Common Equity

12 Months Ended

Dec. 31, 2024

Stockholders' Equity Note [Abstract]

COMMON EQUITY

COMMON EQUITY

Stock-Based Compensation

The following table summarizes our pre-tax stock-based compensation expense and the related tax benefit recognized in income for the years ended December 31:

(in millions)	2024		2023			2022
Stock options	$	4.9	$	5.3		$	6.5
Restricted stock	7.6		6.6			7.0
Performance units	26.8		(2.2)		(1)	21.3
Stock-based compensation expense	$	39.3	$	9.7		$	34.8
Related tax benefit	$	10.8	$	2.7		$	9.6

(1)    The reduction in expense was due to a decrease in the fair value of the outstanding performance units.

Stock-based compensation costs capitalized during 2024, 2023, and 2022 were not significant.

Stock Options

The following is a summary of our stock option activity during 2024:

Stock Options	Number of Options	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Life (in years)	Aggregate Intrinsic Value (in millions)
Outstanding as of January 1, 2024	3,015,751	$	79.57
Granted	294,990	84.92
Exercised	(380,412)	62.20
Forfeited	(10,286)	91.82
Expired	(3,141)	91.34
Outstanding as of December 31, 2024	2,916,902	82.32		5.4	$	35.0
Exercisable as of December 31, 2024	2,182,660	79.16		4.6	$	32.7

The aggregate intrinsic value of outstanding and exercisable options in the above table represents the total pre-tax intrinsic value that would have been received by the option holders had they exercised all of their options on December 31, 2024. This is calculated as the difference between our closing stock price on December 31, 2024, and the option exercise price, multiplied by the number of in-the-money stock options. The intrinsic value of options exercised during the years ended December 31, 2024, 2023, and 2022 was $11.2 million, $5.2 million, and $29.2 million, respectively. The actual tax benefit from option exercises for the same years was approximately $3.1 million, $1.4 million, and $8.0 million, respectively.

As of December 31, 2024, approximately $1.4 million of unrecognized compensation cost related to unvested and outstanding stock options was expected to be recognized over the next 1.6 years on a weighted-average basis.

During the first quarter of 2025, the Compensation Committee awarded 231,024 non-qualified stock options with a weighted-average exercise price of $94.55 and a weighted-average grant date fair value of $18.23 per option to certain of our officers and other key employees under its normal schedule of awarding long-term incentive compensation.

Restricted Shares

The following restricted stock activity occurred during 2024:

Restricted Shares	Number of Shares	Weighted-Average Grant Date Fair Value
Outstanding and unvested as of January 1, 2024	100,398	$	93.95
Granted	108,484	84.96
Released	(99,941)	91.07
Forfeited	(3,699)	88.56
Outstanding and unvested as of December 31, 2024	105,242	87.61

The intrinsic value of restricted stock released was $8.6 million, $5.8 million, and $7.5 million for the years ended December 31, 2024, 2023, and 2022, respectively. The actual tax benefit from released restricted shares for the same years was $2.4 million, $1.6 million, and $2.1 million, respectively.

As of December 31, 2024, approximately $4.2 million of unrecognized compensation cost related to unvested and outstanding restricted stock was expected to be recognized over the next 1.8 years on a weighted-average basis.

During the first quarter of 2025, the Compensation Committee awarded 79,170 restricted shares to certain of our directors, officers, and other key employees under its normal schedule of awarding long-term incentive compensation. The grant date fair value of these awards was $94.55 per share.

Performance Units

During 2024, 2023, and 2022, the Compensation Committee awarded 205,051; 157,035; and 171,492 performance units, respectively, to officers and other key employees under the WEC Energy Group Performance Unit Plan.

Performance units with an intrinsic value of $2.4 million, $10.2 million, and $20.2 million were settled during 2024, 2023, and 2022, respectively. The actual tax benefit from the distribution of performance units for the same years was $0.6 million, $2.6 million, and $5.1 million, respectively.

At December 31, 2024, we had 466,679 performance units outstanding, including dividend equivalents. A liability of $34.7 million was recorded on our balance sheet at December 31, 2024 related to these outstanding units. As of December 31, 2024, approximately $22.5 million of unrecognized compensation cost related to unvested and outstanding performance units was expected to be recognized over the next 1.7 years on a weighted-average basis.

During the first quarter of 2025, we settled performance units with an intrinsic value of $14.1 million. The actual tax benefit from the distribution of these awards was $3.4 million. In January 2025, the Compensation Committee also awarded 185,945 performance units to certain of our officers and other key employees under its normal schedule of awarding long-term incentive compensation.

Restrictions

Our ability as a holding company to pay common stock dividends primarily depends on the availability of funds received from our utility subsidiaries, We Power, Bluewater, ATC Holding, and WECI. Various financing arrangements and regulatory requirements impose certain restrictions on the ability of our subsidiaries to transfer funds to us in the form of cash dividends, loans, or advances. All of our utility subsidiaries, with the exception of UMERC and MGU, are prohibited from loaning funds to us, either directly or indirectly.

In accordance with their most recent rate orders, WE, WPS, and WG may not pay common dividends above the test year forecasted amounts reflected in their respective rate cases, if it would cause their average common equity ratio, on a financial basis, to fall

below their authorized level of 53.0%. A return of capital in excess of the test year amount can be paid by each company at the end of the year provided that their respective average common equity ratios do not fall below the authorized level.

WE may not pay common dividends to us under WE's Restated Articles of Incorporation if any dividends on its outstanding preferred stock have not been paid. In addition, pursuant to the terms of WE's 3.60% Serial Preferred Stock, WE's ability to declare common dividends would be limited to 75% or 50% of net income during a 12-month period if its common stock equity to total capitalization, as defined in the preferred stock designation, is less than 25% and 20%, respectively.

NSG's long-term debt obligations contain provisions and covenants restricting the payment of cash dividends and the purchase or redemption of its capital stock.

The long-term debt obligations of UMERC, Bluewater Gas Storage, and ATC Holding contain a provision requiring them to maintain a total funded debt to capitalization ratio of 65% or less.

The long-term debt obligations of WECI Wind Holding I, WECI Wind Holding II, and WECI Energy Holding III contain various conditions that must be met prior to them making any cash distributions. Included in these provisions is a requirement to maintain a debt service coverage ratio of 1.2 or greater for the 12-month period prior to the distribution.

WEC Energy Group has the option to defer interest payments on its 2024A Junior Notes and 2024B Junior Notes, from time to time, for one or more periods of up to 10 consecutive years per period. During any period in which it defers interest payments, it may not declare or pay any dividends or distributions on, or redeem, repurchase or acquire, its common stock.

See Note 13, Short-Term Debt and Lines of Credit, for discussion of certain financial covenants related to short-term debt obligations.

As of December 31, 2024, restricted net assets of our consolidated subsidiaries totaled approximately $13 billion. Our equity in undistributed earnings of investees accounted for by the equity method was approximately $583 million.

We do not believe that these restrictions will materially affect our operations or limit any dividend payments in the foreseeable future.

Common Stock

As of January 1, 2024, we began issuing new shares of common stock to fulfill our obligations under various stock-based employee benefit and compensation plans and to provide shares to participants in our dividend reinvestment and stock purchase plan. During 2023 and 2022, we instructed our independent agents to purchase shares on the open market to fulfill obligations under these plans. As such, no new shares of common stock were issued during the years ended December 31, 2023 and 2022.

On August 6, 2024, we entered into an EDA, under which we may offer and sell, from time to time, shares of our common stock having an aggregate sales price of up to $1.5 billion through an at-the-market offering program, which includes an equity forward sales component. We may offer and sell our common shares through the sales agents party to the EDA during the term of the agreement. The EDA will terminate upon the earliest of (i) the sale of all common stock subject to the EDA, (ii) termination of the EDA pursuant to its terms, or (iii) August 31, 2027. Actual sales of common stock under the EDA will depend on a variety of factors, including market conditions, the trading price of our common stock, capital needs, and our determination of the appropriate sources of funding. Any shares offered and sold will be done pursuant to our registration statement on Form S-3 filed with the SEC on August 5, 2024 and the related prospectus supplement. During the year ended December 31, 2024, we issued 1,030,674 shares of common stock under the EDA and received proceeds of $98.3 million, which is net of $1.7 million of commissions and other fees. We have not entered into any forward sale agreements.

We had the following changes to our outstanding common stock during the year ended December 31, 2024 :

Common stock shares outstanding at beginning of period	315,434,531
Shares issued:
At-the-market offering program	1,030,674
Stock-based compensation	455,474
401(k)	336,800
Stock investment plan	423,376
Common stock shares outstanding at end of period	317,680,855

The following is a summary of shares purchased to fulfill exercised stock options and restricted stock awards during the years ended December 31:

(in millions, except share amounts)	2024		2023		2022
Shares purchased	23,292		182,795		687,416
Cost of shares purchased	$	3.2	$	16.6	$	69.2

During the year ended December 31, 2024, our Board of Directors declared common stock dividends which are summarized below:

Date Declared	Date Payable	Per Share	Period
January 18, 2024	March 1, 2024	$0.835	First quarter
April 18, 2024	June 1, 2024	$0.835	Second quarter
July 18, 2024	September 1, 2024	$0.835	Third quarter
October 17, 2024	December 1, 2024	$0.835	Fourth quarter

On January 16, 2025, our Board of Directors declared a quarterly cash dividend of $0.8925 per share, which equates to an annual dividend of $3.57 per share. The dividend is payable on March 1, 2025, to shareholders of record on February 14, 2025. In addition, the Board of Directors affirmed our dividend policy that continues to target a dividend payout ratio of 65-70% of earnings.