benefit from, the significant technological changes affecting the utility industry, combined with rapidly evolving customer expectations about the products and services they want and

 

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need to power their lives. As a result of this initial phase, John R. Burbank was appointed to the Board in March 2018 and subsequently elected by the Company’s shareholders at the 2018 Annual Meeting.

Subsequent to Mr. Burbank’s election, in recognition of the continuing importance of successfully executing on the Company’s substantial capital plan, the committee asked Russell Reynolds to help it identify candidates with senior executive experience implementing major capital investment projects or leading companies in capital-intensive industries. Through this process Russell Reynolds identified M. Elise Hyland as a candidate who offered that experience, based on, among other things, her senior executive experience at EQT Corporation, a large natural gas production company, and EQT Midstream Services, LLC. Her more than 35 years of operations experience also has included positions in finance, strategic planning and customer service. Prior to joining EQT Ms. Hyland, who holds undergraduate and graduate degrees in metallurgical engineering and materials science, held roles of increasing responsibility in research, materials and business development at Alcoa, Inc.

Ms. Hyland was interviewed by our Chairman of the Board, our Lead Director, the Chair of the Corporate Governance Committee and the immediate past Chair of the Corporate Governance Committee. Her background and qualifications were reviewed and discussed by the Corporate Governance Committee and with the full Board of Directors prior to her recommendation for election to the Board. Following this review, the Corporate Governance Committee concluded that Ms. Hyland would be an outstanding candidate for election to the Board and unanimously recommended her election. Following the Corporate Governance Committee’s recommendation, Ms. Hyland was elected to the Board effective March 2019.

Shareholder Nominations and Recommendations of Director Candidates

Shareholders who wish to nominate directors for election at an Annual Meeting should follow the procedures and instructions set forth in our Bylaws.

Our Bylaws also include a “proxy access” right that permits a group of up to 20 shareholders who have owned at least 3% of our outstanding common stock for at least three years to submit director nominees for up to 20% of the Board for inclusion in our Proxy Statement, if the shareholder and the nominee meet the requirements in our Bylaws.

Shareholders who wish to recommend, but not directly nominate, candidates for consideration should send their recommendations to the Company’s Secretary at 639 Loyola Avenue, New Orleans, Louisiana 70113. The committee will consider director candidates recommended by shareholders in accordance with the criteria for director selection described above under “Identifying Director Candidates.”

Director Orientation and Continuing Education

Upon joining the Board, new directors undergo a comprehensive orientation program that introduces them to the Company, including our business operations, strategy, key members of management, and our corporate governance practices. This program is considered a valuable part of the director onboarding process and is annually reviewed for effectiveness by the Corporate Governance Committee. In 2018, this policy was revised to, among other things, clarify that meetings with a new director should be tailored to complement the background of the new director and should take into account whether the new director currently serves or has previously served on a public company board. Directors also are encouraged to enroll in director education programs, and the Corporate Governance Committee annually reviews and reports on director participation in such programs.

 

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  BOARD OF DIRECTORS  

 

 

 

The Board is briefed regularly on industry and corporate governance developments affecting the Company and, at its annual Retreat, the Board has the opportunity to discuss some of the most critical strategic issues facing the Company with outside experts in the applicable fields. The annual Retreat also includes a director education component, programmed by the Corporate Governance Committee, which focuses on director duties and responsibilities and current issues in corporate governance. To enhance the Board’s understanding of some of the unique issues affecting our nuclear fleet, directors are regularly invited to visit our nuclear plant sites, where they tour the facilities and interact directly with the personnel responsible for our day-to-day nuclear operations. These activities collectively help to ensure that the Board remains knowledgeable about the most important issues affecting our Company and its business.

 

CORPORATE GOVERNANCE AT ENTERGY

Entergy’s Board of Directors

The Board of Directors provides oversight with respect to our overall performance, strategic direction and key corporate policies. It approves major initiatives, advises on key financial and business objectives, and monitors progress with respect to these matters. Members of the Board are kept informed of our business through various reports and documents provided to them on a regular basis, including operating and financial reports made at Board and committee meetings by the Chairman and Chief Executive Officer and other senior executive officers.

Director Independence

Board Members. A director is considered independent if the Board affirmatively determines that he or she has no material relationship with the Company and otherwise satisfies the independence requirements of the NYSE. A director is “independent” under the NYSE listing standards and our Corporate Governance Guidelines if the Board affirmatively determines that the director has no material relationship with us directly or as a partner, shareholder or officer of an organization that has a material relationship with us. In addition, the Board of Directors considers all of the independence factors specified in the rules of the NYSE in making its determination. The Board of Directors has reviewed information concerning each of its non-employee directors and has considered all relevant transactions, relationships and arrangements to determine compliance with the independence standards established by the NYSE and our Corporate Governance Guidelines.

Our Board has determined, upon the recommendation of the Corporate Governance Committee, that all directors other than Mr. Denault are independent within the meaning of the rules of the NYSE and our Corporate Governance Guidelines. In making this determination, the Board considered Ms. Lincoln’s service as a director of Hope Enterprises Corporation, a non-profit community development financial institution (“HEC”), that provides financial products and services in Arkansas, Louisiana and Mississippi. In 2010, one of our subsidiaries renewed a $1,500,000 loan to a subsidiary of HEC. Ms. Lincoln is neither an officer nor an employee of HEC or any of its subsidiaries.

Heightened Standards for Audit and Personnel Committee Members. In addition to the general independence requirements of the NYSE, all members of the Audit and Personnel Committees must meet the heightened independence standards imposed by the SEC and the NYSE applicable to members of such committees. All of the members of the Audit and Personnel Committees satisfy the heightened independence standards established for those committees under the rules of the SEC and NYSE.

 

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CORPORATE GOVERNANCE AT ENTERGY  

 

 

Structure of Our Board

Our Board Leadership Structure

Our Corporate Governance Guidelines provide the flexibility to split or combine the Chairman and Chief Executive Officer responsibilities. However, when the roles of Chairman of the Board and the Chief Executive Officer are combined, the guidelines require the Board of Directors to appoint, from among its independent members, a Lead Director. The independent directors annually review our leadership structure to determine the structure that is in the best interest of Entergy and its shareholders. Currently our Company is led by Leo P. Denault, who has served as Chief Executive Officer and Chairman of the Board since 2013, and Stuart L. Levenick who has served as our Lead Director since 2016. Our Board is currently composed of Mr. Denault and 9 independent directors.

How We Select The Lead Director

The Corporate Governance Committee considers feedback from our Board members and then makes a recommendation to the Board’s independent directors. Based on this recommendation, the Lead Director is appointed by a majority of the independent members of the Board of Directors. The Lead Director, subject to his or her annual election to the Board of Directors, serves for a term of three years.

Role of the Lead Director

Under our Corporate Governance Guidelines and other governance policies, the Lead Director has the following responsibilities:

 

   

Calls meetings of the independent directors

   

Presides at executive sessions of the independent directors and all meetings of the Board at which the Chairman and Chief Executive Officer is not present

   

Serves as a member of the Executive Committee of the Board

   

Serves as a liaison with the Chairman and Chief Executive Officer when requested by the independent directors

   

Serves as the point of contact for shareholders and others to communicate with the Board

   

Meets individually with each director to discuss the performance of the individual director, the Board and its committees

   

Reviews and advises on Board meeting agendas and consults with the Chairman and Chief Executive Officer on the preparation of agendas

   

Provides feedback from the Board to the Chairman and Chief Executive Officer following each executive session of independent directors and, together with the Chair of the Personnel Committee, provides the Chairman and Chief Executive Officer with an annual performance review

   

Assists with recruitment of director candidates and, along with the Chairman, may extend the invitation to a new potential director to join the Board

Why Our Board Structure Is Appropriate

The Board understands and appreciates the reasons many boards choose to be led by a fully independent Chairman of the Board. In recognition of the importance of this issue, our Corporate Governance Committee annually evaluates whether we continue to have the appropriate Board leadership structure. However, the Board believes that its current leadership structure, under which it is led by a combined Chairman and Chief Executive Officer and a strong independent Lead Director, with

 

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independent directors chairing each of the Board committees, is most suitable for the Company at this time because it provides the optimal balance between independent oversight of management and efficient, unified leadership. Given his deep involvement in the Company’s business and industry, we believe Mr. Denault is uniquely positioned to determine the issues and topics that should be on the Board’s agenda, subject to the Lead Director’s review and concurrence. At the same time, we believe that having an otherwise entirely independent Board of Directors, led by a strong independent Lead Director and independent chairs of each of our standing committees, provides ample assurance that the Board will not be unduly dominated or influenced by management and will always act independently and in the best interests of the Company’s shareholders.

Board Committees

The Board has 6 standing committees: Audit, Corporate Governance, Personnel, Finance, Nuclear and Executive. The committees:

 

   

Operate pursuant to a written charter;

   

Evaluate their performance annually; and

   

Review their charters annually.

The members of the Board committees and their Chairs are nominated by the Corporate Governance Committee and appointed by the Board. The specific membership of each committee allows us to take advantage of our directors’ diverse skill sets, which enables deep focus on committee matters.

Board Committee Composition and Responsibilities

The tables below show the current chairs and membership of each standing committee. All of the directors are independent, except Mr. Denault.

 

   
Audit   Key Responsibilities

Patrick J. Condon

(Chair)

Philip L. Frederickson

Blanche L. Lincoln

Karen A. Puckett

11 meetings in 2018

 

Mr. Condon and Mr. Frederickson have been determined to be Financial Experts as defined by the SEC

 

•   Oversees our accounting and financial reporting processes and the audits of our financial statements;

•   Assists the Board in fulfilling its oversight responsibilities with respect to our compliance with legal and regulatory requirements, including our disclosure controls and procedures;

•   Decides whether to appoint, retain or terminate our independent auditors;

•   Pre-approves all audit, audit-related, tax and other services, if any, provided by the independent auditors;

•   Appoints and oversees the work of our Vice President, Internal Audit and assesses her performance annually; and

•   Prepares the Audit Committee Report.

   
Corporate Governance   Key Responsibilities

Blanche L. Lincoln

(Chair)

Alexis M. Herman

Stuart L. Levenick

9 meetings in 2018

 

•   Develops policies and practices relating to corporate governance and reviews compliance with the Company’s Corporate Governance Guidelines;

•   Recommends the director nominees for approval by the Board and shareholders;

•   Establishes and implements self-evaluation procedures for the Board and its committees;

•   Reviews annually the form and amount of non-employee director compensation, and makes recommendations to the Board with respect thereto; and

•   Provides oversight of the Company’s sustainability strategies, policies and practices.

 

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Finance   Key Responsibilities

Philip L. Frederickson

(Chair)

John R. Burbank

Kirkland H. Donald

8 meetings in 2018

 

•   Oversees corporate capital structure and budgets and recommends approval of capital projects;

•   Oversees financial plans and key financial risks;

•   Reviews and makes recommendations to the Board regarding our financial policies, strategies, and decisions, including our dividend policy;

•   Reviews our investing activities; and

•   Reviews and makes recommendations to the Board with respect to significant investments.

   
Nuclear   Key Responsibilities

Kirkland H. Donald

(Chair)

Patrick J. Condon

Stuart L. Levenick

5 meetings in 2018*

 

•   Provides non-management oversight and reviews all of the Company’s nuclear generating plants;

•   Focuses on safety, operating performance, operating costs, staffing and training; and

•   Consults with management concerning internal and external nuclear-related issues.

   
Personnel   Key Responsibilities

Karen A. Puckett

(Chair)

John R. Burbank

Alexis M. Herman

9 meetings in 2018

 

•   Determines and approves the compensation of our Chief Executive Officer and other senior executive officers;

•   Approves or makes recommendations to the Board to approve incentive, equity-based and other compensation plans;

•   Develops and implements compensation policies;

•   Evaluates the performance of our Chairman and Chief Executive Officer; and

•   Reports at least annually to the Board on succession planning, including succession planning for the Chief Executive Officer.

   
Executive   Key Responsibilities

Leo P. Denault (Chair)

Phillip L. Frederickson

Stuart L. Levenick

No meetings in 2018

 

•   Authorized to act for the Board on all matters, except those matters specifically reserved by Delaware law to the entire Board.

 

*

The number of Nuclear Committee meetings in 2018 does not include visits to our nuclear sites or meetings with the Institute of Nuclear Power Operations by members of the Nuclear Committee.

Director Attendance and Executive Sessions

Board Meetings. In 2018, our Board of Directors held 16 meetings. No incumbent director attended fewer than 75% of the total number of meetings of our Board and the committees on which he or she served. Overall attendance at Board and committee meetings during 2018 was an average of 93% for our directors as a group.

Annual Shareholder Meeting. We encourage, but do not require, our Board members to attend our annual meeting of shareholders. All of our Board members then in office attended our 2018 Annual Meeting of Shareholders.

Executive Sessions. The Corporate Governance Guidelines require the independent directors to meet in executive session without any members of management present at least four times a year. In practice, our Board typically meets in executive session during each regular Board meeting.

 

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How Our Board and Committees Evaluate Their Performance

Annually, the Board and each of its committees conduct a rigorous self-evaluation of their respective performance and effectiveness. This process, which is conducted in the early part of the calendar year, is overseen by the Corporate Governance Committee and is reviewed annually to determine whether it is well designed to maximize its effectiveness and to ensure that all appropriate feedback is being sought and obtained by the Corporate Governance Committee. Under the process followed in 2018, a comprehensive questionnaire was circulated to all independent members of the Board that asked the directors to assign ratings and comment on a wide range of issues relating to Board effectiveness. The collective ratings and comments were then compiled (on an anonymous basis), summarized and presented to the Corporate Governance Committee and the full Board for discussion.

Our Board evaluations cover the following areas:

 

 

Board effectiveness;

 

Board and committee structure and composition;

 

Satisfaction with the performance of the Chairman;

 

Satisfaction with the performance of the Lead Director;

 

Access to the Chief Executive Officer and other members of senior management;

 

Quality of the Board discussions and balance between presentations and discussion;

 

Quality of materials presented to directors;

 

Board and committee information needs;

 

Satisfaction with Board agendas and the frequency of meetings and time allocation;

 

Areas where directors want to increase their focus;

 

Board dynamics and culture;

 

Board dialogue;

 

Board and committee succession planning;

 

Director access to experts and advisors; and

 

Satisfaction with the format of the evaluation.

In 2018, our Board self-assessment process was revised to provide for the Lead Director and the Chairman of the Board to meet individually with each director to discuss the director’s individual performance and to obtain any additional feedback on the performance of the Board and its committees that the director wishes to provide. The Board believes that combining the confidential questionnaire-based process with the additional feedback that will be provided through these one-on-one meetings will help to ensure that the Board continues to function at the highest level.

Our Board’s Governance Role

How Our Board Oversees Risk Management

We believe the Board of Directors provides effective oversight of the risks we face and our risk assessment and risk management processes. The Board reviews the Company’s processes for identifying and managing risks and communicating with the Board about those risks to help ensure that the processes are effective. Like other companies, Entergy is subject to many diverse risks. These include financial and accounting risks, market and credit risks, capital deployment risks, operational risks, compensation risks, liquidity risks, litigation risks, strategic risks, regulatory risks, reputation risks, natural-disaster risks and technology risks, including the cybersecurity risks discussed below, among others. Some critical risks having enterprise-wide significance, such as corporate strategy and capital budget, require the full Board’s active oversight, but our Board committees also play a key role because they can devote more time to reviewing specific risks within their respective areas of responsibility.

 

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In accordance with NYSE standards, our Audit Committee has the primary responsibility for overseeing risk management. Our standing Board committees also regularly consider risks arising within their respective functional areas of responsibility. Each of these committees receives regular reports from management which assist it in its oversight of risk in its respective area of responsibility. Current risk assignments for our Board committees are as follows:

 

   
Party Responsible   Areas of Risk Oversight

Board

 

•   Overall identification, management and mitigation of risk, with a focus on strategic risks

Audit Committee

 

•   Financial reporting process and internal control risks

•   Risks associated with environmental compliance, corporate compliance, significant legal matters, and the Company’s insurance programs

•   Market and credit risks

•   Cybersecurity risks

Corporate Governance Committee

 

•   Corporate governance and legislative and regulatory policy risks

•   Board succession risks

•   Risks related to shareholder activism

•   Environmental, sustainability and corporate social responsibility

Finance Committee

 

•   Risks associated with strategic decisions and major transactions

•   Financial risks, including liquidity, credit and capital market risks

Nuclear Committee

 

•   Risks related to the operation of our nuclear fleet

Personnel Committee

 

•   Executive compensation risks

•   Risks associated with safety and employee matters

•   Management succession risks

We have identified cybersecurity as a key enterprise risk. As a result, the Audit Committee, on a regular basis, reviews our cybersecurity risk management practices and performance, primarily through reports provided by the Chief Information Officer, Chief Security Officer and General Auditor on the Company’s cybersecurity management program. Among other things, these reports have focused on:

 

  Ø

recent cyber risk and cybersecurity developments;

  Ø

industry engagement activities;

  Ø

legislative and regulatory developments;

  Ø

cyber risk governance and oversight;

  Ø

cyber incident response plans and strategies;

  Ø

cybersecurity drills and exercises;

  Ø

assessments by third party experts;

  Ø

key cyber risk metrics and activities; and

  Ø

major projects and initiatives.

The Audit Committee receives these reports at least four times per year, and more frequently as needed. In addition, the Board has received briefings from outside experts on cybersecurity risks and cyber risk oversight. We have also established a governance structure under our Chief Security Officer that oversees investments in tools, resources, and processes that allows for the continued maturity of our cyber security posture.

We also monitor the risks associated with our executive compensation programs, as well as the components of our programs and individual compensation decisions, on an ongoing basis. Each year management, with the assistance of the Personnel Committee’s independent compensation

 

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consultant, undertakes a review of our various compensation programs to assess the risks arising from our compensation policies and practices. Management presents these risk assessments to the Personnel Committee. The risk assessments have included a review of the primary design features of the Company’s compensation plans, the process to determine compensation pools and awards for employees and an analysis of how those features could directly or indirectly encourage or mitigate risk-taking. In February 2019, the committee agreed with the study’s conclusions that these risks were within our ability to effectively monitor and manage, and that these compensation programs do not encourage unnecessary or excessive risk-taking and do not create risks that are reasonably likely to have a material adverse effect on the Company.

Succession Planning for the Chief Executive Officer

The Personnel Committee and the Chief Executive Officer maintain an ongoing dialogue on executive development and succession planning to prepare the Company for future success. In addition to preparing for Chief Executive Officer succession, the succession planning process includes all other senior management positions. A comprehensive review of executive talent, including, from time to time, assessments by an independent consulting firm, determines readiness to take on additional leadership roles and identifies developmental and coaching opportunities needed to prepare our executives for greater responsibilities. The Chief Executive Officer discusses management succession issues frequently with the Board and provides a comprehensive review of management succession plans for all of the members of the Office of Chief Executive to the Personnel Committee annually.

Our succession planning also includes appropriate contingencies for the unexpected retirement or incapacity of the Chief Executive Officer. In 2016, our Board adopted a detailed plan to address emergency Chief Executive Officer and senior management succession in extraordinary circumstances. Our emergency Chief Executive Officer succession plan is intended to enable our Board and our Company to respond quickly and effectively to an unplanned and unexpected vacancy in the position of Chief Executive Officer, regardless of cause and regardless of the surrounding circumstances, so as to assure continuity of leadership and minimize any disruption to our business and operations.

Key Corporate Governance Features

Board Governance

 

      

  Director Retirement

  Policy

  

Our Corporate Governance Guidelines provide that a person may not be nominated for election or re-election to the Board if he or she has reached the age of 74 on or before January 1 of the year in which such person would be elected or re-elected, unless specifically recommended to serve beyond the age of 74 by the Corporate Governance Committee and approved by the Board of Directors. The Company does not have term limits for its directors. Instead, our Board addresses the suitability for continued service as a director upon the expiration of each director’s term.

 

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  Limits on Other Board

  Service

  

Without the approval of the Corporate Governance Committee, non-employee directors may not serve on more than 4 other public-company boards, and directors who are either an executive of the Company or an executive of another company may not serve on more than 2 other public-company boards. Our Corporate Governance Guidelines also require directors to advise the Chairman of the Board, the Lead Director, the Chair of the Corporate Governance Committee and the General Counsel in advance of accepting an invitation to sit on the board of another publicly-held company so that an appropriate evaluation can be made of the potential for any conflicts of interest or other issues that should be considered before the Board member accepts another board position. In addition, no director may serve as a member of the Audit Committee if that director serves on the audit committees of more than 2 other public companies unless the Board determines that such simultaneous service would not impair the ability of that director to serve effectively on the Audit Committee.

      

  Mandatory Resignation  

  Upon Change in

  Circumstances

  

Our Corporate Governance Guidelines provide that non-employee directors should offer their resignations when either their employment or the major responsibilities they held when they joined the Board change. The Corporate Governance Committee then reviews the change in circumstances and makes a recommendation to the Board as to whether it is appropriate for the director to continue to serve on the Board and be nominated for re-election.

      

  Stock Ownership

  

Within five years of their election, directors must hold shares or units of Entergy common stock having a market value of at least five times the annual cash retainer or $537,500. A review of non-employee director stock ownership was conducted at the December 2018 Corporate Governance Committee meeting, and the committee determined that all of our non-employee directors satisfied this requirement, as all non-employee directors who had been members of the Board for at least five years held the requisite number of shares or units.

Shareholder Rights

 

      

  Majority Voting in

  Director Elections

  

Our Bylaws require each director to be elected by a majority of the votes cast with respect to such director in uncontested elections (the number of shares voted “For” a director must exceed the number of shares voted “Against” that director). In a contested election (a situation in which the number of nominees exceeds the number of directors to be elected), the standard for election of directors will be a plurality of votes cast by holders of shares entitled to vote at any meeting for the election of directors at which a quorum is present.

      

  Annual Election of

  Directors

  

All of our directors are elected annually at our annual meeting of shareholders.

 

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  Proxy Access

  

Any shareholder (or any group of up to 20 shareholders) owning at least 3 percent of Entergy’s outstanding common stock for at least three years may include a specified number of director nominees in our proxy materials for the annual meeting of shareholders. Our Bylaws specify qualifying stock ownership, the number of permitted nominees and other requirements related to proxy access.

      

  Policy on Poison Pills  

  

Entergy does not have a shareholder rights plan, otherwise known as a “Poison Pill.” The Board will obtain shareholder approval prior to adopting a future shareholder rights plan unless the Board, in the exercise of its fiduciary duties, determines that under the circumstance then existing, it would be in the best interest of the Company and our shareholders to adopt a rights plan without prior shareholder approval. If a rights plan is adopted by the Board without prior shareholder approval, the plan must be approved by shareholders at the next annual meeting.

      

  Executive Severance

  Agreements

  

Shareholders must ratify any employment or severance agreement with an executive officer that provides severance benefits exceeding 2.99 times the sum of the executive’s annual base salary and annual incentive award. This policy is described on page 58.

      

Sustainability

Our sustainability mission is to create sustainable value for our customers, employees, owners and the communities we serve through the use of sustainable business practices that integrate environmental, social and economic objectives and concerns. Achieving this mission is possible only through a balanced review of opportunities and risks to our business strategy. On an ongoing basis, we analyze material environmental, social and economic issues that impact our ability to create value for our key stakeholders.

We also use stakeholders’ input to help identify the most material issues and guide our strategic imperatives. We engage in a variety of informal and formal communications with our key stakeholders and other important groups, including regulators, suppliers, nongovernmental and nonprofit organizations, and professionals in industry, government, labor and education. Feedback is obtained through engagement at many levels. We then use this stakeholder input from dialogue, surveys and other means to help prioritize the most material issues and ensure that our sustainability focus is on these most important areas.

Our sustainability efforts and strategies incorporate, among other things, the following:

 

   

Social. We believe that our people and our culture provide a significant strategic advantage in helping us achieve our objectives for our stakeholders. Our holistic approach to employee wellness includes effective and forward-looking talent management, competitive compensation and benefits, workforce safety and wellness, diversity and inclusion and organizational health. We are also committed to creating value for our communities through economic development, philanthropy, volunteerism and advocacy, and by operating our business in a socially and environmentally responsible way.

   

Environmental. We have been a long-time advocate for policy action and societal investments to address climate change and to adapt to physical environmental risks. We recently announced a new climate goal beyond our 2020 commitment – a 50 percent reduction in our emission rate from our 2000 level by 2030. Entergy’s current CO2 emissions reduction commitment is to maintain CO2 emissions from Entergy-owned

 

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power plants and controllable power purchases through 2020 at 20 percent below year 2000 levels. Through 2018, our cumulative emissions were approximately 8 percent below our target.

   

Economic. Our utilities provide power at some of the lowest rates in the country to our customers. We have been making significant customer-centric investments in our generation, transmission and distribution infrastructure. As new technologies, data and analytics continue to improve, so too will our ability to deliver solutions that better meet our evolving customer expectations through a dynamic integrated energy network and new products and services beyond basic power delivery. We are focused on delivering tailored customer solutions that include uninterrupted service, tools and tips to save money, improved predictability, renewable energy options, sustainability and environmental performance, and more convenient ways to do business.

Recent Developments

In 2018, two important developments in Entergy’s sustainability journey were the creation of a specific sustainability organization and the commitment to publish a climate strategy and scenario analysis in 2019. Entergy’s new sustainability organization includes an officer-level position focused on implementing the company’s sustainability mission. The organization established a sustainability working group comprised of representatives from across the company to provide leadership on developing strategic priorities and action plans in all pillars of sustainability, including climate strategy, supply chain management, human resources, corporate social responsibility and other areas.

Entergy’s climate strategy and scenario analysis report, published contemporaneously with this proxy statement, is an evolution of the company’s recognition and evaluation of the key risk of climate change and opportunities to innovate, invest and improve the world around us. This report presents a thorough discussion of the company’s historic leadership on climate issues, including its action in 2001 as the first U.S. investor-owned utility to adopt a voluntary cap on its carbon emissions, compares Entergy’s generation and emission profile to potential future emission limitation and carbon pricing scenarios and shares Entergy’s future strategic plans to reduce emission intensity even further while providing the power needed to electrify additional sectors of the economy. The purpose of this analysis and report is to continue the Company’s long history of managing the risk of climate change, to use scenario planning to analyze potential impacts to and opportunities for Entergy’s business, and to inform and engage stakeholders on this important issue. Entergy’s climate strategy and scenario analysis report may be accessed on our website at http://entergy.com/climatereport.

Disclosure

Our 2018 Integrated Report further describes our sustainability strategies and efforts, particularly as they relate to social, economic and environmental issues. Our Integrated Report provides a single integrated source of information for all stakeholders and explains how we measure and manage our overall performance with a combination of financial, environmental, community and employee measures. Most importantly, it reflects our central belief that the interests of all of our stakeholders are inextricably linked. The 2018 Integrated Report may be accessed on our website at integratedreport.entergy.com.

Additionally, in partnership with the Edison Electric Institute, Entergy is utilizing a new means to report sustainability goals and actions, including environmental, social and governance measurements. The new reporting measures provide greater consistency for our investors as they evaluate our company and industry. The link for the EEI Template is: http://www.entergy.com/content/sustainability/EEI-Quantitative.pdf.

 

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Recognition

In recognition of our commitment to sustainability, Entergy was again named to the Dow Jones Sustainability North America Index, which measures performance in economic, environmental and social dimensions against industry peers around the globe. We earned top scores in the areas of policy influence, climate strategy, water-related risks and corporate citizenship and philanthropy. It was the 17th consecutive year for Entergy to be included on either the World or North America sustainability index or both. For information on other areas of recognition, such as being named one of the nation’s Top 10 Utilities in Economic Development or being named a Corporate Citizenship Awards Finalist, see our 2018 Integrated Report at integratedreport.entergy.com.

Public Policy Engagement and Political Participation

We are committed to participating constructively in the political and legislative process, as we believe such participation is essential to our Company’s long-term success. Our participation in the political and legislative process includes contributions to political organizations and lobbying activity in a manner that is compliant with all applicable laws and reporting requirements. Entergy’s Board has adopted the Public Policy and Advocacy Policy (the “Public Advocacy Policy”) which can be found on our website at http://www.entergy.com/investor_relations/corporate_governance.aspx. This policy outlines our principles governing political and lobbying activities, including our policy prohibiting corporate contributions directly to federal, state or local candidates.

Corporate Political Contributions

We comply fully with all federal, state and local laws and reporting requirements governing corporate political contributions. In compliance with the Public Advocacy Policy, annually, we post the Advocacy and Political Contribution Report that provides:

 

   

all contributions made by Entergy and its subsidiaries to political parties, political committees and political entities organized under Sections 527 and 501(c)(4) of the Internal Revenue Code (the “Code”);

   

the portion of annual dues or payments made by Entergy to all trade associations in excess of $50,000 that are not deductible under Section 162(e)(1) of the Code; and

   

information about Entergy’s sponsorship of two Political Action Committees (“PACs”) –the Entergy Corporation PAC and the Entergy Corporation PAC – New York.

All political contributions must go through our approval process. At the federal level, all contributions must be approved by the Senior Vice President, Federal Policy, and at the state level, contributions must be approved by the President of the appropriate subsidiary.

Federal and State Lobbying Activity

The Company’s legislative and regulatory lobbying activities are overseen by the Senior Vice President, Federal Policy who also directs the participation or the engagement of individuals and/or entities which perform any federal lobbying activities on our behalf. For each subsidiary of the Company, these activities must be approved by the applicable subsidiary’s Vice President for External or Governmental Affairs. In compliance with the Honest Leadership and Open Government Act of 2007, we file quarterly reports on our federal lobbying activity.

 

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Board Oversight

The Corporate Governance Committee is responsible for monitoring public policies applicable to the Company and oversight of the Company’s corporate political activity. Management provides regular updates on lobbyists and lobbying activities to the Corporate Governance Committee, and annually, the Corporate Governance Committee reviews and approves our Advocacy and Political Contributions Report.

Our website also provides our shareholders with useful information about political contributions and lobbying activity. Please see our website at http://www.entergy.com/investor_relations/corporate_governance.aspx for a copy of the annual report and more information about the ways in which we participate in the political process.

Shareholder Engagement

Our Board’s Commitment to Shareholder Engagement

We welcome the opportunity to engage with you, our shareholders, to share our perspective on and obtain your insights and feedback on matters of mutual interest. The Board’s and management’s commitment to understanding the interests and perspectives of our shareholders is a key component of our corporate governance strategy and compensation philosophy. We engage with shareholders throughout the year to:

 

 

Provide visibility and transparency into our business and our financial and operational performance;

 

Discuss with our shareholders the issues that are important to them, hear their expectations for us and share our views;

 

Share our perspective on Company and industry developments;

 

Discuss and seek feedback on our executive compensation and corporate governance policies and practices;

 

Share our environmental and sustainability strategy and record; and

 

Seek feedback on our communications and disclosures to investors.

How We Engage

We approach shareholder engagement as an integrated, year-round process involving senior management, our investor relations team and our corporate governance team. Throughout the year, we meet with analysts and institutional investors to inform and share our perspective and to solicit their feedback on our performance. This includes participation in investor conferences and other formal events and group and one-on-one meetings throughout the year. We also engage with governance representatives of our major shareholders, through conference calls that occur during and outside of the proxy season. Members of our investor relations, executive compensation, corporate governance and environmental groups discuss, among other matters, Company performance, executive compensation, emerging corporate governance practices and environmental and sustainability oversight and performance.

During our 2018 off-season outreach effort, we contacted the holders of approximately 48% of our outstanding shares, resulting in substantive engagements with shareholders representing approximately 27% of our outstanding shares. In these engagements, we discussed the following issues and topics of mutual interest, among others:

 

   

Industry and business developments;

   

Corporate strategy;

   

Executive compensation, including incentive plan metrics and target setting;

 

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Workforce planning and investing in human capital;

   

Corporate governance issues, including director refreshment and assessment;

   

Environmental and social issues, including environmental, social and governance scoring and disclosure frameworks, our ongoing two-degree scenario analysis, and enhancements to our existing environmental, social and governance disclosures; and

   

Proxy Statement and Integrated Report disclosures.

The investors we spoke with remain supportive of the leadership our Board and management are providing and the business strategies our management is pursuing. They generally agreed with our view that our executive compensation programs are well designed to align pay with performance and had done so effectively over the past several years. We spent relatively more of our time with investors discussing environmental and sustainability issues and topics than we have in past years, in keeping with the increased prominence of these issues with investors generally and particularly in our industry. We also discussed Board composition and refreshment and related disclosures and the Board self-assessment process. In addition to this feedback, we received suggestions for enhancing our proxy statement disclosures, and we have sought to respond to those suggestions. The comments, questions and suggestions offered by our investors were shared with and discussed by the full Board, and their perspectives will inform the Board’s decision making in 2019 and beyond.

Outcomes from Investor Feedback

Input received through our shareholder engagement process has been a significant factor in numerous changes to our executive compensation programs, governance practices and disclosures, and was an important consideration in our decision to prepare and publish a climate strategy and scenario analysis report in 2019. Some of the specific actions we have taken in response to shareholder input over the last few years include:

 

 

Addition of a cumulative utility earnings measure, as a second performance metric, in addition to relative total shareholder return, to our Long-Term Performance Unit Program;

 

Adoption of proxy access for director nominations;

 

Addition of a one-on-one individual assessment component to our Board self-evaluation process;

 

Amendments to our Corporate Governance Guidelines to limit the number of public-company boards on which our directors may serve;

 

Enhancements to our proxy disclosure, including in the areas of risk oversight (including cyber risk oversight), director backgrounds and qualifications, and incentive plan target setting;

 

Our decision to prepare and publish a two degree scenario analysis in 2019; and

 

Other enhancements to the environmental and sustainability disclosures in our Integrated Report.

 

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How You Can Communicate With Our Board

We believe communication between the Board and the Company’s shareholders and other interested parties is an important part of the corporate governance process. Shareholders and other interested parties may communicate with our Board, our Lead Director or any individual director in care of the Lead Director at:

Entergy Corporation

639 Loyola Avenue

P.O. Box 61000

New Orleans, LA 70161

Email: etrbod@entergy.com

However, spam junk mail and mass mailings, service complaints, service inquiries, new service suggestions, resumes and other forms of job inquiries, surveys, business solicitations and advertisements or request for donations and sponsorships will not be forwarded.

Corporate Governance Policies

Entergy Policies on Business Ethics and Conduct

All of our employees, including our Chief Executive Officer, Chief Financial Officer and other senior members of management, are required to abide by our Code of Entegrity, which sets forth the ethical responsibilities of our employees, officers and representatives. Our Code of Entegrity, along with other Entergy policies on business conduct, helps ensure that our business is conducted in a consistently legal and ethical manner. Entergy’s policies form the foundation of a comprehensive process that includes compliance with corporate policies and procedures, an open relationship among employees to foster good business conduct, and a high level of integrity. Our policies and procedures cover all major areas of professional conduct, including employment practices, conflicts of interest, intellectual property and the protection of confidential information, and require strict adherence to laws and regulations applicable to the conduct of our business. Annually, all employees with computer access are required to acknowledge that they are familiar with the Code of Entegrity and agree to uphold Entergy’s core values and follow Entergy’s policies.

Employees are required to report any conduct that they believe in good faith to be an actual or apparent violation of Entergy’s policies. Retaliation against any employee who in good faith seeks advice, raises a concern, reports misconduct, or provides information in an investigation is strictly prohibited. Our Internal Audit department has procedures to receive, retain and treat complaints received regarding accounting, internal accounting controls, or auditing matters and to allow for confidential and anonymous submissions by employees with concerns regarding questionable accounting or auditing matters.

Code of Business Conduct and Ethics

Our directors, officers and employees are required to comply with a Code of Business Conduct and Ethics (the “Code”). The Code is intended to focus individuals on areas of ethical risk, help them recognize and deal with ethical issues, provide mechanisms to report unethical conduct, and foster a culture of honesty and accountability. The Code covers a wide range of professional conduct, including conflicts of interest, unfair or unethical use of corporate opportunities, strict protection of confidential information, compliance with applicable laws and regulations, and oversight of ethics and compliance by employees of the Company. The Code emphasizes our expectation that directors act ethically and with integrity and to clarify the process for reporting suspected violations of the Code.

 

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  CORPORATE GOVERNANCE AT ENTERGY  

 

 

 

Key Corporate Governance Documents

Our Corporate Governance Guidelines, Certificate of Incorporation, Bylaws and Board committee charters form the framework of our corporate governance. Our Corporate Governance Guidelines, the charters of our Audit, Corporate Governance and Personnel Committees, and our Code of Entegrity and other ethics policies, including any amendments or waivers, are available at http://www.entergy.com/investor_relations/corporate_governance.aspx and in print to any shareholder who requests a copy from the Secretary of the Company.

Our Transactions with Related Persons Policy

Our Board of Directors has adopted written policies and procedures for the review, approval or ratification of any transaction involving an amount in excess of $120,000 in which any director or executive officer of the Company, any nominee for director, or any immediate family member of the foregoing has or will have a material interest as contemplated by Item 404(a) of Regulation S-K (“Related Person Transactions”). Under these policies and procedures, the Corporate Governance Committee or a subcommittee of the Board of Directors consisting entirely of independent directors reviews the transaction and either approves or rejects the transaction after taking into account the following factors:

 

   

Whether the proposed transaction is on terms that are at least as favorable to the Company as those achievable with an unaffiliated third party;

   

Size of the transaction and amount of consideration;

   

Nature of the interest;

   

Whether the transaction involves a conflict of interest;

   

Whether the transaction involves services available from unaffiliated third parties; and

   

Any other factors that the Corporate Governance Committee or subcommittee deems relevant.

The policy does not apply to:

 

   

Compensation and related party transactions involving a director or an executive officer solely resulting from service as a director or employment with the Company so long as the compensation is approved by the Board of Directors (or an appropriate committee);

   

Transactions involving public utility services at rates or charges fixed in conformity with law or governmental authority; or

   

any other categories of transactions currently or in the future excluded from the reporting requirements of Item 404(a) of Regulation S-K.

Related Party Transactions

Since January 1, 2018, neither the Company nor any of its affiliates has participated in any Related Person Transaction.

 

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2018 NON-EMPLOYEE DIRECTOR COMPENSATION

The Company uses a combination of cash and equity-based compensation to attract and retain qualified candidates to serve on the Board. The Corporate Governance Committee periodically reviews non-employee director compensation with the advice of its independent compensation consultant and recommends to the Board any changes it considers appropriate. In making such recommendations, the Corporate Governance Committee considers the type and amount of compensation paid to non-employee directors by comparable companies and the amount of time that directors expend in fulfilling their duties to the Company, as well as the backgrounds and skill level required by the Company of Board members.

2018 Compensation Changes

In 2018, based on a recommendation of the Corporate Governance Committee, the Board of Directors approved certain changes to the Company’s non-employee director compensation structure and programs to better align such structure and programs with evolving market practice. The Corporate Governance Committee based its recommendation on a competitive analysis and advice it received from its independent compensation consultant, Pay Governance LLC. Pay Governance reviewed the competitiveness of the Company’s non-employee director compensation programs, including an evaluation of each of the elements used to deliver total non-employee director compensation. Pay Governance compared Entergy’s non-employee director pay practices to the companies in the Philadelphia Utility Index and to companies within the S&P 500 Index. The changes recommended by the Corporate Governance Committee were designed to align certain elements of compensation and total compensation at a level approximately equal to the blended utility industry and general industry median. This resulted in an increase of $1,875 in the quarterly cash retainer, a $1,875 increase in the value of the quarterly stock grant received by non-employee directors, and a $2,500 increase in the annual Personnel Committee Chair retainer. These changes continued our practice of delivering a majority of non-employee director compensation in the form of equity, which further aligns the interests of our non-employee directors with the interests of our shareholders.

Cash Compensation Paid To Non-Employee Directors

Our non-employee directors receive the cash compensation and retainers as provided below:

 

   
Compensation            Amount          

  Quarterly Cash Retainer

   $ 26,875  

  Annual Lead Director Retainer

   $ 30,000  

  Annual Audit, Nuclear and Personnel Committee Chair Retainer

   $ 20,000  

  Annual Finance and Corporate Governance Chair Retainer

   $ 15,000  

  Annual Nuclear Committee Member Retainer

   $ 18,000  

Equity-Based Compensation

All non-employee directors receive two types of equity-based compensation grants:

Non-Employee Director Stock Program. Each of our non-employee directors receives a quarterly stock grant of shares of our common stock with a fair market value at the time of grant equal to $18,125. Directors may elect to defer receipt of these shares and receive phantom units of Entergy common stock in lieu of the quarterly common stock grant. The phantom stock units are the economic equivalent of one share of our common stock and paid in cash in an amount equal to the market value of our common stock at the time of distribution. Deferred shares accrue dividend equivalents until distribution.

 

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    2018 NON-EMPLOYEE DIRECTOR COMPENSATION  

 

 

 

Service Recognition Program. Annually, non-employee directors receive a grant of phantom stock units having a value of $80,000 on the date of grant. All phantom stock units granted under this program are the economic equivalent of one share of our common stock, are vested at the time of grant and payable upon the conclusion of the director’s service on the Board. Upon the conclusion of his or her service on the Board, the director will receive one share of our common stock for each phantom stock unit held by the director on the date of the director’s retirement or separation from the Board. Phantom stock units accumulate dividend equivalents based on the dividends paid on the Company’s common stock, which also are payable in shares of common stock following the conclusion of the director’s service. Payouts under this program, which we refer to as the “Director Service Recognition Program,” are made in five annual installments beginning on the first day of the month following the director’s separation from the Board or in one lump sum upon the non-employee director’s death.

Other Benefits

Non-employee directors receive $1,500 per day for participation in director education programs, director orientation or business sessions, inspection trips or conferences not held on the same day as a Board meeting. We also provide, but do not require, annual physical exams for our non-employee directors. The Company reimburses non-employee directors for their expenses in attending Board and committee meetings, director education programs, travel for physical exams and other Board-related activities. Our directors do not receive tax gross ups on any benefits they receive.

2018 Non-Employee Director Compensation Table

The table below provides information regarding non-employee director compensation for the fiscal year ended December 31, 2018:

 

           
Name(1)  

Fees

Earned

or Paid

in Cash

($)

(2)

   

Stock Awards

($)

(3)

   

Option

Awards

($)

   

All Other

Compensation

($)

(4)

    Total ($)  
       
(a)   (b)     (c)     (d)     (g)     (h)  

  Maureen S. Bateman

    83,055       102,228                     47,851               233,134  

  John R. Burbank

    81,750       72,582             445       154,777  

  Patrick J. Condon

            155,250               148,919               —       10,702       314,871  

  Kirkland H. Donald

    154,500       148,919             14,679       318,098  

  Philip L. Frederickson

    118,750       148,919             8,081       275,750  

  Alexis M. Herman

    103,750       148,919             43,713       296,382  

  Donald C. Hintz

    67,056       102,228             41,637       210,921  

  Stuart L. Levenick

    138,250       148,919             37,380       324,549  

  Blanche L. Lincoln

    120,250       148,919             21,517       290,686  

  Karen A. Puckett

    117,250       148,919             14,013       280,182  

  W.J. “Billy” Tauzin

    43,055       102,228             32,893       178,176  

 

(1)

Leo P. Denault, the Company’s Chairman and Chief Executive Officer, is not included in this table as he was an employee of the Company and thus received no additional compensation for his service as a director during 2018. The compensation received by Mr. Denault as an employee of the Company is shown in the 2018 Summary Compensation Table on page 63. Mr. Burbank became a member of the Board effective March 3, 2018, and Ms. Bateman, Mr. Hintz and Mr. Tauzin retired from the Board effective May 4, 2018. The compensation

 

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  2018 NON-EMPLOYEE DIRECTOR COMPENSATION  

 

 

 

reported in this table for each of Ms. Bateman, Mr. Burbank, Mr. Hintz and Mr. Tauzin represent prorated compensation for their service in 2018.

(2)

The amounts reported in column (b) consist of all fees earned or paid in cash for services as a director, including retainer fees, and Lead Director, Committee Chair and Nuclear Committee annual retainers, all of which are described under “Cash Compensation Paid to Non-Employee Directors” above.

(3)

The amounts in this column represent the aggregate grant date fair value determined in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation – Stock Compensation (“FASB ASC Topic 718”) for the shares of common stock granted on a quarterly basis to each non-employee director during 2018 and the 989 phantom units granted to each director in 2018 under the Director Service Recognition Program, other than Ms. Bateman, Mr. Burbank, Mr. Hintz and Mr. Tauzin who received a pro-rated number of phantom units. For a discussion of the relevant assumptions used in valuing these amounts, see Note 12 to the Financial Statements in our Form 10-K for the year ended December 31, 2018. As of December 31, 2018, the outstanding phantom units held by each individual serving as a director during 2018 were: Ms. Bateman: 12,023; Mr. Burbank: 247; Mr. Condon: 3,249; Mr. Donald: 4,592; Mr. Frederickson: 2,749; Ms. Herman: 12,702; Mr. Hintz: 11,829; Mr. Levenick: 10,933; Ms. Lincoln: 6,502; Ms. Puckett: 3,249; and Mr. Tauzin: 8,577.

(4)

The amounts in column (g) include dividend equivalents accrued under the Director Service Recognition Program, Company paid physical exams and related expenses and director education related expenses. None of the perquisites referenced above exceeded $25,000 for any of the non-employee directors. For 2018, accrued dividend equivalents under the Director Service Recognition Program were: Ms. Bateman: $46,763; Mr. Burbank: $445; Mr. Condon: $9,871; Mr. Donald: $14,679; Mr. Frederickson: $8,081; Ms. Herman: $43,713; Mr. Hintz: $40717; Mr. Levenick: $37,380; Ms. Lincoln: $21,517; Ms. Puckett: $9,871; and Mr. Tauzin: $32,893.

 

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AUDIT MATTERS

Proposal 2 – Ratification of Appointment of Deloitte & Touche LLP as Independent Registered Public Accountants for 2019

The Audit Committee is directly responsible for the appointment, compensation, retention, and oversight of the independent auditor. It annually reviews the qualifications, performance and independence of the Company’s independent auditor in accordance with regulatory requirements and guidelines and evaluates whether to change the Company’s independent auditor.

Based on this review, the Audit Committee has appointed Deloitte & Touche LLP (“Deloitte & Touche”) as the independent auditor to conduct the Company’s annual audit for 2019. Deloitte & Touche has served as the Company’s independent auditor since 2001. The Board considers the selection of Deloitte & Touche as the Company’s independent auditor for 2019 to be in the best interest of the Company and its shareholders. Although shareholder approval is not required for the appointment of Deloitte & Touche, the Board and the Audit Committee have determined that it would be desirable as a good corporate governance practice to request the shareholders to ratify the appointment of Deloitte & Touche as our independent auditor. Ratification requires the affirmative vote of a majority of the shares entitled to vote on the matter and present in person or represented by proxy at the Annual Meeting. If the shareholders do not ratify the appointment, the Audit Committee may reconsider the appointment. Even if the appointment is ratified, the Audit Committee, in its discretion, may select different independent auditors if it subsequently determines that such a change would be in the best interest of the Company and its shareholders.

The Board of Directors and the Audit Committee unanimously recommend that the shareholders vote FOR the ratification of the appointment of Deloitte & Touche LLP.

Audit Committee Report

The Entergy Corporation Board of Directors’ Audit Committee is comprised of four independent directors. The committee operates under a Board-adopted written charter which was revised most recently in May 2017. The Board has determined that each member of the Audit Committee has no material relationship with the Company under the Board’s independence standards and that each is independent and financially literate under the listing standards of the NYSE and under the SEC’s standards relating to independence of audit committees. In addition, the Board has determined that Messrs. Condon and Frederickson satisfy the financial expertise requirements of the NYSE and have the requisite experience to be designated an audit committee financial expert as that term is defined by the rules of the SEC.

Management is responsible for the preparation, presentation and integrity of Entergy’s financial statements and for maintaining appropriate accounting and financial reporting policies and practices and internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. The Audit Committee is responsible for overseeing Entergy’s accounting and financial reporting processes and audits of Entergy’s financial statements. As set forth in its charter, the Audit Committee acts in an oversight capacity and relies on the work and assurances of management, Entergy’s internal auditors, as well as Entergy’s independent registered public accounting firm, Deloitte & Touche. Deloitte & Touche is responsible for auditing the consolidated financial statements of Entergy and expressing an opinion on their conformity with generally accepted accounting principles, as well as expressing an opinion on the effectiveness of internal control over financial reporting in accordance with the requirements of the Public Company Accounting Oversight Board (“PCAOB”).

The Audit Committee held 11 meetings during 2018. The meetings were designed to facilitate and encourage private communication between the Audit Committee and management, the internal

 

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AUDIT MATTERS  

 

 

auditors and Deloitte & Touche. During these meetings, the Audit Committee reviewed and discussed the audited annual financial statements, the unaudited interim financial statements and significant accounting policies applied by Entergy in its financial statements with management and Deloitte & Touche. The Audit Committee also has discussed with, and received regular status reports from Entergy’s General Auditor and Deloitte & Touche on the overall scope and plans for their audits of Entergy, including their scope and plans for evaluating the effectiveness of internal control over financial reporting as required by applicable rules of the PCAOB and applicable SEC rules. On a regular basis, the Audit Committee reviews Entergy’s cybersecurity risk management practices and performance, primarily by receiving reports on the Company’s cybersecurity management program as prepared by the Chief Information Officer, Chief Security Officer, and General Auditor.

The discussions with Deloitte & Touche also included the matters required by the standards of the PCAOB. The Audit Committee received from the independent registered public accounting firm the written disclosures and the letter required pursuant to applicable requirements of the PCAOB regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence, and has discussed with Deloitte & Touche, its independence. As required by SEC rules, lead audit partners are rotated every five years. The Audit Committee is directly involved in the selection process of the current and prior lead partners. One or more members of the Audit Committee meet with candidates for the lead audit partner and the committee discusses the appointment before the rotation occurs. Deloitte & Touche provides no internal audit services for Entergy and the Audit Committee has concluded that non-audit services provided by Deloitte & Touche are compatible with maintaining its independence.

Based on the above-referenced reviews and discussions, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in Entergy’s Annual Report on Form 10-K for the year ended December 31, 2018.

The Audit Committee of the Entergy Corporation Board of Directors:

 

Patrick J. Condon, Chair

   Blanche L. Lincoln

Philip L. Frederickson

   Karen A. Puckett

Independent Registered Public Accountants

A representative of Deloitte & Touche will be present at the Annual Meeting and will be available to respond to appropriate questions by shareholders and will be given an opportunity to make a statement if the representative desires to do so.

Aggregate fees billed to Entergy and its subsidiaries for the years ended December 31, 2018 and 2017 by Deloitte & Touche and their affiliates were as follows:

 

 

   2018      2017  

Audit Fees

    $ 8,801,895       $ 8,401,845  

Audit-Related Fees(a)

     1,017,119        875,000  
  

 

 

    

 

 

 

Total audit and audit-related fees

    $ 9,819,014       $ 9,276,845  

Tax Fees

             

All Other Fees

             
  

 

 

    

 

 

 

Total Fees(b)

    $ 9,819,014       $ 9,276,845  

 

  (a)

Includes fees for employee benefit plan audits, consultation on financial accounting and reporting, and other attestation services.

  (b)

100% of fees paid in 2018 and 2017 were pre-approved by the Audit Committee.

 

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  AUDIT MATTERS

 

 

 

Audit Committee Guidelines for Pre-Approval of Independent Auditor Services

The Audit Committee has adopted the following guidelines regarding the engagement of Entergy’s independent auditor to perform services for Entergy:

 

  1.

The independent auditor will provide the Audit Committee, for approval, an annual engagement letter outlining the scope of services proposed to be performed during the fiscal year, including audit services and other permissible non-audit services (e.g. audit-related services, tax services, and all other services).

 

  2.

For other permissible services not included in the engagement letter, Entergy management will submit a description of the proposed service, including a budget estimate, to the Audit Committee for pre-approval. Management and the independent auditor must agree that the requested service is consistent with the SEC’s rules on auditor independence prior to submission to the Audit Committee. The Audit Committee, at its discretion, will pre-approve permissible services and has established the following additional guidelines for permissible non-audit services provided by the independent auditor:

 

   

Aggregate non-audit service fees are targeted at fifty percent or less of the approved audit service fee.

   

All other services should only be provided by the independent auditor if it is a highly qualified provider of that service or if the Audit Committee pre-approves the independent audit firm to provide the service.

 

  3.

The Audit Committee will be informed quarterly as to the status of pre-approved services actually provided by the independent auditor.

 

  4.

To ensure prompt handling of unexpected matters, the Audit Committee delegates to the Audit Committee Chair or its designee the authority to approve permissible services and fees. The Audit Committee Chair or designee will report action taken to the Audit Committee at the next scheduled Audit Committee meeting.

 

  5.

The Vice President and General Auditor will be responsible for tracking all independent auditor fees and will report quarterly to the Audit Committee.

 

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EXECUTIVE OFFICER COMPENSATION

Proposal 3 – Advisory Vote to Approve Named Executive Officer Compensation

Pursuant to Section 14A of the Exchange Act, we are seeking shareholders’ views on the compensation of our Named Executive Officers through an advisory vote on the following resolution:

RESOLVED that the shareholders of Entergy Corporation approve, on an advisory basis, the compensation of its Named Executive Officers, as disclosed in the Company’s Proxy Statement for the 2019 Annual Meeting of Shareholders, pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the compensation tables, and any related information found in the Proxy Statement of Entergy Corporation.

While this advisory proposal, commonly referred to as “Say-on-Pay” is not binding, the Board of Directors and the Personnel Committee will review and consider the voting results when evaluating our executive compensation programs. To facilitate more frequent shareholder input, the Board has adopted a policy of providing for annual Say-on-Pay advisory votes.

As discussed in the Compensation Discussion and Analysis section of this Proxy Statement, our compensation principles and underlying programs are designed to attract, motivate and retain key executives who are crucial to our long-term success. We believe the compensation paid to our Named Executive Officers reflects our commitment to pay for performance. Our Board recognizes that performance-based executive compensation is an important element in driving long-term shareholder value, and accordingly a significant percentage of our Named Executive Officers’ compensation is delivered in the form of long-term incentive awards that are designed to incentivize management to achieve results to the mutual benefit of shareholders and management. Moreover, a significant portion of our Named Executive Officers’ cash compensation is delivered in the form of annual performance bonuses that are paid based on the achievement of pre-defined performance measures. In addition, the Company recognizes that a strong governance framework is essential to effective executive compensation programs. This framework and executive compensation philosophy are established by an independent Personnel Committee that is advised by an independent executive compensation consultant.

The following Compensation Discussion and Analysis provides additional details about our executive compensation programs. We believe the information provided above and within the Compensation Discussion and Analysis demonstrates that our executive compensation programs have been designed appropriately and work effectively to align management’s interests with the interests of shareholders. Accordingly, the Board of Directors requests that you approve our Named Executive Officers compensation by approving the advisory resolution.

The Board of Directors unanimously recommends that the shareholders vote FOR the advisory resolution approving the Company’s Named Executive Officer compensation.

 

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  EXECUTIVE OFFICER COMPENSATION

 

 

 

Compensation Discussion and Analysis

In this section, we discuss the compensation earned in 2018 by the following executive officers (referred to herein as our “Named Executive Officers”). Each officer’s age and title is provided as of December 31, 2018.

 

     
Name       Age       Title

  Leo P. Denault

  59   Chairman of the Board and Chief Executive Officer

  Andrew S. Marsh

  47   Executive Vice President and Chief Financial Officer

  A. Christopher Bakken, III

  57   Executive Vice President, Nuclear Operations/Chief Nuclear Officer

  Marcus V. Brown

  57   Executive Vice President and General Counsel

  Roderick K. West

  50   Group President, Utility Operations

CD&A Table of Contents

 

        Page

 CD&A

 Highlights

 

  2018 Performance and Strategic Accomplishments

  41
 

  Our Executive Compensation Programs and Practices

  43
   

  Our Pay for Performance Philosophy

  43
   

  2018 Incentive Pay Outcomes

  44
   

  Alignment of Pay and Performance

  45
   

  Consideration of Most Recent Say-On-Pay Vote

  46

 What We Pay

 and Why

 

  How We Set Target Pay

  47
 

  Principal Executive Compensation Elements

  48
   

  Fixed Compensation

  49
   

  Variable Compensation

  50
   

  Benefits and Perquisites

  57
   

  Severance and Other Compensation Arrangements

  58
 Compensation  Policies and  Practices  

  Clawback Provisions

  59
 

  Stock Ownership Guidelines and Share Retention Requirements

  59
 

  Trading Controls and Anti-Pledging and Anti-Hedging Policies

  60
   

  How We Make Compensation Decisions

  60
   

  Compensation Consultant Independence

  62

 

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CD&A Highlights

2018 Performance and Strategic Accomplishments

In 2018, we delivered solid financial returns to our owners while reducing our overall business risk profile through continued execution on our strategy to exit our merchant operations. We also continued our leadership in sustainability, consistent with our longstanding mission of building sustainable value for all of our stakeholders.

Financial Performance

 

  LOGO

We reported consolidated 2018 earnings per share of $4.63 on an as-reported basis and $7.31 on an operational basis, compared to 2017 earnings of $2.28 per share on an as-reported basis and $7.20 per share on an operational basis. Our operational results significantly exceeded our original guidance range set at the beginning of the year.

 

  LOGO

Our core combined Utility, Parent & Other results, which excluded special items and normalized weather and incomes taxes, contributed $4.71 to 2018 consolidated EPS, compared to $4.57 in 2017. These results were in line with our guidance range and growth expectations for the year.

 

  LOGO

Our total shareholder return for 2018 was 10.6 percent, which ranked 6th out of the 20 companies in the Philadelphia Utility Index, just short of our top quartile goal.

 

  LOGO

We increased our regular quarterly dividend for the 4th straight year, to $0.91 per share.

Investing in the Utility

 

  LOGO

In generation, we continued to execute on our portfolio transformation strategy to better meet customers’ needs by replacing older, less efficient generation units with cleaner, more efficient resources. After obtaining the required approvals, we began construction of the Lake Charles Power Station, a 994-MW combined cycle gas turbine (CCGT) generating unit in Louisiana, and the Montgomery County Power Station, a 993-MW CCGT located in Texas, and we continued construction of the St. Charles Power Station, a 980-MW CCGT in Louisiana that is scheduled to be completed in 2019. We also reached an agreement to acquire an 810-MW CCGT in Mississippi and received regulatory approval to acquire the Washington Parish Energy Center, a 361-MW simple-cycle combustion turbine unit in Louisiana.

 

  LOGO

We continued to invest in new renewables projects. The 81-MW Stuttgart Solar Energy Center began supplying capacity and energy to Entergy Arkansas customers under a 20-year power purchase agreement, and the Arkansas Public Service Commission approved a power purchase agreement for the Chicot Solar project, a 100-MW solar photovoltaic installation that is currently under construction. Entergy Louisiana filed for approval of a 20 year power purchase agreement for a 50 MW photovoltaic generating facility, and in early 2019, Entergy New Orleans filed for approval of three new solar resources totaling 90 MW in New Orleans. These represent a portion of the approximately 1,000 MW of renewable resources in various stages of development.

 

  LOGO

In 2018, we also invested approximately $900 million in transmission projects to connect our generation assets, support economic development by serving new customers, and enhance reliability efficiency and resiliency.

 

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  EXECUTIVE OFFICER COMPENSATION

 

 

 

 

  LOGO

We continued to execute on our approximately $900 million Advanced Meter Infrastructure initiative and began installing advanced meters in 2019. The deployment of advanced meters to all of our nearly 3 million customers is expected to be completed in 2021. These meters will provide significant benefits to customers, from faster outage restoration to enhanced customer service and cost savings, and will lay the foundation for the next generation of grid technologies for customers.

Exiting the Wholesale Business

 

  LOGO

We completed the sale of the previously shut down Vermont Yankee Nuclear Power Station.

 

  LOGO

We entered into agreements to sell the Pilgrim Nuclear Power Station and Palisades Power Plant after the plants are shut down in 2019 and 2022, respectively, and filed with the NRC for approval of the Pilgrim sale.

Sustainability

 

  LOGO

We were again named to the Dow Jones Sustainability North America Index, earning top scores in the areas of policy influence, climate strategy, water-related risks and corporate citizenship and philanthropy.

 

  LOGO

To enhance our governance of sustainability, in 2018 we created a new sustainability organization, which established a working group of representatives from across the Company that provides leadership on developing strategic priorities and action plans in key areas of sustainability. We also amended our Corporate Governance Committee charter to provide clear Board-level accountability for oversight of sustainability strategy and reporting.

 

  LOGO

We continued to provide leadership in addressing the impacts of climate change, by preparing and publishing, contemporaneously with the issuance of this proxy statement and our 2018 Integrated Report, a comprehensive climate strategy and scenario analysis report. We also announced a new climate commitment to reduce our CO2 emission rate to 50 percent below 2000 levels by 2030.

 

  LOGO

We continued to invest in our workforce, resulting in continued improvements in recordable accident indices and organizational health, and we invested more than $18 million in our communities, including education and workforce training and development, poverty and social services solutions, and a wide variety of other community improvement and enrichment programs and initiatives.

 

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EXECUTIVE OFFICER COMPENSATION  

 

 

Our Executive Compensation Programs and Practices

We regularly review our executive compensation programs to align them with commonly viewed best practices in the market and to reflect feedback from our discussions with investors on executive compensation.

Executive Compensation Best Practices

 

What We Do

 

 

What We Don’t Do

 

 Executive compensation programs are highly correlated to performance and focused on long-term value creation

 Double trigger for cash severance payments and equity acceleration in the event of a change in control

 Clawback policy

 Maximum payout capped at 200% of target under our Annual Incentive Plan and Long-Term Performance Unit Program for members of the Office of the Chief Executive

 Minimum vesting periods for equity based awards

 Long-term compensation mix weighted more toward performance units than service-based equity awards

 All long-term performance units settled in shares of Entergy stock

 Rigorous stock ownership requirements

 Executives required to hold substantially all equity compensation received from the Company until stock ownership guidelines are met

 Annual Say-on-Pay vote

 

 

×  No 280G tax “gross up” payments in the event of a change in control

×  No tax “gross up” payments on executive perquisites, other than relocation benefits

×  No option repricing or cash buy-outs for underwater options

×  No agreements providing for severance payments to executive officers that exceed 2.99 times annual base salary and annual incentive awards without shareholder approval

×  No unusual or excessive perquisites

×  No new officer participation in the System Executive Retirement Plan

×  No grants of supplemental service credit to newly-hired officers under any of the Company’s non-qualified retirement plans

Our Pay for Performance Philosophy

Entergy’s executive compensation programs are based on a philosophy of pay for performance that is embodied in the design of our annual and long-term incentive plans. We believe the executive pay programs described in this section and in the accompanying tables have played a significant role in our ability to drive strong financial and operational results and to attract and retain a highly experienced and successful management team.

 

  Ø

Our Annual Incentive Plan incentivizes and rewards the achievement of financial metrics that are deemed by the Personnel Committee to be consistent with the overall goals and strategic direction that the Board has approved for the Company.

 

  Ø

Our long-term incentive programs further align the interests of our executives and our shareholders by directly tying the value of equity awards granted to executives under these programs to our stock price performance, total shareholder return, and beginning in 2018, cumulative adjusted utility earnings growth. Our long-term incentives consist of three components – performance units, stock options and restricted stock.

By incentivizing officers to achieve important financial and operational objectives and create long-term shareholder value, we believe these programs play a key role in creating sustainable value for the benefit of all of our stakeholders, including our owners, customers, employees and communities.

 

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At Risk” Compensation

Our total direct compensation (“TDC”) consists of base salary, annual cash incentive and long-term compensation. We target TDC for our executive officers at market median and place a significant portion of that compensation “at risk” subject to achieving both short-term and long-term performance goals. Approximately 86% of the annual target TDC of our Chief Executive Officer and, on average, approximately 71% of the annual target TDC of our other Named Executive Officers (in each case excluding non-qualified supplemental retirement income and all other compensation reported in the summary compensation table) is equity or performance-based compensation. Only the base salary portion of annual target TDC is fixed.

 

 

LOGO

FY 2018 CEO Target TDC Mix FY 2018 Other NEOs Target TDC Mix

2018 Incentive Pay Outcomes

We believe the 2018 incentive pay outcomes for our Named Executive Officers demonstrated the application of our pay for performance philosophy.

Annual Incentive Plan

Awards under our Executive Annual Incentive Plan, or Annual Incentive Plan, are tied to our financial and operational performance through the Entergy Achievement Multiplier (“EAM”), which is the performance metric used to determine the maximum funding available for awards under the plan. The 2018 EAM was determined based in equal part on our success in achieving our consolidated operational earnings per share (“EPS”) and operational operating cash flow (“OCF”) goals set at the beginning of the year. These goals were approved by the Personnel Committee based on the Company’s financial plan and the Board’s overall goals for the Company and were consistent with the Company’s published earnings guidance.

 

  Ø

2018 Annual Incentive Plan Payout. For 2018, the Personnel Committee, based on the recommendation of the Finance Committee, determined that management exceeded its consolidated operational EPS goal of $6.55 per share by $2.08 per share, but fell short of its consolidated operational OCF goal of $3.000 billion by approximately $180 million. Based on the targets and ranges previously established by the Personnel Committee, these results resulted in a calculated EAM of 134%.

 

      

After considering individual performance, including not only the role played by each of the Named Executive Officers in advancing the Company’s strategies and delivering the strong financial results achieved in 2018, but also each such individual’s degree of

 

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accountability for certain operational and regulatory challenges the Company experienced in 2018, the Personnel Committee approved payouts ranging from 115% to 122% of target for each of the Named Executive Officers.

Long-Term Incentives

Our long-term incentives consist of three components:

 

   

Long-Term Performance Unit Program – Units are granted with performance measured over a three-year period based on Entergy’s total shareholder return in relation to the total shareholder return of the companies included in the Philadelphia Utility Index, and beginning with the 2018 – 2020 performance period, a cumulative utility earnings metric. Payouts, if any, are based on our performance on these measures against pre-established performance goals.

   

Stock Options – Incentivizes executives to take actions that increase the market value of our common stock.

   

Restricted Stock – Increases our executive stock ownership and is an effective retention mechanism.

 

  Ø

Long-Term Performance Unit Program Payout. For the three-year performance period ending in 2018, the Company’s total shareholder return was 9th out of the 20 companies in the Philadelphia Utility Index, resulting in a payout of 111% of target for our executive officers. Payouts were made in shares of Entergy stock which are required to be held by our executive officers until they satisfy our executive stock ownership guidelines.

Alignment of Pay and Performance

The figure below compares for each of the past three years, (i) Mr. Denault’s Adjusted Summary Compensation Table (“SCT”) Compensation as reported in the Summary Compensation Table, which reflects the accounting value of long-term incentives at grant date and not the value actually received from these grants or their potential future value; (ii) Mr. Denault’s Realizable Pay, which represents his future pay opportunity for each year, including both vested and unvested equity granted in the respective year valued as of the most recent year-end; and (iii) his Realized Pay, which is the amount he actually received in the applicable year. The chart also illustrates how our total shareholder return (consisting of stock price appreciation/depreciation and dividends paid during the period) has compared to the total shareholder return of the companies in the Philadelphia Utility Index over the three-year period presented. We believe this comparison illustrates the important role that “at risk” performance-based compensation plays in linking the value of compensation actually received by our Chief Executive Officer to the various performance measures used by our programs and to the Company’s total shareholder return.

 

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For purposes of the preceding figure, we define:

 

  (1)

Adjusted SCT Compensation: (i) base salary paid in each year; (ii) actual bonus earned for each year; and (iii) the grant date fair value of long-term incentive awards as shown in the Summary Compensation Table for each year.

  (2)

Realizable Pay: (i) base salary paid in each year; (ii) the actual bonus earned for each year; (iii) for stock option grants, the intrinsic (“in-the-money”) value of each year’s grant as of December 31, 2018; (iv) for performance units, the actual payout for the units granted in 2016 (for the three year performance period from 2016 through 2018) which was 111% of target and, for grants made in 2017 and 2018, the payout that would occur if the performance period ended on December 31, 2018 (150% and 137.5% of target, respectively); and (v) for restricted stock grants, the value of each year’s grant on December 31, 2018. Long-term incentive values exclude dividend equivalents.

  (3)

Realized Pay: (i) base salary paid in each year; (ii) the actual bonus earned for each year; (iii) for stock option grants, the gain on any options exercised during each year valued on the exercise date; (iv) for performance units, the actual payout for the performance periods ending each year valued at each year’s closing price, i.e., 2016 represents the payout for the 2014 – 2016 period which was 36% of target, the period ending in 2017 was 31% of target and the period ending in 2018 was 111% of target; and (v) for restricted stock grants, the value of grants vesting in each year valued at each year’s closing price.

Consideration of Most Recent Say-On-Pay Vote

Following our 2018 Annual Meeting of Shareholders, the Personnel Committee reviewed the results of the shareholder advisory vote on executive compensation (“Say-on-Pay Vote”) that was held at the meeting with respect to the 2017 compensation actions and decisions for Mr. Denault and the other Named Executive Officers. Approximately 92% of the votes cast with respect to our Say-on-Pay Vote were voted in favor of the Company’s Named Executive Officer compensation. Given this high level of support for the Company’s executive compensation programs and the feedback received

 

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through our annual shareholder outreach process, the Personnel Committee believes that the Company’s shareholders are generally supportive of our executive compensation pay practices, and did not make any changes to Entergy’s executive compensation programs in response to this advisory vote.

What We Pay and Why

How We Set Target Pay

The Personnel Committee annually reviews compensation data from two sources:

Use of Competitive Data

To develop marketplace compensation levels for our executive officers, the Personnel Committee primarily uses data comparing the current compensation opportunities provided to each of our executive officers against the compensation opportunities provided to executives holding similar positions at companies with corporate revenues similar to ours as follows:

 

   

published and private compensation survey data compiled by Pay Governance;

   

both utility and general industry data to determine total cash compensation (base salary and annual incentive) for non-industry specific roles;

   

data from utility companies to determine total cash compensation for management roles that are utility-specific, such as Group President, Utility Operations; and

   

utility market data to determine long-term incentives for all positions.

The Personnel Committee uses this survey data to develop compensation opportunities that are designed to deliver total target compensation within a targeted range of approximately the 50th percentile of the surveyed companies in the aggregate. In most cases, the committee considers its objectives to have been met if our Chief Executive Officer and the six other executive officers (including all of the Named Executive Officers) who constitute our Office of the Chief Executive each has a target compensation opportunity that falls within a targeted range of 85% – 115% of the 50th percentile of the survey data. In general, compensation levels for an executive officer who is new to a position tend to be at the lower end of the competitive range, while seasoned executive officers with strong performance who are viewed as critical to retain would be positioned at the higher end of the competitive range. Actual compensation received by an individual officer may be above or below the targeted range based on an individual officer’s skills, performance, experience and responsibilities, Company performance and internal pay equity.

 

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Proxy Analysis

Although the survey data described above are the primary data used in benchmarking compensation, the committee reviews data derived from the proxy statements of companies included in the Philadelphia Utility Index to evaluate the overall reasonableness of the Company’s compensation programs. The Personnel Committee identified the Philadelphia Utility Index as the appropriate industry peer group because the companies included in this index, in the aggregate, are comparable to the Company in terms of business and scale. Companies included in the Philadelphia Utility Index at the time the proxy data was compiled were as follows:

 

 

 

    AES Corporation

  

    El Paso Electric Co.

    Ameren Corporation

  

    Eversource Energy

    American Electric Power Co. Inc.

  

    Exelon Corporation

    American Water Works

  

    FirstEnergy Corporation

    CenterPoint Energy Inc.

  

    NextEra Energy, Inc.

    Consolidated Edison Inc.

  

    PG&E Corporation

    Dominion Energy

  

    Public Service Enterprise Group Inc.

    DTE Energy Company

  

    Southern Company

    Duke Energy Corporation

  

    Xcel Energy Inc.

    Edison International

  

Principal Executive Compensation Elements

The following table summarizes the elements of TDC granted or paid to our executive officers under our 2018 executive compensation programs. The programs use a mix of fixed and variable compensation elements and are designed to provide alignment with both short- and long-term business goals through annual and long-term incentives. An executive officer’s TDC is based primarily on corporate performance, market-based compensation levels and individual performance with each of these elements reviewed annually for each Named Executive Officer.

 

Compensation    
Component
  Primary Purpose   Performance
Measured
  Key
Characteristic
 

Cash/

Equity

  Performance
Period
Base Salary   Provides a base level of competitive cash compensation for executive talent   Role, experience, job scope, market data and individual performance   Fixed   Cash   Ongoing

Annual

Incentive

  Motivates and rewards executives for performance on key financial measures during the year.   Consolidated operational EPS and operational OCF   Variable   Cash   1 year

Long-Term

Performance

Unit Program

  Focuses our executives on growing earnings and building long-term shareholder value and increases our executives’ ownership of our common stock.   Total shareholder return and utility earnings growth   Variable   Equity   3 years

 

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Compensation    
Component
  Primary Purpose   Performance
Measured
  Key
Characteristic
 

Cash/

Equity

  Performance
Period
Stock Options   Align interests of executives with long-term shareholder value, provide competitive compensation, and increase our executives’ ownership in our common stock.   Job scope, market data, individual and Company performance   Variable   Equity   3 years

Restricted

Stock

  Aligns interests of executives with long-term shareholder value, provides competitive compensation, retains executive talent and increases our executives’ ownership in our common stock.   Job scope, market data, and individual performance   Variable   Equity   3 years

Fixed Compensation

Base Salary

In 2018, all of the Named Executive Officers received merit increases in their base salaries ranging from approximately 2.4% to 3.7%. The increases in base salary were based on the market data previously discussed in this Compensation, Discussion and Analysis under “What We Pay and Why – How We Set Target Pay.” In addition, in determining base salary adjustments, the Personnel Committee considered internal pay equity, although the Personnel Committee has not established any predetermined formula by which an individual’s base salary is measured or evaluated in relation to other employees.

The following table sets forth the 2017 and 2018 base salaries for our Named Executive Officers. Changes in base salaries for 2018 were effective in April.

 

Named Executive Officer          2017 Base Salary                2018 Base Salary      

Leo P. Denault

   $1,230,000    $1,260,000

Andrew S. Marsh

   $600,000    $622,000

A. Christopher Bakken, III

   $620,125    $638,125

Marcus V. Brown

   $630,000    $650,000

Roderick K. West

   $675,598    $696,598

 

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Variable Compensation

Short-Term Incentive Compensation

Annual Incentive Plan

Our Named Executive Officers annual incentives are determined through the following process:

 

 

LOGO

Annual Bonus % of Target Established EAM (Max Funding Level) Determined By Financial Performance Individual Performance Evaluated Final Incentive Awards Determined and Distributed "Our Chief Executive Officer: 135% "Our other Named Executive Officers: 70% "Operational Earnings per Share ("EPS"); and "Operational Operating Cash Flow ("OCF") vs pre-established targets "Personnel Committee may apply negative discretion based on individual performance "Following the end of the performance period, awards are approved by the Personnel Committee at its meeting in late January and subsequently delivered to executives during the first quarter.

Setting Targets;

Annual Review of Performance Measures to Determine EAM Pool:

In December 2017, the Personnel Committee decided to retain consolidated operational EPS and consolidated operational OCF, with each measure weighted equally, as the performance measures for determining the EAM pool. The Personnel Committee considered other measures, but determined that consolidated operational EPS and operational OCF continued to be the best metrics to use for this purpose because:

 

   

They represent objective measures that we and our investors consider to be important in evaluating our financial performance;

   

They align with our internal and external financial reporting; and

   

They provide both discipline and transparency.

Establishing Target Achievement Levels:

The Personnel Committee annually engages in a rigorous process with a goal of establishing target achievement levels that are consistent with the Company’s strategy and business objectives for the upcoming year, as reflected in its financial plan and sufficient to drive results that represent a high level of achievement. These targets are approved based on a comprehensive review by the full Board of the Company’s financial plan, conducted in December of the preceding year and updated in January to reflect the most current information concerning changes in commodity market conditions and other key drivers of anticipated changes in performance from the preceding year. The Personnel Committee also seeks to assure that the targets:

 

   

Take into account changes in the business environment and specific challenges facing the Company;

   

Reflect an appropriate balancing of the various risks and opportunities recognized at the time the targets are set; and

   

Are aligned with external expectations communicated to our shareholders.

 

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2018 Targets:

In January 2018, the Personnel Committee followed the process described above in setting 2018 performance targets. Consistent with its authority and past practice, the Personnel Committee determined that the effect of the following would be excluded from the reported results:

 

   

Any major storms that may occur during the year;

   

Certain impacts that may occur as a result of the implementation of December 2017 tax reform legislation;

   

Certain unresolved litigation initiated in the late 1990s and early 2000s relating to an agreement among the Company’s utility operating company subsidiaries that has since been terminated; and

   

Unrealized gains and losses on equity securities different than assumed in the plan.

The Personnel Committee viewed the exclusion of major storms as appropriate because although the Company includes estimates for storm costs in its financial plan, it does not include estimates for a major storm event, such as a hurricane. The adjustment for unanticipated impacts of the December 2017 tax law changes was limited to the impact of any deviations from the regulatory assumptions incorporated into the plan relating to (a) the timing of the adjustment of retail electric rates due to the change in the federal tax rate, and (b) the timing and amount of deferred income taxes that may be refunded to customers. However, the impacts of tax reform were only to be excluded to the extent that they cumulatively impacted consolidated operational EPS by more than $0.10 per share in 2018. The Personnel Committee considered the exclusion of tax reform to be appropriate because of the substantial uncertainty around the outcomes of the applicable discussions and proceedings with regulators, which had not yet commenced, and because of the potential that there could be significant adverse impacts on 2018 results from such outcomes that would be in the long-term best interest of the Company. The Personnel Committee approved the other exclusions from reported results—for the impact of the legacy system agreement litigation and unrealized gains and losses on securities held by the Company’s nuclear decommissioning trusts—primarily because of management’s inability to influence either of the related outcomes.

In determining the targets to set for 2018, the Personnel Committee reviewed anticipated drivers for consolidated operational EPS and consolidated operational OCF for 2018 as set forth in the Company’s financial plan, as well as factors driving the strong financial performance achieved in 2017. The Personnel Committee noted that a substantial portion of 2017 operational EPS was attributable to a major restructuring tax benefit at the Company’s EWC business. The committee also noted that 2017 operational EPS had been adversely impacted by unusual weather. After adjusting to eliminate the impact on 2017 operational results of both the tax item and weather, the committee confirmed that the proposed plan target for operational EPS reflected substantial growth in core operational earnings.

The Personnel Committee also considered the potential impact of certain risks and opportunities, including potential differences from plan in wholesale energy prices and capacity factors at EWC, utility sales, operations and maintenance costs, interest expense and certain tax and regulatory outcomes. This evaluation indicated that there was significantly more downside risk than upside opportunity in the targets and, as a result, that there was a reasonable degree of challenge embedded in the targets.

 

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2018 Performance Assessment

The following table shows the 2018 Annual Incentive Plan targets established by the Personnel Committee and 2018 results:

 

Annual Incentive Plan Targets and Results  
   
      Performance Goals(1)  
         
           Minimum                Target                  Maximum                  2018 Results(2)         

 Consolidated Operational Earnings Per Share ($)

     5.90        6.55          7.20        8.63  

 Consolidated Operational Operating Cash Flow ($ billion)

     2.580        3.000          3.420        2.820  

 EAM as % of Target

     25%        100%          200%        134%  

 

  (1)

Payouts for performance between minimum and target achievement levels and between target and maximum levels are calculated using straight-line interpolation. There is no payout for performance below minimum.

  (2)

These results are adjusted to reflect the pre-determined exclusions approved by the Personnel Committee in January 2018 and described above. See Appendix A for the reconciliation of non-GAAP financial measures to GAAP results.

In January 2019, the Finance and Personnel Committees jointly reviewed the Company’s financial results against the performance objectives reflected in the table above. Management discussed with the committees the Company’s consolidated operational EPS and OCF results for 2018, including primary factors explaining how those results compared to the 2018 business plan and Annual Incentive Plan targets set in January. Consolidated operational EPS, adjusted as determined by the committee when targets were set at the beginning of the year, exceeded the Company’s consolidated operational EPS goal of $6.55 per share by $2.08, due in large part to a favorable tax item and a pre-determined adjustment made for the impact of below-plan market performance by the investment securities in the Company’s nuclear decommissioning trusts, but management fell short of achieving its consolidated operational OCF goal of $3.000 billion by approximately $180 million, on an adjusted basis, leading to a calculated EAM of 134%.

Operational results for 2018 excluded the impact of certain special items that were excluded from as-reported (GAAP) consolidated EPS and OCF to determine operational EPS and OCF, including items related to tax reform legislation, the shutdown and disposition of EWC nuclear plants, the accelerated return of unprotected accumulated deferred income taxes as a result of tax reform, EWC net revenue and nuclear decommissioning trust tax payments. These were not adjustments made by the committee in determining the EAM, but were all considered special items and therefore excluded from the operational results reported to investors and from the financial measures used in the plan targets.

To determine individual executive officer awards under the Annual Incentive Plan, the Personnel Committee considered not only each executive’s role in executing on the Company’s strategies and delivering the strong financial performance achieved in 2018, but also the individual’s accountability for certain operational and regulatory challenges the Company experienced during the year. With these considerations in mind, the committee exercised negative discretion to determine individual awards that ranged from 115% to 122% of target for each of the Named Executive Officers, with the extent of the negative discretion applied varying based on the executive’s specific accountabilities and accomplishments.

 

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Based on the foregoing evaluation of management performance, the Personnel Committee approved the following Annual Incentive payouts:

 

Named Executive

Officer

   Base Salary(1)     

Target as

Percentage of

Base Salary

  Payout as
Percentage of
Target(2)
 

2018 Annual

Incentive Award 

 

Leo P. Denault

     $1,260,000      135%   120%     $2,041,200  

Andrew S. Marsh

     $ 622,000      70%   122%     $531,188  

A. Christopher Bakken, III

     $ 638,125      70%   122%     $544,959  

Marcus V. Brown

     $ 650,000      70%   120%     $546,000  

Roderick K. West

     $ 696,598      70%   115%     $560,762  

 

  (1)

The target opportunities established for the Named Executive Officers did not increase as compared to the levels set in 2017.

  (2)

The Named Executive Officers may earn a maximum payout ranging from 0% to 200% of their target opportunity, not to exceed the EAM.

Nuclear Retention Plan

Mr. Bakken participates in the Nuclear Retention Plan, a retention plan for officers and other leaders with expertise in the nuclear industry. The Personnel Committee authorized this plan to attract and retain key management and employee talent in the nuclear power field, a field that requires unique technical and other expertise that is in great demand in the utility industry. The plan provides for bonuses to be paid annually over a three-year service period with the bonus opportunity dependent on the participant’s management level and continued employment. Each annual payment is equal to an amount ranging from 15% to 30% of the employee’s base salary as of their date of enrollment in the plan. Mr. Bakken’s participation in the plan commenced in May 2016, and in accordance with the terms and conditions of the plan, in May 2017 and 2018, Mr. Bakken received, and in May 2019, subject to his continued employment, Mr. Bakken will receive a cash bonus equal to $181,500 or 30% of his May 1, 2016 base salary. This plan does not provide for accelerated or prorated payout upon termination of any kind.

Long-Term Incentive Compensation

In general, we seek to allocate the total value of long-term incentive compensation as follows:

 

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2018 Target Allocation of Long-term Incentives

 

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Awards for individual Named Executive Officers may vary from this target as a result of individual performance, promotions and internal pay equity. All of the outstanding performance units and all of the shares of restricted stock and stock options granted to our Named Executive Officers in 2018 were granted pursuant to the 2015 Equity Ownership Plan or 2015 Equity Plan. The 2015 Equity Plan requires both a change in control and an involuntary job loss or substantial diminution of duties (a “double trigger”) for the acceleration of these awards upon a change in control.

Performance Unit Program

Our Named Executive Officers are issued performance unit awards under our Long-Term Performance Unit Program.

 

   

Each performance unit represents one share of our common stock at the end of the three-year performance period, plus dividends accrued during the performance period.

   

The performance units and accrued dividends on any shares earned during the performance period are settled in shares of Entergy common stock.

   

The Personnel Committee sets payout opportunities for the program at the outset of each performance period, with payouts only occurring if the performance goals are met.

   

Payouts under this program are not made if minimum performance goals are not achieved.

   

All shares paid out under the Long-Term Performance Unit Program are required to be retained by our officers until applicable executive stock ownership requirements are met.

The Long-Term Performance Unit Program specifies a minimum, target and maximum achievement level, the achievement of which will determine the number of performance units that may be earned by each participant. For the 2016 – 2018 and 2017 – 2019 performance periods, performance is measured by assessing Entergy’s total shareholder return relative to the total shareholder return of the companies in the Philadelphia Utility Index. The Personnel Committee identified the Philadelphia Utility Index as the appropriate industry peer group for this purpose because the companies included in this index, in the aggregate, are comparable to the Company in terms of business and scale. The Personnel Committee chose relative total shareholder return as a performance measure because it reflects the Company’s creation of shareholder value relative to other electric utilities over the performance period. It also takes into account dividends paid by the companies in this index and normalizes certain events that affect the industry as a whole. Minimum, target and maximum performance levels are determined by reference to the ranking of Entergy’s total shareholder return against the total shareholder return of the companies in the Philadelphia Utility Index.

For the 2018 – 2020 performance period, performance will be measured using two performance measures – total shareholder return and cumulative adjusted Utility, Parent & Other earnings per share (UP&O Adjusted EPS), with each performance measure weighted equally. UP&O Adjusted EPS, which adjusts the Company’s operational Utility, Parent & Other results to eliminate the impact of tax items and weather, was added as a performance measure since delivering steady, predictable growth at the Utility is an integral component of executing Entergy’s strategy and it aligns with externally communicated Utility guidance. Similar to the way targets are established for the Annual Incentive Plan, targets for the UP&O Adjusted EPS performance measure were established by the Personnel Committee after the Board’s review of the Company’s financial plan. These targets also incorporate exclusions similar to those used with the Annual Incentive Plan. Given the economic and market conditions at the time the targets were set, the target payout levels for the UP&O Adjusted EPS goal were designed to be challenging but achievable, while payouts at the maximum levels were designed to be stretch goals. Payout is based on achieving the performance goals established for both performance measures by the committee at the beginning of the performance period.

 

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Performance Unit Program Grants. At any given time, a participant in the Long-Term Performance Unit Program may be participating in up to three performance periods. During 2018, eligible participants were participating in the 2016 – 2018, 2017 – 2019 and 2018 – 2020 performance periods. Subject to achievement of the applicable performance levels as described below, the Personnel Committee established the following target performance unit payout opportunities for each of the 2016 – 2018, 2017 – 2019 and 2018 – 2020 performance periods:

 

          Named Executive Officer   

    2016-2018    

Target

  

    2017-2019    

Target

  

    2018-2020    

Target

Leo P. Denault

   41,700    48,700    42,700

Andrew S. Marsh

   8,200    8,300    7,900

A. Christopher Bakken, III(1)

   7,289    8,300    7,900

Marcus V. Brown

   8,200    8,300    7,900

Roderick K. West

   8,200    8,300    7,900

 

  (1)

As a new hire in 2016, Mr. Bakken received a pro-rated target award opportunity for the 2016 – 2018 performance period.

The range of potential payouts for the 2016 – 2018 and 2017 – 2019 performance periods under the program is shown below.

 

         
Performance Level(1)          Minimum    Target    Maximum

Total Shareholder Return

   4th Quartile      Bottom of 3rd Quartile    Median percentile    Top Quartile

Payout

   No Payout     

Minimum

Payout of

25% of target

   100% of target    200% of Target

 

  (1)

Payouts for performance between achievement levels are calculated using straight-line interpolation, with no payouts for performance below the minimum achievement level.

As noted above, for the 2018 – 2020 performance period, performance will be measured using two performance measures, total shareholder return and UP&O Adjusted EPS, with each performance measure weighted equally. Under the 2018 – 2020 performance period, the performance goals and the payout opportunities associated with the relative total shareholder return metric are consistent with the 2016 – 2018 and 2017 – 2019 performance periods, as described above. Based on performance, the performance units allocated to the UP&O Adjusted EPS goal could range from 25% to 200% of the target opportunity, with no payment for performance below the minimum performance goal. The Personnel Committee established the performance goals and range of potential payouts for the 2018 – 2020 performance period to encourage strong, focused performance.

 

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Payout for the 2016 – 2018 Performance Period. In January 2019, the Personnel Committee reviewed the Company’s total shareholder return for the 2016 – 2018 performance period in order to determine the payout to participants. The committee compared the Company’s total shareholder return against the total shareholder return of the companies that comprise the Philadelphia Utility Index, with the performance measures and range of potential payouts for the 2016 – 2018 performance period as discussed above. As recommended by the Finance Committee, the Personnel Committee concluded that the Company’s relative total shareholder return for the 2016 – 2018 performance period fell in the second quartile, yielding a payout of 111% of target for the Named Executive Officers.

 

Named Executive

Officer

  

  2016-2018  

Target

   Number of
 Shares Issued 
   Value of Shares
 Actually Issued(1) 
  

  Grant Date  

 Fair Value 

Leo P. Denault

   41,700    51,933    $4,467,796    $3,524,484

Andrew S. Marsh

   8,200    10,212    $878,538    $693,064

A. Christopher Bakken, III(2)

   7,289    8,998    $774,098    $616,066

Marcus V. Brown

   8,200    10,212    $878,538    $693,064

Roderick K. West

   8,200    10,212    $878,538    $693,064

 

  (1)

Value determined based on the closing price of our common stock on January 17, 2019 ($86.03), the date the Personnel Committee certified the 2016 – 2018 performance period results.

  (2)

As a new hire in 2016, Mr. Bakken received a pro-rated target award opportunity for the 2016 – 2018 performance period.

Stock Options and Restricted Stock

Factors used by the Personnel Committee to determine the number of stock options and shares of restricted stock it will grant to our Named Executive Officers include Company and individual performance, internal pay equity, prevailing market practice, with the committee’s assessment of individual performance of each Named Executive Officer, other than the Chief Executive Officer, being the most important factor in determining the number of shares of restricted stock and stock options awarded and comparative market data being the most important factor in determining the Chief Executive Officer’s award levels. The Personnel Committee, in consultation with our Chief Executive Officer, reviews each other Named Executive Officer’s performance, role and responsibilities, strengths and developmental opportunities. Stock option and restricted stock awards for our Chief Executive Officer are determined solely by the Personnel Committee on the basis of the same considerations.

The following table sets forth the number of stock options and shares of restricted stock granted to each Named Executive Officer in 2018. The exercise price for each option was $78.08, which was the closing price of Entergy’s common stock on the date of grant.

 

 Named Executive Officer           Stock Options                     Shares of Restricted Stock          

 Leo P. Denault

   167,100    15,700

 Andrew S. Marsh

   49,000    5,200

 A. Christopher Bakken, III

   40,500    5,000

 Marcus V. Brown

   40,500    5,000

 Roderick K. West

   42,500    5,200

 

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Benefits and Perquisites

Entergy’s Named Executive Officers are eligible to participate in or receive the following benefits:

 

     
Plan Type    Description     

Retirement Plans

  

Company-sponsored:

 

•   Entergy Retirement Plan – a tax-qualified final average pay defined benefit pension plan that covers a broad group of employees hired before July 1, 2014.

•   Cash Balance Plan –a tax-qualified cash balance defined benefit pension plan that covers a broad group of employees hired on or after July 1, 2014.

•   Pension Equalization Plan – a non-qualified pension restoration plan for a select group of management or highly compensated employees who participate in the Entergy Retirement Plan.

•   Cash Balance Equalization Plan – a non-qualified restoration plan for a select group of management or highly compensated employees who participate in the Cash Balance Plan.

•   System Executive Retirement Plan – a non-qualified supplemental retirement plan for individuals who became executive officers before July 1, 2014.

 

See the 2018 Pension Benefits Table on page 70 of this Proxy Statement for additional information regarding the operation of the plans described above.

   

Savings Plan

  

Company-sponsored 401(k) Savings Plan that covers a broad group of employees.

   
Health & Welfare Benefits   

Medical, dental and vision coverage, life and accidental death and dismemberment insurance, business travel accident insurance and long-term disability insurance.

 

Eligibility, coverage levels, potential employee contributions and other plan design features are the same for the Named Executive Officers as for the broad employee population.

   

2018 Perquisites

  

Corporate aircraft usage, annual mandatory physical exams, relocation assistance and event tickets. The Named Executive Offices do not receive tax gross ups on any benefits, except for relocation assistance. For additional information regarding perquisites, see the “All Other Compensation” column in the 2018 Summary Compensation Table on page 63 of this Proxy Statement.

   
Deferred Compensation   

The Named Executive Officers are eligible to defer up to 100% of their base salary and Annual Incentive Plan awards into the Company-sponsored Executive Deferred Compensation Plan. As of December 31, 2018, none of the Named Executive Officers participated in this plan.

   
Executive Disability Plan   

Eligible individuals who become disabled under the terms of the plan are eligible for 65% of the difference between their annual base salary and $276,923 (the annual base salary that produces the maximum $15,000 monthly disability payment under our general long-term disability plan).

   

We provide these benefits to our Named Executive Officers as part of providing a competitive executive compensation program and because we believe that these benefits are important retention and recruitment tools since many of the companies with which we compete for executive talent provide similar arrangements to their senior executive officers.

 

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Severance and Other Compensation Arrangements

The Personnel Committee believes that retention and transitional compensation arrangements are an important part of overall compensation, as they help to secure the continued employment and dedication of our Named Executive Officers, notwithstanding any concern that they might have at the time of a change in control regarding their own continued employment. In addition, the Personnel Committee believes that these arrangements are important as recruitment and retention devices, as many of the companies with which we compete for executive talent have similar arrangements in place for their senior employees.

To achieve these objectives, we have established a System Executive Continuity Plan under which each of our Named Executive Officers is entitled to receive “change in control” payments and benefits if such officer’s employment is involuntarily terminated in connection with a change in control of the Company. Severance payments under the System Executive Continuity Plan generally are based on a multiple of the sum of an executive officer’s annual base salary plus his average Annual Incentive Plan award for the two calendar years immediately preceding the calendar year in which the termination of employment occurs. Under our policy, under no circumstances can this multiple exceed 2.99 times the sum of the executive officer’s annual base salary and his annual incentive, calculated in accordance with this policy. We strive to ensure that the benefits and payment levels under the System Executive Continuity Plan are consistent with market practices. Our executive officers, including the Named Executive Officers, are not entitled to any tax gross up payments on any severance benefits received under this plan. For more information regarding the System Executive Continuity Plan, see “2018 Potential Payments Upon Termination or Change in Control – Change in Control.”

In certain cases, the Personnel Committee may approve the execution of a retention agreement with an individual executive officer. These decisions are made on a case by case basis to reflect specific retention needs or other factors, including market practice. If a retention agreement is entered into with an individual officer, the committee considers the economic value associated with that agreement in making overall compensation decisions for that officer. The Company has voluntarily adopted a policy that any employment or severance agreements providing severance benefits in excess of 2.99 times the sum of an officer’s annual base salary and annual incentive award (other than the value of the vesting or payment of an outstanding equity-based award or the pro rata vesting or payment of an outstanding long-term incentive award) must be approved by the Company’s shareholders.

We currently have a retention agreement with Mr. Denault. In general, Mr. Denault’s retention agreement provides for certain payments and benefits in the event of his termination of employment by his Entergy employer other than for cause, by Mr. Denault for good reason, or on account of his death or disability. See “2018 Potential Payments Upon Termination or Change in Control – Mr. Denault’s 2006 Retention Agreement.” Because Mr. Denault has reached age 55, certain severance payment provisions in his retention agreement no longer apply. Mr. Denault is not entitled to receive tax gross up payments on any payments or benefits he may receive under his agreement. Mr. Denault’s retention agreement was entered into in 2006 when he was our Chief Financial Officer and was designed to reflect the competition for chief financial officer talent in the marketplace at that time and the Personnel Committee’s assessment of the critical role this position played in executing the Company’s long-term financial and other strategic objectives. Based on the market data provided by its former independent compensation consultant, the committee, at the time the agreement was entered into, believed the benefits and payment levels under Mr. Denault’s retention agreement were consistent with market practices.

In connection with the commencement of his employment, we provided Mr. Bakken with relocation assistance to facilitate his move to Jackson, Mississippi where our nuclear fleet corporate

 

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headquarters is located. As part of that relocation assistance, we agreed to provide Mr. Bakken with certain relocation benefits, including the purchase of Mr. Bakken’s house at a fixed price which the Personnel Committee determined was necessary to facilitate Mr. Bakken’s transition to the Company and to mitigate the expenses associated with his relocation. The terms of Mr. Bakken’s employment, including the relocation assistance, were reviewed by the Personnel Committee, were determined based on competitive market data, and were designed to reflect the competition for chief nuclear officer talent in the marketplace and the committee’s assessment of the critical role this position plays in transforming our nuclear fleet and to encourage retention of his leadership in light of his marketability as a chief nuclear officer.

Compensation Policies and Practices

We strive to ensure that our compensation philosophy and practices are in line with the best practices of companies in our industry as well as other companies in the S&P 500. Some of these practices include the following:

Clawback Provisions

We have adopted a clawback policy that covers all individuals subject to Section 16 of the Exchange Act, including all of the members of our Office of the Chief Executive. Under the policy, which goes beyond the requirements of the Sarbanes-Oxley Act of 2002, the Personnel Committee will require reimbursement of incentives paid to these executive officers where:

 

   

(i) the payment was predicated upon the achievement of certain financial results with respect to the applicable performance period that were subsequently determined to be the subject of a material restatement other than a restatement due to changes in accounting policy; or (ii) a material miscalculation of a performance award occurs, whether or not the financial statements were restated and, in either such case, a lower payment would have been made to the executive officer based upon the restated financial results or correct calculation; or

 

   

in the Board of Directors’ view, the executive officer engaged in fraud that caused or partially caused the need for a restatement or caused a material miscalculation of a performance award, in each case, whether or not the financial statements were restated.

The amount the Personnel Committee requires to be reimbursed is equal to the excess of the gross incentive payment made over the gross payment that would have been made if the original payment had been determined based on the restated financial results or correct calculation. Further, following a material restatement of our financial statements, we will seek to recover any compensation received by our Chief Executive Officer and Chief Financial Officer that is required to be reimbursed under Sarbanes-Oxley.

Stock Ownership Guidelines and Share Retention Requirements

For many years, the Company has had stock ownership guidelines for executives, including the Named Executive Officers. These guidelines are designed to align the executives’ long-term financial interests with the interests of our shareholders. Annually, the Personnel Committee monitors the executive officers’ compliance with these guidelines.

Our ownership guidelines are as follows:

 

Role    Value of Common Stock to be Owned
Chief Executive Officer    6 times base salary
Executive Vice Presidents    3 times base salary
Senior Vice Presidents    2 times base salary
Vice Presidents    1 time base salary

 

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Further, to facilitate compliance with the guidelines, until an executive officer satisfies the stock ownership guidelines, the officer must retain:

 

   

all net after-tax shares paid out under our Long-Term Performance Unit Program;

   

all net after-tax shares of our restricted stock and restricted stock units received upon vesting; and

   

at least 75% of the after-tax net shares received upon the exercise of Company stock options.

Trading Controls and Anti-Pledging and Anti-Hedging Policies

Executive officers, including the Named Executive Officers, are required to receive the permission of the Company’s General Counsel prior to entering into any transaction involving Company securities, including gifts, other than the exercise of employee stock options. Trading is generally permitted only during specified open trading windows beginning immediately following the release of earnings. Employees, who are subject to trading restrictions, including the Named Executive Officers, may enter into trading plans under Rule 10b5-1 of the Exchange Act, but these trading plans may be entered into only during an open trading window and must be approved by the Company. The Named Executive Officer bears full responsibility if he violates Company policy by permitting shares to be bought or sold without pre-approval or when trading is restricted.

We also prohibit our directors and executive officers, including the Named Executive Officers, from pledging any Entergy securities or entering into margin accounts involving Entergy securities. We prohibit these transactions because of the potential that sales of Entergy securities could occur outside trading periods and without the required approval of the General Counsel.

We also have adopted an anti-hedging policy that prohibits officers, directors and employees from entering into hedging or monetization transactions involving our common stock. Prohibited transactions include, without limitation, zero-cost collars, forward sale contracts, purchase or sale of options, puts, calls, straddles or equity swaps or other derivatives that are directly linked to the Company’s stock or transactions involving “short-sales” of the Company’s stock. The Board adopted this policy to require officers, directors and employees to continue to own Company stock with the full risks and rewards of ownership, thereby ensuring continued alignment of their objectives with those of the Company’s other shareholders.

How We Make Compensation Decisions

Role of the Personnel Committee

The Personnel Committee is responsible for overseeing the development and administration of our compensation and benefits policies and programs. The committee, which consists of three independent directors, is responsible for the review and approval of all aspects of our executive compensation programs. Among its duties, the Personnel Committee is responsible for formulating the compensation recommendations for our Chief Executive Officer and approving all compensation recommendations for all members of the Office of Chief Executive, including:

 

   

Annual review of the compensation elements and mix of elements for the following year:

   

Annual review and approval of incentive program design, goals and objectives for alignment with our compensation and business strategies;

   

Evaluation of company and individual performance results in light of these goals and objectives;

   

Evaluation of the competitiveness of each executive officer’s total compensation package;

 

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Approval of any changes to our officers total compensation package, including but not limited to, base salary, annual and long-term incentive award opportunities, and retention programs;

   

Evaluation of the performance of our Chairman and Chief Executive Officer; and

   

Reporting, at least annually, to the Board on succession planning.

The Personnel Committee is supported in its work by its independent compensation consultant and our executive management to ensure that our compensation policies and practices are consistent with our values and support the successful recruitment, development and retention of executive talent so that we can achieve our business objectives and optimize our long-term financial returns.

Role of the Chief Executive Officer

Within the framework of the compensation programs approved by the Personnel Committee and competitive data, each year our Chief Executive Officer makes recommendations with respect to compensation decisions for the members of the Office of the Chief Executive. Our Chief Executive Officer provides the Personnel Committee with an assessment of the performance of each of the other Named Executive Officers and recommends compensation levels to be awarded to each of them. In addition, the committee may request that the Chief Executive Officer provide management feedback and recommendations on changes in the design of the Company’s executive compensation programs, such as special retention plans or changes in incentive program structure. However, our Chief Executive Officer does not play any role with respect to any matter affecting his own compensation, and is not present when the committee discusses and formulates his compensation. The Personnel Committee also relies on the recommendations of the most senior Human Resources officer with respect to compensation decisions, policies and practices.

The Chief Executive Officer may attend meetings of the Personnel Committee only at the invitation of the chair of the Personnel Committee and cannot call a meeting of the committee. Since he is not a member of the Personnel Committee, he has no vote on matters submitted to the committee. During 2018, Mr. Denault attended 6 meetings of the Personnel Committee.

Role of the Compensation Consultant

The Personnel Committee conducts an annual review of the compensation consultant, and in 2018, it retained Pay Governance LLC as its independent compensation consultant to assist it in, among other things, evaluating different compensation practices and programs and developing market data to assess our compensation programs. Also in 2018, the Corporate Governance Committee retained Pay Governance to review and perform a competitive analysis of non-employee director compensation.

During 2018, Pay Governance assisted the Personnel Committee with its responsibilities related to the Company’s compensation programs for its executives. The committee directed Pay Governance to: (i) regularly attend meetings of the committee; (ii) conduct studies of competitive compensation practices; (iii) identify the Company’s market surveys and proxy peer group; (iv) review base salary, annual incentives and long-term incentive compensation opportunities relative to competitive practices; and (v) develop conclusions and recommendations related to the Company’s executive compensation programs for consideration by the committee. A senior consultant from Pay Governance attended all Personnel Committee meetings to which he was invited in 2018.

Our Personnel Committee has the sole authority to hire the compensation consultant, approve its compensation, determine the nature and scope of its services evaluate its performance and terminate its engagement.

 

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Compensation Consultant Independence

To maintain the independence of the Personnel Committee’s compensation consultant, the Board has adopted a policy that any consultant (including its affiliates) retained by the Board of Directors or any committee of the Board of Directors to provide advice or recommendations on the amount or form of executive or director compensation should not be retained by the Company or any of its affiliates to provide other services in an aggregate amount that exceeds $120,000 in any year. Pay Governance did not provide any services to management in 2018.

Annually, the Personnel Committee reviews the relationship with its compensation consultant, including services provided, quality of those services, and fees associated with services in its evaluation of the compensation consultant’s independence. The committee also assesses Pay Governance’s independence under NYSE rules and has concluded that no conflicts of interest exist that would prevent Pay Governance from independently advising the Personnel Committee

Personnel Committee Report

The Personnel Committee of the Company has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the Personnel Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.

The Personnel Committee of the Entergy Corporation Board of Directors:

 

Karen A. Puckett, Chair

 

John R. Burbank

Alexis M. Herman

 

Personnel Committee Interlocks and Insider Participation

Each member of the Personnel Committee is an independent director. During the last completed fiscal year, none of the Personnel Committee members served as an officer of the Company, and none of the Company’s executive officers served as a member of a compensation committee or board of directors of any other entity that had an executive officer serving as a member of the Company’s Board of Directors.

Annual Compensation Risk Assessment

We monitor the risks associated with our executive compensation programs, as well as the components of our programs and individual compensation decisions, on an ongoing basis. In February 2019, the Personnel Committee was presented with the results of a study reviewing our compensation programs, including our executive compensation programs, to assess the risk arising from our compensation policies and practices. The committee agreed with the study’s findings that these risks were within our ability to effectively monitor and manage, and that these compensation programs do not encourage unnecessary or excessive risk-taking and do not create risks that are reasonably likely to have a material adverse effect on the Company.

 

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Executive Compensation Tables

2018 Summary Compensation Table

The following table summarizes the total compensation paid or earned by each of the Named Executive Officers for the fiscal year ended December 31, 2018, 2017 and 2016.

 

(a)   (b)     (c)     (d)   (e)     (f)     (g)   (h)     (i)   (j)  

Name and
Principal Position

(1)

  Year     Salary(2)     Bonus(3)  

Stock

Awards(4)

    Option
Awards(5)
   

Non-Equity
Incentive

Plan
Compensation(6)

 

Change in

Pension

Value and

Non-qualified

Deferred
Compensation
Earnings(7)

   

All

Other
Compensation(8)

  Total  

Leo P. Denault

    2018       $1,251,346     $ -     $4,744,977       $1,168,029     $2,041,200     $982,800     $138,104     $10,326,456  

Chairman of the

    2017       $1,221,346     $ -     $4,676,190       $1,173,276     $2,142,045     $3,819,500     $125,863     $13,158,220  

Board and Chief

Executive Officer

    2016       $1,191,462     $ -     $4,632,276       $1,235,800     $2,154,600     $4,166,800     $97,786     $13,478,724  

Andrew S. Marsh

    2018       $615,654     $ -     $1,057,095       $342,510     $531,188     $ -     $57,638     $2,604,085  

Executive Vice

    2017       $588,291     $ -     $1,022,853       $287,760     $541,800     $801,900     $51,647     $3,294,251  

President and

Chief Financial Officer

    2016       $553,284     $ -     $1,144,648       $333,000     $509,061     $593,700     $47,484     $3,181,177  

A. Christopher

Bakken, III

    2018       $632,967     $181,500     $1,041,479       $283,095     $544,959     $108,700     $452,012     $3,244,712  

Executive Vice

    2017       $615,791     $181,500     $959,376       $245,904     $559,973     $33,000     $114,494     $2,710,038  

President and

Chief Nuclear Officer

    2016       $426,990     $650,000     $3,292,700       $ -     $529,375     $27,900     $140,601     $5,067,566  
Marcus V. Brown     2018       $644,231     $ -     $1,041,479       $283,095     $546,000     $371,800     $61,885     $2,948,490  

Executive

    2017       $622,788     $ -     $1,022,853       $287,760     $568,890     $1,217,200     $43,269     $3,762,760  

Vice President and General Counsel

    2016       $563,208     $ -     $1,144,648       $333,000     $550,550     $934,600     $34,381     $3,560,387  

Roderick K. West

    2018       $690,581     $ -     $1,057,095       $297,075     $560,762     $ -     $67,234     $2,672,747  
Group President,     2017       $670,876     $ -     $818,316       $190,968     $610,065     $867,200     $52,220     $3,209,645  

Utility Operations

    2016       $654,514     $ -     $1,116,424       $303,400     $461,384     $601,000     $73,706     $3,210,428  

 

(1)

Effective April 6, 2016, Mr. Bakken was named Executive Vice President, Nuclear Operations/Chief Nuclear Officer.

 

(2)

The amounts in column (c) represent the actual base salary paid to the Named Executive Officers in the applicable year. The 2018 changes in base salaries noted in the Compensation Discussion and Analysis were effective in April 2018.

 

(3)

The amount in column (d) in 2018 and 2017 represents the cash bonus paid to Mr. Bakken pursuant to the Nuclear Retention Plan. See “Nuclear Retention Plan” in Compensation Discussion and Analysis. The amount in 2016 for Mr. Bakken represents a cash sign-on bonus paid to Mr. Bakken in connection with the commencement of his employment with the Company.

 

(4)

The amounts in column (e) represent the aggregate grant date fair value of restricted stock, performance units, and restricted stock units granted under the 2015 Equity Plan, each calculated in accordance with FASB ASC Topic 718, without taking into account estimated forfeitures. The grant date fair value of the restricted stock, restricted stock units and half of the performance units is based on the closing price of the Company’s common stock on the date of

 

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grant. The grant date fair value of the portion of the performance units with vesting based on total shareholder return was measured using a Monte Carlo simulation valuation model. The simulation model applies a risk-free interest rate and an expected volatility assumption. The risk-free interest rate is assumed to equal the yield on a three-year treasury bond on the grant date. Volatility is based on historical volatility for the 36-month period preceding the grant date. The performance units in the table are also valued based on the probable outcome of the applicable performance condition at the time of grant. The maximum value of shares that will be received if the highest achievement level is attained with respect to both the total shareholder return and UP&O Adjusted EPS for performance units granted in 2018 are as follows: Mr. Denault, $6,668,032; Mr. Marsh, $1,233,664; Mr. Bakken $1,233,664; Mr. Brown, $1,233,664; and Mr. West, $1,233,664. The amount in 2016 for Mr. Bakken includes restricted stock units granted to him in connection with his commencement of employment as Chief Nuclear Officer.

 

(5)

The amounts in column (f) represent the aggregate grant date fair value of stock options granted under the 2015 Equity Plan calculated in accordance with FASB ASC Topic 718. For a discussion of the relevant assumptions used in valuing these awards, see Note 12 to the Financial Statements in our Form 10-K for the year ended December 31, 2018.

 

(6)

The amounts in column (g) represent cash payments made under the Annual Incentive Plan.

 

(7)

For all Named Executive Officers, the amounts in column (h) include the annual actuarial increase in the present value of these Named Executive Officers’ benefits under all pension plans established by the Company using interest rate and mortality rate assumptions consistent with those used in the Company’s financial statements and include amounts which the Named Executive Officers may not currently be entitled to receive because such amounts are not vested. For 2018, the aggregate change in the actuarial present value of Messrs. Marsh and West’s pension benefits was a decrease of $163,000 and $149,300, respectively. See the 2018 Pension Benefits Table on page 70 of this Proxy Statement. None of the increase for any of the Named Executive Officers is attributable to above-market or preferential earnings on non-qualified deferred compensation.

 

(8)

The amounts set forth in column (i) for 2018 include (a) matching contributions by the Company under the Savings Plan to each of the Named Executive Officers; (b) dividends paid on restricted stock when vested; (c) life insurance premiums; (d) tax gross up payments on relocation expenses; and (e) perquisites and other compensation as described below. The amounts are listed in the following table:

 

    

Leo P.

Denault

    

Andrew S.

Marsh

     A. Christopher
Bakken, III
     Marcus V.
Brown
    

Roderick K.

West

 

Company Contribution – Savings Plan

     $11,550        $11,550        $16,500        $11,550        $11,550  

Dividends Paid on Restricted Stock

     $102,475        $41,159        $6,028        $41,159        $35,795  

Life Insurance Premiums

     $7,482        $4,929        $11,919        $7,482        $4,002  

Tax Gross Up Payments

     $-        $-        $1,235        $-        $-  

Perquisites and Other Compensation

     $16,597        $-        $416,330        $1,694        $15,887  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     $138,104        $57,638        $452,012        $61,885        $67,234  

 

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Perquisites and Other Compensation

The amounts set forth in column (i) also include perquisites and other personal benefits that we provide to our Named Executive Officers as part of providing competitive executive compensation programs and for employee retention. The following perquisites were provided to the Named Executive Officers in 2018.

 

         

Named

Executive Officer

    Relocation     Personal Use of
  Corporate Aircraft  
 

Executive

  Physical Exams  

    Event Tickets  

      Leo P. Denault

      X   X   X

      Andrew S. Marsh

          X    

      A. Christopher Bakken, III

  X   X   X    

      Marcus V. Brown

          X    

      Roderick K. West

      X   X    

For security and business reasons, we permit our Chief Executive Officer to use our corporate aircraft for personal use at Company expense. Our other Named Executive Officers may use the corporate aircraft for personal travel subject to the approval of our Chief Executive Officer. The Personnel Committee reviews the level of usage throughout the year. We believe that our officers’ ability to use a Company plane for limited personal use saves time and provides additional security for them, thereby benefiting our Company. The amounts included in column (i) for the personal use of corporate aircraft, reflect the incremental cost to the Company for use of the corporate aircraft, determined on the basis of the variable operational costs of each flight, including fuel, maintenance, flight crew travel expense, catering, communications and fees, including flight planning, ground handling and landing permits. In addition, we require our executive officers who are members of the Office of the Chief Executive to have a comprehensive annual physical exam at our expense. Tickets to cultural and sporting events are purchased for business purposes, and if not utilized for business purposes, the tickets are made available to our employees, including our Named Executive Officers, for personal use.

Entergy also provides relocation benefits to a broad base of employees, which include assistance with moving expenses, transportation of household goods and in certain circumstances, assistance with the sale of the employee’s existing home. In connection with his employment, and as an inducement for Mr. Bakken to join Entergy and relocate to Jackson, Mississippi, we agreed to purchase Mr. Bakken’s home at a fixed price. In 2018, we sold the purchased property. The amount reported in this column includes $400,074 from the loss on the sale of Mr. Bakken’s home, which was calculated based on the agreed price we paid for the home as compared to the price we received upon disposition. None of the other perquisites referenced above exceeded $25,000 for any of the Named Executive Officers.

 

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  EXECUTIVE OFFICER COMPENSATION

 

 

 

2018 Grants of Plan-Based Awards

The following table summarizes award grants during 2018 to the Named Executive Officers.

 

          Estimated Future
Payouts Under Non-Equity
Incentive Plan Awards(1)
  Estimated Future Payouts
under Equity Incentive Plan
Awards(2)
                       
Name  

Grant

Date

   

Threshold

($)

 

Target

($)

 

Maximum

($)

 

Threshold

(#)

   

Target

(#)

   

Maximum

(#)

   

All Other
Stock
Awards:
Number of
Shares

of Stock
or Units

(#)

(3)

   

All Other
Option
Awards:
Number
of
Securities
Under-
lying
Options
(#)

(4)

    Exercise
or Base
Price of
Option
Awards
($/Sh)
   

Grant

Date Fair
Value of

Stock
and
Option
Awards

(5)

(a)

  (b)     (c)   (d)   (e)   (f)     (g)     (h)     (i)     (j)     (k)     (l)

Leo P. Denault

    1/25/18     $ -   $1,701,000   $3,402,000              
    1/25/18             10,675       42,700       85,400           $3,519,121
    1/25/18                   15,700         $1,225,856
    1/25/18                     167,100       $78.08     $1,168,029

Andrew S. Marsh

    1/25/18     $ -   $435,400   $870,800              
    1/25/18             1,975       7,900       15,800           $651,079
    1/25/18                   5,200         $406,016
    1/25/18                     49,000       $78.08     $342,510

A Christopher Bakken, III

    1/25/18     $ -   $446,688   $893,376              
    1/25/18             1,975       7,900       15,800           $651,079
    1/25/18                   5,000         $390,400
    1/25/18                     40,500       $78.08     $283,095

Marcus V. Brown

    1/25/18     $ -   $455,000   $910,000              
    1/25/18             1,975       7,900       15,800           $651,079
    1/25/18                   5,000         $390,400
    1/25/18                     40,500       $78.08     $283,095

Roderick K. West

    1/25/18     $ -   $487,619   $975,238              
    1/25/18             1,975       7,900       15,800           $651,079
    1/25/18                   5,200         $406,016
    1/25/18                     42,500       $78.08     $297,075

 

(1)

The amounts in columns (c), (d) and (e) represent minimum, target and maximum payment levels under the Annual Incentive Plan. The actual amounts awarded are reported in column (g) of the Summary Compensation Table.

 

(2)

The amounts in columns (f), (g) and (h) represent the minimum, target and maximum payment levels under the Long-Term Performance Unit Program. Performance under the program is measured using two performance measures—the Company’s total shareholder return relative to the total shareholder returns of the companies included in the Philadelphia Utility Index and UP&O Adjusted EPS with each performance measure weighted equally. There is no payout under the program if the Company’s total shareholder return falls within the lowest quartile of the peer companies in the Philadelphia Utility Index and UP&O Adjusted EPS is below the minimum performance goal. Subject to achievement of performance targets, each unit will be converted into one share of the Company’s common stock on the last day of the performance period (December 31, 2020). Accrued dividends on the shares earned will also be paid in Company stock.

 

(3)

The amounts in column (i) represent shares of restricted stock granted under the 2015 Equity Plan. Shares of restricted stock vest one-third on each of the first through third anniversaries of the grant date, have voting rights and accrue dividends during the vesting period.

 

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EXECUTIVE OFFICER COMPENSATION  

 

 

 

(4)

The amounts in column (j) represent options to purchase shares of the Company’s common stock. The options vest one-third on each of the first through third anniversaries of the grant date and have a ten-year term from the date of grant. The options were granted under the 2015 Equity Plan.

 

(5)

The amounts in column (l) are valued based on the aggregate grant date fair value of the award calculated in accordance with FASB ASC Topic 718 and, in the case of the performance units, are based on the probable outcome of the applicable performance conditions. See Notes 4 and 5 to the 2018 Summary Compensation Table for a discussion of the relevant assumptions used in calculating the grant date fair value.

2018 Outstanding Equity Awards at Fiscal Year-End

The following table summarizes, for each Named Executive Officer, unexercised options, restricted stock that has not vested and equity incentive plan awards outstanding as of December 31, 2018.

 

Option Awards

    Stock Awards  
(a)   (b)     (c)     (d)     (e)     (f)     (g)     (h)     (i)     (j)  
Name        

Number

of
Securities
Underlying
Unexercised
Options

(#)
Exercisable

   

Number

of

Securities
Underlying
Unexercised
Options

(#)
Unexercisable

   

Equity
Incentive
Plan
Awards:
Number

of
Securities
Underlying
Unexercised
Unearned
Options

(#)

   

Option
Exercise
Price

($)

    Option
Expiration
Date
   

Number
of Shares
or Units
of Stock
That Have
Not
Vested

(#)

   

Market

Value of
Shares or
Units of

Stock That
Have
Not Vested
($)

   

Equity
Incentive
Plan

Awards:
Number of
Unearned
Shares,
Units or
Other

Rights

That Have
Not Vested

(#)

   

Equity
Incentive
Plan

Awards:
Market or
Payout

Value of
Unearned
Shares,

Units or
Other

Rights
That Have
Not Vested

($)

 

Leo P. Denault

          167,100 (1)         $78.08       1/25/2028          
    59,800       119,600 (2)         $70.53       1/26/2027          
    111,333       55,667 (3)         $70.56       1/28/2026          
    88,000               $89.90       1/29/2025          
    106,000               $63.17       1/30/2024          
    50,000               $64.60       1/31/2023          
    30,000               $71.30       1/26/2022          
    25,000               $72.79       1/27/2021          
    50,000               $77.10       1/28/2020          
                  85,400(4)       $7,350,378  
                  97,400(5)       $8,383,218  
              15,700 (6)       $1,351,299      
              11,334 (7)       $975,517      
              5,234 (8)       $450,490      

Andrew S. Marsh

          49,000 (1)         $78.08       1/25/2028          
    14,666       29,334 (2)         $70.53       1/26/2027          
    30,000       15,000 (3)         $70.56       1/28/2026          
    24,000               $89.90       1/29/2025          
    35,000               $63.17       1/30/2024          
    32,000               $64.60       1/31/2023          
    10,000               $71.30       1/26/2022          
    4,000               $72.79       1/27/2021          
    9,100               $77.10       1/28/2020          
    8,000               $77.53       1/29/2019          
                  15,800(4)       $1,359,906  
                  16,600(5)       $1,428,762  
              5,200 (6)       $447,564      
              4,067 (7)       $350,047      
              2,134 (8)     $ 183,673      
              21,100 (9)     $ 1,816,077      

 

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  EXECUTIVE OFFICER COMPENSATION

 

 

 

Option Awards

    Stock Awards  
(a)   (b)     (c)     (d)     (e)     (f)     (g)     (h)     (i)     (j)  
Name        

Number

of
Securities
Underlying
Unexercised
Options

(#)
Exercisable

   

Number

of

Securities
Underlying
Unexercised
Options

(#)
Unexercisable

   

Equity
Incentive
Plan
Awards:
Number

of
Securities
Underlying
Unexercised
Unearned
Options

(#)

   

Option
Exercise
Price

($)

    Option
Expiration
Date
   

Number
of Shares
or Units
of Stock
That Have
Not
Vested

(#)

   

Market

Value of
Shares or
Units of

Stock That
Have
Not Vested
($)

   

Equity
Incentive
Plan

Awards:
Number of
Unearned
Shares,
Units or
Other

Rights

That Have
Not Vested

(#)

   

Equity
Incentive
Plan

Awards:
Market or
Payout

Value of
Unearned
Shares,

Units or
Other

Rights
That Have
Not Vested

($)

 

A. Christopher Bakken, III

          40,500 (1)       $ 78.08       1/25/2028          
    12,533       25,067 (2)       $ 70.53       1/26/2027          
                  15,800(4)       $1,359,906  
                  16,600(5)       $1,428,762  
              5,000 (6)     $ 430,350      
              3,467 (7)     $ 298,405      
              30,000 (10)     $ 2,582,100      

Marcus V. Brown

          40,500 (1)       $ 78.08       1/25/2028          
    14,666       29,334 (2)       $ 70.53       1/26/2027          
    20,000       15,000 (3)       $ 70.56       1/28/2026          
    24,000             $ 89.90       1/29/2025          
    20,500             $ 63.17       1/30/2024          
    10,800             $ 64.60       1/31/2023          
    4,600             $ 71.30       1/26/2022          
    2,800             $ 72.79       1/27/2021          
    4,500             $ 77.10       1/28/2020          
                  15,800(4)       $1,359,906  
                  16,600(5)       $1,428,762  
              5,000 (6)     $ 430,350      
              4,067 (7)     $ 350,047      
              2,134 (8)     $ 183,673      

Roderick K. West

          42,500 (1)       $ 78.08       1/25/2028          
          19,467 (2)       $ 70.53       1/26/2027          
          13,666 (3)       $ 70.56       1/28/2026          
    23,000             $ 89.90       1/29/2025          
                  15,800(4)       $1,359,906  
                  16,600(5)       $1,428,762  
              5,200 (6)     $ 447,564      
              2,134 (7)     $ 183,673      
              2,000 (8)     $ 172,140      

 

(1)

Consists of options granted under the 2015 Equity Plan that vested or will vest as follows: 1/3 of the options granted vest on each of 1/25/2019, 1/25/2020, and 1/25/2021.

 

(2)

Consists of options granted under the 2015 Equity Plan that vested or will vest as follows: 1/2 of the remaining unexercisable options vest on each of 1/26/2019 and 1/26/2020.

 

(3)

Consists of options granted under the 2015 Equity Plan that vested on 1/28/2019.

 

(4)

Consists of performance units granted under the 2015 Equity Plan that will vest on December 31, 2020 based on two performance measures—the Company’s total shareholder return performance over the 2018 – 2020 performance period and UP&O Adjusted EPS. with each performance measure weighted equally, as described under “What We Pay and Why – Executive Compensation Elements – Variable Compensation – Long-Term Incentive Compensation – Performance Unit Program” in the Compensation Discussion and Analysis.

 

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(5)

Consists of performance units granted under the 2015 Equity Plan that will vest on December 31, 2019 based on the Company’s total shareholder return performance over the 2017 – 2019 performance period.

 

(6)

Consists of shares of restricted stock granted under the 2015 Equity Plan that vested or will vest as follows: 1/3 of the shares of restricted stock granted vest on each of 1/25/2019, 1/25/2020, and 1/25/2021.

 

(7)

Consists of shares of restricted stock granted under the 2015 Equity Plan that vested or will vest as follows: 1/2 of the shares of restricted stock granted vest on each of 1/26/2019 and 1/26/2020.

 

(8)

Consists of shares of restricted stock granted under the 2015 Equity Plan that vested on 1/28/2019.

 

(9)

Consists of restricted stock units granted under the 2015 Equity Plan. The units vest on August 3, 2020.

 

(10)

Consists of restricted stock units granted under the 2015 Equity Plan. The units vest one-third on April 6, 2019, April 6, 2022, and April  6, 2025.

2018 Option Exercises and Stock Vested

The following table provides information concerning each exercise of stock options and each vesting of stock during 2018 for the Named Executive Officers.

 

     Options Awards    Stock Awards  
(a)    (b)    (c)    (d)      (e)  

Name

           Number of        
Shares Acquired
on Exercise
(#)
   Value Realized
        on Exercise        

($)
       Number of Shares    
Acquired
on Vesting
(#)
         Value Realized    
on Vesting
($)(1)
 

Leo P. Denault

   45,000        $402,179          68,161      $ 5,723,234  

Andrew S. Marsh

    -        $ -          16,579      $ 1,370,815  

A. Christopher Bakken, III

    -        $ -          10,808      $ 915,803  

Marcus V. Brown

   28,200        $633,480          16,579      $ 1,370,815  

Roderick K. West

   91,066        $1,379,491          36,310      $ 2,977,673 (2)  

 

  (1)

Represents the value of performance units for the 2016 – 2018 performance period (payable solely in shares based on the closing stock price of the Company on the date of vesting) under the Performance Unit Program and the vesting of shares of restricted stock in 2018.

 

  (2)

Includes the May 1, 2018 cash settlement of 21,000 restricted stock units granted under the 2011 Equity Ownership Plan.

 

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  EXECUTIVE OFFICER COMPENSATION

 

 

 

2018 Pension Benefits

The following table shows the present value as of December 31, 2018 of accumulated benefits payable to each of the Named Executive Officers, including the number of years of service credited to each Named Executive Officer, under our retirement plans determined using interest rate and mortality rate assumptions set forth in Note 11 to the Financial Statements in the Form 10-K for the year ended December 31, 2018. Additional information regarding these retirement plans follows this table.

 

Name

  Plan
    Name    
  Number
of Years
Credited
    Service    
    Present
Value of
    Accumulated    

Benefit
        Payments    
During
2018
 

Leo P. Denault(1)(2)

  System Executive
Retirement Plan
    34.83         $ 23,059,200         $  -  
  Entergy
Retirement Plan
    19.83         $ 797,900         $  -  

Andrew S. Marsh

  System Executive
Retirement Plan
    20.37         $ 3,376,500         $  -  
  Entergy
Retirement Plan
    20.37         $ 502,600         $  -  

A. Christopher Bakken, III

  Cash Balance
Equalization Plan
    2.74         $ 121,600         $  -  
  Cash Balance
Plan
    2.74         $ 48,000