DEF 14A 1 d866210ddef14a.htm DEF 14A DEF 14A
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.    )

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Preliminary Proxy Statement

 

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Definitive Proxy Statement

 

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Soliciting Material under §240.14a-12

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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

AND PROXY STATEMENT OF PSEG

 

 

      
DATE        At the Annual Meeting, you will be asked to:
 

April 21, 2020

at 1:00 P.M.

 

  

  

1.  Elect ten members of the Board of Directors (Board) to hold office until the Annual Meeting of Stockholders in 2021, or until each director’s respective successor is elected and qualified;

 
      

2.  Approve on an advisory basis, our executive compensation;

 
LOCATION       

3.  Ratify the appointment of Deloitte & Touche LLP (Deloitte) as independent auditor for 2020; and

 

Newark Museum

49 Washington Street

Newark, NJ 07102

      

4.  Transact any other business that is properly presented at the meeting.

 

By order of the Board of Directors,

 

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Scan this QR code to access the 2020 PSEG Proxy Statement and 2019 Annual Report on your mobile device

 

RECORD DATE

 

Stockholders entitled to vote at the Annual Meeting are the holders of common stock of record on February 21, 2020

      

 

Michael K. Hyun

 

Secretary

 

March 16, 2020

 

  
      

YOUR VOTE IS IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN. PLEASE SIGN, DATE AND MAIL THE ACCOMPANYING PROXY CARD OR VOTING INSTRUCTION FORM PROMPTLY. YOU MAY ALSO VOTE VIA THE INTERNET OR BY TELEPHONE. PLEASE USE THE INTERNET ADDRESS OR TOLL-FREE NUMBER SHOWN ON YOUR PROXY CARD OR VOTING INSTRUCTION FORM.

 

      

IF YOU HAVE MULTIPLE ACCOUNTS, YOU MAY RECEIVE MORE THAN ONE PROXY CARD OR VOTING INSTRUCTION FORM AND RELATED MATERIALS. PLEASE VOTE EACH PROXY CARD AND VOTING INSTRUCTION FORM THAT YOU RECEIVE. THANK YOU FOR VOTING.

 

 

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For shares held by a bank or broker, including those in the various stockholder and employee plans that we offer, please follow the voting instructions from your bank, broker or plan administrator. For more information, see pages 67-71.

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be held on April 21, 2020 (Annual Meeting). The Proxy Statement and Annual Report to Stockholders are available at www.ezodproxy.com/pseg/2020/ar.

The approximate date on which this Proxy Statement and the accompanying proxy card were first sent or given to security holders and made available electronically via the Internet was March 16, 2020.

Public Service Enterprise Group Incorporated (we, us, our, PSEG or the Company) is distributing this Proxy Statement to solicit proxies in connection with our 2020 Annual Meeting of Stockholders.

 

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Future Electronic Delivery

 

You can help us and the environment by choosing to receive future proxy statements and related documents such as the Annual Report and Form 10-K by electronic delivery. You may sign up for future electronic delivery at the website below, depending on the nature of your ownership. Please note that these are not the same sites to use for voting. For further information about how to vote, see the Notice of Annual Meeting of Stockholders and page 67.

 

   If you are a stockholder of record, please go to www.proxyconsent.com/peg.

 

   For shares held in Employee Benefit Plans, please go to www.proxyconsent.com/peg.

 

   If your shares are held by a bank or broker, please go to https://enroll.icsdelivery.com/peg.

 

PSEG 2020 Proxy Statement    i


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PROXY STATEMENT SUMMARY

     1  

Proposal 1: ELECTION OF DIRECTORS

     6  
OVERVIEW OF BOARD NOMINEES      6  

Diversity of Skills, Qualifications and Experience

     6  

Director Independence

     7  

Board Refreshment and Tenure

     7  

Diversity of Our Board

     7  

Board Membership Selection

     8  

Board Qualifications

     8  
NOMINEES FOR DIRECTOR      8  

Biographical Information

     9  
CORPORATE GOVERNANCE      14  

Role of the Board of Directors

     14  

Board Leadership Structure

     14  

The Role of Our Lead Director

     14  

Our Corporate Governance Principles

     14  

Board and Committee Self-Assessment Process

     15  

Director Education and Orientation

     15  

Board and Committee Meetings and Attendance

     16  

Service on Other Boards

     16  

Board Committees

     16  

Board and Committee Oversight of Risk Management

     20  

Board Oversight of Cybersecurity

     21  

Human Capital Management

     21  

Our Approach to Sustainability

     23  

Transparency and Oversight of Political Participation and Spending

     25  

What We Expect of Our Employees, Officers and Directors

     25  

Certain Relationships and Related Party Transactions

     25  

Conflicts of Interest

     26  
SECURITY OWNERSHIP OF DIRECTORS, MANAGEMENT AND CERTAIN BENEFICIAL OWNERS      27  

Delinquent Section 16(a) Reports

     28  
DIRECTOR COMPENSATION      28  

How Our Directors Are Compensated

     29  

Proposal 2: ADVISORY VOTE ON THE APPROVAL OF EXECUTIVE COMPENSATION

     31  
EXECUTIVE COMPENSATION SUMMARY      32  

2019 Named Executive Officers

     32  

2019 Company Performance Overview

     32  

Executive Compensation Philosophy and Pay for Performance

     34  
EXECUTIVE COMPENSATION      35  

Say-On-Pay and Shareholder Engagement

     35  

Executive Compensation Best Practices

     35  

Peer Comparison and Benchmarking

     36  

How We Compensate Our Executives

     38  

Our Compensation Elements Explained

     41  

Executive Compensation Governance Features and Controls

     46  

Accounting and Tax Implications

     48  

Compensation Committee Interlocks and Insider Participation

     49  
COMPENSATION COMMITTEE REPORT      49  
EXECUTIVE COMPENSATION TABLES      50  

2019 Summary Compensation Table

     50  

2019 Grants of Plan-Based Awards Table

     52  

Material Factors Concerning Awards Shown in Summary Compensation Table, Grants of Plan-Based Awards Table and Employment Agreements

     53  

Outstanding Equity Awards at Year-End December 31, 2019 Table

     54  

Option Exercises and Stock Vested During 2019 Table

     56  

2019 Pension Benefits Table

     57  

Qualified and Non-Qualified Pension Plans

     58  

2019 Non-Qualified Deferred Compensation Table

     60  

Deferred Compensation

     60  
POTENTIAL PAYMENTS UPON TERMINATION OF EMPLOYMENT OR CHANGE-IN-CONTROL      61  

Termination without Cause

     61  

Change-In-Control

     62  
PAY RATIO      63  
Proposal 3: RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITOR      64  
OVERSIGHT OF THE INDEPENDENT AUDITOR      65  

Pre-Approval of Services

     65  

Fees billed by Deloitte for 2019 and 2018

     65  
AUDIT COMMITTEE REPORT      66  
ANNUAL MEETING, VOTING AND PROCEDURES      67  
APPENDIX A: OPERATING EARNINGS (Non-GAAP) AND ADJUSTED EBITDA (Non-GAAP) RECONCILIATIONS      72  
MAP, DIRECTIONS AND TRANSPORTATION      74  
 

Forward-Looking Statements

The statements contained in this Proxy Statement that are not purely historical are “forward-looking statements” within the meaning of The Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ materially from those anticipated. Factors that could cause actual results to differ materially from those contemplated in any forward-looking statements made by us herein are discussed in our Annual Report on Form 10-K and subsequent reports on Form 10-Q and Form 8-K filed with the Securities and Exchange Commission (SEC) and available on our website: https://investor.pseg.com/financial-information/sec-filings. Readers are cautioned not to place undue reliance on these forward-looking statements in making any investment decision. Forward-looking statements made in this Proxy Statement apply only as of the date hereof. We specifically disclaim any obligation to update these forward-looking statements unless required by applicable securities laws. Information on our website should not be deemed incorporated into, or as a part of, this report.

 

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Corporate Governance – Role of the Board of Directors

 

    

 

CORPORATE GOVERNANCE

Role of the Board of Directors

PSEG is governed by our Board and its committees that meet throughout the year. The Board is elected by our stockholders and is the ultimate decision-making body of the Company except for the items reserved to stockholders.

The Board provides direction and oversight by:

 

   

Actively engaging in developing corporate strategy and approving major initiatives and significant investments;

 

   

Monitoring financial and business integrity and performance, including risk management;

 

   

Evaluating the performance of the CEO and approving succession plans for the CEO and other senior executives;

 

   

Selecting a diverse group of nominees for election to the Board; and

 

   

Evaluating Board and committee performance.

The Board holds an annual strategy session in addition to its regular meetings, receives regular updates and actively engages in dialogue with our senior management. The Board has full and free access to all members of management and may hire its own consultants and advisors as it deems necessary.

Board Leadership Structure

The Board has determined that, at the present time, it is in the best interests of the Company and stockholders for all three positions of Chairman of the Board, President and CEO to be combined under the leadership of Ralph Izzo and that independent board member Shirley Ann Jackson serve as Lead Director. The Board believes that Mr. Izzo possesses the attributes of experience, judgment, vision, managerial skill and overall leadership ability essential for our continued success.

The Role of Our Lead Director

Shirley Ann Jackson has served as our Lead Director since April 2019. Our Lead Director is an independent director designated annually by the independent directors and typically serves in that capacity for four years. The Lead Director’s duties include:

 

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  Presiding over executive sessions of the independent directors

 

  Providing the independent directors with a key means for collaboration and communication

 

  Coordinating with the Chairs of our various Board committees to set agendas for committee meetings

 

  Leading CEO succession planning, CEO performance evaluations and compensation

 

  Ensuring a robust Board self-evaluation

  

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Our Lead Director complements the talents and contributions of Mr. Izzo and promotes confidence in our governance structure by providing an additional perspective to that of management.

Our Corporate Governance Principles

The Board has adopted and operates under our By-Laws and Governance Principles. The Governance Principles provide guidelines for directors and management to effectively pursue and support our business objectives. The Governance Principles govern our board structure, requirements of our directors, board operations and functioning of our Board committees and are reviewed periodically by the Corporate Governance Committee, which recommends any changes to the Board. Our By-Laws and Governance Principles can be found on our website at https://investor.pseg.com/governance/governance-overview.

 

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Corporate Governance – Board and Committee Self-Assessment Process

 

    

 

Board and Committee Self-Assessment Process

Our Board and committees each have a robust annual process for self-assessment, as shown below.

 

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Governance Enhancements from the 2019 Self-Assessment Process:

 

   

Enhanced PSEG’s director education program by expanding internal and external learning opportunities for the directors as described below

   

Reviewed and updated board meeting agendas to facilitate robust executive session discussions led by Lead Director

   

Expanded opportunities for directors to meet and receive feedback from PSEG employees below the officer level

   

Enhanced risk update process for each committee

Director Education and Orientation

In addition to our Board and committee meetings, members of our Board are offered and participate in a variety of learning opportunities.

 

Internal

Educational Presentations

   The Board is regularly offered educational presentations that comprise “deep dives” on specific topics presented by management with outside experts as needed.

External Programs

   Directors are encouraged to attend third-party programs; management regularly updates a list of recommended offerings.

Outside Speakers

   The Board regularly hears from outside experts on such topics as investor perspectives, strategy, cybersecurity, environmental, social and governance (ESG) issues, climate change, regulatory matters and business leadership.

PSEG Site Visits

   The Board periodically visits sites such as new facilities, nuclear plants and utility operational and monitoring sites.
  

Orientations

  

New directors and new committee members receive comprehensive materials and in-house orientation sessions featuring presentations by key members of management and the independent auditor. These sessions cover such topics as strategic plans; operations; human capital management; ESG and climate change; significant financial, accounting and risk management issues; regulatory and governance practices and compliance programs and trends.

 

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Corporate Governance – Board and Committee Meetings and Attendance

 

    

 

Board and Committee Meetings and Attendance

In 2019, the Board met eight times, including six regular meetings, one strategy session and one special meeting. The PSE&G Board met seven times, including six regular meetings and one strategy session. During 2019, each director attended at least 75% of the aggregate number of meetings of the Board and the committees on which the director served with the exception of Thomas A. Renyi, who did not attend meetings immediately preceding his retirement. All of the directors who were elected in 2019 attended the 2019 Annual Meeting of Stockholders.

Our Governance Principles provide that each director is expected to attend all Board meetings, all meetings of committees of which the director is a member and the Annual Meeting of Stockholders. The Board encourages personal attendance, unless telephonic attendance is required by special circumstances.

Service on Other Boards

The experience gained through other directorships provides our Board with a breadth of valuable knowledge and insight. The Corporate Governance Committee carefully monitors each director’s service on other boards. All of our nominees have successfully balanced other demands on their time and attention in meeting their obligations to PSEG.

Board Committees

Our Board has seven standing Committees: Audit, Corporate Governance, Executive, Finance, Fossil Generation Operations Oversight, Nuclear Generation Operations Oversight and Organization and Compensation. A description of each Committee follows.

Committee assignments and Chairs are regularly reviewed and periodically changed to optimize the talents of our directors and meet the Company’s evolving needs.

Each committee has open and free access to all Company information, may require any of our officers or employees to furnish it with information, documents or reports, may investigate any matter involving us and has discretion to hire outside resources. Each committee, other than the Executive Committee, has a charter that defines its roles and responsibilities and annually conducts a performance evaluation of its activities and a review of its charter.

The Executive Committee consists of the Chairman of the Board, the Lead Director and at least one additional independent director. In 2019, the members of the Executive Committee were Ralph Izzo, Shirley Ann Jackson, Richard J. Swift and, until his retirement in April 2019, Thomas A. Renyi. The authority of the Executive Committee is set forth in our By-Laws. The committee charters and our By-Laws are posted on our website,

https://corporate.pseg.com/aboutpseg/leadershipandgovernance/boardofdirectors/committeedescriptions.

 

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Corporate Governance – Board Committees

 

    

 

 

 

Audit Committee                        

 

  Chair: Susan Tomasky
 

Members: Willie A. Deese, William V. Hickey, David

                  Lilley, Barry H. Ostrowsky, Alfred W.

                  Zollar

  Meetings held in 2019: 9

Key Responsibilities

 

Ø  

Oversees the quality and integrity of our accounting, auditing and financial reporting practices and financial statements;

 

Ø  

Selects and evaluates the work of the independent auditor;

 

Ø  

Oversees our internal audit functions, our environmental, health and safety audit functions and our legal and business compliance program;

 

Ø  

Reviews our cybersecurity program, the status of material litigation matters and the guidelines, policies and processes of our risk management program;

 

Ø  

Reviews disclosure controls and procedures and earnings press releases, financial information and earnings guidance; and

 

Ø  

Recommends to the Board audited financial statements to be included in our Form 10-K and report for inclusion in this Proxy Statement.

 

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The Audit Committee Report appears under Proposal 3: Ratification of the Appointment of Independent Auditor on page 64.

 

   

Organization and Compensation                

Committee                

  Chair: David Lilley
 

Members: Willie A. Deese, Shirley Ann Jackson, Barry

                  H. Ostrowsky, John P. Surma, Richard J.

                  Swift, Susan Tomasky

  Meetings held in 2019: 6

Key Responsibilities

 

Ø  

Oversees our executive compensation policies, practices and plans;

 

Ø  

Reviews the stockholder advisory vote on say-on-pay and considers action in light of that vote;

 

Ø  

Approves executive compensation targets and awards;

 

Ø  

Monitors the risks associated with our compensation policies and practices and other talent management risks;

 

Ø  

Selects and oversees the Board’s independent compensation consultant;

 

Ø  

Evaluates the CEO’s performance and recommends approval of the CEO’s compensation to the Board;

 

Ø  

Reviews the performance of certain other key members of management as well as key management succession and development plans; and

 

Ø  

Reviews the Compensation Discussion and Analysis section of, and provides its report in, the annual Proxy Statement.

 

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The Organization and Compensation Committee Report on Executive Compensation appears under Proposal 2: Advisory Vote on the Approval of Executive Compensation on page 31.

 

 

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Corporate Governance – Board Committees

 

    

 

Finance Committee                          Corporate Governance Committee                

Chair: Alfred W. Zollar

 

Members: William V. Hickey, David Lilley,

Barry H. Ostrowsky, Scott G. Stephenson

 

Meetings held in 2019: 4

    

Chair: Richard J. Swift

 

Members: Willie A. Deese, Shirley Ann Jackson,

Laura A. Sugg, John P. Surma,

Susan Tomasky

 

Meetings held in 2019: 6

Key Responsibilities           Key Responsibilities

 

Ø   Oversees corporate financial policies and processes and significant financial decisions;

 

Ø   Reviews annually our financial plan, dividend policy, capital structure and cash management policies and practices;

 

Ø   Discusses with management our risk assessment and risk management policies;

 

Ø   Oversees the investment guidelines for, and investment performance of, the Company’s pension plan trust funds and nuclear decommissioning trust funds; and

 

Ø   Reviews with management credit agency ratings and analyses.

    

 

Ø   Oversees the Company’s corporate governance practices;

 

Ø   Evaluates the composition and qualifications of the Board, its committees and prospective nominees, assesses the independence of each nominee and makes recommendations to the Board;

 

Ø   Oversees the self-evaluation process of the Board and its committees and reviews the Governance Principles and committee charters and makes recommendations to the Board in order to improve effectiveness of the Board and its committees;

 

Ø   Oversees sustainability efforts and initiatives, activities and disclosures related to climate change and our political participation activities and expenses;

 

Ø   Oversees risk management guidelines, policies, processes and mapping and identifies risks to the Board and its committees;

 

Ø   Reviews and approves transactions with related persons;

 

Ø   Reviews and makes recommendations to the Board regarding compensation of directors; and

 

Ø   Provides input to the Organization and Compensation Committee regarding the performance of the CEO as Chairman of the Board.

     The nomination process and criteria used are described under Board Membership selection beginning on page 8.

 

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Corporate Governance – Board Committees

 

    

 

  Fossil Generation Operations

  Oversight Committee

Chair: William V. Hickey

 

Members: Shirley Ann Jackson, Scott G.

Stephenson, Laura A. Sugg, John P.

Surma, Richard J. Swift, Alfred W. Zollar

 

Meetings held in 2019: 4

Key Responsibilities

Ø   Evaluates the effectiveness of our generation operations, focusing on safety, plant performance, regulatory matters, large construction projects and improvement in operations;

 

Ø   Oversees labor and human relations, environmental, health and safety and legal and compliance issues;

 

Ø   Reviews the results of major inspections, evaluations and audit findings by external oversight groups and management’s response; and

 

Ø   Oversees management of risks related to the roles, duties and responsibilities of the Committee.

        Nuclear Generation Operations

        Oversight Committee

Chair: William V. Hickey

 

Members: Shirley Ann Jackson, Scott G.

Stephenson, Laura A. Sugg, John P.

Surma, Richard J. Swift, Alfred W. Zollar

 

Meetings held in 2019: 4

Key Responsibilities

Ø   Evaluates the effectiveness of our nuclear operations, focusing on safety, plant performance, regulatory matters, large construction projects and improvement in operations;

 

Ø   Oversees labor and human relations, environmental, health and safety and legal and compliance issues;

 

Ø   Reviews the results of major inspections and evaluations by external oversight groups such as the NRC and the Institute of Nuclear Power Operations and management’s response to the findings and follow up on implementation plans.

 

Ø   Reviews reports from the Chief Nuclear Officer; and

 

Ø   Oversees management of risks related to the roles, duties and responsibilities of the Committee.

 

 

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Corporate Governance – Board and Committee Oversight of Risk Management

 

    

 

Board and Committee Oversight of Risk Management

The objective of PSEG’s risk management program is to promote effective management of risk in order to support the achievement of growth and business objectives within acceptable risk levels. An important aspect of the program is promoting a risk-aware culture where all employees have a responsibility for identifying and communicating risks.

The Board has ultimate responsibility for the oversight of risk management at PSEG, overseeing the Company’s risk management program and reviewing the most significant risks facing the Company.

The Board interacts with senior management regarding assessment and mitigation of the most significant risks facing the Company, across a range of categories that includes strategic, financial, operational, environmental, health and safety, legal and compliance and reputational risks.

The Corporate Governance Committee reviews key enterprise risks and recommends to the Board the mapping of each risk to an appropriate committee or the full Board, in accordance with the allocation of risk categories reflected in the charter of each committee.

 

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The Board’s oversight of risk management is supported by the Risk Management Committee, which consists of senior executives, and by the Enterprise Risk Management (ERM) team, led by PSEG’s Chief Risk Officer in collaboration with other assurance functions and management committees and councils, such as the Cybersecurity Council. Our cybersecurity risk management practices are fully integrated into our overall risk management program. At least annually, the Chief Risk Officer briefs the Corporate Governance Committee and the Audit Committee on enterprise-level risks and emerging risks. Throughout the year, the Board and each committee provide ongoing oversight of key enterprise risks through deep-dive risk reviews and risk updates presented by representatives of the relevant line of business and functional areas. The risk reviews include analyses of underlying risk causes, as well as reviews of current risk mitigation and response activities. The committees report out to the Board regarding their risk reviews and elevate risk issues to the Board as appropriate. Management integrates risk evaluation into business decisions and escalates to the committees and Board as appropriate.

 

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Corporate Governance – Board Oversight of Cybersecurity

 

    

 

Board Oversight of Cybersecurity

Cybersecurity is a critical component of our risk management program. The Board, the Audit Committee and senior management receive frequent reports on such topics as personnel and resources to monitor and address cybersecurity threats, technological advances in cybersecurity protection, rapidly evolving cybersecurity threats that may affect our Company and industry, cybersecurity incident response and applicable cybersecurity laws, regulations and standards as well as collaboration mechanisms with intelligence and enforcement agencies and industry groups to assure timely threat awareness and response coordination.

Our cybersecurity program is focused on the following areas:

 

 

 

Governance: The Cybersecurity Council, which is comprised of members of senior management, meets regularly to discuss emerging cybersecurity issues, maintenance of a corporate cybersecurity scorecard that sets annual improvement targets to approximately 30 metrics and publication of security practices. The Cybersecurity Council ensures that senior management and ultimately, the Board, is informed of all information required to exercise proper oversight over cybersecurity risks and that escalation procedures are followed to promptly inform senior management and the Board of significant cybersecurity incidents and risks.

 

 

 

Cybersecurity Awareness: Identifying and assessing cyber risks through partnerships with public and private entities and industry groups and disseminating electronic notices to, and conducting presentations for, company personnel.

 

 

 

Training: Providing annual cybersecurity training for all personnel with network access, as well as additional education for personnel with access to industrial control systems or customer information systems; and conducting phishing exercises. Regular cybersecurity education is also provided to our Board through management reports and presentations by external subject matter experts.

 

 

 

Technical Safeguards: Deploying measures to protect our network perimeter and internal Information Technology platforms, such as internal and external firewalls, network intrusion detection and prevention, penetration testing, vulnerability assessments, threat intelligence, anti-malware and access controls.

 

 

 

Vendor Management: Maintaining a risk-based vendor management program, including the development of robust security contractual provisions.

 

 

 

Incident Response Plans: Maintaining and updating incident response plans that address the life cycle of a cyber incident from a technical perspective (i.e., detection, response and recovery), as well as data breach response (with a focus on external communication and legal compliance); and testing those plans (both internally and through external exercises).

 

 

 

Mobile Security: Deploying controls to prevent loss of data through mobile device channels.

Human Capital Management

At PSEG, we know that our people are the most valuable source of energy powering our business. Our Board and its committees play a key role in the oversight of our talent management programs and culture initiatives. We strive to attract, develop and retain a high performing and diverse workforce and to foster a culture of collaboration, learning and comfort speaking up, where new ideas are welcome and all employees feel valued and enhance each other’s performance.

Talent Management

CEO and Executive Succession Planning: The Board is committed to its oversight of our succession planning process to ensure there is a strong, sustainable and diverse leadership pipeline. At least semi-annually, the Board engages with management in a comprehensive talent review of executive performance and potential and executive succession and development plans. The Board reviews key organizational design plans, meets with executive succession candidates and emerging high potential talent and is kept informed of talent metrics inclusive of workforce diversity, retention rates and pay equity analyses. The Organization and Compensation Committee and Corporate Governance Committee also annually review the CEO’s performance and make recommendations to the Board for approval.

Workforce Development: We firmly believe that strategic workforce planning and investments to develop and train our people are important to our success. We have a regular, disciplined workforce review process and link hiring plans and training needs to business objectives. We offer a People Strong curriculum, which is a suite of multi-media learning and development experiences tailored to enhancing employees’ skills and enabling their growth. Technical training supports the workforce maintaining job

 

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Corporate Governance – Human Capital Management

 

    

 

qualifications or reskilling as technology and other factors change job requirements. We utilize talent analytics that enable us to project our future workforce needs and allow us to identify and mitigate talent risks proactively.

Total Rewards: We provide our employees a valuable Total Rewards package that includes market competitive pay, short-term incentives and stock programs. Our comprehensive benefits support employees’ physical, emotional, financial and social wellbeing. These programs include health care, life and disability insurance, retirement benefits, paid time off, flexible work options and a number of onsite programs to provide employees with the support they need to meet their health and wellness goals. We know that employees’ personal and professional needs are varied, so our program includes childcare and elder care resources, voluntary benefits for discounted services, tuition reimbursement and adoption assistance. We continually review our Total Rewards offerings to ensure that we not only remain competitive but are delivering programs in the most efficient manner to meet the needs of our employees.

Our Culture

Core Commitments: A great culture is more than a source of pride: it is critical to sustained trust in the marketplace, in the communities we serve and among current and potential employees. Our core commitments are the foundation of our culture that we leverage to build innovative, high-performing teams who deliver safe, reliable, economic and greener energy to our customers. In a changing business climate, we recognize the importance of consistently reinforcing the core commitments that we stand for and live by in all we do as a company, especially in the behaviors and actions of our approximately 13,000 employees.

 

LOGO

We put safety first.

 

We never sacrifice safety to achieve results. We stop the job and report unsafe conditions. We protect each other, our communities and our environment. We respect our training, equipment, procedures and tools.

  

We do what’s right.

 

We hold ourselves to the highest ethical standards, even in the most difficult situations. We speak up and encourage clear and honest communication. We accept our individual and team responsibilities and are accountable for our actions. We respect and adhere to all laws and company policies. We lead by example.

  

We aspire to achieve excellence.

 

We responsibly question the status quo and each other. We benchmark processes to streamline workflows and increase efficiency. We leverage teamwork to face complex issues and decisions. We take action to improve personal performance. We are accountable for our accomplishments and setbacks and learn from them to influence future decisions.

  

We treat all individuals with dignity and respect.

 

We assume positive intent. We create an environment and inclusive culture that respects unique perspectives, experiences and ways of thinking. We engage one another and encourage teamwork. We are accountable for making PSEG a great place to work for everyone.

  

We keep customers at the heart of everything we do.

 

We actively listen to and respect our internal and external customers. We are accountable for our customers’ needs. We engage and collaborate as a team with our communities and stakeholders. We solicit and use feedback to improve our business. We always ask, “What else can we do?”

Accountability: Our Board oversees the alignment of our culture with the strategic objectives of the Company and reviews culture risk mitigation plans. Management and our unions partner in initiatives to reinforce that all employees are accountable for the culture at PSEG. We engage councils throughout the Company to advance our core commitments and we solicit qualitative and quantitative feedback throughout the year through focus groups, surveys and other channels. Effective 2020, the Chief Diversity Officer role was elevated as a direct report to the CEO to further senior management accountability for a strong culture. Metrics linked to our core commitments are embedded in our performance, talent and incentive programs.

 

22    PSEG 2020 Proxy Statement


Table of Contents

Corporate Governance – Our Approach to Sustainability

 

    

 

Our Approach to Sustainability

PSEG’s approach to sustainability reflects our goal of being a leader in building an economically strong, environmentally responsible energy future. Our Board takes an active role in overseeing sustainability, ESG and corporate citizenship issues including our climate strategy. As specified in its charter, the Corporate Governance Committee holds the primary responsibility for overseeing sustainability matters for our Company and will oversee our vision for a transition to a future of net-zero carbon emissions. In our shareholder engagement efforts, sustainability and ESG issues are among the more frequently discussed topics. Highlights of our recent sustainability achievements are below.

 

LOGO

 

PSEG 2020 Proxy Statement    23


Table of Contents

Corporate Governance – Our Approach to Sustainability

 

    

 

CLEANER ENERGY

Clean Energy Future

PSE&G’s $3.5 billion Clean Energy Future proposal calls for significant investments in energy efficiency, electric vehicle charging infrastructure, energy storage and advanced metering. The program is subject to approval by the New Jersey Board of Public Utilities (BPU).

ZECs to Preserve Nuclear

The BPU awarded Zero Emissions Certificates (ZECs) to all three New Jersey nuclear plants, recognizing their zero carbon benefits. The ZEC law demonstrates New Jersey’s intent to preserve nuclear plants for their clean air attributes and positive impact on jobs and on fuel diversity.

Gas System Modernization Continues

PSE&G completed Phase I of its Gas System Modernization Program (GSMP), which replaced approximately 450 miles of cast-iron and unprotected steel gas infrastructure over three years, avoiding approximately 75,000 tons of greenhouse gas (GHG) emissions. We began GSMP II, which calls for replacement of an additional 875 miles of aging gas mains through 2023.

Moving to a Cleaner, More Efficient Generating Portfolio

PSEG Power sold its 776-megawatt interest in the coal-fired Keystone and Conemaugh generating facilities and related assets, leaving PSEG Power with one remaining coal asset, which is scheduled for retirement in mid-2021.

Evaluating Offshore Wind and Renewable Investments

PSEG exercised its option on Ørsted’s Ocean Wind Project, which begins a period of exclusive negotiation to potentially acquire a 25% equity interest in the offshore wind project.

 

 

“Climate change is the preeminent challenge of our time. How PSEG and others in our industry respond to this challenge will define our legacy.”

 

Ralph Izzo, CEO                    

 

GOALS AND ADVOCACY

New, Updated Emissions Goals

As part of a major update to our Powering Progress Initiative, PSEG announced its goal to reduce GHG emissions from PSEG Power’s fleet by 80% from 2005 levels by 2046.

PSEG announced a vision for net-zero emissions by 2050, assuming necessary advances in technology, public policy and consumer behavior, including preservation of existing nuclear fleet, continued investment in renewable energy sources, retirement or sale of coal assets and no plans to acquire or build new fossil units.

Advocating for a National Price on Carbon

Ralph Izzo joined the CEO Climate Dialogue, a cross-sectoral organization that seeks to leverage CEO voices to build support for a national price on carbon and whose guiding principles for federal action include economy-wide GHG emissions reductions of 80% or more by 2050. Mr. Izzo also testified before the Congressional Subcommittee on Energy during a hearing titled, “Building a 100 Percent Clean Economy: Solutions for the U.S. Power Sector.”

DISCLOSURE AND GOVERNANCE

Adopted a Human Rights Practice

PSEG published its Human Rights Practice using the United Nations’ Guiding Principles on Business and Human Rights, underscoring our commitment to minimize any adverse effects of our operations on people or communities.

2020 Climate Report

PSEG announced its commitment to reporting annually on sustainability and climate using the Task Force on Climate-related Financial Disclosures framework, starting in 2020.

Enhanced ESG Disclosure and Transparency

PSEG published its Sustainability report incorporating a comprehensive analysis of its contributions to the United Nations Sustainable Development Goals. ESG disclosures are featured on our website.

 

 


 

24    PSEG 2020 Proxy Statement


Table of Contents

Corporate Governance – Transparency and Oversight of Political Participation and Spending

 

    

 

Transparency and Oversight of Political Participation and Spending

The Corporate Governance Committee oversees our political activities and contributions in accordance with our Corporate Political Participation Practice, which may be found at: https://s24.q4cdn.com/601515617/files/doc_downloads/corporate_responsibility/Practice_530-3_Corporate_Political_Participation.pdf

For purposes of transparency, we publish an annual political contributions report that includes our corporate contributions to candidates, trade associations and other political and social welfare organizations. PSEG requests that trade associations to which it paid total annual payments of $50,000 or more identify the portion of dues or payments received from PSEG that were used for expenditures or contributions that, if made directly by PSEG, would not have been deductible under Section 162(e)(1)(B) of the Internal Revenue Code (IRC). The report is available on our website.

What We Expect of Our Employees, Officers and Directors

We have a long-established corporate culture of emphasizing integrity, honesty and the highest ethical standards and require all to remain in compliance with our Standards of Conduct. Our Chief Compliance Officer has overall responsibility for administering the Standards of Conduct under the oversight of the Audit Committee of the Board.

The Standards of Conduct are posted on our website at: https://corporate.pseg.com/aboutpseg/leadershipandgovernance/standardsofconduct

Our Standards of Conduct:

 

 

 

Form an integral part of our business conduct compliance program and apply to all of our directors, employees and contractors, who are each responsible for understanding and complying with the Standards of Conduct;

 

 

 

Establish a set of written common expectations for dealings with investors, customers, fellow employees, competitors, vendors, government officials and the media; and

 

 

 

Provide procedures for seeking ethical guidance and reporting concerns, including a hotline.

We require every employee annually to complete a training program on, and to certify compliance with, the Standards of Conduct.

We commit to post on our website:

 

 

 

Any amendment to the Standards of Conduct; and

 

 

 

Any waiver from the Standards of Conduct that applies to any director, executive officer or person performing similar functions and that relates to any applicable SEC requirement. Waivers may be granted in exceptional circumstances only and must be made by the Board.

In 2019, we did not grant any waivers to the Standards of Conduct.

Our Standards of Conduct, Compliance Program, Related Person Transactions Practice and Conflicts of Interest Practice described below, establish clear policies and procedures regarding personal and business conduct. Our written management practices provide that any capital investment with a non-PSEG entity or its affiliate, for which one of our directors or officers serves as a director or executive officer, must be approved by our Board. These are our only written policies and procedures regarding the review, approval or ratification of transactions with related persons.

Certain Relationships and Related Party Transactions

Under our Related Person Transactions Practice, which is administered by the Corporate Governance Committee, directors and executive officers must report any potential related person transactions.

For purposes of our Related Person Transactions Practice, a related person transaction includes transactions in which PSEG is a participant, the amount involved exceeds $120,000 and a “related person” has or will have a direct or indirect interest. Related persons of PSEG consist of directors (including director nominees), executive officers, stockholders beneficially owning more than 5% of PSEG’s voting securities and the immediate family members of these individuals.

 

PSEG 2020 Proxy Statement    25


Table of Contents

Corporate Governance – Certain Relationships and Related Party Transactions

 

    

 

The Corporate Governance Committee reviews the facts and circumstances of each transaction and approves or ratifies related person transactions that it determines are in the best interests of PSEG and its stockholders. The Corporate Governance Committee’s consideration include:

 

 

  Whether the transaction was in the ordinary course of business and at arm’s length, in accordance with the Company’s internal policies and procedures

 

 

  Whether the transaction involved any special treatment of the related person

 

 

  The purpose of the transaction and its potential benefits to PSEG
 

  The approximate dollar value of the transaction

 

 

  The related person’s interest in the transaction

 

 

  Any other information regarding the transaction or the related person that the Committee deems relevant
 

PSEG Director Barry H. Ostrowsky is the President and CEO of RWJBarnabas Health (RWJBarnabas), a non-profit corporation incorporated in New Jersey.

 

 

 

In 2019, as part of the Company’s philanthropic activities and commitment to invest in the communities in which we do business, the Company, directly or through a subsidiary, donated approximately $58,450 to facilities affiliated with RWJBarnabas and the PSEG Foundation, a separate, 501(c)(3) organization that is funded by the Company but whose donations are not determined or influenced by the PSEG Board, donated approximately $135,000. It is expected that PSEG and the PSEG Foundation each will make future contributions to facilities affiliated with RWJBarnabas.

 

 

 

Since 2013, the Company’s subsidiary, PSEG Services Corporation (Services), has had a contractual arrangement with an RWJBarnabas affiliate, Robert Wood Johnson University Hospital Hamilton (RWJ Hamilton), pursuant to which RWJ Hamilton provides medical care, medical testing and related services to the Company and its subsidiaries. In 2019, the Company paid a total of approximately $275,000 for services provided pursuant to this arrangement. The Company expects to pay a similar amount in 2020.

 

 

 

Since 2008, the Company’s subsidiary, PSE&G, has engaged in an ongoing Hospital Energy Efficiency Program (HEE Program), through which PSE&G provides funds for energy efficiency upgrades to hospitals throughout the PSE&G service territory. The HEE Program was approved, and is overseen, by the BPU. PSE&G has committed to invest approximately $211.5 million through the HEE Program to a variety of hospitals over the course of several years. PSEG had made commitments of approximately $44.1 million to RWJBarnabas facilities. These projects are in various stages of completion, with several fully completed and others in progress or in the planning stage. The aggregate portion that RWJBarnabas facilities have committed to repay to PSE&G through utility bills in accordance with the BPU-approved terms of the program is equal to approximately $15.1 million. Because the HEE Program is ongoing, the investment and repayment figures are subject to change in the coming years.

Christopher LaRossa, brother of Ralph A. LaRossa, Chief Operating Officer of PSEG and one of the Company’s Named Executive Officers, is an employee of, and receives compensation from, PSE&G. During 2019, Christopher LaRossa served and currently serves as District Manager – Regulatory Policy and Procedure. The approximate total compensation paid to Christopher LaRossa during 2019 was within the range set for employees with comparable qualifications and responsibilities who held similar positions at the Company (salary of $111,500 to $223,100 plus incentive compensation targeted at 20% of salary). He also received health insurance and other benefits available to all other employees in a similar position. His compensation was determined in accordance with our compensation practices applicable to employees who hold similar positions. Ralph A. LaRossa did not and does not have any direct responsibility for directing or reviewing his brother’s work or any influence over his brother’s compensation or the other terms of his employment.

The Corporate Governance Committee reviewed all of the transactions referenced above and determined that they are in the best interests of PSEG and its stockholders. We do not have any other related person transactions that meet the requirements for disclosure in this Proxy Statement.

Conflicts of Interest

The Governance Principles provide that a director must notify the Chair of the Corporate Governance Committee if the director encounters a conflict of interest or proposes to accept a position with a new entity so that potential conflicts of interest may be reviewed. Our Conflicts of Interest Practice applies to all employees, contractors, suppliers and any third party working on behalf of PSEG and covers situations where individual interests are or could be at odds or in conflict with PSEG’s interests. These situations are required to be reported to our Office of Ethics and Compliance, which may conduct an investigation or take actions it deems appropriate.

 

26    PSEG 2020 Proxy Statement


Table of Contents

Security Ownership Table

 

    

 

SECURITY OWNERSHIP OF DIRECTORS, MANAGEMENT AND CERTAIN BENEFICIAL OWNERS

The following table shows, as of February 21, 2020, beneficial ownership of our common stock by the directors and nominees and the currently serving executive officers named in the 2019 Summary Compensation Table. None of these amounts exceeds one percent of our common stock outstanding. The table also shows as of February 21, 2020, beneficial ownership in shares by any person or group known to us to be the beneficial owner of more than five percent of our common stock. According to the Schedule 13G filed by each owner with the SEC, these securities were acquired and are held in the ordinary course of business and not for the purpose of changing or influencing the control of the Company.

 

    Name  

Owned

Shares

(#)(1)

   

Restricted

Stock

(#)(2)

   

Stock

Units/

RSUs

(#)(3)

   

Phantom

Shares

(#)(4)

   

Deferred

Equity

Shares

(#)(5)

   

Stock

Options

(#)(6)

   

Amount of

Beneficial

Ownership

of Common

Stock

(#)

   

Percent

of Class

(%)

 

 

    Directors:

               

    Willie A. Deese

    -       -       11,830       -       -       -         11,830       <1  

    William V. Hickey

    6,332       9,600       48,398       24,005       -       -         88,335       <1  

    Shirley Ann Jackson

    5,604       9,600       48,398       -       -       -         63,602       <1  

    David Lilley

    -       -       41,065       31,441       -       -         72,506       <1  

    Barry H. Ostrowsky(7)

    -       -       5,107       -       -       -         5,107       <1  

    Scott G. Stephenson(8)

    -       -       -       -       -       -         -       <1  

    Laura A. Sugg(9)

    210       -       2,351       -       -       -         2,561       <1  

    John P. Surma(10)

    1,736       -       -       -       -       -         1,736       <1  

    Richard J. Swift

    304       14,400       48,398       59,224                  122,326       <1  

    Susan Tomasky

    -       -       27,391       -       -       -         27,391       <1  

    Alfred W. Zollar

    -       -       27,180       -       -       -         27,180       <1  

    NEOs:

               

    Ralph Izzo(11)

    22,697       -       86,129       -       1,454,982       -         1,563,808       <1  

    Daniel J. Cregg(11)

    44,100       -       15,511       -       10,943       -         70,554       <1  

    Ralph A. LaRossa(11)

    8,534       -       49,317       -       143,731       -         201,582       <1  

    Tamara L. Linde(11)

    33,078       -       14,961       -       -       -         48,039       <1  

    David M. Daly(11)(12)

    27,732       -       11,583       -       -       -         39,315       <1  

    All Directors, NEOs and Executive Officers of the Company as a Group (18 Persons):

 

    221,061       33,600       447,277       114,670       1,609,656       -         2,426,264       <1  

    Certain Beneficial Owners:

 

    Blackrock, Inc. (13)

                43,370,761       8.60  

    Capital World Investors (14)

                29,647,312       5.80  

    State Street Corporation (15)

                28,543,311       5.64  

    Vanguard Group, Inc. (16)

                                                    42,378,686       8.37  

 

(1)

Includes all shares, if any, held directly, in brokerage accounts, under the Thrift and Tax-Deferred Savings Plan (401(k) Plan), Enterprise Direct, Employee Stock Purchase Plan, shares owned jointly by or with a spouse and shares held in a trust or a custodial account.

(2)

Includes restricted stock granted to directors under the former Stock Plan for Outside Directors.

(3)

Includes vested and unvested RSUs granted to executive officers under the LTIP and stock units granted to directors under the Equity Compensation Plan for Outside Directors (Directors Equity Plan), with no voting rights.

(4)

Includes phantom shares accrued under the Directors’ Deferred Compensation Plan for those individuals who have elected to have the earnings on their deferred payments calculated based upon the performance of our common stock, with no voting rights and all payouts in cash.

(5)

Includes shares deferred under the Equity Deferral Plan, with no voting rights.

(6)

Stock options granted under the LTIP, all of which have been exercised. There are no outstanding stock options.

(7)

Mr. Ostrowsky joined the Board in February 2018 and has not yet met his ownership requirement.

(8)

Mr. Stephenson joined the Board in February 2020 and has not yet met his ownership requirement.

(9)

Ms. Sugg joined the Board in January 2019 and has not yet met her ownership requirement.

 

PSEG 2020 Proxy Statement    27


Table of Contents

Security Ownership Table – Delinquent Section 16(a) Reports

 

    

 

(10)

Mr. Surma joined the Board in November 2019 and has not yet met his ownership requirement.

(11)

Address: 80 Park Plaza, Newark, NJ 07102

(12)

Mr. Daly was elected to his current position effective October 2, 2017 and has until January 2023 to meet his ownership requirement.

(13)

As reported on Schedule 13G filed on February 5, 2020. Address: 55 East 52nd Street, New York, NY 10055.

(14)

As reported on Schedule 13G filed on February 14, 2020. Address: 333 South Hope Street, Los Angeles, CA 90071.

(15)

As reported on Schedule 13G filed on February 13, 2020. Address: One Lincoln Street, Boston, MA 02111.

(16)

As reported on Schedule 13G filed on February 12, 2020. Address: 100 Vanguard Blvd., Malvern, PA 19355.

Delinquent Section 16(a) Reports

The following information is based upon our review of Forms 3 and 4 filed in 2019 and Forms 5 filed with respect to 2019 with the SEC under Section 16(a) of the Securities Exchange Act of 1934, as amended, regarding transactions involving our common stock. During 2019, none of our directors was late in filing a Form 3, 4 or 5 in accordance with the applicable requirements of the SEC. For our Named Executive Officers, exceptions due to administrative oversight were: one Form 4 was filed late for Ralph A. LaRossa, reporting the sale of 1,650 shares per his 10b5-1 Plan and one Form 4 was filed late for each of Ralph Izzo, Daniel J. Cregg, Ralph A. LaRossa, Tamara L. Linde and David M. Daly, reporting their annual awards of restricted units.

DIRECTOR COMPENSATION

The table below reports 2019 compensation to directors except Mr. Izzo, as explained below, under How Our Directors Are Compensated.

 

    

Fees Earned

or Paid in

Cash

($)(1)

   

Stock

Awards

($)(2)

   

Option

    Awards    

($)

 

Non-Equity

Incentive Plan

Compensation

($)

 

Change in Pension

Value and

Nonqualified

Deferred

Compensation

Earnings

($)

 

All Other

Compensation

($)(3)

   

Total

($)

 

    Willie A. Deese

    155,000         135,018       -   -   -     150               290,168  

    William V. Hickey

    158,333         135,018       -   -   -     150               293,501  

    Shirley Ann Jackson

    203,333         135,018       -   -   -     150               338,501  

    David Lilley(4)

    206,250         135,018       -   -   -     -                 341,268  

    Barry H. Ostrowsky

    148,333         135,018       -   -   -     150               283,501  

    Thomas A. Renyi(5)

    65,000         -     -   -   -     10,150               75,150  

    Laura A. Sugg

    135,000         135,018       -   -   -     -                 270,018  

    John P. Surma

    12,917         -     -   -   -     -                 12,917  

    Richard J. Swift

    178,333         135,018       -   -   -     -                 313,351  

    Susan Tomasky

    158,333         135,018       -   -   -     150               293,501  

    Alfred W. Zollar

    160,000         135,018       -   -   -     -                 295,018  

 

(1)

Includes all meeting fees, chair/committee retainer fees and the annual retainer, as described below under How Our Directors Are Compensated, and reflects time served in a particular position throughout the year. Includes the following amounts deferred pursuant to the Directors’ Deferred Compensation Plan, described below.

 

    Deese    

($)

 

  Hickey  

($)

  

  Jackson  

($)

  

  Lilley  

($)

  

  Ostrowsky  

($)

  

  Renyi(5)  

($)

  

  Sugg  

($)

  

  Surma  

($)

  

  Swift  

($)

  

  Tomasky  

($)

  

  Zollar  

($)

-   158,333    203,333    -    -    65,000    -    -    -    -    -

 

(2)

For each, the grant date fair value of the award on May 1, 2019, equated to 2,297 stock units, rounded up to the nearest whole share, based on the then current market price of the common stock of $58.78. In addition, each individual’s account is credited with additional stock units on the quarterly dividend dates at the then current dividend rate. The following table shows outstanding stock units granted under the Directors’ Equity Plan and restricted stock granted under the prior Stock Plan for Outside Directors, as of December 31, 2019:

 

     

Deese

(#)

  

Hickey

(#)

  

Jackson

(#)

  

Lilley

(#)

  

Ostrowsky

(#)

  

Renyi

(#)

  

Sugg

(#)

  

Surma

(#)

  

Swift

(#)

  

Tomasky

(#)

  

Zollar  

(#)

    Stock Units

   11,830    48,398    48,398    41,065    5,107    -    2,351    -    48,398    27,391    27,180  

    Restricted Stock

   -    9,600    9,600    -    -    -    -    -    14,400    -    -

 

(3)

Consists of charitable contributions made by us on behalf of each individual, including a special contribution in honor of Mr. Renyi’s retirement.

(4)

Due to an administrative oversight, $41,250 that was payable in 2018 was delayed and paid in 2019.

(5)

Service on our Board ended in April 2019.

 

28    PSEG 2020 Proxy Statement


Table of Contents

Director Compensation – How Our Directors Are Compensated

 

    

 

How Our Directors Are Compensated

As provided in our Governance Principles, director compensation is reviewed periodically by the Corporate Governance Committee, which recommends approval to the Board. Our compensation to non-management directors is comparable to median director compensation among our peer companies, in order to be able to attract and retain high quality Board members. This compensation includes a cash retainer, RSUs and reimbursement for expenses for attending Board and committee meetings and related functions. Ralph Izzo, who is compensated as our CEO does not receive any additional compensation for Board membership. His compensation as an employee is shown in this Proxy Statement in the executive compensation tables and the Executive Compensation section. In accordance with PSEG’s Certificate of Incorporation, the Company provides indemnity and reimbursement of expenses to the full extent permitted by law and provides directors’ and officers’ insurance.

Every two years, our independent compensation consultant, CAP, advises the Corporate Governance Committee on the competitiveness of our director compensation.

The independent directors are compensated according to the schedule shown below. All amounts are paid in cash, except the equity grant, which is paid in common stock units equal to the amount shown. All payments to the Chairs and committee members, as indicated, are per assignment and are in addition to the annual retainer and equity grant. Following a review of peer company market data conducted by CAP, the fee schedule was last revised effective May 1, 2016. The fee schedule, among other things, was last reviewed by CAP in 2019 and no changes were made to the fee schedule at that time.

 

     

Fee Schedule  

($)

 

    Annual Retainer

     95,000    

    Annual Equity Grant

     135,000    

    Lead Director

     40,000    

    Committee Chair: Audit; Organization and Compensation Committee (O&CC)

     30,000    

    Committee Chair: Corporate Governance; Finance

     25,000    

    Committee Chair: Fossil Generation; Nuclear Generation

     12,500    

    Committee Member: Audit

     20,000    

    Committee Member: Corporate Governance; Executive; Finance; O&CC

     20,000    

    Committee Member: Fossil Generation; Nuclear Generation

     10,000    

Directors’ Stock Ownership Requirement

Our Governance Principles require that our directors own shares of our common stock (including any restricted stock, whether or not vested, any stock units under the Directors’ Equity Plan and any phantom stock under the Directors’ Deferred Compensation Plan) equal to six times the annual retainer (which is currently $95,000 for a total required ownership level of $570,000) before they may sell any PSEG stock. The Board raised the minimum ownership requirement in 2019 from five to six times the annual retainer to be aligned with market practice. All incumbent directors currently meet this stock ownership level except for our four newest directors: Barry H. Ostrowsky, who joined the Board in February 2018; Laura A. Sugg, who joined the Board in January 2019; John P. Surma, who joined the Board in November 2019 and Scott G. Stephenson who joined the Board in February 2020. Additional details can be found in the table under Security Ownership of Directors, Management and Certain Beneficial Owners on page 27.

Directors’ Equity Plan

The Directors’ Equity Plan is a deferred compensation plan and, under its terms, each of our outside directors is granted an award of stock unit equivalents each May 1st (in an amount determined from time-to-time by the Board) which is recorded in a bookkeeping account in the director’s name and accrues credits equivalent to the dividends on shares of our common stock. If a director does not remain a member of the Board (other than on account of disability or death) until the earlier of the succeeding April 30th or the next Annual Meeting of Stockholders, the award for that year will be prorated to reflect actual service. Distributions of all deferred equity under the Directors’ Equity Plan are made in shares of our common stock after the director terminates service on the Board in accordance with elected distributions, which may be either in a lump-sum payment or, with respect to grants made prior to 2012, in annual payments over a period of up to ten years.

Under the Directors’ Equity Plan, beginning with grants made in 2012, directors may elect to receive distribution of a particular year’s deferrals either upon termination of service or after a specified number of years or, effective in 2020, directors who have met the stock ownership requirement may elect to receive distribution of shares upon vesting. A director may elect to receive distribution of such deferrals in the form of a lump-sum payment or annual installments over a period of three to fifteen years. Distribution elections must be made prior to the date of the award.

 

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Director Compensation – How Our Directors Are Compensated

 

    

 

Directors may make a distribution election for each year’s deferred compensation and may make changes regarding the timing of distribution elections with respect to prior deferred compensation as long as any new distribution election is made at least one year prior to the date that the distribution would otherwise have begun and the revised commencement date is at least five years later than the date that the distribution would otherwise have begun.

Directors’ Deferred Compensation Plan

Under the Directors’ Deferred Compensation Plan, directors may elect to defer any portion of their cash fees. Elections must be made in the calendar year prior to the year of payment. When deferral is elected, the director must make an election as to the timing of the distribution from the Directors’ Deferred Compensation Plan account. Distributions are made in cash.

For amounts deferred prior to 2012, distributions may begin (a) on the thirtieth day after the date of termination of service as a director or, in the alternative, (b) on January 15th of any calendar year following termination of service, but in any event no later than the later of (i) January of the year following the year of the director’s 71st birthday or (ii) January following termination of service. Directors may elect to receive the distribution of their Directors’ Deferred Compensation account in the form of one lump-sum payment or annual distributions over a period of up to ten years.

For compensation deferred beginning in 2012, directors may elect to begin distribution of a particular year’s deferrals, either (a) within 30 days of termination of service or (b) a specified number of years following termination of service. They may elect to receive distribution of such deferrals in the form of a lump-sum payment or annual installments over a period of three to fifteen years.

Directors may make a distribution election for each year’s deferred compensation and may make changes regarding the timing of distribution elections with respect to prior deferred compensation as long as any new distribution election is made at least one year prior to the date that the distribution would otherwise have begun and the revised commencement date is at least five years later than the date that the distribution would otherwise have begun.

 

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Compensation Discussion and Analysis

 

    

 

LOGO

We recognize that executive compensation is an important matter for our stockholders. As required by Section 14A of the Exchange Act, we provide you with an opportunity to cast an advisory vote on our executive compensation programs as described in this Proxy Statement. This is commonly referred to as say-on-pay.

This vote is held annually and is non-binding, but the Board, the Organization and Compensation Committee and management carefully review the voting results and take them into consideration when making future decisions regarding our executive compensation.

The next say-on-pay vote will occur at our 2021 Annual Meeting of Stockholders. The next say-on-frequency vote, which determines how often the say-on-pay vote is to be held, will also occur at our 2021 Annual Meeting of Stockholders.

The Organization and Compensation Committee has approved the compensation arrangements discussed in the Report of our Organization and Compensation Committee, the Executive Compensation section and the compensation tables. We encourage you to read our Executive Compensation section, in which we explain the reasons supporting our executive pay decisions. We have summarized the highlights in our Executive Compensation Summary.

We believe our executive compensation is reasonable and appropriate, reflecting market conditions and performance. We are asking you to indicate your support of our executive compensation program as described in this Proxy Statement. This vote is not intended to address any specific item of compensation or any specific individual. Rather, it is an indication of your agreement with the overall philosophy, policies, practices and compensation of our Named Executive Officers as described in this Proxy Statement. Accordingly, as recommended by the Board, we ask for you to vote in favor of the following resolution:

Resolved, that the stockholders hereby approve, on an advisory basis, the compensation of the Named Executive Officers, as disclosed in the Company’s Proxy Statement for the 2020 Annual Meeting of Stockholders pursuant to the applicable rules of the SEC, including the Compensation Discussion and Analysis, compensation tables and narrative discussion.

Vote required: We will tally the votes cast in person or by proxy, excluding abstentions and shares withheld or for which no instructions are given.

LOGO THE BOARD RECOMMENDS A VOTE FOR THE RESOLUTION IN THIS PROPOSAL.

 

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Table of Contents

Compensation Discussion and Analysis – Executive Compensation Summary

 

    

 

EXECUTIVE COMPENSATION SUMMARY

TABLE OF CONTENTS

      2019 Named Executive Officers

     2019 Company Performance Overview

      Executive Compensation Philosophy and Pay for Performance

     Executive Compensation

      Say-on-Pay and Shareholder Engagement

     Executive Compensation Best Practices

      Peer Comparison and Benchmarking

     How We Compensate Our Executives

      Our Compensation Elements Explained

     Executive Compensation Governance Features and Controls

      Accounting and Tax Implications

     Compensation Committee Interlocks and Insider Participation

      Executive Compensation Tables

2019 Named Executive Officers

 

LOGO  

Ralph Izzo, Chairman of the Board, President & CEO

LOGO  

Daniel J. Cregg, Executive Vice President (EVP) & CFO

LOGO  

Ralph A. LaRossa, Chief Operating Officer (COO) - PSEG (1)

LOGO  

Tamara L. Linde, EVP & General Counsel

LOGO  

David M. Daly, President & COO - PSEG Utilities and Clean Energy Ventures(2)

 

(1)

Mr. LaRossa was elected to the position of COO - PSEG, effective January 1, 2020. During 2019, he was President & COO of PSEG Power. He continues to hold the positions of President and COO of PSEG Power in addition to his current position.

(2)

Mr. Daly was elected to the position of President & COO - PSEG Utilities and Clean Energy Ventures, effective January 1, 2020. During 2019, he was President & COO of PSE&G and Chairman of the Board (COB) of PSEG Long Island. He continues to hold the positions of President of PSE&G and COB of PSEG Long Island.

2019 Company Performance Overview

The charts below compare the relative contributions to earnings of PSE&G and PSEG Power over the past five years and show our steady earnings and consistent dividend growth in those years. This impact on our earnings is reflected in the realized pay of our Named Executive Officers, since our executive compensation program links incentive payouts to earnings measures over multiple time frames. Accordingly, we show below the annual TSR and ROIC in the last three years compared to our 2019 peer group. Our financial highlights are presented on page 3. You can find a more comprehensive discussion of our 2019 business and financial performance in our 2019 Form 10-K.

 

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Compensation Discussion and Analysis – 2019 Company Performance Overview

 

    

 

See Appendix A on pages 72-73 for a complete list of items excluded from Net Income in the determination of non-GAAP Operating Earnings.

 

LOGO    LOGO

 

LOGO

LOGO

 

 

LOGO

 

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Table of Contents

Compensation Discussion and Analysis – Executive Compensation Philosophy and Pay for Performance

 

    

 

Executive Compensation Philosophy and Pay for Performance

Our program aligns executive compensation to the successful execution of our strategic plans, meeting our financial and operational goals and delivering strong returns while balancing the interests of our multiple stakeholders. These include our stockholders, the customers we serve, our employees and the communities in which we operate. We attract and retain exceptional executive talent needed for long-term success by ensuring our compensation is market competitive with our peers.

Our SMICP focuses on financial and operating performance over a one-year period while our LTIP, which includes our PSUs, focuses on outperforming our peers on a multi-year horizon. The goals of individual Named Executive Officers, including our CEO, place a high value on strategic initiatives, long-range planning, disciplined investments, ESG priorities and operational excellence that enhance value and our responsibilities as a public utility. The actual value of compensation, especially equity grants, reflect our Company’s performance over time.

For 2019, we set SMICP targets that were higher than actual 2018 results for the PSEG and PSE&G earnings components. Recognizing that our business is highly sensitive to factors outside our control, including energy prices and weather, in some years our goals in the SMICP may be below the prior year’s results, which is common among our peers. Accordingly, PSEG Power’s 2019 SMICP earnings component was set slightly below 2018 actual results.

Actual Payout Compared to Target

 

LOGO

The Organization and Compensation Committee annually reviews and evaluates our compensation program and maintains the flexibility to make decisions about actual compensation levels and awards based on achievement of our business objectives and relevant circumstances affecting our Company. In addition to the established performance measures, these may include economic, market and competitive conditions, regulatory and legal requirements, internal pay equity considerations, ESG priorities and peer group or market practices. The Organization and Compensation Committee and the Board align strong pay for performance with long-term stockholder value creation without encouraging excessive risk taking.

2019 Target Compensation Summary

Overall target compensation should be competitive compared to individuals in our peer group so that we can attract, engage, motivate and retain exceptional talent. The 2019 compensation decisions are reflective of each executive’s role, responsibilities, performance and time in position. Our 2019 target compensation is as follows:

 

                  Target Total    Long-Term    Target Total  
     Base Salary    Annual    Cash    Incentive($)    Compensation  
  Executive    ($)    Incentive    ($)    PSUs    RSUs    ($)  

Ralph Izzo

       1,380,000        125%          3,105,000        5,176,535        2,218,554        10,500,089       

Daniel J. Cregg

       660,200        75%          1,155,350        980,043        420,020        2,555,413

Ralph A. LaRossa

       737,700        75%          1,290,975        980,043        420,020        2,691,038

Tamara L. Linde

       620,000        75%          1,085,000        910,000        390,054        2,385,054

David M. Daly

       569,300        75%          996,275        770,039        330,011        2,096,325

The above values may not match the Summary Compensation Table due to timing of increases and accounting valuation of equity awards.

 

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Compensation Discussion and Analysis – Say-on-Pay and Shareholder Engagement

 

    

 

EXECUTIVE COMPENSATION

Say-on-Pay and Shareholder Engagement

At the 2019 Annual Meeting, our stockholders voted approximately 93.5% in favor of our say-on-pay proposal, demonstrating their concurrence that our programs reflect our strong pay-for-performance philosophy. We continuously review our executive compensation program in recognition of investor feedback and adjust, as appropriate, the compensation of our executives in light of their performance, our business results, our financial condition and the competitive market for the role.

 

 

93.5%

     of stockholders voted in favor of 2019          

     say-on-pay proposal           

  

 

We strongly encourage investor feedback and will continue to review and make changes to our executive compensation program in recognition of investor interests, evolving trends and best practices.

In particular, the Organization and Compensation Committee, with input from our independent compensation consultant, CAP, considered the 2019 say-on-pay vote result and current market practices as it evaluated our executive compensation program. During the past year, we actively reached out to many of our largest investors to advise them of recent compensation and governance actions we have taken and to listen to any concerns they may have. We always welcome stockholders’ comments and suggestions and continue to consider the outcome of the say-on-pay vote on our program design.

Executive Compensation Best Practices

 

 

      What We Do

 

  

 

   What We Don’t Do

 

  

  Pay for performance, with a significant portion of target compensation at risk

 

  Set stretch performance goals

 

  Competitive pay, targeted around the median

 

  Maximum payout cap for incentive plans

 

  Minimum vesting of three years for RSUs and PSUs

 

  Double trigger in the event of a change-in-control to receive severance benefits

 

  Clawback policy that applies to financial restatements or in the event of misconduct or material violations of our Standards of Conduct

 

  Robust stock ownership guidelines for executives

 

  Independent executive compensation consultant reviews executive compensation programs and practices

 

  Engage stockholders to solicit feedback on our compensation program

 

  Uniform retirement formulas for all employees

  

x  No guaranteed incentive compensation

 

x  No excise tax gross ups

 

x  No hedging or pledging for any employee, including officers and directors

 

x  No compensation plans that encourage or reward executives’ excessive risks

 

x  No dividends paid on unearned awards

 

x  No repricing or exchange of underwater stock options

 

x  No excessive perks

 

x  No longer offer additional service credit for pension calculation

 

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Compensation Discussion and Analysis – Peer Comparison and Benchmarking

 

    

 

Peer Comparison and Benchmarking

How We Choose Peers for Benchmarking

We evaluate and set executive compensation to be competitive within an identified peer group comprised of similarly sized energy companies. We consider our peers’ earnings, market capitalization and revenue. Because our revenue is driven by energy demand and prices that are outside the control of management, we emphasize earnings over revenue. We believe this approach is more reflective of the complexities of our business when comparing across companies.

Each year, we re-evaluate the peer group to assess its appropriateness. We removed PG&E Corporation in early 2019 due to its bankruptcy announcement. Our peer companies for 2019 are listed below.

 

Peer Companies

Ameren Corporation

  

American Electric Power Co., Inc.

  

CenterPoint Energy, Inc.

Consolidated Edison, Inc.

  

Dominion Resources, Inc.

  

DTE Energy Company

Duke Energy Corporation

  

Edison International

  

Entergy Corporation

Eversource Energy

  

Exelon Corporation

  

FirstEnergy Corp.

NextEra Energy, Inc.

  

NRG Energy, Inc.

  

PPL Corporation

Sempra Energy

  

Southern Company

  

Xcel Energy Inc.

How We Use Peer Data

 

 

 

Reference point for setting 2019 pay levels

 

 

Target the median (50th percentile) of the peer group for Total Direct Compensation

 

 

Assess our performance under our LTIP and the alignment between pay and performance

 

 

Review incentive plan design, equity usage and governance practices

Pay Governance LLC assists in analyzing the annual Willis Towers Watson Energy Services Executive Compensation Survey–U.S. assessment of the market using the peer companies. We use the peer group data to the extent each position is reported in the survey data. The Organization and Compensation Committee’s independent consultant, CAP, reviews the outcome of the competitive assessment and provides supplemental data on the peer group as required.

 

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Compensation Discussion and Analysis – Peer Comparison and Benchmarking

 

    

 

Compensation Benchmark

The Organization and Compensation Committee considers a range of approximately +/-20% of the 50th percentile of benchmark positions to be within the competitive range, with an emphasis on Total Direct Compensation.

When an executive is promoted into a new role, we do not necessarily bring them to the market median immediately. Instead, we will bring them to median over a multi-year period. Conversely, executives who have been in their roles a significant amount of time may exceed the median of peers due to experience and performance.

Base salary, target Total Cash Compensation and target Total Direct Compensation of each of the Named Executive Officers as a percentage of the comparative median benchmark levels of the peer group are noted below, along with each individual’s time in position.

Percent of Comparative Median Benchmark Levels (2019)

Chart reflects executive compensation decisions made in December 2018.

LOGO

.

 

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Compensation Discussion and Analysis How We Compensate Our Executives

 

    

 

How We Compensate Our Executives

 

   
  Element    Purpose      Description

 

  Base Salary

  

 

Recognizes executives’ competencies, experience, job responsibilities, skills, internal equity and the competitive market for the position.

 

 

Each Named Executive Officer’s base salary is based on market data, CEO recommendations, performance and additional factors including time in position, leadership, managerial skills and other personal contributions. (See page 41 for details.)

 

 

  Annual Cash Incentive  

  (SMICP)

  

 

Incentivizes the achievement of  
key financial, operational and strategic goals.

 

 

Our Named Executive Officers are eligible for an annual cash incentive under our SMICP. The incentive compensation is evaluated based on achievement of specific performance goals relating to four factors: Corporate EPS (Non-GAAP), business unit earnings, business unit scorecard and strategic goals, as well as individual performance. In setting our SMICP goals, we consider internal and external factors and set stretch goals to reflect an appropriate degree of difficulty. Participants also have “People Strong” goals that support strategic initiatives including ESG-related priorities. The payout period is one year and payout can range from zero to 200% of target percentage of salary. (See page 42 for details.)

 

 

  Long-Term Incentive

  (LTIP)

  

 

Aligns Named Executive Officers’ interests with long-term interests of stockholders and the Company by rewarding for strong stock price performance and capital efficiency.

 

PSUs and RSUs facilitate retention and align the interest of officers with long-term stockholder value. In addition, PSUs reward strong financial and stock price performance over a longer time frame.

 

 

Named Executive Officers, other officers and key employees are eligible to participate in the LTIP. The CEO develops recommendations for LTIP awards for each Named Executive Officer except for himself and submits these recommendations to the Organization and Compensation Committee for approval. Factors that are considered in the determination of award amounts are the competitive market and the individual’s role, responsibilities and contribution as well as talent retention needs. With respect to the CEO, the Organization and Compensation Committee develops a recommended award opportunity in consultation with CAP and submits the proposal for approval by the Board.

 

PSUs are measured over a three-year period based 50% upon TSR vs. peers and 50% on ROIC vs. peers with the opportunity to earn between zero and 200% of target. RSUs cliff vest at the end of three years, unless retirement eligible, when RSUs vest one-twelfth per month over one year. All of our Named Executive Officers are retirement eligible. The pay mix for Named Executive Officers is 70% PSUs and 30% RSUs. (See page 40 for details.)

 

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Compensation Discussion and Analysis How We Compensate Our Executives

 

    

 

   
  Element    Purpose      Description

 

  Retirement and Post-  Employment Benefits

  

 

Facilitates attraction and retention  
and provides participants with the opportunity to effectively manage the timing of income and tax liability.

 

 

Retirement Benefits (See page 45 for details.)

 

All employees, including the Named Executive Officers, receive certain qualified retirement benefits under one of the Pension Plans of PSEG (Pension Plans), which provide either a traditional defined benefit pension (Final Average Pay Component) or a cash balance defined benefit pension (Cash Balance Component). Each of our Named Executive Officers currently participates only in the Final Average Pay Component.

 

In addition to the qualified plan, we provide certain nonqualified retirement benefits under the Retirement Income Reinstatement Plan (Reinstatement Plan) and the Supplemental Executive Retirement Income Plan (Supplemental Plan).

 

Deferred Compensation Plans (See page 60 for details.)

 

We offer cash and equity deferred compensation plans to our officers. With respect to the cash deferred compensation plan, participants may choose from among several different investment options based upon the choices available in our 401(k) Plan as well as a market-based rate.

 

Severance Benefits (See page 61 for details.)

 

All of our Named Executive Officers participate in our Key Executive Severance Plan. Mr. Izzo is also eligible for certain other severance benefits, as described under Potential Payments Upon Termination of Employment or Change-In-Control. We provide competitive severance benefits upon a change-in-control to officers.

See the section on Our Compensation Elements Explained below for more detail.

 

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Compensation Discussion and Analysis How We Compensate Our Executives

 

 

Executive Pay Mix

The Organization and Compensation Committee finds that target Total Direct Compensation is a better measure for evaluating executive compensation than focusing on each of the elements individually and the Committee does not set a formula to determine the mix of the various elements. The Organization and Compensation Committee believes that the majority of a senior executive’s compensation should be performance-based, and the more senior an executive’s position is in the organization, the more that executive’s pay should be oriented toward long-term compensation.

The 2019 compensation mix is presented below for the CEO as well as for the average of other Named Executive Officers excluding the CEO. Value at risk represents performance-based incentive awards of cash, RSUs and PSUs.

 

LOGO

Executive Performance and Goals

We have provided detailed calculations of the payouts under our SMICP and LTIP, including a discussion of the pre-established goals for these incentive plans and the performance achieved by our Named Executive Officers.

We do not disclose forward looking targets for our annual incentive plan, where the disclosure could result in competitive harm. On an annual basis, the Organization and Compensation Committee and CAP, the Committee’s independent consultant, review the degree of difficulty of the targets to ensure that the goals are driving performance. For our long-term plan, however, we use all relative metrics and the goal and corresponding payout percent are noted in the 2019 Grants section.

Targets are set based on the proposed business plan and a rigorous process is undertaken at the start of each year to determine the range of performance for each measure. The corporate and business unit performance goals are set at levels that require strong performance for a target payout and superior performance for a greater than target payout.

CEO Compensation

Mr. Izzo has demonstrated strong performance over his tenure as CEO. The changes to the key terms of Mr. Izzo’s compensation in 2019 were as follows:

 

Component    2019 vs. 2018

 

Base Salary

  

 

   Increased annual salary to $1,380,000 for 2019 from $1,340,000 in 2018.

 

  

   Positioned at 107% of the market median.

 

 

Annual Cash Incentive

  

 

   Maintained annual incentive target at 125% of salary for 2019.

 

  

   Positioned at 109% of the market median for target Cash Compensation.

 

 

Long-Term Incentive

  

   Increased target long-term incentive to $7,395,089 (reported in the Summary Compensation Table at grant date fair value) in February 2019, a 6% increase from 2018.

 

  

   Positioned at 111% of the market median for target Total Direct Compensation

 

 

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Compensation Discussion and Analysis – How We Compensate Our Executives

 

    

 

2019 vs. 2018 Target Compensation for CEO

(in thousands)

 

LOGO

The graph does not include change in pension values and nonqualified deferred compensation earnings and all other compensation, which are shown in the Summary Compensation Table. SMICP and LTIP amounts in the graph above reflect the target values. Actual payouts are reported in the Executive Compensation section following the applicable performance period.

After meeting in executive session without the CEO present, the Organization and Compensation Committee recommended the CEO’s compensation to all of the independent directors, who approved the compensation.

Our Compensation Elements Explained

Executive Base Salary

Each Named Executive Officer’s base salary level is reviewed annually by the Organization and Compensation Committee. The Organization and Compensation Committee considers base salaries and salary adjustments for individual Named Executive Officers other than the CEO based on market data, CEO recommendations, performance and additional factors including leadership, time in position and other personal contributions. Mr. Izzo received a base salary increase of 3% in 2019. Other Named Executive Officer increases ranged from 3% to 9%.

Executive Annual Cash Incentive

Our Named Executive Officers are eligible for an annual cash incentive under our SMICP. The Organization and Compensation Committee evaluates each Named Executive Officer’s incentive compensation based on achievement of specific performance goals relating to the Company’s and the applicable business unit’s earnings, a business unit scorecard and strategic goals. The business unit scorecard metrics are comprised of goals based on financial, operational and strategic performance of the respective business unit. The focus is on performance measured against benchmarked targets and continuous improvement from prior year. The Organization and Compensation Committee approves the incentive compensation for all Named Executive Officers except the CEO. The Organization and Compensation Committee recommends the CEO’s incentive compensation to the Board, which approves it.

All executive officers have strategic “People Strong” goals, including leadership, continuous improvement and leading practices in support of Company-wide strategic initiatives. The goals foster a culture of inclusion inside the Company as well as in the communities we serve. The business unit scorecard and other strategic goals focus on the following categories: People, Safe and Reliable, Economic and Greener Energy, which are benchmarked, when possible, against the broader utility industry, setting our targets at the top quartile (or the top decile for safety-related measures). Mr. Izzo has a larger percentage tied to additional strategic objectives focused more broadly on Operational Excellence, Financial Strength and Disciplined Investments.

 

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Compensation Discussion and Analysis – Our Compensation Elements Explained

 

    

 

 

  Operational Excellence

 

   Financial Strength    Disciplined Investments
           

  Achieve top quartile performance in providing safe, reliable, economic and greener energy

  Continuously improve operations through a culture that recognizes the value of diversity and inclusion and an environment where all employees value safety, integrity, continuous improvement and customer service and are engaged and comfortable speaking up

  Attract, develop and retain a high-performing and diverse workforce

  

  Achieve earnings targets and improve long-term growth prospects while maintaining strong credit ratings

  Relentless focus on cost control and deliver on business plan commitments

  Execute on cost efficiency and business optimization initiatives

  Deliver value through strong relations with key stakeholders – customers, stockholders, employees, regulators, governments and communities

  Advocate for policies and rules that fairly compensate the utility and generation business while supporting appropriate environmental standards

  

  Execute planned investment programs and complete remaining new construction build on time and in compliance with budget

  Develop and execute strategies to profitably grow the competitive, environmentally advantaged generation and related businesses

Each Named Executive Officer’s performance under each applicable factor — corporate EPS, business unit earnings, business unit scorecard and strategic goals — could range from zero to 2.0 (200%) based on the achievement of pre-determined goals.

Target and Actual Performance Levels for 2019 Financial Metrics

 

LOGO

 

(1)

For Power Adjusted EBITDA, discretion was applied to bring payout factor to threshold result.

Operating EPS (non-GAAP) excludes mark-to-market activity, Nuclear Decommissioning Trust (NDT) and other material one-time items. In order to provide a consistent comparison of earnings, PSE&G’s non-GAAP Operating Earnings results are adjusted for variances between actual interest expense and the business plan. PSEG Power’s non-GAAP Adjusted EBITDA excludes the same items as non-GAAP Operating Earnings, interest expense and depreciation and amortization. We further adjusted PSEG Power’s non-GAAP Adjusted EBITDA to exclude tax credit purchase costs, which directly impact income tax expense. We used these non-GAAP measures because we believe they better reflect operating performance and more directly relate to ongoing operations of the businesses. See Appendix A on pages 72-73 for reconciliation to GAAP of non-GAAP Operating Earnings and non-GAAP Adjusted EBITDA.

 

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Compensation Discussion and Analysis – Our Compensation Elements Explained

 

    

 

LOGO

Executive Long-Term Incentive

The LTIP, as amended and restated, was approved by our stockholders at the 2013 Annual Meeting. Named Executive Officers, other officers as determined by the Organization and Compensation Committee and other key employees, as selected by the CEO within guidelines established by the Organization and Compensation Committee, are eligible to participate in the LTIP.

The CEO develops recommendations for LTIP awards for each Named Executive Officer except for himself and submits these recommendations to the Organization and Compensation Committee for approval. Factors that are considered in the determination of award amounts are the competitive market and the individual’s role, responsibilities and contribution as well as talent retention needs. The value of an executive’s current holdings is not a consideration, though it is reviewed periodically by the Organization and Compensation Committee to evaluate officers’ stock ownership compared with our requirements. With respect to the CEO, the Organization and Compensation Committee develops a recommended award opportunity in consultation with CAP and submits the proposal for approval by the Board. Grants are typically made each February.

 

LOGO

RSUs are denominated in units of common stock and cliff vest at the end of three years. For retirement eligible employees, RSUs vest one-twelfth for each month of service beginning in the year of the grant of the RSUs and are fully vested at the end of that year. RSUs are payable in shares of our common stock at the end of the three-year period. PSUs are denominated in units of common stock and are subject to achievement of certain performance goals over a three-year period. PSUs are payable as determined by us in shares of our common stock. PSUs vest at the end of the performance period. For retirement eligible employees, PSUs vest one thirty-sixth for each month of service beginning in the year of the grant of the PSUs and are fully vested at the end of the performance period. Unvested RSUs and PSUs are forfeited upon retirement or termination of service. Any PSU payments are made following the conclusion of the performance period.

 

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Compensation Discussion and Analysis – Our Compensation Elements Explained

 

    

 

2017 Grant PSU Result: LTIP awards of PSUs made for the three-year performance period ended December 31, 2019 were reported in our Proxy Statement (other than for Mr. Daly who was not a Named Executive Officer at the time of the report) at fair value at the time of the grants. These PSU grants were subject to the achievement of goals related to relative TSR and relative ROIC vs. peers.

 

 

LOGO

We determine ROIC by dividing Net Income (adjusted for interest expense, excluding amounts related to securitized debt) by debt and equity (adjusted for securitized debt).

The performance schedule for relative TSR and ROIC is determined by ranking within the peer group. Shown below are the ranks and payout factors at threshold, target and maximum levels and our actual rank for this period:

For 2017 grants, the peer group consisted of 19 companies plus PSEG.

 

LOGO

Based on the performance results for that period, as approved by the Organization and Compensation Committee, Mr. Cregg, Mr. LaRossa, Ms. Linde and Mr. Daly, and as recommended by the Organization and Compensation Committee and approved by the Board, Mr. Izzo, will receive payment in 2020 of shares of our common stock equal to 142% (see table below) of the grant target amounts. Although Mr. Daly was not a Named Executive Officer at the time he received his LTIP award in February 2017, we have included his payout in 2020 for the performance period.

 

44    PSEG 2020 Proxy Statement


Table of Contents

Compensation Discussion and Analysis – Our Compensation Elements Explained

 

    

 

Determination of Individual Payouts for Executives: Based on these results, participants earned a PSU payout of 142%. The dollar amount of each payout, made in shares of our common stock, is shown below, calculated using the average of the high and low price of our common stock on March 2, 2020, $52.52. These amounts are reported in the Option Exercises and Stock Vested during 2019 Table.

 

NEO

  

PSUs

Granted

(#)

    

PSUs

Earned

(#) (1)

    

PSUs

Payout

($) (1)

 

 

Ralph Izzo

 

 

  

 

 

 

 

 

101,067

 

 

 

 

 

 

  

 

 

 

 

 

159,093  

 

 

 

 

 

 

  

 

 

 

 

 

8,355,564    

 

 

 

 

 

 

Daniel J. Cregg

 

 

    

 

 

15,549

 

 

 

 

 

    

 

 

24,476  

 

 

 

 

 

    

 

 

1,285,480    

 

 

 

 

 

Ralph A. LaRossa

 

 

    

 

 

20,214

 

 

 

 

 

    

 

31,820  

 

 

 

    

 

1,671,186    

 

 

 

Tamara L. Linde

 

    

 

15,549

 

 

 

    

 

24,476  

 

 

 

    

 

1,285,480    

 

 

 

David M. Daly

    

 

3,610

 

 

 

    

 

5,683  

 

 

 

    

 

298,471    

 

 

 

 

(1)

Reflects rounding and includes accrued dividend equivalents earned.

2019 Grants: The structure of the long-term incentive is consistent with the prior grants as described in the Executive Long-Term Incentive section above, in the form of 70% PSUs and 30% RSUs vesting at the end of three years. Payouts, if any, will be based on TSR vs. peers and ROIC vs. peers on the scale below.

 

 

Performance vs. Peers

 

  

 

Payout

 

Rank 5

   200%

Rank 10

   100%

Rank 15

   20%

Rank 16 and Higher

   0%

 

Note: Chart reports payout scale for 18 peers plus PSEG for a total of 19. This scale could be adjusted if a peer undergoes a change such as being acquired.

The grants included in our Summary Compensation Table were approved in February 2019 for the Named Executive Officers. These grants are for the three-year performance period ending December 31, 2021 and are shown in the 2019 Grants of Plan-Based Awards Table. These awards are also reported in the Summary Compensation Table at the grant date fair value.

Retirement and Post-Retirement Benefits

Deferred Compensation Plans: We offer a deferred compensation plan to our officers so they can more effectively manage their personal tax obligations. Participants may elect to defer all or any portion of their cash compensation and may choose from among several different investment options based upon the choices available in our 401(k) Plan (except the Company Stock Fund and the Fidelity Brokerage Link Account), as well as a market-based rate of Prime plus 1/2%, capped at 120% of the applicable federal long-term rate.

We also have a plan that provides officers with the opportunity to defer equity compensation. The election to defer shares underlying an equity award must be made before the services giving rise to the equity award are performed. Deferred shares are held in a Rabbi Trust.

Additional details about these deferred compensation plans are provided in the descriptions following the Non-Qualified Deferred Compensation Table.

Retirement Benefits for Executives: All employees, including the Named Executive Officers, receive certain qualified retirement benefits under one of the Pension Plans, which provides either a Final Average Pay Component or a Cash Balance Component. The nature of the individual’s Pension Plan benefit depends upon the date of hire. Mr. Izzo, Mr. Cregg, Mr. LaRossa, Ms. Linde and Mr. Daly participate in the Final Average Pay Component as they each began employment before January 1, 1996.

In addition to the qualified plan, we provide certain nonqualified retirement benefits under the Reinstatement Plan and the Supplemental Plan. All of our Named Executive Officers participate in the Reinstatement Plan and Mr. Izzo and Mr. LaRossa participate in the additional limited benefit provisions of the Supplemental Plan. As described in the Pension Benefits Table, Mr. Izzo is eligible to receive additional years of credited service.

 

PSEG 2020 Proxy Statement    45


Table of Contents

Compensation Discussion and Analysis – Our Compensation Elements Explained

 

    

 

Additional information is provided in the Pension Benefits Table and the accompanying narrative, below. Amounts reported for 2019 reflect changes in the discount rate as well as actuarial changes, which impacted the benefit calculations.

We also maintain a defined contribution 401(k) Plan and provide a partial employer matching contribution for 401(k) Plan participants. We provide retirees with the opportunity to receive medical benefits with a subsidy available to participants in the Final Average Pay Component of the Pension Plan who meet the eligibility requirements.

Severance and Change-In-Control Benefits for Executives: We provide severance benefits in the event of certain employment terminations to all officers, including the Named Executive Officers. All of our Named Executive Officers participate in our Key Executive Severance Plan. Mr. Izzo is also eligible for certain other severance benefits, as described under Potential Payments Upon Termination of Employment or Change-In-Control.

We provide severance benefits upon a change-in-control to officers. A change-in-control is by its nature disruptive to an organization and its executives. Executives are frequently key players in the success of organizational change. To assure the continuing performance of these executives and maintain stability and continuity in the face of a possible termination of employment in the event of a change-in-control, we provide a competitive severance package.

Neither our Key Executive Severance Plan nor Mr. Izzo’s severance agreement provide for gross-up payments from us in the event that any Named Executive Officer or other participant is subject to an excise tax related to receipt of a change-in-control payment. Both the Key Executive Severance Plan and Mr. Izzo’s severance agreement include a “double-trigger” provision on benefits, which are paid only in the event of termination of employment following a change-in-control. PSU payments, if any, are prorated. No benefits are paid in the event of a termination for cause.

Severance and change-in-control benefits are described under Potential Payments Upon Termination of Employment or Change-in-Control.

Limited Perquisites for Executives

We provide certain perquisites that are reasonably aligned with those of our peers or provide benefit to us, such as providing personal security to executives with a high public profile and allowing executives to be productive while commuting. These include an automobile stipend (and for the CEO, a driver), parking, reimbursement of relocation expenses, annual physical examinations, limited personal and spousal travel including use of aircraft (in accordance with the policy we have established and with CEO approval), home security, limited personal technology, charitable contributions on behalf of the individual, limited club memberships, limited reimbursement of credit card annual fees and limited personal entertainment. These perquisites are described in the 2019 Summary Compensation Table, as applicable.

We do not provide a tax gross-up of personal benefit amounts deemed to be taxable income under federal or state income tax laws and regulations, except for certain relocation expenses, primarily in the case of newly hired executives.

Executive Compensation Governance Features and Controls

Role of the Compensation Consultant

The Organization and Compensation Committee has retained CAP as its independent compensation consultant to provide information, analyses and advice regarding executive and director compensation. Select responsibilities include:

 

   

Review compensation program and levels

 

   

Analyze pay and performance alignment

 

   

Provide comparative industry trends and peer data

 

   

Ad hoc support on executive compensation matters

CAP reports directly to the Organization and Compensation Committee and is prohibited from sharing certain information with management. CAP also periodically meets with the Organization and Compensation Committee in executive session without the presence of management and provides only executive compensation consulting services. In 2019, CAP attended four meetings of the Organization and Compensation Committee.

Management also retains a compensation consultant, Pay Governance, to provide market compensation data for our officers, including the Named Executive Officers. This data is made available to CAP.

In July 2019, the Organization and Compensation Committee reviewed CAP’s independence relative to the following factors: (i) CAP’s provision of other services to the Company; (ii) the amount of fees CAP receives from the Company as a percentage of CAP’s total revenue; (iii) the policies and procedures of CAP that are designed to prevent conflicts of interest; (iv) any business or personal relationship between Organization and Compensation Committee members and CAP or its compensation

 

46    PSEG 2020 Proxy Statement


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Compensation Discussion and Analysis – Executive Compensation Governance Features and Controls

 

    

 

consultants; (v) any PSEG stock owned by CAP or its compensation consultants; (vi) any business or personal relationship between our executive officers and CAP or any of its compensation consultants; and (vii) other factors that would be relevant to CAP’s independence from management. The Organization and Compensation Committee concluded that CAP is independent and no conflicts of interest exist.

Executive Compensation Risk Assessment

In 2019, CAP reviewed our compensation program to assess whether they could encourage excessive risk-taking. The risk assessment included a full inventory of all incentive compensation plans in the organization, including their design, metrics, goals and operation and a review of business and operational risks as well as governance and oversight practices and internal controls. Our Vice President and Chief Risk Officer, as well as our internal compensation professionals under the supervision of our Senior Vice President - Human Resources, provided input into this process as appropriate. Management and CAP reviewed this assessment with the Organization and Compensation Committee. Based on this review, the Organization and Compensation Committee determined that the programs are appropriately structured and do not encourage excessive risk-taking.

Our compensation programs include the following risk mitigation features:

 

   

Strong governance processes and controls in place.

 

   

A balanced total compensation package that includes a mix of base salary, benefits and annual and long-term incentive.

 

   

Multi-year vesting for long-term incentives.

 

   

Caps on the total amount of incentive compensation that can be earned and paid out annually.

 

   

Multiple dimensions of performance, including:

 

   

A balanced scorecard that includes, among other factors, ESG goals;

 

   

EPS (non-GAAP) for corporate financial performance; earnings (non-GAAP) for business unit performance; and key strategic and operational metrics that balance risks.

 

   

Organization and Compensation Committee oversight of incentive plan formulas, performance measures/goals and corresponding payment scales.

 

   

Equity compensation and our stock ownership and retention policy discourage a short-term focus.

 

   

A robust Clawback Practice.

Strong Clawback Practice

We have a Clawback Practice that has a three-year look-back and:

 

   

Applies to all incentive compensation for all non-represented employees;

 

   

Applies in the event of (i) a restatement of financial statements, (ii) recalculation of incentive compensation, in each case resulting from the employee’s misconduct or (iii) an employee’s act or omission that constitutes a material violation of our Standards of Conduct and that results or would have resulted in termination of employment; and

 

   

Is administered by the Organization and Compensation Committee for officer compensation.

Actual LTIP grants may contain additional provisions, such as recoupment for violations of non-compete, non-solicitation or confidentiality agreements. We will adjust the terms of our Clawback Practice as may be needed to comply with appropriate regulations and best practices.

Role of the CEO in Executive Compensation

The CEO attends Organization and Compensation Committee meetings, other than executive sessions. The CEO recommends changes to the salaries of his direct reports (who, in 2019, included the Named Executive Officers). The CEO develops and the Organization and Compensation Committee considers these recommendations in the context of each executive’s individual performance, experience in role and competitiveness of salary as well as internal equity among executives. The Organization and Compensation Committee believes that the role played by the CEO in this process is appropriate because the CEO is uniquely suited to evaluate the performance of his direct reports.

 

PSEG 2020 Proxy Statement    47


Table of Contents

Compensation Discussion and Analysis – Executive Compensation Governance Features and Controls

 

    

 

No Hedging and Pledging

We have a policy that prohibits all employees, including Named Executive Officers, other officers and directors, from hedging, short-selling or pledging our common stock. All employees are prohibited from trading in options, puts, calls or other derivative instruments related to PSEG equity or debt securities. They also are prohibited from purchasing our common stock on margin, borrowing against our common stock held in a margin account and or pledging our common stock as collateral for a loan. A direction to exercise and hold, or to exercise and sell, PSEG equity in compliance with an approved Rule 10b5-1 Plan is exempt from the requirement.

Trading Pre-clearance is Required for Directors and Officers

Under our Insider Trading Practice, all of our directors and officers, including the Named Executive Officers, are required to obtain pre-clearance from the Office of the General Counsel prior to engaging in any transaction involving our common stock and may only engage in transactions during “open window” periods or pursuant to pre-established plans.

Stock Ownership and Retention Policy for Executives

Our Stock Ownership and Retention Policy applies to our officers (as shown on the table). The required amount, including vested and unvested RSUs and 401(k) shares, but not unearned PSUs, must be acquired within five years.

 

 

                   
        Stock Ownership Requirement as Multiple of Base
Salary
         
   

CEO

   8x Salary         
   

Other NEOs

   4x Salary         
   

Executive Vice President

   4x Salary         
   

Senior Vice President

   2x Salary         
     

Vice President

 

  

1x Salary  

 

      
                     

 

Each officer must retain 100%, after tax and costs of issuance, of all shares acquired through equity grants, including the vesting of restricted stock or RSU grants, payout of PSU awards and exercise of option grants, until the ownership requirement is met.

Mr. Izzo, Mr. Cregg, Mr. LaRossa and Ms. Linde have each met their respective requirement. Mr. Daly was elected to his current position in October 2017 and has until January 2023 to meet his ownership requirement.

 

 

Accounting and Tax Implications

The Organization and Compensation Committee has considered the effect of Financial Accounting Standards Board Accounting Standards Codification Topic 718 (see Note 20 to Consolidated Financial Statements included in our 2019 Form 10-K) regarding the expensing of equity awards in determining the nature of the grants under the LTIP.

The Organization and Compensation Committee considers the tax-deductibility of our compensation payments as one factor in determining executive compensation. In addition, the Organization and Compensation Committee considers other factors in making decisions, as noted in this Executive Compensation section, and retains the flexibility to award compensation consistent with our compensation philosophy and program in the best interests of the Company and our stockholders even if it is not deductible. IRC Section 162(m) generally denies a deduction for federal and state income tax purposes for compensation in excess of $1 million for the CEO and certain other persons named in the Proxy Statement. At the time that the Organization and Compensation Committee made its decisions as to the 2017 incentive awards, an exemption existed for PSUs granted under the LTIP, as qualifying performance-based compensation pursuant to stockholder-approved plans. In December 2019, the Internal Revenue Service (IRS) issued proposed regulations under IRC 162(m). Certain aspects of the proposed regulations are unclear. PSEG recorded taxes based on our interpretation of the relevant statute.

Effective for 2018, the Section 162(m) exemption applicable for qualifying plans was repealed in the federal tax legislation enacted in December 2017, except for certain arrangements in place on November 2, 2017. PSUs granted in 2017 will be deductible subject to the $1 million cap.

 

48    PSEG 2020 Proxy Statement


Table of Contents

Compensation Discussion and Analysis – Compensation Committee Interlocks and Insider Participation

 

    

 

Compensation Committee Interlocks and Insider Participation

During 2019, each of the following individuals served as a member of the Organization and Compensation Committee for all or a portion of the year: Willie A. Deese, Shirley Ann Jackson, David Lilley (Chair), Barry H. Ostrowsky, John P. Surma, Richard J. Swift and Susan Tomasky. No member of the Organization and Compensation Committee was an officer or employee or a former officer or employee of any PSEG company. None of our executive officers were “interlocks” meaning none served as a director of or on the compensation committee of any of the companies for which any of these individuals served as an executive officer. No member of the Organization and Compensation Committee had a direct or indirect material interest in any transaction with us, other than as described on pages 25-26 under Certain Relationships and Related Party Transactions with respect to Barry H. Ostrowsky.

 

 

 

COMPENSATION COMMITTEE REPORT

 
The Organization and Compensation Committee of the Board of Directors has reviewed and discussed the Compensation Discussion and Analysis included in this Proxy Statement with management and with Compensation Advisory Partners LLC, the Committee’s compensation consultant. Based on this review and these discussions, the Organization and Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement.
   

Members of the Organization and Compensation Committee:

 

     
   
LOGO  

LOGO

 

LOGO

 

LOGO

 

LOGO

 

LOGO

 

LOGO

David Lilley

Chair

 

  Willie A. Deese

 

  Shirley Ann

  Jackson

 

  Barry H.

  Ostrowsky

 

  John P. Surma

 

  Richard J. Swift

 

  Susan Tomasky

   

February 17, 2020

 

           

 

PSEG 2020 Proxy Statement    49


Table of Contents

Executive Compensation Tables – 2019 Summary Compensation Table

 

    

 

EXECUTIVE COMPENSATION TABLES

2019 Summary Compensation Table

The following table summarizes the compensation of our Named Executive Officers for the years shown. The Named Executive Officers are our CEO, CFO and three most highly compensated executive officers in 2019.

 

    Name and

    Principal Position(1)

  Year    

Salary

($)(2)

   

Bonus

($)

 

Stock

Awards

($)(3)

   

Option

Awards

($)

 

Non-Equity

Incentive Plan

Compensation

($)(4)

   

Change in

Pension

Value and

Non-Qualified

Deferred

Compensation

Earnings

($)(5)

   

All Other

Compensation

($)(6&7)

   

Total

($)

 

 

    Ralph Izzo

    2019       1,380,000     -     7,395,089     -     2,052,800       2,186,000       60,338       13,074,227  

Chairman of the Board,
President & CEO

 

    2018       1,340,000     -     6,985,019     -     2,036,800       -       57,472       10,419,291  
    2017       1,300,000     -     6,500,069     -     1,803,800       963,000       54,246       10,621,115  

 

    Daniel J. Cregg

    2019       660,200     -     1,400,063     -     599,200       712,000       31,057       3,402,520  

EVP & CFO

 

    2018       628,700     -     1,200,039     -     594,100       95,000       28,929       2,546,768  
   

 

2017

 

 

 

   

 

585,000

 

 

 

  -

 

   

 

1,000,041

 

 

 

  -

 

   

 

511,200

 

 

 

   

 

483,000

 

 

 

   

 

28,960

 

 

 

   

 

2,608,201

 

 

 

 

    Ralph A. LaRossa

    2019       737,700     -     1,400,063     -     608,600       1,281,000       28,559       4,055,922  

President & COO
(Power)

 

    2018       719,700     -     4,400,095     -     597,500       1,770,000       27,292       7,514,587  
   

 

2017

 

 

 

   

 

704,808

 

 

 

  -

 

   

 

1,300,050

 

 

 

  -

 

   

 

602,000

 

 

 

   

 

777,000

 

 

 

   

 

47,590

 

 

 

   

 

3,431,448

 

 

 

 

    Tamara L. Linde

    2019       620,000     -     1,300,054     -     562,700       883,000       29,974       3,395,728  

EVP &

    2018       595,600     -     1,200,039     -     571,800       54,000       29,079       2,450,518  

General Counsel

 

   

 

2017

 

 

 

   

 

560,769

 

 

 

  -

 

   

 

1,000,041

 

 

 

  -

 

   

 

444,400

 

 

 

   

 

528,000

 

 

 

   

 

29,345

 

 

 

   

 

2,562,555

 

 

 

 

    David M. Daly

    2019       569,300     -     1,100,050     -     576,500       550,000       26,464       2,822,314  

President & COO
(PSE&G)

 

    2018       522,200     -     850,033     -     514,600       -       25,929       1,912,762  
                                                               

 

(1)

Mr. LaRossa was elected President and COO of Power effective October 2, 2017; prior to that he was President and COO of PSE&G. Mr. Daly was not an NEO in 2017; he was elected to his position effective October 2, 2017.

(2)

Amounts shown are based on annualized salary. Mr. Cregg deferred $195,000, $129,944 and $232,000 of his 2019, 2018 and 2017 salary, respectively (see 2019 Non-Qualified Deferred Compensation Table).

(3)

The amounts shown reflect the grant date fair value of the awards. For a discussion of the assumptions made in valuation, see Note 20 to the Consolidated Financial Statements included in our Form 10-K. 2019, 2018 and 2017 LTIP awards were granted in February of each year. All 2019 awards are shown in the Grants of Plan Based Awards Table and discussed in the Executive Compensation section and consist of PSUs and RSUs. PSU value is shown at the target amount. Actual value of the shares received upon vesting of RSUs depends upon the price of our common stock. Payout value of the PSUs earned at the conclusion of the three-year performance period may be less than or exceed the grant date fair value, dependent upon achieving TSR and ROIC performance factors. More detailed information is provided in the Executive Compensation section. The respective amounts shown below represent the grant date fair value of PSUs at target and maximum amounts.

 

     2019               2018               2017  
    

Value at

Target

(100%)

($)

      

Value at

Maximum

(200%)

($)

             

Value at

Target

(100%)

($)

      

Value at

Maximum

(200%)

($)

             

Value at

Target

(100%)

($)

      

Value at

Maximum

(200%)

($)

 

    Ralph Izzo

    5,176,535          10,353,070            4,889,504          9,779,008            4,550,036          9,100,072  

    Daniel J. Cregg

    980,043          1,960,086            840,025          1,680,050            700,016          1,400,032  

    Ralph A. LaRossa

    980,043          1,960,086            2,480,053          4,960,105            910,034          1,820,068  

    Tamara L. Linde

    910,000          1,820,000            840,025          1,680,050            700,016          1,400,032  

    David M. Daly

    770,039          1,540,078                  595,006          1,190,012                  -          -  

 

50    PSEG 2020 Proxy Statement


Table of Contents

Executive Compensation Tables – 2019 Summary Compensation Table

 

    

 

(4)

As discussed in the Executive Compensation section, amounts awarded were earned under the SMICP and determined and paid in the following year. Mr. Cregg deferred $179,760, $118,820 and $204,480 of his 2019, 2018 and 2017 SMICP, respectively.

(5)

Includes the change in the actuarial present value of accumulated benefit under Defined Benefit Pension Plans and Supplemental Executive Retirement Plans between calendar years 2019 and 2018, 2018 and 2017, and 2017 and 2016, determined by calculating the benefit under the applicable plan benefit formula for each of the plans, measured at December 31 of each year, based on years of credited service, earnings in effect at the respective measurement dates, applicable interest rates and other assumptions as discussed in Note 14 to the Consolidated Financial Statements included in our Form 10-K. If the aggregate change in pension plan values is negative, it is shown as zero. The changes are as follows:

 

     

Izzo

($)

    

Cregg

($)

    

LaRossa

($)

    

Linde

($)

    

  Daly  

($)

    2019

     2,186,000        712,000        1,281,000        883,000      550,000

    2018

     -        95,000        1,770,000        54,000      -

    2017

     963,000        483,000        777,000        528,000      -

Any interest earned under the Deferred Compensation Plan at the prime rate plus 1/2% did not exceed 120% of the applicable long-term rate for any of the NEOs in 2019, 2018 or 2017.

(6)

For 2019, depending on the individual, includes perquisites and personal benefits which include (a) automobile, parking and related expenses, (b) physical examinations, (c) home security systems and services, (d) limited credit card annual fees, (e) limited personal entertainment, (f) limited airline club memberships and (g) charitable contributions. For automobiles, the pro rata personal usage value of the vehicle lease cost based on the IRS Annual Lease Value Table was used or a stipend; for parking, the market value for the parking space was used; for the driver, actual pro-rata expense was used for the time devoted to CEO commuting and personal use. For all other items, actual expenses were used. No NEO received a perquisite in 2019 that exceeded the greater of $25,000 or 10% of the NEO’s total perquisite and personal benefit amount.

(7)

Includes the employer matching contribution to our 401(k) Plan at the same percentage generally available to all non-represented employees. For 2019, these amounts were:

 

     

Izzo

($)

    

Cregg

($)

    

LaRossa

($)

    

Linde

($)

    

  Daly  

($)

 

 

    401(k) Company Match

 

     11,200        11,200        11,200        11,200        11,200  

 

PSEG 2020 Proxy Statement    51


Table of Contents

Executive Compensation Tables – 2019 Grants of Plan-Based Awards Table

 

    

 

2019 Grants of Plan-Based Awards Table

The following table provides information on plan-based awards made to our Named Executive Officers for 2019.

 

         

Estimated Possible Payouts

Under Non-Equity Incentive

Plan Awards(2)

 

Estimated Future Payouts

Under Equity Incentive

Plan Awards(3)

                   

    Name and

    Type of Award(1)

 

Grant

Date

 

Threshold

($)

 

Target

($)

 

Maximum

($)

 

Threshold

(#)

 

Target

(#)

 

Maximum

(#)

 

All Other

Stock

Awards;

Number

of Shares

of Stock

or Units

(#)(4)

 

All Other

Option

Awards;

Number of

Securities

Underlying

Options

(#)

 

Exercise

or Base

Price of

Option

Awards

($/Sh)

 

Grant

Date

Fair

Value

of

Stock

and

Option

Awards

($)(5)

 

Ralph Izzo

                     

SMICP

    862,500   1,725,000   3,450,000   -   -   -   -   -   -       -

PSUs

  2/19/2019   -   -   -   8,329   83,291   166,582   -   -   -   5,176,535  

RSUs

  2/19/2019   -   -   -   -   -   -   39,462   -   -   2,218,554  

 

Daniel J. Cregg

SMICP

    247,600   495,200   990,400   -   -   -   -   -   -       -

PSUs

  2/19/2019   -   -   -   1,577   15,769   31,538   -   -   -   980,043  

RSUs

  2/19/2019   -   -   -   -   -   -   7,471   -   -   420,020  

 

Ralph A. LaRossa

SMICP

    276,650   553,300   1,106,600   -   -   -   -   -   -       -

PSUs

  2/19/2019   -   -   -   1,577   15,769   31,538   -   -   -   980,043  

RSUs

  2/19/2019   -   -   -   -   -   -   7,471   -   -   420,020  

 

Tamara L. Linde

SMICP

    232,500   465,000   930,000   -   -   -   -   -   -       -

PSUs

  2/19/2019   -   -   -   1,464   14,642   29,284   -   -   -   910,000  

RSUs

  2/19/2019   -   -   -   -   -   -   6,938   -   -   390,054  

 

David M. Daly

SMICP

    213,488   426,975   853,950   -   -   -   -   -   -       -

PSUs

  2/19/2019   -   -   -   1,239   12,390   24,780   -   -   -   770,039  

RSUs

  2/19/2019   -   -   -   -   -   -   5,870   -   -   330,011  

 

(1)

Relates to cash awards under the SMICP and equity awards (PSUs and RSUs) made under the LTIP.

(2)

Represents possible payouts under SMICP for 2019 performance. Threshold represents minimum amount payable, if earned. For payout factors, see the Executive Compensation section. The actual payouts on the awards were determined in February 2020 and paid thereafter, as reported in the 2019 Summary Compensation Table.

(3)

Represents LTIP award of PSUs described below. Threshold represents minimum amount payable, if earned. For additional information, see the Executive Compensation section.

(4)

Represents LTIP award of RSUs described below. For additional information, see the Executive Compensation section.

(5)

Represents the grant date fair value of the equity award. For a discussion of the assumptions made in valuation, see Note 20 to the Consolidated Financial Statements included in our Form 10-K.

 

52    PSEG 2020 Proxy Statement


Table of Contents

Executive Compensation Tables – Material Factors Concerning Awards Shown

 

    

 

Material Factors Concerning Awards Shown in Summary Compensation Table, Grants of Plan-Based Awards Table and Employment Agreements

SMICP

The plan-based awards for annual cash incentive compensation included in the 2019 Summary Compensation Table were paid in 2020 with respect to 2019 performance under the terms of the SMICP. The range of possible awards for each Named Executive Officer in relation to the Named Executive Officer’s target award is set forth in the Grants of Plan-Based Awards Table. An explanation of the SMICP and performance goals, measures and performance factors achieved are described under Executive Annual Cash Incentive in the Executive Compensation section.

LTIP

LTIP awards were made to Named Executive Officers in February 2019 in the form of RSUs and PSUs. The RSUs cliff vest after three years. The three-year performance period for the PSUs ends December 31, 2021, with payment, if any, made the following year. As explained in the Executive Compensation section, for retirement eligible employees, RSUs vest 1/12th per month in the year awarded and PSUs vest 1/36th per month over the three-year performance period. All of our Named Executive Officers are retirement eligible. The range of possible payouts for each Named Executive Officer in relation to the Named Executive Officer’s target award is set forth in the table above. Payments of awards granted in February 2017 will be made in 2020 based on performance for the three-year period that ended on December 31, 2019. Further explanation of PSU payment determination is set forth under Executive Long-Term Incentive in the Executive Compensation section. For additional information about vesting, see Potential Payments Upon Termination of Employment or Change-In-Control.

No stock options have been granted since 2009 and as of December 31, 2019 no stock options are outstanding. No discounted options may be granted and no repricings may be done without stockholder approval.

Employment Agreements

The CEO and each Named Executive Officer receive an annual salary review and participate in the SMICP, LTIP, Reinstatement Plan and Key Executive Severance Plan. Mr. Izzo has entered into a severance agreement, the terms of which are discussed below under Potential Payments Upon Termination of Employment or Change-in-Control. Mr. Izzo and Mr. LaRossa participate in the Supplemental Plan.

For additional information regarding severance benefit provisions, see Potential Payments Upon Termination of Employment or Change-in-Control.

 

PSEG 2020 Proxy Statement    53


Table of Contents

Executive Compensation Tables – Outstanding Equity Awards at Year-End December 31, 2019 Table

 

    

 

Outstanding Equity Awards at Year-End December 31, 2019 Table

The following table lists all outstanding awards, consisting of stock options, PSUs and RSUs, as of December 31, 2019 for our Named Executive Officers.

 

           Name and

    Option Grant Date

 

  

Number of

Securities

Underlying

Unexercised

Options

Exercisable

(#)

 

  

Number of

Securities

Underlying

Unexercised

Options

Unexercisable

(#)

 

  

Incentive Plan

Awards:

Number of

Securities

Underlying

Unexercised

Unearned

Options

(#)

 

  

Option

Exercise

Price

($)

 

  

Option

Expiration

Date

 

       

Number

of

Shares or

Units of

Stock that

have Not

Vested

(#)(1)

 

    

Market

Value

of Shares or

Units of

Stock that

have Not

Vested

($)(2)

 

    

Equity

Incentive

Plan

Awards:

Number of

Unearned

Shares,

Units or

Other Rights

that have

Not Vested

(#)(3)

 

    

Equity

Incentive

Plan

Awards:

Market or

Payout Value

of Unearned

Shares,

Units,

or Other

Rights that

have Not

Vested

($)(4)

 

 

 

Ralph Izzo

 

   -    -    -    -    -          -        -       

 

89,007

 

 

 

    

 

5,255,863

 

 

 

 

Daniel J. Cregg

 

   -

 

   -

 

   -

 

   -

 

   -

 

        

 

-

 

 

 

    

 

-

 

 

 

    

 

16,295

 

 

 

    

 

962,220

 

 

 

 

Ralph A. LaRossa

 

   -

 

   -

 

   -

 

   -

 

   -

 

        

 

32,506

 

 

 

    

 

1,919,479

 

 

 

    

 

46,387

 

 

 

    

 

2,739,152

 

 

 

 

Tamara L. Linde

 

   -

 

   -

 

   -

 

   -

 

   -

 

        

 

-

 

 

 

    

 

-

 

 

 

    

 

15,520

 

 

 

    

 

916,456

 

 

 

 

David M. Daly

 

   -

 

   -

 

   -

 

   -

 

   -

 

        

 

-

 

 

 

    

 

-

 

 

 

    

 

12,382

 

 

 

    

 

731,157

 

 

 

(1)

The vesting schedule for unvested RSUs is shown below. Dividend equivalents accrue on RSUs at the regular dividend rate and are paid in shares of common stock upon distribution. Because all NEOs are retirement eligible, their annual RSUs are fully vested as RSUs vest 1/12th each month in the year awarded. Amounts vested in 2019 are shown in the Option Exercises and Stock Vested During 2019 Table. Mr. LaRossa’s 2018 RSU retention award will vest on January 1, 2021, as this award is not subject to Retirement Eligibility vesting provisions.

 

        RSU Vesting Schedule                            
        Grant Date       

2020

(#)

    

2021

(#)

      

2022

(#)

    

Total    

(#)    

 

  Ralph A. LaRossa

    

 

 

 

2/20/2018      

 

 

     -     

 

 

 

32,506

 

 

    

 

-

    

 

 

 

32,506

 

 

 

(2)

Value represents number of shares or units multiplied by the closing price on the NYSE on December 31, 2019 of $59.05.

 

54    PSEG 2020 Proxy Statement


Table of Contents

Executive Compensation Tables – Outstanding Equity Awards at Year-End December 31, 2019 Table

 

    

 

(3)

PSUs in the table above are shown at target. PSUs awarded under the LTIP are earned based on a three-year performance period. Payment, if any, is made in the first quarter of the year following the end of the performance period. The vesting schedule below shows the number of unvested PSUs at target and maximum and includes accrued dividend equivalents. Each of the NEOs is retirement eligible. PSUs for retirement eligible NEOs vest 1/36th in their awards each month over the three-year performance period. The amounts shown for those individuals represent 12/36th of their 2018 awards that vest in 2020, 12/36th of their 2019 awards that vest in 2020 and 12/36th of their 2019 awards that vest in 2021. The schedule also includes Mr. LaRossa’s 2018 PSU retention award, which cliff vests on December 31, 2020. For further explanation of PSUs, see the Executive Compensation section.

 

      PSU Vesting Schedule  
      Grant Date     

Target

2020

(#)

    

Maximum

2020

(#)

    

Target

2021

(#)

    

Maximum

2021

(#)

    

Target

Total

(#)

    

Maximum

Total

(#)

 

    Ralph Izzo

     2/20/2018              31,710        63,420        -        -        31,710          63,420    
     2/19/2019              28,648        57,296        28,649        57,298        57,297          114,594    
                 

 

 

    

 

 

 
                             89,007                178,014    
                 

 

 

    

 

 

 
                    

 

    Daniel J. Cregg

     2/20/2018          5,448        10,896        -        -        5,448          10,896    
     2/19/2019          5,423        10,846        5,424        10,848        10,847          21,694    
                 

 

 

    

 

 

 
                           16,295          32,590    
                 

 

 

    

 

 

 
                    

 

    Ralph A. LaRossa

     2/20/2018          6,356        12,712        -        -        6,356          12,712    
     2/20/2018          29,184        58,368        -        -        29,184          58,368    
     2/19/2019          5,423        10,846        5,424        10,848        10,847          21,694    
                 

 

 

    

 

 

 
                           46,387          92,774    
                 

 

 

    

 

 

 
                    

 

    Tamara L. Linde

     2/20/2018          5,448        10,896        -        -        5,448          10,896    
     2/19/2019          5,036        10,072        5,036        10,072        10,072          20,144    
                 

 

 

    

 

 

 
                           15,520          31,040    
                 

 

 

    

 

 

 
                    

 

    David M. Daly

     2/20/2018          3,859        7,718        -        -        3,859          7,718    
     2/19/2019          4,261        8,522        4,262        8,524        8,523          17,046    
                 

 

 

    

 

 

 
                    12,382          24,764    
                 

 

 

    

 

 

 
                                                                

 

(4)

Value of PSUs is shown at target, multiplied by the closing price on the NYSE on December 31, 2019 of $59.05.

 

PSEG 2020 Proxy Statement    55


Table of Contents

Executive Compensation Tables – Option Exercises and Stock Vested During 2019 Table

 

    

 

Option Exercises and Stock Vested During 2019 Table

The following table provides information, as noted, regarding the exercise of stock options by the Named Executive Officers in 2019 and the vesting during 2019 of RSUs and PSUs previously granted to the Named Executive Officers, under our LTIP.

 

    

 

Option Awards

        

 

Stock Awards    

    Name  

Number of

Shares

Acquired on

Exercise

(#)

  

Value

Realized

on Exercise

($)(1)

         Award     

Number of

Shares

Acquired on

Vesting

(#)

    

Value      

Realized      

on Vesting      

($)      

 

    Ralph Izzo

  231,933    5,454,941         PSU(2)(3)      159,093      8,355,564      
         RSU(4)(5)      40,719      2,404,472      

 

    Daniel J. Cregg

  -    -     PSU(2)(3)      24,476      1,285,480      
         RSU(4)(5)      7,709      455,218      

 

    Ralph A. LaRossa

  -    -     PSU(2)(3)      31,820      1,671,186      
        

RSU(4)(5)

 

    

7,709

 

    

455,218      

 

 

    Tamara L. Linde

  -    -     PSU(2)(3)      24,476      1,285,480      
         RSU(4)(5)      7,159      422,741      

 

    David M. Daly

  -    -    

 

PSU(2)(3)

     5,683      298,471      
                    

RSU(4)(5)

 

 

    

6,057

 

 

    

357,667      

 

 

 

(1)

Reflects the difference between the exercise price and the market price on the date of exercise, multiplied by the number of shares acquired.

(2)

The table above shows the total payout value distributed for each of the NEOs for the 2017 grants based on the results of the three-year performance period and our common stock price, as described further in the Executive Compensation section. Each NEO became retirement eligible prior to 2018. Under the LTIP, PSUs vest 1/36th per month of service for retirement eligible participants. We show below for each NEO the number of PSUs, including accrued dividend equivalents, at both target and maximum values, that vested in 2019 with respect to their 2018 and 2019 grants. No dollar values are shown for these as payouts, if any, are dependent on the actual results of the performance metrics and applicable stock prices for the respective performance periods. The number of PSUs, including dividend equivalents, earned, if any, will be determined at the conclusion of the applicable performance periods and reported in the relevant Proxy Statements. Mr. LaRossa’s PSU retention award is not included, as the award is not subject to retirement eligible vesting provisions.

 

     

 

PSU Grant

Date

     Granted       

Target

Vested

(#)    

    

Maximum    

Vested    

(#)    

 

   Ralph Izzo

   2/20/2018      89,062      31,710        63,420      
   2/19/2019      83,291      28,648        57,296      

   Daniel J. Cregg

   2/20/2018      15,301      5,448        10,896      
   2/19/2019      15,769      5,424        10,848      

   Ralph A. LaRossa

   2/20/2018      17,851      6,356        12,712      
   2/19/2019      15,769      5,424        10,848      

   Tamara L. Linde

   2/20/2018      15,301      5,448        10,896      
   2/19/2019      14,642      5,036        10,072      

   David M. Daly

   2/20/2018      10,838      3,859        7,718      
     2/19/2019      12,390      4,262        8,524      

 

(3)

Each of the NEOs had PSUs which vested on December 31, 2019, including accrued dividend equivalents, for the three-year performance period ended that day. The final awards shown in the table were made at 142% of target, as explained in the Executive Compensation section. PSUs earned and value realized reflects rounding. Shares are issued in 2020. Value realized reflects the value of the PSUs on March 2, 2020, the PSU value determination date, using the average of the high and low NYSE stock price of $52.52. Mr. Izzo deferred payment as reported in the Non-Qualified Deferred Compensation Table.

(4)

Represents RSUs that vested for NEOs, each of whom is retirement eligible, at the NYSE closing price of $59.05 on December 31, 2019. RSUs awarded under Mr. LaRossa’s retention award are not included, as they are not subject to retirement eligible vesting.

(5)

RSUs that vested in 2017 and 2018 due to retirement eligibility were previously reported in our prior years’ Proxy Statements. RSUs that were granted in 2016 were distributed on January 1, 2019, in the following amounts, including DEUs: Mr. Izzo: 60,658 shares, with a value of $3,124.346; Mr. Cregg: 9,006 shares, with a value of $463,882; Mr. LaRossa: 13,244 shares, with a value of $682,163; Ms. Linde: 9,066 shares, with a value of $463,882. Mr. Daly received a distribution of 2,649 shares, with a value of $136,433. The average of the high and low NYSE stock price of $51.51 on December 31, 2018 was used to calculate the value of the shares. Amounts include rounding.

 

56    PSEG 2020 Proxy Statement


Table of Contents

Executive Compensation Tables – 2019 Pension Benefits Table

 

    

 

2019 Pension Benefits Table

The following table provides information on the actuarial present value of the Named Executive Officers accumulated benefit under each of our pension and retirement plans.

 

Name

 

    

Plan Name

 

  

 

Number of

Years Credited

Service

(#)

 

    

 

Present Value of  

Accumulated  

Benefit  

($)(4)  

 

 

 

Ralph Izzo

    

 

Qualified Pension Plan(1)

  

 

 

 

27.69

 

 

  

 

 

 

2,821,000  

 

 

     Retirement Income Reinstatement Plan(2)      27.69        7,375,000    
     Supplemental Executive Retirement Plan(3)      32.69        5,085,000    
          

 

 

 
                     15,281,000    
          

 

 

 
          

 

Daniel J. Cregg

    

Qualified Pension Plan(1)

     28.17        1,801,000    
     Retirement Income Reinstatement Plan(2)      28.17        1,572,000    
          

 

 

 
             3,373,000    
          

 

 

 
          

 

Ralph A. LaRossa          

    

Qualified Pension Plan(1)

     34.50        2,206,000    
     Retirement Income Reinstatement Plan(2)      34.50        4,777,000    
     Supplemental Executive Retirement Plan      34.50        1,143,000    
          

 

 

 
             8,126,000    
          

 

 

 
          

 

Tamara L. Linde

    

Qualified Pension Plan(1)

     29.46        2,015,000    
     Retirement Income Reinstatement Plan(2)      29.46        1,871,000    
          

 

 

 
             3,886,000    
          

 

 

 
          

 

David M. Daly

    

Qualified Pension Plan(1)

     32.86        1,858,000    
     Retirement Income Reinstatement Plan(2)      32.86        855,000    
          

 

 

 
             2,713,000    
          

 

 

 
                          

 

(1)

All NEOs participate in the Final Average Pay Component of the Pension Plan, described below. Years shown reflect actual years of service. Each is retirement eligible.

(2)

Years shown reflect actual years of service.

(3)

Mr. Izzo receives five additional years of credited service, for the purpose of retirement benefit calculations under the Supplemental Plan in recognition of prior work experience. Years shown reflect the sum of actual years of service and years credited under the Supplemental Plan. The actuarial present value of accumulated benefits based on actual years of service for Mr. Izzo is $13,699,000 and the actuarial present value of accumulated benefits based on additional years of service for him is $1,582,000.

(4)

Amounts shown represent the actuarial present value of accumulated benefit computed as of the same Pension Plan measurement date used for our financial statements for the year ended December 31, 2019, with these exceptions: (i) NEOs were assumed to retire at the earliest date as of which they would be eligible to receive unreduced benefits; and (ii) no pre-retirement termination, disability or death was assumed to occur. For a discussion of the valuation method and material assumptions applied in quantifying the present value, see Note 14 to the Consolidated Financial Statements included in our Form 10-K.

 

PSEG 2020 Proxy Statement    57


Table of Contents

Executive Compensation Tables – Qualified and Non-Qualified Pension Plans

 

    

 

Qualified and Non-Qualified Pension Plans

All of our employees are eligible to participate in the Pension Plan in either the Final Average Pay Component or the Cash Balance Component, depending upon date of hire.

Effective July 1, 2019, certain assets and liabilities were transferred from the Pension Plan to a new pension plan, the Pension Plan of Public Service Enterprise Group Incorporated II (Pension Plan II).

 

   

The current Pension Plan is the plan predominantly for inactive participants (i.e., retired participants and terminated vested participants).

 

   

The new plan, Pension Plan II, is the plan predominantly for active participants.

The Pension Plan and Pension Plan II each have three components: (i) Final Average Pay Component, (ii) Cash Balance Component and (iii) Represented Cash Balance Component.

The purpose of the split was to reduce the variability of pension expense while leaving the underlying benefits unchanged.

There are no changes to the benefits provided to employees under the Pension Plan or Pension Plan II.

New hires and rehires will participate in the Cash Balance Component or Represented Cash Balance Component, as applicable, of Pension Plan II.

The assets of the Pension Plan and Pension Plan II will continue to be held under a Master Trust. The assets will be tracked separately for each of the two plans. Post-split, both plans are well funded.

Final Average Pay Component

The Final Average Pay Component covers non-represented employees hired prior to January 1, 1996 and represented employees hired prior to January 1, 1997 and provides participants with a life annuity benefit at normal retirement (age 65) pursuant to a formula based upon (a) the participant’s number of years of service and (b) the average of the participant’s five or seven highest years of compensation up to the limit imposed by the IRC. We amended the Final Average Pay Component effective January 1, 2012, to change the benefit formula for non-represented participants. The effect of the change is to reduce projected pension payments. Under the new formula, the average of the participant’s seven highest years of compensation up to the limit imposed by the IRC will be used rather than the average of the participant’s five highest years of compensation. For represented participants, the benefit is based on the 5-year final average formula.

Under the Final Average Pay Component a participant’s accrued benefit is calculated under the 5-year final average formula as of December 31, 2011 and added to the 7-year final average pay formula beginning on January 1, 2012. The final average pay formula is as follows:

(i) 1.3% of the lesser of 5 or 7 year final average earnings or $24,600 times years of credited service not exceeding 35 years;

(ii) 1.5% of the amount by which 5 or 7 year final average earnings exceeds $24,600 times years of credited service not exceeding 35 years; and

(iii) 1.5% of 5 or 7 year final average earnings times years of credited service in excess of 35 years.

An additional benefit equal to $4.00 per month (effective January 1, 2018, $5.00 per month for represented employees) for each year of credited service is payable until the retiree reaches age 65.

All active participants are fully vested in their Final Average Pay Component benefit. Benefits are payable on an unreduced basis (i) at age 65, (ii) at age 60, if the participant’s age, plus years of service, equals or exceeds 80 or (iii) at age 55, if the participant has 25 or more years of service. Participants whose age, plus years of service, equals or exceeds 80, but who have not yet met the criteria in (ii) or (iii) may commence their Final Average Pay Component benefits on a reduced basis.

 

58    PSEG 2020 Proxy Statement


Table of Contents

Executive Compensation Tables – Qualified and Non-Qualified Pension Plans

 

    

 

Cash Balance Component

 

Sum of Age and Service   

 

Percentage of

Compensation

Credited

(%)

 

<30

 

  

 

2.00

 

 

30-39

 

  

 

2.50

 

 

40-49

 

  

 

3.25

 

 

50-59

 

  

 

4.25

 

 

60-69

 

  

 

5.50

 

 

70-79

 

  

 

7.00

 

 

80-89

 

  

 

9.00

 

 

90+

 

  

 

12.00

 

The Cash Balance Component covers non-represented employees hired or rehired after December 31, 1995 and represented employees hired after December 31, 1996 and provides each participant with a life annuity benefit at normal retirement (age 65) equal to the actuarial equivalent of a notional amount maintained for him/her. Participants are eligible for retirement under the Cash Balance Component upon the attainment of age 55 with five or more years of service. Participants’ accounts are credited each year with a percentage of compensation, which is determined based on the participant’s age plus years of service measured at year-end.

Each participant’s notional amount grows each year with interest credits based on a 6.0% annual rate of interest. Participants are immediately fully vested in their Cash Balance Component benefit upon hire.

Reinstatement Plan

Certain management and highly compensated employees participate in a nonqualified excess benefit retirement plan, the Reinstatement Plan, designed to replace earned pension benefits as determined under the Pension Plan formula, but which cannot be paid from the Pension Plan as a result of the IRC mandated limits for qualified plans or the terms of the Pension Plan. The benefits payable under this plan mirror those of the Pension Plan described above except that the compensation considered in computing the benefit (i) will not be limited by qualified plan limits, (ii) will include amounts deferred under the deferred compensation plan, (iii) will include amounts earned under the SMICP and the Management Incentive Compensation Plan (which are not considered under the Pension Plan), (iv) will be limited to 150% of average base salary for the applicable five or seven years for Final Average Pay Component participants and will be limited to 150% of base salary each year for Cash Balance Component participants and (v) will be offset by any benefits received by the participant under the Pension Plan.

Supplemental Plan

Certain employees receive supplemental limited retirement and death benefits in a nonqualified plan, the Supplemental Plan. In addition, prior to January 1, 2011 certain employees receive additional years of service for the purpose of retirement benefit calculations in recognition of prior allied work experience. The benefit formula mirrors the Reinstatement Plan, except that additional years of service are used. Any benefit payable under the Supplemental Plan is offset by benefits payable under the Pension Plan and the Reinstatement Plan.

Certain participants in the Supplemental Plan receive an additional limited benefit, which is a total target replacement income percentage equal to credited service for qualified pension plan calculation purposes, plus any applicable additional credited service, plus 30, to a maximum of 75%, of an average of covered compensation. Covered compensation used for determining limited benefits under the Supplemental Plan is the same as the covered compensation used under the Reinstatement Plan. The limited benefit provides that the last five or seven years are used to determine final average earnings used in the calculation. The target replacement amount under the limited benefit portion of the Supplemental Plan is reduced by any pension benefits from any previous employers accrued and vested at the time of hire, by the participant’s Social Security benefit at normal retirement age and by the pension benefits provided by each other PSEG retirement benefit plan (qualified plans and non-qualified plans). There is also a death benefit equal to 150% of base compensation if death occurs while the participant is actively employed. Participants are entitled to this benefit only upon (a) retirement under the terms of the component of the Pension Plan in which they participate or (b) death.

The change in the benefit formula under the qualified Final Average Pay Component from a five year final average pay formula to a seven year final average pay formula impacts the limited benefits under the Supplemental Plan. Accordingly, we amended the Supplemental Plan as of January 1, 2012 to reflect this change.

 

PSEG 2020 Proxy Statement    59


Table of Contents

Executive Compensation Tables – 2019 Non-Qualified Deferred Compensation Table

 

    

 

2019 Non-Qualified Deferred Compensation Table

The following table provides information regarding compensation deferred by the Named Executive Officers under our Deferred Compensation Plans.

 

   Name         

Executive

Contributions

in Last

Fiscal

Year

(2019)

($)(1)

    

Registrant

Contributions

in Last

Fiscal

Year

(2019)

($)

  

Aggregate

Earnings

in Last

Fiscal

Year

(2019)

($)(2)

    

Aggregate

Withdrawals/

Distributions

(2019)

($)

    

Aggregate

Balance

at Last

Fiscal

Year

End

(2019)

($)(1)(3)

 

 Ralph Izzo

   Deferred Compensation Plan      -      -      325,317        -        10,768,747   
   Equity Deferral Plan      11,479,906      -      11,253,747        -        91,393,364   

 Daniel J. Cregg

   Deferred Compensation Plan      374,760      -      182,925        -        1,517,694   
   Equity Deferral Plan      -      -      162,419        429,908        1,114,375   

 Ralph A. LaRossa

   Deferred Compensation Plan      -      -      -        -         
   Equity Deferral Plan      -      -      1,237,042        -        8,487,294   

 Tamara L. Linde

   Deferred Compensation Plan      -      -      -        -         
   Equity Deferral Plan      -      -      -        -         

 David M. Daly

   Deferred Compensation Plan      -      -      -        -         
     Equity Deferral Plan      -      -      -        -         

 

(1)

Amounts shown include, pursuant to the Deferred Compensation Plan, 2019 deferred salary and SMICP earned in 2019 and paid in 2020 and, pursuant to the Equity Deferral Plan, PSUs vested at December 31, 2019 and paid in 2020 and RSUs vested on January 1, 2019, as shown in the Option Exercises and Stock Vested During 2019 Table.

(2)

Reflects earnings and change in value on amount in each individual’s deferred compensation account.

(3)

Includes amounts reported in the Summary Compensation Table in prior-year Proxy Statements for the Deferred Compensation Plan and/or the Equity Deferral Plan, respectively, as follows: Mr. Izzo $7,473,894 and $49,297,869; Mr. Cregg $1,321,154 and no equity deferral as the equity grant was made prior to becoming CFO; Mr. LaRossa equity deferral of $3,814,439.

Deferred Compensation

Deferred Compensation Plan

Under the Deferred Compensation Plan, participants, including the Named Executive Officers, may elect to defer any portion of their cash compensation by making appropriate elections in the calendar year prior to the year in which the services giving rise to the compensation being deferred are rendered. A participant may change an election to defer compensation not later than the date that is the last date that an election to defer may be made.

At the same time a participant elects to defer compensation, the participant must make an election as to the timing and the form of distribution of that year’s deferrals from the Deferred Compensation Plan account. For compensation deferred in 2011 and earlier years distribution may commence (a) on the thirtieth day after the date employment is terminated or, in the alternative, (b) on January 15th of any calendar year following termination of employment elected by him/her, but in any event no later than the later of (i) the January of the year following the year of the participant’s 70th birthday or (ii) the January following termination of employment. For Named Executive Officers and other specified employees, distribution of their accounts may not occur earlier than six months following the date of their termination of service. Participants may elect to receive the distribution of their Deferred Compensation account in the form of one lump-sum payment, annual distributions over a five year period or annual distributions over a 10 year period.

With respect to compensation deferred in 2012 and future years, participants may elect to commence distribution of a particular year’s deferrals (a) six months following termination of employment or (b) a specified number of years following termination of employment. Participants may elect to receive distribution of their deferrals under the Deferred Compensation Plan in the form of a lump-sum payment or annual distributions over a period of three to fifteen years.

Under the scheduled future date distribution feature, participants may elect to receive a specific plan year’s deferral balance on a specified date as early as three years after the beginning of the year in which the deferrals are made. Distributions are paid in a lump sum within 90 days from the date elected regardless of whether the participant is employed by us on the payment date.

Participants may change their distribution elections as to future year’s deferrals. Participants may also make changes of their distribution elections with respect to prior years’ deferrals provided that (a) any such new distribution election is made at least one year prior to the previously selected commencement date or (b) the new commencement date is at least five years later than the previously selected commencement date.

 

60    PSEG 2020 Proxy Statement


Table of Contents

Executive Compensation Tables – Deferred Compensation

 

    

 

Amounts deferred under the Deferred Compensation Plan are credited with earnings based on (a) the performance of one or more of the investment portfolio funds available to employees under our 401(k) plans (except the Company Stock Fund and the Fidelity Brokerage Link Account) or (b) at the rate of Prime plus 1/2%, capped at 120% of the applicable federal long-term rate, in the percentages selected by the participant. Participants who fail to provide a designation of investment funds will accrue earnings on their accounts at the rate of Prime plus 1/2%, capped at 120% of the applicable federal long-term rate. Participants may change their investment elections on a daily basis.

For 2019, the one-year rates of returns as of December 31, 2019 for the funds offered as computed by the recordkeeper of the Deferred Compensation Plan were as follows:

 

                   Rates of Return  

Funds

      

Target Retirement Funds

  

Stable Value

     2.63  

Target Retirement Income

     13.25

Diversified Bond

     9.07  

Target Retirement 2015

     14.90

Intermediate Duration Bond

     7.15  

Target Retirement 2020

     17.66

Large Company Stock Index

     31.45  

Target Retirement 2025

     19.72

Mid-Cap Index

     31.02  

Target Retirement 2030

     21.12

International Developed Markets Index

     22.04  

Target Retirement 2035

     22.54

Small-Cap Index

     27.37  

Target Retirement 2040

     23.94

Money Market

     2.11  

Target Retirement 2045

     25.04

Other

      

Target Retirement 2050

     25.01

Prime Plus 1/2%

     3.11  

Target Retirement 2055

     25.04
      

Target Retirement 2060

     25.06
            

Target Retirement 2065

     25.08

Equity Deferral Plan

Participants in our Equity Deferral Plan may defer receipt of all or a portion of the shares of our common stock underlying future equity awards under the LTIP. Deferral elections must be made during an annual enrollment period prior to the date that services giving rise to the awards are performed. Deferral elections under the Equity Deferral Plan are irrevocable.

Individuals may make changes to their distribution elections commencing with Plan Year 2019 provided that (a) any such new distribution election is made at least one year prior to the previously selected commencement date or (b) the new commencement date is at least five years later than the previously selected commencement date.

Generally, at the time a participant elects to defer, the participant must make an election as to the timing of payment of the deferred shares. Distributions will be made in a lump sum. Distributions may commence (a) on a specified date occurring between the third anniversary and the fifteenth anniversary of the date that the shares otherwise would have been distributed to the participant (b) upon termination of employment or (c) the earlier of (a) and (b). For Named Executive Officers and other specified employees, distribution may not occur earlier than six months following the date of termination of employment. Participants will receive shares on the applicable distribution date. We hold the deferred shares in a Rabbi Trust. The dividends attributable to the deferred shares are reinvested in common stock and distributed at the same time that the deferred shares are distributed to the participants. Participants are not permitted to direct the trustee of the Rabbi Trust to vote the deferred shares.

POTENTIAL PAYMENTS UPON TERMINATION OF EMPLOYMENT OR CHANGE-IN-CONTROL

Termination without Cause

Mr. Izzo’s severance agreement provides for certain benefits if he is terminated without cause (a willful failure to perform his duties) or resigns for good reason (a reduction in pay, position or authority) during the term of this agreement. He would be paid a benefit of two times base salary and target bonus, as well as a prorated payment of the SMICP target incentive award for the year of termination. His welfare benefits would be continued for two years, unless he is sooner employed. Any unvested equity awards would be forfeited. The agreement provides that Mr. Izzo will be prohibited from competing with, and from recruiting employees from, us or our subsidiaries or affiliates, for certain periods after termination of employment. Violations of these provisions require a forfeiture of certain benefits.

Our Key Executive Severance Plan provides severance benefits to Mr. Izzo, Mr. Cregg, Mr. LaRossa, Ms. Linde, Mr. Daly and to certain of our other key executive-level employees whose employment is terminated without cause. Participants must agree to

 

PSEG 2020 Proxy Statement    61


Table of Contents

Potential Payments Upon Termination of Employment or Change-in-Control – Termination without Cause

 

 

    

 

restrictive covenants including confidentiality, non-competition and non-solicitation. Termination for cause includes certain violations of our performance, behavioral and value expectations for executives.

Also under the Key Executive Severance Plan, Mr. Cregg, Mr. LaRossa, Ms. Linde and Mr. Daly are entitled to certain severance benefits in the event that their employment was terminated without cause other than in a change-in-control situation. In such event they would be entitled to 1.0 times their annual base salary plus their target bonus, as well as a prorated payment of their SMICP target incentive award for the year of termination and certain outplacement services, educational assistance, health care and life insurance coverage. The Key Executive Severance Plan further provides that any unvested equity awards would be accelerated or forfeited in accordance with the terms of the individual’s grants under the LTIP and/or employment agreement.

In accordance with Mr. LaRossa’s retention award, upon termination, voluntary or involuntary, following a change in leadership, Mr. LaRossa would become fully vested in his retention award.

Assuming a termination without cause or for a reduction in force or reorganization had occurred on December 31, 2019, each of the Named Executive Officers would have received the following additional benefits:

 

  Termination without Cause   

Izzo

($)

    

Cregg

($)

    

 

LaRossa

($)

    

Linde

($)

    

Daly

($)

 

  Severance

 

    

 

6,210,000  

 

 

 

    

 

1,155,350  

 

 

 

    

 

1,290,975  

 

 

 

    

 

1,085,000  

 

 

 

  

996,275  

 

 

  Pro Rata Bonus (SMICP)

 

    

 

1,725,000  

 

 

 

    

 

495,150  

 

 

 

    

 

553,275  

 

 

 

    

 

465,000  

 

 

 

  

426,975  

 

 

  Unvested Restricted Stock Units(1)

 

    

 

-  

 

 

 

    

 

-  

 

 

 

    

 

1,919,538  

 

 

 

    

 

-  

 

 

 

  

-  

 

 

  Performance Share Unit Payout(1)

    

 

-  

 

 

 

    

 

-  

 

 

 

    

 

1,723,330  

 

 

 

    

 

-  

 

 

 

  

-  

 

 

  Health/Welfare Benefits

    

 

57,743  

 

 

 

    

 

10,980  

 

 

 

    

 

24,771  

 

 

 

    

 

25,346  

 

 

 

  

24,557  

 

 

  Outplacement

    

 

25,000  

 

 

 

    

 

25,000  

 

 

 

    

 

25,000  

 

 

 

    

 

25,000  

 

 

 

  

25,000  

 

 

  Education Assistance

    

 

3,000  

 

 

 

    

 

3,000  

 

 

 

    

 

3,000  

 

 

 

    

 

3,000  

 

 

 

  

3,000  

 

  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  Aggregate Payments

 

    

 

  8,020,743  

 

 

 

    

 

  1,689,480  

 

 

 

    

 

  5,539,889  

 

 

 

    

 

  1,603,346  

 

 

 

  

  1,475,807  

 

 

(1)

Includes Mr. LaRossa’s 2018 retention award.

Assuming a termination due to death or disability had occurred on December 31, 2019, each of the Named Executive Officers would have received the following additional benefits:

 

   Termination Upon Death or Disability   

Izzo

($)

    

 

Cregg

($)

    

LaRossa

($)

    

Linde

($)

    

Daly

($)

   Unvested and Vested Restricted Stock Units(1)(2)

     141,660          25,918          1,946,929          24,697        19,666  

   Performance Share Unit Payout(1)

     -          -          1,723,330          -        -  

   Death Benefit Under Supplemental Plan(3)

     2,070,000          -          1,106,550          -        -  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

   Aggregate Payments

       2,211,660                 25,918            4,776,809                 24,697               19,666  

 

(1)

For Mr. LaRossa, includes his 2018 retention award.

 

(2)

All annually granted RSUs for all NEOs, each of whom are retirement eligible, were vested at December 31, 2019. Amounts shown for them represent the difference in present value of the accelerated payout at December 31, 2019.

 

(3)

Includes an additional death benefit under the Supplemental Plan equal to 1.5 times base salary.

Change-In-Control

Under our Key Executive Severance Plan, if any of Mr. Izzo, Mr. Cregg, Mr. LaRossa, Ms. Linde and Mr. Daly is terminated without cause or resigns for good reason within two years after a change-in-control, the individual will receive (1) three times (two times for Mr. Cregg, Ms. Linde and Mr. Daly) the sum of the Named Executive Officer’s salary and target incentive bonus, (2) a pro rata bonus based on the Named Executive Officer’s target annual incentive compensation, (3) accelerated vesting of equity-based awards, except for PSUs, which vest pro rata, based on target, (4) a lump sum payment equal to the actuarial equivalent of the Named Executive Officer’s benefits under all of our retirement plans in which the individual participates calculated as though the Named Executive Officers remained employed for three years (two years for Mr. Cregg, Ms. Linde and Mr. Daly) beyond the date employment is terminated less the actuarial equivalent of such benefits on the date employment terminates (reported in the table below as Enhanced Retirement Benefit for pension-related amount and as Retiree Medical Increase for amount due for retiree medical benefits), (5) three years (two years for Mr. Cregg, Ms. Linde and Mr. Daly) continued welfare benefits, (6) one year of PSEG-paid outplacement services and (7) vesting of any compensation previously deferred. Payments are limited to an amount that would not give rise to an excise tax liability under applicable IRS provisions, currently 2.99 times the individual’s average W-2 compensation for the period. Amounts above that limit are forfeited. Potential payments are shown in the Change-in-Control Termination Table.

 

62    PSEG 2020 Proxy Statement


Table of Contents

Potential Payments Upon Termination of Employment or Change-in-Control – Change-in-Control

 

    

 

Assuming a termination without cause or resignation with good reason had occurred on December 31, 2019 following a change-in-control, each of the Named Executive Officers would have received the following benefits:

 

   Change-in-Control  Termination   

 

Izzo

($)

    

Cregg

($)

    

LaRossa

($)

    

Linde

($)

    

Daly

($)

 

  Severance

     9,315,000          2,310,700          3,872,925          2,170,000          1,992,550  

  Pro Rata Bonus (SMICP)

     1,725,000          495,150          553,275          465,000          426,975  

  Unvested and Vested Restricted Stock Units(1)(2)

     141,660          25,918          1,946,929          24,697          19,666  

  Performance Share Unit Payout(1)

     5,436,586          963,657          2,794,210          940,767          707,366  

  Enhanced Retirement Benefit

     -          368,000          -          299,000          259,000  

  Retiree Medical Increase

     -          279,000          -          261,000          -  

  Health/Welfare Benefits

     97,037          23,986          84,734          57,641          55,794  

  Outplacement

     25,000          25,000          25,000          25,000          25,000  

  Parachute Payments Forfeited

     -          (2,520,568)         -          -          (700,815
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

  Aggregate Payments

       16,740,283            1,970,843            9,277,073            4,243,105            2,785,536  

 

(1)

For Mr. LaRossa, includes his 2018 retention award.

(2)

All annually granted RSUs for all NEOs, each of whom are retirement eligible, were vested at December 31, 2019. Amounts shown for them represent the difference in present value of the accelerated payout at December 31, 2019.

A Named Executive Officer would not be eligible for any payments under the Key Executive Severance Plan, either prior to or following a change-in-control, if the Named Executive Officer voluntarily terminated employment (other than for good reason as described above under Termination Without Cause) or if employment was terminated for cause.

In the case of a Named Executive Officer’s retirement or termination of employment on account of death or disability, the Key Executive Severance Plan provides that the Named Executive Officer would be entitled to accrued pay through the date of termination and prorated payment of that Named Executive Officer’s target incentive award for the year of termination.

Change-in-control provisions under the Key Executive Severance Plan generally mean the occurrence of any of the following events:

 

   

Any person is or becomes the beneficial owner of our securities representing 25% or more of the combined voting power of our then outstanding securities; or

 

   

A majority of the Board is replaced without approval of the current Board; or

 

   

There is consummated a merger or consolidation of us, other than a merger or consolidation which would result in our voting securities outstanding immediately prior to the merger continuing to represent at least 75% of the combined voting power of the securities of us or the surviving entity immediately after the merger or consolidation; or

 

   

Our stockholders approve a plan of complete liquidation or dissolution of us or there is consummated an agreement for the sale or disposition by us of all or substantially all of our assets.

For additional information regarding the provisions of LTIP awards, see Material Factors Concerning Awards Shown in Summary Compensation Table, Grants of Plan-Based Awards Table and Employment Agreements.

PAY RATIO

We have calculated the ratio of our CEO’s compensation to that of our median employee. In doing so, we reviewed a comparison of our CEO’s annual total compensation for 2019 to that of all other employees in 2019, using the same methodology and elements of compensation as we used in determining the total compensation shown for our CEO in the Summary Compensation Table that appears on page 50. The median employee was determined using internal payroll records of income reported on IRS Form W-2, which is a consistently applied compensation measure, as provided by the applicable SEC provisions. We believe that the pay ratio shown below is a reasonable estimate calculated in a manner consistent with those provisions. We note that our calculation does not include all elements of our employee compensation package, such as health insurance and other benefits generally applicable to all employees.

For 2019, for purposes of this pay ratio disclosure, the compensation of our median employee was $142,188 and the compensation of our CEO was $13,074,227. The ratio of CEO to median employee pay was approximately 92:1.

 

PSEG 2020 Proxy Statement    63


Table of Contents

Ratification of Auditor

 

    

 

LOGO

The Audit Committee has appointed Deloitte & Touche LLP of Parsippany, NJ, as the independent auditor for the fiscal year ending December 31, 2020, because it believes that doing so is in the best interests of the Company and its stockholders. The responsibilities of the independent auditor include auditing our financial statements and our internal controls over our financial reporting. Deloitte (or its predecessors) has performed the annual audit of the books of account of PSEG (and its predecessors) since 1934. PSEG derives many benefits from the long-term relationship, including:

 

   

Enhanced audit quality due to a deep understanding of our business, accounting policy and practices and internal controls; and

 

   

Efficient fee structures due to experience and a familiarity with our Company and industry.

As recommended by the Board, we ask you to ratify this appointment.

Representatives of Deloitte plan to be present at the 2020 Annual Meeting. They will have an opportunity to make a statement if they so desire and to respond to appropriate questions.

Vote required: An affirmative vote requires a majority of the votes cast in person or by proxy, excluding abstentions and shares withheld for which no instructions are given and are not voted.

LOGO   THE BOARD RECOMMENDS A VOTE FOR THIS PROPOSAL.

 

64    PSEG 2020 Proxy Statement


Table of Contents

Ratification of Auditor – Oversight of the Independent Auditor

 

    

 

OVERSIGHT OF THE INDEPENDENT AUDITOR

The Audit Committee is solely responsible for the appointment, termination, compensation and oversight of the work of PSEG’s independent registered public accounting firm, Deloitte. The Audit Committee also annually reviews its independence, performance, the selection of the lead engagement partner and reports on its performance by the Public Company Accounting Oversight Board and peer reviewers. Under applicable accounting requirements, there is a mandatory rotation of the lead engagement partner every five years. The current lead engagement partner was appointed in 2018. The Audit Committee discusses with the independent auditor the audit and any issues encountered. Additional information about the Audit Committee’s responsibilities appears above in the section on the Audit Committee on page 17.

Pre-Approval of Services

In accordance with its charter, the Audit Committee annually pre-approves all audit and non-audit services to be provided by our independent auditor subject to predetermined limits set for each category of service. The annual pre-approval of services and predetermined limits is documented in an Audit Committee resolution.

During the year, circumstances may arise when it becomes necessary to engage the independent auditor for additional services. For those instances, the Chair of the Audit Committee has been authorized to approve fees and services in excess of those authorized in the resolution. The Chair is required to report any such authorizations to the Audit Committee at its next meeting.

Fees Billed by Deloitte for 2019 and 2018

The table below shows the fees paid to Deloitte during or in connection with 2019 and 2018. All fees billed by and paid to Deloitte were negotiated by management under the direction of our CFO with the oversight and approval of the Audit Committee.

 

      Years ended December 31  
    

2019

     2018  
   Description of Professional Service    (millions)  

Audit Fees - The audit fees were incurred for audits of our annual consolidated financial statements and those of our subsidiaries, including our Annual Reports on Form 10-K, reviews of financial statements included in our quarterly reports on Form 10-Q and for services rendered in connection with certain financing transactions, statutory and regulatory filings and fees for accounting consultations related to the application of new accounting standards and rules.

     $6.8        $6.8    

Audit Related Fees - The audit related fees primarily related to performing certain attest services.

     -        0.2    

Tax Fees - The tax fees relate to tax compliance and tax advice for preparation of various state and foreign corporate returns and assistance with filing tax refund claims.

     0.1        0.1    

All Other Fees

     -        -