XPLR INFRASTRUCTURE, LP
10-Ks and 10-Qs
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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. )
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant ☒Filed by a Party other than the Registrant ☐
Check the appropriate box:
☐
Preliminary Proxy Statement
☐
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
☒
Definitive Proxy Statement
☐
Definitive Additional Materials
☐
Soliciting Material Pursuant to §240.14a-12
NextEra Energy Partners, LP
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
☒
No fee required.
☐
![[MISSING IMAGE: lg_nexterar-bwlr.jpg]](lg_nexterar-bwlr.jpg)
Fee paid previously with preliminary materials.
☐
Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a6(i)(1) and 0-11
Notice of 202
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Annual Meeting and
Proxy Statement
Annual Meeting and
Proxy Statement
| |
YOUR VOTE IS IMPORTANT
PLEASE SUBMIT YOUR PROXY PROMPTLY | |
NextEra Energy Partners, LP
P.O. Box 14000
700 Universe Boulevard
Juno Beach, Florida 33408-0420
P.O. Box 14000
700 Universe Boulevard
Juno Beach, Florida 33408-0420
Notice of Annual Meeting of Unitholders
April 2 2, 2024
April 2 2, 2024
The 2024 Annual Meeting of Unitholders of NextEra Energy Partners, LP (“NextEra Energy Partners” or the “Company”) will be held on Monday, April 22, 2024, at 1:30 p.m., Eastern time, at NextEra Energy Partners’ principal offices, 700 Universe Boulevard, Juno Beach, Florida to consider and act upon the following matters:
1.
election of the nominees specified in the accompanying proxy statement as directors;
2.
ratification of appointment of Deloitte Touche LLP as NextEra Energy Partners’ independent registered public accounting firm for 2024;
3.
approval, by non-binding advisory vote, of the compensation of NextEra Energy Partners’ named executive officers;
4.
approval of the NextEra Energy Partners, LP 2024 Long Term Incentive Plan; and
5.
such other business as may properly be brought before the annual meeting or any adjournment(s) or postponement(s) of the annual meeting.
The proxy statement more fully describes these matters. NextEra Energy Partners has not received notice of other matters that may properly be presented at the annual meeting.
The record date for unitholders entitled to notice of, and to vote at, the annual meeting and any adjournment(s) or postponement(s) of the annual meeting is February 23, 2024.
Admittance to the annual meeting will be limited to unitholders as of the record date or their duly appointed proxies. For the safety of attendees, all boxes, handbags and briefcases are subject to inspection. Cameras, cell phones, recording devices and other electronic devices are not permitted at the annual meeting.
NextEra Energy Partners is pleased to furnish proxy materials by taking advantage of the Securities and Exchange Commission rule that allows issuers to furnish proxy materials to their unitholders on the internet. NextEra Energy Partners believes this rule allows it to provide you with the information you need while reducing the environmental impact and cost of the annual meeting.
Regardless of whether you expect to attend the annual meeting, please submit your proxy or voting instructions promptly on the internet or by telephone by following the instructions about how to view the proxy materials on your Notice of Internet Availability of Proxy Materials.
By order of the Board of Directors,
W. S
cott
S
eeley
Corporate Secretary
Corporate Secretary
Juno Beach, Florida
March 5, 2024
March 5, 2024
TABLE OF CONTENTS
| | ELECTRONIC DELIVERY OF PROXY MATERIALS | | | | | 1 | | |
| | ABOUT THE ANNUAL MEETING | | | | | 2 | | |
| | BUSINESS OF THE ANNUAL MEETING | | | | | 8 | | |
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| | INFORMATION ABOUT NEXTERA ENERGY PARTNERS AND MANAGEMENT | | | | | 21 | | |
| | | | | | 21 | | | |
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| | CORPORATE GOVERNANCE AND BOARD MATTERS | | | | | 23 | | |
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| | AUDIT-RELATED MATTERS | | | | | 35 | | |
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| | EXECUTIVE COMPENSATION | | | | | 37 | | |
| | | | | | 37 | | | |
| | | | | | 38 | | | |
| | DIRECTOR COMPENSATION | | | | | 39 | | |
| | UNITHOLDER PROPOSALS FOR 2025 ANNUAL MEETING | | | | | 40 | | |
| | NO INCORPORATION BY REFERENCE | | | | | 40 | | |
| | Appendix A: NextEra Energy Partners, LP 2024 Long Term Incentive Plan | | | | | A-1 | | |
NextEra Energy Partners, LP
Annual Meeting of Unitholders
April 2
2, 2024
PROXY STATEMENT
This proxy statement contains information related to the solicitation of proxies by the Board of Directors (the “Board”) of NextEra Energy Partners, LP, a Delaware limited partnership (“NextEra Energy Partners,” the “Company,” “us” or “our”), in connection with the 2024 annual meeting of NextEra Energy Partners’ unitholders to be held on Monday, April 22, 2024, at 1:30 p.m., Eastern time, at NextEra Energy Partners’ principal executive offices, 700 Universe Boulevard, Juno Beach, Florida, and at any adjournment(s) or postponement(s) of the annual meeting. Directions to the annual meeting are available by calling NextEra Energy Partners at 561-694-4697.
ELECTRONIC DELIVERY OF PROXY MATERIALS
Under the rules of the Securities and Exchange Commission (“SEC”), NextEra Energy Partners is furnishing proxy materials to its unitholders on the internet, rather than mailing paper copies of the materials to each unitholder.
On or about March 5, 2024, NextEra Energy Partners mailed to its unitholders of record a Notice of Internet Availability of Proxy Materials (the “Notice”) containing instructions on how to access and review the proxy materials, including the proxy statement and annual report to unitholders, on the internet. The Notice also instructs unitholders on how to access their proxy card to be able to submit their proxies on the internet or by telephone. Brokerage firms and other nominees who hold NextEra Energy Partners units on behalf of beneficial owners will be sending their own similar notice. Other unitholders, in accordance with their prior requests, have received an e-mail notification of how to access the proxy materials and submit their proxies on the internet. On or about March 5, 2024, NextEra Energy Partners also began mailing a full set of proxy materials to certain unitholders, including unitholders who have previously requested a paper copy of the proxy materials.
Internet distribution of the proxy materials is designed to expedite receipt by unitholders, lower the cost of the annual meeting and conserve natural resources. However, if you would prefer to receive printed proxy materials, please follow the instructions included in the Notice. If you have previously elected to receive NextEra Energy Partners’ proxy materials electronically, you will continue to receive the materials via e-mail unless you elect otherwise.
How do I access the proxy materials if I received the Notice?
The Notice provides instructions regarding how to view NextEra Energy Partners’ proxy materials for the 2024 annual meeting on the internet. As explained in greater detail in the Notice, to view the proxy materials and submit your proxy, you will need to follow the instructions in the Notice and have available your 16-digit control number(s) contained in the Notice.
How do I request paper copies of the proxy materials?
Whether you hold NextEra Energy Partners units through a brokerage firm, bank or other nominee (in “street name”), or hold NextEra Energy Partners units directly in your name through NextEra Energy Partners’ transfer agent, Computershare Trust Company, N.A. (“Computershare”), you may request paper copies of the 2024 annual meeting proxy materials by following the instructions listed at
www.proxyvote.com
, by telephoning 800-579-1639 or by sending an e-mail to
sendmaterial@proxyvote.com
.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR
THE ANNUAL MEETING TO BE HELD APRIL 22, 2024
THE ANNUAL MEETING TO BE HELD APRIL 22, 2024
This proxy statement and the NextEra Energy Partners 202
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annual report to unitholders are available at
www.proxyvote.com
.
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ABOUT THE ANNUAL MEETING
What is the purpose of the annual meeting?
At the annual meeting, unitholders will act upon the matters identified in the accompanying notice of annual meeting of unitholders. These matters include the election of the nominees specified in this proxy statement as directors, ratification of appointment of Deloitte Touche LLP as our independent registered public accounting firm for 2024, approval, by non-binding advisory vote, of the compensation of NextEra Energy Partners’ named executive officers and approval of the NextEra Energy Partners, LP 2024 Long Term Incentive Plan.
Who may attend the annual meeting?
Subject to space availability, all unitholders as of the record date, or their duly appointed proxies, may attend the annual meeting. Since seating is limited, admission to the annual meeting will be on a first-come, first-served basis. Registration and seating will begin at 1:00 p.m., Eastern time. If you plan to attend, please note that you will be asked to present valid picture identification, such as a driver’s license or passport. Invited representatives of the media and financial community may also attend the annual meeting.
You will need proof of ownership of NextEra Energy Partners units on the record date to attend the annual meeting:
•
If you hold units directly in your name as a unitholder of record, you may follow the instructions in the Notice to request an admission ticket by calling 561-694-4697.
•
If your units are held in “street name,” you will need to bring proof that you were the beneficial owner of those “street name” units of NextEra Energy Partners units as of the record date, such as a legal proxy or a copy of a bank or brokerage statement, and check in at the registration desk at the annual meeting.
For the safety of attendees, all boxes, handbags and briefcases are subject to inspection. Cameras, cell phones, recording devices and other electronic devices are not permitted at the annual meeting.
Who is entitled to vote at the annual meeting?
Only NextEra Energy Partners unitholders at the close of business on February 23, 2024, the record date for the annual meeting, are entitled to receive notice of, and to vote at, the annual meeting. If you were a unitholder on that date, you will be entitled to vote all of the NextEra Energy Partners units that you held on that date at the annual meeting or at any adjournment or postponement of the annual meeting, subject to the voting rights discussed below under “
What are the voting rights of the holders of the Company’s units?
” Unitholders includes holders of common units and Special Voting Units (“special voting units”) as of the record date.
Each reference in this proxy statement to a vote of record holders of units includes a vote of record holders of common units and special voting units.
What are the voting rights of the holders of the Company’s units?
Each NextEra Energy Partners unit will be entitled to one vote on each matter properly brought before the annual meeting. A unit refers to any unit entitled to vote at the annual meeting, including common units and special voting units. However, as explained below, a 5% of outstanding units voting limitation will apply to the election of directors and, in the circumstances described below, a separate 10% of votes cast cutback will apply to certain unitholders at the annual meeting.
What is the 5% of outstanding units voting limitation in the election of directors?
The 5% of outstanding units voting limitation will only apply to the election of directors. A unitholder or any related group, including NextEra Energy, Inc. (“NextEra Energy”) and its affiliates (the “NextEra Energy Group”), that owns more than 5% of the outstanding units as of the record date cannot vote more than 5% of the total outstanding units in the election of directors at the annual meeting (the “5% of Outstanding Units Director Voting Limitation”).
The following example of the 5% of Outstanding Units Director Voting Limitation, which assumes 1,000 total units are outstanding as of the record date, is included for illustrative purposes only and does not represent actual ownership of units or votes at the annual meeting:
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Example of the Operation of the 5% of Outstanding Units Director Voting Limitation
| | | Unit Owner | | | | Ownership | | | | Original Votes | | | | Original Voting % of Total Outstanding Votes | | | | 5% of Outstanding Units Director Voting Limitation Votes Removed | | | | Actual Votes after 5% of Outstanding Units Director Voting Limitation | | | | Voting % After 5% of Outstanding Units Director Voting Limitation | | |
| | | NextEra Energy Group | | | | 57% | | | | 570 | | | | 57% | | | | (520) | | | | 50 | | | | 11.6% | | |
| | |
10% Holder
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| | | 10% | | | | 100 | | | | 10% | | | | (50) | | | | 50 | | | | 11.6% | | |
| | | Other Public Unitholders | | | | 33% | | | | 330 | | | | 33% | | | | - | | | | 330 | | | | 76.7% | | |
| | | TOTAL | | | | 100% | | | | 1,000 | | | | 100% | | | | (570) | | | | 430 | | | | 100.0% | | |
How does the 10% of votes cast cutback apply to the election of directors?
In the election of directors, no unitholder may cast votes greater than 9.99% of votes actually cast. A unitholder or any related group, including the NextEra Energy Group, casting votes equal to or greater than 10% of actual votes cast will be subject to a 10% of votes cast cutback so that such unitholder(s) cannot cast votes equal to more than 9.99% of the units actually cast in the election of directors at the annual meeting (the “10% of Votes Cast Director Election Cutback”). The units cast in excess of 9.99% will be allocated and voted proportionally with all other votes cast, which will result in the total number of votes counted as being cast by the cutback unitholder to be 9.99% or less of votes cast.
The following example of the 10% of Votes Cast Director Election Cutback, which assumes 1,000 total units are outstanding as of the record date, is included for illustrative purposes only and does not represent actual ownership of units or votes at the annual meeting:
Example of the Operation of 10% of Votes Cast Director Election Cutback
| | | Unit Owner | | | | Votes Cast After 5% of Outstanding Director Voting Limitation | | | | % of Votes Cast of Total Outstanding Units Votes | | | | 10% of Votes Cast Director Election Cutback Votes Removed | | | | Votes Cast After 10% of Votes Cast Director Election Cutback | | | | % of Votes Cast After 10% of Votes Cast Director Election Cutback | | |
| | | NextEra Energy Group | | | | 50 | | | | 11.6% | | | | (8) | | | | 42 | | | | 9.77% | | |
| | | 10% Holder | | | | 50 | | | | 11.6% | | | | (8) | | | | 42 | | | | 9.77% | | |
| | | Other Public Unitholders | | | | 330 | | | | 76.7% | | | | - | | | | 330 | | | | 76.74% | | |
| | | Proportional Votes | | | | - | | | | - | | | | - | | | | 16 | | | | 3.72% | | |
| | | TOTAL | | | | 430 | | | | 100.0% | | | | (16) | | | | 430 | | | | 100% | | |
In the example above, the 16 votes removed from the NextEra Energy Group and the 10% holder would be allocated and voted proportionally with all other director election votes.
How does the 10% of votes cast cutback apply to the other items of business at the annual meeting?
Other than in the election of directors, the 10% of votes cast cutback does not apply to the NextEra Energy Group, but is applicable to all other unitholders or groups. A unitholder or any related group, other than the NextEra Energy Group, casting
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votes equal to or greater than 10% of actual votes cast will be subject to a 10% of votes cast cutback so that such unitholder(s) cannot cast votes equal to more than 9.99% of the units actually cast on each item to be voted (the “General 10% of Votes Cast Cutback”). The units cast in excess of 9.99% will be allocated and voted proportionally with all other votes cast for each item.
The following example of the General 10% of Votes Cast Cutback for the items of business at the annual meeting other than director elections, which assumes 1,000 total units are outstanding as of the record date, is included for illustrative purposes and does not represent actual ownership of units or votes at the annual meeting:
Example of the Operation of the General 10% of Votes Cast Cutback in All Other Voting Items
| | | Unit Owner | | | | Votes Cast | | | | % of Votes Cast of Total Outstanding Votes | | | | General 10% of Votes Cast Cutback Votes Removed | | | | Actual Votes Cast After General 10% of Votes Cast Cutback | | | | % of Votes Cast After General 10% of Votes Cast Cutback | | |
| | | NextEra Energy Group | | | | 570 | | | | 57% | | | | - | | | | 570 | | | | 57% | | |
| | | 10% Holder | | | | 100 | | | | 10% | | | | (1) | | | | 99 | | | | 9.9% | | |
| | | Other Public Unitholders | | | | 330 | | | | 33% | | | | - | | | | 330 | | | | 33% | | |
| | | Proportional Votes | | | | - | | | | - | | | | - | | | | 1 | | | | 0.1% | | |
| | | TOTAL | | | | 1,000 | | | | 100% | | | | (1) | | | | 1000 | | | | 100% | | |
What constitutes a quorum?
The presence at the annual meeting, in person or by proxy, of the holders of a majority of the NextEra Energy Partners units issued and outstanding and entitled to vote on the record date will constitute a quorum, permitting the business of the meeting to be conducted.
As of the record date, 192,321,089 NextEra Energy Partners units were outstanding, including 98,781,831 special voting units and 93,539,258 common units. Thus, a total of 192,321,089 votes are entitled to be present at the annual meeting and the presence of the holders of NextEra Energy Partners units representing at least 96,162,468 units will be required to establish a quorum.
In determining the presence of a quorum at the annual meeting, abstentions in person, proxies received but marked as abstentions as to any or all matters to be voted on that permit abstentions and proxies received with broker non-votes on some but not all matters to be voted on will be counted as present.
A broker “non-vote” occurs when a broker, bank or other holder of record that holds units for a beneficial owner (“broker”) does not vote on a particular proposal because the broker has not received voting instructions from the beneficial owner and does not have discretionary voting power for that particular proposal. Brokers may vote on ratification of the appointment of our independent registered public accounting firm even if they have not received voting instructions from the beneficial owners whose units they hold. However, brokers may not vote on any of the other matters set forth in this proxy statement at the 2024 annual meeting unless they have received voting instructions from the beneficial owner. See the response to “
What vote is required to approve the matters proposed?”
on page 6 for a discussion of the effect of broker non-votes.
How do I submit my proxy or voting instructions?
On the internet or by telephone
•
On the Internet
—You may submit your proxy or voting instructions on the internet 24 hours a day and up until 11:59 p.m., Eastern time, on Sunday, April 21, 2024 by going to
www.proxyvote.com
and following the instructions. Please have your Notice available when you access the web page. If you hold your units in “street name,” your broker, bank, trustee or other nominee may provide additional instructions to you regarding how to submit your proxy or voting instructions on the internet.
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•
By Telephone
—You may submit your proxy or voting instructions by telephone by calling the toll-free telephone number (800-690-6903) 24 hours a day and up until 11:59 p.m., Eastern time, on Sunday, April 21, 2024 and following the prerecorded instructions. Please have your Notice available when you call. If you hold your units in “street name,” your broker, bank, trustee or other nominee may provide additional instructions to you regarding how to submit your proxy or voting instructions by telephone.
Please see the Notice or the information your broker provided to you for more information on your voting options. NextEra Energy Partners’ proxy tabulator, Broadridge Investor Communications Solutions, Inc. (“Broadridge”), must receive any vote on the internet or by telephone, no later than 11:59 p.m., Eastern time, on Sunday, April 21, 2024.
If you are a unitholder of record and you submit your proxy on the internet or by telephone, but do not indicate your voting preferences, the persons named as proxies will vote the units represented by that proxy as recommended by the Board on all proposals.
In person at the annual meeting
All unitholders may vote in person at the annual meeting. However, if you are a beneficial owner of units, you must obtain a legal proxy from your broker and present it to the inspector of election with your ballot to be able to vote in person at the annual meeting. See the response to “
Who may attend the annual meeting?”
for additional information on how to attend the annual meeting.
Your vote is important. You can save us the expense of further solicitation of proxies by submitting your proxy or voting instructions promptly.
May I change my vote after I submit my proxy or voting instructions?
Yes. If you are a unitholder of record, you may revoke your proxy before it is exercised by:
•
providing written notice of the revocation to the Corporate Secretary of the Company at the Company’s offices, P.O. Box 14000, 700 Universe Blvd., Juno Beach, Florida 33408-0420;
•
making timely delivery of later-dated voting instructions on the internet or by telephone; or
•
voting by ballot at the annual meeting; although, please note that attendance at the annual meeting will not by itself revoke a previously granted proxy.
You may change your proxy by using any one of these methods regardless of the method you previously used to submit your proxy.
If you are a beneficial owner of units, you may submit new voting instructions by contacting your broker. You may also change your vote in person at the annual meeting if you obtain a legal proxy as described in the answer to the previous question.
All units for which proxies have been properly submitted and not revoked will be voted at the annual meeting.
What is “householding” and how does it affect me?
NextEra Energy Partners has adopted a procedure approved by the SEC called “householding.” Under this procedure, unitholders of record who have the same address and last name and do not participate in electronic delivery of proxy materials will receive only one package containing individual copies of the Notice for each unitholder of record at the common address. This procedure will reduce the volume of duplicate materials unitholders receive, conserve natural resources and reduce NextEra Energy Partners’ postage costs. Unitholders who participate in householding and request a full set of proxy materials will receive separate proxy cards.
If you are a unitholder of record and are eligible for householding, but you and other unitholders of record with whom you share an address currently receive multiple packages containing copies of the Notice or, if requested, proxy materials in paper form, or if you hold units in more than one account, and in either case you wish to receive only a single package for your household in the future, please contact Computershare in writing at Computershare Trust Company, N.A., P.O. Box 43078, Providence, RI 02940-3078 or by calling 888-218-4392. You may contact Computershare at the same mailing address or telephone number if you wish to revoke your consent to future householding mailings.
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If your household receives only a single package containing a copy of the Notice or, if requested, the proxy materials, and you wish to receive a separate copy for each unitholder of record, please contact Broadridge toll-free at 866-540-7095, or write to Broadridge, Householding Department, 51 Mercedes Way, Edgewood, NY 11717, and separate copies will be provided promptly.
Beneficial owners may request information about householding from their banks, brokers or other holders of record.
What are the Board’s recommendations?
Unless you give other instructions, the persons named as proxies will vote in accordance with the recommendations of the Board. The Board’s recommendations are set forth together with the description of each proposal in this proxy statement. In summary, the Board recommends a vote:
•
FOR
election as directors of the nominees specified in this proxy statement. (See Proposal 1)
•
FOR
ratification of appointment of Deloitte Touche LLP as NextEra Energy Partners’ independent registered public accounting firm for 2024. (See Proposal 2)
•
FOR
approval, by non-binding advisory vote, of the compensation of NextEra Energy Partners’ named executive officers. (See Proposal 3)
•
FOR
approval of the NextEra Energy Partners, LP 2024 Long Term Incentive Plan. (See Proposal 4)
•
In accordance with the discretion of the persons acting pursuant to the proxy concerning such other business as may properly be brought before the annual meeting or any adjournment or postponement thereof.
What vote is required to approve the matters proposed?
•
Election
as directors of the nominees specified in this proxy statement —
A nominee for director will be elected to the Board if the votes cast for such nominee’s election by unitholders present in person or represented by proxy at the meeting and entitled to vote on the matter exceed the votes cast by such unitholders against such nominee’s election. If you are a beneficial owner, your broker is not permitted under New York Stock Exchange (“NYSE”) rules to vote your units on the election of directors if your broker does not receive voting instructions from you. Without your voting instructions, a broker non-vote will occur. Since broker non-votes are not considered votes cast, they will have no legal effect on the election of directors. Abstentions also are not considered votes cast and will have no legal effect on the election of directors. For a discussion of certain voting limitations applicable to the election of directors, please see “
What are the voting rights of the holders of the Company’s units?
” on page 2.
•
Ratification of appointment of Deloitte Touche LLP as NextEra Energy Partners’ independent registered public accounting firm for 202
4—
The ratification of appointment of Deloitte Touche LLP as NextEra Energy Partners’ independent registered public accounting firm for 2024 will be approved if the votes cast for the proposal by unitholders present in person or represented by proxy at the annual meeting and entitled to vote on the matter exceed the votes cast by such unitholders against such proposal (a “Majority Vote”). Since brokers are permitted under NYSE rules to vote your units on this proposal even if your broker does not receive voting instructions from you, there are not expected to be broker non-votes on this proposal. Abstentions are not considered votes cast and will have no legal effect on whether this proposal is approved. In determining the votes cast, the General 10% of Votes Cast Cutback, as described under “
How does the 10% of votes cast cutback apply to the other items of business at the annual meeting?
” beginning on page 3, will apply to unitholders other than the NextEra Energy Group.
•
Approval, by non-binding advisory vote, of the compensation of NextEra Energy Partners’ named executive officers—
A Majority Vote is required to approve this non-binding advisory proposal. If your broker does not receive voting instructions from you, your broker is not permitted under NYSE rules to vote your units on this proposal. Without your voting instructions, a broker non-vote will occur. Since broker non-votes are not considered votes cast, they will have no legal effect on whether this proposal is approved. Abstentions also are not considered votes cast and will have no legal effect on whether this proposal is approved. The vote on this proposal is advisory and the result of the vote on this proposal will not be binding on the Company or the Board. However, the Board will consider the result of the vote when making future decisions regarding named executive officer (“NEO”) compensation. In determining the votes cast, the General 10% of Votes Cast Cutback, as described under “
How does the 10% of votes cast cutback apply to the other items of business at the annual meeting?”
beginning on page 3, will apply to unitholders other than the NextEra Energy Group.
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•
Approval of the NextEra Energy Partners, LP 2024 Long Term Incentive Plan—
A Majority Vote is required to approve this proposal. If your broker does not receive voting instructions from you, your broker is not permitted under NYSE rules to vote your units on this proposal. Without your voting instructions, a broker non-vote will occur. Since broker non-votes are not considered votes cast, they will have no legal effect on whether this proposal is approved. Abstentions also are not considered votes cast and will have no legal effect on whether this proposal is approved. In determining the votes cast, the General 10% of Votes Cast Cutback, as described under “
How does the 10% of votes cast cutback apply to the other items of business at the annual meeting
?” beginning on page 3, will apply to unitholders other than the NextEra Energy Group.
Who pays for the solicitation of proxies?
NextEra Energy Partners is soliciting proxies and it will bear the expense of solicitation. Proxies will be solicited principally by mail and by electronic media, although directors, officers and employees of NextEra Energy Partners or its affiliates may solicit proxies personally, by telephone or by electronic means, but without compensation other than their regular compensation, if any. NextEra Energy Partners has retained D.F. King Co., Inc. to assist it in the solicitation of proxies, for which D.F. King Co., Inc. will be paid a fee of $12,500 plus reimbursement of out-of-pocket expenses. NextEra Energy Partners will reimburse custodians, nominees and other persons for their out-of-pocket expenses in sending the Notice and/or proxy materials to beneficial owners.
Could other matters be decided at the annual meeting?
At the date of printing of this proxy statement, the Board did not know of any matters to be submitted for action at the annual meeting other than those referred to in this proxy statement and does not intend to bring before the annual meeting any matter other than the proposals described in this proxy statement. If, however, other matters are properly brought before the annual meeting, or any adjourned or postponed meeting, your proxies include discretionary authority on the part of the individuals appointed to vote your units or act on those matters according to their discretion, including voting to adjourn or postpone the annual meeting one or more times to solicit additional proxies with respect to any proposal or for any other reason.
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BUSINESS OF THE ANNUAL MEETING
Proposal 1: Election of the nominees specified in this proxy statement as directors
The Board is currently composed of seven members. In accordance with our Fifth Amended and Restated Agreement of Limited Partnership (“Partnership Agreement”), four of the seven directors will be elected by unitholders at the annual meeting. The other three directors are appointed by our general partner, NextEra Energy Partners GP, Inc. (the “general partner”), in its sole discretion.
The current directors are John W. Ketchum (Chairman), Susan D. Austin, Robert J. Byrne, Terrell Kirk Crews, II, Mark E. Hickson, Peter H. Kind and Rebecca J. Kujawa.
Upon the recommendation of the chief executive officer, the Board has nominated the four directors listed below for election as directors at the 2024 annual meeting (“Elected Directors”). Unless you specify otherwise in your voting instructions, your proxy will be voted
FOR
the Elected Directors. If any Elected Director becomes unavailable for election, which is not currently anticipated, proxies instructing a vote for that Elected Director may be voted for a substitute nominee selected by the Board.
The Board believes that the Board membership at its current size is appropriate because such a Board size facilitates substantive discussions among Board members, provides for sufficient staffing of Board committees and allows for contributions by directors having a broad range of skills, expertise, industry knowledge and diversity of opinion. Elected Directors serve until the next annual meeting of unitholders or until their respective successors are qualified and elected.
Director Qualifications
.
The Company’s Corporate Governance Principles Guidelines, a copy of which is available on the Company’s website at http://www.investor.nexteraenergypartners.com, identifies Board membership qualifications, including experience, skills and attributes that are considered by the Board in recommending nominees for Board membership. The Board views itself as a cohesive whole consisting of members who together serve the interests of the Company and its unitholders. Qualifications, attributes and other factors considered by the Board in recommending director nominees include, but are not limited to, the following:
•
integrity, competence, insight, creativity and dedication, together with the ability to work with colleagues while challenging one another to achieve superior performance;
•
attained a prominent position in their field of endeavor;
•
broad business experience;
•
the ability to exercise sound business judgment;
•
the ability to draw on experience relative to significant issues facing the Board and the Company;
•
experience in the Company’s industry or in another industry or endeavor with practical application to the needs of the Company and the Board;
•
sufficient time for preparation and participation in Board and committee meetings (including by limiting service on public company boards to no more than three additional boards);
•
possess attributes deemed appropriate given the then-current needs of the Board;
•
the individual’s contribution to the achievement of a mix of directors who represent a diversity of background and experience, including age, gender, race, ethnicity and specialized experience;
•
the individual’s independence as described in applicable listing standards, legislation and regulations and the Company’s Corporate Governance Principles Guidelines; and
•
whether the individual would be considered an “audit committee financial expert” or “financially literate” as described in applicable listing standards or regulations.
Information about each director appointed by our general partner and each director nominee is presented below and includes specific experience, qualifications, attributes and skills that led the general partner and Board to the conclusion that he or she should serve as a director. Overall, the directors appointed by our general partner and the Elected Directors represent a diverse mix of qualifications deemed beneficial to the formation of a cohesive and effective Board.
8
Directors Appointed by Our General Partner
The following directors were appointed by our general partner and serve a current term expiring on the date that their successors are qualified and appointed.
Terrell Kirk Crews
, II
Biography
Mr. Crews, 45, has served as chief financial officer of NextEra Energy Partners and our general partner since March 2022. He has served as executive vice president, finance and chief financial officer of NextEra Energy since March 2022. Previously, he served as vice president, business management of NextEra Energy Resources, LLC (“NextEra Energy Resources”) from March 2019 until March 2022. Prior to that, he served as controller and chief accounting officer of NextEra Energy Partners from September 2016 until March 2019 and vice president, controller and chief accounting officer of NextEra Energy from September 2016 until March 2019. He served as a partner in the national office of Deloitte Touche LLP from July 2015 to April 2016 and was a professional accounting fellow in the Office of the Chief Accountant of the SEC from June 2013 until June 2015. Prior to that, Mr. Crews was audit service senior manager at Deloitte from June 2010 to June 2013. He was appointed to the NextEra Energy Partners’ Board in April 2022 and has served on the board of our general partner since March 2022.
Qualifications
Mr. Crews’ qualifications to serve as a director include his experience in finance, financial reporting and management gained through his current position as executive vice president, finance and chief financial officer of NextEra Energy and his prior roles as vice president, controller and chief accounting officer of NextEra Energy and as vice president, business management of NextEra Energy Resources. Mr. Crews also has experience in the renewables business as NextEra Energy Resources’ vice president, business management. He has a Bachelor of Science in Business Administration degree in accounting from the University of Richmond—Robins School of Business.
Mark E. Hickson
Biography
Mr. Hickson, 57, has served as executive vice president, strategy and corporate development of NextEra Energy Partners since August 2017 and our general partner since February 2017. He has served as executive vice president, corporate development and strategy of NextEra Energy since May 2022 and previously served as executive vice president, corporate development, strategy, quality and integration of NextEra Energy from May 2017 to May 2022. Prior to that, he served as senior vice president, corporate development, strategy, quality and integration of NextEra Energy from May 2016 to May 2017. Mr. Hickson previously served as vice president, strategy and corporate development of our general partner from March 2014 to February 2017 and senior vice president, corporate development and strategic initiatives of NextEra Energy from February 2015 to May 2016. From May 2012 to February 2015, he was vice president, strategy and corporate development of NextEra Energy. From 1997 to April 2012, Mr. Hickson served as managing director in Global Mergers and Acquisitions at Merrill Lynch Co. He was appointed to the NextEra Energy Partners’ Board upon its establishment in August 2017 and previously served on the board of our general partner from February 2015 until August 2017. Mr. Hickson has served as a director of Fisker Inc. (NYSE: FSR), an electric vehicle automaker, since July 2020.
Qualifications
Mr. Hickson’s qualifications to serve as a director include his expertise in mergers, acquisitions and capital markets transactions gained through his current and prior positions. Mr. Hickson has a bachelor’s degree in aerospace engineering from Texas AM University and an MBA from Columbia University, where he graduated with honors.
Rebecca J. Kujawa
Biography
Mrs. Kujawa, 48, has served as president of NextEra Energy Partners and our general partner since March 2022 and has been a director of the Company since March 2019. She served as a director of our general partner from March 2019 until March 2022. She previously served as chief financial officer of NextEra Energy Partners and our general partner from March 2019 until March 2022. Mrs. Kujawa has served as president and chief executive officer of NextEra Energy Resources since March 2022. She served as executive vice president, finance and chief financial officer of NextEra Energy from March 2019 until March 2022. Previously, she was vice president, business management of NextEra Energy Resources from
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2012 until March 2019. Mrs. Kujawa joined NextEra Energy in 2007 and has held various business and finance roles, including as the director of investor relations for NextEra Energy. Mrs. Kujawa also currently serves as a director of Nuclear Electric Insurance Limited (NEIL), an industry mutual insurance company.
Qualifications
Mrs. Kujawa’s qualifications to serve as a director include her experience in finance, risk management, business management, and energy marketing gained from her current and prior roles for subsidiaries of NextEra Energy as well as her experience as an equities and equity derivatives analyst prior to joining NextEra Energy. She also holds a Chartered Financial Analyst (CFA) designation. Mrs. Kujawa has a Bachelor of Arts degree in public policy studies from Duke University.
Director Nominees
The following Elected Directors currently serve as directors of the Board and have been nominated by the Board for election at the 2024 annual meeting. If elected, each Elected Director will serve until the next annual meeting of unitholders or until a successor Elected Director has been qualified and elected.
Susan D. Austin
Biography
Ms. Austin, 56, is the chief financial and operating officer of Grace Church School. She has served as chief financial officer since September 2019 and chief operating officer since July 2023. Prior to joining Grace Church School in September 2019, Ms. Austin served as a senior managing director with Brock Capital LLC, an investment banking firm focusing on strategic and corporate advisory services, since October 2014. In addition, she served as vice chairman of Sheridan Broadcasting Corporation (“SBC”), a radio broadcasting company, until July 2017, where she served in various leadership capacities since joining that company in 2002 as vice president of strategic planning and treasurer. In 2004, Ms. Austin became president of the Sheridan Gospel Network and, in 2007, was named senior vice president and chief financial officer of SBC. She was promoted to vice chairman of SBC in July 2013. Prior to joining SBC, Ms. Austin spent 10 years in investment banking, specializing in telecommunications and media finance. Ms. Austin serves as an independent trustee or director of certain Prudential Insurance mutual funds (since 2011). She was appointed to the NextEra Energy Partners’ Board upon its establishment in August 2017 and previously served on the board of our general partner from February 2015 until August 2017.
Qualifications
Ms. Austin’s qualifications to serve as a director include her expertise in strategic planning, treasury operations, finance and capital markets transactions through her current and prior positions. Ms. Austin has a Bachelor of Arts degree in mathematics from Harvard College and an MBA from Stanford University Graduate School of Business.
Robert J. Byrne
Biography
Mr. Byrne, 62, has served as a director of Masonite International Corporation (“Masonite”) (NYSE: DOOR), one of the largest manufacturers of doors in the world, since June 2009 and has been chairman of the board of Masonite since July 2010. Since January 2019, Mr. Byrne has served as executive chairman of Source2, Inc., a privately-held company specializing in providing recruiting assistance to middle market companies with high volume hiring needs. Previously, Mr. Byrne was the founder and served as president of Power Pro-Tech Services, Inc., which specialized in the installation, maintenance and repair of emergency power and solar photovoltaic power systems, since its founding in 2012 until it was sold in 2017 to PowerSecure. From 1999 to 2001, Mr. Byrne was executive vice president and chief financial officer of EPIK Communications, a start-up telecommunications company which merged with Progress Telecom in 2001 and was subsequently acquired by Level3 Communications. Having begun his career in investment banking, Mr. Byrne served as partner at Advent International, a global private equity firm, from 1997 to 1999 and immediately prior to that, from 1993 to 1997, served as a director of Orion Capital Partners. Mr. Byrne formerly served as an independent director of the board of our general partner from July 2014 through April 2017. Mr. Byrne was appointed to the Board in December 2018.
Qualifications
Mr. Byrne’s qualifications to serve as a director include his expertise in the founding and managing of businesses in the electric power and telecommunications industries as well as his experience as the chairman of Masonite and as a former
10
member of Masonite’s audit committee. Mr. Byrne has a bachelor’s degree, summa cum laude, from the Wharton School at the University of Pennsylvania and an MBA from Harvard Business School.
John W. Ketchum
Biography
Mr. Ketchum, 53, has been chairman of the NextEra Energy Board of Directors since July 2022, and president and chief executive officer and a director of NextEra Energy since March 2022. He has also served as chairman of NextEra Energy’s subsidiary, Florida Power Light Company (which has no publicly traded stock) since February 2023. He previously served as president and chief executive officer of NextEra Energy Resources from March 2019 until March 2022. Mr. Ketchum also served as executive vice president, finance and chief financial officer of NextEra Energy from March 2016 until March 2019. Previously, Mr. Ketchum served as NextEra Energy’s senior vice president, finance from February 2015 to March 2016. Mr. Ketchum joined NextEra Energy in 2002 and held various business, finance and legal roles prior to being named vice president, general counsel secretary of NextEra Energy Resources. From December 2013 to February 2015, he was senior vice president, business management and finance of NextEra Energy Resources and from December 2012 to December 2013, he was senior vice president, business management of NextEra Energy Resources. Mr. Ketchum served as vice president, general counsel secretary of NextEra Energy Resources from June 2009 to December 2012. Mr. Ketchum joined NextEra Energy in 2002 and held various business, finance and legal roles prior to being named vice president, general counsel and secretary of NextEra Energy Resources. Prior to joining NextEra Energy in 2002, Mr. Ketchum served as corporate counsel to TECO Energy and as a corporate and securities law associate for Holland Knight, LLP in Tampa, Florida. He began his career as a tax lawyer for Lathrop Gage in Kansas City, Missouri, and, prior to that, worked in corporate banking. He was appointed to the NextEra Energy Partners’ Board upon its establishment in August 2017 and has served on the board of our general partner since March 2022. He has also served as chief executive officer of NextEra Energy Partners and our general partner since March 2022. Previously, he served as president of NextEra Energy Partners and our general partner from March 2019 until March 2022 and as chief financial officer of NextEra Energy Partners from August 2017 until March 2019 and our general partner from March 2016 until March 2019.
Qualifications
Mr. Ketchum’s qualifications to serve as a director include his extensive experience in operations, strategic planning, risk management and mergers and acquisitions gained through his current and prior positions. He also has experience in finance, financial reporting and management gained through his roles as the executive vice president, finance and chief financial officer and senior vice president, finance of NextEra Energy, among other roles. Mr. Ketchum also has experience leading a growing business as former president of NextEra Energy Resources and as NextEra Energy Resources’ former senior vice president, business management. He has a Bachelor of Arts degree in economics and finance, magna cum laude, from the University of Arizona and Master of Laws in taxation and Juris Doctor degrees from the University of Missouri—Kansas City School of Law. Mr. Ketchum also completed the Emerging CFO-Strategic Financial Leadership Program at Stanford University.
Peter H. Kind
Biography
Mr. Kind, 67, is executive director of Energy Infrastructure Advocates LLC, an independent financial and strategic advisory firm. From 2009 to 2011, Mr. Kind was a senior managing director of Macquarie Capital, an investment banking firm. From 2005 to 2009, Mr. Kind was a managing director of Bank of America Securities and group head of Power and Utility Investment Banking. Mr. Kind, a certified public accountant (“CPA”), also has experience in the audit of large public energy companies. He served as a director and chairman of the audit committee of the general partner of Enable Midstream Partners, LP from February 2014 until December 2021. He was appointed to the NextEra Energy Partners’ Board upon its establishment in August 2017 and previously served on the board of our general partner from July 2014 until August 2017.
Qualifications
Mr. Kind’s qualifications to serve as a director include his expertise in capital markets transactions and in public accounting and auditing in the energy industry gained through his current and prior positions. Mr. Kind has a Bachelor of Science degree in accounting from Iona College and an MBA from the NYU Stern School of Business. He is also a CPA.
Unless you specify otherwise in your voting instructions, your proxy will be voted
FOR
election of each of the four Elected Director nominees.
| |
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE
FOR
THE ELECTION OF ALL NOMINEES
|
|
11
Proposal 2: Ratification of appointment of Deloitte Touche LLP as NextEra Energy Partners’ independent registered public accounting firm for 202
4
In accordance with the provisions of the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”), the Audit Committee of the Board appoints the Company’s independent registered public accounting firm. It has appointed Deloitte Touche LLP (“Deloitte Touche”) as the independent registered public accounting firm to audit the accounts of NextEra Energy Partners and its subsidiaries, as well as to provide its opinion on the effectiveness of the Company’s internal control over financial reporting, for the fiscal year ending December 31, 2024. Although ratification is not required, the Board is submitting the selection of Deloitte Touche to unitholders as a matter of good corporate practice. If the unitholders do not ratify the appointment, the appointment will be reconsidered by the Audit Committee, although the Audit Committee may nonetheless decide to continue the retention of Deloitte Touche as the Company’s independent registered public accounting firm for 2024. Even if the appointment is ratified, the Audit Committee may, in its discretion, terminate the service of Deloitte Touche at any time during the year if it determines that the appointment of a different independent registered public accounting firm would be in the best interests of NextEra Energy Partners and its unitholders. Representatives of Deloitte Touche are expected to be present at the annual meeting and will have an opportunity to make a statement and respond to appropriate questions from unitholders at the annual meeting.
Unless you specify otherwise in your voting instructions, your proxy will be voted
FOR
ratification of appointment of Deloitte Touche as NextEra Energy Partners’ independent registered public accounting firm for 2024.
| |
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE
FOR
RATIFICATION OF APPOINTMENT OF DELOITTE TOUCHE LLP AS NEXTERA ENERGY PARTNERS’ INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2024
|
|
12
Proposal 3: Approval, by non-binding advisory vote, of the compensation of NextEra Energy Partners’ named executive officers
The Company is asking unitholders to cast an advisory vote on the compensation of the Company’s NEOs, which is commonly called a “say-on-pay” vote. The advisory vote, which is required pursuant to Section 14A of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is to approve the compensation of the Company’s NEOs as described under the “
Compensation Discussion Analysis
” section of this proxy statement (beginning on page 37). Although this vote is not binding, it will provide information to the Board regarding investor sentiment about the Company’s executive compensation philosophy, policies and practices, which the Board will consider when making future determinations regarding NEO compensation. The Company currently plans to give unitholders the opportunity to cast an advisory vote on this matter every year, so that, following the vote on this proposal, the next opportunity will occur in connection with the Company’s 2025 annual meeting of unitholders.
The Company’s executive officers do not receive any compensation from the Company. All of the NEOs of the Company are also employees of NextEra Energy. NextEra Energy compensates these officers for the performance of their duties as employees of NextEra Energy, which include managing NextEra Energy Partners. NextEra Energy does not allocate this compensation between services for the Company and services for NextEra Energy and its affiliates. NextEra Energy Partners’ NEOs do not receive any additional compensation for their services to NextEra Energy Partners’ business. No portion of the management fee that NextEra Energy Partners pays to NextEra Energy is allocated to executive officer compensation. All compensation for the NEOs, including the portion that is fixed and variable, is paid by NextEra Energy and will be disclosed in NextEra Energy’s 2024 proxy statement, expected to be filed late March or early April 2024.
The Company asks unitholders to approve this proposal by approving the following non-binding resolution:
RESOLVED, that the unitholders of NextEra Energy Partners, LP approve, on an advisory basis, the compensation paid to the Company’s named executive officers, as described in the NextEra Energy Partners, LP proxy statement for the 202
4
annual meeting of unitholders, including the
Compensation Discussion Analysis
section.
Unless you specify otherwise in your voting instructions, your proxy will be voted
FOR
approval, by non-binding advisory vote, of the compensation of NextEra Energy Partners’ NEOs.
| |
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE
FOR
APPROVAL, BY NON-BINDING ADVISORY VOTE, OF THE COMPENSATION OF NEXTERA ENERGY PARTNERS’ NAMED EXECUTIVE OFFICERS AS DISCLOSED IN THIS PROXY STATEMENT
|
|
13
Proposal 4: Approval of the NextEra Energy Partners, LP 2024 Long Term Incentive Plan
Unitholders are asked to consider and vote upon a proposal to approve the NextEra Energy Partners, LP 2024 Long Term Incentive Plan (the “2024 LTIP” or the “plan”).
On February 20, 2024, the Board unanimously approved the 2024 LTIP, subject to unitholder approval at the next annual meeting. If this proposal is approved at the annual meeting, the 2024 LTIP will become effective at the time of unitholder approval.
The purpose of this proposal is to maintain a unitholder-approved plan under which the Company may continue to make compensatory equity-based awards to Directors and officers and other employees of the Company or its affiliates (and other independent service providers). Such awards are integral to motivate and encourage unitholder value creation. The 2024 LTIP will replace the Company’s 2014 Long Term Incentive Plan (the “Current Equity Plan”), which was first approved in 2014 and which will terminate on June 30, 2024.
No awards under the 2024 LTIP have been granted or will be granted unless and until the 2024 LTIP is approved by the Company’s unitholders at the annual meeting. Grants of awards under the 2024 LTIP will be at the discretion of the LTIP Committee (as defined below) and any other committee authorized to grant awards under the plan. The Company’s Board and executive officers have an interest in this proposal, as they will be eligible to receive awards under the 2024 LTIP.
The Board believes that approval of the 2024 LTIP is in the best interests of the Company and its unitholders. Unitholders are encouraged to read in their entirety this proposal and the text of the 2024 LTIP in the form in which it would become effective upon approval by unitholders, which appears at the end of this proxy statement as Appendix A.
Unless you specify otherwise in your proxy instructions, your proxy will be voted
FOR
approval of the NextEra Energy Partners, LP 2024 Long Term Incentive Plan.
| |
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE
FOR
APPROVAL OF THE NEXTERA ENERGY PARTNERS, LP 2024 LONG TERM INCENTIVE PLAN
|
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Outstanding Equity Awards
The following table presents information as of February 20, 2024 regarding the Company’s outstanding equity awards held by officers and other employees of the Company or its subsidiaries or other affiliates and shares available for future awards under the Current Equity Plan:
| |
Total shares underlying all outstanding and unvested restricted unit awards
|
| | | | 222,673 | | |
| |
Shares available for future awards under Current Equity Plan
|
| | | | 840,220 | | |
The Current Equity Plan automatically expires on June 30, 2024, and no further awards may be issued after that date under the Current Equity Plan.
Summary of Material Provisions of 2024 LTIP
The following is a summary of the material terms of the 2024 LTIP. This summary, however, does not purport to be a complete description of all of the provisions of the 2024 LTIP and is qualified in its entirety by reference to the complete text of the 2024 LTIP, a copy of which is attached as Appendix A to this proxy statement and incorporated by reference into this proposal. You are urged to read this proposal and the text of the 2024 LTIP in their entirety.
Purpose.
The 2024 LTIP is intended to: (i) provide participants in the 2024 LTIP with an incentive to contribute to the Company’s success and to manage the Company’s business in a manner that will provide for the Company’s long-term growth and profitability to benefit its unitholders and other important stakeholders, including its employees and customers; and (ii) provide a means of obtaining, rewarding and retaining key personnel, including the Company’s officers and directors, as well as employees of the Company’s affiliates who provide substantial service to the Company.
Eligibility.
Awards may be granted to non-employee directors, officers, any employees of the Company and any employees of independent service providers or affiliates of the Company who provide service to the Company. As of February 20, 2024, approximately ten non-employee directors and officers of the Company, no independent service providers and 32 employees of affiliates of the Company are eligible to participate in the 2024 LTIP.
14
Plan Benefits.
The number or amount of awards under the 2024 LTIP that may be subject to future grants is not determinable as of the date of this proxy statement. Such awards will be limited by the total number of units of the Company that will be available for issuance, as described below.
Administration.
The 2024 LTIP generally will be administered by a committee (the “LTIP Committee”) consisting of the Board or at least two members of the Board or such other entity authorized to administer the 2024 LTIP.
Our Board will retain the authority under the 2024 LTIP to exercise any or all of the powers and authorities related to the administration and implementation of the 2024 LTIP.
Except where authority to act on such matters is specifically reserved to our Board under the 2024 LTIP or applicable law, the LTIP Committee and each other committee referred to above acting in accordance with the foregoing plan provisions will have full power and authority to interpret and construe all provisions of the 2024 LTIP, any award or any award agreement, and to make all related determinations, including the power and authority to:
•
designate grantees of awards;
•
determine the type or types of awards to be made to a grantee;
•
determine the number of units subject to an award;
•
establish the terms and conditions of each award;
•
prescribe the form of each award agreement; and
•
subject to certain limitations in the 2024 LTIP, amend, modify or supplement the terms of any outstanding award.
Effective Date, Amendment and Termination.
If approved by unitholders at the annual meeting, the 2024 LTIP will become effective at the time of unitholder approval. The 2024 LTIP will terminate automatically ten years after its effective date, unless it is earlier terminated by the Board.
The Board will be authorized to amend, alter, suspend or terminate the 2024 LTIP as to any units as to which awards have not been made. Any amendment to the 2024 LTIP, however, will be subject to receipt of the approval of the Company’s unitholders if unitholder approval of the amendment is required by any law or regulation or NYSE rule or to the extent determined by the Board. Unitholder approval will be required for any proposed amendment to the 2024 LTIP provisions that prohibit the repricing of outstanding options or unit appreciation rights or that generally require the option price of any option to be at least equal to the fair market value of the Company’s units on the option grant date. Without the consent of the affected grantee of an outstanding award, no amendment, suspension or termination of the 2024 LTIP may impair the rights or obligations under that award.
Awards.
The following types of awards may be made under the 2024 LTIP, subject to limitations set forth in the plan:
•
options, which will be non-qualified options (i.e., options that do not meet the requirements of section 422 of the Internal Revenue Code (“Code”));
•
restricted units;
•
deferred units;
•
performance units or other performance-based awards;
•
unit appreciation rights; and
•
other equity-based awards, including unrestricted units.
A restricted unit is an award on which vesting restrictions are imposed that subject the unit to a substantial risk of forfeiture, as defined in section 83 of the Code. A deferred unit is an award that represents a conditional right to receive units in the future and that may be made subject to the same types of restrictions and risk of forfeiture as a restricted unit. Performance-based awards are awards of options, restricted units, deferred units, unit appreciation rights or other equity-based awards made subject to the achievement of one or more pre-established performance goals over a performance period established by the LTIP Committee. An award of performance units is a performance-based award representing a right or interest denominated or payable in units, valued by reference to units, or otherwise based on or related to units that is made subject to the achievement of one or more pre-established performance goals over a performance period of up to ten years. A unit appreciation right is a right to receive upon exercise, in the form of units, cash or a combination of units and cash, the excess
15
of the fair market value of one unit on the exercise date over the grant price of the unit appreciation right. An unrestricted unit is an award that is free of restrictions other than those imposed under federal or state securities laws.
The 2024 LTIP provides that each award will be evidenced by an award agreement, which may specify terms and conditions of the award that differ from the terms and conditions which would apply under the 2024 LTIP in the absence of the different terms and conditions in the award agreement. Awards under the 2024 LTIP may be granted alone or in addition to, in tandem with, or in substitution or exchange for any other award under the 2024 LTIP, other awards under another compensatory plan of the Company or any of its affiliates (or any business entity that has been a party to a transaction with the Company or any of the Company’s affiliates), or other rights to payment from the Company or any of its affiliates. Awards granted in addition to or tandem with other awards may be granted either at the same time or at a different time.
Awards under the 2024 LTIP may be settled in cash, the Company’s units, other awards under the 2024 LTIP or other property. The LTIP Committee may permit or require the deferral of any payment under any award into a deferred compensation arrangement in accordance with rules and procedures established by the LTIP Committee.
Units Available for Issuance.
Subject to the adjustments described below and as provided in the 2024 LTIP, the maximum number of units of the Company that will be available for issuance under the 2024 LTIP will be equal to 1,100,000 common units, plus the number of units subject to awards outstanding under the Current Equity Plan as of the effective date of the 2024 LTIP that later terminate without the issuance of the units.
Units subject to an award granted under the 2024 LTIP will be counted against the maximum number of units available for issuance under the plan as one unit for every one unit subject to such an award. Units subject to an award granted under the 2024 LTIP will again become available for issuance under the 2024 LTIP if the award terminates by expiration, forfeiture, cancellation, or otherwise, without the issuance of such units (except as set forth below). In addition, any units withheld, deducted, or delivered from an award under the 2024 LTIP in connection with the Company’s tax withholding obligations will again become available for making awards under the 2024 LTIP in the same amount as such units were counted against the unit limit under the 2024 LTIP. The number of units available for issuance under the 2024 LTIP will not be increased by the number of units:
•
deducted or delivered from payment of an award in connection with the Company’s tax withholding obligations;
•
tendered or withheld or subject to an award surrendered in connection with the purchase of units upon exercise of an option; or
•
purchased by the Company with proceeds from option exercises (if any).
Units to be issued under the 2024 LTIP will be authorized and unissued units or, to the extent permitted under applicable laws, treasury units, or any combination of the foregoing, as may be determined from time to time by the LTIP Committee.
The number and kinds of units for which awards may be made under the 2024 LTIP, including the unit limits described above, will be adjusted proportionately and accordingly by the LTIP Committee in the event of any change in the outstanding units of the Company by reason of any unit distribution or split, reorganization, recapitalization, merger, consolidation, spin-off, combination or transaction or exchange of units or other corporate exchange, or any distribution to unitholders other than regular cash distributions or any transaction similar to the foregoing.
Fair Market Value Determination.
For so long as the Company’s units remain listed on the NYSE, the fair market value of a unit on an award grant date, or on any other date for which fair market value is required to be established under the 2024 LTIP, will be the closing price of the units as reported on the NYSE on the trading day immediately preceding such date. If there is no such reported closing price on the trading day immediately preceding such date, the fair market value of the unit will be the closing price of the unit as reported on the NYSE on the next preceding date on which any sale of units shall have been reported on the NYSE.
If the Company’s units cease to be listed on the NYSE and are listed on another established national or regional stock exchange or traded on another established securities market, fair market value will similarly be determined by reference to the closing price of the units on the applicable date as reported on such other exchange or established securities market.
If the Company’s units cease to be listed on an established national or regional stock exchange or traded on another established securities market, the LTIP Committee will determine the fair market value of a unit by the reasonable application of a reasonable valuation method in a manner consistent with section 409A of the Code.
On February 20, 2024, the closing price of a unit as reported on the NYSE was $28.37 per unit.
16
Options.
An option granted under the 2024 LTIP will be exercisable only to the extent that it is vested. Each option will become vested and exercisable at such times and under such conditions as the LTIP Committee may approve consistent with the terms of the 2024 LTIP. No option may be exercisable more than ten years after the option grant date. The LTIP Committee may include in the option agreement provisions specifying the period during which an option may be exercised following termination of the grantee’s service.
The exercise price per unit under each option granted under the 2024 LTIP may not be less than 100% of the fair market value of the unit on the option grant date.
Except in connection with a corporate transaction involving the Company (including any distribution (whether in the form of cash, units, other securities or other property), unit split, extraordinary distribution, recapitalization, change in control, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of units or other securities or similar transaction), the Company may not, without obtaining the grantee’s approval: (i) amend the terms of outstanding options to reduce the exercise price of such outstanding options; (ii) cancel outstanding options in exchange for options with an exercise price that is less than the exercise price of the original options; or (iii) cancel outstanding options with an exercise price above the current unit price in exchange for cash or other securities.
Payment of the exercise price for units purchased under the exercise of an option may be made in such forms as are approved by the LTIP Committee. These forms may include, in the LTIP Committee’s discretion, cash, cash equivalents acceptable to the Company, and units.
Awards of options generally will be nontransferable, except for transfers by will or the laws of descent and distribution.
Restricted Units and Deferred Units.
Subject to the provisions of the 2024 LTIP, the LTIP Committee will determine the terms and conditions of each award of restricted units and deferred units, including the restricted period for all or a portion of the award, the restrictions applicable to the award and the purchase price, if any, for the unit subject to the award. A grantee of restricted units will have all the rights of a unitholder, including the right to vote the units and receive distributions, except to the extent limited by the LTIP Committee or the Partnership Agreement. Grantees of deferred units will have no voting or distribution rights or other rights associated with unit ownership, although the LTIP Committee may award the right to cash payment on such units upon the Company’s payment of a cash distribution on its units, and any such payment may be subject to payroll withholding if required.
Grantees will not vest in distributions paid on performance-based awards of restricted units or deferred units, and will be required to forfeit and repay to the Company such distributions, if the performance goals for the underlying awards of restricted units or deferred units are not achieved or such awards otherwise do not vest. In addition, the LTIP Committee may subject distributions paid on time-vested awards of restricted units and deferred units to such forfeiture and repayment obligations if the underlying awards are forfeited before they vest.
The restrictions and the restricted period may differ with respect to each grantee of an award. An award will be subject to forfeiture if events specified by the LTIP Committee occur before the lapse of the restrictions. Awards of restricted units and deferred units generally will be nontransferable during the restricted period or before satisfaction of any other restrictions applicable to the awards.
Performance Units and Other Performance-Based Awards.
The LTIP Committee may award performance units and other performance-based awards in such amounts and upon such terms as the LTIP Committee may determine. Each grant of a performance-based award will have an initial value or target number of units that is established by the LTIP Committee at the time of grant. The LTIP Committee may set performance goals in its discretion which, depending on the extent to which they are met, will determine the value and number of performance units or other performance-based awards that will be paid out to a grantee. The right of a grantee to exercise or receive a grant or settlement of a performance-based award and the timing thereof may be subject to such performance goals as may be specified by the LTIP Committee. The LTIP Committee may use such business criteria and other measures of performance as it may deem appropriate in establishing any performance goals. Performance awards may be payable in cash, units, other awards under the 2024 LTIP or other property. The LTIP Committee will establish the performance periods for performance-based awards.
Unit Appreciation Rights.
Unit appreciation rights may be granted in conjunction with all or a part of any option or other award granted under the 2024 LTIP, or without regard to any option or other award. The LTIP Committee will determine on the grant date the time or times at which and the circumstances under which a unit appreciation right may be exercised in whole or in part, the time or times at which and the circumstances under which a unit appreciation right will cease to be exercisable, the method of exercise, the method of settlement, the form of consideration payable in settlement, the method by which units
17
payable as consideration will be delivered or deemed delivered to grantees, and any other terms or conditions of any unit appreciation right. Exercisability of unit appreciation rights may be subject to future service requirements, to the achievement of one or more of the performance measures described below or to such other terms and conditions as the LTIP Committee may impose. Upon exercise of a unit appreciation right, the holder will be entitled to receive, in the specified form of consideration, the excess of the fair market value of one unit on the exercise date over the grant price of the unit appreciation right, as determined by the LTIP Committee. The grant price of a unit appreciation right may not be less than the fair market value of a unit on the grant date.
Except in connection with a corporate transaction involving the Company (including any distribution (whether in the form of cash, units, other securities or other property), unit split, extraordinary distribution, recapitalization, change in control, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of units or other securities or similar transaction), the Company may not, without obtaining unitholder approval: (i) amend the terms of outstanding unit appreciation rights to reduce the exercise price of such outstanding unit appreciation rights; (ii) cancel outstanding unit appreciation rights in exchange for unit appreciation rights with an exercise price that is less than the exercise price of the original unit appreciation rights; or (iii) cancel outstanding unit appreciation rights with an exercise price above the current unit price in exchange for cash or other securities.
Awards of unit appreciation rights generally will be nontransferable, except for transfers by will or the laws of descent and distribution.
Other Equity-Based Awards.
The LTIP Committee may grant other types of equity-based or equity-related awards, including the grant or offer for sale of unrestricted units, in such amounts and subject to such terms and conditions as the LTIP Committee may determine.
Forfeiture; Recoupment.
The LTIP Committee may reserve the right in an award agreement to cause a forfeiture of the gain realized by a grantee with respect to an award thereunder on account of actions taken by, or failed to be taken by, such grantee in violation or breach of or in conflict with any (a) employment agreement, (b) non-competition agreement, (c) agreement prohibiting solicitation of employees or clients of the Company or any affiliate, (d) confidentiality obligation with respect to the Company or any affiliate, (e) Company policy or procedure, (f) other agreement or (g) any other obligation of such grantee to the Company or any affiliate, as and to the extent specified in such award agreement. The LTIP Committee may annul an outstanding award if the grantee thereof is terminated for “Cause” as defined in the 2024 LTIP or the applicable award agreement or for “cause” as defined in any other agreement between the Company or such affiliate and such grantee, as applicable. Any award granted pursuant to the 2024 LTIP shall be subject to mandatory repayment by the grantee to the Company to the extent the grantee is, or in the future becomes, subject to (a) any Company “clawback” or recoupment policy that is adopted to comply with the requirements of any applicable law, rule or regulation, or otherwise, or (b) any law, rule or regulation which imposes mandatory recoupment under circumstances set forth in such law, rule or regulation.
Change in Control in which Awards are not Assumed.
Upon the occurrence of a Change in Control (as defined below) in which outstanding awards of options, unit appreciation rights, restricted units, deferred units or other equity-based awards are not assumed or continued, the following provisions will apply to the awards:
•
Except with respect to performance-based awards, either of the following will occur:
•
all outstanding awards of restricted units and deferred units will be deemed to have vested, and the units subject to such deferred units will be delivered immediately before the Change in Control, and 15 days before the scheduled completion of the Change in Control, all outstanding options and unit appreciation rights will become immediately exercisable and will remain exercisable for a period of 15 days (subject to completion of the Change in Control); or
•
the LTIP Committee may elect to cancel any outstanding awards of options, restricted units, deferred units and unit appreciation rights and require payment or delivery to the holders of such awards of an amount in cash or securities having a value (as determined by the LTIP Committee): (i) in the case of restricted units and deferred units equal to the price per unit paid to holders of units under the Change in Control; and (ii) in the case of options or unit appreciation rights, equal to the product of the number of units subject to such options or unit appreciation rights multiplied by the amount, if any, by which (a) the price per unit paid to holders of units under the Change in Control exceeds (b) the option price per unit or appreciation right price applicable to such options and unit appreciation rights.
•
For performance-based awards:(i) if less than half of the performance period has lapsed, the awards will be converted into restricted units or performance units assuming target performance has been achieved (or into
18
unrestricted units if no further restrictions apply); (ii) if at least half of the performance period has lapsed, the awards will be converted into restricted units or performance units based on actual performance to date (or into unrestricted units if no further restrictions apply); and (iii) if actual performance is not determinable, the awards will be converted into restricted units or performance units assuming target performance has been achieved, based on the discretion of the LTIP Committee (or into unrestricted units if no further restrictions apply).
•
Other equity-based awards will be governed by the terms of the applicable award agreement.
Change in Control in which Awards are Assumed.
Except as otherwise provided in the applicable award agreement, another agreement with the grantee, or another writing, upon the occurrence of a Change in Control in which outstanding awards of options, unit appreciation rights, restricted units, deferred units or other equity-based awards are being assumed or continued, the 2024 LTIP and such awards (to the extent the awards are assumed or continued) will continue in the manner and under the terms specified in any writing providing for assumption or continuation of such awards, which may specify the substitution for such awards of new options, unit appreciation rights, restricted units, common units and other equity-based awards relating to the units of a successor entity, or a parent or subsidiary thereof. In the event of such a substitution, appropriate adjustments will be made to the number of units subject to the original awards (disregarding any transaction consideration that is not units) and to option and unit appreciation right exercise prices.
Definition of Change in Control.
The 2024 LTIP generally defines a “Change in Control” to mean the occurrence of any person, other than a person approved by the general partner, becoming the general partner of the Company.
U.S. Federal Income Tax Consequences
The U.S. federal income tax consequences of awards under the 2024 LTIP for grantees and the Company will depend on the type of award granted. The following summary description of tax consequences is intended only for the general information of unitholders and does not address state, local or non-United States tax laws. A grantee in the 2024 LTIP should not rely on this description and instead should consult his or her own tax advisor.
Options.
An option holder will not realize taxable income upon the grant of an option. When an option holder exercises the option, however, the difference between the exercise price of the option and the fair market value of the units subject to the option on the date of exercise will constitute compensation income taxable to the option holder. We will generally be entitled to a tax deduction equal to the amount of compensation income taxable to the option holder. If an option holder tenders units in payment of part or all of the exercise price of an option, no gain or loss will be recognized with respect to the units tendered. In such an event, the option holder will be treated as receiving an equivalent number of units under the exercise of the option in a nontaxable exchange. The tax basis of the units tendered will be treated as the substituted tax basis for an equivalent number of units received, and the units received will be treated as having been held for the same holding period as the holding period that expired with respect to the tendered units. The difference between the aggregate exercise price and the aggregate fair market value of the units received under the exercise of the option will be taxed as ordinary income, just as if the option holder had paid the exercise price in cash.
Restricted Units.
A grantee of a restricted unit (an actual transfer of ownership interest) will not recognize any taxable income for U.S. federal income tax purposes in the year of the award if the unit is subject to restrictions (that is, the restricted unit is nontransferable and subject to a substantial risk of forfeiture). The grantee, however, may elect under section 83(b) of the Code to recognize compensation income in the year of the award in an amount equal to the fair market value of the units on the date of the award, determined without regard to the restrictions, in which case the Company will generally be entitled to a tax deduction in the year of the grant and no tax deduction in the year of vesting. The grantee will have to find other assets to pay for the payroll tax withholding on an 83(b) election. If the grantee does not make such a section 83(b) election, the fair market value of the units on the date on which the restrictions lapse will be treated as compensation income to the grantee and will be taxable in the year in which the restrictions lapse. The Company will be entitled to a deduction for compensation paid equal to the amount treated as compensation income to the grantee in the year in which the grantee is taxed on the income.
Deferred Units and Performance-Based Awards.
A distribution of units or a payment of cash in satisfaction of deferred units or a performance-based award will be taxable as ordinary income when the distribution or payment is actually or constructively received by the recipient. The amount taxable as ordinary income is the aggregate fair market value of the unit determined as of the date it is received or, in the case of a cash award, the amount of the cash payment. The Company will generally be entitled to deduct the amount of such payments when such payments are taxable as compensation to the recipient.
19
Unit Appreciation Rights.
The grant of unit appreciation rights will not result in taxable income to the holder. Upon exercise of a unit appreciation right, the holder will recognize ordinary income in an amount equal to the cash or the fair market value of the unit received by the holder. The Company will generally be entitled to a deduction equal to the amount of any compensation income taxable to the grantee.
Unrestricted Units.
A holder of unrestricted units will be required to recognize ordinary income in an amount equal to the fair market value of the units on the date of the award, reduced by the amount, if any, paid for such units. The Company will generally be entitled to a tax deduction in the amount of any compensation income taxable to the grantee. Upon the holder’s disposition of the unrestricted units, any gain realized in excess of the amount reported as ordinary income will be reportable by the holder as a capital gain, and any loss will be reportable as a capital loss. Capital gain or loss will be long-term if the holder has held the units for more than one year. Otherwise, the capital gain or loss will be short-term.
Tax Withholding.
Payment of the taxes imposed on awards made under the 2024 LTIP may be made by withholding from payments otherwise due and owing to the grantee.
20
INFORMATION ABOUT NEXTERA ENERGY PARTNERS AND
MANAGEMENT
MANAGEMENT
Unit Ownership of Certain Beneficial Owners and Management
The following table shows the beneficial ownership of NextEra Energy Partners units as of December 31, 2023 by the only persons known by the Company to own beneficially more than 5% of any class of the outstanding units based on the units outstanding on the record date:
| | |
Title of Class
|
| | |
Name and Address of Beneficial Owner
|
| | |
Amount and Nature
of Beneficial Ownership
|
|
|
|
Percent of Class
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | Special Voting Units | | | |
NextEra Energy, Inc.
700 Universe Blvd. Juno Beach, FL 33408(1)
|
|
|
|
98,781,831
|
|
|
|
100%
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | Common Units | | | |
BlackRock, Inc.
55 East 52 nd Street New York, NY 10055(2)
|
|
|
|
7,172,519
|
|
|
|
7.7%
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | Common Units | | | |
NextEra Energy, Inc.
700 Universe Blvd. Juno Beach, FL 33408(1)
|
|
|
|
2,337,882
|
|
|
|
1.22%
|
|
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | |
Name
|
| | |
Units Beneficially Owned
|
| | ||||||||
| |
Units Owned
|
| | |
Units Which May Be
Acquired Within 60 Days
|
|
|
|
Total Units
Beneficially Owned
|
|
|
|||||
| | | Susan D. Austin | | | |
28,950
|
| | |
0
|
| | |
28,950
|
| |
| | | Robert J. Byrne | | | |
36,210
|
| | |
0
|
| | |
36,210
|
| |
| | | Terrell Kirk Crews, II | | | |
8,436
|
| | |
0
|
| | |
8,436
|
| |
| | | Mark E. Hickson | | | |
25,804
|
| | |
0
|
| | |
25,804
|
| |
| | | John W. Ketchum | | | |
54,136
|
| | |
0
|
| | |
54,136
|
| |
| | | Peter H. Kind | | | |
37,630
|
| | |
0
|
| | |
37,630
|
| |
| | | Rebecca J. Kujawa | | | |
32,342
|
| | |
0
|
| | |
32,342
|
| |
| | |
All directors and executive officers as a group (10 persons)
|
| | |
271,065
|
| | |
0
|
| | |
271,065
|
| |
| | Pipeline Entity | | | Transportation Reimbursements | |
| | LaSalle Pipeline, LP | | | $904,000 | |
| | Mission Natural Gas Company, LP | | | $61,000 | |
| | Mission Valley Pipeline Company, LP | | | $674,000 | |
| | NET Mexico Pipeline Partners, LLC | | | $426,000 | |
| | South Shore Pipeline, LP | | | $1,536,000 | |
30
The transportation reimbursements received by LaSalle Pipeline, LP, Mission Natural Gas Company, LP, Mission Valley Pipeline Company, LP, NET Mexico Pipeline Partners, LLC and South Shore Pipeline, LP under the NGTSA reflect amounts received prior to the sale of the NGTSA Pipeline Entities to a third party on December 28, 2023.
Section 311 Natural Gas Transportation Service Agreements
From time to time, Eagle Ford Midstream, LP, which was formally an indirect subsidiary of NEP OpCo prior to December 28, 2023, entered into Natural Gas Policy Act Section 311 Natural Gas Transportation Service Agreements (collectively, the “Eagle Ford NGTSAs”) with NEM. Under each Eagle Ford NGTSA, Eagle Ford Midstream, LP provides, transports and delivers natural gas on behalf of NEM (and the ultimate customer) on a firm basis, subject to the applicable pipeline’s operational capacity and force majeure events. In addition to a transportation rate payable under each Eagle Ford NGTSA, Eagle Ford Midstream, LP is also reimbursed by NEM for certain third-party fees. Each Eagle Ford NGTSA carries an initial term that may vary between one month and one year and, upon expiration of the initial term, the contract is automatically renewed on a month-to-month basis. After the expiration of the initial term, each party may cancel the agreement upon 30-days written notice to the other party. Eagle Ford Midstream, LP was sold to a third party on December 28, 2023 and therefore is no longer an indirect subsidiary of NEP OpCo. For the year ended December 31, 2023, NEM paid Eagle Ford Midstream, LP approximately $3.0 million in the aggregate under the Eagle Ford NGTSAs, inclusive of fees and reimbursements.
Fuel Management Services Agreement
On October 1, 2015, as amended thereafter on November 1, 2021 and December 28, 2023, NET Holdings Management, LLC, an indirect subsidiary of NEP OpCo, entered into a Fuel Management Services Agreement (“FMSA”) with NEM. NET Holdings Management, LLC assigned the FMSA to another indirect subsidiary of the Company, South Texas Midstream, LLC (“STX Midstream”), effective as of November 1, 2019. STX Midstream owned the Company’s pipeline business located in Texas (“Texas Pipelines”) prior to its sale to a third party on December 28, 2023. Under this agreement, NEM provided support for STX Midstream’s obligations to the Texas Pipelines under various natural gas sale and purchase, fuel supply, balancing, peaking and other gas-related agreements to supply and manage the Texas Pipelines. The agreement initially expired on December 31, 2016, but automatically renewed for successive one-year terms unless either party gives 60-days prior written notice of an election not to renew. For the year ended December 31, 2023, NEM paid NET Holdings Management, LLC approximately $1.1 million under this agreement.
Cash Sweep and Credit Support Agreement
NEP OpCo and NextEra Energy Resources are parties to an Amended and Restated Cash Sweep and Credit Support Agreement, dated August 4, 2017 (the “CSCS Agreement”), under which:
•
NextEra Energy Resources provides certain credit support on behalf of the Company’s subsidiaries’ existing projects and, upon NEP OpCo’s request and at NextEra Energy Resources’ option, may agree to provide certain credit support on behalf of any future project subsidiaries of the Company on similar terms, and NEP OpCo will reimburse NextEra Energy Resources to the extent NextEra Energy Resources or its affiliates are required to make payments under such credit support or to post cash collateral, subject to certain exceptions; and
•
when the projects in the Company’s portfolio receive revenues or when NEP OpCo receives distributions from the Company’s subsidiaries, NextEra Energy Resources or one of its affiliates may borrow excess funds from the Company’s subsidiaries, including NEP OpCo, and hold such funds in an account of NextEra Energy Resources or one of its affiliates for the benefit of NextEra Energy Resources and its affiliates until such funds are required by the Company or its subsidiaries to fund distributions or pay the Company’s subsidiaries’ expenses or until NEP OpCo otherwise demands the return of such funds. If NextEra Energy Resources or one of its affiliates realizes any earnings on the withdrawn funds prior to the return of such funds, it will be permitted to retain those earnings except as otherwise agreed upon with NEP OpCo.
NEP OpCo pays NextEra Energy Resources an annual credit support fee that is based on NextEra Energy’s borrowing costs, subject to adjustment. The fee is calculated as a fixed percentage of the aggregate amount of continuing credit support provided by NextEra Energy Resources or its affiliates to the Company’s subsidiaries, excluding credit support for which the Company’s subsidiaries do not have reimbursement obligations. If the aggregate amount of such credit support by NextEra Energy Resources or its affiliates increases or decreases, the credit support fee is adjusted accordingly as determined in
31
good faith by NextEra Energy Resources. For the year ended December 31, 2023, NEP OpCo paid NextEra Energy Resources approximately $7.6 million under the CSCS Agreement.
The term of the CSCS Agreement is for ten years from July 1, 2014 and will automatically renew for successive five-year periods unless NEP OpCo or NextEra Energy Resources provides written notice that it does not wish to renew the agreement. However, in certain limited circumstances, NEP OpCo is permitted to terminate the CSCS Agreement prior to the expiration of its term upon 90-days prior written notice. In certain limited circumstances, NextEra Energy Resources is permitted to terminate the CSCS Agreement upon 180-days prior written notice.
Exchange Agreement
The Company entered into an Exchange Agreement, dated July 1, 2014, and as amended on July 5, 2016 (the “Exchange Agreement”), with NEP OpCo and NEE Equity under which NEE Equity can tender NEP OpCo units for redemption to NEP OpCo. NEE Equity has the right to receive, at its election, either common units of the Company or a cash amount equal to the net proceeds from the sale by the Company of an equivalent number of the Company’s common units issued to fund such redemption, provided that NEP OpCo will only be required to pay the cash amount to the extent it has received corresponding capital contributions from the Company, although the Exchange Agreement does not require the Company to make such capital contributions. In addition, the Company has the right, but not the obligation, to directly purchase such tendered common units for, subject to the approval of the Company’s Conflicts Committee, cash or the Company’s common units. The Exchange Agreement also provides that, subject to certain exceptions, NEE Equity does not have the right to exchange its NEP OpCo units if NEP OpCo or the Company determines that such exchange would be prohibited by law or regulation or would violate other agreements to which the Company may be subject.
If NEE Equity elects to receive the Company’s common units in exchange for NEE Equity’s tendered NEP OpCo units, the exchange will be on a one-for-one basis, subject to adjustment in the event of splits, combinations of units and similar events. If NEE Equity elects to receive cash in exchange for NEE Equity’s tendered NEP OpCo units, or if the Company exercises its right to purchase tendered NEP OpCo units for cash, the amount of cash payable will be based on the net proceeds received by the Company in a sale of an equivalent number of the Company’s common units.
For the year end December 31, 2022, NEE Equity exchanged approximately 838,000 of NEP OpCo common units in exchange for the same number of the Company’s common units.
On January 31, 2023, NEE Equity gave notice to NEP OpCo electing to exchange 860,000 of NEP OpCo common units for the same number of the Company’s common units on or about April 3, 2023. On April 10, 2023, NEE Equity gave notice to NEP OpCo electing to exchange 860,000 of NEP OpCo common units for the same number of the Company’s common units on or about June 9, 2023.
Retail Power Supply Agreement
On May 27, 2020 and June 26, 2020, NET Mexico Pipeline Partners, LLC, an indirect subsidiary of NEP OpCo, entered into retail power supply agreements with Gexa Energy, LP (“Gexa”), an indirect wholly owned subsidiary of NextEra Energy Resources, authorizing Gexa to purchase and sell electricity on its behalf in the ERCOT day-ahead market or ERCOT real-time market. NET Mexico Pipeline Partners, LLC was sold to a third party on December 28, 2023 and therefore is no longer an indirect subsidiary of NEP OpCo. For the year end December 31, 2023, NET Mexico Pipeline Partners, LLC paid a total of approximately $11.4 million to Gexa for these services.
Related Party Tax Receivable
In 2018, the Company and NextEra Energy entered into a tax sharing agreement and, as a result, the Company recorded a tax receivable of approximately $18 million which was reflected in noncontrolling interests on the Company’s condensed consolidated balance sheets. In June 2023, NextEra Energy contributed 100,169 NEP OpCo units to the Company as payment to settle this tax receivable. Approximately $13 million, primarily related to the difference between the value of the tax receivable and the value of the NEP OpCo units received, was recorded as an adjustment to common unit equity and noncontrolling interests.
Whiptail-Montezuma Funding, LLC and VMCLR Holdings, LLC Acquisition
On April 24, 2023, NextEra Energy Partners Acquisitions, LLC (“NEP Acquisitions”), an indirect subsidiary of NEP OpCo, entered into a purchase and sale agreement with NEP US SellCo, LLC and ESI Energy, LLC, both of which are subsidiaries
32
of NextEra Energy Resources, to acquire from NEP US SellCo, LLC a 100% membership interest in each of Whiptail-Montezuma Funding, LLC, and VMCLR Holdings, LLC, which indirectly owns an approximately 688 MW portfolio of wind and solar generation facilities consisting of the following:
•
Montezuma II Wind, an approximately 78 MW wind generation facility in California;
•
Chaves County Solar, an approximately 70 MW solar generation facility in New Mexico;
•
Live Oak Solar, an approximately 51 MW solar generation facility in Georgia;
•
River Bend Solar, an approximately 75 MW solar generation facility in Alabama;
•
Casa Mesa Wind, an approximately 51 MW wind generation facility in New Mexico; and
•
New Mexico Wind, an approximately 204 MW wind generation facility in New Mexico.
The acquisition closed in June 2023 for a total purchase price of approximately $566 million, plus working capital and other adjustments.
Emerald Breeze Holdings, LLC, Appaloosa Run Wind, LLC, Eight Point Wind, LLC, Elk City Wind II, LLC, Great Prairie Wind, LLC, Sac County Wind, LLC, Sholes Wind, LLC, Yellow Pine Solar, LLC
In December 2022, an indirect subsidiary of the Company, completed the acquisition of ownership interests (December 2022 acquisition) in a portfolio of wind and solar-plus-storage generation facilities from subsidiaries of NextEra Energy Resources, LLC (“NEER”), the seller, consisting of the following:
•
100% of the Class A membership interests in Emerald Breeze Holdings, LLC (“Emerald Breeze”), representing a 49% controlling ownership interest, which indirectly owns:
•
Great Prairie Wind, LLC, an approximately 1,029 MW wind generation facility in Texas and Oklahoma.
•
Appaloosa Run Wind, LLC, an approximately 172 MW wind generation facility in Texas.
•
Yellow Pine Solar, LLC (“Yellow Pine”), a 125 MW solar generation and 65 MW storage facility in Nevada.
•
100% of the membership interests in Sac County Wind Holdings, LLC (“Sac County Wind”) and Elk City Sholes Holdings, LLC, which indirectly own:
•
Sholes Wind, LLC, an approximately 160 MW wind generation facility located in Nebraska.
•
Elk City Wind II, LLC, an approximately 107 MW wind generation facility located in Oklahoma.
•