DEF 14A 1 d85714ddef14a.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.     )

 

 

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

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  Preliminary Proxy Statement
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  Definitive Proxy Statement
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  Soliciting Material under §240.14a-12

PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED

(Name of Registrant as Specified in Its Charter)

 

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Leading toward a sustainable future 2021 Proxy Statement Notice of Annual Meeting April 20, 2021 1 p.m. ET Virtual Only PSEG > Powering Progress PSEGLeading toward a sustainable future 2021 Proxy Statement Notice of Annual Meeting April 20, 2021-1 p.m. ET Virtual Only PSEG > Powering Progress PSEG


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LOGO

One of Americas Best Employers for DiversityForbes2020 Public Company Board of the YearNational Association of Corporate Directors, New Jersey ChapterEnergy Star Partner of the Year Award (PSEG LI)U.S. Environmental Protection AgencyMost Trusted Combined Gas & Electric Utility in the East, Most Trusted BrandCogent Syndicated Brand Trust IndexFramatome Top Innovative Practice Award (PSEG Nuclear)Nuclear Energy InstituteCorporate Citizenship Award (Large Business)Long Island Business NewsReliabilityOneTM Award for Outstanding Reliability Performance in Mid-Atlantic Metropolitan Region, 19th consecutive yearPA Consulting2020 Outstanding Customer Engagement AwardPA ConsultingDow Jones Sustainability North America Index, 13th consecutive yearDow JonesTop Utilities Company, 2020 Reader RankingNJBIZAmericas Most Responsible Companies 2021NewsweekRECENTAW A R D S & R E C O G N I T I O NJan.2020 Jan.Jun. Jun. Jul. Sept. Nov. Nov. Nov. Nov. Dec. Best Employers for Diversity 2020 Forbes2020 Public Company Board of the YearNational Association of Corporate Directors, New Jersey ChapterEnergy Star Partner of the Year Award (PSEG LI)U.S. Environmental Protection AgencyMost Trusted Combined Gas & Electric Utility in the East, Most Trusted BrandCogent Syndicated Brand Trust IndexFramatome Top Innovative Practice Award (PSEG Nuclear)Nuclear Energy InstituteCorporate Citizenship Award (Large Business)Long Island Business NewsReliabilityOneTM Award for Outstanding Reliability Performance in Mid-Atlantic Metropolitan Region, 19th consecutive yearPA Consulting2020 Outstanding Customer Engagement AwardPA ConsultingDow Jones Sustainability North America Index, 13th consecutive yearDow JonesTop Utilities Company, 2020 Reader RankingNJBIZAmericas Most Responsible Companies 2021NewsweekRECENTAW A R D S & R E C O G N I T I O NJan.2020 Jan.Jun. Jun. Jun. Jul. Nov. Nov. Nov. Nov. Dec.


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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

AND PROXY STATEMENT OF PSEG

The Annual Meeting of Stockholders of Public Service Enterprise Group Incorporated (the “Company”) will be held on Tuesday, April 20, 2021, at 1:00 p.m. Eastern Time. Due to the public health impact of the coronavirus outbreak (COVID-19) and to support the health and well-being of our stockholders and other meeting participants, the Annual Meeting will be held in a virtual only format via live webcast on the internet. You will not be able to attend the Annual Meeting in person. However, stockholders of record as of the close of business on February 19, 2021 will be able to attend, vote, and submit questions during the virtual meeting by registering at: register.proxypush.com/peg

 

           

DATE

 

April 20, 2021

at 1:00 P.M., Eastern Time

 

VIRTUAL MEETING

 

To attend the meeting

register at: register.proxypush.com/peg

 

LOGO

 

Scan this QR code to access the 2021 PSEG Proxy Statement and 2020 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 19, 2021

        

You are encouraged to vote your shares in advance of the Annual Meeting for the following items:

 

1.  Elect ten members of the Board of Directors (Board) to hold office until the Annual Meeting of Stockholders in 2022, or until each director’s respective successor is elected and qualified;

 

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

 

3.  Ratify the appointment of Deloitte & Touche LLP (Deloitte) as independent auditor for 2021;

 

4.  Approve the 2021 Equity Compensation Plan for Outside Directors;

 

5.  Approve the 2021 Long-Term Incentive Plan; and

 

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

 

By order of the Board of Directors,

 

Michael K. Hyun

 

Secretary

 

March 15, 2021

 

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.

 

Voting Methods for Stockholders

 

       

 

MAIL

EQ Shareowner Services

P.O. Box 64945

St. Paul, MN 55164-0945

 

       

 

INTERNET/MOBILE

www.proxypush.com/peg

 

 

 

PHONE

1-866-883-3382 (toll-free)

 


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Please vote on these items:

 

                    
          PROPOSAL             PROPOSAL             PROPOSAL         
   1  

Election of Directors

     2  

Advisory Vote on the Approval of Executive Compensation

     3  

Ratification of the Appointment of Independent Auditor

 

 
                    
             
                            PROPOSAL             PROPOSAL                           
   4  

Approval of the 2021

Equity Compensation

Plan for Outside Directors

     5  

Approval of the 2021

Long-Term Incentive Plan

 

 
             

To Submit Proposals for the 2022 Annual Meeting

 

 

FINAL DATE

 

November 15, 2021

(last day for receipt by us)

 

 

CONTACT

 

Corporate Secretary, PSEG

80 Park Plaza, T4B, Newark, NJ 07102

 

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 84-88.

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be held on April 20, 2021 (Annual Meeting).

The Proxy Statement and Annual Report to Stockholders are available at www.pseg.com/annualmeeting.

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 15, 2021.

Public Service Enterprise Group Incorporated (we, us, our, PSEG or the Company) is distributing this Proxy Statement to solicit proxies in connection with our 2021 Annual Meeting of Stockholders.

 

LOGO

Save Trees Go Paperless.

 

 

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 87.

 

 

   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 2021 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  

Gender, Racial and Ethnic Diversity

     7  

Director Independence

     7  

Board Refreshment and Tenure

     8  

Board Membership Selection

     9  

Board Selection Criteria and Qualifications

     9  
NOMINEES FOR DIRECTOR      9  

Biographical Information

     10  
CORPORATE GOVERNANCE      15  

Role of the Board of Directors

     15  

Board Leadership Structure

     15  

The Role of Our Lead Director

     15  

Our Corporate Governance Principles

     15  

Board and Committee Self-Assessment Process

     16  

Director Education and Orientation

     16  

Board and Committee Meetings and Attendance

     17  

Service on Other Boards

     17  

Board Committees

     17  

Integrated Approach to Shareholder Engagement

     21  

Board and Committee Oversight of Risk Management

     22  

Board Oversight of Cybersecurity

     22  

Response to COVID-19 Pandemic

     23  

Our Approach to Sustainability

     25  

Our Environmental Priorities

     26  

Our Social Priorities

     27  

Our Governance Priorities

     30  

Certain Relationships and Related Person Transactions

     32  

Conflicts of Interest

     33  
SECURITY OWNERSHIP OF DIRECTORS, MANAGEMENT AND CERTAIN BENEFICIAL OWNERS      34  

Delinquent Section 16(a) Reports

     35  
DIRECTOR COMPENSATION      35  

How Our Directors Are Compensated

     36  
Proposal 2: ADVISORY VOTE ON THE APPROVAL OF EXECUTIVE COMPENSATION      38  
EXECUTIVE COMPENSATION SUMMARY      39  

2020 Named Executive Officers

     39  

2020 Company Performance Overview

     40  

Executive Compensation Philosophy and Pay for Performance

     41  
EXECUTIVE COMPENSATION      42  

Say-On-Pay and Shareholder Engagement

     42  

Executive Compensation Best Practices

     42  

Peer Comparison and Benchmarking

     43  

How We Compensate Our Executives

     45  

Our Compensation Elements Explained

     47  

Executive Compensation Governance Features and Controls

     52  

Accounting and Tax Implications

     54  

Compensation Committee Interlocks and Insider Participation

     55  
COMPENSATION COMMITTEE REPORT      55  
EXECUTIVE COMPENSATION TABLES      56  

2020 Summary Compensation Table

     56  

2020 Grants of Plan-Based Awards Table

     58  

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

     59  

Outstanding Equity Awards at Year-End December  31, 2020 Table

     60  

Option Exercises and Stock Vested During 2020 Table

     62  

2020 Pension Benefits Table

     63  

Qualified and Non-Qualified Pension Plans

     64  

2020 Non-Qualified Deferred Compensation Table

     66  

Deferred Compensation

     66  
POTENTIAL PAYMENTS UPON TERMINATION OF EMPLOYMENT OR CHANGE-IN-CONTROL      68  

Termination without Cause

     68  

Change-In-Control

     69  
PAY RATIO      70  
Proposal 3: RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITOR      71  
OVERSIGHT OF THE INDEPENDENT AUDITOR      72  

Pre-Approval of Services

     72  

Fees billed by Deloitte for 2020 and 2019

     72  
AUDIT COMMITTEE REPORT      73  
Proposal 4: APPROVAL OF THE 2021 EQUITY COMPENSATION PLAN FOR OUTSIDE DIRECTORS      74  
Proposal 5: APPROVAL OF THE 2021 LONG-TERM INCENTIVE PLAN      77  
ANNUAL MEETING, VOTING AND PROCEDURES      84  
APPENDIX A: OPERATING EARNINGS (Non-GAAP) AND ADJUSTED EBITDA (Non-GAAP) RECONCILIATIONS      A-1  
APPENDIX B: 2021 EQUITY COMPENSATION PLAN FOR OUTSIDE DIRECTORS      B-1  
APPENDIX C: 2021 LONG-TERM INCENTIVE PLAN      C-1  
 

 

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.

 

  ii         PSEG 2021 Proxy Statement    


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Proxy Statement Summary

 

 


 

 

 

PROXY STATEMENT SUMMARY

This summary highlights information that is contained elsewhere in this Proxy Statement. It does not contain all the information that you should consider. We encourage you to read the entire Proxy Statement carefully before voting.

 

 

ANNUAL MEETING AGENDA AND VOTING RECOMMENDATIONS

 

 

At the Annual Meeting, you will be asked to vote on the following five proposals. It is our recommendation that you vote in favor of all five.

 

     

Proposal

Board
Recommendation
Page  
Reference  

1.

 Election of Directors

         FOR   6

2.

 Advisory Vote on the Approval of Executive Compensation

         FOR   38

3.

 Ratification of the Appointment of Deloitte as Independent Auditor for 2021

         FOR   71

4.

 Approval of the 2021 Equity Compensation Plan for Outside Directors

         FOR   74

5.

 Approval of the 2021 Long-Term Incentive Plan

         FOR   77

Ensuring that our Board has the optimal balance of skills, viewpoints, perspectives and experiences is a top priority of the Board and the Corporate Governance Committee. The nominees you are being asked to vote for are a diverse group of highly qualified leaders with a broad range of business, industry, academic and public service experience. Our Board nominees also reflect our commitment to diversity.

For additional information about the diversity, experience, skills and qualifications of each individual nominee, please see the charts on page 2 and pages 6-8 and biographical data on pages 10-14.

 

 

WHAT’S NEW?

 

 

 

 

This year we have expanded our discussion of the following items:

 

  Integrated Approach to Shareholder Engagement, see page 21.

 

  Board Oversight of Cybersecurity, see page 22.

 

  Human Capital Management, including Diversity, Equity and Inclusion, see pages 27-30.

 

  Oversight of Political Contributions and Engagement Activities, see page 31.

 

  COVID-19 Response:

 

  Oversight of COVID-19 Risk Management, see page 23;

 

  COVID-19 Response (Community, Customers, Employees), see page 24; and

 

  No COVID-19 Adjustments to Compensation, see page 41.

  

 

ESG Highlights (p.24-31) Announced exploration of strategic alternatives for non-nuclear assets. Gained NJBPU approval for the Clean Energy Future proposal to invest $1 billion in Energy Efficiency programs, approximately $700 million for Energy Cloud/Smart Meters (AMI) and $166 million for Electric Vehicle charging infrastructure. Entered into an agreement to acquire a 25% interest in Orsteds 1,100MW Ocean Wind project, located off the coast of New Jersey, (subject to regulatory approval). Added Equity to our Diversity & Inclusion strategy for a renewed focus on fair and equitable workplace processes. Enhanced transparency on workforce diversity. Enhanced oversight and transparency of political contributions and engagement.

LOGO


 

    PSEG 2021 Proxy Statement       1

 


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Proxy Statement Summary

 

 


 

 

 

OUR DIRECTOR NOMINEES

 

Name

  Age  

Director

Since

  Primary Occupation   Independent   Committee
Memberships

Ralph Izzo

  63   2006   Chairman of the Board, President and Chief Executive Officer (CEO) of PSEG            E (Chair)

Shirley Ann Jackson

Lead Director

  74   2001   President of Rensselaer Polytechnic Institute          CG, E, IO, O

Willie A. Deese

  65   2016   Retired Executive Vice President (EVP) of Merck & Co. Inc.          A, CG (Chair), O

David Lilley

  74   2009   Retired Chairman of the Board, President and CEO of Cytec Industries, Inc.          A, E, F, O (Chair)

Barry H. Ostrowsky

  70   2018   President and CEO of RWJBarnabas Health, Inc.          A, F, O

Scott G. Stephenson

  63   2020   Chairman of the Board, President and CEO, Verisk Analytics, Inc.          F, IO

Laura A. Sugg

  60   2019   Retired President – Australasia Division of ConocoPhillips Corporation          A, IO (Chair)

John P. Surma

  66   2019   Retired Chairman and CEO, United States Steel Corporation          CG, IO, O

Susan Tomasky

  68   2012   Retired President – AEP Transmission of American Electric Power Corporation          A (Chair), CG, E, O

Alfred W. Zollar

  66   2012   Retired General Manager – Tivoli Software Division of IBM Corporation          A, F (Chair), IO

A=Audit    CG=Corporate Governance    E=Executive    F=Finance    IO=Industrial Operations    O=Organization and Compensation

GOVERNANCE HIGHLIGHTS

PSEG is committed to strong corporate governance practices, as we recognize that they contribute to long-term stockholder value. For additional information on our corporate governance, see the section under Proposal 1: Election of Directors beginning on page 6.

 

 

LOGO

Board Tenure Gender, Racial and Ethnic Diversity Board Independence 4 new directors added in the last 4 years bringing fresh perspectives to the BoardBoard Tenure Gender, Racial and Ethnic Diversity Board Independence 3 Directors 10+ years Average Tenure 7.8 years 4 Directors 04 years 3 Directors 59 years 50% Diversity 3 Directors Racially/Ethnically Diverse Lead Director 3 Directors Women 9 of 10 Are independent (all but CEO) 4 new directors added in the last 4 years bringing fresh perspectives to the Board

Governance Best Practices

 

  Annual election of all directors

  Majority voting for directors with a director resignation policy

  Stockholders’ right to call special meetings

  Proxy access

  No poison pill

  Independent board (all but CEO)

  Strong independent Lead Director with clear duties

  Regular executive sessions of independent directors

  Regular engagement with investors

    

  Board oversight of sustainability, climate change, cybersecurity, and human capital management (including diversity, equity, and inclusion)

  Diverse directors’ skills, qualifications, gender, race and ethnicity (50% women and/or racially/ethnically diverse; Corporate Governance Committee is 75% gender and/or racially/ethnically diverse; two Committees chaired by women; two Committees chaired by racially/ethnically diverse directors)

  Robust stock ownership requirements for directors and executives

  Succession planning for CEO and key executives

  Annual disclosure of political engagement activities

 


 

  2         PSEG 2021 Proxy Statement    

 


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Proxy Statement Summary

 

 


 

    

2020 PERFORMANCE SNAPSHOT

The charts below compare the relative contributions to earnings of Public Service Electric and Gas Company (PSE&G) and PSEG Power LLC (PSEG Power or Power) over the past five years and show our earnings growth in those years. Our financial highlights are presented below. You can find a more comprehensive discussion of our 2020 business and financial performance in our 2020 Form 10-K.

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

 

 

LOGO

$3.76$3.33 $3.43$3.28$3.10 $2.93 $3.12$2.83 $2.90 7 594 13122 468 20 4306 72 502 409 479 365 505 514$1.75 181,067 1,250 1,327 1,250 1,327 973 963 1,067 889 889(20) (25) (16) (16)2016 2017 2018 2019 2020 2016 2017 2018 2019 2020PSEG Enterprise/Other PSEG Enterprise/Other PSEG Power PSEG Power PSE&G PSE&GNet Income per share (GAAP) Opera ng Earnings per share (non-GAAP)GAAP: Contribution to PSEG Net Income ($ Millions)and Net Income per share ($/Share)Non-GAAP: Contribution to PSEG Operating Earnings ($ Millions)and Operating Earnings per share ($/Share)

Financial Highlights

 

     

Dollars in Millions, except per share amounts

  

2020 ($)

    

2019 ($)

 

Operating Revenues

     9,603        10,076  

Net Income

     1,905        1,693  

Total Assets

     50,050        47,730  

Earnings Per Share (EPS) – Diluted

     3.76        3.33  

Dividends Paid per Share

     1.96        1.88  

Market Price per Share – Year-end

     58.30        59.05  

PSEG Value Proposition

We conduct our business through two direct wholly owned subsidiaries, PSE&G and PSEG Power. We are an energy company with a diversified business mix with operations primarily in the Northeastern and Mid-Atlantic United States. Our business approach focuses on operational excellence, financial strength and disciplined investment.

 

 

LOGO

Operational Excellence Safe, Reliable Operations with Commitment to Continuous Improvement Financial Strength Sound Credit Quality, Balance Sheet and Cash Flow Disciplined Investment Aligned with NJ Energy and Environmental Goals


 

    PSEG 2021 Proxy Statement       3

 


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Proxy Statement Summary

 

 


 

    

EXECUTIVE COMPENSATION HIGHLIGHTS

 

 

SAY ON PAY

 

Stockholders continued to show strong support for our executive compensation programs, with 94.1% of the votes cast for the approval of the “say on pay” proposal at our 2020 Annual Meeting.

 

  

 

94.1%

Approval in 2020

 

The following are some highlights of our executive compensation program. Our executive compensation program is benchmarked against our peers and helps us recruit and retain top talent. Our executive compensation program closely links pay to performance in order to align our leadership team’s interests with stockholders’ interests. Our incentives put a significant portion of our executives’ pay at risk based on performance.

Our independent compensation consultant, Compensation Advisory Partners LLC (CAP), provides executive compensation services to the Board.

 

     

Key Components

  

Type

  

Rationale

Base salary

   Fixed    Experience, performance and competitive market.

Annual cash incentive under our Senior Management Incentive Compensation Plan (SMICP)

   Variable performance-based    Emphasis on Operating EPS (non-GAAP) as the corporate financial objective and business unit financial performance, as well as additional operational and strategic metrics. Payment opportunity from zero to 200% of target percentage of salary.

Equity-based incentive awards under our Long-Term Incentive Plan (LTIP), consisting of performance share units (PSUs) and restricted stock units (RSUs)

   Variable performance-based   

PSUs (70% for the Named Executive Officers (NEOs)) are measured over a three-year period based equally upon Total Shareholder Return (TSR) and Return on Invested Capital (ROIC) vs. peers with the opportunity to earn between zero and 200% of target.

 

RSUs (30% for the NEOs) cliff vest at the end of three years, unless retirement eligible, when RSUs vest one-twelfth per month over one year. All of our NEOs are retirement eligible.

Retirement and post-employment benefits

        Assist in attracting and retaining our executives and provide a competitive benefits package to our employees.

 

  4         PSEG 2021 Proxy Statement    

 


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Proxy Statement Summary

 

 


 

    

Executive Pay Mix

For 2020, the target annual and long-term incentive pay for our CEO and other NEOs as a group was 89% and 77%, respectively, of target Total Direct Compensation.

 

 

LOGO

CEO Pay Mix Average Other NEO Pay Mix 11% 16% 73% 23% 58% 19% Salary SMICP LTIP Value at Risk

2020 TARGET COMPENSATION SUMMARY

 

Executive

   Base
Salary ($)
     Annual
Incentive
     Target
Total
Cash ($)
    

 

Long-Term Incentive ($)

     Target Total
Compensation
($)
 
   PSUs      RSUs  

Ralph Izzo

  

 

1,421,400

 

  

 

140

  

 

3,411,360

 

  

 

6,370,046

 

  

 

2,730,029

 

  

 

12,511,435

 

Daniel J. Cregg

  

 

680,000

 

  

 

75

  

 

1,190,000

 

  

 

1,134,027

 

  

 

486,030

 

  

 

2,810,057

 

Ralph A. LaRossa

  

 

787,000

 

  

 

90

  

 

1,495,300

 

  

 

1,680,020

 

  

 

720,044

 

  

 

3,895,364

 

Tamara L. Linde

  

 

638,600

 

  

 

75

  

 

1,117,550

 

  

 

910,021

 

  

 

390,004

 

  

 

2,417,575

 

David M. Daly

  

 

600,000

 

  

 

75

  

 

1,050,000

 

  

 

952,013

 

  

 

408,005

 

  

 

2,410,018

 


 

    PSEG 2021 Proxy Statement       5

 


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Overview of Board Nominees – Diversity of Skills, Qualifications and Experience

 

 


 


    

LOGO

PROPOSAL 1 ELECTION OF DIRECTORS

OVERVIEW OF BOARD NOMINEES

You are being asked to vote on the election of ten directors.

Our Corporate Governance Principles (Governance Principles) place great emphasis on diversity that utilizes a broad meaning to include a balance of factors such as race, ethnicity, gender, background, experience, leadership positions, skills, accomplishments, financial expertise, professional interests, personal qualities and other traits desirable for achieving an appropriate group of qualified individuals.

Our Board is composed of the right mix of skills and backgrounds to enable us to achieve our strategic goals. Each director elected at the Annual Meeting is elected to serve a one-year term. Our Corporate Governance Committee evaluated the nominees and recommended them to the full Board, which approved their nomination. All nominees were elected at the 2020 Annual Meeting.

Vote required: A director will be elected if the number of shares voted FOR that director exceeds the number of shares voted AGAINST that director, not counting abstentions and votes withheld or for which no instructions are given. See Majority Voting for Election of Directors on page 86.

Diversity of Skills, Qualifications and Experience

 

 

LOGO

Skills and QualificationsAccounting/Finance*Construction/Engineering/ManufacturingCorporate GovernanceCustomer Satisfaction & SalesEnvironment/ScienceGovernment/Policy/RegulatoryHuman Capital ManagementIndustrial OperationsRisk ManagementTechnology/CybersecurityIzzoJacksonDeeseLilleyOstrowsky SuggSurmaTomaskyZollar

 

* See page 18 for “audit committee financial expert” information as defined under the Sarbanes-Oxley Act of 2002 and the rules of the SEC.

 

  6         PSEG 2021 Proxy Statement    

 


Table of Contents

 

Overview of Board Nominees – Gender, Racial and Ethnic Diversity

 

 


 

    

Gender, Racial and Ethnic Diversity

 

We value diversity of gender, race and ethnicity in our multifaceted Board selection process. Our Board includes three women and three racially/ethnically diverse directors.

 

Ø   75% of Corporate Governance Committee members are either women and/or racially/ethnically diverse

 

Ø   Two of the Board’s standing Committees are chaired by women (Audit Committee; Industrial Operations Committee)

 

Ø   Two of the Board’s standing Committees are chaired by racially/ethnically diverse directors (Corporate Governance Committee; Finance Committee)

   

 

            Gender, Racial and            
Ethnic Diversity

 

 

LOGO

3 DirectorsRacially/Ethnically DiverseLead Director3 DirectorsWomen50% Diversity

Director Independence

 

The Board consists of a majority of independent directors, as required by our Governance Principles and the New York Stock Exchange (NYSE). The Governance Principles define our standards for director independence. The Corporate Governance Committee annually assesses the independence of each director and makes recommendations to the Board. For a director to be independent, the Board must affirmatively determine that the director has no material relationship with the Company other than service as a director.

 

The Board has determined that all of the current directors and nominees for election are independent except Ralph Izzo, our Chairman of the Board, President and CEO. These determinations were based upon the responses submitted by each director to questionnaires, business records, publicly available information and applicable SEC and NYSE requirements. Other than the payments reported in this Proxy Statement in the Director Compensation Table, none of our directors have or will receive any compensation or have entered into any golden leash arrangements in connection with their service on our Board.

    

 

            Independence of our            
Board Members

 

 

LOGO

9 of 10 are independent (all but CEO)


 

    PSEG 2021 Proxy Statement       7

 


Table of Contents

Overview of Board Nominees – Board Refreshment and Tenure

 

 


 

    

Board Refreshment and Tenure

 

Refreshing our Board is important to provide new perspectives and ideas while ensuring sufficient experience and institutional knowledge. This mix helps mitigate risk. We replenish needed skills and experience and refresh Board committees through rotation of chairs and memberships.

 

The Corporate Governance Committee considers upcoming retirements in order to replenish needed skills. It also considers the Board’s average tenure. Upon election of the nominees at this Annual Meeting, the average tenure of the members of our Board for their current term of service will be approximately 7.8 years. In the past four years, we have added four new directors to our Board. Upon the election of the nominees presented in this Proxy Statement, the tenure of our directors will be balanced across a spectrum of experience on our Board.

 

Mandatory Retirement at 75

 

Our independent directors may not serve beyond the Annual Meeting of Stockholders held in the calendar year following their seventy-fifth birthday. This allows us to benefit from long-serving directors’ industry expertise, institutional knowledge and continuity, while maintaining our ability to refresh our Board through the addition of new members.

   

 

            Director Tenure            

 

 

LOGO

3 Directors 10+ years4 Director 0-4 years3 Directors 5-9 yearsAverage Tenure 7.8 years

 

4 new directors added in the last 4 years,
bringing fresh perspectives to the Board


 

  8         PSEG 2021 Proxy Statement    

 


Table of Contents

 

Overview of Board Nominees – Board Membership Selection

 

 


 


Board Membership Selection

The selection of qualified, engaged directors with diverse skills and viewpoints is critical to our success and to the long-term interests of our stockholders. The Corporate Governance Committee considers the mix of qualifications of Board members, evaluates prospective nominees and recommends candidates to the Board. The Board’s evaluation is focused on the strategic needs of the Company and the composition of the Board.

 

 

LOGO

Board Composition Evaluated identify skills and experience desirablefor new directors in light of our strategy,current Board skills composition, andsuccession planning.Diverse Pool of Candidates IdentifiedMultiple sources used,including inputfrom directors andindependent research.ElectionBoard elects a newmember, who thenstands for election bystockholders at theAnnual Meeting.Potential Directors RecommendedCorporate GovernanceCommittee recommendspotential directors tothe Board.Potential Candidates AssessedAssess candidates qualifications,conflicts, independenceand background. Board membersmeet with qualifiedcandidates.

Board Selection Criteria and Qualifications

DIVERSITY OF SKILLS, EXPERIENCE, GENDER, RACE AND ETHNICITY. The Corporate Governance Committee considers the need for diversity in background, experience, leadership positions, skills, accomplishments, financial expertise, professional interests, personal qualities, gender, race and ethnicity as well as other traits desirable for an optimal combination of qualified individuals.

TIME TO DEVOTE TO BOARD SERVICE. The Corporate Governance Committee also considers the amount of time that a candidate will likely have to devote to the duties required of a director.

REVIEW OF POTENTIAL CONFLICTS. Prior to a director accepting an invitation to serve as a director of another company, the Corporate Governance Committee reviews potential conflicts. The Corporate Governance Committee also reviews the relevant details of any new position of a director and determines the continued appropriateness of Board membership.

INDEPENDENCE. A majority of the Board must consist of independent directors in accordance with our Governance Principles and NYSE requirements.

NOMINEES FOR DIRECTOR

Set forth on the following pages is important information about our director nominees.

 

LOGO   THE BOARD RECOMMENDS A VOTE FOR EACH OF THE NOMINEES BELOW.

 

    PSEG 2021 Proxy Statement       9

 


Table of Contents

 

Biographical Information

 

 


 


    

LOGO

 

RALPH IZZO

 

Chairman of the Board,
President and CEO, PSEG

 

Age: 63

Director since: 2006

 

  

LOGO

 

SHIRLEY ANN JACKSON

 

Independent Lead Director, PSEG

President, Rensselaer Polytechnic Institute

 

Age: 74

Director since: 2001*

Committees

Executive (Chair)

  

Committees

Corporate Governance, Executive, Industrial Operations, Organization & Compensation

 

Current Public Company Directorships

Bank of New York Mellon

  

Current Public Company Directorships

FedEx Corp

 

Prior Public Company Directorships

The Williams Companies, Inc.

  

Prior Public Company Directorships

International Business Machines Corporation (IBM), NYSE Euronext; Marathon Oil Corp.; Medtronic, Inc.

 

Experience

 

Chairman of the Board, President and CEO of PSEG since April 2007 and Chair of the Executive Committee. A member of the PSEG Board since 2006.

 

Director of PSE&G, PSEG Power, and Energy Holdings since October 2006. Director of Services since December 2003.

 

President and Chief Operating Officer (COO) of PSEG from October 2006 to April 2007. President and COO of PSE&G from October 2003 to October 2006.

 

  

Experience

 

Director of PSE&G since February 2013.

 

President of Rensselaer Polytechnic Institute, Troy, New York, a major technological research university since July 1999.

 

*A member of the PSEG Board from 1987 to 1995 and rejoined in 2001. Chair, U.S. Nuclear Regulatory Commission (NRC) from July 1995 to July 1999.

Reasons for Nomination

 

  Extensive senior leadership experience in operational excellence, strategic planning, finance and risk management as our Chairman of the Board, President and CEO.

 

  Thorough understanding of the challenges and opportunities of our evolving industry.

 

  In-depth knowledge of PSEG’s strengths, challenges, opportunities, risks and corporate culture.

 

  Deep understanding of managing the technical and scientific issues our Company faces from his background as a research physicist.

 

  Experience in energy policy and a recognized thought leader.

  

Reasons for Nomination

 

  A wide array of executive, governmental, scientific and research experience as a recipient of the National Medal of Science, the highest honor for scientific achievement bestowed by the President of the United States.

 

  Valuable management and financial skills gained as President of Rensselaer Polytechnic Institute.

 

  In-depth experience and continued involvement in energy policy, scientific research and development, technology and innovation, risk management, physical and cybersecurity and financial services industry oversight.

 

  Thorough understanding of the requirements for maintaining the excellence of our extensive nuclear operations gained through her background as a nuclear physicist and former NRC Chair.


 

  10         PSEG 2021 Proxy Statement    

 


Table of Contents

 

Biographical Information

 

 


 


    

LOGO

 

WILLIE A. DEESE

 

Retired EVP, Merck & Co. Inc. and President, Merck Manufacturing Division

 

Age: 65

Director since: 2016

 

  

LOGO

 

DAVID LILLEY

 

Retired Chairman of the Board, President and CEO, Cytec Industries, Inc.

 

Age: 74

Director since: 2009

Committees

Audit, Corporate Governance (Chair), Organization & Compensation

 

  

Committees

Audit, Executive, Finance, Organization & Compensation (Chair)

 

Current Public Company Directorships

CDK Global, Inc.; Dentsply Sirona USA; G1 Therapeutics

 

  

Current Public Company Directorships

None

 

Prior Public Company Directorships

None

 

  

Prior Public Company Directorships

Rockwell Collins, Inc.; Andeavor Corporation; Arch Chemicals, Inc.

 

Experience

 

EVP of Merck & Co. Inc., Kenilworth, New Jersey, which develops, manufactures and distributes pharmaceuticals, from January 2008 until June 2016, President of Merck Manufacturing Division from 2005 until 2008, and Senior Vice President of Global Procurement at Merck from 2004 to 2005.

 

Prior to that, Senior Vice President of Global Procurement and Logistics at GlaxoSmithKline, a pharmaceutical company.

 

  

Experience

 

Director of PSE&G since April 2020.

 

Chairman of the Board, President and CEO of Cytec Industries, Inc., Woodland Park, New Jersey, a global specialty chemicals and materials company, from January 1999 until December 2008, President and CEO from May 1998 to January 1999, and President and COO from January 1997 to May 1998.

Reasons for Nomination

 

  Significant regulatory, manufacturing and procurement experience gained through his service as EVP of Merck & Co., President of Merck Manufacturing Division and Senior Vice President of Global Procurement and Logistics at GlaxoSmithKline.

 

  Thorough understanding of the many regulatory requirements our Company faces gained through extensive leadership experience in a highly regulated industry.

 

  Deep knowledge of manufacturing and technology contributes to strong oversight of our operations and overall cost effectiveness.

  

Reasons for Nomination

 

  In-depth knowledge of product development, manufacturing and sales gained through his years as Chairman of the Board, President and CEO at Cytec Industries.

 

  Valuable experience with ultimate responsibility for financial matters and overall business performance.

 

  Significant leadership experience that contributes to our Board’s oversight of our operations and adherence to safety and environmental requirements.

 

  Broad experience with finance and executive compensation, as well as extensive experience in operational management.


 

    PSEG 2021 Proxy Statement       11

 


Table of Contents

 

Biographical Information

 

 


 


    

LOGO

 

BARRY H. OSTROWSKY

 

President and CEO, RWJBarnabas Health

 

 

Age: 70

Director since: 2018

 

  

LOGO

 

SCOTT G. STEPHENSON

 

Chairman of the Board, President and
CEO, Verisk Analytics, Inc.

 

Age: 63

Director since: 2020

 

Committees

Audit, Finance, Organization & Compensation

 

  

Committees

Finance, Industrial Operations

Current Public Company Directorships

None

 

  

Current Public Company Directorships

Verisk Analytics, Inc.

Prior Public Company Directorships

None

 

  

Prior Public Company Directorships

None

Experience

 

President and CEO of RWJBarnabas Health, West Orange, New Jersey, a comprehensive integrated health care delivery system of hospitals, programs and services since April 2016.

 

President and CEO of Barnabas Health from January 2012 until April 2016; President and COO from July 2011 until January 2012 and EVP and General Counsel from December 1996 until July 2011.

  

Experience

 

Chairman of the Board and CEO of Verisk Analytics, Jersey City, New Jersey, a data analytics and risk assessment company since April 2013 and President since March 2011. Between 2001 and 2011, held various leadership positions at Verisk Analytics, including COO, head of the Decision Analytics segment, EVP and President of its Intego Solutions segment.

 

Advisor at Silver Lake Partners, a technology-oriented private equity firm, from 2000 to 2001. Partner with the Boston Consulting Group from 1989 to 1999.

 

Reasons for Nomination

 

  Extensive experience in dealing with regulatory and public policy matters for an organization serving a diverse population gained through his experience as President and CEO of RWJBarnabas Health and Barnabas Health.

 

  Valuable legal background as well as strong experience in financial matters and management of a large, comprehensive business enterprise.

 

  Significant management, strategic planning and implementation skills that contribute to the changing landscape of our industry.

 

  Broad knowledge of consumers, customer service and health care of great benefit for matters relating to our large customer and employee base.

  

Reasons for Nomination

 

  Significant strategic leadership, financial management and human capital management experience as Chairman and CEO of Verisk Analytics.

 

  Valuable innovation, technology, data analytics, customer service and risk assessment experience from his various senior management and operational positions at Verisk Analytics.

 

  In-depth operations and value creation experience gained from his positions at the Boston Consulting Group.


 

  12         PSEG 2021 Proxy Statement    

 


Table of Contents

 

Biographical Information

 

 


 


    

LOGO

 

LAURA A. SUGG

 

Retired President, Australasia Division of
ConocoPhillips Corporation

 

Age: 60

Director since: 2019

  

LOGO

 

JOHN P. SURMA

 

Retired Chairman and CEO,
United States Steel Corporation

 

Age: 66

Director since: 2019

 

Committees

Audit, Industrial Operations (Chair)

  

Committees

Corporate Governance, Industrial Operations, Organization & Compensation

 

Current Public Company Directorships

Murphy Oil Corporation

  

Current Public Company Directorships

Marathon Petroleum Corporation and its consolidated subsidiary, MPLX GP LLC; Trane Technologies plc

 

Prior Public Company Directorships

The Williams Companies, Inc.; Denbury Resources, Inc.

  

Prior Public Company Directorships

Concho Resources, Inc.; Bank of New York Mellon Corporation; Mellon Bank Corporation; Calgon Carbon Corporation

 

Experience

 

President, Australasia Division of ConocoPhillips Corporation, Houston, Texas, a leading worldwide oil and gas exploration and development company, from July 2005 to February 2007.

 

General Manager-Human Resources, exploration and production of ConocoPhillips from October 2003 to June 2005.

  

Experience

 

Chairman and CEO, United States Steel Corporation, a leading global integrated steel producer, from October 2004 through September 2013 and Executive Chairman until December 2013. President and COO of United States Steel from February 2003 to October 2004; Chief Financial Officer (CFO) from January 2002 to February 2003.

 

Chairman of the Board of the Federal Reserve Bank of Cleveland from 2017 to 2018; Chairman of the National Safety Council from September 2015 to September 2017.

 

Reasons for Nomination

 

  Extensive experience in engineering, science and operations, including responsibility for major exploration and production operations.

 

  Valuable background in corporate planning, business development and regulatory matters acquired through executive roles at ConocoPhilips.

 

  In-depth knowledge of human capital management matters from leadership experience in human resources management.

 

  Strong track record across disciplines gained through her success in varied roles at ConocoPhilips.

  

Reasons for Nomination

 

  Experienced leader with a strong financial, management, manufacturing and regulatory matters background as Chairman and CEO of United States Steel Corporation.

 

  Deep knowledge of enhancing shareholder value in a complex enterprise.

 

  Significant financial and accounting expertise as the CFO of United States Steel Corporation.

 

  Extensive experience on strategic, operational and financial oversight gained as a director of large public company boards.


 

    PSEG 2021 Proxy Statement       13

 


Table of Contents

 

Biographical Information

 

 


 


    

LOGO

 

SUSAN TOMASKY

 

Retired President, AEP Transmission of American Electric Power Corporation

 

Age: 68

Director since: 2012

 

  

LOGO

 

 

ALFRED W. ZOLLAR

 

Executive Advisor, Siris Capital Group, LLC and

Retired General Manager, Tivoli Software Division of IBM

 

Age: 66

Director since: 2012

Committees

Audit (Chair), Corporate Governance, Executive, Organization & Compensation

 

  

Committees

Audit, Finance (Chair), Industrial Operations

Current Public Company Directorships

Marathon Petroleum Corporation; Fidelity Equity and High Income Mutual Funds

 

  

Current Public Company Directorships

Bank of New York Mellon; Nasdaq, Inc.

Prior Public Company Directorships

Andeavor Corporation; Summit Midstream Partners, LP.

 

  

Prior Public Company Directorships

Red Hat, Inc.; Chubb Corporation

Experience

 

Director of PSE&G since April 2020.

 

Member of the Advisory Board of certain Fidelity funds from February 2020 to June 2020. President, AEP Transmission of American Electric Power Corporation (AEP), Columbus, Ohio, an electric utility holding company with generation, transmission and distribution businesses, from May 2008 to July 2011, and held Executive positions with AEP from July 1998 to May 2008, including EVP, CFO and General Counsel. General Counsel of the U.S. Federal Energy Regulatory Commission (FERC) from March 1993 to June 1997.

 

  

Experience

 

Executive Advisor, Siris Capital Group, LLC, New York, New York, a private equity firm, since March 2021 and served as Executive Partner from February 2014 to March 2021. General Manager, Tivoli Software division of IBM, Armonk, New York, a worldwide information technology and consulting company, from July 2004 to January 2011. General Manager-eServer iSeries from January 2003 to July 2004. President and CEO, Lotus Software division, from January 2000 to 2003, and Division General Manager, Network Computer Software division, from 1996 to 2000.

Reasons for Nomination

 

  Broad electric industry executive experience from key leadership positions involving transmission operations, services and governance at one of the largest utility holding companies in the United States.

 

  In-depth knowledge of industry financial and legal matters acquired as CFO and General Counsel at AEP.

 

  Highly valuable experience in oversight of regulated business, science and environmental matters gained as General Counsel of FERC.

 

  Deep knowledge of and valuable perspective on utility management, finance, law, risk management and governmental regulation.

  

Reasons for Nomination

 

  Broad knowledge in executive leadership, product development and information technology, including cybersecurity.

 

  Valuable experience from various leadership roles, including senior management positions in varied IBM software group divisions.

 

  Deep executive and managerial experience in oversight of operational excellence, customer satisfaction and cybersecurity.

 

  In-depth knowledge of finance and risk management through private equity leadership roles.


 

  14         PSEG 2021 Proxy Statement    

 


Table of Contents

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;

 

   

Monitoring sound corporate citizenship grounded in the principles of diversity, equity and inclusion;

 

   

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:

 

LOGO

 

  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;

 

  Reviewing quality and timeliness of information provided to the directors; and

 

  Ensuring a robust Board self-evaluation.

 

LOGO

As communities face adversity climate change, diversity, equity and inclusion challenges, the COVID-19 pandemic I am confident that citizenship and innovation will prevail. Strong Board oversight and good governance at PSEG will help steer the company towards powering a clean energy future and benefiting its stakeholders. Shirley Ann Jackson

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.

 

    PSEG 2021 Proxy Statement       15


Table of Contents

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.

 

LOGO

The Corporate Governance Committee leads the committee evaluation process. Directors provide written assessments of board and committee performance, identifying areas for improvement. The lead Director, Chair and committee members analyze the responses and report on the results to the full board. The board and each committee discuss the responses, decide on action items and execute plans to address them.The Corporate Governance Committee leads the committee evaluation process. Directors provide written assessments of board and committee performance, identifying areas for improvement. The Lead Director, Chairs and committee members analyze the responses and report on the results to the full board. The board and each committee discuss the responses, decide on action items and execute plans to address them.

Governance Enhancements from the 2020 Self-Assessment Process:

 

We continued enhancements with respect to Board meeting effectiveness, executive

sessions of independent directors and director selection process.

Director Education and Orientation

To assist the Board in understanding the Company and to maintain the necessary knowledge to perform their responsibilities, members of our Board are offered and participate in a variety of learning opportunities throughout the year.

 

Internal

Educational

Presentations

   The Board is regularly offered internal presentations that comprise “deep dives” on specific topics presented by management as well as detailed assets data books where appropriate.

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.
  

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.

 

LOGO

Highlights In 2020, we continued to provide lunch and learn series of educational presentations on topics of interest to our Board. These sessions provide the Board with the opportunity to interact with subject matter experts below the officer level.

 

  16         PSEG 2021 Proxy Statement    


Table of Contents

Corporate Governance – Board and Committee Meetings and Attendance

 

 

Board and Committee Meetings and Attendance

In 2020, the Board met seven times, including five regular meetings, one strategy session and one special meeting. The PSE&G Board met six times, including five regular meetings and one strategy session. During 2020, each director attended at least 75% of the aggregate number of meetings of the Board and the committees on which the director served. All of the directors who were elected in 2020 attended the 2020 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.

Service on Other Boards

The experience gained through other directorships provides our Board with a breadth of valuable knowledge and insight. Advance approval by the Corporate Governance Committee is required for service on any public company board. 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 six standing Committees: Audit, Corporate Governance, Executive, Finance, Industrial Operations, and Organization and Compensation (O&CC). 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 2020, the members of the Executive Committee were Ralph Izzo, Shirley Ann Jackson, David Lilley and Susan Tomasky. 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.

 

    PSEG 2021 Proxy Statement       17


Table of Contents

Corporate Governance – Board Committees

 

 

 

Audit Committee

 

Chair:

 

Susan Tomasky

Members:

 

Willie A. Deese, David Lilley, Barry H. Ostrowsky, Laura A. Sugg, Alfred W. Zollar

Meetings held in 2020: 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 and our legal and business compliance program;

 

Ø  

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

 

Ø  

Reviews disclosure controls and procedures and cybersecurity relating to financial controls;

 

Ø  

Reviews 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 the Audit Committee Report for inclusion in this Proxy Statement.

 

 

LOGO

The Board has determined that: All members of the Audit Committee meet heightened independence and qualification criteria and are financially literate; All members of the Audit Committee possess accounting or financial management expertise, as defined in the NYSE rules and Governance Principles; and Each of David Lilley, Barry H. Ostrowsky, and Susan Tomasky is an audit committee financial expert under the Sarbanes-Oxley Act of 2002 and the rules of the SEC. No member of the Audit Committee serves on the Audit Committee of more than three public companies, including ours.

The Audit Committee Report appears under Proposal 3: Ratification of the Appointment of Independent Auditor on page 73.

 

Organization and Compensation

Committee

Chair:

 

David Lilley

Members:

 

Willie A. Deese, Shirley Ann Jackson, Barry H. Ostrowsky, John P. Surma, Susan Tomasky

Meetings held in 2020: 5

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 (with the exception of the CEO, whose compensation is approved by the Board);

 

Ø  

Monitors the risks associated with our compensation policies and practices and other risks related to human capital management matters (including periodic review of diversity, equity and inclusion, and other workforce initiatives);

 

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.

 

LOGO

The Board has determined that: All O&CC members meet heightened independence and qualification criteria in accordance with the NYSE listing standards and SEC rules; and The current composition of the O&CC provides the committee with the requisite expertise and experience to oversee our executive compensation program and assess the alignment of pay for performance.

The O&CC Report on Executive Compensation appears under Proposal 2: Advisory Vote on the Approval of Executive Compensation on page 55.

 

 

  18         PSEG 2021 Proxy Statement    


Table of Contents

Corporate Governance – Board Committees

 

 

 

Finance Committee

 

    

 

Corporate Governance Committee

 

          Chair: Alfred W. Zollar

 

          Members: David Lilley, Barry H. Ostrowsky,

                             Scott G. Stephenson

 

          Meetings held in 2020: 5

    

           Chair: Willie A. Deese

 

           Members: Shirley Ann Jackson, John P. Surma,

                              Susan Tomasky

 

           Meetings held in 2020: 4

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 O&CC 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 6.

 

    PSEG 2021 Proxy Statement       19


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Corporate Governance – Board Committees

 

 

Industrial Operations Committee

 

          Chair: Laura A. Sugg

 

          Members: Shirley Ann Jackson, Scott G.

                             Stephenson, John P. Surma, Alfred W. Zollar

 

          Meetings held in 2020: 5

Key Responsibilities

Ø   Oversees the operations of the Company including electric and natural gas transmission and distribution, nuclear, fossil and other generation and energy trading, as well as related matters;

 

Ø   Oversees all matters relating to cyber and physical security across the Company;

 

Ø   Provides oversight of crisis management related to operations of the Company;

 

Ø   Oversees environmental, health and safety and legal and compliance issues relating to operations;

 

Ø   Reviews the results of major inspections and evaluations by external oversight groups such as the NRC and the Institute of Nuclear Power Operations;

 

Ø   Reviews the results of significant reports of the PSEG Nuclear Safety Review Board (NSRB), and receives independent reports from the NSRB Committee Representative;

 

Ø   Receives and reviews periodic reports from officers and employees who have responsibility for operation of nuclear generating facilities, including regular reports from the Chief Nuclear Officer;

 

Ø   Reviews the results of significant reports of the PSEG Cybersecurity Excellence Oversight Board (CEOB), and receives independent reports from the CEOB Committee Representative; and

 

Ø   Reviews periodic reports from officers and employees who have responsibility for the Company’s cybersecurity program including regular reports from the Chief Information Security Officer.

 

 

  20         PSEG 2021 Proxy Statement    


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Corporate Governance – Integrated Approach to Shareholder Engagement

 

 

Integrated Approach to Shareholder Engagement

The Board and management believe in ongoing shareholder engagement and conduct engagement efforts throughout the year in an integrated approach, including through investor conferences, analyst meetings, and one-on-one discussions. Understanding the issues that are important to our shareholders is critical for our accountability. We have robust conversations on topics such as corporate governance, executive compensation, business strategy, risk management, human capital management and ESG matters. Our Board routinely reviews and improves our practices and disclosures in a manner that best supports our business and our culture taking into account feedback from shareholder engagement.

Shareholder Outreach and Engagement

 

 

LOGO

Engaged Through:Annual Shareholder Outreach Investor Conferences Quarterly Earnings Calls Annual Meeting Invitation to Speak to BoardAnnual Shareholder Outreach:We extended engagement invitations to over 30 of our largest shareholders representing >50% of our outstanding shares. Approximately onefourth of them accepted and engaged in one-on-one discussions with us.Information Shared Through:SEC Fillings, Press Releases & Company Website ESG Performance Report Annual Sustainability/Climate Change Report Annual Investor Fact Book & IR Fact Sheets Investor Conference MaterialsDiscussion Topics - Annual Shareholder Outreach:Board Diversity, Refreshment & Tenure ESG-related Business Strategy COVID-19 Response Sustainability & Climate ChangeHuman Capital Management, including Diversity, Equity & Inclusion

 

 

    PSEG 2021 Proxy Statement       21


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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 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, and where there is clear accountability for risk mitigation.

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, human capital management, 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.

 

LOGO

Board of Directors Strategic risks Risks not mapped to specific CommitteesCorporate Governance Committee Risk policies and practices Mapping of risks to Board and Committees Reputation and political activity risks ESG and climate change risksAudit Committee Risk-related processes and assessments Financial and other reporting risks Compliance and legal risksFinance Committee Finance and investment risk Commodity, credit, liquidity, tax event, pension fund and trust riskIndustrial Operations CommitteeOperating risks (including Health & Safety) Project risks Cybersecurity risksOrganization and Compensation Committee Executive compensation, succession planning and other talent risks Senior officer interaction Reporting on risks by Chief Risk Officer, Chief InformationERM Programs annual risk assessment, deep & Digital Officer, Chief Compliance Officer and Vice dive reviews and regular risk updates President of Internal Auditing Services, among othersSenior Management / Risk Management CommitteeLines of Business / Functional Areas

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, and the CEOB. (For more information on cybersecurity risk management, see the next section.) 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 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.

Board Oversight of Cybersecurity

Cybersecurity is a critical component of our risk management program. The Board, the Audit Committee, Industrial Operations 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.

 

  22         PSEG 2021 Proxy Statement    


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Corporate Governance – Board Oversight of Cybersecurity

 

 

Our cybersecurity program is focused on the following areas:

Governance:

 

 

 

Cybersecurity Council – which is comprised of members of senior management, meets regularly to discuss emerging cybersecurity issues and maintenance of a corporate cybersecurity scorecard to measure performance of key risk indicators (KRIs). The Cybersecurity Council ensures that senior management and ultimately, the Board, is informed of information required to exercise proper oversight over cybersecurity risks and that escalation procedures are followed.

 

 

 

CEOB – provides the COO with periodic cybersecurity assessments of the Company. The CEOB is comprised of employee and non-employee members who have expertise in technology security, compliance and controls, or in management practices.

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. Notably, in 2020, the Company implemented additional measures to ensure compliance with new requirements promulgated by the North American Electric Reliability Corporation applicable to cyber systems involved in the operation of the Bulk Electric System (BES). These new or enhanced measures require PSEG to identify and assess cybersecurity risks to the BES from vendor products or services.

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.

Response to COVID-19 Pandemic

A pandemic has the potential to influence risks across the enterprise with the capacity to impact operations, health & safety, and financial results. Throughout the COVID-19 pandemic, PSEG has relied on a well-established crisis management structure to quickly coordinate responses across the organization and ensure the continued delivery of our essential services to our customers in a safe manner. The Executive Crisis Management Team, led by the COO and with representation from all operating companies and functional areas, met as often as seven days a week in the early months of the crisis and continues to meet regularly to monitor evolving conditions and adapt the Company’s response. Frequent updates and testimonials on pandemic safety are provided to employees, including on personal mobile devices.

PSEG’s ERM program provided the framework by which the potential impacts of the pandemic on the enterprise were proactively assessed and planned for, beyond the immediate response horizon. These assessments were discussed with the Risk Management Committee and the Executive Crisis Management Team at multiple times throughout the year and presented to the Board. PSEG is documenting lessons learned to strengthen business continuity plans and improve resilience to the uncertainty of the ongoing pandemic or a future event.

 

    PSEG 2021 Proxy Statement       23


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Corporate Governance – Response to COVID-19 Pandemic

 

 

COVID-19 Response (Community, Customers and Employees)

By providing essential electric and natural gas service to over 3.5 million customers in New Jersey and Long Island, New York – two states that saw the highest early positivity and morbidity rates – PSEG delivered more than just heating and lighting to homes, businesses, and essential emergency services. These essential services have proven to be more critical than ever in powering the communication infrastructure, enabling the work-from-home economy, keeping us connected to our loved ones and maintaining the critical energy infrastructure that supports economic activity in our service territories. Furthermore, our response efforts have contributed to employee and customer safety protocols, and expanded community outreach as follows:

Community:

 

Ø  

PSEG Foundation pledged $4 million in support to communities for pandemic response and relief efforts and to combat food insecurity;

 

Ø  

PSEG donated 50,000 N95 masks and 200,000 pairs of gloves to New Jersey health care workers; and

 

Ø  

PSEG sponsored the COVID-19 testing site in Salem County, and continues to support local food and community organizations and events to ease the financial hardship in the Salem community.

 

Customers:

 

Ø    Voluntarily suspended shutoffs of service due to
non-payment; worked cooperatively with customers needing
payment flexibility;

 

Ø   Maintained full customer service staffing and hours of
availability via phone;

 

Ø   WorryFree® Tech-Talk Appliance Repair introduced to
remotely assist appliance repair customers; and

 

Ø    Provided assistance with electricity provisioning
for emergency medical facilities construction.

 

Employees:

 

Ø    Maintained workforce levels and employee benefits.
Implemented remote work practice for all employees where
job could be performed remotely;

 

LOGO

PSEG COVID-19 ResponsePledged $4M since the start of the COVID-19 pandemic to support communitiesDonated 50K N95 masks & 200K pairs ofgloves to New Jersey health care workersVoluntarily suspended shutoffs of service dueto non-payment WorryFree Tech-Talk Appliance Repair introduced to remotely assist appliance repair customers Continuation of hiring for talent pipelineincluding internships and no layoffs due to thepandemic Pandemic hotline exclusively for employees

 

Ø  

Pandemic response hotline exclusive for PSEG employees to guide them through questions on their health and safety, identification and notification of close contact exposure, clinical assessments to determine quarantine needs and appropriate return to work procedures;

 

Ø  

Enhanced bereavement leave allotments to accommodate any employee suffering a loss of a family member;

 

Ø  

Expanded COVID-19 related paid time off for employees to take care of themselves and their family members, get vaccinated and navigate school and daycare closures;

 

Ø  

Expanded childcare resources, including discounted home and remote placement services, expanded referrals and tutoring support;

 

Ø  

Implemented changes to medical and retirement savings plan made available through federal relief packages;

 

Ø  

Introduced a mobile assessment tool that enables employees to answer questions, regarding their health and exposure status which provides a daily passport for entry into the workplace;

 

Ø  

Provided frequent education to front line managers and the workforce by PSEG’s medical director and Health and Safety teams;

 

Ø  

Increased leadership communication platforms, including “The Link” employee social media channel and ongoing pulse surveys during the critical period of the pandemic to ensure employee well-being and engagement; and

 

Ø  

Designed Responsible Reentry approach and playbook for future business practices.

 

  24         PSEG 2021 Proxy Statement    


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Corporate Governance – Our Approach to Sustainability

 

 

Our Approach to Sustainability

We continue to implement sound ESG practices throughout our business. PSEG’s agile approach for continuous integration of ESG practices reflects our goal of being a leader in building an economically strong, environmentally responsible energy future. Our Board takes an active role in overseeing 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 transition to a future of net-zero carbon emissions.

 

LOGO

ENVIRONMENTAL CEF: EE, EC/Smart Meters, EV Charging Infrastructure Coal Free by Mid-2021 Orsteds Ocean Wind Farm Strategic Alternatives for Fossil Fleet Net-Zero Vision PROGRESS TOWARD OUR ESG GOALS IN 2020-2021 GOVERNANCE Board/Committee Oversight Board Diversity/Refreshment Sustainability/Climate reports (follows SASB and TCFD), ESG Performance report Executive Compensation linked to ESG goals Member of CEO Climate Dialogue Political Contributions/ Engagement Oversight SOCIAL Company/Foundation giving of $13M in 2020 Committed $1M to Social Justice Initiative Committed to Just Transition principles Expanded D&I commitment to include Equity Continuous Employee Engagement & Development Sustainability yearbook member 2021 s&p global Ceres Dow jones sustainability indices In collaboration with sam CECPENVIRONMENTAL CEF: EE, EC/Smart Meters, EV Charging Infrastructure Coal Free by Mid-2021 Orsteds Ocean Wind Farm Strategic Alternatives for Fossil Fleet Net-Zero Vision PROGRESS TOWARD OUR ESG GOALS IN 2020-2021 GOVERNANCE Board/Committee Oversight Board Diversity/Refreshment Sustainability/Climate reports (follows SASB and TCFD), ESG Performance report Executive Compensation linked to ESG goals Member of CEO Climate Dialogue Political Contributions/ Engagement Oversight SOCIAL Committed $4M to Pandemic Relief Efforts Committed $1M to Social Justice Initiative Committed to Just Transition principles Expanded D&I commitment to include Equity Continuous Employee Engagement & Development Sustainability yearbook member 2021 s&p global Ceres Dow jones sustainability indices In collaboration with sam CECP

 

 

    PSEG 2021 Proxy Statement       25


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Corporate Governance – Our Environmental Priorities

 

 

Our Environmental Priorities

PSEG’s Powering Progress vision is a future in which we help all customers use less energy, ensure the energy they use is cleaner, and deliver that energy more reliably than ever before.

In 2020, we continued to successfully execute on our Powering Progress vision through our Clean Energy Future programs, renewable energy investment strategy, and enhanced ESG disclosures that follow the Task Force on Climate-related Financial Disclosures framework (TCFD).

Clean Energy Future Programs: In 2020, New Jersey Board of Public Utilities (NJBPU) approved $1 billion of investments through our Energy Efficiency (EE) program. This is the largest commitment to energy efficiency ever in NJ.

In 2021, NJBPU also approved AMI (Smart Meters)/Energy Cloud program, which provides investments of approximately $700 million for smart meter programs over the next four years, and a proposal for PSE&G to provide investments of approximately $166 million for electric vehicle (EV) charging infrastructure programs.

Furthermore, PSEG has filed for NJBPU review of its electric storage (ES) proposal for utility-scale investments to supplement solar generation and enhance grid resiliency.

Progress in Offshore Wind Renewable Energy: In 2020, PSEG entered into an agreement to acquire a 25% ownership interest in Ørsted’s 1,100-megawatt Ocean Wind project, NJ’s first offshore wind farm (subject to regulatory approval).

Strategic Review of Non-Nuclear Generation Assets: In 2020, PSEG announced a strategic review of PSEG Power’s non-nuclear generation assets to accelerate transformation into a primarily regulated electric and gas utility and contracted business which will, among other benefits, enhance its ESG position.

PSEG’s Emissions Goals and Net-Zero Vision: As part of our Powering Progress Initiative, PSEG is working towards reducing greenhouse gas emissions from PSEG Power’s fleet by 80% from 2005 levels by 2046.

PSEG’s vision of net-zero emissions by 2050 assumes 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.

Sustainability/Climate Reports: PSEG is committed to reporting annually on sustainability and climate using the TCFD framework. PSEG’s Sustainability/Climate reports are compliant with the Sustainability Accounting Standards Board and incorporates a comprehensive analysis of contributions to the United Nations Sustainable Development Goals. PSEG’s Sustainability/Climate reports are featured on our website.

 

 

2021 ESG Performance Report: In 2021, PSEG launched its first ESG Performance report as part of its ongoing efforts to increase disclosures and transparency. The report includes additional ESG metrics and disclosures, as well as the Company’s progress toward existing goals. The report is featured on our website.

 

PSEG’s Gas System Modernization Program: In addition, PSEG’s Gas System Modernization Program (GSMP) focuses on modernizing and replacing cast iron and unprotected steel main, resulting in a reduction in methane leaks, safety enhancements and supports customer usage of high efficiency appliances.

  

LOGO

PSEG Sustainability Net-Zero By 2050 Generates >90% of New Jerseys carbon emissions-free energy $2 billion in Clean Energy Future programs 25% interest in NJs first offshore wind farm 13th year in a row Dow Jones Sustainability North America Index and 2021 selection in S&P Sustainability Yearbook invested $2.7 billion in electric and gas transmission and distribution system

 

  26         PSEG 2021 Proxy Statement    


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Corporate Governance – Our Social Priorities

 

 

Our Social Priorities

Our focus on citizenship is grounded in the belief that we can do well as a company by doing good for the diverse people and communities we serve. The Board, through its Corporate Governance Committee, oversees our corporate citizenship that is grounded in the principles of diversity, equity and social priorities.

PSEG Foundation & Corporate Citizenship: Through the PSEG Foundation, the Company makes approximately $8 million annually in corporate contributions to support our communities.

Employee Volunteerism: We also support our communities through employee volunteerism that includes paid time off and grants to nonprofits.

NJ CEO Council: Our CEO is a member of the New Jersey CEO Council, a coalition of CEOs that has pledged to hire or train more than 30,000 residents by 2030 and spend an additional $250 million on procurement with state-based, diverse companies by 2025. Both efforts focus on underrepresented and underserved communities.

Environmental Stewardship: Community investment in environmental stewardship is another strategic pillar of PSEG’s Foundation and we aim to increase support to 20% of annual giving by 2023.

Clean Energy Workforce: PSEG is developing New Jersey’s clean energy workforce through innovative training and pipeline development programs, emphasizing low- to moderate-income and underserved communities. PSE&G’s $1 billion energy efficiency program is expected to create more than 4,000 direct and indirect clean energy jobs.

Powering Progress / Social Justice: In a joined effort, PSEG and the PSEG Foundation launched the Powering Equity and Social Justice Initiative with a $1 million commitment to fight racial injustice and inequity.

COVID-19 Community Efforts: Our community efforts through the PSEG Foundation expanded this year and include additional support for pandemic response and relief efforts and to combat food insecurity, for which we pledged $4 million. To further assist customers and communities during the pandemic, PSEG also voluntarily suspended shutoffs of service due to non-payment and worked cooperatively with customers needing payment flexibility. For more information see pages 23-24.

Supplier Diversity: PSEG is also committed to diversity that spans across the value chain, including supplier diversity with a goal of achieving 30% of applicable supplier spend allocated to diverse suppliers by 2023.

Customer focus: PSEG provides essential electric service to over 2.3 million customers and gas to over 1.9 million customers. Through disciplined cost management, sound investment practices and reliable energy delivery, PSEG strives to keep customer cost as low as possible. NJ customers benefit from access to low cost natural gas which has also resulted in lower electricity prices.

Human Capital Management: Our People

At PSEG, we know that our people are our most valuable resource. Therefore, our Human Capital Management strategy is designed to ensure we have the best talent and culture to sustain our business both today and in the future as we lead transformation in our industry.

Board Oversight of Human Capital Management

Our Board has a key role in the oversight of our talent management programs and culture initiatives with particular focus on diversity, equity and inclusion, organization and succession planning, talent and workforce development, total rewards, and culture. At least semi-annually the Board is engaged in a review of our human capital management focusing on our organizational and leadership priorities, executive leadership succession and development plans, and executive performance and potential. In addition, the Board reviews workforce and talent diversity metrics, employee engagement and culture survey data and findings, and talent and culture plans and programmatic developments. The Board actively engages not only with our executive leadership teams but also our rising senior leaders through formal presentations and talent engagement meetings.

As specified in its charter, the O&CC holds the primary responsibility for overseeing our organizational, talent and total rewards strategy. The Organizational and Compensation Committee oversees our annual incentive plan, which includes specific metrics holding our leaders accountable to meet human capital related goals to drive key talent, culture, diversity, equity and inclusion priorities. Specifically, annual employee incentive awards are tied to a People Strong Goal, which measures employee growth and development, engagement, and inclusion, and a Diversity, Equity and Inclusion (DEI) index, which measures DEI progress, among other business performance goals. PSEG’s pay-for-performance philosophy aligns employee compensation with individual performance as well as business unit and Enterprise performance results, driving employee accountability and ownership of overall results and progress on key strategic objectives.

 

    PSEG 2021 Proxy Statement       27


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Corporate Governance – Our Social Priorities

 

 

Our Culture

 

PSEG continuously strives for a culture inclusive and supportive of its employees, customers and the communities we serve. Through our Core Commitments, we attract, develop, and retain a high-performing diverse workforce that drives organizational performance and fosters a culture of collaboration, learning and comfort speaking up, where new ideas are welcome and all of our approximately 13,000 employees feel valued and enhance each other’s performance.

 

Diversity, Equity and Inclusion

 

With intention and action, in 2020, PSEG added “Equity” to its Diversity & Inclusion commitment, signaling a renewed focus on ensuring our systems and processes are fair and equitable.

 

 

OUR CORE COMMITMENTS

 

SAFETY

We put safety first.

 

INTEGRITY

We do what’s right.

 

CONTINUOUS IMPROVEMENT

We aspire to achieve excellence.

 

DIVERSITY, EQUITY & INCLUSION

We treat all individuals fairly, equitably, and with dignity and

respect.

 

CUSTOMER SERVICE

We keep customers at the heart of everything we do.

 

Pay Equity Reviews: We set compensation levels for new and existing employee candidates based on role qualification and market data. We calibrate our performance ratings and perform semi-annual equity reviews across the Enterprise to ensure our pay is fair and equitable for all employees.

Policy, Practice and Equity Reviews: We performed a comprehensive equity review of our policies and practices, resulting in specific updates to our programs to better support equity (e.g., expanded access to our parental leave program). We enhanced our year-end performance management process for all non-represented employees to control for bias. We continue to review and modify job requirements to focus on Day 1 job requirements to maximize opportunity and allow for on-the-job training.

 

Inclusion: In January 2020, we launched a new program, Inclusion for All, to foster a more inclusive workplace culture. We trained Diversity Champions and our leadership teams on inclusive leadership skills and created Local Inclusion Teams throughout the businesses. The Local Inclusion Teams, along with our strong, active network of Employee Business Resource Groups (EBRGs) drive inclusion at the local and grassroots levels of the Enterprise. In the third quarter, we launched a disability inclusion campaign to better understand our employee population self-identifying as having a disability.

 

Diversity: Our approach has become more transparent so that we can assess progress in our diversity representation. We track our Equal Employment Opportunity data to inform our workforce development strategy. To bolster diversity pipeline hiring, this year we created a women-in-skilled-trades initiative, and are piloting an in-depth partnership model with historically Black colleges and universities (HBCUs).

 

 

Employee Business

Resource Groups (EBRGs)

Over 25 employee groups in 12 focus areas networked with over 500 local organizations and schools.

 

Black Professionals, Asian & Pacific Islanders, Hispanic & LatinX, LGBTQ+, People with Disabilities, New Hires, Women, Working Parents & Caregivers, Veterans, Young Generations in Nuclear, Environmental and Safety professionals.

 

 

  28         PSEG 2021 Proxy Statement    


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Corporate Governance – Our Social Priorities

 

 

Talent Attraction and Retention

PSEG has maintained an unwavering focus on attracting, developing and retaining a robust talent pipeline for the future, from our frontline to our leadership levels. To remain competitive and continue to provide our customers with the best service, we must ensure our employees are engaged and have the right skills and environment to drive innovation, productivity, safety and excellence.

To PSEG, developing the talent of the future is about:

 

   

Deployment of the right people in the right roles;

 

   

Continuous skill building to meet current operational needs and stay ahead of market and industry trends;

 

   

Leveraging people, technology, and processes to create high quality, timely and effective outcomes for our customers; and

 

   

Evaluation of both internal and contracted talent options to optimize efficiency.

Diversity, Equity & Inclusion Highlights

 

 

LOGO

Forbes 2020 list of Americas Best Employers for Diversity 3rd year in a row Military Friendly Employer 2021 Bronze medallion Forbes 2020 list of best employers for veterans $1 Million Commitment to fight racial injustice and inequity CEO is part of NJ CEO Council supporting the training and placement of 30,000 NJ residents by 2030 Our CEO is a signatory to CEO Action for Diversity & Inclusion commitment

 

 

Talent Development

 

Our learning and development programs reach all of our employees from entry to executive level and include digital on-demand learning resources and live, instructor-led workshops.

 

  In 2020 we trained our Top 200+ Leaders on developing Inclusive Leadership skills.

 

  We pioneered a leadership development program for Black professionals designed to increase representation in leadership ranks.

 

  We doubled our participation in women’s leadership development programs through virtual platform offerings.

 

  We delivered a six-month “Accelerate” program to support newly hired college graduates in their introduction to our workplace.

     

 

Employee Engagement                                                 

 

We solicit continuous feedback so that we improve our culture in a way that is responsive to the voices of our employees.

 

2020 Your Voice Matters survey highlights:

   
               
   

LOGO

    LOGO    

LOGO

   
      86% Overall engagement score     88% of employees are proud to work at PSEG     Annual Employee net promoter score improved 6.9 points    

 

Our Total Rewards Program

 

In addition to our competitive pay, incentives and benefits programs, our Total Rewards offerings take into account the safety, health and overall well-being of our employees. We offer an array of programs designed to support physical, emotional, social, and financial wellness, the foundation of employee engagement and productivity.

 

We support our employees through everyday challenges, critical life events, as well as new and changing life experiences. Our benefits program includes access to mental health, childcare and elder care resources, voluntary benefits for discounted services, tuition reimbursement and adoption assistance.

 

   

 

    PSEG 2021 Proxy Statement       29


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Corporate Governance – Our Social Priorities

 

 

Labor Relations

We are proud of the partnership we have with union leadership and the 7,786 employees represented by unions in our workforce.

 

   

Our strong relationship with our unions allowed for swift and effective implementation of COVID-19 protocols, with over 45 negotiated agreements on terms such as sequestration, flexible work hours and paid time off, telecommuting, use of personal vehicles, and training.

 

   

In 2020, we extended several of our labor contracts through 2023, providing labor stability during the pendency of key business initiatives.

Just Transition: As we accelerate our business to a primarily regulated utility and contracted energy business with zero-carbon nuclear assets, PSEG is committed to a fair, equitable and transparent approach to human capital management, one that is grounded in treating people with dignity and respect. With evolving technologies in energy and digital advancements we look for training, upskilling and redeployment opportunities for our existing workforce.

PSEG Workforce at a Glance

 

 

LOGO

Total Headcount 12,788 Voluntary Turnover (excluding retirement 1.4% Avg. employee tenure 15 years 61% Represented Employees PSEG Benchmark Results (Utilities) Racially/Ethnically Diverse Women 26% 21% 18% 24% Race/ Ethnicity White or Caucasian (73%) Black or African American (12%) Hispanic or Latino (9%) Asian (5%) Others* (1%) *includes Native Hawaiian or Other Pacific Islander or Two or More Races 14% Racially/Ethnically Diverse Executives 28% Women in Executive positionsTotal Headcount 12,788 Voluntary Turnover (excluding retirement) 1.4% Avg. employee tenure 15 years 61% Represented Employees PSEG Benchmark Results (Utilities) Racially/Ethnically Diverse Women 26% 21% 18% 24% Race/ Ethnicity White or Caucasian (73%) Black or African American (12%) Hispanic or Latino (9%) Asian (5%) Others* (1%) *includes Native Hawaiian or Other Pacific Islander or Two or More Races 14% Racially/Ethnically Diverse Executives 28% Women in Executive positions

Our Governance Priorities

Sound corporate governance is integral to the results and progress we achieve. We are guided by a code of conduct and integrity that emphasizes high ethical standards, accountability and transparency. Governance is a top priority and includes a focus on enterprise risk management (see p. 22), cybersecurity (see p. 22), political contributions (see p. 31) and executive compensation (see p. 39). Our Board exercises oversight, supported by each committee, as reflected in their charters.

 

Ø  

Corporate Governance Committee – sustainability/ESG practices (and climate change), and enterprise risk management

 

Ø  

Audit Committee – ethics and compliance (Standards of Conduct), financial reporting, internal controls and related risks

 

Ø  

Industrial Operations Committee – cybersecurity and safety

 

Ø  

Finance Committee – finance and investment risk, commodity/credit/liquidity, tax and pension risks

 

Ø  

Organization and Compensation Committee – human capital management

Sound corporate governance starts from the top where we strive to balance the right mix of Board diversity characteristics (including skills, backgrounds, gender, racial and ethnic diversity) that will enable us to achieve our strategic goals. Our Board is continuously refreshed and we had seven new directors in the last ten years (including four new directors since 2018) and four of the seven directors were women or racially/ethnically diverse. For more information, see pages 6-8.

Our ESG goals are also linked to executive compensation. Compensation scorecards reflect key ESG goals including diversity, equity and inclusion, climate and sustainability. For more information, see pages 47-48.

 

  30         PSEG 2021 Proxy Statement    


Table of Contents

Corporate Governance – Our Governance Priorities

 

 

Oversight of Political Contributions and Engagement Activities

The Company is committed to maintaining orderly, stable and productive relationships with its stakeholders in government. The nature of our business requires that we are a trusted corporate citizen with an unwavering commitment to integrity. The Corporate Governance Committee oversees our political engagement activities in accordance with our Corporate Political Participation Practice, which may be found here: https://investor.pseg.com/governance/governance-overview/default.aspx

In 2020, we revised our Corporate Political Participation Practice to implement additional controls on the Company’s political engagement activities. These controls expand internal requirements applicable to the Company’s interactions with prominent political figures and its contributions to political organizations and social welfare organizations (i.e., 501(c)(4) organizations). For example, any contribution to a social welfare organization will undergo a robust review to confirm the contribution will not result in unreasonably adverse reputational or business risk and must be approved by the Senior Vice President—Corporate Citizenship and EVP and General Counsel. These additional controls also expand the review and approval process applicable to interactions with prominent political figures and others close to them. Also, vendors or suppliers who perform lobbying activities or political consulting may not subcontract work without our prior review and approval.

 

Consistent with our commitment to integrity in our political activities, we are transparent about our political contributions. Annually, we publish a report that includes our corporate contributions to candidates, trade associations and other political and social welfare organizations. With regard to trade associations, we request that trade associations to which we 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 here:

https://investor.pseg.com/governance/governance-overview/default.aspx

 

 

 

 

Political Spending Transparency & Governance

 

 

 

Received First Tier Score on the CPA-Zicklin Index

for Corporate Political Disclosure and Accountability

 

     
 

 

Annually publish Political

Contributions Report on

corporate political contributions,
including to 501(c)(4),

organizations

 

   

 

Corporate

Governance

Committee oversight of

political expenditures

and disclosures

 

     
 

 

Enhanced Corporate Political Participation Practice to implement additional controls, including over politically connected vendors and 501(c)(4) contributions

 

     

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.

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 to complete annual training on 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.

 

    PSEG 2021 Proxy Statement       31


Table of Contents

Corporate Governance – Our Governance Priorities

 

 

In 2020, 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 Person 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.

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 2020, 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 $43,800 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 2020, the Company paid a total of approximately $376,000 for services provided pursuant to this arrangement. The Company expects to pay a similar amount in 2021.

 

 

 

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 NJBPU. PSE&G has committed to invest approximately $271.8 million through the HEE Program to a variety of hospitals over the course of several years. PSEG had made commitments of approximately $64.7 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 NJBPU-approved terms of the program is equal to approximately $24.1 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, COO of PSEG and one of the Company’s NEOs, is an employee of, and receives compensation from, PSE&G. During 2020, Christopher LaRossa served and currently serves as District Manager – Regulatory Policy and Procedure. The approximate total compensation paid to Christopher LaRossa during 2020 was within the range set for employees with comparable qualifications and responsibilities who held similar positions at the Company (salary of $114,000-$228,000 plus incentive compensation targeted at 20% of salary). He also received health insurance and other benefits

 

  32         PSEG 2021 Proxy Statement    


Table of Contents

Corporate Governance – Certain Relationships and Related Person Transactions

 

 

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.

 

    PSEG 2021 Proxy Statement       33


Table of Contents

Security Ownership Table

 

 

SECURITY OWNERSHIP OF DIRECTORS, MANAGEMENT AND CERTAIN BENEFICIAL OWNERS

The following table shows, as of February 19, 2021, beneficial ownership of our common stock by the directors and nominees and the currently serving executive officers named in the 2020 Summary Compensation Table. None of these amounts exceeds one percent of our common stock outstanding. The table also shows as of February 19, 2021, 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)
    Amount of
Beneficial
Ownership
of Common
Stock
(#)
    Percent
of Class
(%)
 

 

Directors:

             

Willie A. Deese

    -       -       15,096       -       -       15,096       <1  

Shirley Ann Jackson

    5,604       9,600       53,082       4,338       -       72,624       <1  

David Lilley

    -       -       45,465       32,659       -       78,124       <1  

Barry H. Ostrowsky(6)

    -       -       8,114       -       -       8,114       <1  

Scott G. Stephenson(6)

    -       -       2,808       -       -       2,808       <1  

Laura A. Sugg(6)

    210       -       5,251       -       -       5,461       <1  

John P. Surma(6)

    1,736       -       2,808       -       -       4,544       <1  

Susan Tomasky

    -       -       31,261       -       -       31,261       <1  

Alfred W. Zollar

    -       -       31,042       -         31,042       <1  

NEOs:

             

Ralph Izzo(7)

    50,817       -       137,464       -       1,676,483       1,864,764       <1  

Daniel J. Cregg(7)

    62,780       -       25,623       -       8,781       97,184       <1  

Ralph A. LaRossa(7)

    26,324       -       33,107       -       149,288       208,719       <1  

Tamara L. Linde(7)

    51,249       -       21,032       -       -       72,281       <1  

David M. Daly(7)

    35,580       -       20,515       -       -       56,095       <1  

All Directors, NEOs and Executive Officers of the Company as a Group (16 Persons):

 

    316,412       9,600       443,615       36,997       1,834,552       2,641,176       <1  

Certain Beneficial Owners:

 

         

Blackrock, Inc.(8)

              51,015,043       10.10  

State Street Corporation(9)

              26,360,568       5.21  

T. Rowe Price Associates, Inc.(10)

              26,136,648       5.10  

Vanguard Group, Inc.(11)

                                            42,222,685       8.35  

 

(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)

Board member has not yet met their ownership requirement.

(7)

Address: 80 Park Plaza, Newark, NJ 07102

(8)

As reported on Schedule 13G filed on January 8, 2021. Address: 55 East 52nd Street, New York, NY 10055.

(9)

As reported on Schedule 13G filed on February 10, 2021. Address: One Lincoln Street, Boston, MA 02111.

(10)

As reported on Schedule 13G filed on February 16, 2021. Address: 100 E. Pratt Street, Baltimore, MD 21202.

(11)

As reported on Schedule 13G filed on February 8, 2021. Address: 100 Vanguard Blvd., Malvern, PA 19355.

 

  34         PSEG 2021 Proxy Statement    


Table of Contents

Security Ownership Table – Delinquent Section 16(a) Reports

 

 

Delinquent Section 16(a) Reports

The following information is based upon our review of Forms 3 and 4 filed in 2020 and Forms 5 filed with respect to 2020 with the SEC under Section 16(a) of the Securities Exchange Act of 1934, as amended, regarding transactions involving our common stock. During 2020, none of our NEOs were late in filing a Form 3, 4 or 5 in accordance with the applicable requirements of the SEC. For our directors, due to administrative error, one Form 4 was filed late for Shirley Ann Jackson reflecting the notional first quarterly investment in the PSEG Stock Fund as part of the Deferred Compensation Plan.

DIRECTOR COMPENSATION

The table below reports 2020 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
($)
  All Other
Compensation
($)
  Total
($)
    

Willie A. Deese

      158,333       135,038       -       -       -       150       293,521  

William V. Hickey(3)

      53,333       -       -       -       -       -       53,333  

Shirley Ann Jackson

      215,000       135,038       -       -       -       150       350,188  

David Lilley

      178,333       135,038       -       -       -       150       313,521  

Barry H. Ostrowsky

      155,000       135,038       -       -       -       150       290,188  

Scott G. Stephenson

      109,167       135,038       -       -       -       150       244,355  

Laura A. Sugg

      138,333       135,038       -       -       -       150       273,521  

John P. Surma

      155,000       135,038       -       -       -       150       290,188  

Richard J. Swift(3)

      60,000       -       -       -       -       -       60,000  

Susan Tomasky

      178,333       135,038       -       -       -       150       313,521  

Alfred W. Zollar

      160,000       135,038       -       -       -       150       295,188    

 

(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(3)

($)

 

 

Jackson

($)

 

 

Lilley

($)

 

 

Ostrowsky

($)

 

  

Stephenson

($)

 

 

Sugg

($)

 

 

Surma

($)

 

 

Swift(3)

($)

 

 

Tomasky

($)

 

 

Zollar

($)

 

-

 

53,333

 

215,000

 

-

 

-

  

-

 

-

 

-

 

-

 

-

 

-

 

(2)

For each, the grant date fair value of the award on May 1, 2020 equated to 2,733 stock units, rounded up to the nearest whole share, based on the then current market price of the common stock of $49.41. 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, 2020:

 

    

Deese

(#)

 

 

Jackson

(#)

 

 

Lilley

(#)

 

 

Ostrowsky

(#)

 

 

Stephenson

(#)

 

 

Sugg

(#)

 

 

Surma

(#)

 

 

Tomasky

(#)

 

 

Zollar   

(#)   

 

Stock Units

      15,096       53,082       45,465       8,114       2,808       5,251       2,808       31,261       31,042   

Restricted Stock

      -       9,600       -       -       -       -       -       -       -   

 

(3)

Service on our Board ended in April 2020.

 

    PSEG 2021 Proxy Statement       35


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 in 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; O&CC

       30,000

Committee Chair: Corporate Governance; Finance

       25,000

Committee Chair: Industrial Operations

       25,000

Committee Member: Audit

       20,000

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

       20,000

Committee Member: Industrial Operations

       20,000

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 34.

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.

 

  36         PSEG 2021 Proxy Statement    


Table of Contents

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.

 

    PSEG 2021 Proxy Statement       37


Table of Contents

Compensation Discussion and Analysis

 

 

LOGO

PROPOSAL 2 ADVISORY VOTE ON THE APPROVAL OF EXECUTIVE COMPENSATION

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 O&CC 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 2022 Annual Meeting of Stockholders. The next say-on-frequency vote, which determines how often the say-on-pay vote is to be held, will occur at our 2023 Annual Meeting of Stockholders.

The O&CC has approved the compensation arrangements discussed in the Report of our O&CC, 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 NEOs 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 NEOs, as disclosed in the Company’s Proxy Statement for the 2021 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, excluding abstentions and shares withheld or for which no instructions are given.

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

 

  38         PSEG 2021 Proxy Statement    


Table of Contents

Compensation Discussion and Analysis – Executive Compensation Summary

 

 

EXECUTIVE COMPENSATION SUMMARY

TABLE OF CONTENTS

 

2020 Named Executive Officers

 

LOGO   

 

 

Ralph Izzo, Chairman of the Board, President & Chief Executive Officer (CEO)

 

  

 

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

 

  

 

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

 

  

 

Tamara L. Linde, Executive Vice President (EVP) & General Counsel

 

  

 

David M. Daly, President – PSE&G (2)

 

 

(1)

Mr. LaRossa was elected to the position of Chairman of the Board (COB) of PSEG Long Island, effective December 14, 2020. During 2020, he was President & COO of PSEG Power and continues to hold these positions in addition to his current position.

(2)

Effective December 14, 2020, Mr. Daly no longer holds the positions relating to Clean Energy Ventures and PSEG Long Island LLC.

 

    PSEG 2021 Proxy Statement       39


Table of Contents

Compensation Discussion and Analysis – 2020 Company Performance Overview

 

 

2020 Company Performance Overview

The charts below compare the relative contributions of PSE&G and PSEG Power to our consolidated Net Income and Non-GAAP Operating Earnings over the past five years and show our steady earnings and consistent dividend growth in those years. This impact is reflected in the realized pay of our NEOs, since our executive compensation program links incentive payouts to measures of Non-GAAP Operating Earnings over multiple time frames. We show below the annual TSR and ROIC in the last three years compared to our 2020 peer group. You can find a more comprehensive discussion of our 2020 business and financial performance in our 2020 Form 10-K.

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

 

 

LOGO

GAAP: Contribution to PSEG Net Income ($ Millions) and Net Income per share ($/Share) Non-GAAP: Contribution to PSEG Operating Earnings ($ Millions) and Operating Earnings per share($/Share) PSEG Enterprise/Other PSEG Power PSE&G Net Income per share (GAAP) PSEG Enterprise/Other PSEG Power PSE&G Opera_ng Earnings per share (non-GAAP) Annual Total Shareholder Return (TSR) Annual Return on Invested Capital (ROIC) 3-Year TSR PSEG: 25.5% PSEG Peers: 28.9% 3-Year ROIC PSEG: 6.8% PSEG Peers: 7.2% PSEG Peer Group PSEG Dividend Payout ($/Share) 2020 5.1%

 

 

  40         PSEG 2021 Proxy Statement    


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 to our shareholders 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 incentive plans focus on financial and operational performance as well as Human Capital Management. Our LTIP also focuses on performance versus peers over a multi-year time horizon. The goals of individual NEOs, 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.

 

LOGO

Actual Payout Compared to Target CEO SMICP Payout Avg. Other NEO SMICP Payout PSU Payout

   The O&CC 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 O&CC and the Board align strong pay for performance with long-term stockholder value creation without encouraging excessive risk taking.

No COVID-19 Related Adjustments to Compensation

The O&CC determined not to make any adjustments to the targets or results for the 2020 compensation program for our NEOs despite our 2020 financial results being impacted by the COVID-19 pandemic. All metrics were unchanged from what was established at the beginning of the fiscal year, and incentive programs were assessed including the impacts of COVID-19. Annual incentive targets were established versus business plan or internal/external benchmarks, prior to COVID-19. Both PSU metrics (TSR and ROIC) are measured relative to peer performance, with all peers impacted to various degrees by this event. For more information on CEO Compensation, see page 46.

2020 Target Compensation Summary

Overall target compensation should be competitive compared to individuals in our peer group so that we can attract, motivate and retain exceptional talent. The 2020 compensation decisions are reflective of each executive’s role, responsibilities, performance and time in position. Our 2020 target compensation is as follows:

 

           

Executive

 

Base Salary
($)

 

Annual
Incentive

 

Target Total
Cash ($)

 

Long-Term

Incentive($)

 

Target Total
Compensation
($)

  PSUs   RSUs

Ralph Izzo

   

 

1,421,400

   

 

140

%

   

 

3,411,360

   

 

6,370,046

   

 

2,730,029

   

 

12,511,435

Daniel J. Cregg

   

 

680,000

   

 

75

%

   

 

1,190,000

   

 

1,134,027

   

 

486,030

   

 

2,810,057

Ralph A. LaRossa

   

 

787,000

   

 

90

%

   

 

1,495,300

   

 

1,680,020

   

 

720,044

   

 

3,895,364

Tamara L. Linde

   

 

638,600

   

 

75

%

   

 

1,117,550

   

 

910,021

   

 

390,004

   

 

2,417,575

David M. Daly

   

 

600,000

   

 

75

%

   

 

1,050,000

   

 

952,013

   

 

408,005

   

 

2,410,018

The above values reflect target compensation opportunities, which may not match the Summary Compensation Table.

 

    PSEG 2021 Proxy Statement       41


Table of Contents

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

 

 

EXECUTIVE COMPENSATION

Say-on-Pay and Shareholder Engagement

At the 2020 Annual Meeting, our stockholders voted approximately 94.1% 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.

 

 

94.1%

     of stockholders voted in favor of 2020     

     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 O&CC, with input from our independent compensation consultant, CAP, considered the 2020 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

 

  

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

 

LOGO  Set stretch performance goals

 

LOGO  Competitive pay, targeted around the median

 

LOGO  Maximum payout cap for incentive plans

 

LOGO  Minimum vesting of three years for RSUs and PSUs unless retirement eligible

 

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

 

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

 

LOGO  Robust stock ownership guidelines for executives

 

LOGO  Independent executive compensation consultant reviews programs and practices

 

LOGO  Engage stockholders to solicit feedback on our compensation program

 

LOGO  Uniform retirement formulas for all employees

  

LOGO    No guaranteed incentive compensation

 

LOGO    No excise tax gross ups

 

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

 

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

 

LOGO    No dividends paid on unearned awards

 

LOGO    No repricing or exchange of underwater stock options

 

LOGO    No excessive perks

 

LOGO    No longer offer additional service credit for pension calculation

 

LOGO    No discretion exercised for adverse effects of COVID-19

 

  42         PSEG 2021 Proxy Statement    


Table of Contents

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 a peer group comprised of similarly sized energy companies, with a significant focus on regulated utilities given our strategy. We consider our peers’ earnings, market capitalization, operational characteristics, price-to-earnings ratio 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. Our peer companies for 2020 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.

For 2021, we removed NextEra Energy and NRG Energy and added CMS Energy and WEC Energy. NextEra Energy and NRG Energy were removed due to their business mix and profile. CMS Energy and WEC Energy were added due to their comparability to us in business mix, profile, and size.

How We Use Peer Data

 

 

LOGO

Reference point for setting 2020 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 O&CC’s independent consultant, CAP, reviews the outcome of the competitive assessment and provides supplemental data on the peer group as required.

 

    PSEG 2021 Proxy Statement       43


Table of Contents

Compensation Discussion and Analysis – Peer Comparison and Benchmarking

 

 

Compensation Benchmark

Market positioning varies based on benchmark match (comparability), and an executives’ experience, performance, and time in role. 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 NEOs as a percentage of the comparative median benchmark levels of the peer group are noted below, along with each individual’s time in position. Mr. Izzo’s compensation decisions are discussed further in the CEO Compensation section.

Percent of Comparative Median Benchmark Levels (2020)

Chart reflects executive compensation decisions made in December 2019.

 

 

LOGO

50% 75% 100% 125% 150% R. Izzo 12 years, 9 months D. Cregg 4 years, 3 months R. LaRossa(1) 2 years, 3 months T. Linde 5 years, 6 months D. Daly 2 years, 3 months (1) Compensation decisions for Mr. LaRossa above reflects his new role as COO - PSEG effective January 1, 2020. Time in position as of Dec 31, 2019 Base Salary Note: Shading reflects competitive range (+/- 20% of median) Time in position as of Dec 31, 2019 Total Cash Total Direct

 

 

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Table of Contents

Compensation Discussion and Analysis – How We Compensate Our Executives

 

 

How We Compensate Our Executives

 

 

LOGO

Element Link to Business and Talent Strategy Link to Performance Form Base Salary Fixed Pay Recognizes executives competencies, experience, job responsibilities, skills, internal equity and the competitive market for the position Cash Annual Cash Incentive-SMICP At Risk Pay Incentivizes the achievement of key financial, operational, and strategic goals Cash Multiple performance measures, with a strong emphasis on non-GAAP EPS, measured over a one year period with a payout ranging from 0% 200% Equity-Based Incentive Awards-LTIP At Risk Pay Aligns NEOs interests with long-term interests of shareholders and the Company by rewarding for strong stock price performance and capital efficiency Common Stock 70% PSUs and 30% RSUs Payout of PSUs (if any) based equally on our ROIC vs. peers and TSR vs. peers and ranges from 0% - 200%Awards vest at the end of three years Retirement and Post-Employment Benefits Fixed Pay Facilitates attraction and retention and provides participants with the opportunity to effectively manage the timing of income and tax liability Cash

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

The O&CC 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. On average, 77% of pay is at risk for our NEOs, with 89% of pay at risk for our CEO.

 

 

LOGO

CEO Pay Mix 23% 19% 58% Average Other NEO Pay Mix 11% 16% 73% Salary SMICP LTIP Value at Risk

 

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 NEOs.

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 O&CC 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 relative metrics only and the goal and corresponding payout percent are noted in the 2020 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.

 

    PSEG 2021 Proxy Statement       45


Table of Contents

Compensation Discussion and Analysis – How We Compensate Our Executives

 

 

For 2020, we set SMICP targets that were higher than actual 2019 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 2020 SMICP earnings component was set slightly below 2019 actual results.

CEO Compensation

2020 compensation decisions recognize the long-tenure and seasoned experience of Mr. Izzo and the Board’s confidence in his ability to successfully lead the Company as CEO. Acknowledging Mr. Izzo’s experience, including his deep understanding of our strategy, operations, risk profile, regulatory and environmental circumstances, supports the above market median compensation philosophy in light of continued strong financial performance over time. Compensation increases are primarily in the form of at-risk, incentive compensation. The changes to the key terms of Mr. Izzo’s compensation in 2020 were as follows:

 

   
Component    2020 vs. 2019

Base Salary

  

 

   Increased annual salary to $1,421,400 for 2020 from $1,380,000 in 2019.

 

  

   Positioned at 104% of the market median.

 

 

Annual Cash Incentive

  

 

   Increased annual incentive target from 125% to 140% of salary for 2020.

 

  

   Positioned at 112% of the market median for target Cash Compensation.

 

 

Long-Term Incentive

  

   Increased target long-term incentive to $9,100,075 from $7,395,089 in February 2020.

 

    

   Positioned at 122% of the market median for target Total Direct Compensation

 

 

 

LOGO

2020 vs 2019 Target Compensation for CEO (in thousands) 2020 $1,421 $1,990 $9,100 $12,511 19% 2019 $1,380 $1,725 $7,395 $10,500 Salary SMICP LTIP

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 O&CC recommended the CEO’s compensation to all of the independent directors, who approved the compensation. In recognition of Mr. Izzo’s contributions to the Company, long-term management development, and succession planning, the Board believes Mr. Izzo’s 2020 compensation and positioning is appropriate.

In December 2020, at the request of the CEO, the Committee made no changes to Mr. Izzo’s 2021 target compensation due to macroeconomic challenges and the impact the global pandemic had on businesses, communities, our customers, our employees, and individuals.

 

  46         PSEG 2021 Proxy Statement    


Table of Contents

Compensation Discussion and Analysis – Our Compensation Elements Explained

 

 

Our Compensation Elements Explained

Executive Base Salary

Each NEO’s base salary level is reviewed annually by the O&CC. The O&CC considers base salary adjustments for individual NEOs 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 2020. Other NEOs’ increases ranged from 3% to 7%.

Executive Annual Cash Incentive

Our NEOs are eligible for an annual cash incentive under our SMICP. The O&CC evaluates each NEO’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 O&CC approves the incentive compensation for all NEOs except the CEO. The O&CC 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, enhancing the employee experience with a focus on culture, diversity, equity and inclusion, and talent development. The goals foster a culture of inclusion inside the Company, where every employee is valued for their unique perspectives, backgrounds, skills and experiences and can contribute to the success of PSEG, 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). People-related goals include OSHA benchmarks, talent slate diversity, and diversity, equity and inclusion measures. Safe and Reliable includes System Average Interruption Duration Index and other reliability measures, JD Power measures, performance indicators and cybersecurity measures. Economic focuses on financial measures including cash generation, EPS and ROIC. Greener Energy focuses on renewable energy generation.

Strategic Enterprise-wide scorecard categories include PSE&G filings, nuclear ZECs, long-term strategic business plan, market policy rules, ESG – climate and sustainability matters, cost management and continuous improvement, and New Jersey hiring. Mr. Izzo has a larger percentage tied to additional strategic objectives focused more broadly on Operational Excellence, Financial Strength and Disciplined Investments.

 

    PSEG 2021 Proxy Statement       47


Table of Contents

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

  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 through our core commitments of safety, diversity, equity and inclusion, integrity, continuous improvement and customer service

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

  

  Achieve earnings targets and execute on cost efficiency and business optimization initiatives

  Improve valuation by improving long-term growth prospects and more sustainable earnings mix while maintaining strong credit ratings

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

  Advocate for policies and rules that fairly compensate the transmission, distribution and generation businesses

 

  

  Implement enhanced capital review process and execute investments on budget and schedule

  Obtain approval of our Clean Energy Future (CEF) filing, including Energy Efficiency, Electric Vehicles and Energy Storage, and AMI

  Develop and execute strategies to sustain and profitably grow our businesses, with a focus on clean energy opportunities, including preserving nuclear and considering offshore wind investments

Each NEO’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.

 

 

LOGO

Target and Actual Performance Levels for 2020 Financial Metrics Threshold (50%) Target (100%) Stretch (150%) Maximum (200%) Payout Factor Corporate Operating EPS (non-GAAP) ($) 3.43 1.15 3.30 3.40 3.50 3.55 PSE&G Adjusted Operating Earning (non-GAAP) ($Millions) 1,328.5 0.84 1,310.0 1,337.0 1,370.0 1,382.7 Power Adjusted EBITDA (non-GAAP) ($Millions) 1,026.1 1.14 944.0 1,008.0 1,072.0 1,090.0

Operating EPS (non-GAAP) excludes mark-to-market activity, Nuclear Decommissioning Trust (NDT) related activity and 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, as well as income tax expense, 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 for reconciliation to GAAP of non-GAAP Operating Earnings and non-GAAP Adjusted EBITDA.

 

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Table of Contents

Compensation Discussion and Analysis – Our Compensation Elements Explained

 

 

Percentage of Comparative Median Benchmark Levels (2020)

Chart reflects executive compensation decisions made in December 2019

 

 

LOGO

Performance Factor Overall Achievement Factor Modification (if applicable) (000s) Payout Earned (000s) Ralph Izzo Daniel J. Cregg Ralph A. LaRossa Tamara L. Linde David M. Daly Corporate EPS Business Unit Earnings Business Unit Scorecard Corporate Strategic Goals

The final payout for Mr. Daly was modified downward by the Organizational and Compensation Committee to reflect the identification of needed improvements to processes and systems in connection with PSEG LI’s performance during Tropical Storm Isaias as reported in Note 15 to the Consolidated Financial Statements in our 2020 Form 10-K.

Executive Long-Term Incentive

Grants are typically made each February. Factors that are considered in the determination of award amounts are the competitive market and the individual’s role, responsibilities, and contribution, CEO recommendation as well as talent retention needs. With respect to the CEO, the O&CC develops a recommended award opportunity in consultation with CAP and submits the proposal for approval by the Board.

 

 

LOGO

2020 Equity Program 70% PSUs " Rewards strong financial and stock price performance over a longer time frame than annual rewards " Facilitates retention as recipient generally must remain an employee through vesting dates to earn payout, unless retirement eligible " Aligns the interest of officers with long term stockholder value 30% RSUs " Facilitates retention as recipient generally must remain an employee through vesting dates to earn payout, unless retirement eligible " Aligns the interests of officers with long term stockholder value2020 Equity Program 70% PSUs " Rewards strong financial and stock price performance over a longer time frame than annual rewards " Facilitates retention as recipient generally must remain an employee through vesting dates to earn payout, unless retirement eligible " Aligns the interest of officers with long-term stockholder value 30% RSUs " Facilitates retention as recipient generally must remain an employee through vesting dates to earn payout, unless retirement eligible " Aligns the interests of officers with long-term stockholder value

RSUs are denominated in units of common stock and cliff vest at the end of three years, payable in shares of our common stock. PSUs are denominated in units of common stock and are subject to achievement of certain performance goals over a three-year period, vesting at the end of the performance period.

2018 Grant PSU Result: LTIP awards of PSUs made for the three-year performance period ended December 31, 2020 were reported in our Proxy Statement 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

50% Relative TSR Rewards management when we deliver value to shareholders in excess of our peers 50% Relative ROIC Rewards management for managing our business and capital better than our peers

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).

 

    PSEG 2021 Proxy Statement       49


Table of Contents

Compensation Discussion and Analysis – Our Compensation Elements Explained

 

 

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 2018 grants, the peer group consisted of 19 companies plus PSEG.

 

LOGO

Performance vs. Peers Payout Rank 5 200% Rank 10 100% Rank 15 20% Rank 16 and Higher 0% Actual TSR Result Rank 10 100% Payout Actual ROIC Result Rank XX XX% Payout Final Overall PSU Payout XXX%

 

Based on the performance results for that period, as approved by the O&CC, Mr. Cregg, Mr. LaRossa, Ms. Linde and Mr. Daly, and as recommended by the O&CC and approved by the Board, Mr. Izzo, will receive payment in 2021 of shares of our common stock equal to 140% (see table below) of the grant target.

Determination of Individual Payouts for Executives: Based on these results, participants earned a PSU payout of 140%. 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, 2021, $54.69. These amounts are reported in the Option Exercises and Stock Vested during 2020 Table.

 

       

NEO

  

PSUs

    Granted    

(#)

  

PSUs

    Earned    

(#) (1)

  

PSUs

    Payout    

($) (1)

Ralph Izzo

       89,062        138,354        7,566,603

Daniel J. Cregg

       15,301        23,770        1,299,955

Ralph A. LaRossa

       45,174        70,176        3,837,930

Tamara L. Linde

       15,301        23,770        1,299,955

David M. Daly

       10,838        16,836        920,784

 

(1)

Reflects rounding and includes accrued dividend equivalents earned.

2020 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 19 peers plus PSEG for a total of 20. 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 2020 for the NEOs. These grants are for the three-year performance period ending December 31, 2022 and are shown in the 2020 Grants of Plan-Based Awards Table. These awards are also reported in the Summary Compensation Table at the grant date fair value.

 

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Table of Contents

Compensation Discussion and Analysis – Our Compensation Elements Explained

 

 

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: Substantially all employees, including the NEOs, 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 Executive Retirement Income Plan (Supplemental Plan). All of our NEOs 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.

Additional information is provided in the Pension Benefits Table and the accompanying narrative, below. Amounts reported for 2020 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 NEOs. All of our NEOs 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 NEO 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 2020 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.

 

    PSEG 2021 Proxy Statement       51


Table of Contents

Compensation Discussion and Analysis – Executive Compensation Governance Features and Controls

 

 

Executive Compensation Governance Features and Controls

Role of the Compensation Consultant

The O&CC 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 O&CC and is prohibited from sharing certain information with management. CAP also periodically meets with the O&CC in executive session without the presence of management and provides only executive compensation consulting services. In 2020, CAP attended four meetings of the O&CC.

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

In July 2020, the O&CC reviewed CAP’s independence relative to the following factors:

 

 

LOGO

CAPs provision of other services to the Company The amount of fees CAP receives from the Company as a percentage of CAPs total revenue The policies and procedures of CAP that are designed to prevent conflicts of interest Any business or personal relationship between Organization and Compensation Committee members and CAP or its compensation consultants Any PSEG stock owned by CAP or its compensation consultants Any business or personal relationship between our executive officers and CAP or any of its compensation consultants Other factors that would be relevant to CAPs independence from management

The O&CC concluded that CAP is independent and no conflicts of interest exist.

Executive Compensation Risk Assessment

In 2020, 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 O&CC. Based on this review, the O&CC determined that the programs are appropriately structured and do not encourage excessive risk-taking.

 

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Table of Contents

Compensation Discussion and Analysis – Executive Compensation Governance Features and Controls

 

 

Our compensation programs include the following risk mitigation features:

 

  Strong governance processes and controls in place

 

  Multi-year vesting for long-term incentives

 

  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

 

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

 

 

  

 

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

 

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

 

  O&CC oversight of incentive plan formulas, performance measures/goals and corresponding payment scales

 

  A robust Clawback policy

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

 

   

Is administered by the O&CC 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 O&CC meetings, other than executive sessions. The CEO recommends changes to the salaries of his direct reports (who, in 2020, included the NEOs) and recommends LTI award levels. The CEO develops and the O&CC 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 O&CC 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.

No Hedging and Pledging

We have a policy that prohibits all employees, including NEOs, 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 NEOs, 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.

 

    PSEG 2021 Proxy Statement       53


Table of Contents

Compensation Discussion and Analysis – Executive Compensation Governance Features and Controls

 

 

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.

 

LOGO

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%, of all shares, net of taxes, 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.

 

All NEOs have met their respective ownership requirement.

Accounting and Tax Implications

The O&CC has considered the effect of Financial Accounting Standards Board Accounting Standards Codification Topic 718 (see Note 20 to the Consolidated Financial Statements included in our 2020 Form 10-K) regarding the expensing of equity awards in determining the nature of the grants under the LTIP.

The O&CC considers the tax-deductibility of our compensation payments as one factor in determining executive compensation. In addition, the O&CC 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 O&CC 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 2020, the Internal Revenue Service (IRS) issued final regulations under IRC 162(m). 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.

 

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Table of Contents

Compensation Discussion and Analysis – Compensation Committee Interlocks and Insider Participation

 

 

Compensation Committee Interlocks and Insider Participation

During 2020, each of the following individuals served as a member of the O&CC for all or a portion of the year: Willie A. Deese, Shirley Ann Jackson, David Lilley (Chair), Barry H. Ostrowsky, John P. Surma and Susan Tomasky. No member of the O&CC 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 O&CC had a direct or indirect material interest in any transaction with us, other than as described on page 32 under Certain Relationships and Related Person Transactions with respect to Barry H. Ostrowsky.

 

 

LOGO

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 Committees 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: David Lilley Chair Barry H. Ostrowsky Willie A. Deese Shirley Ann John P. Surma Susan Tomasky February 15, 2021

 

    PSEG 2021 Proxy Statement       55


Table of Contents

Executive Compensation Tables – 2020 Summary Compensation Table

 

 

EXECUTIVE COMPENSATION TABLES

2020 Summary Compensation Table

The following table summarizes the compensation of our NEOs for the years shown. The NEOs are our CEO, CFO and three most highly compensated executive officers in 2020.

 

Name and

Principal Position(1)

Year Salary
($)(2)
Stock
Awards
($)(3)
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

  2020   1,421,400   9,100,075   2,348,200   1,335,000   103,579   14,308,254

Chairman of the Board,
President & CEO

 

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

 

2018

 

 

 

 

1,340,000

 

 

 

 

6,985,019

 

 

 

 

2,036,800

 

 

 

 

-

 

 

 

 

57,472

 

 

 

 

10,419,291

 

 

Daniel J. Cregg

  2020   680,000   1,620,057   601,800   657,000   29,609   3,588,466

EVP & CFO

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

 

2018

 

 

 

 

628,700

 

 

 

 

1,200,039

 

 

 

 

594,100

 

 

 

 

95,000

 

 

 

 

28,929

 

 

 

 

2,546,768

 

 

Ralph A. LaRossa

  2020   787,000   2,400,064   835,800   928,000   29,400   4,980,264

COO

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

 

2018

 

 

 

 

719,700

 

 

 

 

4,400,095

 

 

 

 

597,500

 

 

 

 

1,770,000

 

 

 

 

27,292

 

 

 

 

7,514,587

 

 

Tamara L. Linde

  2020   638,600   1,300,025   565,200   686,000   30,416   3,220,241

EVP &

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

General Counsel

 

 

 

2018

 

 

 

 

595,600

 

 

 

 

1,200,039

 

 

 

 

571,800

 

 

 

 

54,000

 

 

 

 

29,079

 

 

 

 

2,450,518

 

 

David M. Daly

  2020   600,000   1,360,018   424,600   511,000   26,744   2,922,362

President
(PSE&G)

 

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

 

2018

 

 

 

 

522,200

 

 

 

 

850,033

 

 

 

 

514,600

 

 

 

 

-

 

 

 

 

25,929

 

 

 

 

1,912,762

 

 

 

(1)

Mr. LaRossa was elected to the position of COB of PSEG Long Island, effective December 14, 2020. During 2020, he was President & COO of PSEG Power. He continues to hold the positions of President & COO of PSEG Power in addition to his current position. Effective December 14, 2020, Mr. Daly no longer holds the positions relating to Clean Energy Ventures and PSEG Long Island LLC.

(2)

Amounts shown are based on annualized salary. Mr. Cregg deferred, $9,141, $195,000 and $129,944 of his 2020, 2019 and 2018 salary, respectively (see 2020 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. 2020, 2019 and 2018 LTIP awards were granted in February of each year. All 2020 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.

 

  

 

  2020          

 

    2019          

 

    2018  
  

 

 

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

    6,370,046          12,740,092       

 

 

 

    5,176,535          10,353,070       

 

 

 

    4,889,504          9,779,008  

Daniel J. Cregg

    1,134,027          2,268,054       

 

 

 

    980,043          1,960,086       

 

 

 

    840,025          1,680,050  

Ralph A. LaRossa

    1,680,020          3,360,040       

 

 

 

    980,043          1,960,086       

 

 

 

    2,480,053          4,960,105  

Tamara L. Linde

    910,021          1,820,042       

 

 

 

    910,000          1,820,000       

 

 

 

    840,025          1,680,050  

David M. Daly

    952,013          1,904,026         

 

 

 

 

 

    770,039          1,540,078         

 

 

 

 

 

    595,006          1,190,012  

 

(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 $0, $179,760 and $118,820 of his 2020, 2019 and 2018 SMICP, respectively.

 

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Table of Contents

Executive Compensation Tables – 2020 Summary Compensation Table

 

 

(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 2020 and 2019, 2019 and 2018, and 2018 and 2017, 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 2020 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     

($)   

2020

   1,335,000        657,000        928,000        686,000    511,000   

2019

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

2018

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

 

    

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 2020, 2019 or 2018.

(6)

For 2020, 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 2020 that exceeded the greater of $25,000 or 10% of the NEO’s total perquisite and personal benefit amount, except for Ralph Izzo whose perquisite increase in 2020 was due to a home security system repair cost totaling $59,170.

(7)

Includes the employer matching contribution to our 401(k) Plan at the same percentage generally available to all non-represented employees. For 2020, these amounts were:

 

     

 

Izzo

($)

 

  

 

Cregg

($)

 

  

 

LaRossa

($)

 

  

 

Linde

($)

 

  

 

  Daly     

($)   

 

401(k) Company Match

       11,400        11,400        11,400        11,400        11,400    

 

    PSEG 2021 Proxy Statement       57


Table of Contents

Executive Compensation Tables – 2020 Grants of Plan-Based Awards Table

 

 

2020 Grants of Plan-Based Awards Table

The following table provides information on plan-based awards made to our NEOs for 2020.

 

           
       

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
($)
  Threshold
(#)
  Target
(#)
  Maximum
(#)
  All Other
Stock
Awards;
Number
of Shares
of Stock
or Units
(#)(4)
  Grant
Date
Fair
Value
of
Stock
and
Option
Awards
($)(5)

 

Ralph Izzo

                 

SMICP

    995,000   1,990,000   3,980,000   -   -   -   -   -

PSUs

  2/18/2020   -   -   -   12,333   123,331   246,662   -   6,370,046

RSUs

  2/18/2020   -   -   -   -   -   -   46,256   2,730,029

 

Daniel J. Cregg

SMICP

    255,000   510,000   1,020,000   -   -   -   -   -

PSUs

  2/18/2020   -   -   -   2,196   21,956   43,912   -   1,134,027

RSUs

  2/18/2020   -   -   -   -   -   -   8,235   486,030

 

Ralph A. LaRossa

SMICP

    354,200   708,300   1,416,600   -   -   -   -   -

PSUs

  2/18/2020   -   -   -   3,253   32,527   65,054   -   1,680,020

RSUs

  2/18/2020   -   -   -   -   -   -   12,200   720,044

 

Tamara L. Linde

SMICP

    239,500   479,000   958,000   -   -   -   -   -

PSUs

  2/18/2020   -   -   -   1,762   17,619   35,238   -   910,021

RSUs

  2/18/2020   -   -   -   -   -   -   6,608   390,004

 

David M. Daly

SMICP

    225,000   450,000   900,000   -   -   -   -   -

PSUs

  2/18/2020   -   -   -   1,843   18,432   36,864   -   952,013

RSUs

  2/18/2020   -   -   -   -   -   -   6,913   408,005

 

(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 2020 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 2021 and paid thereafter, as reported in the 2020 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 2020 Form 10-K.

 

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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 2020 Summary Compensation Table were paid in 2021 with respect to 2020 performance under the terms of the SMICP. The range of possible awards for each NEO in relation to the NEO’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 NEOs in February 2020 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, 2022, 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 NEOs are retirement eligible. The range of possible payouts for each NEO in relation to the NEO’s target award is set forth in the table above. Payments of awards granted in February 2018 will be made based on performance for the three-year period that ended on December 31, 2020. 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, 2020 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 NEO 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 2021 Proxy Statement       59


Table of Contents

Executive Compensation Tables – Outstanding Equity Awards at Year-End December 31, 2020 Table

 

 

Outstanding Equity Awards at Year-End December 31, 2020 Table

The following table lists all outstanding awards, consisting of PSUs and RSUs, as of December 31, 2020 for our NEOs.

 

         

Name

 

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

        115,176       6,714,761  

Daniel J. Cregg

    -       -       20,841       1,215,030  

Ralph A. LaRossa

    33,769       1,968,733       28,162       1,641,845  

Tamara L. Linde

    -       -       17,434       1,016,402  

David M. Daly

    -       -       17,192       1,002,294  
(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 2020 are shown in the Option Exercises and Stock Vested During 2020 Table. Mr. LaRossa’s 2018 RSU retention award vested 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      -      33,769      -      33,769

 

(2)

Value represents number of shares or units multiplied by the closing price on the NYSE on December 31, 2020 of $58.30.

 

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Table of Contents

Executive Compensation Tables – Outstanding Equity Awards at Year-End December 31, 2020 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 2019 awards that vest in 2021, 12/36th of their 2020 awards that vest in 2021 and 12/36th of their 2020 awards that vest in 2022. For further explanation of PSUs, see the Executive Compensation section.

 

   
     PSU Vesting Schedule  
      Grant Date     

Target

2021

(#)

    

Maximum

2021

(#)

    

Target

2022

(#)

    

Maximum

2022

(#)

    

Target

Total

(#)

    

Maximum

Total

(#)

 

 

   Ralph Izzo

  

 

 

 

2/19/2019  

 

 

  

 

 

 

    29,761

 

 

  

 

 

 

59,522

 

 

  

 

 

 

-

 

 

  

 

 

 

-

 

 

  

 

 

 

29,761  

 

 

  

 

 

 

59,522  

 

 

     2/18/2020              42,707        85,414        42,708        85,416        85,415          170,830    
                 

 

 

    

 

 

 

 

            

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

       115,176                230,352    
                 

 

 

    

 

 

 
                    

 

   Daniel J. Cregg

     2/19/2019          5,635        11,270        -        -        5,635          11,270    
     2/18/2020          7,603        15,206        7,603        15,206        15,206          30,412    
                 

 

 

    

 

 

 

 

            

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

     20,841          41,682    
                 

 

 

    

 

 

 
                    

 

   Ralph A. LaRossa

     2/19/2019          5,635        11,270        -        -        5,635          11,270    
     2/18/2020          11,264        22,528        11,263        22,526        22,527          45,054    
                 

 

 

    

 

 

 

 

            

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

     28,162          56,324    
                 

 

 

    

 

 

 
                    

 

   Tamara L. Linde

     2/19/2019          5,232        10,464        -        -        5,232          10,464    
     2/18/2020          6,101        12,202        6,101        12,202        12,202          24,404    
                 

 

 

    

 

 

 

 

            

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

     17,434          34,868