DEF 14A 1 xel-def14a_20200522.htm DEF 14A xel-def14a_20200522.htm

 

 

 

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  

Check the appropriate box:

 

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

XCEL ENERGY INC.

(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

 

No fee required.

Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

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Fee paid previously with preliminary materials.

Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

(1)

Amount Previously Paid:

 

 

(2)

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(3)

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Ben Fowke

Chairman of the Board and Chief Executive Officer

April 8, 2020

Dear Fellow Shareholders:


What a difference a month makes. As we were preparing for our Annual Shareholders’ Meeting this year, I was excited to share with you our outstanding 2019 results. However, in the face of a global pandemic, our immediate focus has shifted. I want to thank the entire Xcel Energy team for their work to keep our customers and employees safe. And a special thank you to our mission critical employees who are working hard to ensure our customers have the electricity and natural gas service they depend on every day.

  

Due to concerns about the coronavirus (COVID-19), this year’s annual meeting will be completely virtual and held via live webcast over the internet.  This approach is consistent with actions we have taken to protect the health and safety of our employees and the public during this challenging time while continuing to provide vital electric and gas service.

 

Our enclosed materials will showcase the outstanding accomplishments of 2019 at Xcel Energy and the continuation of our record of operational and financial excellence. Our 2019 highlights include:

 

• Meeting or exceeding our annual ongoing earnings guidance for the 15th consecutive year

• Increasing our dividend for the 16th consecutive year

• Exceeding total shareholder return for our industry peer group on a one-, three-, five- and 10-year basis

• Making progress toward our industry-leading vision of producing 100% carbon-free electricity by 2050 and reducing carbon emissions 80% (from a 2005 baseline) by 2030  

 

As part of the clean energy transition, we have exciting opportunities to invest in our system and our communities. Xcel Energy’s future is indeed bright, and we have strong plans in place for:

 

• The continued transition from fossil-fuels to clean, low-cost renewable energy

• Enhancing the customer experience through a variety of programs, from electric vehicle subscriptions to new ways for customers to choose    their fuel sources and manage their energy

• Keeping customer bills low, all while delivering outstanding service and value

 

Logistics for this meeting will be different than in years past. You may attend the online meeting, submit questions, and vote your shares electronically during the meeting via the internet by visiting www.virtualshareholdermeeting.com/XEL2020.  Please review the information in the proxy statement for instructions on how to access and participate in the virtual meeting.

 

As always, we encourage you to vote your shares prior to the annual meeting. Details for how and when to vote and other important information are included in the proxy statement.

 

Thank you for your confidence in us.

Sincerely,

 

Ben Fowke

Chairman and Chief Executive Officer

 


 

 

 

 

 

  

 

Chris Policinski

Lead Independent Director

April 8, 2020

Dear Fellow Shareholders:

On behalf of the Board of Directors, I join Ben in inviting you to Xcel Energy’s 2020 Annual Shareholders’ Meeting. Your Board is committed to effective governance that delivers both strong results for you and great value for customers.

We are proud to have delivered those results consistently over time. Our sound governance practices combine the benefits of strong, independent oversight with broad expertise and strong management that — working together — allow us to successfully execute innovative strategies in a complex and changing industry. Our practices ensure effective Board operations, encourage independent thought and judgment, and execute appropriate levels of Board oversight to produce these consistent and strong results. We continue this oversight as the Company navigates the challenges of the coronavirus with the goal of supporting our employees, customers and communities.

We are committed not only to delivering outstanding results, but also to representing your interests. These and other practices are detailed in the proxy statement, which I encourage you to review as you cast your vote.

As part of the evolution of our Board, we appointed two new independent directors during the past year: Netha Johnson, President, Bromide Specialties, Abermarle Corporation, and George Kehl, retired Office Managing Partner at KPMG LLP. Netha and George join our existing directors, who bring a variety of diversity, skills, qualifications and experiences, and represent an effective mix of deep Company knowledge and fresh perspectives.

I would like to thank Richard Davis, for his many contributions and years of dedicated service to Xcel Energy. Richard, who has served on the Board since 2006, will be leaving our Board when his term ends at the annual meeting.  

As your Lead Independent Director, I am focused on the important obligations that our Board owes to you, our shareholders. My responsibilities include reviewing and approving the agendas for our Board meetings to ensure they cover key areas of Company focus, working with the Chairman to provide the directors information needed to effectively govern, developing and executing succession plans for both the Board and management to ensure strong independent oversight over the long term, and acting as a regular communications channel between our independent directors and our chief executive officer.   

2019 was another great year for Xcel Energy. It is my privilege to serve as Xcel Energy’s Lead Independent Director, and I look forward to continuing my service to the Company. Know that your Board remains focused on delivering value to you, today and long into the future.

Thank you for investing in Xcel Energy.

Sincerely,

 

Chris Policinski

Lead Independent Director

 


 

Table of Contents

 

 

 

Notice of 2020 Annual Shareholders’ Meeting

 

 

 

 

 

 

Proxy Summary

 

 

1

 

 

 

Corporate Governance

 

 

7

 

Leadership Structure and Roles

 

 

8

 

Risk Oversight

 

 

9

 

Board Committees

 

 

10

 

Practices

 

 

12

 

Board Planning and Composition

 

 

15

 

Additional Board Information

 

 

19

 

Governing Documents

 

 

20

 

 

 

Proposal No. 1 Election of Directors

 

 

21

 

Nominees

 

 

22

 

 

 

Beneficial Ownership of Certain Shareholders

 

 

29

 

Share Ownership of Directors and Officers

 

 

29

 

Largest Owners of Xcel Energy’s Shares

 

 

30

 

 

 

Proposal No. 2 Advisory Vote on Executive Compensation

 

 

31

 

Recommendation and Background

 

 

31

 

 

 

Compensation Discussion and Analysis

 

 

32

 

Highlights

 

 

32

 

2019 Performance

 

 

32

 

2019 Compensation

 

 

32

 

Compensation Philosophy

 

 

32

 

Executive Compensation Practices

 

 

33

 

Impact of Say-on-Pay Vote

 

 

33

 

Establishing Compensation

 

 

34

 

Market Analysis

 

 

34

 

Peer Group

 

 

34

 

Executive Compensation Elements

 

 

34

 

Mix of Total Compensation

 

 

35

 

Overview of Target Total Compensation

 

 

35

 

Base Salary

 

 

36

 

Annual Incentive

 

 

36

 

Long-Term Incentives

 

 

37

 

Restricted Stock Units Subject to Service-Based Vesting

 

 

38

 

Retirement and Deferred Compensation Benefits

 

 

39

 

Additional Compensation Program Features and Policies

 

 

39

 

Severance Policy

 

 

39

 

Employment Contracts

 

 

39

 

Stock Ownership Requirements

 

 

39

 

Equity Grant Practices

 

 

40

 

Sign-On Compensation

 

 

40

 

Hedging and Pledging

 

 

40

 

Recoupment

 

 

40

 

Risk Assessment

 

 

41

 

Deductibility of Executive Compensation under IRC Section 162(m)

 

 

41

 

 

 

 

 

 

Report of the Compensation Committee

 

 

42

 

 

 

 

 

 

Executive Compensation Tables

 

 

43

 

 

 

 

 

 

CEO Pay Ratio

 

 

55

 

 

 

 

 

 

Director Compensation

 

 

56

 

Annual Equity Grant

 

 

56

 

Director Compensation Table

 

 

56

 

Director Stock Ownership Guidelines

 

 

57

 

Stock Program

 

 

57

 

 

 

 

 

 

Proposal No. 3 Ratification of the Appointment of Deloitte & Touche LLP as Xcel Energy Inc.’s Independent Registered Public Accounting Firm for 2020

 

 

58

 

 

 

 

 

 

Report of the Audit Committee

 

 

59

 

 

 

 

 

 

Independent Registered Public Accounting Firm

 

 

60

 

Audit and Non-Audit Fees

 

 

60

 

Audit Committee Pre-Approval Policies

 

 

60

 

 

 

 

 

 

Proposal No. 4 Shareholder Proposal

 

 

61

 

Additional Information

 

 

63

 

Related Person Transactions

 

 

63

 

 

 

 

 

 

Questions and Answers About the Proxy Materials and the Annual Meeting

 

 

64

 

 

 

 

 

 

Exhibit A

 

 

A-1

 

 

 

 

 

 

 

 


 

Forward-Looking Statements

The statements contained in this proxy statement about our future performance, including, without limitation, future financial and operational results, strategies, visions, prospects, consequences and all other statements that are not purely historical, are forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. Although we believe that our expectations are based on information currently available and on reasonable assumptions, we can give no assurance they will be achieved. There are a number of risks and uncertainties that could cause actual results to differ materially from any forward-looking statements made herein. A discussion of some of these risks and uncertainties is contained in our Annual Report on Form 10-K and subsequent reports on Form 8-K filed with the Securities and Exchange Commission (“SEC”), and available on our website: www.xcelenergy.com. These reports address in further detail our business, industry issues and other factors that could cause actual results to differ materially from those indicated in this proxy statement. In addition, any forward-looking statements included herein represent our estimates only as of the date hereof and should not be relied upon as representing our estimates as of any subsequent date. While we may elect to update forward-looking statements from time to time, we specifically disclaim any obligation to do so, even if our internal estimates change, unless otherwise required by applicable securities laws.

 


 

 

Xcel Energy Inc.

414 Nicollet Mall, Minneapolis, MN 55401    

 

   Notice of 2020 Annual Shareholders’ Meeting

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Meeting Information

 

 

  

Voting Information

 

•   Please act as soon as possible to vote your shares, even if you plan to attend the annual meeting.

 

•   Your broker will NOT be able to vote your shares on the election of directors, the advisory vote on executive compensation, and the shareholder proposal presented at the meeting unless you have given your broker specific instructions to do so. We strongly encourage you to vote.

 

•   You may vote via the internet, by telephone, or, if you have received a printed version of these proxy materials, by mail.

 

•   See “Questions and Answers about the Proxy Materials and the Annual Meeting” beginning on page 64 of this proxy statement for more information. 

Time and Date

 

9:00 a.m. CDT

May 22, 2020

How to Attend

 

Via the internet at www.virtualshareholdermeeting.com/XEL2020. There will be no physical meeting location.

 

Record Date

March 25, 2020

 

Annual Meeting Agenda

Proposals

1.

Election of 14 director nominees named in the proxy statement

2.

Approval of executive compensation in an advisory vote

3.

Ratification of the appointment of Deloitte & Touche LLP as the independent registered public accounting firm for 2020

4.

A shareholder proposal, if properly presented at the annual meeting  

5.

Transaction of other business that may properly come before the meeting

 

How to Attend the Virtual Meeting

 

Due to coronavirus (COVID-19) developments and the related recommendations and protocols issued by public health authorities and federal, state, and local governments, we have determined our annual meeting of shareholders will be a completely virtual annual meeting; therefore there will be no physical meeting location. To attend the virtual meeting, visit www.virtualshareholdermeeting.com/XEL2020. If you wish to vote your shares during the virtual meeting, you will need the control number included on your proxy card or your Notice of Internet Availability of Proxy Materials. We recommend that you log in at least fifteen minutes before the meeting to ensure that you are logged in when the meeting starts.

Please refer to the Questions and Answers Section under “How do I attend and vote at the Annual Meeting?” on page 66 of this proxy statement for important information about attending and voting at the annual meeting.

Notice of Internet Availability of Proxy Materials or this proxy statement and proxy card are being distributed on or about April 8, 2020. Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to be held on May 22, 2020: Our 2020 proxy statement and Annual Report are available free of charge at www.proxyvote.com.

You are receiving these proxy materials in connection with the solicitation by the Board of Directors (“Board”) of Xcel Energy Inc. (referred to in this proxy statement as “Xcel Energy,” the “Company,” “we,” “us,” and “our”) of proxies to be voted at Xcel Energy’s 2020 Annual Meeting of Shareholders. Please vote on the proposals described in this proxy statement.

Thank you for investing in Xcel Energy.

 

 

 

 


 

 

 

 

NOTICE OF ANNUAL MEETING AND PROXY STATEMENT    

 

 

 

 

 

2020 PROXY STATEMENT   |   XCEL ENERGY   |   1


 

 

    NOTICE OF ANNUAL MEETING AND PROXY STATEMENT

 

  

 

 

 

 

2   |   THE FUTURE IN SIGHT   |   XCEL ENERGY


 

 

 

 

NOTICE OF ANNUAL MEETING AND PROXY STATEMENT    

 

 

 

 

 

2020 PROXY STATEMENT   |   XCEL ENERGY   |   3


 

 

    NOTICE OF ANNUAL MEETING AND PROXY STATEMENT

 

  

 

 

 

4   |   THE FUTURE IN SIGHT   |   XCEL ENERGY


 

 

 

 

NOTICE OF ANNUAL MEETING AND PROXY STATEMENT    

 

 

 

 

 

2020 PROXY STATEMENT   |   XCEL ENERGY   |   5


 

 

    NOTICE OF ANNUAL MEETING AND PROXY STATEMENT

 

  

 

 

 

 

 

 

6   |   THE FUTURE IN SIGHT   |   XCEL ENERGY


 

 

 

 

 

 

 

CORPORATE GOVERNANCE    

 

 

 

Corporate Governance

Serving shareholders well is a key priority for your Board. We believe that the most effective oversight comes from:

 

 

 

Strong and effective practices in corporate governance and ethical business conduct, as these practices create the business culture that drives successful performance.

 

 

Directors who bring a diverse range of experiences and perspectives to provide the collective skills, qualifications and attributes needed to provide sound governance.

 

 

An engaged Board that works well as a whole and plans for its own refreshment, with members bringing their experience to the table and dialoguing freely with each other and management to create an environment of well-functioning oversight.

Xcel Energy has the practices, the Board, and the management team to deliver consistent and strong results for shareholders.

We regularly monitor issues and trends in corporate governance and employ practices that best serve shareholders. Current practices include:

 

 

Leadership and organization most appropriate to our business. Ours is a rapidly changing business that benefits from industry experience and expertise coupled with strong independent oversight. Through the roles of the Chairman and CEO, Lead Independent Director, and committees of independent directors, we are best positioned to continue delivering strong results. We annually review this structure to ensure it remains the best suited for our business.

 

 

Sound practices to ensure effective Board operations and independent oversight. To ensure the Board remains focused on the right issues over time, Xcel Energy employs sound practices to regularly assess enterprise risks and industry trends and then refreshes charters and practices as appropriate.

 

 

Effective Board planning and succession. Succession planning is important for both management and the Board. We employ good practices to ensure regular and planned Board refreshment while maintaining valuable and reasonable continuity to ensure effective oversight over the long term.

 

 

Strong governance practices. Serving shareholders well is a top priority for Xcel Energy. We keep abreast of developments in corporate governance practices and adopt those that best serve our shareholders.

 

 

Regular oversight of key corporate policies. Our governance practices set the foundation for excellent management and operations for the Company. Corporate policies communicate expectations to employees so they understand and adhere to good business conduct.

 

Highlights of our practices are summarized on the following table, followed by additional explanation of key features.

 

 

Summary of Governance Practices

 

 

Structure

 

 

Lead Independent Director

 

 

Specified duties ensure robust independent oversight and effective flow of information between management and independent directors.  Governance structure is reviewed annually.

 

 

Committees

 

 

Membership and chairs are reviewed annually and are set to both leverage directors’ expertise and provide development opportunities to promote effective oversight over the long term.

 

 

Independence and Expertise    

 

 

The Governance, Compensation and Nominating Committee (“GCN”) regularly reviews and validates director independence and assesses desired expertise for potential new directors to ensure the Board is well

positioned to effectively manage risks and execute strategies. The Board also regularly determines which directors qualify as Audit Committee financial experts and meet independence standards under the requirements of Nasdaq and the SEC.

 

 

Practices

 

 

Risk Management

 

 

Regular updates on enterprise risks are provided to the Board, which then assigns new and emerging risks to the appropriate committee. Regular updates on compliance risks and legal risks are provided to the Audit Committee, which oversees plans to mitigate those risks.

 

 

Strategy Session

 

 

The Board holds a regular session to review industry landscape, hear from outside experts and refine strategies for execution. The Board and committees receive updates throughout the year on progress made

on the key initiatives to execute those strategies.

 

 

Annual Evaluations

 

 

The Board employs a formal and regular process to evaluate Board and committee operation effectiveness

and address identified areas for improvement. This evaluation process includes surveys, individual director conversations with the Lead Independent Director, and executive session discussions at both the Board and committee levels.

 

 

Training

 

 

Every committee regularly identifies topics and dedicates committee time to training that keeps them engaged with emerging issues and best practices. Directors are also encouraged to participate in topical conferences and off-site training opportunities, including specialized training in overseeing nuclear operations, audit committee issues, and industry topics.

 

2020 PROXY STATEMENT   |   XCEL ENERGY   |   7


 

 

 

 

 

    CORPORATE GOVERNANCE

 

  

 

 

 

Summary of Governance Practices

 

 

Tenure Policies

 

 

Term Limit

 

 

Directors may not serve on the Board for more than 15 years (directors at the time of the merger in 2000 are exempt from this requirement). Having this requirement, coupled with the mandatory retirement age, is rare among our peers and most public companies and provides an additional impetus to board refreshment.

 

 

Mandatory Retirement

 

 

 

Directors must retire on the day of the annual meeting of shareholders after turning age 72.

 

Change in Principal Employment

 

 

 

Directors must offer to resign upon any substantial change in principal employment.

 

 

Shareholder Rights

 

 

Shareholder Voting

 

 

Our shareholders have the opportunity to annually vote for directors, provide an advisory vote on executive compensation and ratify the selection of auditors.

 

 

No Supermajority

 

 

There are no supermajority voting provisions.

 

 

Opportunities to be Heard

 

 

We provide an open forum at our annual meeting as well as published lines of communication to our directors and management.

 

 

Proxy Access

 

 

Shareholders have the ability to include nominees for director candidates for nomination as directors in our proxy statement, in accordance with the terms of our bylaws.

 

 

Corporate Policies

 

 

Code of Conduct

 

 

Our Code of Conduct guides our actions and frames the honest and ethical practices needed for business success. The GCN annually reviews the Code of Conduct and requires annual training of directors, officers,

and employees.

 

 

Stock Ownership Requirements

 

 

 

Directors and executive officers are required to maintain specific levels of stock ownership.

 

 

Hedging and Pledging

 

 

 

We have in place policies that prohibit hedging and restrict pledging of our stock.

 

 

Political Contributions,

Lobbying, and Government

Communications

 

 

 

Our policy governs our engagement with policymakers and holds us to high ethical standards. We provide

more disclosure than required by law, including an annual disclosure of political contributions on Xcel

Energy’s website.

 

Environmental

 

 

We are committed to environmental excellence, adhere to policies to ensure environmental compliance and adopt environmental initiatives that enhance value to customers and shareholders.

 

Leadership Structure and Roles

Our Board consists of a combined Chairman and CEO position, complemented with a Lead Independent Director chosen from our independent directors. This structure, along with other corporate governance practices discussed below, provides sound and independent oversight of the Company. The Board believes that this structure is best suited for the Company at this time and serves shareholders well. We annually review this structure to confirm it is most effective for our business.

The combined Chairman and CEO role brings to the Board important experience and expertise, both of the Company and our rapidly changing industry. The skills and experience of the CEO are well suited for the role of Chairman, putting the Board in the best position to assess key industry drivers, identify important changes in the energy and consumer landscape, and develop effective strategies. In light of the opportunities and challenges facing the Company and our industry, the Board believes that shareholders are best served by having a combined role of Chairman and CEO.

Mr. Fowke currently serves in this role, providing the benefit of his extensive experience in the regulated energy industry to both the Company and the Board. His thorough understanding of the opportunities and challenges facing the industry is valuable at both the Board and management levels. For example, under his leadership, S&P Global Energy Awards honored Xcel Energy with the Award of Excellence in the Power category for our carbon-free vision. The S&P Global Energy Awards recognizes companies in the energy space all over the world for industry achievements. Xcel Energy was also recognized by Ethisphere, a global leader in defining and advancing the standards of ethical business practices, as one of the World’s Most Ethical Companies in 2020. For its proactive transition to clean energy and commitment to reducing carbon emissions, Xcel Energy was honored as an Organizational Leader by the national Climate Leadership Awards.

The Lead Independent Director likewise plays a critical role in our governance structure, working with both the independent directors and management to ensure the Company is well positioned with sound strategy, solid risk management and effective governance. The Lead Independent Director role is well defined, with responsibilities consistent with best practice. Mr. Policinski serves in this role, having been elected to serve a one-year term in May 2019, his fourth consecutive year in this role.

8   |   THE FUTURE IN SIGHT   |   XCEL ENERGY


 

 

 

 

 

 

 

CORPORATE GOVERNANCE    

 

 

The final piece of this governance structure is the independent directors. The Board currently includes fourteen independent directors. Our directors are strong individuals, comfortable with their roles representing shareholders, and maintaining objectivity in the Board’s deliberations. They conduct business via a sound committee structure that governs risk management and mitigation as assigned by the Board and reports back to the Board through an efficient and effective process.

The Board believes that this structure ensures that directors receive the information, industry insights and direction needed to form successful strategies while maintaining the independence necessary to ensure effective governance and oversight. Our business is rather unique in that it is price-regulated, operates under a complex set of federal, state and local regulations, and is undergoing significant transformation. Working with the Lead Independent Director, the Chairman can lead the development of strategy, providing information and insight on the Company’s opportunities, challenges and performance.

 

 

 

 

 

 

 

Board of Directors

 

 

  

 

Lead Independent Director

 

 

Independent Oversight

 

 

 

 

Responsibilities

(Per our Guidelines on Corporate Governance)

 

•  14 of 15 directors are independent.

 

•  Independent directors regularly meet in executive session without management present at both Board and committee meetings.

 

•  Each director may request items to be addressed at Board meetings.

 

•  Directors may request additional information from management at any time.

 

•  All committees are composed entirely of independent directors.

 

•  CEO performance is addressed annually by the GCN, and all independent members of the Board participate in the CEO’s performance evaluation.

 

 

 

•  Presides at all meetings of the Board at which the Chairman is not present.

 

•  Presides at all Board executive sessions of the independent directors.

 

•  Maintains regular communications with the independent directors, including an annual evaluation process.

 

•  Serves as a liaison between the Chairman and the independent directors.

 

•  Approves the agenda, materials provided to the directors and the meeting schedules.

 

•  Calls meetings of the independent directors, as necessary.

 

•  Consults and communicates with major shareholders, if requested.

 

•  Develops and maintains a process for CEO and Board succession planning with the GCN.

 

 

 

 

 

 

 

Term and Selection

 

•  Elected by the independent directors annually.

 

•  Is generally expected to serve for at least one, but no more than four years.

 

 

Risk Oversight

A key accountability of the Board is the oversight of material risk, and our Board employs a strong process for doing so. As outlined below, management and each Board committee have responsibilities for overseeing the identification and mitigation of key risks and reporting their assessments, activities, and initiatives to the full Board.

Management identifies and analyzes risks to determine materiality and other attributes such as timing, probability and controllability. Management broadly considers our business, the utility industry, business and policy trends, the domestic and global economies, and the environment to determine enterprise risks and actions to mitigate them, and employs a robust program to identify, assess, manage, and mitigate compliance risks.

 

 

 

 

 

Key Components of Management’s Oversight and Mitigation of Risk

 

 

Identify and analyze materiality of risks through:

 

 

•  Formal key risk assessment

 

•  Financial disclosure process

 

•  Hazard risk management process

 

•  Internal auditing and compliance with financial and operational controls

 

•  Business planning process

 

•  Development of strategic goals and key performance indicators (“KPIs”)

 

 

Provide regular presentations to the Board regarding risk assessment and mitigation, including:    

 

 

•  Comprehensive risk overview

 

•  Legal and regulatory risks

 

•  Operating risks

 

•  Financial risks

 

•  Compliance risks

 

•  Environmental risks

 

2020 PROXY STATEMENT   |   XCEL ENERGY   |   9


 

 

 

 

 

    CORPORATE GOVERNANCE

 

  

 

 

 

Key Components of Management’s Oversight and Mitigation of Risk

 

 

Manage and mitigate risks through use of management structures and groups, including:

 

 

 

•  Management councils

 

•  Management risk committees

 

•  Advice from internal corporate areas

 

Employ a robust compliance program for the mitigation of risk, including:

 

 

 

•  Adherence to our Code of Conduct and other compliance policies

 

•  Operation of formal risk management structures and groups

 

•  Focused management to mitigate the risks inherent in the implementation of our strategy

 

The Board approaches risk oversight and mitigation as an integral and continuous part of its governance of the Company. First, the Board as a whole regularly reviews management’s key risk assessment and analyzes areas of existing and future risks and opportunities. Next, the Board assigns oversight of certain critical risks to each of its four standing committees to ensure these risks are well understood and provides focused oversight by the committee with the most applicable expertise. New risks identified during the risk assessment process are considered and assigned as appropriate, typically during the annual Board and committee evaluation process, with committee charters and annual work plans updated accordingly. Committees regularly report on their oversight activities, and certain risk topics may be brought to the full Board for consideration where deemed appropriate to ensure broad Board understanding of the nature of the risk. Finally, the Board conducts an annual strategy session where the Company’s future plans and initiatives are reviewed and confirmed in light of the current and projected landscape.

The Audit Committee is responsible for reviewing the adequacy of risk oversight and affirming that appropriate oversight occurs. Current risk assignments are as follows:

 

 

 

 

 

Responsible Party            

 

 

 

Area of Risk Oversight

 

 

Board of Directors

 

 

 

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

 

 

Audit Committee

 

 

Financial reporting and internal control risks

Risk management policies and guidelines  

Compliance risk assessment and mitigation

Litigation risks

 

 

Finance Committee

 

 

 

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

 

 

GCN Committee

 

 

Executive compensation-related risks

Political activity risks

Board and management succession risks

 

Operations, Nuclear, Environmental and Safety (“ONES”) Committee

 

 

 

Operating risks, including safety, nuclear, environmental, electric and natural gas operations, cybersecurity and physical security, and wildfire risks

 

 

This tiered and structured approach provides a comprehensive risk-management framework that ensures shareholder interests are protected. For example, given its emergence as a threat, the Board employs comprehensive oversight of the risks associated with cybersecurity and the physical security of our assets, with the topic addressed twice at the Board level, as well as at the ONES and Audit Committees throughout the year. While the ONES Committee has primary committee responsibility for this topic due to the operational issues involved, the Board has determined that the topic is of sufficient importance to warrant this comprehensive oversight approach. Likewise, given the importance of employee and public safety in our industry, the Board implemented regular safety briefings and heard presentations addressing our refreshed approach to safety. Augmenting such oversight efforts, the Board conducts annual drills to practice its response in a possible emergency situation to ensure it is well prepared and positioned to perform in a possible crisis.

The Board also employs a process of ensuring compliance practices are sound, a particularly important topic given our highly regulated business. Management performs a regular compliance risk assessment as a companion to the enterprise risk assessment, providing a focused overview of the unique areas of compliance risk the Company faces. The Audit Committee is apprised of compliance risks via regular briefings and written updates to ensure these risks are appropriately managed and mitigated.

Board Committees

Structures

As noted, the Board employs a committee structure to assist in conducting its work and regularly refreshes that work in light of risk assessments. By assigning responsibilities to committees with particular expertise and focus, the Board can ensure it fulfills its duties in an efficient and effective manner.

Committees are made up exclusively of independent directors, with members of the Audit Committee and GCN meeting additional independence criteria. Each operates under a written charter that clearly defines its responsibilities, which is regularly reviewed and approved at both the committee and Board levels. Committees have the authority to engage outside experts, advisors, and counsel to assist in their duties, as needed. In addition, each committee undertakes a regular evaluation process and members participate in training on relevant topics to ensure the committee functions well and directors are well educated on issues. Additional information regarding these governance practices is provided in the Practices section below.


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CORPORATE GOVERNANCE    

 

 

For topics having broad implications for Xcel Energy, the full Board may hear or act on any issue, and committees may provide updates to the full Board for its information and consideration. Likewise, a committee may delegate all or a portion of its responsibilities to a subcommittee, as appropriate. This flexibility can be employed as appropriate to ensure risks are effectively overseen and managed.

 

 

 

 

 

 

 

 

Audit Committee

 

  

 

  

(6 Meetings; 6 Executive Sessions)

O’Brien (chair)

Kehl

Sampson

Westerlund

Wolf

Yohannes

 

•  All members are financially literate and independent under the applicable Nasdaq and SEC requirements

 

•  Mr. Kehl, Mr. O’Brien, and Mr. Wolf have been determined to be audit committee financial experts under the definition provided by the SEC

 

•  No member serves on the audit committees of more than three public boards

 

 

 

Oversees the financial reporting process, including the integrity of our financial statements, compliance with legal and regulatory requirements and our Code of Conduct, and the independence and performance of internal and external auditors.

 

 

Reviews the annual audited financial statements and quarterly financial information with management and the independent registered public accounting firm.

 

 

Appoints our independent registered public accounting firm.

 

 

Reviews with management the Company’s major financial risk exposures and the steps management has taken to monitor and control the exposures, including the Company’s risk assessment and risk management guidelines and policies.

 

 

Reviews the compliance risks and implementation and effectiveness of our compliance and business conduct program.

 

 

Reviews the scope and the planning of the annual audit with both the internal auditors and the independent registered public accounting firm.

 


 

 

Reviews the findings and recommendations of both internal auditors and the independent registered public accounting firm and management’s response to those recommendations.

Prepares the report of the Audit Committee for the proxy statement.

Finance Committee

(6 Meetings; 4 Executive Sessions)

Williams (chair)

Casey

Davis

Owens

Sampson

Sheppard

Yohannes

 

•  All members meet the Nasdaq

standards for independence

 

 

 

Oversees corporate capital structure and budgets and recommends approval of major capital projects.

 

 

Oversees financial plans and key financial risks.

 

 

Oversees dividend policies and makes recommendations as to dividends.

 

 

Oversees insurance coverage and banking relationships.

 

 

Reviews investment objectives of our nuclear decommissioning trust and trusts for our employee benefit plans.

 

 

Oversees investor relations.

 

 

Reviews and recommends lines of new business.

Governance, Compensation and Nominating Committee (GCN)

4 Meetings; 4 Executive Sessions)

Davis (chair)

Policinski

Prokopanko

Westerlund

Williams

 

•  All members meet the Nasdaq and SEC standards for independence

 

 

 

Determines Board organization, selection of director nominees and setting of director compensation.

 

 

Recommends Lead Independent Director and Board committee memberships.

 

 

Ensures effective CEO and Board succession planning.

 

 

Evaluates performance of the CEO.

 

 

Approves executive officer compensation, including incentives and other benefits.

 

 

Oversees compensation and governance-related risks.

 

 

Establishes corporate governance principles and procedures.

 

 

Oversees Company’s Code of Conduct policy.

 

 

Reviews the Company’s political contributions policy, lobbying expenditures, contributions, and key lobbying activity.

 

 

Oversees activities and reporting of environmental, social, and governance (“ESG”) matters.

 

 

Reviews the Company’s workforce strategy and risks and the process for management development and long-range planning.

 

 

Reviews proxy disclosures regarding directors’ and executive officers’ compensation and benefits.

 

 

Prepares the Report of the Compensation Committee included in this proxy statement.

Operations, Nuclear, Environmental, and Safety Committee (ONES)

(4 Meetings; 4 Executive Sessions)

Sheppard (chair)

Casey

Johnson

O’Brien

Owens

Prokopanko

Wolf

 

•  All members meet the Nasdaq standards for independence

 

 

 

Oversees nuclear strategy, operations and performance, including the review of the results of reports and major inspections and evaluations.

 

 

Oversees the operating issues and performance of the Company’s significant electric and natural gas operations.

 

 

Reviews environmental strategy, compliance, performance issues, and initiatives.

 

 

Reviews material risks relating to our nuclear operations and environmental and safety performance, as well as risks, performance, and compliance with operations measures of our electric and natural gas systems.

 

 

Oversees physical and cybersecurity risks related to plants and operations.

 

 

Reviews safety performance, strategy, and initiatives.

 

 

Regularly tours facilities and conducts meetings at key Company locations, including nuclear plants.

 

 

Oversees enterprise-wide operational risks and performance.  

 

 

 

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    CORPORATE GOVERNANCE

 

  

 

 

Practices

Coordinating Officer

Each committee is supported by a senior member of management who works directly with the committee chair in setting agendas, providing supporting materials, ensuring charter requirements are fulfilled, and communicating with committee members. This function provides another avenue for directors to have meaningful exchange with members of management to gain a deeper understanding of the issues impacting the business and the effectiveness and impact of strategic initiatives and risk mitigation efforts. The effectiveness of the coordinating officer role is regularly evaluated as part of the annual evaluation process.

Evaluations

The Board and committees conduct an annual assessment to evaluate the effectiveness of their processes, identify issues or topics for further exploration and provide feedback on the quality and timeliness of information from management, among other things. The assessment includes a survey of the directors, individual interviews with the Lead Independent Director, discussion in both regular and executive sessions, and feedback to management. Input and feedback from the assessments are incorporated into Board practices such as inviting more third-party speakers at Board and committee meetings to provide additional perspective to the Directors. The Board believes this assessment is an important component of the governance process and is helpful in driving continued improvement in the overall effectiveness of Board and committee oversight.

 

Training

Committees are regularly apprised of new and emerging requirements and trends facing the industry. Each committee conducts training on topics relevant to its responsibilities, and committees regularly seek input to prioritize training topics. In addition, the ONES Committee participates in site visits to gain understanding of our operations, including tours of our nuclear plants, and the full Board has toured certain facilities to gain even deeper understanding of various aspects of our business. Directors are also encouraged to participate in outside training on topics related to corporate governance and industry issues. In addition, under our Guidelines on Corporate Governance, each new director is expected to participate in a detailed orientation process and each sitting director is expected to participate in periodic continuing education.

We publish continuing education opportunities periodically for director consideration and facilitate participation. During 2019, members of the Board attended outside trainings on topics such as emerging trends in audit issues and education on industry issues, and many directors have attended training from the Institute of Nuclear Power Operations, which addresses issues specific to oversight of nuclear operations.

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CORPORATE GOVERNANCE    

 

 

ESG Oversight

Corporate responsibility is embedded throughout our organization and integrated into our governance processes. With strong leadership from our Board and executive management team, along with engaged leaders and business units across the Company, we are able to effectively manage risks and opportunities and drive strong performance across a spectrum of corporate responsibility issues. Through our strategic planning process, the Board and executive leadership team identified three strategic priorities, lead the clean energy transition, keep bills low, and enhance the customer experience, that represent the keys to our continued success in achieving our vision to be the preferred and trusted provider of the energy our customers need. Strong alignment exists between our strategic priorities and our corporate responsibility.

Our most recent Corporate Responsibility Report, published in May 2019, marks the fourteenth year we have published the report. Our report covers a variety of ESG issues and is built on 24 issues that we have identified as important to our stakeholders and Company. The GCN oversees activities and reporting of our ESG matters. A copy of our most recent Corporate Responsibility Report is available on our website at www.xcelenergy.com.

Director Succession Planning

The Board employs robust practices to ensure strong continuity of skills and leadership over time through sound succession planning. The GCN regularly develops and the Board regularly reviews succession plans for the CEO and other top leaders, as well as plans to develop and/or acquire talent in key positions of management. Likewise, the GCN regularly reviews and identifies timing of changes in Board make-up given director tenure and age requirements and needed skills for appointment of new directors to the Board. The GCN also considers and develops paths both for Board leadership positions, such as committee chairs and independent lead director and ensuring diversity of experience, gender, and race. The Board has been successful in self-identifying, recruiting, and recommending diverse candidates who complement current director skills and attributes, and bringing on new directors with unique skills that are important to our business. It plans to continue to develop and execute plans to ensure sound governance, strong leadership, and business continuity through effective succession planning. In performing its responsibilities for identifying, recruiting, and recommending candidates to the Board, the GCN is committed to including qualified candidates who reflect diverse backgrounds, including gender and race. If the Board is unable to self-identify, recruit, and recommend candidates to the Board, the GCN is likewise committed to including in each third-party search qualified candidates who reflect such diverse backgrounds.

 

Human Capital Management

Xcel Energy’s success depends on our ability to actively implement programs to attract, hire, develop, and retain skilled employees. We emphasize a policy of inclusion – including investments in diversity and inclusion programs to create a diverse, inclusive, and safe working environment. We believe this leads to higher employee satisfaction, engagement, opportunity, productivity, and retention for our 11,000 employees who demonstrate our values – connected, safe, committed, and trustworthy. Our human capital management and succession planning practices are an integral part of who we are, how we operate, and how we see our future. The GCN is responsible for CEO and executive officer succession planning, annually reviewing the Company’s workforce strategy, and overseeing the process for management development. In 2020, Xcel Energy’s practices were recognized by the Human Rights Campaign by being named a top corporation on the Equality Index for four consecutive years.

Political Contributions, Lobbying, and Government Communications Disclosure  

We believe interaction with legislative and policy-making environments is important to our business and is a part of responsible corporate citizenship. Xcel Energy works with federal, state, and local officials on political activities important to our Company, employees, customers, and shareholders. We may provide financial support to political candidates, committees, and other political organizations by making corporate contributions when it is legally permissible to do so. Political activity by the Company is done to promote the interests of the Company and we seek to have interactions that are clear, transparent, and in full compliance with all laws, regulations, and Company policies.

The Board plays an important role in providing oversight of our public policy engagement and political participation with respect to significant policy issues that could impact the reputation of the electric and gas utility industry and Xcel Energy. The GCN annually reviews the Company’s policy, lobbying expenditures, contributions, and key lobbying activities. Our policy and our corporate contributions to a candidate campaign, ballot measure, and entities organized under Section 527 of the Internal Revenue Code are disclosed on our website at www.xcelenergy.com.  

 

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    CORPORATE GOVERNANCE

 

  

 

 

Strategy Session

The Board annually conducts a strategy session to consider new and emerging industry trends, consult with outside experts, and assess current strategies and key initiatives to ensure the Company is well positioned for the future. This session offers the opportunity for a fluid exchange of information and ideas, helping to refine the current approach, identify new opportunities and risks, and establish key objectives to be monitored throughout the year as the strategies are executed. Agendas for future Board meetings are set in consideration of these objectives.

Code of Conduct Refresh

In 2019, the Company undertook an effort to refresh our Code of Conduct to align with our values, which plays an important role in our organizational culture by outlining the Company’s requirements and expectations. With the Code of Conduct refresh, employees were given both clear guidance on what is expected and better tools to help them make compliant and ethical business decisions. The Board adopted the refreshed Code of Conduct, completed training, and acknowledged their obligation to follow the Code of Conduct.

Key Performance Indicators and Scorecard Development

The GCN reviews and approves KPIs and the corporate scorecard annually to ensure our goals are appropriately aligned with corporate priorities. The annual refinement of KPIs establishes the long-term oversight of operational goals that promote the best interests of our shareholders, customers, and employees.

Shareholder Engagement and Investor Outreach

Our Company believes that regular, transparent communication with our shareholders and other stakeholders is essential to Xcel Energy’s long-term success. We have continued our practice of engaging with shareholders throughout the year on a range of topics. Presentations at financial conferences, meetings with analysts and investment firms, regular outreach on governance topics, and responding to inquiries are examples of the activities we employ to engage our shareholders. During 2019, our governance outreach to our largest shareholders represented more than 50 percent of outstanding shares, we participated in 23 sell-side/industry conferences or non-deal road shows, and we held over 210 individual and group meetings with approximately 430 institutional investors, representing nearly 65 percent of shares held by active managers. We voluntarily disclosed our performance and metrics in the ESG Report based on the Edison Electric Institute and American Gas Association Templates and published our Corporate Responsibility Report. Both are available on our website at www.xcelenergy.com.  The Board receives regular updates on such efforts. We also engaged in discussions with investors with specific ESG interests to respond to inquiries, and share information on our performance and plans. Finally, the Board also offers channels for shareholders to contact it with any inquiry or issue, and responds as appropriate.

Communications with the Board

The Board welcomes your input. You may communicate with the Board in two ways: first, you may send correspondence to the Company’s principal offices in care of the Corporate Secretary, Xcel Energy Inc., 414 Nicollet Mall, Minneapolis, Minnesota 55401. Second, you may contact the directors directly via email at BoardofDirectors@xcelenergy.com. These emails are sent automatically to an independent director designated to receive such communications. The email is simultaneously sent to the Corporate Secretary’s office, who may act as agent for the independent directors and coordinate the response. If the receiving director requests the Company to respond on behalf of the directors, a copy of the Company-prepared response is provided to the receiving director. If the receiving director does not request a response, the agent acting for the receiving director will provide a summary of the actions taken. The Board reserves the option to review and change this policy due to the nature and volume of the correspondence.

 

 

Determining Executive Officer and Director Compensation

The GCN has broad authority to develop and implement compensation policies and programs for executive officers and directors. The GCN may retain independent, external compensation consultants to assist in this effort and may change consultants at any time during the year if it determines that a change would be in the best interests of the Company and its shareholders.

To assist in setting 2019 compensation, the GCN retained Meridian Compensation Partners, LLC (“Meridian”) as its independent, executive compensation consultant. Meridian is an independent consulting firm delivering advisory services to compensation committees and does not perform any assignments for the Company other than providing executive and director compensation services for the GCN.

Several internal controls exist to ensure the independent judgment of Meridian:

 

 

 

Meridian reports directly to the GCN and not to Company management.

 

 

Meridian routinely participates in executive sessions of the GCN without members of management present.

 

 

The GCN has the exclusive authority to hire, retain, and set the compensation for its executive compensation consultant and advisors.

The GCN assessed Meridian’s independence pursuant to Nasdaq and SEC rules and concluded that no conflict of interest exists that prevents it from independently advising the GCN. In its oversight of our 2019 executive compensation program, the GCN worked with Meridian and the CEO and the Senior Vice President, Chief Human Resources Officer. The GCN received additional support from the Senior Vice President, Corporate Secretary and Executive Services and the Executive Vice President, General Counsel. In 2019, the CEO and other officers provided recommendations with respect to:

 

 

 

The corporate performance objectives and goals, on which awards of both annual and long-term incentive compensation are based.

 

 

Attracting, retaining and motivating executive officers.

 

 

Information regarding financial performance, budgets and forecasts as they pertain to executive compensation.

 

 

Market information regarding compensation levels, practices, and trends.

Additional information regarding the determination of executive compensation is included in the Compensation Discussion and Analysis (“CD&A”) beginning on page 32.

14   |   THE FUTURE IN SIGHT   |   XCEL ENERGY


 

 

 

 

 

 

 

CORPORATE GOVERNANCE    

 

 

Board Planning and Composition

We believe that the most effective oversight comes from a Board of Directors that represents a diverse range of experience and perspectives that provide the collective skills, qualifications, and attributes necessary to provide sound governance. We also believe it is important for the Board to work well as a whole, with members bringing their experience to the table and dialoguing freely with each other and with management to create an environment that results in well-functioning oversight. The GCN regularly reviews with the Board the experience and attributes desired for effective governance in our changing industry and evaluates the current Board make-up in light of these criteria.

Director Experience and Attributes

The Board has identified key skills, expertise, and attributes that are important for effective governance of Xcel Energy. Each director brings to us a wealth of experience that combines to varying degrees many or all of these skills, but some have more in-depth experience in a particular area than others. Consistent with the goal of ensuring a comprehensive mix of skills and expertise are represented at the Board table, below we capture how our directors contribute to both the general skills mix (organized by key attribute), as well as the specialized expertise relevant to that attribute. In making this assessment, we considered the experience each director has from work, education, board service on other public companies, and engagement in community, civic, and business organizations.

 

 

 

 

 

 

 

 

 

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    CORPORATE GOVERNANCE

 

  

 

 

 

 

 

 

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CORPORATE GOVERNANCE    

 

 

 


2020 PROXY STATEMENT   |   XCEL ENERGY   |   17


 

 

 

 

 

    CORPORATE GOVERNANCE

 

  

 

 

Demographic Background

Our directors represent a diverse range of experience and backgrounds. Over the last several years, the GCN has focused on recruiting and recommending diverse candidates to complement current director demographics.  

 

18   |   THE FUTURE IN SIGHT   |   XCEL ENERGY


 

 

 

 

 

 

 

CORPORATE GOVERNANCE    

 

 

Director Tenure

The Board believes that diversity in tenure creates a good mix of perspectives with longer-tenured directors bringing a deep understanding of the Company while new members bring a fresh perspective and expertise helpful to keeping abreast of a changing industry. The GCN considers emerging business needs and desired skills when evaluating potential candidates. Over the past five years, the Board has added six new directors. As of the date of this proxy statement, the Board consists of 15 directors, whose tenure is shown below.

It is critical for the Company and shareholders to have a well-rounded, diverse Board that functions well as a whole. In evaluating director nominees, the GCN considers experience in the areas identified above and expects director nominees to have proven leadership skills, sound judgment, integrity and a commitment to the success of the Company. In addition, for incumbent directors, the GCN considers attendance, past performance on the Board and contributions to the Board and applicable committees.

Additional Board Information

New Director Nominees

The Board determined to expand the size of the Board by two additional directors and currently has a total of 15 members. The GCN reviewed the skills and expertise of the Board and determined the Board would benefit from two additional members, with Mr. Johnson having expertise in leading operations and growing businesses through innovation and Mr. Kehl having extensive experience advising audit committees of Fortune 500 companies in financial reporting and controls, compliance and regulatory matters, and strategic transactions. The GCN sought recommendations of the directors and one of our non-employee directors identified Mr. Kehl as a potential candidate. Mr. Johnson was identified to the Board through a third-party search firm. After reviewing Mr. Johnson’s and Mr. Kehl’s individual qualifications and interviewing each, the GCN recommended them for election to the Board, effective March 1, 2020.

We believe our slate of director nominees provides a well-rounded and well-qualified Board that collectively provides effective oversight and governance of the Company.

Director Independence

Each of our director nominees other than Mr. Fowke is independent. The Board has satisfied, and expects to continue to satisfy, its objective to have no more than two directors who are not independent serving on the Board at any time.

The Board determines director independence under the standards established by Nasdaq, which we have adopted with a four-year look back. In addition, a director who is an employee or representative of a significant supplier of any Xcel Energy business unit or legal entity will not be “independent” unless the relationship was entered into with the supplier as a result of competitive purchasing practices. When evaluating director independence, the Board has determined that the receipt of regulated electric and gas service from the Company does not constitute a material relationship. The Board reviews ordinary course of business transactions in which directors have an interest as part of the Board’s annual independence review.

Director Attendance

During 2019 the Board met six times, and the independent directors met in executive session without management present on all six occasions. The average attendance for all directors at Board and committee meetings was approximately 98 percent, with nine of our directors attending 100 percent of Board and applicable committee meetings. Each director also attended a half-day strategy session and related executive session. We do not have a formal policy, but encourage our directors to attend the annual meeting of shareholders. All but one of the then-serving directors attended the 2019 annual meeting.

2020 PROXY STATEMENT   |   XCEL ENERGY   |   19


 

 

 

 

 

    CORPORATE GOVERNANCE

 

  

 

 

Governing Documents

The following materials relating to our corporate governance can be found on our website at www.xcelenergy.com, under “Company — Investor Relations — Governance Documents” and are also available free of charge to shareholders who request them.

      Guidelines on Corporate Governance

      Audit Committee Charter

      Amended and Restated Articles of Incorporation

      Finance Committee Charter

      Bylaws

      Governance, Compensation and Nominating Committee Charter

      Code of Conduct

      Operations, Nuclear, Environmental and Safety Committee Charter

      Political Contributions Policy

 

 

 Shareholders may request our governing documents by writing our offices at: Corporate Secretary, Xcel Energy Inc., 414 Nicollet Mall, Minneapolis, Minnesota 55401. We publish any amendments to the Code of Conduct and waivers of the Code of Conduct for our executive officers or directors on our website.

Shareholder Recommendation of Directors

Any shareholder may recommend potential nominees to the GCN for consideration for membership on the Board. Recommendations can be made by sending a written statement of the qualifications of the recommended individual to the Corporate Secretary, Xcel Energy Inc., 414 Nicollet Mall, Minneapolis, Minnesota 55401. Such recommendations should be received by October 1, 2020 to be considered for the 2021 annual meeting. The GCN will evaluate candidates recommended by shareholders on the same basis as it evaluates other candidates.

Proxy Access

In February 2016, we amended our bylaws to permit any shareholder (or group of no more than 20 shareholders) owning three percent or more of our common stock continuously for at least three years to nominate up to an aggregated limit of two candidates or 20 percent of our Board (whichever is greater) for inclusion in our proxy statement. Notice of such nominees for the 2021 annual meeting must be received no earlier than November 9, 2020 and no later than close of business on December 9, 2020. Notice should be addressed to the Corporate Secretary, Xcel Energy Inc., 414 Nicollet Mall, Minneapolis, Minnesota 55401. Requirements for such nominations and nominees are detailed in our bylaws, which are available on our website at www.xcelenergy.com, under “Company —Investor Relations — Governance Documents”.

 

 

 

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PROPOSAL NO. 1    

 

 

Proposal No. 1

Election of Directors

Serving shareholders well is a key priority for your Board. We believe a well-qualified and diverse mix of directors best positions the Board to effectively govern and achieve strong results. Demonstrated leadership, judgment, and expertise, combined with diversity, integrity, and experience, are some of the important characteristics for Board members. Such characteristics are evaluated when considering director candidates.

Fourteen nominees have been recommended by the GCN and nominated by the Board. We believe this slate of directors brings not only the right expertise and experience to the Board, but also the right attributes to ensure constructive and free exchange of ideas and opinions with each other and with management.

Of the fourteen director nominees, twelve were elected by shareholders at the 2019 annual meeting. The Board elected to expand to fifteen members to bring on the expertise and experience of Mr. Netha N. Johnson and Mr. George J. Kehl, whose backgrounds are detailed below. The Board has set the size of the Board at fourteen when Mr. Davis’ term ends at the annual meeting. Xcel Energy thanks Mr. Davis for his significant contributions and service to the Company since 2006.

Each nominee has agreed to be named in this proxy statement and to serve if elected. Should any nominee become unable to serve for any reason, the persons named as proxies reserve full discretion to vote “FOR” any other persons who may be recommended by the GCN and nominated by the Board, or the Board may reduce the number of nominees. If elected at the 2020 annual meeting, the nominees will hold office until the 2021 annual meeting and until their successors have been elected and qualified.

Vote Required

Each director shall be elected by majority vote, meaning a nominee must receive more votes “FOR” election than the votes cast “AGAINST.” Any director who does not receive a majority of the votes cast “FOR” election must offer his or her resignation for consideration by the Board under the process outlined on page 64. Proxies solicited by the Board will be voted “FOR” each of the nominees, unless a different vote is specified.

 

 

 

 

   

  

Your Board recommends a vote “FOR” the election to the Board of

each of the following nominees.

 

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    PROPOSAL NO. 1

 

  

 

 

 

Nominees

 

 

 

 

 

 

 

 

 

 

Director Qualifications and Experience:

Ms. Casey has extensive executive experience in brand strategy and investor, corporate, and media relations. She is nationally recognized as an industry leader in building and protecting brands. Ms. Casey brings valuable skills to the Board with her experience in creating and delivering high-impact communication strategies, her expertise in crisis communications and management, and her strong commitment to the local community. Ms. Casey also serves as a director of several nonprofit organizations in the communities that we serve.  

 

 

 

Lynn Casey

Age 64

 

Director since 2018

 

Retired Chair and CEO,

Padilla  

 

 

Business Experience:

•  Chair, Padilla, a public relations and communications firm (August 2018 to December 2019)

•  Chair and CEO, Padilla (September 2013 to August 2018)

•  CEO, Padilla Speer Beardsley (2001 to September 2013)

Public Company Directorships

• None

 

Committees:

•   Finance

•   ONES

 

 

 

Director Qualifications and Experience:

With a long and distinguished career in the utility industry, Mr. Fowke provides the strategic focus and leadership needed to position the Company well for the future. Having served as the Company’s Chief Financial Officer, he has a strong background in finance, financial reporting, and shareholder outreach. His extensive experience in environmental issues, operations, and the energy business makes Mr. Fowke keenly familiar with the risks we face and provides unique insight into effective management of those risks that has delivered strong results over the long term. His tenure and involvement in the utility industry provides significant expertise on regulatory and policy issues that are central to our business, and he is active in representing and advocating for the industry on important national issues such as security and tax reform. With his service as a director of nonprofit institutions and utility industry organizations, he provides good understanding of not only the opportunities and challenges of our business, but also the customers and communities we serve.

Ben Fowke

Age 61

 

Director since 2009

 

Chairman of the Board and CEO, Xcel Energy Inc.

 

 

Business Experience:

•  Chairman of the Board and CEO, Xcel Energy Inc. (2011 to present)

•  President, Xcel Energy Inc. (2009 to 2020)

•  Chief Operating Officer, Xcel Energy Inc. (August 2009 to August 2011)

•  Various Executive Positions with Xcel Energy Inc. since 2002

Public Company Directorships

• None

 

Committees:

•  None

 

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PROPOSAL NO. 1    

 

 

 

 

Director Qualifications and Experience:

Mr. Johnson’s global operations leadership experience provides the Board with valuable business and strategic insight and executive leadership skill. His background in the specialty chemicals industry is relevant to our business, and his experience with the industry and electrical and renewable energy solutions will provide valuable insight to our business as we work towards our carbon-free future. Prior to starting his business career, Mr. Johnson was an officer in the United States Navy. Mr. Johnson has served as a director on several nonprofit boards throughout his career.

 

 

Netha N. Johnson

Age 49

 

Director since 2020

 

President, Bromine Specialties, Albemarle Corporation

 

 

Business Experience:

•  President, Bromine Specialties, Albemarle Corporation, a global specialty chemicals company (August 2018 to present)

•  Vice President and General Manager, 3M Company, a multi-national industrial, worker safety, health care, and consumer goods company (February 2015 to August 2018)

•  President, Filtration, Pentair, a global water treatment company (February 2010 to February 2015)

 

Public Company Directorships

• None

 

Committees:

•   ONES

 

 

 

Director Qualifications and Experience:

With 38 years of experience in a global public accounting firm, Mr. Kehl brings an extensive knowledge of financial accounting, auditing and internal control over financial reporting experience which is valuable to our highly regulated company. He was an audit partner for 25 years at KPMG LLP serving mostly Fortune 500 companies and was the managing partner of the Minneapolis office from 2010 until his retirement in 2019. Mr. Kehl is a Certified Public Accountant in Minnesota and Florida.  His experience provides the Board with valuable strategic business, leadership and financial expertise and he has been determined to be an audit committee financial expert by our Board. Mr. Kehl has served as a director of several non-profit companies in the communities that we serve, providing valuable insights into our stakeholder base that is vital to our business.

George Kehl

Age 61

 

Director since 2020

 

Retired Office Managing Partner, KPMG LLP

 

 

Business Experience:

• Office Managing Partner, KPMG LLP, a global audit, tax, and advisory firm (January 2010 to September 2019)

•  Audit Partner, KPMG LLP (July 1994 to September 2019)

 

Public Company Directorships

• None

 

Committees:

•   Audit

 

2020 PROXY STATEMENT   |   XCEL ENERGY   |   23


 

 

 

 

 

    PROPOSAL NO. 1

 

  

 

 

 

 

Director Qualifications and Experience:

Mr. O’Brien’s extensive executive experience provides to the Board valuable strategic insight, leadership skills, and a sound understanding of delivering effective operations in an expansive and capital-intensive business. His acumen in financial reporting and accounting has been determined by our Board to qualify him as an audit committee financial expert. He is currently consulting in the areas of strategy, leadership and operating effectiveness with select mining firms. His background in both the mining and electric and gas industries is directly relevant to our business and he brings both valuable experience in effective management of environmental issues and expertise in industry and regulatory issues to our Board.

Richard T. O’Brien

Age 66

 

Director since 2012

 

Independent Consultant

 

 

Business Experience:

•  Independent Consultant (October 2015 to present)

•  President and CEO, Boart Longyear Limited, a global provider of drilling services, equipment and performance tooling for mining and drilling companies (April 2013 to October 2015)

•  CEO, Newmont Mining Corporation, a global gold mining company (September 2012 to February 2013)

•  President and CEO, Newmont Mining Corporation (July 2007 to September 2012)

Public Company Directorships

• Pretium Resources Inc.

  (2019 to present)

• Vulcan Materials Company

  (2008 to present)

• Boart Longyear Limited

  (2013 to 2015)

• Newmont Mining

  (2007 to 2013)

• Inergy, L.P.

  (2006 to 2012)

 

Committees:

•  Audit (Chair)

•  ONES

 

 

 

Director Qualifications and Experience:

With 30 years of leadership experience in the energy industry, Mr. Owens brings a wealth of knowledge and skill to the Board. In his role at the Edison Electric Institute, the electric utility industry trade association, he oversaw key areas such as environmental, energy supply and finance, and state and federal regulatory and policy issues, all important topics for our business. He is a recognized expert in the energy field and has been a leader in shaping constructive public policy frameworks to support the industry’s transition to new and cleaner technologies. An active member in the community, Mr. Owens serves on the boards of a number of professional, academic, and community-based organizations.

 

 

David K. Owens

Age 71

 

Director since 2017

 

Retired Executive, Edison Electric Institute  

 

 

Business Experience:

•  Executive Vice President, Business Operations Group and Regulatory Affairs, Edison Electric Institute (October 1992 to June 2017)

Public Company Directorships

• None

 

Committees:

•   Finance

•   ONES

 

24   |   THE FUTURE IN SIGHT   |   XCEL ENERGY


 

 

 

 

 

 

 

PROPOSAL NO. 1    

 

 

 

 

Director Qualifications and Experience:

Mr. Policinski led a rapidly growing, multinational food and agricultural cooperative, an experience that positions him to provide valuable leadership and strategic insight in effectively addressing environmental and other major issues. As the former president and CEO of the third-largest United States cooperative, Mr. Policinski has a wealth of experience in effectively managing operations, addressing new risks and regulatory requirements, and delivering value via effective growth management. He is well versed in finance and the financial reporting process. Mr. Policinski has experience as a director of a number of nonprofits, educational institutions and trade industry groups and provides a solid understanding of the communities we serve.

 

 

Christopher J. Policinski

Age 61

 

Director since 2009

Lead Independent Director since May 2016

 

Retired President and CEO, Land O’Lakes, Inc.  

 

 

Business Experience:

•  President and CEO, Land O’Lakes, Inc., an agricultural and dairy cooperative (October 2005 to June 2018)

•  Senior leadership positions at Land O’Lakes, Inc. and The Pillsbury Company, a grain processing and food production company

Public Company Directorships

• Hormel Foods Corporation  

  (2012 to present)

 

Committees:

•  GCN

 

 

 

Director Qualifications and Experience:

Having led large and complex businesses, Mr. Prokopanko brings valuable leadership skills and strategic insight to the Board. Throughout his career he has created growth, managed expansive operations, built key assets and effectively addressed environmental issues, all valuable skills to contribute to the Board. His experience in commodities, with capital-intensive businesses, and as a director for other public companies likewise contributes valuable and relevant expertise to the Board. Mr. Prokopanko works with, supports and serves on the boards of several nonprofit organizations and brings a thoughtful understanding of the communities we serve.

 

 

James T. Prokopanko

Age 66

 

Director since 2015

 

Retired President and CEO, The Mosaic Company

 

 

Business Experience:

•  President and CEO, The Mosaic Company, producer of phosphate and potash crop nutrients (January 2007 to August 2015)

•  Executive Vice President and COO, The Mosaic Company (July 2006 to January 2007)

•  Senior leadership positions, Cargill Corporation, trading, purchasing and distributing grain and other agricultural commodities (1999 to 2006)

 

Public Company Directorships

• Regions Financial  

  (2016 to present)

• Vulcan Materials Company  

  (2009 to present)

• The Mosaic Company  

  (2004 to 2015)

 

Committees:

•  GCN

•  ONES

 

2020 PROXY STATEMENT   |   XCEL ENERGY   |   25


 

 

 

 

 

    PROPOSAL NO. 1

 

  

 

 

 

 

Director Qualifications and Experience:

As leader of a management development and strategy planning business, Ms. Sampson brings valuable expertise and business experience to the Board. She provides perspective in ethics and business conduct, talent acquisition, retention and development, diversity and social responsibility, all of which are important issues to our stakeholders. Her experience as a business owner provides insight into finance and the financial reporting processes. Ms. Sampson is the former CEO of the Greater Minneapolis Area Chapter of the American Red Cross and is a former board member of various religious and philanthropic organizations within the communities we serve.

 

 

 

A. Patricia Sampson

Age 71

 

Director since 1985

 

CEO, President and Owner, The Sampson Group, Inc.  

 

 

Business Experience:

•  CEO, President and Owner, The Sampson Group, Inc., a management development and strategic planning business (1996 to present)

•  Former CEO, Greater Minneapolis Area Chapter of the American Red Cross

 

Public Company Directorships

• None

 

Committees:

•  Audit

•  Finance

 

 

 

Director Qualifications and Experience:

Mr. Sheppard brings to the Board extensive leadership experience in electric utilities, a solid understanding of the issues facing our industry, and valuable expertise on effective and efficient operations. He is a recognized expert in the nuclear industry, having overseen nuclear operations for major utilities and currently consulting on nuclear projects under development across the globe. In 2017, Mr. Sheppard was appointed to the Board of Directors of Ontario Power Generation, a generating company owned by the Province of Ontario, Canada, by the Ontario, Canada Minister of Energy. His experience provides valuable insight, knowledge, business acumen, and judgment that is valuable to our nuclear operations and is extremely helpful to the Board.

 

James J. Sheppard

Age 71

 

Director since 2011

 

Independent Consultant

 

 

 

 

Business Experience:

•  Independent Consultant (January 2011 to present)

•  Senior Vice President and Chief Nuclear Officer, Southern California Edison, an electric utility (September 2010 to December 2010)

•  Independent Consultant (January 2010 to August 2010)

•  Chairman, President and CEO, STP Nuclear Operating Company (April 2003 to December 2009)

•  Senior positions, South Texas Project, Sequoyah Fuels Corp. and Robinson Nuclear Project (1990 to 2003)

Public Company Directorships

• None

 

Committees:

•  ONES (Chair)

•  Finance

 

26   |   THE FUTURE IN SIGHT   |   XCEL ENERGY


 

 

 

 

 

 

 

PROPOSAL NO. 1    

 

 

 

 

Director Qualifications and Experience:

Mr. Westerlund has extensive experience in corporate governance and environmental and workforce issues, bringing valuable insight to the Board. Having served as a senior executive in a Fortune 500 company, he contributes leadership skills and business acumen to the Board. Mr. Westerlund was responsible for environmental health and safety, corporate compliance, security, real estate activities, and human resources, including labor and employee relations, and benefits while at Ball Corporation, and he brings extensive knowledge of compliance, corporate governance, compensation, and equal employment opportunity issues to the Board. He serves on the boards of a number of community organizations.

 

 

 

David A. Westerlund

Age 69

 

Director since 2007

 

Retired Executive Vice President, Administration and Corporate Secretary, Ball Corporation

 

 

Business Experience:

•  Executive Vice President, Administration and Corporate Secretary, Ball Corporation, a supplier of metal packaging, aerospace and other technologies and services (2006 to September 2011)

•  Senior level positions with Ball Corporation prior to 2006

 

Public Company Directorships

• None

 

Committees:

•  Audit

•  GCN

 

 

 

Director Qualifications and Experience:

Ms. Williams brings extensive experience in leadership with a major investment management company, providing valuable and unique strategic insights to the Board. Her strong financial background is particularly valuable in our capital-intensive industry. She brings extensive expertise in risk assessment and management that is valuable for our business. She is active in the community and does and has served as a trustee of a number of nonprofit and educational boards.

 

 

 

Kim Williams

Age 64

 

Director since 2009

 

Retired Partner, Wellington Management Company LLP

 

 

Business Experience:

•  Partner, Wellington Management Company, LLP, an investment and asset management company for institutional investors (1995 to 2005)

•  Leadership positions, Loomis, Sayles & Co., Inc., an investment management company, and Imperial Chemical Industries Pension Fund, a defined benefit occupational pension fund (prior to 1995)

Public Company Directorships

• Weyerhaeuser Corporation

  (2006 to present)

• E.W. Scripps Co.  

  (2006 to present)

 

Committees:

•  Finance (Chair)

•  GCN

 

2020 PROXY STATEMENT   |   XCEL ENERGY   |   27


 

 

 

 

 

    PROPOSAL NO. 1

 

  

 

 

 

 

Director Qualifications and Experience:

With a career as a senior executive in consumer products industries, Mr. Wolf brings strategic insight, business acumen and valuable experience to the Board. He served as Chief Financial Officer of a major corporation and contributes valuable experience in and knowledge of finance, reporting and governance. His financial experience provides the Board with valuable insights and he has been determined to be an audit committee financial expert by our Board. Having led both organizations and the integration of organizations, Mr. Wolf has a sound understanding of business risk and effective risk management oversight. He serves as a director of several nonprofit and educational organizations.

 

Timothy V. Wolf

Age 66

 

Director since 2007

 

President, Wolf Interests, Inc.

 

 

Business Experience:

•  President, Wolf Interests, Inc., an investment company (June 2010 to present)

•  Chief Integration Officer, MillerCoors Brewing Company LLC, a consumer beverage product company (June 2008 to February 2010)

•  Prior leadership positions including Global Chief Financial Officer with Molson Coors Brewing Company and Chief Financial Officer with Coors Brewing Company

 

Public Company Directorships

• Rally Software Development Company (2011 to 2015)

• Borders Group, Inc.  

  (2009 to 2011)

 

Committees:

•  Audit

•  ONES

 

 

 

Director Qualifications and Experience:

Mr. Yohannes has a successful record of operation execution and corporate transformation as a Chief Executive Officer and as an entrepreneur. Mr. Yohannes brings an extensive experience in banking, economic development, and in global energy policy, providing the Board with strategic insight and leadership skills. He has served in leadership roles in U.S. Government organizations, and for which he was nominated by President Obama and confirmed by the U.S. Senate. He is very passionate about protecting the environment and provides experience in effectively addressing environmental issues. He is very active in his community and serves on the various boards of nonprofits and civic organizations.

 

 

Daniel Yohannes

Age 67

 

Director since 2017

 

Former United States Ambassador to the Organization for Economic Cooperation and Development

 

 

Business Experience:

•  U.S. Ambassador and Permanent Representative to the Organization for Economic Cooperation and Development, including the International Energy Agency and the Nuclear Energy Agency (April 2014 to January 2017)

•  Chief Executive Officer, Millennium Challenge Corporation, an independent U.S. Government foreign aid agency (November 2009 to April 2014)

•  Prior leadership positions with US Bank and Security Pacific Bank (now Bank of America)

•  Co-founder of New Resource Bank, which invests in environmentally sustainable businesses

 

Public Company Directorships

• Dow

  (2019 to present)

 

Committees:

•  Audit

•  Finance

 

 

 

28   |   THE FUTURE IN SIGHT   |   XCEL ENERGY


 

 

 

 

 

 

 

BENEFICIAL OWNERSHIP OF CERTAIN SHAREHOLDERS    

 

 

Beneficial Ownership of Certain Shareholders

Share Ownership of Directors and Officers

The table below provides the beneficial ownership of our common stock as of March 25, 2020 for: (a) each director; (b) the executive officers named in the Summary Compensation Table; and (c) the directors and current executive officers as a group. Unless otherwise indicated, each person has sole investment and voting power (or shares such powers with his or her spouse) of the shares noted. None of the listed individual directors, officers, or director nominees beneficially owned more than one percent of our common stock. The directors and executive officers as a group beneficially owned less than one percent of our common stock on March 25, 2020. None of the shares owned by our directors or executives are subject to any type of pledge.

 

Name and Principal

Position of Beneficial Owner

 

Common

Stock (1)

 

 

Restricted

Stock

 

 

Total

Shares

Beneficially

Owned

 

 

Stock

Equivalents (2)

 

Lynn Casey

   Director

 

 

1,123

 

 

 

 

 

 

1,123

 

 

 

7,712

 

Richard K. Davis

   Director

 

 

13,481

 

 

 

 

 

 

13,481

 

 

 

66,982

 

Netha N. Johnson

   Director

 

 

531

 

 

 

 

 

 

531

 

 

 

 

George J. Kehl

   Director

 

 

531

 

 

 

 

 

 

531

 

 

 

 

Richard T. O’Brien

   Director

 

 

4,621

 

 

 

 

 

 

4,621

 

 

 

56,147

 

David K. Owens

   Director

 

 

 

 

 

 

 

 

 

 

 

8,246

 

Christopher J. Policinski

   Director

 

 

2,000

 

 

 

 

 

 

2,000

 

 

 

93,736

 

James T. Prokopanko

   Director

 

 

1,000

 

 

 

 

 

 

1,000

 

 

 

17,762

 

A. Patricia Sampson

   Director

 

 

8,604

 

 

 

 

 

 

8,604

 

 

 

144,302

 

James J. Sheppard

   Director

 

 

1,000

 

 

 

 

 

 

1,000

 

 

 

46,529

 

David A. Westerlund

   Director

 

 

7,750

 

 

 

 

 

 

7,750

 

 

 

129,080

 

Kim Williams

   Director

 

 

4,972

 

 

 

 

 

 

4,972

 

 

 

87,164

 

Timothy V. Wolf

   Director

 

 

1,000

 

 

 

 

 

 

1,300

 

(3)

 

65,030

 

Daniel Yohannes

   Director

 

 

3,891

 

 

 

 

 

 

3,891

 

 

 

6,510

 

Ben Fowke

   Chairman and Chief Executive Officer (4)

 

 

566,327

 

 

 

 

 

 

566,327

 

 

 

74,535

 

Robert Frenzel

   President and Chief Operating Officer (5)

 

 

46,772

 

 

 

9,984

 

 

 

56,756

 

 

 

 

Brett Carter

   Executive Vice President, Chief Customer and Innovation Officer

 

 

21,433

 

 

 

 

 

 

21,433

 

 

 

12,085

 

Kent Larson

   Executive Vice President and Group President, Operations (6)

 

 

50,797

 

 

 

 

 

 

50,797

 

 

 

38,171

 

Scott Wilensky

   Executive Vice President, General Counsel

 

 

76,057

 

 

 

 

 

 

76,057

 

 

 

23,537

 

Directors and Current Executive Officers

   as a group (28 persons)

 

 

1,078,721

 

 

 

12,065

 

 

 

1,091,086

 

 

 

988,292

 

 

(1)  

On March 25, 2020, the closing price of our common stock on the Nasdaq was $55.55.

(2)  

Common stock equivalents represent (i) the share equivalents of our common stock held by executive officers under our deferred compensation plan as of March 25, 2020, and (ii) stock equivalent units held under the directors’ Stock Program as of March 25, 2020. For information on common stock equivalents granted during 2019 and holdings at December 31, 2019, see page 56. The information in this column is not required by the rules of the SEC because these share equivalents carry no voting rights and the recipient does not have the right to acquire any underlying shares within 60 days of March 25, 2020. Nevertheless, we believe that this information provides a more complete picture of the financial stake that our directors and executive officers have in the Company.

(3)  

Mr. Wolf’s son owns 300 of these shares. Mr. Wolf disclaims beneficial ownership of these shares.

(4)  

Mr. Fowke served as Chairman, President and Chief Executive Officer until March 31, 2020, when he became Chairman and Chief Executive Officer.  

(5)  

Mr. Frenzel served as Executive Vice President, Chief Financial Officer until March 31, 2020, when he became President and Chief Operating Officer.

(6)  

As of March 31, 2020, Mr. Larson is no longer serving as Executive Vice President and Group President, Operations, but will remain an employee to assist with transition until May 31, 2020.  

 

2020 PROXY STATEMENT   |   XCEL ENERGY   |   29


 

 

 

 

 

    BENEFICIAL OWNERSHIP OF CERTAIN SHAREHOLDERS

 

  

 

 

 

Largest Owners of Xcel Energy’s Shares

The table below provides information as to each person or entity known to us to be the beneficial owner of more than five percent of our common stock:

 

Name and Address of Beneficial Owner

 

Number of Shares

Beneficially Owned

 

Percent

of Class

 

BlackRock, Inc.

   55 East 52nd Street

   New York, NY 10055

 

51,734,215 (1)

 

9.6%

 

The Vanguard Group

   100 Vanguard Blvd.

   Malvern, PA 19355

 

48,497,347 (2)

 

9.2%

 

JPMorgan Chase & Co.

   383 Madison Avenue

   New York, NY 10179

 

38,747,221 (3)

 

7.3%

 

Magellan Asset Management Limited

   MLC Centre, Level 36

   19 Martin Place

   Sydney NSW 2000 Australia

 

31,040,812 (4)

 

5.9%

 

State Street Corporation

   State Street Financial Center

   One Lincoln Street

   Boston, MA 02111

 

28,475,334 (5)

 

5.4%

 

 

(1)  

The information contained in the table and this footnote with respect to BlackRock, Inc. is based solely on a Schedule 13G/A filed by the listed person with the SEC on February 6, 2020. The filing indicates that as of December 31, 2019, BlackRock, Inc. had sole voting power for 46,616,166 shares and sole dispositive power for 51,734,215 shares.

(2)  

The information contained in the table and this footnote with respect to The Vanguard Group, Inc. is based solely on a Schedule 13G/A filed by the listed person with the SEC on February 12, 2020. The filing indicates that as of December 31, 2019, The Vanguard Group, Inc. reported that it had sole voting power for 910,335 shares, shared voting power for 324,994 shares, sole dispositive power for 47,461,792 shares and shared dispositive power for 1,035,555 shares. The Vanguard Group, Inc. also reported that (i) Vanguard Fiduciary Trust Company, a wholly-owned subsidiary of The Vanguard Group, Inc., is the beneficial owner of 593,248 shares as a result of its serving as investment manager of collective trust accounts and (ii) Vanguard Investment Australia, Ltd., a wholly-owned subsidiary of The Vanguard Group, Inc., is the beneficial owner of 750,847 shares as a result of its serving as investment manager of Australian investment offerings.

(3)

The information contained in the table and this footnote with respect to JPMorgan Chase & Co. is based solely on a Schedule 13G/A filed by the listed person with the SEC on January 21, 2020. The filing indicates that as of December 31, 2019, JPMorgan Chase & Co. had sole voting power for 36,306,539 shares, shared voting power for 66,954 shares, sole dispositive power for 38,563,782 shares and shared dispositive power for 152,953 shares.

(4)

The information contained in the table and this footnote with respect to Magellan Asset Management Limited is based solely on a Schedule 13G filed by the listed person with the SEC on February 13, 2020. The filing indicates that as of December 31, 2019, Magellan Asset Management Limited had sole voting power for 27,099,189 shares and sole dispositive power for 31,040,812 shares.

(5)

The information contained in the table and this footnote with respect to State Street Corporation is based solely on a Schedule 13G filed by the listed person with the SEC on February 12, 2020. The filing indicates that as of December 31, 2019, State Street Corporation had shared voting power for 24,540,981 shares and shared dispositive power for 28,435,978 shares.

 

 

 

 

 

30   |   THE FUTURE IN SIGHT   |   XCEL ENERGY


 

 

 

 

 

 

 

PROPOSAL NO. 2    

 

 

Proposal No. 2

Advisory Vote on Executive Compensation

Recommendation and Background

Our Board recognizes that performance-based executive compensation is an important element in driving long-term shareholder value. We are seeking shareholders’ views on the compensation of named executive officers identified in the Executive Compensation Tables section of this proxy statement through an advisory vote on the following resolution:

“RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed in the Company’s 2020 proxy statement, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.”

The Company’s goal for its executive compensation program is to align executive leadership’s interests with those of our shareholders, customers, and employees. The Board believes our executive compensation program satisfies this goal and is strongly aligned with the long-term interests of our shareholders.

Shareholders are urged to read the CD&A and other information included in the Executive Compensation Tables section of this proxy statement. The GCN and the Board believe that the information provided in these sections demonstrate that our executive compensation program aligns our executives’ compensation with our short-term and long-term performance and provides the compensation and incentives needed to attract, motivate, and retain key executives who are crucial to our long-term success.

As an advisory vote, this proposal is not binding upon the Company. However, the GCN, which is responsible for designing and administering our executive compensation program, values the opinions expressed by shareholders in their vote on this proposal and will continue to consider the outcome of the vote when making future compensation decisions for named executive officers.

Vote Required

The Board will consider shareholders to have approved our executive compensation if the shares voted “FOR” the proposal exceed the shares voted “AGAINST.” Abstentions and broker non-votes will have no effect on this matter. Proxies solicited by the Board will be voted “FOR” the approval of our executive compensation, unless a different vote is specified.

 

 

 

 

  

 

Your Board recommends a vote “FOR” approval of the advisory vote on

compensation.

 

 

 

 

2020 PROXY STATEMENT   |   XCEL ENERGY   |   31


 

 

 

 

 

    COMPENSATION DISCUSSION AND ANALYSIS

 

  

 

 

Compensation Discussion and Analysis

 

In this section, we describe the material components of our executive compensation program for 2019 for named executive officers (“NEOs”) who appear in the Summary Compensation Table and other compensation tables contained in this proxy statement.

 

Highlights

2019 Performance

We are executing our strategy for long-term customer and shareholder value. Our successful track record positions us well as we continue to provide cleaner generation and the options customers want.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

Financial

Results

  

 

 

  

Continue to Improve

Safety and Reliability

 

•  One-, three-, five-, and 10-year total shareholder return (“TSR”) better than our peer group average

•  Met or exceeded ongoing EPS guidance
for 15 consecutive years

•  Increased our dividend for 16 consecutive years

  

 

 

•  Matched our best DART employee safety year, reducing injuries 61% in the past 10 years

•  Solid nuclear operations with a 92.6% capacity factor, NRC Column 1 status, and all units with an INPO index of 100

•  Improved gas emergency response time by 6% since 2018 and 25% since 2014

 

 

 

 

 

 

 

 

 

  

Lead the Clean Energy

Transition

 

  

Keep Bills

Low

  

 

 

  

Enhance the

Customer Experience

 

•  Reduced carbon emissions 44% since 2005  
from electricity provided to customers  

•  3 owned wind farms, totaling 700 MW,
completed in 2019, with nearly 2,000 MW
under construction      

•  Recognized with a national Climate Leadership  
Award for organizational leadership  

 

•  Operating and maintenance expenses have declined almost 1%, even as we invested in the system

• Lean training provided to select employees across the organization

• Residential customer bills have declined since 2013, while inflation increased consumer prices by almost 10%

  

 

 

•  More than 200,000 customers participate in renewable choice offerings

•  Secured approval for the Midwest’s largest Electric Vehicle program

•  5 efficiency programs recognized as exemplary by the American Council for an Energy-Efficient Economy

2019 Compensation

No significant changes were made to our executive compensation program for 2019, which continues to be primarily variable compensation based on performance outcomes. We continue to monitor evolving best practices to ensure our talent needs for attraction, motivation, and retention are met, and we continue to assess certain features of our programs compared to market practices.

Our 2019 incentive compensation outcomes are:

 

The 2019 annual incentive program achieved a payout of 161.6 percent of targeted results. This payout is reflective of our strong operational and financial performance, as described in the Annual Incentive section beginning on page 36.

 

Performance-based long-term incentive awards that settled in 2019 achieved a weighted average payout of 165 percent of targeted performance. This result is reflective of our strong relative TSR performance and achievement of our environmental commitment to reduce carbon dioxide emissions, as described in the Long-Term Incentives section on pages 37 to 38.

As part of our thoughtful succession planning, we made several leadership changes that were effective in March 2020.  As part of these changes, Bob Frenzel became our President and Chief Operating Officer, Brian Van Abel became our Executive Vice President and Chief Financial Officer, and Tim O’Connor became our Executive Vice President and Chief Generation Officer.

Compensation Philosophy

Our executive compensation programs are designed to align the interests of our executives with the interests of our shareholders, customers, and employees. Our compensation philosophy is based on the following principles:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

Performance

Based

  

 

 

  

Market

Competitive

  

 

 

  

Equity-based

Incentive

 

•  Majority of executive compensation is at risk, and pay is aligned with Company performance

 

•  Motivates achievement of financial, operational and stock price performance goals

  

 

 

 

•  Enables us to attract and retain talented leaders

 

•  Compares us to an industry peer group

  

 

 

 

•  Focuses on long-term shareholder value

 

•  Aligns executive interests with those of shareholders and rewards for strategic success

This philosophy, which includes significant emphasis on pay for performance, is applied consistently across all executives. Individual compensation may be differentiated based on scope of responsibilities, experience, and contributions to Company results.

32   |   THE FUTURE IN SIGHT   |   XCEL ENERGY


 

 

 

 

 

 

 

COMPENSATION DISCUSSION AND ANALYSIS    

 

 

Executive Compensation Practices

Our compensation practices for NEOs are outlined below. These practices reflect our compensation philosophy and help ensure sound corporate governance practices.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

 

 

    

What We

Do

 

  

  

 

Pay for performance with a substantial percentage of each NEO’s total direct compensation being variable, at risk and aligned with performance-based metrics

 

  

 

 

 

  

 

Use an appropriate peer group when establishing compensation

 

 

 

 

 

  

 

Balance short-term and long-term incentive performance goals to reflect operating and strategic objectives

 

 

 

 

 

  

 

Place strong emphasis on performance-based equity awards

 

 

 

 

 

  

 

Align executive compensation with shareholder returns through long-term incentives

 

 

 

 

 

  

 

Include caps on individual payouts in incentive plans

 

 

 

 

 

  

 

Set significant stock ownership guidelines for NEOs, other executives, and non-employee directors

 

 

 

 

 

  

 

Require shares to be held until stock ownership guideline achieved

 

 

 

 

 

  

 

Mitigate undue risk-taking in compensation programs

 

 

 

 

 

  

 

Include recoupment provisions in our annual and long-term incentive programs

 

 

 

 

 

  

 

Maintain an independent GCN

 

 

 

 

 

  

 

Retain an independent compensation consultant 

 

 

 

 

 

 

  

 

 

 

 

 

 

What We Don’t Do

 

 

  

 

Provide employment contracts to NEOs

 

 

 

 

 

  

 

Permit directors or employees to hedge their Company stock

 

 

 

 

 

  

 

Provide tax gross-ups for new executive officer participants in the Senior Executive Severance Policy

 

 

 

 

 

  

 

Provide tax gross-ups on executive perquisites except for circumstances regarding relocation

 

 

 

 

 

  

 

Provide unusual or excessive perquisites

 

 

 

 

 

  

 

Supplement service credit to newly hired officers under any of the Company’s qualified or nonqualified retirement plans 

 

 

 

 

 

 

  

 

 

 

 

 

 

Impact of Say-on-Pay Vote

Each year, Xcel Energy provides shareholders with a non-binding say-on-pay vote on its executive compensation programs.

The GCN evaluated results of the say-on-pay vote, and in light of the broad shareholder support of our executive compensation programs, the GCN decided to maintain the core design of our compensation programs. The GCN will continue to consider the outcome of future say-on-pay votes, in addition to various other factors, when making future compensation decisions.

 

96% of the votes cast at our 2019 annual meeting were in favor of our executive compensation programs and policies

2020 PROXY STATEMENT   |   XCEL ENERGY   |   33


 

 

 

 

 

    COMPENSATION DISCUSSION AND ANALYSIS

 

  

 

 

Establishing Compensation

Market Analysis

At the GCN’s request, Meridian, its independent compensation consultant, presented its annual market assessment comparing our executive compensation programs and compensation against our peer group for:

 

base salary;

 

total cash compensation (base salary plus target annual incentive); and

 

total direct compensation (total cash compensation plus target long-term incentive).

To provide a broad perspective of the competitive market, Meridian analyzed data for various market pay levels, including the 25th, 50th, and 75th percentiles. We consider compensation (base salary, target annual incentive, target long-term incentive, and target total compensation) to be market competitive if it is within a competitive range of the median or 50th percentile of the peer group.

For 2019, the GCN made pay decisions based on this annual market assessment of compensation and specific factors about each NEO, including experience, internal equity, Company results, scope and responsibility, retention, and the NEO’s role in succession planning.

The GCN exercises its independent judgment to approve the compensation level for the CEO. For all other executive officers, the GCN considers the CEO’s recommendation for setting compensation levels. The GCN approved compensation for the CEO and all other executive officers that is aligned with the Company’s overall compensation philosophy described above.

Peer Group

Our peer group of publicly traded energy services companies is generally consistent from year to year (subject to changes resulting from mergers and acquisitions or other significant corporate events) and was developed by Meridian and approved by the GCN to approximate the competitive market in which we compete for talent. Peer group companies were selected primarily based on the following criteria:

 

Utilities with similar revenue and market capitalization.

 

Part of the market for which we compete for talent and investor capital.

 

Similar operating models and challenges with their regulated utility businesses.

 

Included in an executive compensation survey database for which compensation information is available for a cross-section of executive and managerial roles.

 

2019 Peer Group Companies (1)

  

 

Ameren Corporation

  

Duke Energy Corporation

  

PG&E Corporation

American Electric Power Company

  

Edison International

  

PPL Corporation

CenterPoint Energy

  

Entergy Corporation

  

Public Service Enterprise Group Incorporated

CMS Energy Corporation

  

Eversource Energy

  

SCANA Corporation

Consolidated Edison

  

Exelon Corporation

  

Sempra Energy

Dominion Energy

  

First Energy Corp.

  

The Southern Company

DTE Energy Company

  

NextEra Energy

  

WEC Energy Group

(1) SCANA Corporation was removed from the peer group effective January 1, 2019, PG&E Corporation was removed from the peer group effective January 1, 2020, and Evergy, Inc. was added to the peer group effective January 1, 2020.

In December 2018, at the time 2019 compensation was assessed:

 

The median revenue for the peer group was $12.3 billion as compared to our revenue of $11.2 billion.

 

The median market capitalization for the peer group was $22.6 billion as compared to our market capitalization of $25.2 billion.

 

Executive Compensation Elements

The following table provides information regarding the elements of total direct compensation for our NEOs in 2019:

 

 

 

 

 

 

 

 

 

 

Base Salary

 

Annual Incentive

 

Long-Term Incentive: Performance Shares

 

Long-Term Incentive: Restricted Stock Units

Primary Purpose

Motivate, Attract, and Retain

Reward for ongoing work

performed

 

Reward short-term

performance

 

Reward long-term performance

Continuity

 

Align interest with customers, shareholders, and employees

Reviewed

Annually

Payment

Ongoing

 

In February following end of performance period

Cash / Equity

Cash

 

Cash or equity at

executive officer’s
election

 

Equity or cash

 

Equity

Performance Period

Ongoing

 

1 year

 

3 years

34   |   THE FUTURE IN SIGHT   |   XCEL ENERGY


 

 

 

 

 

 

 

COMPENSATION DISCUSSION AND ANALYSIS    

 

 

Perquisites offered by the Company are limited in nature and scope. In addition, we provide the following retirement and post-employment programs:

 

 

Retirement and Post-employment programs

Pension Plan (qualified and nonqualified)

•   Provides retirement income for eligible participants based on fixed plan-based formulas. 

Supplemental Executive Retirement Plan (“SERP”)

•   CEO is the sole participant; closed to new participants in 2008.

•   Provides supplemental retirement income in addition to the pension benefits.

401(k) Savings Plan and Deferred Compensation Plan

•   Provides for savings opportunities by deferring salary up to tax code limitations (401(k)) and salary, annual incentive, and/or long-term incentive (Deferred Compensation).

Severance and Change in Control

•   Provides compensation and benefits in the case of involuntary termination without cause.

 

Mix of Total Compensation

We balance the mix of compensation to our NEOs by delivering a blend of short-term and long-term incentives that are consistent with prevailing market practice and our compensation philosophy. This approach has effectively resulted in 87 percent of total direct compensation for the CEO and 74 percent of total direct compensation for other NEOs to be in the form of variable compensation, with the remainder representing fixed compensation. The GCN and the Board believe this design encourages a balance of short-range and long-range strategic thinking, which is important given the long-term nature of utility operations and the capital investment necessary for such operations.

The following charts illustrate the mix of total direct compensation for the CEO and other NEOs at target performance.

 

Overview of Target Total Compensation

For 2019, the GCN set each NEO’s base salary, target annual incentive and target long-term incentive awards, which are shown in the table below.

 

 

 

 

 

 

 

 

 

 

 

Long-Term Incentive Targets

 

 

 

 

 

Named Executive Officer

 

Annualized

Base Salary

($)

 

 

Annual

Incentive

Target (% of

Base Salary)

 

 

Performance

Shares

($)

 

 

Restricted

Stock

Units

($)

 

 

Total

($)

 

Ben Fowke, Chairman and CEO (1)

 

 

1,350,000

 

 

130%

 

 

 

6,200,000

 

 

 

1,550,000

 

 

 

10,855,000

 

Robert Frenzel, President and Chief Operating Officer (2)

 

 

650,000

 

 

75%

 

 

 

1,248,000

 

 

 

312,000

 

 

 

2,697,500

 

Brett Carter, Executive Vice President, Chief Customer and

   Innovation Officer

 

 

550,000

 

 

75%

 

 

 

840,000

 

 

 

210,000

 

 

 

2,012,500

 

Kent Larson, Executive Vice President and Group President,

   Operations (3)

 

 

620,000

 

 

75%

 

 

 

1,000,000

 

 

 

250,000

 

 

 

2,335,000

 

Scott Wilensky, Executive Vice President, General Counsel

 

 

575,000

 

 

70%

 

 

 

840,000

 

 

 

210,000

 

 

 

2,027,500

 

(1)

Mr. Fowke served as Chairman, President and Chief Executive Officer until March 31, 2020, when he became Chairman and Chief Executive Officer.  

 

(2)

Mr. Frenzel served as Executive Vice President, Chief Financial Officer until March 31, 2020, when he became President and Chief Operating Officer.

(3)

As of March 31, 2020, Mr. Larson is no longer serving as Executive Vice President and Group President, Operations, but will remain an employee to assist with transition until May 31, 2020.  

 

These compensation levels align and the mix of pay is competitive with the market for the utility industry.

 

2020 PROXY STATEMENT   |   XCEL ENERGY   |   35


 

 

 

 

 

    COMPENSATION DISCUSSION AND ANALYSIS

 

  

 

 

Base Salary

Base salary provides a fixed element of regular income. The amount of base salary set by the GCN is competitive in the utility industry. A key consideration is the median base salary rates at peer companies, although the GCN has flexibility to review other relevant factors as outlined in our compensation philosophy. The base salaries for the NEOs were, in aggregate, just above the median of base salaries of our peer companies.

Annual Incentive

Our annual incentive plan (“AIP”) is intended to reward our NEOs for the achievement of short-term performance goals. In February 2019, our management recommended AIP goals to the GCN based on an evaluation of prior corporate performance and available objective metrics and benchmarks. These goals were selected as they are aligned with our corporate operational priorities. In addition, they discourage short-term thinking or behavior that could threaten the value of the Company or the investment of its shareholders.

 

The GCN determined each NEO’s 2019 AIP payout in accordance with the following:

 

Each NEO’s target award is determined by multiplying their base salary and their target percent. The award payout range is 0 percent to 200 percent of an NEO’s target award.

 

Up to 150 percent of an NEO’s targeted award is determined by the actual achievement of our operational metrics and a possible funding multiplier based on financial performance, as defined below.

 

Up to an additional 50 percent of an NEO’s targeted award is based on attaining superior financial performance as measured by ongoing EPS.

The table below discloses the GCN approved corporate operational goals and actual results for the AIP in 2019:

 

Key Performance Indicator

Threshold Performance

Target Performance

Maximum Performance

2019 Actual Performance

% Payout

% Weight

Weighted Calculation

Customer Satisfaction
(JD Power residential survey)

726

737

759

741

109.09%

20%

21.82%

O&M Growth
(over 2017) (1)

2.0%

0.0%

-1.0%

3.0%

0.00%

20%

0.00%

Employee Safety
(DART) (2)

0.61

0.49

0.45

0.47

50.00%

20%

10.00%

Public Safety
(gas emergency response)

85%

89%

94%

93%

140.00%

20%

28.00%

Electric System Reliability
(SAIDI)

100

92

84

91

106.25%

20%

21.25%

Results on Operational Metrics

100%

81.07%

(1)

The Operations and Maintenance (“O&M”) growth excludes: (1) any non-ongoing O&M expense reported externally; and (2) any regulatory cost deferrals/amortizations or expense changes with clearly identified revenue offsets in excess of $5 million and approved by the CFO (i.e., mutual aid). No such adjustments were made to the O&M result for 2019. The O&M result for 2019 reflects our decision to spend additional O&M for wildfire mitigation and investments to improve and enhance business processes and customer service, both of which are beneficial to customers.

(2)

Under the terms of the program, despite an actual above target result, payout was decreased to threshold level due to employee fatalities.