NISOURCE INC.
10-Qs and 10-Ks
PROXIES
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
| Filed by the Registrant þ | |
| Filed by a Party other than the Registrant o | |
| Check the appropriate box: |
| o Preliminary Proxy Statement | |
| o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
| þ Definitive Proxy Statement | |
| o Definitive Additional Materials | |
| o Soliciting Material Pursuant to §240.14a-12 |
NiSource, Inc.
(Name
of Registrant as Specified In Its Charter)
(Name
of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
| þ No fee required. | |
| o Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
| 1) Title of each class of securities to which transaction applies: |
| 2) Aggregate number of securities to which transaction applies: |
| 3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): |
| 4) Proposed maximum aggregate value of transaction: |
| 5) Total fee paid: |
| o Fee paid previously with preliminary materials. |
| o Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
| 1) Amount Previously Paid: |
| 2) Form, Schedule or Registration Statement No.: |
| 3) Filing Party: |
| 4) Date Filed: |
| SEC 1913 (02-02) | Persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number. |
Table of Contents
NiSource Inc.
801 E. 86th Avenue • Merrillville, IN 46410 • (877) 647-5990
801 E. 86th Avenue • Merrillville, IN 46410 • (877) 647-5990
NOTICE OF ANNUAL MEETING
April 1,
2011
To the Holders of Common Stock of NiSource Inc.:
The annual meeting of the stockholders (the “Annual
Meeting”) of NiSource Inc. (the “Company”) will
be held at The Hilton Rosemont Chicago O’Hare,
5550 N. River Road, Rosemont, IL 60018 on Tuesday,
May 10, 2011, at 10:00 a.m., local time, for the
following purposes:
| (1) | To elect ten directors to hold office until the next annual stockholders’ meeting and until their respective successors have been elected or appointed; | |
| (2) | To ratify the appointment of Deloitte & Touche LLP as the Company’s independent registered public accountants for the year 2011; | |
| (3) | To consider an advisory vote on executive compensation; | |
| (4) | To consider an advisory vote on the frequency of the advisory vote on executive compensation; and | |
| (5) | To consider a stockholder proposal regarding stockholder action by written consent. |
All persons who are stockholders of record at the close of
business on March 15, 2011 will be entitled to vote at the
Annual Meeting.
Please act promptly to vote your shares with respect to the
proposals described above. You may vote your shares by marking,
signing, dating and mailing the enclosed proxy card. You may
also vote by telephone or through the Internet by following the
instructions set forth on the proxy card. If you attend the
Annual Meeting, you may vote in person, even if you have
previously submitted a proxy.
In order to help us arrange for the Annual Meeting, if you plan
to attend the Annual Meeting, please so indicate in the space
provided on the proxy card or respond when prompted on the
telephone or through the Internet.
PLEASE VOTE YOUR SHARES BY TELEPHONE, THROUGH THE
INTERNET OR BY PROMPTLY
MARKING, DATING, SIGNING AND RETURNING THE ENCLOSED PROXY CARD.
MARKING, DATING, SIGNING AND RETURNING THE ENCLOSED PROXY CARD.
Gary W. Pottorff
Corporate Secretary
Corporate Secretary
Important
Notice Regarding the Availability of Proxy Materials
For the Annual Meeting of Stockholders to be Held on May 10, 2011
The Proxy Statement and 2010 Annual Report to Stockholders
are available at http://ir.nisource.com/annuals.cfm
For the Annual Meeting of Stockholders to be Held on May 10, 2011
The Proxy Statement and 2010 Annual Report to Stockholders
are available at http://ir.nisource.com/annuals.cfm
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Table of Contents
PROXY
STATEMENT
The accompanying proxy is solicited on behalf of the Board of
Directors of the Company. The common stock, $.01 par value
per share, of the Company represented by the proxy will be voted
as directed. If you return a signed proxy card without
indicating how you want to vote your shares, the shares
represented by the accompanying proxy will be voted as
recommended by the Board of Directors “FOR” all of the
nominees for director; “FOR” the ratification of the
appointment of Deloitte & Touche LLP as the
Company’s independent registered public accountants for
2011; “FOR” approval of the compensation of the
Company’s named executive officers; for the
“ANNUALLY” advisory vote on executive compensation;
and “AGAINST” the stockholder proposal to permit
action by written consent of stockholders entitled to cast the
minimum number of votes that would be necessary to authorize the
action at a meeting at which all stockholders entitled to vote
thereon were present and voting (the “Stockholder Action by
Written Consent Proposal”).
This proxy statement and form of proxy are first being sent to
stockholders on April 1, 2011. The Company will bear the
expense of this solicitation. The original solicitation of
proxies by mail may be supplemented by telephone, facsimile,
e-mail and
personal solicitation by officers, employees, and agents of the
Company or its affiliates. To aid in the solicitation of
proxies, the Company has retained Phoenix Advisory Partners for
a fee of $9,500 plus reimbursement of expenses. The Company also
will request brokerage houses and other nominees and fiduciaries
to forward proxy materials, at the Company’s expense, to
the beneficial owners of stock held of record by such persons.
Who May
Vote
The close of business on March 15, 2011 is the date for
determining stockholders entitled to notice of and to vote at
the Annual Meeting. As of March 15, 2011,
279,580,251 shares of common stock were issued and
outstanding. Each share of common stock outstanding on that date
is entitled to one vote on each matter presented at the Annual
Meeting.
Voting
Your Proxy
If you are a stockholder of record (that is, if you hold shares
of common stock of the Company in your own name), you may vote
your shares by proxy using any of the following methods:
| • | Telephoning the toll-free number listed on the proxy card; | |
| • | Using the Internet site listed on the proxy card; or | |
| • | Marking, dating, signing and returning the enclosed proxy card. |
If your shares are held by a broker, bank or other nominee in
“street name,” you will receive voting instructions
from that entity, the “record holder,” that you must
follow in order to have your shares of common stock voted at the
Annual Meeting. If your shares are held by a broker or other
nominee and you or any other person entitled to vote those
shares does not provide the broker or other nominee with
instructions as to how to vote such shares, that broker or
nominee will only be able to vote your shares on the matters for
which the broker or other nominee has discretionary authority.
Brokers and most other nominees will have discretionary
authority to vote your shares of common stock only with regard
to the ratification of the appointment of Deloitte &
Touche LLP as the Company’s independent registered public
accountants for 2011. We do not believe that brokers and most
other nominees will have discretionary authority to vote your
shares with respect to the election of directors, the advisory
vote on executive compensation, the advisory vote on frequency
of the advisory vote on executive compensation or the
Stockholder Action by Written Consent Proposal. Therefore, it is
important that you instruct your broker or other nominee how to
vote your shares.
If you hold your shares in the Company’s 401(k) plan
administered by Fidelity Investments, you will need to vote your
shares by one of the methods discussed in this Proxy Statement
in order to have your vote counted. Fidelity will not exercise
any voting discretion over the shares held in your 401(k)
account. If you fail to vote by returning a completed proxy
card, or by telephone or through the Internet, your shares held
through Fidelity will not be voted.
If you are a stockholder of record and plan to attend the Annual
Meeting, please so indicate when you vote, so that the Company
may send you an admission ticket and make the necessary
arrangements. Stockholders who plan
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Table of Contents
to attend the meeting must present picture identification along
with an admission ticket or evidence of current beneficial
ownership.
Voting in
Person
You also may come to the Annual Meeting and vote your shares in
person by obtaining and submitting a ballot that will be
provided at the meeting. However, if your shares are held in
street name by a broker, bank or other nominee, including
Fidelity Investments as administrator of the Company’s
401(k) plan, then in order to be able to vote at the meeting,
you must obtain a proxy, executed in your favor, from the
institution that is the holder of record of your shares,
indicating that you were the beneficial owner of the shares on
March 15, 2011, the record date for voting, and that the
record holder is giving you the proxy to vote the shares.
Votes cast in person or represented by proxy at the meeting will
be tabulated by the inspectors of election. Abstentions will
have the same effect as a vote against a proposal, except for
the proposal to elect directors and the proposal relating to the
frequency of the advisory vote on executive compensation, as to
which abstentions will have no effect.
Revoking
Your Proxy
You may revoke your proxy at any time before a vote is taken or
the authority granted is otherwise exercised. To revoke a proxy,
you may send to the Company’s Corporate Secretary a letter
indicating that you want to revoke your proxy or you can
supersede your initial proxy by (i) delivering to the
Corporate Secretary a duly executed proxy bearing a later date,
(ii) voting by telephone or through the Internet on a later
date, or (iii) attending the meeting and voting in person.
Attending the Annual Meeting will not in and of itself revoke a
proxy.
Quorum
for the Meeting
A quorum of stockholders is necessary to take action at the
Annual Meeting. A majority of the outstanding shares of common
stock, present in person or represented by proxy, will
constitute a quorum at the Annual Meeting. The inspectors of
election appointed for the Annual Meeting will determine whether
or not a quorum is present. The inspectors of election will
treat abstentions and broker non-votes as present and entitled
to vote for purposes of determining the presence of a quorum. A
broker non-vote occurs when a broker holding shares for a
beneficial owner does not have authority to vote the shares and
has not received instructions from the beneficial owner as to
how the beneficial owner would like the shares to be voted.
PROPOSAL I —
ELECTION OF DIRECTORS
At the recommendation of the Corporate Governance Committee, the
Board of Directors has nominated the persons listed below to
serve as directors, each for one year terms, beginning at the
Annual Meeting on May 10, 2011 and running until the 2012
Annual Meeting. The nominees include nine independent directors,
as defined in the applicable rules of the New York Stock
Exchange (“NYSE”), and the President and Chief
Executive Officer of the Company. The nominees do not include
Dennis E. Foster, who is currently serving as Director, due to
his intention to retire from the Board of Directors at the
conclusion of his current term. The Board of Directors does not
anticipate that any of the nominees will be unable to serve, but
if any nominee is unable to serve, the proxies will be voted in
accordance with the judgment of the person or persons acting
thereunder.
All of the nominees currently serve on the Board of Directors.
The following chart gives information about all nominees (each
of whom has consented to being named in the proxy statement and
to serving if elected). The dates shown for service as a
director include service as a director of the corporate
predecessors of NiSource Inc. (incorporated in Indiana) and
Northern Indiana Public Service Company.
Vote
Required
In order to be elected, each nominee must receive more votes
cast in favor of his or her election than against election.
Broker non-votes will not be voted with respect to the election
of directors and therefore will have no effect on the vote.
Abstentions will have no effect on the vote.
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THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE
“FOR” THE ELECTION OF EACH OF THE NOMINEES LISTED
BELOW.
|
Name, Age and Principal Occupations |
Has Been a |
|
|
for Past Five Years and Present Directorships Held
|
Director Since | |
|
Richard A. Abdoo, 67
|
2008 | |
|
Since May 2004, Mr. Abdoo has been President of R.A.
Abdoo & Co. LLC, Milwaukee, Wisconsin, an
environmental and energy consulting firm. Prior thereto,
Mr. Abdoo was Chairman and Chief Executive Officer of
Wisconsin Energy Corporation from 1991 until his retirement in
April 2004. He also served as President of Wisconsin Energy
Corporation from 1991 to April 2003. Mr. Abdoo is a
director of A.K. Steel Corporation and ZBB Energy Corp.
|
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|
By virtue of his former positions as chairman and chief
executive officer of a large electric and gas utility holding
company, as well as his current positions as director of one
other energy-related company and a steel maker that is a major
user of energy, Mr. Abdoo has extraordinary expertise and
experience with the issues facing the energy industry in general
and public utilities in particular. As a former chief executive
officer, Mr. Abdoo understands well the issues facing
executive management of a major corporation.
Mr. Abdoo’s credentials as a registered professional
engineer in several states allow him to offer a unique technical
perspective on certain issues under consideration by the board.
As a long-time champion of humanitarian and social causes,
including on behalf of the
Lebanese-American
community, Mr. Abdoo brings expertise and understanding
with respect to social issues confronting the Company. His
commitment to and work on behalf of social causes earned him the
Ellis Island Medal of Honor, presented to Americans of diverse
origins for their outstanding contributions to their own ethnic
groups and to American society.
|
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|
Steven C. Beering, 78
|
1986 | |
|
Member of the National Science Board, the governing board of the
National Science Foundation, Washington, D.C., an
independent Federal agency that promotes the progress of
science. He is also President Emeritus of Purdue University,
West Lafayette, Indiana.
|
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|
Dr. Beering’s years of experience as president of a
major research university and his current role as member of the
National Science Board provide him with valuable expertise
regarding the technical issues facing the Company, as well as
the challenges of managing a large institution. As a result of
his years of utility board service, Dr. Beering also has a
deep understanding of the energy industry generally, the
specific service territory and the particular issues the company
has addressed in the past and currently addresses. His tenure as
a director of the Company further allows him to provide a
perspective that brings balance and stability to the board.
|
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|
Michael E. Jesanis, 54
|
2008 | |
|
Since November 2007, Mr. Jesanis has been a principal with
Serrafix, Boston, Massachusetts, a firm providing energy
efficiency consulting and implementation services, principally
to municipalities. From July 2004 through December 2006,
Mr. Jesanis was President and Chief Executive Officer of
National Grid USA, a natural gas and electric utility, and a
subsidiary of National Grid plc, of which Mr. Jesanis was
also an Executive Director. Prior to that, Mr. Jesanis was
Chief Operating Officer of National Grid USA from January 2001
to July 2004. Mr. Jesanis is a director of Ameresco, Inc.
|
||
|
By virtue of his former positions as president and chief
executive officer, chief operating officer and, prior thereto,
chief financial officer of a major electric and gas utility
holding company, as well as his current role with an energy
efficiency consulting firm, Mr. Jesanis has extraordinarily
broad and deep experience with regulated utilities. He has
strong financial acumen and extensive managerial experience,
having led modernization efforts in the areas of operating
infrastructure improvements, customer service enhancements and
management-team development. Mr. Jesanis also demonstrates
a commitment to education as the former chair of the board of a
college and a current trustee (and chair of the audit committee)
of a university. As a result of his former senior managerial
roles and his non-profit board service, Mr. Jesanis also
has particular expertise with board governance issues.
|
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Table of Contents
|
Name, Age and Principal Occupations |
Has Been a |
|
|
for Past Five Years and Present Directorships Held
|
Director Since | |
|
Marty R. Kittrell, 54
|
2007 | |
|
In February, 2011, Mr. Kittrell retired as Executive Vice
President & Chief Financial Officer of Dresser, Inc.,
Addison, Texas, after serving in that capacity since December
2007. Dresser, a worldwide leader in providing highly engineered
products for the global energy industry, was acquired by General
Electric in February 2011. Upon his retirement from Dresser,
Mr. Kittrell entered into an exclusive consulting
arrangement with General Electric to assist with transition and
integration. Prior to joining Dresser, Mr. Kittrell was
Executive Vice President and Chief Financial Officer of Andrew
Corporation from October 2003 to December 2007.
|
||
|
Mr. Kittrell brings to the board over 25 years of
experience as a chief financial officer. He has served in the
role of chief financial officer at several public companies. As
a result of this experience, he has significant expertise with
financial reporting issues facing the Company, including SEC
reporting, and Sarbanes-Oxley internal control design and
implementation. His recent position with a company that supplies
infrastructure products to the energy industry gives
Mr. Kittrell a particular familiarity with the issues
facing the Company’s gas transmission and storage and gas
distribution businesses. Mr. Kittrell also has extensive
experience with mergers and acquisitions and capital markets
transactions. He formerly practiced accounting with a national
accounting firm and is an active member of the AICPA, the
National Association of Corporate Directors, and Financial
Executives International. Mr. Kittrell also shows a
commitment to education through his service on the board of
trustees of a university.
|
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|
W. Lee Nutter, 67
|
2007 | |
|
Prior to his retirement in 2007, Mr. Nutter was Chairman,
President and Chief Executive Officer of Rayonier, Inc.,
Jacksonville, Florida, a leading supplier of high performance
specialty cellulose fibers and owner of timberlands and other
higher value land holdings. Mr. Nutter was elected director
of Rayonier, Inc. in 1996. He is also a director of Republic
Services Inc. and the non-executive Chairman of J.M. Huber
Corporation. He is also a member of the Advisory Board at the
University of Washington Foster School of Business.
|
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|
Mr. Nutter’s former positions as chairman and chief
executive officer of a forest products company, and his current
positions as director of one company engaged in waste management
and another involved in the forest products and energy
industries, give him a particular familiarity with the issues
involved in managing natural resources. These issues include
compliance with environmental laws and exercising responsible
environmental stewardship. Mr. Nutter also has an extensive
background and familiarity in human resource and compensation
issues, which complements well his service as chair of the
Company’s Officer Nomination and Compensation Committee. In
addition, as a former chief executive officer, Mr. Nutter
understands how to address the complex issues facing major
corporations.
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|
Name, Age and Principal Occupations |
Has Been a |
|
|
for Past Five Years and Present Directorships Held
|
Director Since | |
|
Deborah S. Parker, 57
|
2007 | |
|
Since April 2008, Ms. Parker has been President and Chief
Executive Officer of International Business Solutions, Inc.
(“IBS”), Washington, D.C. IBS provides strategic
planning and consulting services to profit and
not-for-profit
organizations. Before joining IBS, Ms. Parker was Executive
Vice President and Chief Operations Officer of the National
Urban League from July 2007 through April 2008. Prior thereto,
Ms. Parker served in numerous operating positions,
including Vice President of Global Quality at Ford Motor
Company. During her tenure at Ford, Ms. Parker also served
as Chief Executive Officer and Group Managing Director at Ford
Motor Company of Southern Africa (Pty) Ltd.from September 2001
to December 2004. Ms. Parker is also National Trustee, Boys
and Girls Club of America.
|
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|
Ms. Parker brings a unique combination of community development
and industrial management experience to the board. As Chief
Executive Officer of a consulting firm and Chief Operating
Officer of a national civil rights organization dedicated to
economic empowerment of historically underserved urban
communities, Ms. Parker brings expertise and understanding
with respect to the social and economic issues confronting the
Company and the communities it serves. As a result of her
23-year
career at a global manufacturing company, Ms. Parker has
extensive experience managing industrial operations, including
turning around several struggling business units, finding
innovative solutions to management/union issues, implementing
quality control initiatives and rationalizing manufacturing and
inventory. This experience positions her well to provide
valuable insights on the Company’s operations and
processes, as well as on social issues confronting the Company.
|
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|
Ian M. Rolland, 77
|
1978 | |
|
Chairman of the Board since November 2006. Prior to his
retirement in 1998, Mr. Rolland served as Chairman and
Chief Executive Officer of Lincoln National Corporation,
Ft. Wayne, Indiana, a provider of financial products and
services. Mr. Rolland is on the board of advisors of CID
Partners.
|
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|
Mr. Rolland’s 21 years of experience as chief
executive officer of a diversified financial services company,
together with his past and current service on other boards of
directors, including a major financial institution, a petroleum
equipment company and a national corporate child care solution
provider, provide him with a deep understanding of the
challenges facing a major corporation and, particularly those
involving finances and financial reporting.
Mr. Rolland’s distinguished career, including his
service as chair of a national insurance council and a national
insurance association, as well as president of a national
actuarial society, gives him a deep understanding of governance
issues, organizational leadership, risk management and insurance
matters. His tenure on the board further gives him a unique
understanding of the Company and its evolution and growth, and
allows him to provide a perspective that brings balance and
stability to the board. His dedication and commitment to
charitable and social causes is demonstrated through his past
and present service on numerous non-profit boards which gives
him an understanding of many of the social issues facing the
Company. His services as a lifetime trustee and former chair of
the Indiana chapter of The Nature Conservancy, a global
conservation organization, provides him a deep understanding of
the environmental issues affecting the Company.
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Table of Contents
|
Name, Age and Principal Occupations |
Has Been a |
|
|
for Past Five Years and Present Directorships Held
|
Director Since | |
|
Robert C. Skaggs, Jr., 56
|
2005 | |
|
Chief Executive Officer (“CEO”) of the Company since
July 2005. President of the Company since October 2004. Prior
thereto, Mr. Skaggs served as Executive Vice President,
Regulated Revenue from October 2003 to October 2004, President
of Columbia Gas of Ohio, Inc. from February 1997 to October
2003; President of Columbia Gas of Kentucky, Inc. from January
1997 to October 2003; President of Bay State Gas Company and
Northern Utilities from November 2000 to October 2003; and
President of Columbia Gas of Virginia, Inc., Columbia Gas of
Maryland, Inc. and Columbia Gas of Pennsylvania, Inc. from
December 2001 to October 2003.
|
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|
The board believes it is important that the Company’s Chief
Executive Officer serve on the board. Mr. Skaggs has a
unique understanding of the challenges and issues facing the
Company. During his nearly 30 years with the Company, he
has served in a variety of positions across the organization,
including the legal and finance departments, president of a
number of our gas distribution subsidiaries, executive vice
president, Regulated Revenue, where he was responsible for
developing regulatory strategies and leading external relations
across all of our energy distribution markets, as well as our
interstate pipeline system. He also led regulated commercial
activities, including large customer and marketer relations, and
energy supply services, as well as federal governmental
relations. This wide and deep experience provides an
incomparable knowledge of the Company’s operations, our
markets and our people. Over the course of his career,
Mr. Skaggs has been involved in a wide array of
community-based organizations as well as a number of industry
organizations, further providing him with a valuable perspective
on the communities the Company serves and the issues facing our
industry. He served as Chairman of the American Gas Association
in 2010.
|
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|
Richard L. Thompson, 71
|
2004 | |
|
Prior to his retirement in 2004, Mr. Thompson was Group
President, Caterpillar Inc., Peoria, Illinois, a leading
manufacturer of construction and mining equipment, diesel and
natural gas engines and industrial gas turbines.
Mr. Thompson also is a director of Gardner Denver, Inc. and
Chairman of the Board of Lennox International, Inc.
|
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|
In his prior role as group president of a large, publicly traded
manufacturing company, Mr. Thompson had responsibility for
its gas turbine and reciprocating engine business, as well as
research and development activities. By virtue of this and prior
positions, and his current directorships at two other companies
serving the energy and utility industries, Mr. Thompson
possesses significant experience in energy issues generally and
gas turbine electric power generation and natural gas pipeline
compression in particular. He is a graduate electrical engineer
with experience in electrical transmission system design and
generation system planning. This experience provides
Mr. Thompson a valuable understanding of technical issues
faced by the Company.
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Table of Contents
|
Name, Age and Principal Occupations |
Has Been a |
|
|
for Past Five Years and Present Directorships Held
|
Director Since | |
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Carolyn Y. Woo, 56
|
1998 | |
|
Martin J. Gillen Dean and Ray and Milann Siegfried Professor of
Entrepreneurial Studies, Mendoza College of Business, University
of Notre Dame, Notre Dame, Indiana. Dr. Woo also is a
director of AON Corporation and was a director of Circuit City,
Inc. until 2009.
|
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|
Dr. Woo’s role as dean of a major business school and
her experience as a professor of entrepreneurship provide her a
deep understanding of business principles and extensive
expertise with management and strategic planning issues. Through
her current and previous service on the boards of directors,
audit committees and compensation committees of a number of
public companies, including a global reinsurance and risk
management consulting company, a pharmaceutical distribution
company, an international automotive manufacturer, a financial
institution and a major electronics retailer, Dr. Woo has
developed an excellent understanding of corporate governance,
internal control, financial and strategic analysis and risk
management issues. Her responsibilities as dean of a major
business school also provide her familiarity with the issues of
managing a large organization. Dr. Woo is a leader in the
areas of corporate social responsibility and sustainability,
which adds an important perspective to the Company. She is also
a current and past board member of several non-profit
organizations, including an international relief organization, a
global business school accreditation organization, leadership
development organizations and an educational organization. This
commitment to social and educational organizations provides
Dr. Woo with an additional important perspective on the
various community and social issues confronting the Company in
the various communities that the Company serves.
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Table of Contents
CORPORATE
GOVERNANCE
Director
Independence
For many years, a substantial majority of the Company’s
Board of Directors (the “Board”) has been comprised of
“independent” directors. In order to assist the Board
in making its determination of director independence, the Board
has adopted categorical standards of independence consistent
with the standards contained in Section 303A.02(b) of the
NYSE Corporate Governance Listing Standards. The Company’s
categorical standards of independence are listed in the
Company’s Corporate Governance Guidelines, a copy of which
can be found on the Company’s website at
http://ir.nisource.com/governance.cfm.
The Board has affirmatively determined that all of the members
of the Board (except Mr. Skaggs) and all nominees (except
Mr. Skaggs) are “independent directors” as
defined in Section 303A.02(b) of the NYSE Listing Standards
and meet the standards for independence set by the Board.
Executive
Sessions of Non-Management Directors
To promote open discussion among the non-management directors,
the Board of Directors schedules regular executive sessions at
meetings of the Board and each of the Board’s Committees.
All non-management directors are also members of the Corporate
Governance Committee. The non-management members met separately
from management five times in 2010. Mr. Ian M. Rolland, the
Chairman of the Board, serves as lead, or presiding director at
the executive sessions of the non-management directors. All of
the non-management members are “independent” directors.
Communications
with the Board and Non-Management Directors
Stockholders and other interested persons may communicate any
concerns they may have regarding the Company as follows:
| • | Communications to the Board may be made to the Board generally, any director individually, the non-management directors as a group or the lead director of the non-management group in the event one is chosen, by writing to the following address: |
NiSource Inc.
Attention: [Board of Directors]/[Board
Member]/[Non-management Directors]/[Lead Director]
c/o Corporate Secretary
801 East 86th Avenue
Merrillville, Indiana 46410
Attention: [Board of Directors]/[Board
Member]/[Non-management Directors]/[Lead Director]
c/o Corporate Secretary
801 East 86th Avenue
Merrillville, Indiana 46410
| • | The Audit Committee has approved procedures with respect to the receipt, retention and treatment of complaints regarding accounting, internal accounting controls or audit matters. Communications regarding such matters may be made by contacting the Company’s Ethics and Compliance Officer at ethics@nisource.com, calling the business ethics hotline at 1-800-457-2814, or writing to: |
NiSource Inc.
Vice President, Ethics and Compliance
801 East 86th Avenue
Merrillville, Indiana 46410
Vice President, Ethics and Compliance
801 East 86th Avenue
Merrillville, Indiana 46410
Code of
Business Conduct
The Board of the Company has adopted a Code of Business Conduct
(the “Code”) to promote (i) ethical behavior
including the ethical handling of conflicts of interest,
(ii) full, fair, accurate, timely and understandable
financial disclosure, (iii) compliance with applicable
laws, rules and regulations, (iv) accountability for
adherence to the Code and (v) prompt internal reporting of
violations of the Code. The Code satisfies applicable Securities
and Exchange Commission (“SEC”) and NYSE requirements
and applies to all directors, officers (including the
Company’s principal executive officer, principal financial
officer, and principal accounting officer and controller) and
employees of the Company and its affiliates. A copy of the Code
is available on the Company’s website at
8
Table of Contents
http://ir.nisource.com/governance.cfm
and will be provided by the Company to any stockholder who
requests it in writing from the Company’s Corporate
Secretary.
Any waiver of the Code for any director, Section 16 officer
or senior executive may be made only by the Audit Committee of
the Board and must be promptly disclosed to the extent and in
the manner required by the Securities and Exchange Commission or
the NYSE and posted on the Company’s website. No waivers
have been granted under the Code.
Corporate
Governance Guidelines
The Corporate Governance Committee is responsible for reviewing
and reassessing the Corporate Governance Guidelines periodically
and will submit any recommended changes to the Board for its
approval. A copy of the Corporate Governance Guidelines can be
found on the Company’s website at
http://ir.nisource.com/governance.cfm
and will be provided to any stockholder who requests it in
writing from the Company’s Corporate Secretary.
Board
Leadership Structure and Risk Oversight
The Company’s Corporate Governance Guidelines state that
the Company should remain free to configure leadership of the
Board in the way that best serves the Company’s interests
at the time and, accordingly, the Board has no fixed policy with
respect to combining or separating the offices of Chairman and
Chief Executive Officer. If the Chairman is not an independent
director, the Board will choose a lead director to serve as
chair of the Corporate Governance Committee and as the presiding
director for purposes of the NYSE rules.
Since late 2006, the offices of Chairman and Chief Executive
Officer of the Company have been held by different individuals,
with the Chairman being an independent director. In deciding to
separate the offices, the Board believed that having a director
with a long tenure serve as Chairman would help ensure
continuity and stability during a transition period between
Chief Executive Officers. The Board believes that the
independent chair arrangement continues to serve the Company
well.
The Board takes an active role in monitoring and assessing the
Company’s risks, which include risks associated with
operations, credit, energy supply, financing and capital
investments. The Board administers its oversight function
through utilization of its various committees, as well as
through a Risk Management Committee, consisting of members of
the Company’s senior management, which is responsible for
the risk management process. The Audit Committee discusses with
management and the independent auditor the effect of regulatory
and accounting initiatives on the Company’s financial
statements and is responsible for overseeing the risk management
program generally. In addition, the Finance Committee, Officer
Nomination and Compensation Committee and the Environmental,
Safety and Sustainability Committee are each charged with
overseeing the risks associated with their respective areas of
responsibility. The Audit Committee receives regular updates on
the activities of the Risk Management Committee and any
significant policy breach.
Meetings
and Committees of the Company’s Board of
Directors
The Board met six times during 2010. Each director attended at
least 82% of the combined total number of the Company’s
Board meetings and the meetings of the committees of which he or
she was a member. Pursuant to the Company’s Corporate
Governance Guidelines, all directors are expected to attend the
Annual Meeting. All incumbent directors attended the 2010 Annual
Meeting of Stockholders.
The Board has established five standing committees to assist the
Board in carrying out its duties: the Audit Committee; the
Corporate Governance Committee; the Environmental, Safety and
Sustainability Committee (“ES&S”); the Finance
Committee; and the Officer Nomination and Compensation Committee
(“ON&C”). The following table shows the
composition of each Board committee during 2010. Mr. Skaggs
does not serve on any committee.
9
Table of Contents
|
Corporate |
|||||||||||||||||||||||||
| Director | Audit | Governance | ES&S | Finance | ON&C | ||||||||||||||||||||
|
Richard A. Abdoo
|
X | X | X | X | |||||||||||||||||||||
|
Steven C. Beering
|
X | X | X | X | |||||||||||||||||||||
|
Dennis E. Foster
|
X | * | X | X | |||||||||||||||||||||
|
Michael E. Jesanis
|
X | X | X | X | |||||||||||||||||||||
|
Marty R. Kittrell
|
X | X | X | ||||||||||||||||||||||
|
W. Lee Nutter
|
X | X | X | X | * | ||||||||||||||||||||
|
Deborah S. Parker
|
X | X | X | X | |||||||||||||||||||||
|
Ian M. Rolland
|
X | X | * | ||||||||||||||||||||||
|
Richard L. Thompson
|
X | X | X | * | |||||||||||||||||||||
|
Carolyn Y. Woo
|
X | X | X | * | X | ||||||||||||||||||||
| * | Chairperson |
Audit
Committee
The Audit Committee met nine times in 2010. Among other things,
the Audit Committee is responsible for monitoring:
| • | integrity of the Company’s financial statements; | |
| • | the independent auditors’ qualifications and independence; | |
| • | performance of the Company’s internal audit function and the independent auditors; and | |
| • | compliance by the Company with legal and regulatory requirements. |
The charter for the Audit Committee can be found on the
Company’s website at
http://ir.nisource.com/governance.cfm
and will be provided by the Company to any stockholder who
requests it in writing from the Company’s Corporate
Secretary.
The Board has determined that all of the members of the Audit
Committee are independent as defined under the applicable NYSE
and SEC rules and meet the additional independence standard set
forth in the Corporate Governance Guidelines. The Audit
Committee has reviewed and approved the independent registered
public accountants, both for 2010 and 2011, and the fees
relating to audit services and other services performed by them.
For more information regarding the Audit Committee, please see
“Audit Committee Report” below.
Corporate
Governance Committee
The Corporate Governance Committee met five times in 2010. The
Committee is responsible for:
| • | nomination and compensation of directors; | |
| • | identifying individuals qualified to become Board members, consistent with criteria approved by the Board; | |
| • | recommending to the Board director nominees for election at the next annual meeting of the stockholders; | |
| • | developing and recommending to the Board a set of corporate governance principles applicable to the Company; and | |
| • | overseeing the evaluation of the performance of the Board and CEO. |
Pursuant to the Corporate Governance Guidelines, the Committee,
with the assistance of the Company’s staff, reviews the
amount and composition of director compensation from time to
time and makes recommendations to the Board when it concludes
changes are needed. The Committee is also responsible for
evaluating the performance of the CEO and his direct executive
reports. The Committee reviews and approves the Company’s
goals and
10
Table of Contents
objectives relevant to the CEO and his direct reports and
evaluates their performance in light of those goals and
objectives and after receiving input from the Board. The Chair
of the Committee reports the Committee’s findings to the
Officer Nomination and Compensation Committee, which uses these
findings to set the compensation of the CEO and his direct
reports.
The Committee identifies and screens candidates for director and
makes its recommendations for director to the Board as a whole.
The Committee has the authority to retain a search firm to help
it identify director candidates to the extent it deems necessary
or appropriate. Based on the Committee’s recommendations,
the Board as a whole selects the candidates for director. In
considering candidates for director, the Committee considers the
nature of the expertise and experience required for the
performance of the duties of a director of a company engaged in
the Company’s businesses, as well as each candidate’s
relevant business, academic and industry experience,
professional background, age, current employment, community
service and other Board service. Pursuant to the Corporate
Governance Guidelines, the Committee also considers the racial,
ethnic and gender diversity of the Board. The Committee seeks to
identify and recommend candidates with a reputation for and
record of integrity and good business judgment who:
(1) have experience in positions with a high degree of
responsibility and are leaders in the organizations with which
they are affiliated, (2) are effective in working in
complex collegial settings, (3) are free from conflicts of
interest that could interfere with a director’s duties to
the Company and its stockholders and (4) are willing and
able to make the necessary commitment of time and attention
required for effective Board service. The Committee also takes
into account the candidate’s level of financial literacy.
The Committee monitors the mix of skills and experience of the
directors in order to assess whether the Board has the necessary
tools to perform its oversight function effectively. The
Committee also assesses the diversity of the Board as part of
its annual self-assessment process. The Committee will consider
nominees for directors recommended by stockholders and will use
the same criteria to evaluate candidates proposed by
stockholders.
The Board has determined that all of the members of the
Committee are independent as defined under the applicable NYSE
rules and meet the additional independence standard set forth in
the Corporate Governance Guidelines by the Board.
The charter for the Committee can be found on the Company’s
website at
http://ir.nisource.com/governance.cfm
and will be provided by the Company to any stockholder who
requests it in writing from the Company’s Corporate
Secretary.
For information on how to nominate a person for election as a
director at the 2012 Annual Meeting, please see the discussion
under the heading “Stockholder Proposals and Nominations
for 2012 Annual Meeting.”
Environmental,
Safety and Sustainability Committee
The Environmental, Safety and Sustainability Committee met four
times during 2010. This Committee reviews the results of
environmental compliance of the Company and considers
environmental public policy issues as well as health and safety
issues affecting the Company. The charter for the Committee can
be found on the Company’s website at
http://ir.nisource.com/governance.cfm
and will be provided by the Company to any stockholder who
requests it in writing from the Company’s Corporate
Secretary.
Finance
Committee
The Finance Committee met five times during 2010. This Committee
is responsible for overseeing and monitoring the financial plans
of the Company, capital structure and financial risk. The
charter for the Committee can be found on the Company’s
website at
http://ir.nisource.com/governance.cfm
and will be provided by the Company to any stockholder who
requests it in writing from the Company’s Corporate
Secretary.
Officer
Nomination and Compensation Committee
The Officer Nomination and Compensation Committee met seven
times in 2010. The charter for the Committee can be found on the
Company’s website at
http://ir.nisource.com/governance.cfm
and will be provided by the Company to any stockholder who
requests it in writing from the Company’s Corporate
Secretary. Pursuant to
11
Table of Contents
the charter, this Committee advises the Board with respect to
nomination, evaluation, compensation and benefits of the
Company’s executives. In that regard, the Committee:
| • | approves the CEO’s compensation based on the Corporate Governance Committee’s report on its evaluation of the CEO’s performance; | |
| • | approves the compensation of the CEO’s direct executive reports; | |
| • | makes recommendations to the Board with respect to incentive-compensation plans and equity-based plans; | |
| • | reviews and approves periodically a general compensation policy for other officers of the Company and officers of its principal affiliates; | |
| • | recommends Company officer candidates for election by the Board; | |
| • | oversees the evaluation of management; and | |
| • | produces the Officer Nomination and Compensation Committee Report on Executive Compensation included in this proxy statement. |
All of the directors serving on the Committee are
(i) independent as defined under the applicable NYSE rules
and meet the additional independence standard set forth in the
Corporate Governance Guidelines, (ii) “non-employee
directors” as defined under the
Rule 16b-3
of the Securities Exchange Act of 1934, and
(iii) “outside directors” as defined by
Section 162(m) of the Internal Revenue Code.
Compensation
Committee Interlocks and Insider Participation
There are no compensation committee interlocks.
DIRECTOR
COMPENSATION
Director Compensation. The Company uses a
combination of cash and stock-based awards to attract and retain
highly qualified candidates to serve on the Board. Only
non-employee directors receive director compensation, therefore,
since Mr. Skaggs is an employee of the Company, he does not
receive compensation for his service as a Board member.
The Company currently pays each director who is not receiving a
salary from the Company an annual retainer of $165,000,
consisting of $82,500 in cash and an award of restricted stock
units valued at $82,500 at the time of the award. The cash
retainer and the restricted stock units are paid and granted in
arrears in four equal installments on the last business day of
each calendar quarter. The number of restricted stock units
issued each quarter is determined by dividing the value of the
grant by the closing price of the Company’s common stock on
the last business day of the relevant quarter. Until
May 10, 2010, restricted stock units were granted to the
directors under the Company’s Non-employee Director Stock
Incentive Plan. Beginning May 10, 2010, restricted stock
units are granted to directors under the 2010 Omnibus Incentive
Plan that was approved by the stockholders at last year’s
annual meeting of stockholders.
The Board also provides additional compensation to those
directors who take on additional responsibilities and serve as
the chair of a Board committee. The annual committee chair fees
are: Audit Committee $20,000; Officer Nomination &
Compensation Committee $20,000 and the Environmental
Safety & Sustainability Committee $15,000. In August
2010, the Board increased the annual committee fee for the
Finance Committee from $15,000 to $20,000. The chairman of the
Board, who also serves as the chair of the Corporate Governance
Committee, receives additional annual compensation of $135,000
per year. Fees paid to the chairman of the Board and the
committee chairs are paid in cash in four equal installments in
arrears. Fees are also prorated based on when Board and
committee service begins or ends.
2010 Omnibus Incentive Plan. In May 2010, the
stockholders approved the 2010 Omnibus Incentive Plan. This plan
allows awards to non-employee directors to consist of incentive
and non-qualified stock options, stock appreciation rights,
restricted stock and restricted stock units, performance shares,
performance units, cash-based awards and other stock-based
awards. Terms and conditions of awards to non-employee directors
are determined by the Board of directors prior to grant. Since
May 10, 2010, awards to directors have been made from the
2010 Omnibus Incentive Plan. Non-employee Directors have
received awards of restricted stock units as part of the annual
retainer. These restricted stock units vest immediately but are
not distributed until the director terminates or
12
Table of Contents
retires from the Board. With respect to restricted stock units,
additional restricted stock units are credited to each
non-employee director to reflect dividends paid to stockholders
of the Company with respect to common stock. The restricted
stock units have no voting or other stock ownership rights and
are payable in shares of the Company’s common stock upon
the directors’ termination of service from the Board.
Non-employee Director Stock Incentive
Plan. With the approval by the stockholders of
the 2010 Omnibus Incentive Plan, the Company has taken action to
freeze the award of any new awards under the Non-employee
Director Stock Incentive Plan. The plan provided for awards to
non-employee directors to consist of restricted stock,
non-qualified stock options and restricted stock units. There
are currently no outstanding grants of restricted stock or
non-qualified stock options under the plan. The directors
received grants of restricted stock units as part of the annual
retainer. These restricted stock units vested immediately, but
will not be distributed until the director terminates or retires
from the Board. With respect to restricted stock units,
additional restricted stock units are credited to each
non-employee director to reflect dividends paid to stockholders
of the Company with respect to common stock. The restricted
stock units have no voting or other stock ownership rights and
are payable in shares of the Company’s common stock upon
the directors’ termination of service from the Board.
Restricted stock units granted between January 1, 2004 and
May 10, 2010 will be paid in shares of Company stock six
months after the date of termination from the Board.
Director Stock Ownership. The Board maintains
stock ownership requirements for its directors that are included
in the Corporate Governance Guidelines. Within five years of
becoming a non-employee director or adoption of these ownership
requirements in 2008, whichever is later, each non-employee
director is required to hold an amount of Company stock equal to
or greater than five times the annual cash retainer paid to
directors by the Company. Company stock that counts towards
satisfaction of this requirement includes shares purchased on
the open market, awards of restricted stock or restricted stock
units through the Non-employee Director Stock Incentive Plan or
2010 Omnibus Incentive Plan, and shares beneficially owned in a
trust or by a spouse or other immediate family member residing
in the same household. On January 21, 2011, the Board
increased the ownership requirements from four to five times the
annual cash retainer paid to directors.
Each director has a significant portion of their compensation
directly aligned with long-term stockholder value. During 2010,
fifty percent (50%) of the Board’s annual retainer was
awarded in restricted stock units. Each unit is equal to one
share of common stock and is not distributed to the director
until the director leaves the Board.
The table below shows the number of shares of common stock
beneficially owned by each director, the number of non-voting
restricted stock units that have been awarded, and the combined
total as of March 1, 2011.
|
Total Number of |
|||||||||||||||
|
Shares of Common |
|||||||||||||||
|
Stock and |
|||||||||||||||
|
Amount and Nature of |
Non-Voting Stock |
Non-Voting Stock |
|||||||||||||
| Name of Beneficial Owner | Beneficial Ownership(1) | Based Units(2) | Units(1)(2) | ||||||||||||
|
Richard A. Abdoo
|
15,000 | 17,203 | 32,203 | ||||||||||||
|
Steven C. Beering
|
7,437 | 54,613 | 62,050 | ||||||||||||
|
Dennis E. Foster
|
54,396 | 46,184 | 100,580 | ||||||||||||
|
Michael E. Jesanis
|
4,000 | 17,203 | 21,203 | ||||||||||||
|
Marty R. Kittrell(3)
|
8,000 | 22,594 | 30,594 | ||||||||||||
|
W. Lee Nutter
|
60,000 | 22,594 | 82,594 | ||||||||||||
|
Deborah S. Parker
|
9,637 | 21,794 | 31,432 | ||||||||||||
|
Ian M. Rolland(4)
|
26,777 | 51,958 | 78,735 | ||||||||||||
|
Richard L. Thompson
|
5,000 | 35,392 | 40,392 | ||||||||||||
|
Carolyn Y. Woo
|
4,000 | 46,528 | 50,528 | ||||||||||||
| (1) | The number of shares owned includes shares held in the Company’s Dividend Reinvestment and Stock Purchase Plan. |
13
Table of Contents
| (2) | The number includes shares that are beneficially owned and non-voting restricted stock units provided in accordance with the Non-employee Director Stock Incentive Plan and 2010 Omnibus Incentive Plan. | |
| (3) | The number of shares owned by Mr. Kittrell includes 2,000 shares that have been pledged as security in a margin account with a broker. | |
| (4) | The number of shares owned by Mr. Rolland includes 9,277 shares owned by the Ian and Miriam Rolland Foundation over which Mr. Rolland maintains investment control, but of which Mr. Rolland disclaims beneficial ownership. |
Director
Compensation
The table below sets forth all compensation earned by
NiSource’s non-employee directors in 2010. Mr. Skaggs
is the Company’s only employee director and does not
receive any separate compensation for his service on the Board.
|
Fees Earned or |
All Other |
|||||||||||||||||||
|
Paid in Cash |
Stock Awards |
Compensation |
Total |
|||||||||||||||||
| Name | ($)(1) | ($)(2) | ($) | ($) | ||||||||||||||||
|
Richard A. Abdoo
|
82,500 | 82,500 | — | 165,000 | ||||||||||||||||
|
Steven C. Beering
|
82,500 | 82,500 | 126 | 165,126 | ||||||||||||||||
|
Dennis E. Foster
|
102,500 | 82,500 | 488 | 185,488 | ||||||||||||||||
|
Michael E. Jesanis
|
82,500 | 82,500 | 226 | 165,226 | ||||||||||||||||
|
Marty R. Kittrell
|
82,500 | 82,500 | 1,284 | 166,284 | ||||||||||||||||
|
W. Lee Nutter
|
102,500 | 82,500 | 74 | 185,074 | ||||||||||||||||
|
Deborah S. Parker
|
82,500 | 82,500 | — | 165,000 | ||||||||||||||||
|
Ian M. Rolland
|
217,500 | 82,500 | 724 | 300,724 | ||||||||||||||||
|
Richard L. Thompson
|
101,200 | 82,500 | 1,693 | 185,393 | ||||||||||||||||
|
Carolyn Y. Woo
|
97,500 | 82,500 | — | 180,000 | ||||||||||||||||
| (1) | The fees shown include the annual cash retainer fee paid throughout the year to each director and Board and committee chair fees. | |
| (2) | This column shows the aggregate grant date fair value of the restricted stock units based on the average market price of the Company’s common stock at the date of grant. |
SECURITY
OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
BENEFICIAL OWNERS AND MANAGEMENT
The following table contains information about those persons or
groups that are known to the Company to be the beneficial owners
of more than five percent of the outstanding common stock.
|
Amount and Nature of |
Percent of Class |
|||||
|
Name and Address of Beneficial Owner
|
Beneficial Ownership | Outstanding | ||||
|
T. Rowe Price Associates, Inc.(1)
|
27,789,556 | 9.9% | ||||
|
100 East Pratt Street Baltimore, MD 21202-1008 |
||||||
|
BlackRock, Inc.(2)
|
22,884,984 | 8.2% | ||||
|
40 East 52nd Street New York, NY 10022 |
||||||
|
The Vanguard Group, Inc.(3)
|
15,209,271 | 5.4% | ||||
|
100 Vanguard Blvd. Malvern, PA 19355 |
||||||
|
State Street Corporation(4)
|
14,132,347 | 5.1% | ||||
|
One Lincoln Street Boston, MA 02111 |
||||||
14
Table of Contents
| (1) | As reported on an amendment to statement on Schedule 13G filed with the SEC on behalf of T. Rowe Price Associates, Inc. on February 14, 2011. These securities are owned by various individual investors to which T. Rowe Price Associates, Inc. serves as investment advisor. T. Rowe Price Associates, Inc. has sole voting power with respect to 6,208,898 and sole dispositive power with respect to 27,752,606 of the shares reported as beneficially owned. | |
| (2) | As reported on an amendment to statement on Schedule 13G filed with the SEC on behalf of BlackRock, Inc. on February 2, 2011. These securities are owned by various individual investors to which BlackRock, Inc. serves as investment advisor. BlackRock has sole voting and sole dispositive power with respect to all the shares reported as beneficially owned. | |
| (3) | As reported on a statement on Schedule 13G filed with the SEC on behalf of The Vanguard Group, Inc., on February 10, 2011. These securities are owned by various individual investors to which The Vanguard Group serves as investment advisor. The Vanguard Group, Inc. has sole voting and shared dispositive power with respect to 347,400 shares and sole dispositive power with respect to 14,861,871 shares reported as beneficially owned. | |
| (4) | As reported on a statement on Schedule 13G filed with the SEC on behalf of State Street Corporation on February 10, 2011. State Street Corporation has shared voting power and shared dispositive power with respect to all of the shares reported as beneficially owned. State Street Corporation expressly disclaims that it is the beneficial owner of these securities. |
The following table contains information about the beneficial
ownership of the Company’s common stock as of March 1,
2011 for each of the directors, nominees and Named Executive
Officers, and for all directors and executive officers as a
group.
|
Amount and Nature of |
||||
|
Name of Beneficial Owner
|
Beneficial Ownership(1)(2) | |||
|
Richard A. Abdoo
|
15,000 | |||
|
Steven C. Beering
|
7,437 | |||
|
Dennis E. Foster
|
54,396 | |||
|
Christopher A. Helms
|
110,052 | |||
|
Carrie J. Hightman
|
26,136 | |||
|
Michael E. Jesanis
|
4,000 | |||
|
Marty R. Kittrell(3)
|
8,000 | |||
|
W. Lee Nutter
|
60,000 | |||
|
Deborah S. Parker
|
9,637 | |||
|
Ian M. Rolland(4)
|
26,777 | |||
|
Robert C. Skaggs, Jr.
|
489,065 | |||
|
Stephen P. Smith
|
27,596 | |||
|
Jimmy D. Staton
|
41,869 | |||
|
Richard L. Thompson
|
5,000 | |||
|
Carolyn Y. Woo
|
4,000 | |||
|
All directors and executive officers as a group (18 persons)
|
965,655 | |||
| (1) | The number of shares owned includes shares held in the Company’s Dividend Reinvestment and Stock Purchase Plan, shares held in the Company’s Retirement Savings Plan (the “401(k)”), shares held in the Company’s Employee Stock Purchase Plan, and restricted shares awarded under the Company’s 1994 Long-Term Incentive Plan and 2010 Omnibus Incentive Plan (the “Incentive Plan”). The percentages of common stock owned by any director or Named Executive Officer, or all directors and executive officers as a group, does not exceed one percent of the common stock outstanding as of March 1, 2011. | |
| (2) | The totals include shares for which the following individuals have a right to acquire beneficial ownership, within 60 days after March 1, 2011, by exercising stock options granted under the Incentive Plan: Robert C. Skaggs, Jr. — 266,149 shares; Christopher A. Helms — 28,571 shares; and all executive officers as a group — 294,720 shares. |
15
Table of Contents
| (3) | The number of shares owned by Mr. Kittrell includes 2,000 shares that have been pledged as security in a margin account with a broker. | |
| (4) | The number of shares owned by Mr. Rolland includes 9,277 shares owned by the Ian and Miriam Rolland Foundation over which Mr. Rolland maintains investment control, but for which Mr. Rolland disclaims beneficial ownership. |
EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
The Compensation Discussion & Analysis
(“CD&A”) has three parts.
| • | Part I describes the Company’s executive compensation philosophy and provides an overview of the compensation program and process that applies to the Company’s senior executives. | |
| • | Part II describes the elements of the Company’s executive compensation program and how the Officer Nomination and Compensation Committee, referred to as the “Committee” throughout the CD&A, determined the compensation paid to each of the Named Executive Officers for the services they provided to the Company in 2010. For 2010, the Company’s Named Executive Officers were: Robert C. Skaggs, Jr., President and Chief Executive Officer; Stephen P. Smith, Executive Vice President & Chief Financial Officer; Christopher A. Helms, Executive Vice President & Group CEO, Gas Transmission and Storage; Jimmy D. Staton, Executive Vice President & Group CEO, Gas Distribution and Northern Indiana Energy; and Carrie J. Hightman, Executive Vice President & Chief Legal Officer. | |
| • | Part III describes the Company’s stock ownership guidelines for senior executives, explains the Company’s determination that its executive compensation program does not create an incentive for excessive risk taking, and describes the Company’s approach to the tax treatment of executive compensation. |
Tables that identify compensation levels, stock award histories,
retirement income benefit levels and potential severance
payments for each Named Executive Officer immediately follow the
CD&A.
I.
Overview of Executive Compensation Philosophy and
Process
The Committee oversees the design, implementation and operation
of the Company’s executive compensation programs. It is
composed entirely of independent directors to ensure that it can
perform its oversight activities effectively and in compliance
with prevailing governance standards.
The Company’s executive compensation program is designed to
attract and retain highly qualified executives by providing
compensation in a manner that is aligned with the Company’s
strategic plan to build stockholder value and long-term,
sustainable earnings growth. Total compensation opportunities
are designed to relate total compensation to corporate
performance, while also remaining competitive with the
compensation practices of competitors in the energy industry.
Total compensation opportunities are defined as the sum of base
salary, annual incentives and the grant date value of long-term
incentives.
The Committee approves the compensation of the Chief Executive
Officer (“CEO”), based on the Corporate Governance
Committee’s evaluation of the CEO’s performance. The
Committee also makes recommendations to the Board with respect
to incentive-compensation plans and equity-based plans and
reviews and approves the general compensation policy for other
officers of the Company and officers of its principal
affiliates. Further, in 2010 the Committee made recommendations
to the Board with respect to the specific compensation of the
CEO’s direct executive reports, who, along with the CEO, we
refer to as the Company’s senior executives.
In 2010, the Committee engaged the services of Exequity, an
executive compensation consulting firm, to advise it with
respect to executive compensation design, comparative
compensation practices, and other compensation matters. The
Company paid $83,847 in 2010 to Exequity for these consulting
services. Exequity provides no other services to the Company or
its affiliates. The Committee meets with the executive
compensation consultant in executive session without management
present.
In connection with its 2010 compensation decision-making, the
Committee reviewed the executive compensation practices reported
by Hewitt Associates to be in effect among a group of energy
services companies identified by the Committee (the
“Comparative Group”). The Comparative Group includes a
number of leading gas, electric,
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combination utility, and natural gas transmission companies. The
group composition has remained fairly stable for several years.
Until 2010, the Comparative Group was comprised of
27 companies, but the Committee removed Aquila Inc. from
the Comparative Group due to its 2008 acquisition by Great
Plains Energy. For purposes of supporting 2010 considerations,
the Comparative Group included the following companies:
Energy
Company Comparative Group
|
AGL Resources Inc
|
Nicor Inc. | |
|
Allegheny Energy, Inc.
|
Pepco Holdings, Inc. | |
|
Ameren Corporation
|
PG&E Corporation | |
|
American Electric Power Company, Inc.
|
PNM Resources, Inc. | |
|
CenterPoint Energy, Inc.
|
PPL Corporation | |
|
CMS Energy Corporation
|
Public Service Enterprise Group | |
|
Dominion Resources, Inc.
|
Questar Corporation | |
|
DTE Energy Company
|
SCANA Corporation | |
|
Duke Energy Corporation
|
Sempra Energy | |
|
El Paso Corporation
|
Southern Company | |
|
EQT Corporation
|
TXU Corp. | |
|
FirstEnergy Corp.
|
WGL Holdings, Inc. | |
|
Kinder Morgan Energy Partners, L.P.
|
Williams Companies Inc. |
In making its recommendations concerning the various components
of executive compensation, the Committee takes into account
various factors, including:
| • | the attainment of established business and financial goals for the Company; | |
| • | the competitiveness of the Company’s programs, based upon competitive market data; and | |
| • | an executive’s position, level of responsibility and performance, as measured by their individual contribution to the Company’s achievement of its business objectives. |
Under the Company’s governance structure, the Corporate
Governance Committee has the responsibility to evaluate the
CEO’s performance. In making its compensation decisions for
the CEO, the Committee therefore places great weight on the
Corporate Governance Committee’s evaluation of the
CEO’s performance. The Corporate Governance Committee also
meets with the CEO and the Senior Vice President, Human
Resources, to review the performance of the Company’s other
senior executives and to consider the Company’s succession
plans for senior executives. Because all of the members of the
Committee are also members of the Corporate Governance
Committee, each member of the Committee participates in this
performance discussion.
For 2010, the Committee considered the performance of senior
executives in making its compensation recommendations to the
Board. The Committee recommended adjustments to compensation
based upon each individual’s contributions to the Company,
the achievement of predetermined goals and the performance of
the business with respect to which the executive had
accountability. The Committee discussed and considered these
factors before making compensation recommendations to the Board,
which took the final action on these matters. The Board accepted
and approved the Committee’s recommendations in 2010.
The Committee concluded that the 2010 compensation provided for
each of the Company’s senior executives, including the
Named Executive Officers, was consistent with the Company’s
compensation philosophy and was reasonable, competitive and
appropriate. The Committee’s conclusions, though based in
part on subjective factors, were based primarily upon the
Committee’s recognition of the performance of each senior
executive, including each Named Executive Officer, and the
Committee’s determination that the total compensation
awarded to each senior executive provided proper incentive to
each person to continue their employment and to focus on serving
the best interests of the Company and its stockholders.
The Company intends to continue to compensate its executives in
accordance with performance. As discussed more fully below, both
the 2010 annual incentive opportunity and 80% of the value of
the 2010 long-term incentive
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opportunity for senior executives, including all of the Named
Executive Officers, were contingent upon the Company attaining
pre-established goals. The Committee believes that the
Company’s executive compensation program has been, and will
continue to be, successful in providing competitive compensation
opportunities sufficient to attract and retain highly qualified
executives, while at the same time encouraging the senior
executives to strive toward the creation of additional
stockholder value.
II.
Elements of Compensation
The executive compensation program consists of: base salary; an
annual incentive plan; long-term incentive opportunities;
benefit programs (including pension, retirement savings,
deferred compensation and health and welfare); a limited number
of perquisites; and post-termination benefits. When balancing
these elements, the Committee takes into account the competitive
environment, internal pay comparisons, Company and individual
performance and evolving governance practices.
The Committee approves compensation for Robert C.
Skaggs, Jr., President and CEO. Prior to August 2010, the
Committee made recommendations to the Board with respect to the
compensation of the Company’s other senior executive
officers, which includes all of the other Named Executive
Officers. In August 2010, the charters of the Corporate
Governance Committee and the Committee were modified so that,
going forward, the Committee is responsible for approving
compensation of the Company’s senior executives.
The Committee’s overall compensation philosophy is to
provide a competitive total compensation program that reflects
the range of compensation paid by similar energy companies and
the Company’s annual and long-term performance. The
Committee’s intent is to continue to align executive
compensation opportunities with Company results measured
principally by accomplishments that generate stockholder value.
2010 Base Salary for Named Executive
Officers. The Committee reviews the base salary
of the Company’s senior executives, including Named
Executive Officers, annually. In so doing, the Committee
considers the base salaries paid to similarly situated
executives by the companies in the Comparative Group. The
Committee determines a reasonable, base salary for the
Company’s senior executives based on a combination of
factors that includes competitive pay standards, level of
responsibility, experience, internal equity considerations,
historical compensation, and individual performance and
contribution to business objectives.
Effective June 1, 2010, the Committee increased
Mr. Skaggs’ annual base salary from $800,000 to
$900,000. Base salary adjustments for other exempt employees
were also made at that time. In making its decision regarding
Mr. Skaggs’ salary adjustment, the Committee reviewed
the Company’s underlying business performance in 2009
which, notwithstanding the challenging economic environment,
remained strong. Among the Company’s 2009 accomplishments
considered by the Committee were:
| • | For the year, the Company’s stock increased 40% in value and total stockholder return for the year approached 50%. | |
| • | The Company successfully executed on an aggressive liquidity plan and refinanced more than $2 billion in debt, enabling it to meet its financing requirements through 2011 and materially enhance its credit profile. | |
| • | The Company delivered net operating earnings in line with its outlook — for the third successive year. | |
| • | Cash flow increased in excess of $1 billion. |
In addition to these achievements, the Committee also took into
consideration that Mr. Skaggs’ base salary was below
the 50th percentile of base salaries of CEO’s in the
Comparative Group.
With respect to the other Named Executive Officers, the
Committee made the following recommendations to the Board.
| • | For Mr. Smith — An increase in base salary from $500,000 to $550,000 effective June 1, 2010. The bases for this recommendation were to recognize the successful execution of a comprehensive liquidity plan that included the reduction of planned capital spending and working capital requirements for 2009, the refinancing of more than $2 billion in debt (enabling the Company to address its financing requirements through 2011), maintaining an investment-grade credit rating, and the ongoing execution of a comprehensive restructuring of the finance organization. |
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| • | For Mr. Helms — An increase in base salary from $520,000 to $550,000 effective June 1, 2010. The bases for this recommendation were to recognize Mr. Helms’ leadership of NiSource’s Gas Transmission and Storage (“NGT&S”) business unit, including the business unit’s achievements of its 2009 stretch financial goals, the delivery of more than $55 million in increased net revenues resulting from growth projects, short-term transportation and storage services, and mineral rights leasing, the delivery of key growth projects on-time and on-budget, and the execution of an organizational optimization initiative. | |
| • | For Mr. Staton — An increase in base salary from $440,000 to $550,000 effective June 1, 2010. The bases for this recommendation were to recognize Mr. Staton’s assumption of responsibility for the Northern Indiana Energy (“NIE”) business unit (in addition to the NiSource Gas Distribution (“NGD”) business unit), NGD’s attaining its target earnings goal and exceeding the stretch goal for cash from operations, increasing net revenues by nearly $70 million, delivering on an extensive array of regulatory initiatives, and providing leadership for the NIE strategic planning initiative. | |
| • | For Ms. Hightman — An increase in base salary from $400,000 to $450,000 effective June 1, 2010. The bases for this recommendation were to recognize Ms. Hightman’s ongoing resolution of legacy litigation, her role in advancing the Company’s regulatory initiatives, the successful implementation of the Legal Department’s optimization initiative, and upgrading the Company’s environmental, safety and sustainability efforts. |
With respect to these recommendations, the Committee also took
into consideration a freeze on executive base salaries that had
been in place since 2009. The increases described above were the
first for Messrs. Smith and Staton and Ms. Hightman
since joining the Company in June 2008, March 2008 and December
2007, respectively. The Board accepted the Committee’s
recommendations.
2010 Annual Incentive Plan. The Committee
determines annual incentive ranges for all senior executives
under the NiSource Inc. Corporate Incentive Plan
(“Incentive Plan”), which is a broad-based plan that
extends to most employees within the organization. The purpose
of this component is to provide an incentive opportunity for
employees based upon the annual performance of the Company and
individual contribution to the success of the Company. As in
past years, every eligible employee has an incentive level that
identifies his or her incentive opportunity at trigger, target
and stretch levels of performance. The incentive paid at the
trigger performance level is 50% of target, and the incentive
paid at the stretch level of performance is 150% of target.
In determining incentive compensation ranges for the Named
Executive Officers, the Committee considered benchmark
information, input from the compensation consultant, historical
payouts and individual performance. For 2010, the Committee
determined that existing target incentive opportunities were
below market norms for certain Named Executive Officers, and,
accordingly, increased the incentive ranges for Mr. Skaggs
and Ms. Hightman. Stated as a percentage of base salary,
the incentive ranges for the Named Executive Officers in 2010
were:
|
Robert C. Skaggs,
President and Chief Executive Officer |
40% to 120% with a target of 80% | |
|
Messrs. Smith,
Helms, and Staton |
32.5% to 97.5% with a target of 65% | |
|
Ms. Hightman
|
30% to 90% with a target of 60% |
For the 2010 Incentive Plan, the Committee established corporate
financial goals for both earnings and cash flow.
| • | The measure of earnings was net operating earnings per share (after accounting for the cost of any incentive payout). Net operating earnings was defined as income from continuing operations determined in accordance with Generally Accepted Accounting Principles (“GAAP”) adjusted for certain items, such as weather, gains and losses on the sale of assets, and certain out-of-period items and reserve adjustments. The Committee uses net operating earnings, a non-GAAP financial measure, for determining financial performance for incentive compensation plans because the Board and management believe this measure better represents the fundamental earnings strength and performance of the Company. NiSource uses net operating earnings internally for budgeting and for reporting to the Board. |
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| • | The cash flow measure, corporate funds from operations, was calculated by taking net income from operations and adding back non-cash items like depreciation. The Committee uses corporate funds from operations as an incentive plan measure because the Board and management believe this measure fairly represents the amount of cash produced by the Company’s operations. |
Incentive Plan awards for 2010 also reflected achievement with
respect to business unit earnings and cash flow goals for the
Company’s three business units. The Committee believes the
inclusion of business unit goals in the Incentive Plan improves
the line of sight between employees and the incentive measures,
thereby enhancing Company performance. The Committee extended to
Mr. Skaggs the authority to establish the annual business
unit targets for the year. He assigned goals that, if
accomplished, were expected to ensure the Company’s
attainment of its overall corporate objectives.
The target goals for the Incentive Plan are based upon the
financial plan approved by the Board. The financial plan is
designed to achieve the Company’s goal of creating
sustainable stockholder value by growing earnings, effectively
managing the Company’s cash, maintaining the dividend, and
sustaining an investment grade credit rating. In addition to
approving goals that correspond to target incentive award
payouts, the Committee also established trigger and stretch
goals that corresponded to the lesser and greater incentive
payments made at trigger and stretch performance levels.
For senior executives, including all the Named Executive
Officers, Incentive Plan awards are based upon achievement with
respect to three corporate measures; net operating earnings per
share, corporate funds from operations, and total debt as of
December 31, 2010. The Committee assigned goals for these
particular measures based upon its determination that their
achievement was vital to the Company’s success in
increasing stockholder value in 2010. The senior
executives’ incentive opportunities are contingent on
achievement of these measures, subject to the Committee’s
final discretion. In addition, Messrs. Helms’ and
Staton’s incentive opportunities are also based upon the
respective performance of the business units they lead.
If the Company and, where applicable, the business unit, meet
their respective goals, employees in good standing are eligible
to receive an incentive in accordance with the plan. As noted
above, the Committee retains the discretion to determine the
incentives to be paid each Named Executive Officer.
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The approved 2010 Incentive Plan performance goals, and the
results in relation to them, follow:
|
Measure
|
Goals | Results | Percent of Target(1) | |||||||
|
NiSource Net Operating Earning per Share
|
Stretch | $1.20 | $1.22 | 150 | % | |||||
| Target | $1.15 | |||||||||
| Trigger | $1.10 | |||||||||
|
NiSource Funds from Operations
|
Stretch | $1,040M | $1,053M | 150 | % | |||||
| Target | $940M | |||||||||
| Trigger | $840M | |||||||||
|
NiSource Debt as of December 31, 2010
|
Stretch | $6,838M | $6,901M(2) | 129 | % | |||||
| Target | $6,988M | |||||||||
| Trigger | $7,138M | |||||||||
|
Gas Transmission & Storage Operating Earnings
|
Stretch | $430M | $394M | 0 | % | |||||
| Target | $418M | |||||||||
| Trigger | $406M | |||||||||
|
Gas Transmission & Storage Cash from Operations
|
Stretch | $443.9M | $353M | 102 | % | |||||
| Target | $349.1M | |||||||||
| Trigger | $289.4M | |||||||||
|
Gas Distribution Operating Earnings
|
Stretch | $355M | $348M | 132 | % | |||||
| Target | $336M | |||||||||
| Trigger | $320M | |||||||||
|
Gas Distribution Cash from Operations
|
Stretch | $574.5M | $508M | 131 | % | |||||
| Target | $400M | |||||||||
| Trigger | $296.4M | |||||||||
|
Northern Indiana Energy Operating Earnings
|
Stretch | $250M | $253M | 150 | % | |||||
| Target | $231M | |||||||||
| Trigger | $213M | |||||||||
|
Northern Indiana Energy Cash from Operations
|
Stretch | $388M | $246M | 103 | % | |||||
| Target | $237M | |||||||||
| Trigger | $166.9M | |||||||||
| (1) | When the result for a particular measure lands between two goals (for example, between the target and stretch goal), then the incentive opportunity is determined by interpolation and is expressed as a percentage of the target opportunity. | |
| (2) | Reflects an adjustment of $176.5 million for the change from Discontinued Operations to Continuing Operations due to a sale not being consummated. |
Consistent with the philosophy of paying for performance,
Incentive Plan funding levels were based upon the performance of
each business unit in relation to its respective goals, which
the Committee believes appropriately aligned the employees of
the organization with the overall objective of increasing
stockholder value. Based upon the strong results displayed
above, the Committee approved payouts to the respective units as
follows:
| • | NGT&S at 76% of target; | |
| • | NGD at 136% of target; | |
| • | NIE at 132% of target; and | |
| • | Corporate Support at 150% of target (this was due to the Company exceeding the stretch goal for both corporate measures). |
2010 Incentive Plan Payouts to the Named Executive
Officers. For 2010, the Committee determined that
Mr. Skaggs should receive an annual incentive payout in the
amount of $1,250,000 — 50% in cash and 50% in
restricted stock. Accordingly, the Committee granted
Mr. Skaggs 33,476 shares of restricted stock, which
had a fair market value of $625,000 as of the date of the grant,
January 28, 2011. The service restrictions on these shares
lapse January 28, 2014. The total value of $1,250,000
exceeds by $206,000 the arithmetic value of the calculated
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incentive amount (based upon Mr. Skaggs’ base salary
of $900,000, the Company’s performance on the three
financial metrics that apply to senior executives and his
incentive range). The Committee determined it was appropriate to
approve a $625,000 cash award and a $625,000 restricted share
grant to Mr. Skaggs to recognize his leadership over the
past several years in building the Company and continuing to
lead the Company’s strong performance in 2010, including
achieving net operating earnings of $1.22 per share in
2010 — an increase of 14% over 2009, and the fourth
consecutive year in which the Company delivered earnings within
its increased guidance range. The Committee further considered
that under Mr. Skaggs’ leadership the Company has
maintained its commitment to preserve a stable investment-grade
credit rating; maintain its dividend level; and improve employee
engagement, safety and system reliability metrics. The Committee
determined that providing Mr. Skaggs these payments was
consistent with the Company’s philosophy to pay for
performance.
Mr. Skaggs made recommendations to the Committee with
respect to the award of incentive payouts to the other senior
executives, including all of the Named Executive Officers other
than himself, for 2010. As noted above, the Company exceeded the
stretch goals for net operating earnings per share and for funds
from operations, and exceeded the target goal for debt. In
making his recommendations, Mr. Skaggs considered the
performance of the senior executives in delivering strong
stockholder returns in 2010, as well as the respective
performances of the business units and corporate functions the
executives led. The Committee considered and accepted
Mr. Skaggs’ recommendations and approved incentive
payouts to the Named Executive Officers as follows:
| • | Mr. Smith received an incentive payout of $550,000 based upon his performance and contributions to the Company’s success. His contributions included: outstanding execution of the Company’s financial strategic plan, including a successful forward equity sale; a debt tender offer; stable credit ratings; and continued strengthening of the finance and accounting team. | |
| • | Mr. Helms received an incentive payout of $450,000 based upon his performance and his contributions to the Company’s success. His contributions included: delivering on his business unit’s cash financial target; delivery of key growth projects, on time and under budget; strong management of pipeline integrity and reliability initiatives; and the development and filing of a rate case regarding Columbia Gulf. | |
| • | Mr. Staton received an incentive payout of $550,000 based upon his performance and his individual contributions to the Company’s success. His contributions included: attainment by NGD and NIE of their financial and business targets; settlement of a gas rate case by Northern Indiana Public Service Company (“NIPSCO”); strong improvements in reliability and customer service metrics at NIPSCO; strengthen safety measures at NGD and NIE; achievement of a constructive result in the first NIPSCO electric rate case; preparation and filing of a second NIPSCO electric rate case; and the building of the leadership teams in NGD and NIE. | |
| • | Ms. Hightman received an incentive payout of $400,000 based upon her contributions to the Company’s performance. Her contributions included: playing a key role in the NIPSCO rate cases; strong support of the Board’s ES&S and Governance Committees; successful settlement of a NIPSCO environmental matter; the resolution of legacy litigation; and the strengthening of sustainability efforts and her leadership team. |
Long-Term Incentive Plan (LTIP). The
Company’s compensation program includes a long-term
incentive component of equity-based compensation. The purpose of
this component includes:
| • | aligning executive compensation with the long-term strategic plan of the Company; | |
| • | fully aligning the interests of the executives with stockholders; and | |
| • | providing a competitive compensation framework enabling the Company to recruit and retain high performing executive talent. |
Under the LTIP, the Committee may award stock options, stock
appreciation rights, performance units, restricted stock units,
restricted stock awards and contingent stock awards. The
Committee considers base salaries of senior executives, prior
awards under the LTIP, and the compensation philosophy in
establishing long-term incentive awards. The actual compensation
value of awards under the LTIP depends largely on meeting
performance criteria, stock price appreciation and stockholder
return.
Consistent with the Company’s philosophy that the
preponderance of its long-term incentive awards should be
performance-based, in 2010 80% of the value of the awards to
Named Executive Officers was in the form of contingent stock,
while 20% was in the form of restricted stock units.
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2008
Contingent Stock Grant
In 2008, the Board approved a grant of contingent stock to
executives of the Company, including all of the Named Executive
Officers (other than Mr. Smith who was not yet an employee
of the Company). Vesting of the 2008 contingent stock was
subject to two performance conditions, each with a 50%
weighting: cumulative net operating earnings per share on the
three-year period of 2008 through 2010; and cumulative funds
from operations over the same period. The Committee selected
these measures as they deemed them to be key drivers to the
enhancement of long-term stockholder value. If the target level
of performance was exceeded on a particular measure, the
executive could receive up to a maximum of 150% of the value of
that portion of the grant. The performance measures and results
follow:
|
% of Award |
||||||||||
|
Performance Measure
|
Goals | Results | to Vest | |||||||
|
Cumulative Net Operating Earnings Per Share
2008-2010
|
Target | $3.90 | $3.56 | 0 | % | |||||
|
Cumulative Funds from Operations
2008-2010
|
Stretch Target |
$2,925M $2,800M |
$3,311M | 150 | % | |||||
Based upon the overall Company’s performance, the
contingent stock vested at 75%. The number of contingent stock
awards granted to the Named Executive Officers and the number
that vested are set forth below:
|
2008 Contingent |
2008 Contingent |
|||||||
|
Named Executive Officer
|
Stock Awards | Stock Vested | ||||||
|
Robert C. Skaggs, Jr.
|
80,046 | 60,035 | ||||||
|
Christopher A. Helms
|
27,635 | 20,726 | ||||||
|
Jimmy D. Staton
|
21,917 | 16,438 | ||||||
|
Carrie J. Hightman
|
21,917 | 16,438 | ||||||
2009
Contingent Stock Grant
In 2009, the Board approved a grant of contingent stock to
executives of the Company, including all of the Named Executive
Officers. Vesting of the 2009 contingent stock was subject to
three performance goals, each with a one-third weighting, over
the two-year period of 2009 through 2010. The measures were
cumulative net operating earnings per share, cumulative funds
from operations and total debt as of December 31, 2010. The
Committee selected these measures as it was their view that they
were key drivers to the enhancement of long-term stockholder
value. In addition to the performance contingencies, the stock
is also subject to an employment restriction through
January 31, 2012.
The performance measures and results follow:
|
% of Award |
||||||||||
|
Performance Measure
|
Goals | Results | to Vest | |||||||
|
Cumulative Net Operating Earnings Per Share
2009-2010
|
Stretch Target |
$2.23 $2.13 |
$2.29 | 150 | % | |||||
|
Cumulative Funds from Operations
2009-2010
|
Stretch Target |
$2,075M $1,950M |
$2,305M | 150 | % | |||||
|
Total Debt as of 12/31/2010
|
Target | $7.45B | $7.08B | 100 | % | |||||
Based upon the Company’s performance, 133% of the
contingent stock awards will vest subject to the satisfaction of
the continuing employment restrictions. The number of contingent
stock awards to the Named Executive Officers and the number that
may vest are set forth below:
|
2009 Contingent |
2009 Contingent |
|||||||
|
Named Officer
|
Stock Awards | Stock That May Vest(1) | ||||||
|
Robert C. Skaggs, Jr.
|
203,941 | 271,242 | ||||||
|
Stephen P. Smith
|
48,030 | 63,880 | ||||||
|
Christopher A. Helms
|
55,419 | 73,707 | ||||||
|
Jimmy D. Staton
|
48,030 | 63,880 | ||||||
|
Carrie J. Hightman
|
44,335 | 58,966 | ||||||
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| (1) | Subject to employment restriction through January 31, 2012. |
2010
Equity Grants
2010 Contingent Stock Grant. Vesting of the
2010 grant of contingent stock is dependent upon the Company
meeting certain performance measures over the three-year period
from 2010 through 2012. The performance measures relate to
cumulative net operating earnings per share over the three-year
period, cumulative funds from operations over the three-year
period and total debt as of December 31, 2012. The
Committee selected these measures because it was their view that
they are key drivers to the enhancement of long-term stockholder
value. The target goals are based upon the Company’s
financial plan. If the target goal is met, then the executive
will receive 100% of the value of that portion of the grant. The
Committee also approved trigger and stretch goals for each
measure. If the trigger level is not met, then the executive
will not receive any value of that portion of the grant. If the
target level is exceeded, the executive could receive up to a
maximum of 150% of the value of that portion of the grant. When
the result for a particular measure lands between two goals (for
example, between the target and stretch goal), then the
long-term incentive award opportunity is determined by
interpolation, and is expressed as a percentage of the target
opportunity.
The measures and goals pertaining to the 2010 contingent stock
award are:
|
Trigger |
Target |
Stretch |
||||||||
|
Performance Measure
|
Weight | (50% Award) | (100% Award) | (150% Award) | ||||||
|
Cumulative Net Operating Earnings Per Share for
2010-2012
|
50 | % | $3.52 | $3.67 | ³$3.82 | |||||
|
Cumulative Funds from Operations for
2010-2012
|
25 | % | $2,528M | $2,828M | ³$3,128M | |||||
|
Total Debt as of December 31, 2012
|
25 | % | $7.191B | $7.041B | £$6.891B | |||||
If the executive terminates employment prior to January 31,
2013 due to (1) retirement, having attained age 55 and
completed ten years of service, (2) disability or
(3) death with 12 or less months remaining in the
performance period, the executive will receive a pro rata
portion of the contingent stock upon the performance conditions
being met. If the executive terminates employment prior to
January 31, 2013 due to death with more than 12 months
remaining in the performance period, the executive’s
beneficiary will receive a pro rata portion of the contingent
stock as if the performance conditions had been met. Termination
due to any other reason will result in all contingent stock
awards being forfeited.
2010 Restricted Stock Unit Grant. The
employment restriction on the 2010 restricted stock units lapses
on January 31, 2013. If before January 31, 2013, the
executive terminates employment (1) due to retirement,
having attained age 55 and completed ten years of service,
or (2) due to death or disability, the employment
conditions will lapse with respect to a pro rata portion of the
restricted stock units on the date of termination. Termination
due to any other reason will result in all restricted stock
units awarded being forfeited.
In determining the 2010 long-term incentive grants to be awarded
to the Named Executive Officers, the Committee considered the
Comparative Group information, as well as the performance of the
individuals and the desire to further align the interests of
management with those of the Company’s stockholders. With
respect to Mr. Skaggs, the Committee also considered that
Mr. Skaggs’ total compensation remained below the
50th percentile for CEOs in the energy company Comparative
Group. The Committee recommended, and the Board authorized,
restricted stock units and contingent stock awards to the Named
Executive Officers in the following amounts:
|
Number of |
Number of |
|||||||
|
Restricted |
Contingent |
|||||||
|
Name
|
Stock Awards | Stock Awards | ||||||
|
Robert C. Skaggs, Jr.
|
31,726 | 126,904 | ||||||
|
Stephen P. Smith
|
11,421 | 45,685 | ||||||
|
Christopher A. Helms
|
11,421 | 45,685 | ||||||
|
Jimmy D. Staton
|
11,421 | 45,685 | ||||||
|
Carrie J. Hightman
|
8,566 | 34,264 | ||||||
24
Table of Contents
Consistent with the philosophy and principles articulated above,
the Committee believes that the 2010 stock awards:
| • | align the interests of executives with the Company’s stockholders as the ultimate value of the award is dependent upon the value of its stock; | |
| • | support the Company’s philosophy of paying for performance as the contingent stock will not vest unless the Company achieves its performance goals over the measurement period; and | |
| • | provide competitive compensation to recruit and retain executive talent by including a long-term incentive component. |
Health and Welfare Benefits. The Company
provides a variety of health and welfare benefits to its
employees, including a number of health care plans, vision,
dental, long-term disability and life insurance. The Named
Executive Officers are eligible to participate in these plans as
employees of the Company. The Company also has the following
plans.
Defined Contribution Plans. Under the NiSource
Inc. Retirement Savings Plan, the Company’s 401(k) plan
that covers most of the Company’s employees (including the
Named Executive Officers), Named Executive Officers can defer a
portion of their base salary and receive employer contributions
that vary according to the terms of the respective pension plans
in which they participate. Additionally, a profit sharing
contribution of between 0.5% and 1.5% of an employee’s
eligible earnings may be made to the account of each eligible
employee, including the Named Executive Officers, in the
Company’s Retirement Savings Plan (and Savings Restoration
Plan if applicable), based on the overall corporate net
operating earnings per share measure. For 2010, the Company made
a profit sharing contribution of 1.5% of each employee’s
eligible earnings, including those of the Named Executive
Officers, to the respective employees’ accounts in the
Company’s Retirement Savings Plan (and Savings Restoration
Plan if applicable).
The Company sponsors the Savings Restoration Plan for NiSource
Inc. and Affiliates to provide a supplemental benefit equal to
the difference between: (i) the benefit an employee would
have received under the Company’s Retirement Savings Plan
had such benefit not been limited by sections 415 (a
limitation on annual contributions under a defined contribution
plan of $49,000 for 2010) and 401(a)(17) (a limitation on annual
compensation of $245,000 for 2010) of the Internal Revenue
Code, reduced by their deferrals into the Company’s
Executive Deferred Compensation Plan, minus (ii) the actual
benefit the employee received under the Retirement Savings Plan.
All of the Named Executive Officers are eligible to participate
in the Savings Restoration Plan.
Executive Deferred Compensation Plan. The
Company sponsors the Executive Deferred Compensation Plan in
which employees at certain job levels and other key employees
designated by the Committee, including the Named Executive
Officers, are eligible to participate. Participants may elect to
defer and invest between 5% and 80% of their base compensation
and between 5% and 100% of their non-equity incentive payment on
a pre-tax basis. Employees designate how their contributions
will be invested; the investment options generally are the same
as those available under the Company’s 401(k) plan except
that there are additional investment options for former Bay
State Gas Company Plan participants and transferred Columbia
Energy Group Plan accounts. Employee contributions and any
earnings thereon are 100% vested.
Pension Plans. The Company and its affiliates
sponsor several qualified pension plans for their respective
employees. The plan, in which an employee participates,
including each of the Named Executive Officers, differs
depending upon the affiliate into which the employee was hired.
Pensions are payable from a trust fund, which consists of
contributions made by the Company and the earnings of the fund.
Over a period of years, the contributions are intended to result
in overall actuarial solvency of the trust fund.
Mr. Skaggs participates in the Columbia Energy Group
Pension Plan (formerly known as the Retirement Plan of Columbia
Energy Group Companies), as he was a participant in this plan at
the time of the acquisition of Columbia Energy Group by the
Company. Messrs. Smith, Helms and Staton, as well as
Ms. Hightman, participate in the NiSource Pension Plan as
they were hired into NiSource Corporate Services Company.
Both the Columbia Energy Group Pension Plan and the NiSource
Pension Plan provide for a “final average pay”
benefit. Both plans also provide for a cash balance feature,
whereby an eligible employee will have a benefit consisting of
an opening account balance (if they transitioned from a final
average pay benefit) plus annual pay and interest credits to the
cash balance account. Pay credits equal a percentage of
compensation based on the
25
Table of Contents
participant’s combined age and service. Interest is
credited to the account based on the interest rate on
30-year
Treasury securities (unless a minimum interest rate applies as
required by law), as determined by the Internal Revenue Service,
for the September immediately proceeding the first day of each
year, but not less than 4%.
At the time the plans added a cash balance benefit, eligible
employees were offered a choice of receiving the final average
pay benefit or receiving the cash balance benefit. Participants
in the plans prior to October 1, 2005 were eligible to
elect to remain in the “final average pay feature” or
the original cash balance feature, or to begin participating in
the new cash balance feature. Participants hired into exempt
employee positions on or after October 1, 2005 and prior to
January 1, 2006 automatically participated in the original
cash balance feature until January 1, 2006 when they
automatically began participating in the new cash balance
feature. Participants hired into exempt employee positions on or
after January 1, 2006 but before January 1, 2010
automatically participate in the new cash balance feature. The
difference between the original cash balance feature and the new
cash balance feature is that the pay credits provided under the
new cash balance feature are a lower percentage of compensation
based upon a participant’s combined age and service.
Participants in the new cash balance feature receive an enhanced
matching contribution under the Retirement Savings Plan.
Employees hired into exempt employee positions on or after
January 1, 2010 are not eligible to participate in the
Company’s pension plans.
Mr. Skaggs and Mr. Helms were the only Named Executive
Officers who were required to make the election described above.
Mr. Skaggs elected to continue to receive the final average
pay benefit under the Columbia Energy Group Pension Plan. The
formula for a retiree’s monthly retirement benefit at
age 65 under the Columbia Energy Group Pension Plan is
(i) 1.15% of the retiree’s final average compensation
that does not exceed
1/2
of the taxable Social Security wage base times years of service
up to 30, plus (ii) 1.5% of the retiree’s final
average compensation in excess of
1/2
of the taxable Social Security wage base times years of service
up to 30, plus (iii) 0.5% of the retiree’s final
average compensation times years of service between 30 and 40.
Mr. Helms elected to receive the new cash balance benefit.
Effective January 1, 2011, both pension plans were amended
to further provide that all eligible exempt employees will
participate in the new cash balance feature and will receive the
enhanced matching contribution under the Retirement Savings
Plan. Mr. Skaggs is the only Named Executive Officer
participating in the final average pay benefit (all other Named
Executive Officers participate in the cash balance feature).
Effective January 1, 2011, Mr. Skaggs will no longer
accrue a final average pay benefit. His pension benefit will
consist of an opening balance based on the conversion of his
final average pay benefit accrued up to January 1, 2011,
plus annual pay and interest credits to his cash balance account
thereafter.
The Company also sponsors the Pension Restoration Plan for
NiSource Inc. and Affiliates. The Pension Restoration Plan is a
non-qualified defined benefit plan. The plan includes employees
of the Company and its affiliates (including all of the Named
Executive Officers) whose benefits under the applicable
tax-qualified pension plan are limited by sections 415 and
401(a)(17) of the Internal Revenue Code. The Pension Restoration
Plan provides for a supplemental retirement benefit equal to the
difference between (i) the benefit a participant would have
received under the qualified pension plan had such benefit not
been limited by section 401(a)(17) of the Internal Revenue
Code and reduced by deferrals into the Company’s Executive
Deferred Compensation Plan, minus (ii) the actual benefit
received under the qualified pension plan.
Perquisites. Perquisites are not a principal
element of the Company’s executive compensation program.
Perquisites are limited in number and modest in value when
compared to its principal elements of compensation. They are
intended to assist executive officers in the performance of
their duties on behalf of the Company or otherwise to provide
benefits that have a combined personal and business purpose.
The Committee regularly reviews the types and costs of
perquisites provided to its Named Executive Officers to be
assured that the perquisites are in line with the Company’s
compensation philosophy. During 2010, the only perquisites
offered by the Company to all of its Named Executive Officers
were financial planning and tax advisory services. The Company
did not reimburse the Named Executive Officers for the payment
of personal income taxes in connection with this benefit.
From time to time, the Company provides benefits in the form of
relocation services and the payment of relocation expenses, when
an officer relocates at the Company’s request or as a
result of a job transfer, and may also allow limited personal
use of Company aircraft or limited spousal travel in conjunction
with attending Company events. None of these benefits were
provided during 2010.
26
Table of Contents
Post-Termination Benefits. The Company
maintains an executive severance policy,
Change-in-Control
Agreements with the Named Executive Officers and letter
agreements with Messrs. Helms, Smith and Staton regarding
payments to be made in connection with the termination of
employment of the executive. Mr. Skaggs is also entitled to
receive payments for vested phantom stock units that were given
to him in February 2001 as an inducement to remain employed with
the Company following the Company’s acquisition of Columbia
Energy Group. The Company entered into the
Change-in-Control
Agreements based upon its belief that these agreements are in
the best interests of the stockholders to ensure that in the
event of extraordinary events, a thoroughly objective judgment
is made on any potential corporate transaction so that
stockholder value is appropriately, safeguarded and maximized by
having these agreements. For further discussion of these
agreements see “Compensation of Executive
Officers — Potential Payments upon Termination of
Employment or a
Change-in-Control
of the Company” below.
In January 2010, the Committee determined that all new
Change-in-Control
Agreements entered into between the Company and employees would
not include
“gross-up”
payments to reimburse such employees for individual excise or
income taxes incurred with respect to benefits triggered by a
Change-in-Control
of the Company. The rationale for this change, including the
prospective nature of the change, was to reflect best practices
with respect to the subject of
gross-up
payments in the context of
Change-in-Control
agreements, while still respecting the Company’s
contractual and other commitments to existing Named Executive
Officers.
III.
Stock Ownership Guidelines, Assessment of Risk, and Tax
Treatment
Executive
Stock Ownership Guidelines
The Company established stock ownership guidelines for its
senior executives in 2007 and revised the guidelines in January
2009. Senior executives are generally expected to satisfy their
applicable ownership guidelines within five years of becoming
subject to the guidelines. The stock ownership requirement for
the CEO is shares of the Company’s common stock having a
value equal to five times his annual base salary. The other
senior executives have a stock ownership guideline of three
times their respective annual base salary. At the end of 2010,
the Named Executive Officers (other than Mr. Skaggs, who
has met the guideline) were determined to be progressing toward
their ownership guidelines. Since the revised ownership
guidelines have been in effect for less than five years,
executives have additional time to comply. Once the senior
executive satisfies the guidelines, they must continue to own a
sufficient number of shares to remain in compliance with the
guidelines. Until such time as the senior executive satisfies
the stock ownership guidelines, the senior executive is required
to hold 50% of the shares of common stock received upon the
lapse of the restrictions on restricted stock units and the
vesting of contingent stock.
Assessment
of Risk
The Company annually assesses whether its incentive compensation
programs are constructed in a manner that might induce
participant behaviors that could cause the Company material
harm. An assessment was performed in 2010 and concluded that the
incentive components of its program for senior executives do not
create an incentive for excessive risk taking for the following
reasons:
| • | The Company’s operations are highly regulated at both the federal and state levels, and therefore, is subject to continuous oversight by independent bodies. | |
| • | The compensation program is evaluated annually for its effectiveness and alignment with the Company’s goals without promoting excessive risk. | |
| • | Senior executive compensation is weighted toward long-term incentives thereby ensuring that senior executives have an ongoing, multi-year focus of attention. | |
| • | The performance goals/measures that are the basis of incentive awards are approved each year by an independent committee of the Board. | |
| • | The long-term incentive equity awards to senior executives generally have three-year vesting periods so that their upside potential and downside risk are aligned with that of our stockholders and promote long-term performance over the vesting period. |
27
Table of Contents
| • | The senior executive officers are subject to stock ownership guidelines that are independently set by the Board which are intended to ensure senior executives assume financial risk that is coincident with the Company’s stockholders. |
Tax
Treatment of Executive Compensation
Section 162(m) of the Internal Revenue Code provides that
annual compensation in excess of $1,000,000 paid to the CEO or
any of the other Named Executive Officers, other than
compensation meeting the definition of “performance-based
compensation,” will not be deductible by a corporation for
federal income tax purposes. The Committee does not anticipate
that the limits of Section 162(m) will materially affect
the deductibility of compensation paid by the Company in 2010.
However, the Committee will continue to review the deductibility
of compensation under Section 162(m) and related
regulations published by the IRS. The Committee retains the
discretion to amend any compensation arrangement to comply with
Section 162(m)’s requirements for deductibility in
accordance with the terms of such arrangements and what it
believes is in the best interest of the Company.
The Committee considers the anticipated tax treatment to the
Company when determining executive compensation and routinely
seeks to structure its executive compensation program in a way
which preserves the deductibility of compensation payments and
benefits. It should be noted, however, that there are many
factors which are considered by the Committee in determining
executive compensation and, similarly, there are many factors
which may affect the deductibility of executive compensation. To
maintain the flexibility to compensate the Named Executive
Officers in a manner designed to promote varying corporate
goals, the Committee has not adopted a strict policy that all
executive compensation must be deductible under
Section 162(m).
In addition, Sections 280G and 4999 of the Internal Revenue
Code impose excise taxes on Named Executive Officers, directors
who own significant stockholder interests in the Company, and
other service providers who receive payments in excess of a
threshold level upon a
Change-in-Control.
Additionally, the Company or its successor could lose a
deduction for amounts subject to the additional tax. As
discussed under “Potential Payments upon Termination of
Employment or a
Change-in-Control
of the Company” below, it is possible that payments to the
Named Executive Officers could be subject to these taxes.
Finally, Section 409A of the Internal Revenue Code imposes
additional taxes on Named Executive Officers, directors and
other service providers who defer compensation in a manner that
does not comply with Section 409A. The Company has reviewed
its compensation arrangements to help ensure they comply with
applicable Section 409A requirements.
Officer
Nomination and Compensation Committee Report
The Officer Nomination and Compensation Committee of the Board
of Directors (the “Committee”) has furnished the
following report to the stockholders of the Company in
accordance with rules adopted by the Securities and Exchange
Commission.
The Committee states that it reviewed and discussed with
management the Company’s Compensation Discussion and
Analysis contained in this Proxy Statement.
Based upon the review and discussions referred to above, the
Committee recommended to the Board of Directors that the
Compensation Discussion and Analysis be included in this Proxy
Statement.
This report is submitted on behalf of the members of the Officer
Nomination and Compensation Committee:
Officer Nomination and Compensation Committee
W. Lee Nutter, Chairman
Richard A. Abdoo
Steven C. Beering
Deborah S. Parker
Carolyn Y. Woo
W. Lee Nutter, Chairman
Richard A. Abdoo
Steven C. Beering
Deborah S. Parker
Carolyn Y. Woo
March 1, 2011
28
Table of Contents
Compensation
of Executive Officers
Summary. The following table summarizes
compensation for services to NiSource and its affiliates for
2010 awarded to, earned by or paid to the CEO, Chief Financial
Officer and three other most highly compensated executive
officers as of December 31, 2010 (collectively these
individuals constitute the “Named Officers”).
Summary
Compensation Table
|
Change in |
||||||||||||||||||||||||||||||||||||||||
|
Pension |
||||||||||||||||||||||||||||||||||||||||
|
Value and |
||||||||||||||||||||||||||||||||||||||||
|
Non-Equity |
Nonqualified |
|||||||||||||||||||||||||||||||||||||||
|
Incentive |
Deferred |
|||||||||||||||||||||||||||||||||||||||
|
Stock |
Plan |
Compensation |
All Other |
|||||||||||||||||||||||||||||||||||||
|
Name and Principal |
Salary |
Bonus |
Awards |
Compensation |
Earnings |
Compensation |
Total |
|||||||||||||||||||||||||||||||||
| Position | Year | ($)(1) | ($)(2) | ($)(3) | ($)(4) | ($)(5) | ($)(6) | ($) | ||||||||||||||||||||||||||||||||
|
Robert C. Skaggs, Jr.
|
2010 | 858,333 | 206,000 | 2,063,776 | 1,044,000 | 1,521,654 | 73,600 | 5,767,363 | ||||||||||||||||||||||||||||||||
|
President and Chief
|
2009 | 800,000 | — | 2,012,215 | 690,000 | 575,622 | 60,540 | 4,138,377 | ||||||||||||||||||||||||||||||||
|
Executive Officer
|
2008 | 791,667 | — | 1,802,236 | — | 294,699 | 60,003 | 2,948,605 | ||||||||||||||||||||||||||||||||
|
Stephen P. Smith
|
2010 | 529,167 | 525,019 | 742,949 | 159,981 | 63,569 | 49,334 | 2,070,019 | ||||||||||||||||||||||||||||||||
|
Executive Vice President and
|
2009 | 500,000 | 559,167 | 473,896 | 75,833 | 42,067 | 42,251 | 1,693,214 | ||||||||||||||||||||||||||||||||
|
Chief Financial Officer
|
2008 | 291,667 | 485,000 | 558,867 | — | 14,073 | 12,500 | 1,362,107 | ||||||||||||||||||||||||||||||||
|
Christopher A. Helms
|
2010 | 537,500 | 100,097 | 742,949 | 349,903 | 69,121 | 40,313 | 1,839,883 | ||||||||||||||||||||||||||||||||
|
Executive Vice President and
|
2009 | 520,000 | 83,133 | 546,801 | 416,867 | 55,926 | 41,812 | 1,664,539 | ||||||||||||||||||||||||||||||||
|
Group Chief Executive Officer
|
2008 | 516,667 | 7,750 | 622,195 | 302,250 | 49,108 | 19,582 | 1,517,552 | ||||||||||||||||||||||||||||||||
|
Jimmy D. Staton
|
2010 | 504,167 | 60,672 | 742,949 | 489,328 | 59,358 | 44,279 | 1,900,753 | ||||||||||||||||||||||||||||||||
|
Executive Vice President and
|
2009 | 440,000 | 97,267 | 473,896 | 352,733 | 45,227 | 39,685 | 1,448,808 | ||||||||||||||||||||||||||||||||
|
Group Chief Executive Officer
|
2008 | 349,206 | 298,969 | 493,469 | 111,031 | 17,823 | 31,670 | 1,302,168 | ||||||||||||||||||||||||||||||||
|
Carrie J. Hightman
|
2010 | 429,167 | 9,175 | 557,219 | 390,825 | 45,804 | 42,668 | 1,474,858 | ||||||||||||||||||||||||||||||||
|
Executive Vice President and
|
2009 | 400,000 | 66,667 | 437,436 | 233,333 | 36,544 | 36,194 | 1,210,174 | ||||||||||||||||||||||||||||||||
|
Chief Legal Officer
|
2008 | 400,000 | 140,000 | 493,469 | 60,000 | 23,570 | 39,172 | 1,156,211 | ||||||||||||||||||||||||||||||||
| (1) | Compensation deferred at the election of the Named Executive Officer is reported in the category and year in which such compensation was earned. | |
| (2) | For 2010, this column shows amounts paid under the Incentive Plan in excess of the amount described in footnote 4 below. For a description of the payments made, please see “Compensation Discussion and Analysis — 2010 Incentive Plan payouts to the Named Executive Officers.” Pursuant to a letter of agreement entered into with Mr. Smith in conjunction with his employment, Mr. Smith received a bonus of $135,000 in each of 2010, 2009, and 2008 to compensate him for the loss of a portion of his long-term incentive award from his prior employer and was guaranteed an incentive payout of $357,500 in 2010, $325,000 in 2009, and $189,583 in 2008. In 2008, Mr. Smith also received a sign-on bonus of $150,000. | |
| (3) | For a discussion of stock awards granted in 2010, see “Compensation Discussion and Analysis — Long-Term Incentive Plan.” The amounts in this column reflect the aggregate grant date fair value based on the average market price of the Company’s common stock at the date of grant, less the present value of dividends not received during the vesting period. For contingent stock, which is subject to performance conditions, the grant date value in the Summary Compensation Table is based upon the probable outcome of such conditions. The table following shows the value of restricted and contingent stock awards reported in the Summary Compensation Table at the grant date assuming that the highest level of performance conditions will be achieved. |
|
Maximum Performance |
Maximum Performance |
Maximum Performance |
|||||||||||||
|
Share Potential as |
Share Potential as |
Share Potential as |
|||||||||||||
|
of Grant Date for |
of Grant Date for |
of Grant Date for |
|||||||||||||
| Name | 2010 Awards ($) | 2009 Awards ($) | 2008 Awards ($) | ||||||||||||
|
Robert C. Skaggs, Jr.
|
2,889,287 | 2,510,239 | 2,402,981 | ||||||||||||
|
Stephen P. Smith
|
1,040,130 | 591,185 | 558,867 | ||||||||||||
|
Christopher A. Helms
|
1,040,130 | 682,134 | 829,595 | ||||||||||||
|
Jimmy D. Staton
|
1,040,130 | 591,185 | 657,956 | ||||||||||||
|
Carrie J. Hightman
|
780,106 | 545,702 | 657,956 | ||||||||||||
29
Table of Contents
| (4) | For 2010, the Incentive Plan payout opportunity for the Named Executive Officers was based upon overall corporate performance, particularly the measures applicable to senior executives, (See “Compensation Discussion and Analysis — 2010 Annual Incentive Plan”). In addition, for Messrs. Helms and Staton, their incentive opportunity was also based upon business unit performance. Accordingly, for 2010, this column shows the plan formula amount for each of the Named Executive Officers. Any amounts awarded in excess of the respective Named Executive Officers’ plan formula amounts are reflected in the Bonus column. For a description of the 2010 Corporate Incentive Plan, please see “Compensation Discussion and Analysis — 2010 Annual Incentive Plan.” For a description of the payments, made please see “Compensation Discussion and Analysis — 2010 Incentive Plan Payouts to the Named Executive Officers.” As noted above, the Committee granted Mr. Skaggs 33,476 shares of restricted stock, which had a fair market value of $625,000 as of the date of the grant, as part of his incentive payout. |
| (5) | This column shows the change in actuarial present value of each Named Executive Officer’s accumulated benefits under the Company’s pension plans and pension restoration plan. For a description of these plans and the basis used to develop the actuarial present values, see “Compensation Discussion and Analysis — Elements of Compensation — Pension Plans” and the Pension Benefits Table and accompanying narrative below. No earnings on deferred compensation are shown in this column, since no earnings were above market or preferential. | |
| (6) | The table below provides a breakdown of the amounts shown in the “All Other Compensation” column for each Named Executive Officer in 2010. |
| Perquisites(a) | Other Compensation | ||||||||||||||||||||||||||||||||||
|
Company |
|||||||||||||||||||||||||||||||||||
|
Company |
Company |
||||||||||||||||||||||||||||||||||
|
Match to |
Contributions |
||||||||||||||||||||||||||||||||||
|
Financial |
401(k) |
and Profit |
|||||||||||||||||||||||||||||||||
|
Consulting/ |
Contributions |
Contributions |
|||||||||||||||||||||||||||||||||
|
Tax Return |
and Profit |
to Savings |
|||||||||||||||||||||||||||||||||
|
Preparation |
Tax |
Shares |
Restoration |
||||||||||||||||||||||||||||||||
|
Services |
Reimbursements |
Contribution |
Plan |
Other |
Total |
||||||||||||||||||||||||||||||
| Name | Year | ($) | (b) ($) | (c) ($) | (d) ($) | (e) | ($) | ||||||||||||||||||||||||||||
|
Robert C. Skaggs, Jr.
|
2010 | 8,616 | 609 | 18,175 | 46,200 | — | 73,600 | ||||||||||||||||||||||||||||
|
Stephen P. Smith
|
2010 | 9,529 | 117 | 18,092 | 21,596 | — | 49,334 | ||||||||||||||||||||||||||||
|
Christopher A. Helms
|
2010 | — | — | 18,008 | 22,305 | — | 40,313 | ||||||||||||||||||||||||||||
|
Jimmy D. Staton
|
2010 | 5,815 | 651 | 17,883 | 19,930 | — | 44,279 | ||||||||||||||||||||||||||||
|
Carrie J. Hightman
|
2010 | 10,399 | — | 18,133 | 14,055 | 81 | 42,668 | ||||||||||||||||||||||||||||
| (a) | All perquisites are valued based on the aggregate incremental cost to the Company, as required by the rules of the SEC. The “Compensation Discussion and Analysis — Perquisites” section of this proxy statement contains additional information about the perquisites provided by the Company to its Named Executive Officers. | |
| (b) | This column shows the amount of tax reimbursement associated with income attributable to the Named Executive Officers in connection with certain limited spousal travel to and from the Company’s events. For Mr. Smith, the amount represents reimbursement of FICA tax withheld. | |
| (c) | This column reflects Company matching contributions and profit sharing contributions made on behalf of the Named Executive Officers to the 401(k) Plan. The 401(k) Plan is a defined contribution plan, as described above under “Compensation Discussion and Analysis — Defined Contribution Plans.” | |
| (d) | This column reflects Company matching contributions and profit sharing contributions made on behalf of the Named Officers to the Savings Restoration Plan. The Savings Restoration Plan is a defined contribution plan, as described above under “Compensation Discussion and Analysis — Defined Contribution Plans.” | |
| (e) | This column reflects the amount of taxable compensation associated with income attributed to a company award. |
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Grants of
Plan-Based Awards
No stock options were granted to the Named Executive Officers in
2010.
The following table sets forth information concerning plan-based
awards under the NiSource Corporate Incentive Plan and the
NiSource Long-Term Incentive Plan to the Named Officers in 2010.
|
All Other Stock |
|||||||||||||||||||||||||||||||||||||||||||||
|
Estimated Future Payouts Under |
Estimated Future Payouts Under |
Awards: |
|||||||||||||||||||||||||||||||||||||||||||
|
Non-Equity Incentive |
Equity Incentive |
Number |
Grant Date Fair Value |
||||||||||||||||||||||||||||||||||||||||||
| Plan Awards(1) | Plan Awards(2) |
of shares of |
of Stock and |
||||||||||||||||||||||||||||||||||||||||||
|
Threshold |
Target |
Maximum |
Threshold |
Target |
Maximum |
stock or units |
Option Awards |
||||||||||||||||||||||||||||||||||||||
| Name | Grant Date | ($) | ($) | ($) | (#) | (#) | (#) | (#)(3) | ($)(4) | ||||||||||||||||||||||||||||||||||||
|
Robert C. Skaggs, Jr.
|
03/23/2010 | 360,000 | 720,000 | 1,080,000 | 63,452 | 126,904 | 190,356 | 31,726 | 2,063,776 | ||||||||||||||||||||||||||||||||||||
|
Stephen P. Smith
|
03/23/2010 | 357,500 | 357,500 | 536,250 | 22,843 | 45,685 | 68,528 | 11,421 | 742,949 | ||||||||||||||||||||||||||||||||||||
|
Christopher A. Helms
|
03/23/2010 | 178,750 | 357,500 | 536,250 | 22,843 | 45,685 | 68,528 | 11,421 | 742,949 | ||||||||||||||||||||||||||||||||||||
|
Jimmy D. Staton
|
03/23/2010 | 178,750 | 357,500 | 536,250 | 22,843 | 45,685 | 68,528 | 11,421 | 742,949 | ||||||||||||||||||||||||||||||||||||
|
Carrie J. Hightman
|
03/23/2010 | 135,000 | 270,000 | 405,000 | 17,132 | 34,264 | 51,396 | 8,566 | 557,219 | ||||||||||||||||||||||||||||||||||||
| (1) | Payouts under the Incentive Plan were based on performance in 2010, which has now occurred. The information in the “Threshold,” “Target,” and “Maximum” columns reflect potential payouts under the performance targets set for the 2010 Corporate Incentive Plan, as described in the Compensation Discussion and Analysis section under the caption “2010 Annual Incentive Plan.” The amounts actually paid under the Corporate Incentive Plan for 2010 appear in the “Non-Equity Incentive Plan Compensation” and “Bonus” columns of the Summary Compensation Table. For a description of the payments made, please see “Compensation Discussion and Analysis — 2010 Corporate Incentive Plan Payouts to the Named Executive Officers.” The threshold amount for Mr. Smith reflects the guaranteed bonus amount for 2010 that was part of his employment agreement. | |
| (2) | The information in these columns reflects the 2010 contingent stock awards, which are based on performance over the three-year period 2010 through 2013. In order for participants to receive shares, the Company must attain specific financial goals. For a description, please see “Compensation Discussion and Analysis — Long-Term Incentive Plan.” If the target level of performance is met, the individual would receive 100% of the grant designated by the Board. The Committee also set trigger and stretch goals. If the trigger level is not met, then the executive would not receive any value of that portion of the grant. At the trigger level, the executive would receive 50% of the value of that portion of the grant and at the stretch level the executive would receive 150% of the value of that portion of the grant. | |
| (3) | The information in this column reflects the number of restricted stock units granted in 2010. Not included in the total is the restricted stock grant made to Mr. Skaggs in January 2011, see “Compensation Discussion and Analysis — 2010 Incentive Plan Payouts to the Named Executive Officers.” | |
| (4) | The grant date fair value of the stock awards is based on the average market price of the Company’s common stock at the date of grant, less the present value of dividends not received during the vesting period and, in the case of the performance-based awards, the probable outcome of the applicable performance conditions. |
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Table of Contents
Outstanding
Equity Awards at Fiscal Year-End
The following table sets forth information at fiscal year end
concerning outstanding grants of equity awards to the Named
Executive Officers, including awards of options to purchase
common stock and restricted and contingent stock to the Named
Executive Officers. No options were granted or exercised in 2010.
| Option Awards | Stock Awards | |||||||||||||||||||||||||||
|
Equity |
||||||||||||||||||||||||||||
|
Incentive |
||||||||||||||||||||||||||||
|
Equity Incentive |
Plan Awards |
|||||||||||||||||||||||||||
|
Plan Awards: |
Market or |
|||||||||||||||||||||||||||
|
Number of |
Payout Value of |
|||||||||||||||||||||||||||
|
Number of |
Number of |
Unearned |
Unearned |
|||||||||||||||||||||||||
|
Securities |
Shares or |
Market Value of |
Shares, |
Shares, |
||||||||||||||||||||||||
|
Underlying |
Units of |
Shares or |
Units or |
Units or |
||||||||||||||||||||||||
|
Unexercised |
Option |
Stock That |
Units of Stock That |
Other Rights |
Other Rights |
|||||||||||||||||||||||
|
Options(#) |
Exercise |
Option |
Have Not |
Have Not |
That Have |
That Have |
||||||||||||||||||||||
|
Exercisable |
Price |
Expiration |
Vested |
Vested ($) |
Not Vested |
Not Vested |
||||||||||||||||||||||
| Name | (1) | ($) |
Date |
(#) | (6) | (#) | ($)(7) | |||||||||||||||||||||
|
Robert C. Skaggs, Jr.
|
171,429 | 22.620 | 1/3/2015 | — | — | — | — | |||||||||||||||||||||
| 48,883 | 21.860 | 1/1/2014 | — | — | — | — | ||||||||||||||||||||||
| 27,287 | 19.840 | 1/1/2013 | — | — | — | — | ||||||||||||||||||||||
| 18,550 | 21.005 | 1/25/2012 | — | — | — | — | ||||||||||||||||||||||
| 15,330 | 25.940 | 1/1/2011 | — | — | — | — | ||||||||||||||||||||||
| — | — | — | 40,023 | (2) | 705,205 | 80,046 | (4) | 1,410,411 | ||||||||||||||||||||
| — | — | — | 67,980 | (3) | 1,197,808 | 203,941 | (5) | 3,593,440 | ||||||||||||||||||||
| — | — | — | 46,685 | (8) | 822,590 | |||||||||||||||||||||||
| — | — | — | 31,726 | (9) | 559,012 | 126,904 | (10) | 2,236,048 | ||||||||||||||||||||
|
Stephen P. Smith
|
— | — | — | 16,010 | (3) | 282,096 | 48,030 | (5) | 846,289 | |||||||||||||||||||
| — | — | — | 11,421 | (9) | 201,238 | 45,685 | (10) | 804,970 | ||||||||||||||||||||
|
Christopher A. Helms
|
28,571 | 22.910 | 4/1/2015 | — | — | — | — | |||||||||||||||||||||
| — | — | — | 13,817 | (2) | 243,456 | 27,635 | (4) | 486,929 | ||||||||||||||||||||
| — | — | — | 18,473 | (3) | 325,494 | 55,419 | (5) | 976,483 | ||||||||||||||||||||
| — | — | — | 11,421 | (9) | 201,238 | 45,685 | (10) | 804,970 | ||||||||||||||||||||
|
Jimmy D. Staton
|
— | — | — | 10,959 | (2) | 193,098 | 21,917 | (5) | 386,178 | |||||||||||||||||||
| — | — | — | 16,010 | (3) | 282,096 | 48,030 | (5) | 846,289 | ||||||||||||||||||||
| — | — | — | 11,421 | (9) | 201,238 | 45,685 | (10) | 804,970 | ||||||||||||||||||||
|
Carrie J. Hightman
|
— | — | — | 10,959 | (2) | 193,098 | 21,917 | (4) | 386,178 | |||||||||||||||||||
| — | — | — | 14,778 | (3) | 260,388 | 44,335 | (5) | 781,183 | ||||||||||||||||||||
| — | — | — | 8,566 | (9) | 150,933 | 34,264 | (10) | 603,732 | ||||||||||||||||||||
| (1) | All outstanding options held by the Named Executive Officers have vested and are exercisable. | |
| (2) | The awards shown represent restricted stock units granted in 2008. Generally, the restrictions with respect to these awards lapse 3 years from the date of the grant. | |
| (3) | The awards shown represent restricted stock units granted in 2009. Generally, the restrictions with respect to these awards lapse 3 years from the date of the grant. | |
| (4) | The awards shown represent contingent stock granted in 2008. For a description of the contingent stock and restricted stock unit awards and the performance criteria and vesting schedule, please see “Compensation Discussion and Analysis — Long-Term Incentive Plan.” | |
| (5) | The awards shown represent contingent stock granted in 2009. For a description of the contingent stock and restricted stock unit awards and the performance criteria and vesting schedule, please see “Compensation Discussion and Analysis — Long-Term Incentive Plan.” | |
| (6) | This column shows the market value of the unvested restricted stock unit awards held by the Named Executive Officers, based on a price of $17.62 per share (the closing market price of the Company’s common stock on December 31, 2010, as reported by the NYSE). | |
| (7) | This column shows the market value of the unearned and unvested restricted stock awards held by the Named Executive Officers, based on a price of $17.62 per share (the closing market price of the Company’s common stock on December 31, 2010, as reported by the NYSE). |
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Table of Contents
| (8) | In lieu of a cash payout under the 2009 Incentive Plan, the Committee granted Mr. Skaggs 46,685 restricted stock units on January 22, 2010. | |
| (9) | The awards shown represent restricted stock units granted in 2010. Generally, the restrictions with respect to these awards lapse 3 years from the date of grant. | |
| (10) | The awards shown represent contingent stock granted in 2010. For a description of the contingent stock and restricted stock unit awards and the performance criteria and vesting schedule, please see “Compensation Discussion and Analysis — Long-Term Incentive Plan.” |
Pension
Benefits
|
Number of Years |
Present Value of |
||||||||||||
|
Credited Service |
Accumulated Benefit |
||||||||||||
|
Name |
Plan Name |
(#)(1) |
($) |
||||||||||
|
Robert C. Skaggs, Jr.
|
Columbia Energy Group Pension Plan | 29.5000 | 1,195,448 | ||||||||||
| Pension Restoration Plan | 29.5000 | 3,029,686 | |||||||||||
|
Stephen P. Smith
|
NiSource Inc. Pension Plan | 2.5833 | 40,865 | ||||||||||
| Pension Restoration Plan | 2.5833 | 78,844 | |||||||||||
|
Christopher A. Helms
|
NiSource Inc. Pension Plan | 5.7500 | 73,371 | ||||||||||
| Pension Restoration Plan | 5.7500 | 172,468 | |||||||||||
|
Jimmy D. Staton
|
NiSource Inc. Pension Plan | 2.7500 | 40,865 | ||||||||||
| Pension Restoration Plan | 2.7500 | 81,543 | |||||||||||
|
Carrie J. Hightman
|
NiSource Inc. Pension Plan | 3.0833 | 45,261 | ||||||||||
| Pension Restoration Plan | 3.0833 | 62,324 | |||||||||||
As discussed above in “Compensation Discussion and
Analysis — Pension Plans” the Company’s
Named Executive Officers currently participate in different
pension plans. Mr. Skaggs participates in the Columbia
Energy Group Pension Plan because he was a participant in this
plan at the time of the acquisition of Columbia Energy Group by
the Company. The remaining Named Officers participate in the
NiSource Pension Plan because they were hired into NiSource
Corporate Services Company.
Pension Benefit. As of December 31, 2010,
Mr. Skaggs would have received the final average pay
benefit under the Columbia Energy Group Pension Plan. Effective
January 1, 2011, Mr. Skaggs’ pension benefit
along with the benefits of all other exempt employees who had
not yet elected to receive the new cash balance feature was
converted to the new cash balance feature. (See
“Compensation Discussion and Analysis — Pension
Plans.”) As part of this conversion, an opening account
balance is created equal to the lump sum actuarial equivalent of
his accrued final average pay benefit as of December 31,
2010. The lump sum calculation assumes a payment age of 60 and
an interest rate based on
30-year
Treasury securities as specified in the conversion provisions of
the plan document. The present value of accumulated benefit
reflects the value of this opening account balance, consistent
with the treatment of the other Named Executive Officers who
receive a cash balance benefit. In prior years, the present
value of accumulated benefit for Mr. Skaggs’ final
average pay benefit assumed a payment age of 63 and an interest
rate equal to the discount rate used to measure liabilities in
the corresponding financial statements. Mr. Skaggs’
opening balance was calculated in the same manner as all exempt
employees who had their pension converted as of January 1,
2011.
Compensation means base pay and “banked” vacation (in
the year of vacation payout) including any salary reduction
contributions made for the employee pursuant to a plan
maintained by the Company or an affiliate under Internal Revenue
Code Section 125 or 401(k), but excluding any amounts
deferred to a non-qualified plan maintained by the Company. In
accordance with Internal Revenue Code limits, the maximum
compensation taken into account in determining benefits was
limited to $245,000 in 2010.
Under the new cash balance benefit (in which all the Named
Executive Officers participated as of January 1, 2011), an
account is maintained for each participant, which consists of
(i) an opening account balance equal to the lump sum
actuarial equivalent of the participant’s accrued benefit
under the plan as of December 31, 2005 assuming
33
Table of Contents
the participant retired at age 60 if applicable,
(ii) compensation credits made by the Company as of the end
of each calendar year that range from 4%-6% of compensation,
plus 1% of compensation above
1/2
of the taxable Social Security wage base, and
(iii) interest credits made by the Company as of the end of
each calendar year, based on the
30-year
Treasury securities rate for the September preceding each such
year (subject to a minimum interest rate of 4%). Compensation
means base pay, bonuses and “banked” vacation (in the
year of vacation payout) including any salary reduction
contributions made pursuant to a plan maintained by the Company
under Section 125 or 401(k) of the Code, but excluding any
amounts deferred to a non-qualified plan maintained by the
Company. In accordance with Internal Revenue Code limits, the
maximum compensation taken into account in determining benefits
was limited to $245,000 in 2010.
The normal form of benefit under the Columbia Energy Group
Pension Plan is a single life annuity in the case of an
unmarried participant and a 50% joint and survivor
pop-up
annuity in the case of a married participant. The normal form of
benefit under the NiSource Pension Plan is a single life annuity
in the case of an unmarried participant, a 50% joint and
survivor annuity in the case of a married participant in the
final average pay option or the original cash balance feature,
and a 50% joint and survivor
pop-up
annuity in the case of a married participant in the new cash
balance feature. Optional forms of payment are available under
the pension plans, depending on the participant’s marital
status and chosen benefit feature.
Eligibility. A participant is eligible to
receive a benefit under the Columbia Energy Group Pension Plan
after completing three years of vesting service. Under the plan,
a participant is eligible to receive (i) a normal
retirement benefit if the participant’s employment
terminates on or after the later of attaining the full social
security retirement age or the fifth anniversary of the date he
or she became a participant (“normal retirement
date”), (ii) an early retirement benefit if the
participant’s employment terminates on or after attaining
age 60 with five years of credited service or age 55
with ten years of credited service (reduced in either case to
reflect commencement), (iii) a delayed retirement benefit
if a participant remains an employee after their normal
retirement date or (iv) a deferred vested benefit if he or
she terminates employment after completing three years of
service.
A participant is eligible to receive a benefit under the
NiSource Pension Plan after completing three years of vesting
service. Under the plan, a nonunion participant is eligible to
receive (i) a normal retirement benefit if his or her
employment terminates on or after the later of attaining
age 65 or the fifth anniversary of the date he or she
became a participant, (ii) an early retirement benefit if
he or she terminates employment after age 55 with ten years
of credited service (reduced to reflect commencement prior to
age 65, except for a participant who terminates employment
on or after age 60 with 25 years of credited service),
(iii) a disability benefit if he or she terminates
employment after completing three years of credited service and
is disabled due to an injury on the job other than an
intentionally self-inflicted injury or (iv) a deferred
vested benefit if he or she terminates employment after
completing three years of service.
Assumptions. The assumptions used in
calculating the present value of the accumulated benefit are set
forth in Note 12 — Pension and Other
Postretirement Benefits in the footnotes to the Consolidated
Financial Statements contained in the Company’s Annual
Report on
Form 10-K
for the year ended December 31, 2010. The Company has not
granted any extra years of credited service under the plans
identified above, other than as noted below under
“Potential Payments upon Termination of Employment or a
Change-in-Control
of the Company.”
Pension Restoration Plan. For discussion of
the Pension Restoration Plan, please see the Compensation
Discussion and Analysis.
No plan benefits were paid to any Named Officer in 2010.
34
Table of Contents
Non-qualified
Deferred Compensation
|
Executive |
Registrant |
Aggregate |
||||||||||||||||||||||||||
|
Contributions in |
Contributions in |
Aggregate Earnings |
Withdrawals/ |
Aggregate Balance |
||||||||||||||||||||||||
|
Last FY |
Last FY |
in Last FY |
Distributions |
at Last FYE |
||||||||||||||||||||||||
| Name | Plan Name | ($)(4) | ($)(5) | ($)(6) | ($) | ($)(7) | ||||||||||||||||||||||
|
Robert C. Skaggs, Jr.
|
Deferred Compensation Plan(1) |
— | — | 283,264 | — | 2,384,285 | ||||||||||||||||||||||
|
Savings Restoration Plan(2) |
69,333 | 46,200 | 42,913 | — | 1,414,392 | |||||||||||||||||||||||
|
Phantom Stock Units(3) |
— | — | 165,451 | — | 2,977,327 | |||||||||||||||||||||||
|
Stephen P. Smith
|
Savings Restoration Plan(2) |
17,333 | 21,596 | 3,145 | — | 125,510 | ||||||||||||||||||||||
|
Christopher A. Helms
|
Savings Restoration Plan(2) |
21,125 | 22,305 | 3,921 | — | 152,839 | ||||||||||||||||||||||
|
Jimmy D. Staton
|
Savings Restoration Plan(2) |
23,833 | 19,930 | 1,325 | — | 72,231 | ||||||||||||||||||||||
|
Carrie J. Hightman
|
Savings Restoration Plan(2) |
13,542 | 14,055 | 1,635 | — | 71,841 | ||||||||||||||||||||||
| (1) | Amounts shown were deferred under the Company’s Deferred Compensation Plan. The Named Executive Officers may elect to defer and invest between 5% and 80% of their base compensation and between 5% and 100% of their bonus on a pre-tax basis. These contributions are fully vested. For a description of the Deferred Compensation Plan, please see “Compensation Discussion and Analysis — Deferred Compensation Plan.” | |
| (2) | Amounts shown were deferred under the Company’s Savings Restoration Plan for NiSource Inc. and Affiliates. For a description of the Savings Restoration Plan, please see “Compensation Discussion and Analysis — Defined Contribution Plans.” All contributions under the Savings Restoration Plan are fully vested. | |
| (3) | For a description of the phantom stock units, see the description provided in footnote 1 to the Potential Payments upon Termination of Employment or Change-in-Control of Company table. All phantom stock units are vested. | |
| (4) | The amount of contributions by each Named Executive Officer and reported in this column is included in each Named Executive Officer’s compensation reported on the Summary Compensation Table, either as Salary, Bonus or Non-Equity Incentive Plan Compensation Earnings. | |
| (5) | The amount of Company contributions for each Named Executive Officer and reported in this column is included in each Named Executive Officer’s compensation reported on the Summary Compensation Table, as All Other Compensation. | |
| (6) | The aggregate earnings in this column are not reported in the Summary Compensation Table, except for dividend equivalents paid on phantom stock units and change in fair value of such units measured over the period, which are reported on the Summary Compensation Table as Stock Awards. For a discussion of investment options under these plans, see “Compensation Discussion and Analysis — Deferred Compensation Plan.” | |
| (7) | The aggregate balance at December 31, 2010, except the phantom stock units, reflects amounts for each Named Executive Officer that would have been previously reported as compensation in the Summary Compensation Table for prior years had he or she been a Named Officer, in those prior years, except for the aggregate earnings on deferred compensation. |
35
Table of Contents
Potential
Payments upon Termination of Employment or a
Change-in-Control
of the Company
of the Company
The Company provides certain benefits to eligible employees upon
certain types of termination of employment, including a
termination of employment involving a
Change-in-Control
of the Company. These benefits are in addition to the benefits
to which the employees would be entitled upon a termination of
employment generally (i.e., (i) vested retirement benefits
accrued as of the date of termination, (ii) stock-based
awards that are vested as of the date of termination,
(iii) the right to continue medical coverage pursuant to
COBRA and (iv) severance payments to salaried employees
upon an involuntary termination of employment in accordance with
the Company’s severance policies). The incremental benefits
that pertain to the Named Officers are described below.
NiSource Executive Severance Policy. The
NiSource Executive Severance Policy was established to provide
severance pay and other benefits to terminated executive-level
employees who satisfy the terms of the policy. An employee is
not eligible to receive benefits under the policy if termination
of employment results in the employee being eligible for a
payment under a
Change-in-Control
and Termination Agreement.
A participant becomes entitled to receive benefits under the
policy only if he or she is terminated for any of the following
reasons: (a) the employee’s position is eliminated due
to a reduction in force or other restructuring; (b) the
employee’s position is required by the Company to relocate
more than 50 miles from its current location and results in
the employee having a longer commute of at least 20 miles
and the employee chooses not to relocate; or (c) the
employee is constructively terminated. Constructive termination
means (1) the scope of the participant’s position is
changed materially or (2) the participant’s base pay
is reduced by a material amount or (3) the
participant’s opportunity to earn a bonus under a corporate
incentive plan of the Company is materially reduced or is
eliminated, and, in any such event, the participant chooses not
to remain employed in such position.
Under the NiSource Executive Severance Policy, an eligible
employee receives severance pay in the amount of 52 weeks
of base salary at the rate in effect on the date of termination.
The employee also receives: a lump sum payment equivalent to
130% of 52-weeks of COBRA (as defined in the Internal Revenue
Code of 1986 and the Employee Retirement Income Security Act of
1974) continuation coverage premiums; and outplacement
services.
All of the Named Executive Officers are eligible to receive
benefits under the NiSource Executive Severance Policy.
Change-in-Control
and Termination Agreements and Employment
Agreements. The Company has
Change-in-Control
and Termination Agreements with each of the Named Executive
Officers. The Company first entered into such an agreement with
Mr. Skaggs as of February 1, 2001. The Company entered
into a new form of
Change-in-Control
Agreement with the Named Executive Officers as of
November 4, 2008. The Company entered into these agreements
based upon its belief that these agreements are in the best
interests of the stockholders, to ensure that in the event of
extraordinary events, a thoroughly objective judgment is made on
any potential corporate transaction, so that stockholder value
is appropriately safeguarded and maximized by having these
agreements. The November 4, 2008 agreements can be
terminated on twenty-four months notice and provide for the
payment of specified benefits if the executive terminates
employment for Good Reason or is terminated by the Company for
any reason other than good cause within twenty-four months
following certain
Change-in-Control
events.
For purposes of the November 4, 2008
Change-in-Control
and Termination Agreements:
“Change-in-Control”
shall be deemed to take place on the occurrence of any of
the following events: (1) the acquisition by an entity,
person or group (including all affiliates or associates of such
entity, person or group) of beneficial ownership, as that term
is defined in
Rule 13d-3
under the Securities Exchange Act of 1934, of capital stock of
the Company entitled to exercise more than 30% of the
outstanding voting power of all capital stock of the Company
entitled to vote in elections of directors (“Voting
Power”); (2) the effective time of: (i) a merger
or consolidation of the Company with one or more other
corporations unless the holders of the outstanding Voting Power
of the Company immediately prior to such merger or consolidation
(other than the surviving or resulting corporation or any
affiliate or associate thereof) hold at least 50% of the Voting
Power of the surviving or resulting corporation (in
substantially the same proportion as the Voting Power of the
Company immediately prior to such merger or consolidation), or
(ii) a transfer of a substantial portion of the property of
the Company, other than to an entity of which the Company owns
at least 50% of the Voting Power; or (3) the election to
the Board of the Company of candidates who were not recommended
for election by the Board, if such candidates constitute a
majority of
36
Table of Contents
those elected in that particular election (for this purpose,
recommended directors will not include any candidate who becomes
a member of the Board as a result of an actual or threatened
election contest or proxy or consent solicitation on behalf of
anyone other than the Board or as a result of any appointment,
nomination, or other agreement intended to avoid or settle a
contest or solicitation). Notwithstanding the foregoing, a
Change-in-Control
shall not be deemed to take place by virtue of any transaction
in which the executive is a participant in a group effecting an
acquisition of the Company and, after such acquisition, the
executive holds an equity interest in the acquiring entity.
“Good Cause” shall be deemed to exist if, and
only if the Company notifies the executive, in writing, within
60 days of its knowledge that one of the following events
occurred: (1) the executive has engaged in acts or
omissions constituting dishonesty, intentional breach of
fiduciary obligation or intentional wrongdoing or malfeasance,
in each case that results in substantial harm to the Company; or
(2) the executive has been convicted of a criminal
violation involving fraud or dishonesty.
“Good Reason” shall be deemed to exist if, and
only if: (1) there is a significant diminution in the
nature or the scope of the executive’s authorities or
duties; (2) there is a significant reduction in the
executive’s monthly rate of base salary and the
executive’s opportunity to earn a bonus under an incentive
bonus compensation plan maintained by the Company or the
executive’s benefits; or (3) the Company changes by
50 miles or more the principal location at which the
executive is required to perform services as of the date of a
Change-in-Control.
The agreements provide for a payment of two (three in the case
of Mr. Skaggs) times the executive’s current annual
base salary and target incentive bonus compensation. The
executive will also receive a pro rata portion of the
executive’s targeted incentive bonus for the year of
termination. The agreements also provide for an increase in the
payment made to the executive as necessary to compensate the
executive on an after-tax basis for any parachute excise tax
imposed on the payment of amounts under the contracts. However,
in the event that payments under the agreements do not exceed
110% of the amount that could be paid a particular executive
without giving rise to any excise tax, then the executive’s
payments would be reduced to avoid the excise tax and no
gross-up
payment would be made. In January, 2010, the Committee
determined that all new
Change-in-Control
Agreements entered into between the Company and employees from
that time forward would not match
“gross-up”
payments to reimburse such employees for individual excise or
income taxes incurred with respect to benefits triggered by a
Change-in-Control
of the Company.
The agreements provide for the executives to receive 130% of the
COBRA continuation premiums due for the two-year period
following termination. In the event of a
Change-in-Control,
all equity awards which have been granted to each of the Named
Executive Officers (including the CEO) under the Company’s
Long-Term Incentive Plan will immediately vest.
Pursuant to a letter agreement, dated December 13, 2007
between the Company and Mr. Staton, in the event his
employment is involuntarily terminated by the Company without
cause prior to January 31, 2011, he would receive the
greater of (1) any benefits to which he would be entitled
under the NiSource Executive Severance Policy or (2) a
severance payment equal to his base salary for the balance of
months remaining in the period of time between February 2008 and
January 2011, a lump sum payment equal to 130% of the COBRA
continuation coverage premiums due for the severance period, and
a pro-rated incentive payment for the year in which the
termination occurs.
Pursuant to a letter agreement, dated May 14, 2008 between
the Company and Mr. Smith, if the Company terminates his
employment other than for cause or if he terminates his
employment for good reason, he is entitled to receive the
following severance benefits: (1) a lump sum payment equal
to his annual base salary; (2) a lump sum payment equal to
his prorated target incentive for the year in which termination
occurs; (3) a lump sum payment equal to 130% of COBRA
continuation coverage premiums for one year; (4) a payment
in the amount of the value of any contingent stock he was
granted in 2008 that had not vested as of the date of his
termination; (5) any unpaid bonus amount provided for in
his agreement (pursuant to his employment agreement,
Mr. Smith, as compensation for the loss of a portion of his
long term incentive award from his prior employer, is entitled
to receive payments of $135,000 on December 31, 2008,
December 31, 2009, and December 31, 2010); and
(6) reasonable outplacement services.
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Table of Contents
Potential Payments Upon Termination of
Employment. The table below represents amounts
payable for the events described, assuming that such events
occurred on December 31, 2010.
|
Pro Rata |
Long-Term |
Excise |
|||||||||||||||||||||||||||||||||||||||||||
|
Target |
Incentive |
Tax & |
|||||||||||||||||||||||||||||||||||||||||||
|
Bonus |
Equity |
Plan |
Retirement |
Welfare |
Tax |
Total |
|||||||||||||||||||||||||||||||||||||||
|
Severance |
Payment |
Grants |
Parachute |
Benefit |
Benefits |
Outplacement |
Gross Up |
Payment |
|||||||||||||||||||||||||||||||||||||
| ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | |||||||||||||||||||||||||||||||||||||
|
Robert C. Skaggs, Jr.
|
|||||||||||||||||||||||||||||||||||||||||||||
|
Voluntary Termination
|
— | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
|
Retirement(1)
|
— | — | 1,871,878 | — | — | — | — | — | 1,871,878 | ||||||||||||||||||||||||||||||||||||
|
Disability(1)
|
— | — | 1,871,878 | — | — | — | — | — | 1,871,878 | ||||||||||||||||||||||||||||||||||||
|
Death(2)
|
— | — | 2,510,744 | — | — | — | — | — | 2,510,744 | ||||||||||||||||||||||||||||||||||||
|
Involuntary Termination(3)
|
900,000 | — | — | — | — | 19,065 | 25,000 | — | 944,065 | ||||||||||||||||||||||||||||||||||||
|
Change-in-Control(4)
|
4,860,000 | 720,000 | 6,878,055 | 3,646,459 | — | 57,194 | 25,000 | 3,866,967 | 20,053,675 | ||||||||||||||||||||||||||||||||||||
|
Stephen P. Smith
|
|||||||||||||||||||||||||||||||||||||||||||||
|
Voluntary Termination
|
— | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
|
Retirement
|
— | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
|
Disability(1)
|
— | — | 234,804 | — | — | — | — | — | 234,804 | ||||||||||||||||||||||||||||||||||||
|
Death(2)
|
464,798 | 464,798 | |||||||||||||||||||||||||||||||||||||||||||
|
Involuntary Termination
|
550,000 | 357,500 | — | — | — | 19,494 | 25,000 | — | 951,994 | ||||||||||||||||||||||||||||||||||||
|
Change-in-Control(4)
|
1,815,000 | 357,500 | 1,329,623 | 804,970 | — | 38,988 | 25,000 | 1,221,134 | 5,592,215 | ||||||||||||||||||||||||||||||||||||
|
Christopher A. Helms
|
|||||||||||||||||||||||||||||||||||||||||||||
|
Voluntary Termination
|
— | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
|
Retirement(1)
|
— | — | 498,593 | — | — | — | — | — | 498,593 | ||||||||||||||||||||||||||||||||||||
|
Disability(1)
|
— | — | 498,593 | — | — | — | — | — | 498,593 | ||||||||||||||||||||||||||||||||||||
|
Death(2)
|
— | — | 728,587 | — | — | — | — | — | 728,587 | ||||||||||||||||||||||||||||||||||||
|
Involuntary Termination(3)
|
550,000 | — | — | — | — | 19,446 | 25,000 | — | 594,446 | ||||||||||||||||||||||||||||||||||||
|
Change-in-Control(4)
|
1,815,000 | 357,500 | 1,746,671 | 1,291,899 | — | 38,892 | 25,000 | 1,118,779 | 6,393,741 | ||||||||||||||||||||||||||||||||||||
|
Jimmy D. Staton
|
|||||||||||||||||||||||||||||||||||||||||||||
|
Voluntary Termination
|
— | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
|
Retirement
|
— | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
|
Disability(1)
|
— | — | 422,387 | — | — | — | — | — | 422,387 | ||||||||||||||||||||||||||||||||||||
|
Death(2)
|
— | — | 652,381 | — | — | — | — | — | 652,381 | ||||||||||||||||||||||||||||||||||||
|
Involuntary Termination(3)
|
550,000 | 357,500 | — | — | — | 19,128 | — | — | 926,628 | ||||||||||||||||||||||||||||||||||||
|
Change-in-Control(4)
|
1,815,000 | 357,500 | 1,522,721 | 1,191,148 | 40,865 | 38,256 | 25,000 | 1,405,456 | 6,395,946 | ||||||||||||||||||||||||||||||||||||
|
Carrie J. Hightman
|
|||||||||||||||||||||||||||||||||||||||||||||
|
Voluntary Termination
|
— | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
|
Retirement
|
— | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
|
Disability(1)
|
— | — | 394,371 | — | — | — | — | — | 394,371 | ||||||||||||||||||||||||||||||||||||
|
Death(2)
|
— | — | 566,871 | — | — | — | — | — | 566,871 | ||||||||||||||||||||||||||||||||||||
|
Involuntary Termination(3)
|
450,000 | — | — | — | — | 19,446 | 25,000 | — | 494,446 | ||||||||||||||||||||||||||||||||||||
|
Change-in-Control(4)
|
1,440,000 | 270,000 | 1,385,426 | 989,910 | — | 38,892 | 25,000 | 1,008,864 | 5,158,092 | ||||||||||||||||||||||||||||||||||||
| (1) | Pursuant to the contingent stock and restricted stock and restricted stock unit awards discussed above under “Compensation Disclosure and Analysis — Long-Term Incentive Plan,” certain restrictions would have lapsed in the event of retirement or disability. For Mr. Skaggs, restrictions would have lapsed as to 106,236 units in the event of his retirement or disability. For Mr. Smith, restrictions would have lapsed as to 13,326 units in the event |
38
Table of Contents
| of his disability. For Mr. Helms, restrictions would have lapsed as to 28,297 units in the event of his retirement or disability. For Mr. Staton, restrictions would have lapsed as to 23,972 units in the event of his disability. For Ms. Hightman, restrictions would have lapsed as to 22,382 units in the event of her disability. The value of the equity grants was determined by multiplying the closing price of the Company’s common stock on the NYSE on December 31, 2010 ($17.62) by the number of units for which restrictions would have been deemed to lapse upon the retirement or disability of the executive. |
In addition to the amounts discussed above, Mr. Skaggs will
receive upon any termination of employment cash in settlement of
fully vested phantom stock units that he received, following the
acquisition by the Company of Columbia Energy Group, as part of
agreements entered into as of February 1, 2001 whereby his
rights under a Columbia Energy Group
Change-in-Control
Agreement were terminated, he accepted employment with the
Company, and he agreed to noncompetition and nonsolicitation
provisions. In the event of termination of employment on
December 31, 2010, Mr. Skaggs would have received the
following payment in respect of his phantom stock units,
Mr. Skaggs — $2,977,327.
| (2) | Pursuant to the contingent stock and restricted stock and restricted stock unit awards discussed above under “Compensation Disclosure and Analysis — Long-Term Incentive Plan,” certain restrictions would have lapsed in the event of death. For Mr. Skaggs, restrictions would have lapsed as to 142,494 units; for Mr. Smith, restrictions would have lapsed as to 26,379; for Mr. Helms, restrictions would have lapsed as to 41,350 units; for Mr. Staton, restrictions would have lapsed as to 37,025; and for Ms. Hightman restrictions would have lapsed as to 32,172 units. The value was determined by multiplying the closing price of the Company’s common stock on the NYSE on December 31, 2010 ($17.62) by the number of units for which restrictions would have been deemed to lapse upon the death of the executive. | |
| (3) | Amounts shown reflect payments to be made upon termination of the Named Executive Officer under the Company’s Executive Severance Policy described above, or pursuant to the terms of the Named Executive Officer’s respective employment agreement. | |
| (4) | Amounts shown reflect payments to be made upon a Change-in-Control of the Company under the Change-in-Control and Termination Agreements described above. |
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
During 2010, Mr. Kittrell was employed as Executive Vice
President and Chief Financial Officer of Dresser, Inc., a
worldwide leader in providing highly-engineered products for the
global energy industry. In February, 2011, General Electric
purchased Dresser, Inc. and Mr. Kittrell retired from
Dresser. The Company and its affiliates use certain of the
products manufactured by Dresser, Inc. in its regular business
operations and purchase such products from Dresser, Inc. in the
ordinary course of business on standard terms and conditions. In
2010, the Company’s total purchases of products from
Dresser, Inc. were approximately $4.7 million, which
represented less than 1% of the consolidated gross revenues of
Dresser, Inc.
POLICIES
AND PROCEDURES WITH RESPECT
TO TRANSACTIONS WITH RELATED PERSONS
TO TRANSACTIONS WITH RELATED PERSONS
The Company’s policies and procedures with respect to the
review, approval and ratification of any transactions with
related persons are set forth in the Audit Committee Charter and
the Code of Business Conduct.
Under its Charter, the Audit Committee is charged with the
review of reports and disclosures of insider and affiliated
party transactions. Under the Code of Business Conduct, the
following situations must be reviewed if they involve a direct
or indirect interest of any director, executive officer or an
employee (including immediate family members):
| • | owning more than a 10% equity interest or a general partner interest in any entity that transacts business with the Company (including lending or leasing transactions, but excluding the receipt of utility service from the Company at tariff rates), if the total amount involved in such transactions may exceed $120,000; | |
| • | selling anything to the Company or buying anything from the Company (including lending or leasing transactions, but excluding the receipt of utility service from the Company at tariff rates), if the total amount involved in such transactions may exceed $120,000; |
39
Table of Contents
| • | consulting for or being employed by a competitor; and | |
| • | being in the position of supervising, reviewing or having any influence on the job evaluation, pay or benefit of any immediate family member. |
Related party transactions requiring review under the Code of
Business Conduct are annually reviewed and ratified at the Audit
Committee’s March meeting. Directors, Section 16
officers and senior executive officers are expected to raise any
potential transactions involving a conflict of interest that
relates to them with the Audit Committee so that they may be
reviewed in a prompt manner. There are no related party
transactions disclosed above under the heading “Certain
Relationships and Related Transactions” that have not been
reviewed and ratified in accordance with these procedures.
PROPOSAL II —
RATIFICATION OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTANTS
The Audit Committee of the Board appointed Deloitte &
Touche LLP, 180 East Broad Street, Columbus, OH 43215, as
independent auditors to examine the Company’s accounts for
the fiscal year ending December 31, 2011, and the Board of
Directors approved the appointment. A representative of
Deloitte & Touche LLP will be present at the meeting,
will be given an opportunity to make a statement if he or she so
desires and will be available to respond to appropriate
questions.
The Board of Directors and its Audit Committee consider
Deloitte & Touche LLP well qualified to serve as the
Company’s independent registered public accountants. The
Audit Committee recommends ratification of such appointment by
the stockholders.
Although action by stockholders for this matter is not required,
the Board of Directors and the Audit Committee believe that it
is appropriate to seek stockholder ratification of this
appointment in order to provide stockholders a means of
communicating the stockholders’ level of satisfaction with
the performance of the independent registered public accountants
and their level of independence from management. If the proposal
is not approved and the appointment of Deloitte &
Touche LLP is not ratified by the stockholders, the Audit
Committee will take this into consideration and will reconsider
the appointment.
Vote
Required
The affirmative vote of a majority of the shares present in
person or represented by proxy at the meeting and entitled to
vote is needed to ratify the appointment of Deloitte &
Touche LLP. Proxies submitted without direction pursuant to this
solicitation will be voted “FOR” the ratification of
the appointment of Deloitte & Touche LLP. Abstentions
will have the same effect as a vote against the proposal. We
believe brokers will have discretionary authority to vote on
this proposal, so there would be no broker non-votes.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE
RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE
LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC
ACCOUNTANTS FOR FISCAL YEAR 2011.
PROPOSAL III — ADVISORY
VOTE ON EXECUTIVE COMPENSATION
Pursuant to federal securities laws, the Company is required to
submit to stockholders a proposal for a non-binding advisory
vote to approve the compensation of the Company’s named
executive officers.
The Board of Directors encourages stockholders to carefully
review the Executive Compensation section of this Proxy
Statement, including the Compensation Discussion and Analysis,
for a thorough discussion of the Company’s executive
compensation program and philosophy. The compensation program is
designed to be significantly performance-based and to attract
and retain highly qualified individuals who enhance long-term
stockholder value by contributing to the Company’s ongoing
success. All facets of the compensation program are regularly
monitored by the Officer Nomination and Compensation Committee
to ensure that the program is well-tailored to fulfill the
Company’s compensation philosophy and objectives.
In considering this proposal, stockholders may wish to consider
the following factors that demonstrate the Company’s
commitment to maintaining a robust compensation program:
| • | Compensation is closely tied to both corporate and individual performance; |
40
Table of Contents
| • | Annual and long-term incentive compensation opportunities are contingent on the Company achieving pre-established goals; | |
| • | Total compensation packages are competitive with those offered by members of the Company’s Comparative Group; | |
| • | Perquisites are appropriately limited in number and modest in dollar value; and | |
| • | The Company’s compensation program does not create incentives for behaviors that create material risk to the Company. |
As discussed in the Executive Compensation section of this Proxy
Statement, the Officer Nomination and Compensation Committee and
the Board of Directors believe that the Company’s executive
compensation program fulfills the objectives of its compensation
philosophy in a prudent and effective manner.
Accordingly, the following resolution is submitted for an
advisory stockholder vote at the Annual Meeting:
RESOLVED, that the compensation paid to the Company’s Named
Executive Officers, as disclosed pursuant to Item 402 of
Regulation S-K,
including the Compensation Discussion and Analysis, compensation
tables and narrative discussion, is hereby approved on an
advisory basis.
As this is an advisory vote, the result will not be binding on
the Company, the Board of Directors or the Officer Nomination
and Compensation Committee, although the Committee and the Board
will carefully consider the outcome of the vote when evaluating
the Company’s compensation program and philosophy.
Vote
Required
The affirmative vote of a majority of the shares present in
person or represented by proxy at the meeting and entitled to
vote is needed to approve the advisory vote on the compensation
of the Named Executive Officers. Proxies submitted without
direction pursuant to this solicitation will be voted
“FOR” the advisory approval of the compensation of the
Company’s Named Executive Officers. Abstentions will have
the same effect as a vote against the proposal. We believe
brokers will not have discretionary authority to vote on this
proposal, so there could be broker non-votes.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE
ADVISORY APPROVAL OF THE COMPENSATION OF THE NAMED OFFICERS.
PROPOSAL IV —
ADVISORY VOTE ON FREQUENCY OF THE ADVISORY VOTE ON
EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION
Federal securities laws also require the Company to submit to
stockholders an advisory resolution as to whether the
stockholder advisory vote on executive compensation should occur
annually, every two years or every three years.
The Board of Directors values stockholders’ opinions and
believes it would benefit from direct, timely feedback on the
Company’s executive compensation program. Accordingly, the
Board of Directors recommends that stockholders vote
“annually” on the frequency of the stockholder
advisory vote on executive compensation.
The following resolution is submitted for an advisory
stockholder vote at the Annual Meeting:
RESOLVED, that the stockholders advise the Company to hold a
stockholder advisory vote on the approval of the compensation of
the Company’s named executive officers:
| • | annually, | |
| • | every two years or | |
| • | every three years. |
As this is an advisory vote, the result will not be binding on
the Company, the Board of Directors or the Officer Nomination
and Compensation Committee. However, the Board will carefully
consider the outcome of the vote when determining the frequency
of the stockholder advisory vote to approve executive officer
compensation.
41
Table of Contents
Vote
Required
The option that receives the greatest number of votes cast by
the stockholders will be considered the option approved by the
stockholders. Proxies submitted without direction pursuant to
this solicitation will be voted for the option of
“ANNUALLY”. Abstentions will have no effect on the
vote. We believe brokers will not have discretionary authority
to vote on this proposal, so there could be broker non-votes.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
“ANNUALLY” AS THE FREQUENCY OF THE STOCKHOLDER
ADVISORY VOTE ON EXECUTIVE COMPENSATION.
PROPOSAL V —
STOCKHOLDER PROPOSAL REGARDING STOCKHOLDER ACTION BY
WRITTEN CONSENT
WRITTEN CONSENT
Mr. Ray T. Chevedden of 5965 S. Citrus Avenue,
Los Angeles, California 90043, who beneficially owns at least
200 shares of common stock, has informed the Company that
he plans to present the following proposal at the meeting.
Shareholder
Action by Written Consent
RESOLVED, Shareholders hereby request that our Board of
Directors undertake such steps as may be necessary to permit
written consent by shareholders entitled to cast the minimum
number of votes that would be necessary to authorize the action
at a meeting at which all shareholders entitled to vote thereon
were present and voting (to the fullest extent permitted by law).
This proposal topic also won majority shareholder support at 13
major companies in 2010. This included 67%-support at both
Allstate (ALL) and Sprint (S). Hundreds of major companies
enable shareholder action by written consent.
Taking action by written consent in lieu of a meeting is a means
shareholders can use to raise important matters outside the
normal annual meeting cycle. A study by Harvard professor Paul
Gompers supports the concept that shareholder dis-empowering
governance features, including restrictions on shareholder
ability to act by written consent, are significantly related to
reduced shareholder value.
The merit of this Shareholder Action by Written Consent proposal
should also be considered in the context of the need for
additional improvement in our company’s 2010 reported
corporate governance status:
The Corporate Library www.thecorporatelibrary.com, an
independent investment research firm, was concerned that two of
our directors were both over 76 years and had tenures of
more than 24 years. Thus [sic] included Ian Rolland,
Chairman of our Board and Chair of our Nomination Committee, and
Steven Beering Chair of our Executive Pay Committee. This may
pose succession planning concerns. Additionally, Director
Carolyn Woo was flagged for her directorship at Circuit City as
it slid into bankruptcy. Ms. Woo was even allowed on each
of our most important board committees.
Six of our directors served on no other major boards. This could
indicate a significant lack of current transferable director
experience. Marty Kittrell attracted our highest negative votes.
90% of our directors were on our Nomination committee so we
really did not have a Nomination Committee.
We did not have proxy access or cumulative voting.
Please encourage our board to respond positively to this
proposal to enable shareholder action by written consent in
order to initiate improved corporate governance and financial
performance: Shareholder Action by Written
Consent — Yes on Proposal V.
Board of
Directors’ Statement in Opposition
Your
Board of Directors unanimously recommends a vote AGAINST this
proposal.
The Board of Directors and its Corporate Governance Committee
have considered this proposal and concluded that it is
unnecessary and not in the best interests of our stockholders.
42
Table of Contents
Requiring
that stockholder action be taken at a meeting effectively
safeguards the broader interests of all stockholders.
The Company’s Certificate of Incorporation provides that
stockholder action must be effected at a duly called annual or
special meeting and may not be effected by written consent. The
communications and processes associated with a stockholder
meeting protect the interests of all stockholders by providing
every stockholder with an opportunity to discuss concerns with
other stockholders and with the Board of Directors and
management and allowing all stockholders to vote on any
proposals. This proposal, however, would enable a group of
stockholders controlling a mere majority of the vote to take
action — even significant action, such as electing new
directors or agreeing to sell the company — without
any input or even a vote from the other stockholders. This
action could become effective without your knowledge, much less
your consent, and without providing you an opportunity to ask
questions, be heard or raise any objection.
The Board believes that it is not in the best interests of the
Company and its stockholders to allow a group of majority
stockholders to dictate decisions of the Company without a
meeting, as it could effectively disenfranchise minority
stockholders and not allow for a full discussion of all views.
Multiple
stockholder actions by written consent could lead to substantial
confusion and disruption.
Permitting stockholder action by written consent could also
create substantial confusion and disruption in a publicly-held
corporation with over 275 million outstanding shares.
Multiple groups of stockholders would be able to solicit written
consents at any time and as frequently as they choose on a range
of issues, some of which may be duplicative or conflicting. This
could lead to a chaotic state of corporate affairs, rather than
the orderly stockholder meeting process currently in place.
Our
corporate governance policies ensure that the Board is held
accountable and provide stockholders with access to the Board
and ample opportunity to submit items for approval at annual
meetings.
The Board believes that the Company’s highly effective
corporate governance policies obviate any need for a group of
stockholders to act by written consent.
Over the last several years, the Board has acted to enhance its
accountability to the Company’s stockholders through
several significant actions, including:
| • | Eliminating the classified structure of the Board to allow for annual election of all directors. | |
| • | Adopting a voting standard in uncontested director elections requiring each nominee to receive more votes in favor of election than against, and a resignation requirement for directors who fail to receive the required vote. | |
| • | Amending our Certificate of Incorporation and By-Laws to eliminate all supermajority stockholder voting requirements. | |
| • | Amending our Corporate Governance Guidelines to require stockholder approval for any future “poison pill” prior to or within twelve months after adoption of the poison pill. | |
| • | Amending our bylaws to allow holders of 25% of the outstanding shares of common stock to call a special meeting. |
In addition, the Company’s stockholders currently have the
right to:
| • | Communicate directly with any director, any Board committee or the full Board. | |
| • | Propose director nominees to the Corporate Governance Committee. | |
| • | Submit proposals for presentation at an annual meeting and for inclusion in the Company’s proxy statement for that annual meeting, subject to certain conditions and the rules and regulations of the Securities and Exchange Commission. |
The Board believes that the Company’s existing corporate
governance policies provide the appropriate balance between
ensuring Board accountability to stockholders and enabling the
Board to effectively oversee the Company’s business and
affairs for the long-term benefit of all stockholders. In
addition, these policies provide stockholders with meaningful
access to Board members and ample opportunities to bring matters
before the stockholders on an annual basis.
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For the reasons set forth above we recommend that you vote
against this proposal.
Vote
Required
If this proposal is properly presented at the meeting, approval
requires the affirmative vote of a majority of the shares
present at the meeting, in person or represented by proxy, and
entitled to vote. Proxies submitted without direction pursuant
to this solicitation will be voted AGAINST the stockholder
proposal. Abstentions will have the same effect as a vote
against the proposal. We believe brokers will not have
discretionary authority to vote on this proposal, so there could
be broker non-votes.
The Board believes that this proposal is not in your best
interests. THE BOARD RECOMMENDS THAT YOU VOTE
“AGAINST” THIS PROPOSAL.
AUDIT
COMMITTEE REPORT
The Company’s Audit Committee consists of
Messrs. Foster, Jesanis, Kittrell, Rolland and Thompson and
Drs. Beering and Woo. Each of the members of the Audit
Committee is independent as defined under the applicable NYSE
rules and meets the additional independence standard set forth
by the Board of Directors. Each of the members of the Audit
Committee also is “financially literate” for purposes
of applicable NYSE rules. The Board of Directors, after
substantial deliberation and a careful review of the Securities
and Exchange Commission rules, has designated Dennis E. Foster,
the Chairman of the Audit Committee as the “audit committee
financial expert.”
The Audit Committee has reviewed and discussed the audited
consolidated financial statements with management and has
discussed with Deloitte & Touche LLP, the
Company’s independent registered public accountants, the
matters required to be discussed by PCAOB Standard,
“Communications with Audit Committees” (AU 380, as
amended; SEC
regulation S-X
Rule 2-07;
Auditing Standard No. 5 and the NYSE Corporate Governance
Rules). The Audit Committee also has received the written
disclosures and the letter from Deloitte & Touche LLP
required by Independence Standards Board Standard No. 1,
and PCAOB Ethics and Independence Rule 3526,
“Communication with Audit Committees concerning
independence,” and has discussed with Deloitte &
Touche LLP its independence. The Audit Committee has considered
whether Deloitte & Touche LLP’s provision of
non-audit services to the Company is compatible with maintaining
Deloitte & Touche LLP’s independence.
In reliance on the review and discussions referred to above, the
Audit Committee recommended to the Board of Directors that the
audited consolidated financial statements be included in the
Company’s Annual Report on
Form 10-K
for the year ended December 31, 2010.
Upon recommendation of the Audit Committee, the Company has
appointed Deloitte & Touche LLP to serve as the
Company’s independent registered public accounting firm for
the fiscal year ended December 31, 2011.
Audit Committee
Dennis E. Foster, Chairman
Steven C. Beering
Michael E. Jesanis
Marty R. Kittrell
Ian M. Rolland
Richard L. Thompson
Carolyn Y. Woo
Steven C. Beering
Michael E. Jesanis
Marty R. Kittrell
Ian M. Rolland
Richard L. Thompson
Carolyn Y. Woo
February 25, 2011
INDEPENDENT
AUDITOR FEES
The following table represents the aggregate fees for
professional audit services rendered by Deloitte &
Touche LLP, the Company’s independent auditors, for the
audit of the Company’s annual financial statements for
44
Table of Contents
the years ended December 31, 2009 and 2010, and fees billed
for other services rendered by Deloitte & Touche LLP
during those periods.
| 2009 | 2010 | |||||||
|
Audit Fees(1)
|
$ | 5,978,440 | $ | 5,214,000 | ||||
|
Audit-Related Fees(2)
|
392,265 | 981,794 | ||||||
|
Tax Fees(3)
|
80,583 | 475,897 | ||||||
|
All Other Fees(4)
|
0 | 30,576 | ||||||
| (1) | Audit Fees — These are fees for professional services performed by Deloitte & Touche LLP for the audit of the Company’s annual financial statements and review of financial statements included in the Company’s 10-Q filings, and services that are normally provided in connection with statutory and regulatory filings or engagements. | |
| (2) | Audit-Related Fees — These are fees for the assurance and related services performed by Deloitte & Touche LLP that are reasonably related to the performance of the audit or review of the Company’s financial statements. | |
| (3) | Tax Fees — These are fees for professional services performed by Deloitte & Touche LLP with respect to tax compliance, tax advice and tax planning. | |
| (4) | All Other Fees — These are fees for permissible work performed by Deloitte that does not meet the above categories. |
Pre-Approval Policies and Procedures. During
fiscal year 2010, the Audit Committee approved all audit, audit
related and non-audit services provided to the Company by
Deloitte & Touche LLP prior to management engaging the
auditor for those purposes. The Audit Committee’s current
practice is to consider for pre-approval annually all audit,
audit related and non-audit services proposed to be provided by
our independent auditors for the fiscal year. Additional fees
for other proposed audit-related or non-audit services which
have been properly presented to the Pre-Approval Subcommittee of
the Audit Committee (consisting of Dennis E. Foster) by the Vice
President, Controller and Chief Accounting Officer of the
Company (not within the scope of the approved audit engagement)
may be considered and, if appropriate, approved by the
Pre-Approval Subcommittee of the Audit Committee, subject to
later ratification by the full Audit Committee. In no event,
however, will (i) any non-audit related service be
presented or approved that would result in the independent
auditor no longer being considered independent under the
applicable Securities and Exchange Commission rules or
(ii) any service be presented or approved by the
Pre-Approval Subcommittee the fees for which are estimated to
exceed $100,000. In making its recommendation to appoint
Deloitte & Touche LLP as the Company’s
independent auditor, the Audit Committee has considered whether
the provision of the non-audit services rendered by
Deloitte & Touche LLP is compatible with maintaining
that firm’s independence.
45
Table of Contents
EQUITY
COMPENSATION PLAN INFORMATION
The following table sets forth certain information for all
equity compensation plans and individual compensation
arrangements (whether with employees or non-employees, such as
directors), in effect as of December 31, 2010.
|
Number of |
||||||||||||
|
Securities |
||||||||||||
|
Remaining Available |
||||||||||||
|
for |
||||||||||||
|
Number of |
Future Issuance |
|||||||||||
|
Securities to |
Under |
|||||||||||
|
be Issued Upon |
Weighted-Average |
Equity |
||||||||||
|
Exercise |
Exercise Price of |
Compensation |
||||||||||
|
of Outstanding |
Outstanding |
Plans (Excluding |
||||||||||
|
Options, |
Options, |
Securities |
||||||||||
|
Warrants and |
Warrants and |
Reflected in |
||||||||||
|
Rights |
Rights |
Column |
||||||||||
|
Plan Category
|
(a) | (2)(b) | (a)(c) | |||||||||
|
Equity compensation plans approved by security holders(1)
|
7,052,562 | 22.51 | 8,241,655 | |||||||||
|
Equity compensation plans not approved by security holders
|
0 | 0 | 0 | |||||||||
|
Total
|
7,052,562 | 22.51 | 8,241,655 | |||||||||
| (1) | Stockholder Approved Plans. This Plan category includes the following plans: the 1994 Long Term Incentive Plan, as approved by the stockholders on May 10, 2005 (no shares remain available for future issuance under the plan), the Non-employee Director Stock Incentive Plan, as approved by the stockholders on May 20, 2003 (no shares remain available for future issuance under the plan), the 2010 Omnibus Incentive Plan as approved by the stockholders on May 11, 2010 (8,076,721 shares remain available for issuance under the plan), and the NiSource Inc. Employee Stock Purchase Plan, last approved by the stockholders on May 10, 2005 (164,934 shares remain available for purchase under the plan). | |
| (2) | In calculating the weighted-average exercise price of outstanding options, warrants and rights shown in column (b), restricted stock units and contingent stock which can convert into shares of common stock upon maturity have been excluded. Restricted stock units and contingent stock are payable at no cost to the grantee on a one-for-one basis. |
STOCKHOLDER
PROPOSALS AND NOMINATIONS FOR 2012 ANNUAL MEETING
Any holder of common stock who wishes to bring any business
before the 2012 Annual Meeting must file a notice of the
holder’s intent to do so no earlier than January 9,
2012, and no later than February 7, 2012. The notice must
include a brief description of the business desired to be
brought before the meeting, the reasons for conducting such
business at the meeting and any material interest in such
business of such stockholder and the beneficial owner, if any,
on whose behalf the proposal is made. Any holder of common stock
who wishes to submit a proposal to be included in the
Company’s proxy materials in connection with the 2012
annual meeting must submit the proposal to the Corporate
Secretary of the Company no earlier than November 3, 2011
and no later than December 5, 2011. The holder submitting
the proposal must have owned common stock having a market value
of at least $2,000 for at least one year prior to submitting the
proposal and represent to the Company that the holder intends to
hold those shares of common stock through the date of the 2012
Annual Meeting.
Any holder of common stock who wishes to nominate a director at
the 2012 Annual Meeting must file a notice of the nomination no
earlier than January 9, 2012, and no later than
February 7, 2012. The Company’s by-laws require that a
notice to nominate an individual as a director must include the
name of each nominee proposed, the number and class of shares of
each class of stock of the Company beneficially owned by the
nominee, such other information concerning the nominee as would
be required under the rules of the SEC in a proxy statement
soliciting proxies for the election of the nominee, the
nominee’s signed consent to serve as a director of the
Company if elected, the nominating stockholder’s name and
address, and the number and class of shares of each class of
stock beneficially owned by the nominating stockholder.
46
Table of Contents
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely upon its review of the Forms 3, 4 and 5
furnished to the Company pursuant to Section 16(a) of the
Securities Exchange Act of 1934, the Company believes that all
of its directors, officers and beneficial owners of more than
10% of its common stock filed all such reports on a timely basis
during 2010.
ANNUAL
REPORT AND FINANCIAL STATEMENTS
Attention is directed to the financial statements contained in
the Company’s Annual Report for the year ended
December 31, 2010. A copy of the Annual Report has been
sent, or is concurrently being sent, to all stockholders of
record as of March 15, 2011. These statements and other
reports filed with the SEC are available through the Company
website at www.nisource.com/financials.cfm.
AVAILABILITY
OF
FORM 10-K
A copy of the Company’s Annual Report on
Form 10-K
for its fiscal year ended December 31, 2010, including the
financial statements and the financial statement schedules, but
without exhibits, is contained within the Company’s Annual
Report which has been sent, or is concurrently being sent, to
you and will be provided without charge to any stockholder or
beneficial owner of the Company’s shares upon written
request to Gary W. Pottorff, Corporate Secretary, NiSource Inc.,
801 E. 86th Avenue, Merrillville, Indiana 46410
and is also available at the Company’s website at
www.nisource.com/annuals.cfm.
OTHER
BUSINESS
The Board of Directors does not intend to bring any other
matters before the Annual Meeting and does not know of any
matters that will be brought before the meeting by others. If
any matters properly come before the meeting it is the intention
of the persons named in the enclosed form of proxy to vote the
proxy in accordance with their judgment on such matters.
Please vote your shares by telephone, through the Internet or by
promptly marking, dating, signing and returning the enclosed
proxy card.
BY ORDER OF THE BOARD OF DIRECTORS
Gary W. Pottorff
Corporate Secretary
Corporate Secretary
Dated: April 1, 2011
47
Table of Contents
YOUR VOTE IS IMPORTANT. PLEASE VOTE TODAY.
We encourage you to take advantage of Internet or telephone voting.
Both are available 24 hours a day, 7 days a week.
Both are available 24 hours a day, 7 days a week.
Internet and telephone voting is available through 11:59 PM Eastern Time the day prior to the stockholder meeting date.
INTERNET
http://www.proxyvoting.com/ni
Use the Internet to vote your proxy. Have
your proxy card in hand when you access the
web site.
OR
TELEPHONE
1-866-540-5760
1-866-540-5760
Use any touch-tone telephone to vote your
proxy. Have your proxy card in hand when you
call.
If you vote your proxy by Internet or by
telephone, you do NOT need to mail back your
proxy card.
To vote by mail, mark, sign and date your
proxy card and return it in the enclosed
postage-paid envelope.
Your Internet or telephone vote authorizes
the named proxies to vote your shares in the
same manner as if you marked, signed and
returned your proxy card.
94619
6 FOLD AND DETACH HERE 6
The Board of Directors recommends a vote “FOR” Proposals I, II, III, “ANNUALLY” for Proposal IV,
and “AGAINST” Proposal V.
Proposal I – To elect ten directors to hold office until the next annual stockholders’ meeting and until their respective successors have been elected or appointed. |
Please mark your votes as indicated in this example |
x |
| FOR | AGAINST | ABSTAIN | FOR | AGAINST | ABSTAIN | FOR | AGAINST | ABSTAIN | ||||||||||||||||||||||
| 1.1 | Richard A. Abdoo |
o | o | o | 1.6 | Deborah S. Parker |
o | o | o | Proposal II – To ratify the appointment of Deloitte & Touche LLP
as the Company’s independent registered public accountants. |
o | o | o | |||||||||||||||||
| 1.2 | Steven C. Beering |
o | o | o | 1.7 | Ian M. Rolland |
o | o | o | Proposal III – To consider an advisory vote on executive
compensation. |
o | o | o | |||||||||||||||||
1.3
|
Michael E. Jesanis |
o | o | o | 1.8 | Robert C. Skaggs, Jr. |
o | o | o | Annually | Every 2 Years |
Every 3 Years |
Abstain | |||||||||||||||||
1.4
|
Marty R. Kittrell |
o | o | o | 1.9 | Richard L. Thompson |
o | o | o | Proposal IV – To consider an advisory vote on the
frequency of the advisory vote on executive
compensation.
|
o | o | o | o | ||||||||||||||||
1.5
|
W. Lee Nutter |
o | o | o | 1.10 | Carolyn Y. Woo | o | o | o | FOR | AGAINST | ABSTAIN | ||||||||||||||||||
Proposal V – To consider a stockholder proposal regarding
stockholder action by written consent. |
o | o | o | |||||||||||||||||||||||||||
|
Attending the Meeting |
o | YES | ||||||||||||||||||||||||||||
| Mark Here for Address Change or Comments SEE REVERSE |
o | |||||||||||||||||||||||||||||
NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such.
Signature
|
Signature
|
Date |
||||||||
Table of Contents
You can now access your NiSource Inc. account online.
Access your NiSource Inc. account online via Investor ServiceDirect® (ISD).
BNY Mellon Shareowner Services, the transfer agent for NiSource Inc., now makes it easy and convenient to get current information on your shareholder account.
| • | View account status | • | View payment history for dividends | |||||
| • | View certificate history | • | Make address changes | |||||
| • | View book-entry information | • | Obtain a duplicate 1099 tax form |
Visit
us on the web at
http://www.bnymellon.com/shareowner/equityaccess
For Technical Assistance Call 1-877-978-7778 between 9am-7pm
Monday-Friday Eastern Time
Investor ServiceDirect®
Available 24 hours per day, 7 days per week
TOLL FREE NUMBER: 1-800-370-1163
Choose MLinkSM for fast, easy and secure 24/7 online access to your
future proxy materials, investment plan statements, tax documents and more.
Simply log on to Investor ServiceDirect® at
www.bnymellon.com/shareowner/equityaccess where step-by-step instructions will
prompt you through enrollment.
Important notice regarding the Internet availability of proxy materials for the Annual
Meeting of Stockholders. The Proxy Statement and the 2010 Annual Report to Stockholders are
available at: http://ir.nisource.com/annuals.cfm
6 FOLD AND DETACH HERE 6
This Proxy is Solicited on Behalf of the Board of Directors of NiSource Inc.
for its Annual Meeting of Stockholders, to be held on May 10, 2011.
for its Annual Meeting of Stockholders, to be held on May 10, 2011.
The undersigned hereby appoints Robert C. Skaggs, Jr. and Stephen P. Smith, or either of them,
the proxies of the undersigned, with all power of substitution, for and in the name of the
undersigned to represent and vote the shares of common stock of the undersigned at the Annual
Meeting of Stockholders of the Company, to be held at The Hilton Rosemont Chicago O’Hare, 5550 N.
River Road, Rosemont, IL 60018, on Tuesday, May 10, 2011, at 10:00 a.m., local time, and at the
adjournment or adjournments thereof.
Unless otherwise marked, this proxy will be voted: “FOR” the nominees listed in Proposal I,
“FOR” ratification of the Independent Registered Public Accountants in Proposal II, “FOR” advisory
approval of the compensation of the company’s named executive officers in Proposal III, for
“ANNUALLY” as the frequency of the advisory vote on executive compensation in Proposal IV and
“AGAINST” the stockholder proposal to permit action by written consent of stockholders in Proposal
V.
The undersigned stockholder hereby acknowledges receipt of the Notice of Annual Meeting of
Stockholders and Proxy Statement relating to the Annual Meeting and hereby revokes any proxy or
proxies previously given. The undersigned stockholder may revoke this proxy at any time before it
is voted by filing with the Corporate Secretary of the Company a written notice of revocation or a
duly executed proxy bearing a later date, by voting by telephone or through the Internet, or by
attending the Annual Meeting and Voting in person.
PLEASE VOTE YOUR SHARES BY TELEPHONE, THROUGH THE INTERNET, OR BY MARKING, SIGNING, DATING AND
MAILING THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
Address Change/Comments
(Mark the corresponding box on the reverse side)
(Mark the corresponding box on the reverse side)
BNY MELLON SHAREOWNER SERVICES
P.O. BOX 3550
SOUTH HACKENSACK, NJ 07606-9250
P.O. BOX 3550
SOUTH HACKENSACK, NJ 07606-9250
| (Continued and to be marked, dated and signed, on the other side) | 94619 |
TABLE OF CONTENTS
Proxy StatementprintWho May VoteprintVoting Your ProxyprintVoting in PersonprintRevoking Your ProxyprintQuorum for the MeetingprintProposal I: Election of DirectorsprintCorporate GovernanceprintDirector IndependenceprintExecutive Sessions of Non-Management DirectorsprintCommunications with the Board and Non-Management DirectorsprintCode of Business ConductprintCorporate Governance GuidelinesprintBoard Leadership Structure and Risk OversightprintMeetings and Committees of the Companys Board of DirectorsprintDirector CompensationprintSecurity Ownership of Certain Beneficial Owners and ManagementprintExecutive CompensationprintCompensation Discussion and AnalysisprintOfficer Nomination and Compensation Committee ReportprintCompensation of Executive OfficersprintCertain Relationships and Related TransactionsprintPolicies and Procedures with Respect to Transactions with Related PersonsprintProposal II: Ratification of Independent Registered Public AccountantsprintProposal III: Advisory Vote on Executive CompensationprintProposal IV: Advisory Vote on Frequency of the Advisory Vote on Executive CompensationprintProposal V: Stockholder Proposal Regarding Stockholder Action by Written ConsentprintAudit Committee ReportprintIndependent Auditor FeesprintEquity Compensation Plan InformationprintStockholder Proposals and Nominations for 2012 Annual MeetingprintSection 16(a) Beneficial Ownership Reporting ComplianceprintAnnual Report and Financial StatementsprintAvailability of Form 10-KprintOther Businessprint