UGI UGI Corp

​

​

​

UNITED STATES

​

SECURITIES AND EXCHANGE COMMISSION

​

Washington, D.C. 20549

SCHEDULE 14A

​

Proxy Statement Pursuant to Section 14(a) of the

​

Securities Exchange Act of 1934

​

(Amendment No.  )

​

​

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

​

UGI Corporation

​

(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.

​

☐    Fee paid previously with preliminary materials.

​

☐    Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.

​

​

​

​

​

​

 ​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

BOX 858 VALLEY FORGE, PA 19482 — 610-337-1000

 ​

MARIO LONGHI

Chair of the Board of Directors

December 19, 2024

​

Dear Fellow Shareholder,

On behalf of our entire Board of Directors, I cordially invite you to attend our Annual Meeting of Shareholders on Friday, January 31, 2025. In an effort to enable shareholder participation from any location around the world and to provide cost savings to both UGI and our shareholders, we will again be hosting an entirely virtual meeting this year.

I would like to take this opportunity to remind you that your vote is important. On December 19, 2024, we mailed our shareholders a notice containing instructions on how to access our Proxy Statement and Annual Report on Form 10-K for the 2024 fiscal year and how to vote online. Please read the proxy materials and take a moment now to vote online or by telephone as described in the proxy voting instructions. Of course, if you received these proxy materials by mail, you may also vote by completing the proxy card and returning it by mail.

On behalf of the UGI Board of Directors, thank you for your investment in and continued support of UGI Corporation. I look forward to addressing your questions on January 31st.

Sincerely,

Mario Longhi

Chair of the Board of Directors

​

BOX 858 VALLEY FORGE, PA 19482 — 610-337-1000

 ​

December 19, 2024

​

NOTICE OF

ANNUAL MEETING OF SHAREHOLDERS

The Annual Meeting of Shareholders of UGI Corporation will be held on Friday, January 31, 2025, at 9:00 a.m. Eastern Standard Time. It will be conducted solely through a virtual meeting format to enable shareholder participation from any location around the world, and to provide cost savings to both us and our shareholders. In-person attendance at the Annual Meeting will not be permitted. UGI Corporation has designed the virtual meeting format to ensure that its shareholders are afforded the same rights and opportunity to participate in the Annual Meeting as they would at an in-person meeting, including the ability to vote shares electronically during the meeting and ask questions during the meeting in accordance with the rules of conduct for the Annual Meeting.

Shareholders who wish to submit a question in advance may do so by visiting www.proxyvote.com. Questions may be submitted from Friday, January 17, 2025 until 11:59 p.m. Eastern Standard Time on Thursday, January 30, 2025. You should have your proxy card, voting instruction form or Notice of Internet Availability of Proxy Materials available when accessing the website. Each shareholder will be limited to no more than one question. Questions relevant to the business of the Annual Meeting will be read aloud and answered during the Annual Meeting, subject to time constraints.

To be admitted to the Annual Meeting, please visit www.virtualshareholdermeeting.com/UGI2025. Shareholders or their legal proxies must enter the 16-digit control number found on their proxy card, voting instruction form or other proxy materials. You will need a computer, web-enabled phone, tablet, or other device, together with appropriate Internet access and your 16-digit control number, to attend the Annual Meeting. Members of the public without a control number will also be able to access the Annual Meeting in listen-only mode by visiting www.virtualshareholdermeeting.com/UGI2025. Shareholders and other individuals without a 16-digit control number will not be able to otherwise participate in or vote at the Annual Meeting.

Online access to the Annual Meeting will open 15 minutes prior to the start of the Annual Meeting. Once admitted to the Annual Meeting, attendees may (i) listen to and participate in the Annual Meeting, (ii) vote or change a previously submitted vote, and (iii) view a list of shareholders of record as of December 2, 2024, the record date. Shareholders will consider and take action on the following items of business:

​

Jessica A. Milner

Corporate Secretary

Important Notice Regarding the Availability of Proxy Materials for the
Shareholder Meeting to be held on Friday, January 31, 2025:

This Proxy Statement and the Company’s 2024 Annual Report on Form 10-K are available at www.ugicorp.com.

​

​

​

​

​

​

​

​

​

​

​

This summary highlights information contained elsewhere in this Proxy Statement. This summary does not contain all of the information that you should consider. Please read the entire Proxy Statement carefully before voting.

​

​

​

​

​

​

​

​

​

Operational Highlights

The Company reported diluted earnings per share of $1.25 and adjusted diluted earnings per share of $3.06 for the fiscal year ended September 30, 2024 (“Fiscal 2024”). Our business strategy is to grow the Company by focusing on our core competencies of distributing, storing, transporting and marketing energy products. We utilize our core competencies from our existing diversified businesses and our international experience, extensive asset base and access to customers to accelerate both organic growth in our existing businesses as well as in related and complementary businesses.  

​

In Fiscal 2024, the Company embarked on a journey to enhance its financial profile and unlock greater value for shareholders. Our journey ahead is a multi-year process to optimize our Company’s operating model, establish a culture of high performance, pursue operational excellence through continuous improvement, and drive reliable earnings growth. Accordingly, we are focused on (1) pursuing opportunities to optimize our portfolio and drive reliable earnings growth in the base businesses; (2) executing on an operational improvement plan at AmeriGas Propane, L.P. (“AmeriGas”); (3) creating operational efficiencies to improve cost agility and deliver sustainable cost savings; and (4) enhancing our capital structure and credit metrics to provide greater financial flexibility.

​

We are committed to pursuing opportunities to optimize our portfolio and drive reliable earnings growth in our regulated utilities businesses, primarily through robust investments in our regulated utilities businesses, optimizing our cost structure, and effectively managing our global LPG businesses, which generate significant free cash flow. We strive to be the preferred provider in all markets we serve and to return value to our shareholders.

Environmental Strategy:

We believe that corporate sustainability is critical to our overall business success and we are committed to growing the Company in an environmentally responsible way. UGI’s environmental strategy is focused on three main areas: reducing our emissions; reducing our customers’ emissions affordably, reliably, and responsibly; and investing in renewable solutions. To support our strategy, we have made the following environmental commitments discussed below while also committing to continue to grow our earnings per share and dividends.

​

​

​

We report our progress on the environmental goals and commitments annually in our Sustainability Reports, including our Scope 1, 2 and 3 emissions, air quality impact, and water management efforts. Our Scope 3 emissions stem primarily from the extraction (upstream) and combustion (downstream) of the molecules we distribute, and from our supply chain. Our Sustainability Reports may be accessed on our website under “ESG - Resources - Sustainability Reports.” Information published in our Sustainability Reports is not incorporated by reference in this Proxy Statement.

​

Corporate Governance Highlights

​

The compensation program for our named executive officers is designed to provide a competitive level of total compensation necessary to attract and retain talented and experienced executives. Additionally, our compensation program is intended to motivate and encourage our executives to contribute to our success and reward our executives for leadership excellence and performance that promotes sustainable growth in shareholder value. In alignment with that objective, our Compensation and Management Development Committee and the Board determine pay based on a comprehensive view of quantitative and qualitative factors designed to enhance shareholder value and align the long-term interests of executives and shareholders.

In Fiscal 2024, the components of our executive compensation program included salary, annual bonus awards, long-term incentive compensation (performance unit awards, restricted stock unit awards, and stock option grants), limited perquisites, retirement benefits and other benefits, all as described in greater detail in the Compensation Discussion and Analysis of this Proxy Statement. We believe that the elements of our compensation program are essential components of a balanced and competitive compensation program to support our short- and long-term goals.

The Company allocates a substantial portion of compensation to performance-based compensation, effectively linking our executives’ compensation to our financial performance. In Fiscal 2024, 55% to 75% of the principal compensation components for all named executive officers, other than Mr. Longhi, were variable and tied to performance objectives.

For example, UGI Corporation relative TSR performance unit awards resulted in no payout for the UGI Corporation performance unit awards cycle ended December 31, 2020, December 31, 2021, December 31, 2022 and December 31, 2023. In addition, the current relative TSR cycle scheduled to end December 31, 2024 is tracking towards no payout. For the Fiscal 2023 performance units tied to Adjusted EPS, 81% of target was achieved for the two-year performance period ended September 30, 2024. However, these performance units are subject to an additional one-year time-vesting requirement ending on September 30, 2025.  For additional information on the alignment between our financial results and executive officer compensation, see the Compensation Discussion and Analysis in this Proxy Statement.

Executive Compensation Highlights

​

​

​

​

​

Ten directors have been nominated by the Board of Directors to stand for election as directors at the Annual Meeting of Shareholders based upon recommendations from the Corporate Governance Committee. Each director-nominee has consented to serve, if elected, until the next Annual Meeting or until his or her earlier resignation or removal. If any director-nominee is not available for election, proxies will be voted for another person nominated by the Board of Directors or the size of the Board will be reduced. At this time, the Board is unaware of any reason why any of the director-nominees may not be able to serve as a director if elected.

Other than Tina Faraca, who was elected by the Board of Directors to serve as a Director effective August 7, 2024, and Robert C. Flexon, David Bingenheimer, and Melanie Ruiz, who were elected by the Board of Directors to serve as Directors effective November 1, 2024, all of the director-nominees were elected to the Board by our shareholders at last year’s annual meeting. The Board of Directors has unanimously nominated David Bingenheimer, M. Shawn Bort, Theodore A. Dosch, Tina Faraca, Robert C. Flexon, Alan N. Harris, Mario Longhi, Kelly A. Romano, Melanie Ruiz, and Santiago Seage for election as directors at the 2025 Annual Meeting. Mr. Marrazzo will retire from the Board of Directors effective as of the Annual Meeting, having reached the mandatory retirement age.

Information about Director-Nominees

Biographical information for each of the director-nominees standing for election is set forth below, as well as a description of the specific experience, qualifications, attributes and skills that led the Board to conclude that, in light of the Company’s business and structure, the individual should serve as a director. The Board believes that each director-nominee has valuable individual skills and experience that, taken as a whole, provide the depth of knowledge, judgment and strategic vision necessary to provide effective oversight of the Company.

​

​

​

The following matrix highlights each director-nominee’s specific skills, knowledge, qualifications and experiences that are relevant to our long-term strategy beyond the minimum qualifications that our Board and Corporate Governance Committee of our Board believe are necessary for all directors. Our Board and Corporate Governance Committee believe that each director-nominee also brings a unique background, personal attributes and a range of expertise and knowledge not reflected in the matrix that provides our Board with an appropriate and diverse mix of skills and attributes necessary for the Board to fulfill its oversight responsibilities to our shareholders. More detailed information on each of our director-nominee’s backgrounds and qualifications is provided in their biographies beginning on page 13. Our Board and the Corporate Governance Committee do not assign specific weights to any of the below skills, knowledge, qualifications and experiences.

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Corporate Governance Principles

The business of UGI Corporation is managed under the direction of the Board of Directors. As part of its duties, the Board oversees the corporate governance of the Company for the purpose of creating and sustaining long-term value for its shareholders and safeguarding its commitment to its other stakeholders. To accomplish this purpose, the Board considers the interests of the Company’s stakeholders when, together with management, it sets the strategies and objectives of the Company.

The Board, recognizing the importance of good corporate governance in carrying out its responsibilities to our shareholders, has adopted the UGI Corporation Principles of Corporate Governance. The Principles of Corporate Governance provide a framework for the effective governance of the Board and the Company by outlining the responsibilities of the Board and Board Committees. The Board, upon recommendation of the Corporate Governance Committee, regularly reviews the Principles and, as appropriate, updates them in response to changing regulatory requirements, feedback from stakeholders on governance matters and evolving best practices in corporate governance.

The Company’s Principles of Corporate Governance are posted on our website at www.ugicorp.com (see Company — Leadership and Governance — Governance Documents) or in print, free of charge, upon written request.

Director Independence

The Board, upon the recommendation of the Corporate Governance Committee, determined that, other than Mr. Longhi (the Company’s then Interim President and Chief Executive Officer), no Director has a material relationship with the Company, and each Director satisfies the criteria for an “independent director” under the rules of the New York Stock Exchange. Effective November 1, 2024, Mr. Longhi no longer served as Interim President and Chief Executive Officer and he again satisfied the criteria for an “independent director” under the rules of the New York Stock Exchange.

The Board has established the following additional guideline to assist it in determining Director independence: if a Director serves as an officer, director or trustee of a non-profit organization, charitable contributions to that organization by the Company and its affiliates that do not exceed the greater of $1,000,000 or 2% of the charitable organization’s total revenues per year will not be considered to result in a material relationship between such Director and the Company.

In making its determination of independence, the Board and the Corporate Governance Committee, with the assistance of the Company’s legal counsel, considered charitable contributions and ordinary business transactions between the Company, or affiliates of the Company, and companies where our Directors are employed or serve as directors, all of which were in compliance with either the independence rules of the New York Stock Exchange or the categorical standard set by the Board for determining director independence.

Board Leadership Structure and Role in Risk Management

The Board of Directors regularly assesses and determines the most appropriate Board structure to ensure effective and independent leadership while also ensuring appropriate oversight of the operations and strategic direction of the Company.  The Board has determined that the appointment of an independent Chair is the most appropriate leadership structure for the Company, taking into account the current business conditions and the environment in which the Company operates.  For the period December 12, 2023 through October 31, 2024, Mr. Longhi served as Interim President and Chief Executive Officer of the Company and Chair of the Board following Roger Perreault’s departure from the Company in December 2023.  However, since November 1, 2024, Mr. Longhi has been serving as Independent Chair of the Board.  The Board believes that the Company is best served by having Mr. Longhi as Chair due to his extensive leadership and operational experience as a chief executive of large, international companies, his global strategic perspective and his prior contributions as a Director of the Board.  

We believe that the Board effectively oversees the Company’s risk management. In particular, our Board takes an active role in risk management and ESG efforts, fulfilling its oversight responsibilities directly as well as through delegation to the Audit Committee, the Compensation and Management Development Committee, the Corporate Governance Committee, and the Safety, Environmental and Regulatory Compliance Committee, with the Chair of each Committee reporting to the Board on each Committee’s oversight activities and decisions.

​

Our businesses are subject to a number of risks and uncertainties, which are described in detail in our Annual Report on Form 10-K for the fiscal year ended September 30, 2024. Throughout the year, management presents to the Board and its Committees on significant risks and risk mitigation plans. Management also reports to each of the Committees and the Board on steps being taken to enhance management processes and controls in light of evolving market, business, regulatory and other conditions. The Board reviews the risks facing the Company with both a short-and long-term strategic focus.

​

Oversight of Cybersecurity Risk

Our Safety, Environmental and Regulatory Compliance Committee is responsible for reviewing the overall adequacy of, and providing oversight with respect to, the Company’s safety, environmental and regulatory compliance policies, programs, procedures, initiatives and training in light of applicable legal requirements and governmental and industry standards in the jurisdictions in which the Company and its subsidiaries conduct business.  We also have several working groups responsible for collaborating on cybersecurity policies and standards.  The Global Chief Information Officer and the Global Chief Information Security Officer report to the Safety, Environmental and Regulatory Compliance Committee quarterly on the Company’s cybersecurity program, and to the full Board, as necessary.  In the event of a cybersecurity incident, our Global Chief Information Officer and Global Chief Information Security Officer, and others serving in similar capacities, will assess the incident and activate an incident response plan.  These officers will escalate review of the incident to business unit leaders and/or members of our executive leadership team, as appropriate.  We have a cybersecurity program to protect and preserve the confidentiality, integrity and continued availability of all information owned by, or in the care of, the Company.  Our cybersecurity program has a formalized framework that is informed by domestic and international laws, regulations and industry best practices and frameworks, such as the National Institute of Standards and Technology Cybersecurity Framework, to safeguard the confidentiality, integrity and availability of our information and systems.  Our Information Security Program serves as the foundation of our cybersecurity program and the Acceptable Use Policy also provides governance in this area.  We partner with other companies, industries and law enforcement to communicate information about the latest cybersecurity threats and leverage threat modeling insights.  We conduct cybersecurity assessments against industry cybersecurity frameworks to better enable us to prioritize actions and investments to enhance our cybersecurity capabilities.  Our cybersecurity teams work diligently to safeguard Company and customer data by applying layered and defensive mechanisms to proactively provide the security needed to detect and defend against cyber-attacks and to withstand potential impacts.  We periodically conduct tabletop exercises and penetration testing to test our defenses.  In addition, we provide new hires and employees with cybersecurity training, which is monitored and tracked on an annual basis.  We also issue routine phishing campaigns to educate employees on social engineering techniques and informal security awareness exercises are conducted throughout the year.

​

Board Meetings and Attendance

The Board of Directors held 23 meetings in Fiscal 2024. All Directors attended at least 75% of the meetings of the Board and Committees of the Board of which they were members. Generally, all Directors are expected to attend the Company’s Annual Meeting of Shareholders, absent unforeseen circumstances that prevent their attendance. All of the Company’s then current Board members attended the 2024 Annual Meeting of Shareholders.

Independent Directors of the Board also meet in regularly scheduled sessions without any members of management present. These sessions have been led by the Chair of the Board and were led by our Presiding Director while our Chair served as the Company’s Interim President and Chief Executive Officer through October 31, 2024.  Following such date, these sessions were again led by the Chair.  The purpose of these executive sessions is to promote open and candid discussion among the independent Directors. After each executive session, the independent Directors report to the full Board through the Chair on their deliberations and any recommendations for action to be taken by the Board.

Board and Committee Structure

Annually, the Corporate Governance Committee monitors and assesses the structure, composition, operation and performance of the Board and its Committees and, if appropriate, makes recommendations for changes to the Board. For Fiscal 2024, our Board Committees included Audit, Compensation and Management Development, Corporate Governance, Safety, Environmental and Regulatory Compliance, and Executive. The members of each of the Board Committees, with the exception of the Executive Committee, were independent as defined by the New York Stock Exchange listing standards. The Charters of the Audit, Compensation and Management Development, Corporate Governance, and Safety, Environmental and Regulatory Compliance Committees are posted on our website, www.ugicorp.com (see Company — Leadership and Governance — Committees and Charters), or in print, free of charge, upon written request.

​

​

​

​

Key Responsibilities:

​

Our Board has determined that each member of the Audit Committee is considered to be financially literate under applicable New York Stock Exchange listing standards. Additionally, the Board has determined that all members of the Audit Committee qualify as “audit committee financial experts” in accordance with the applicable rules and regulations of the U.S. Securities and Exchange Commission (“SEC”).  

​

​

​

​

Key Responsibilities:

​

​

​

Key Responsibilities:

​

​

​

​

​

​

​

Key Responsibilities:

Selection of Board Candidates

The Corporate Governance Committee conducts an annual assessment of the composition of the Board of Directors and the Committees of the Board, and establishes, with the Board, the appropriate qualifications, skills, experience and characteristics required of Board members. The Committee seeks director candidates based upon a number of qualifications, including independence, knowledge, judgment, character, leadership skills, education, experience, financial literacy, standing in the community and diversity of backgrounds and views, including, but not limited to, gender, race, ethnicity and national origin, recognizing that diversity is a critical element to enhancing Board effectiveness. The Committee also considers how director candidates’ qualifications complement the Board’s existing strengths. The Committee continuously evaluates these desired attributes in light of the Company’s long-term strategy and needs as part of its Director succession planning process. The Committee seeks individuals who have a broad range of demonstrated abilities and accomplishments in areas of strategic importance to the Company, such as senior executive leadership, general operational management, finance, energy distribution, international business, information technology, regulatory and public sector activities. Directors should also possess a willingness to challenge and stimulate management and the ability to work as part of a team in a collegial atmosphere. The Committee also seeks individuals who are capable of devoting the required amount of time to serve effectively on the Board and its Committees, and who do not hold directorships that could cause a conflict of interest or impair the individual’s ability to contribute meaningfully to the Board. With respect to incumbent Directors, the Committee also considers the past performance of each Director. As part of the annual process of nominating independent Board candidates, the Committee obtains an opinion of the Company’s legal counsel that there

is no reason to believe that the Board candidate is not “independent” as defined by the New York Stock Exchange listing standards.

The Corporate Governance Committee considers recommendations from a wide variety of its business contacts, including current Directors, executive officers, community leaders, and shareholders as a source for potential Board candidates. From time to time, the Committee also uses the services of third-party search firms and organizations that provide diverse candidates to assist it in identifying and evaluating possible nominees for Director. The Board reviews and has final approval of all potential Director nominees for election to the Board.

Shareholders may submit written recommendations for director-nominees to the Corporate Secretary, UGI Corporation, 500 North Gulph Road, King of Prussia, PA 19406. The Company’s Bylaws do not permit shareholders to nominate candidates from the floor at an annual meeting without notifying the Corporate Secretary 45 days prior to the anniversary of the mailing date of the Company’s proxy statement for the previous year’s annual meeting. Notification must include certain information detailed in the Company’s Bylaws. In addition to satisfying the foregoing notice requirements under our Bylaws, to comply with the universal proxy rules, shareholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must notify the Corporate Secretary 60 days prior to the anniversary of the previous year’s annual meeting. Notification must include certain information detailed in Rule 14a-19 under the Exchange Act. Shareholders who wish to include a director nominee in the Company’s proxy statement must comply in all respects with the terms and conditions set forth in the Company’s Bylaws and must submit such nominee to the Corporate Secretary no earlier than 150 days and no later than 120 days prior to the anniversary of the mailing date of the Company’s proxy statement for the previous year’s annual meeting.

Board and Committee Evaluation Process

The Board of Directors is committed to a robust and constructive annual performance self-assessment process, which seeks to determine whether the Board and its Committees function effectively. This self-assessment process is also linked with the Board’s long-term succession planning practices and Board refreshment generally. The Corporate Governance Committee is responsible for overseeing this formal process, with the assistance of the Corporate Secretary. Each year, the Committee reviews the overall evaluation process, as well as the substantive matters to be addressed by the evaluation process, with the goal to identify opportunities for improvement, as appropriate. The results of the assessments are discussed with the Committees and with the full Board. Any items requiring additional consideration are monitored by the Corporate Secretary throughout the subsequent year for follow-up action, as appropriate.

The Board evaluation process is conducted, in alternating years, by either a written questionnaire or by a series of interviews conducted by the independent Chair. During Fiscal 2024, each Director completed a written questionnaire regarding the effectiveness of the Board and each Committee on which the Director serves, as well as individual Director performance and Board dynamics with the Chair. The Corporate Secretary received the completed questionnaires, compiled the results and prepared a summary.  The summary is used as a basis for discussion by each of the Committees and the Board in identifying opportunities for improving the effectiveness of the Board and its Committees, including potential changes to policies and procedures, in order to enable the Board and each of its Committees to discharge its respective oversight responsibilities.

Limitations on Additional Board Service

The Company’s Principles of Corporate Governance include limits on the number of public company boards on which Directors may serve. The purpose of these limitations is to ensure that simultaneous service on multiple boards of directors will not impair a Director’s ability to contribute meaningfully to the Board.

Specifically, a Director may not serve on more than four public company boards (including UGI) and a Director who serves as an active executive officer of a public company may not serve on more than two public company boards (including UGI). Further, members of the Company’s Audit Committee may not serve on more than three public company board audit committees (including UGI’s Audit Committee). Additionally, for any potential public or private company board service not prohibited by these limitations, a Director is required to notify the Chair of the Corporate Governance Committee prior to accepting an invitation to serve on such board so that the Corporate Governance Committee may review the proposed relationship for potential conflicts of interest and confirm that simultaneous service on the additional board will not impair the Director’s ability to contribute meaningfully to the UGI Board.

Investor Outreach

UGI seeks regular engagement with investors to communicate our strategy and solicit feedback. Additionally, management periodically engages a third-party consultant to obtain independent feedback from our investors. In Fiscal 2024, management participated in a number of investor conferences, roadshows and meetings. These meetings were attended by various members of the Company’s senior management, including our Interim Chief Executive Officer, Chief Financial Officer, Vice Presidents, and/or senior members of our business unit management teams. Management periodically discusses feedback, including key themes and other insights gained from the investor outreach meetings, at the Company’s Board and Committee meetings, as appropriate. The Board, as well as the management team, values the perspectives of our investors as it helps us to understand and evaluate the effectiveness of our investor communications. Additionally, the Compensation and Management Development Committee takes into consideration the results of the annual advisory vote on the Company’s executive compensation program. At the 2024 Annual Meeting, nearly 78% of the Company’s voting shareholders showed their support by voting to approve the compensation of the Company’s named executive officers.

Code of Business Conduct and Ethics and Supplier Code of Business Conduct and Ethics

The Company has adopted a Code of Business Conduct and Ethics and a Supplier Code of Business Conduct and Ethics, which are posted on the Company’s website, www.ugicorp.com (see “Company — Leadership and Governance — Governance Documents”). UGI’s Code of Business Conduct and Ethics expresses our commitment to integrity. It summarizes our expectations and standards for ethical behavior and helps us navigate an increasingly complex world. Our Code of Business Conduct and Ethics applies to all employees of UGI Corporation and its subsidiaries, as well as our Board of Directors and Company officers. We also expect our third-party consultants, contractors, vendors, and service providers to live up to the expectations outlined in our Supplier Code of Business Conduct and Ethics.

Insider Trading Policy and Equity Grant Practices

The Company has adopted an Insider Trading Policy governing the purchase, sale, and/or other dispositions of the Company’s securities that is reasonably designed to promote compliance with applicable laws, rules and regulations.

The Compensation and Management Development Committee generally approves annual stock option, restricted stock unit and performance unit grants to executive officers in the last calendar quarter of each year, to be effective the following January. Grants to a new employee are generally effective on the later of the date the employee commences employment with us or the date the Compensation and Management Development Committee authorizes the grants. In either case, for stock options, the exercise price is equal to or greater than the closing price per share of the Company’s common stock on the effective date of grant. From time to time, management recommends stock option, restricted stock unit, and performance unit grants for non-executive employees, and the grants, if approved by the Chair of the Compensation and Management Development Committee and the Company’s Chief Executive Officer, are effective on or after the date of approval. We believe that our stock option, restricted stock unit and performance unit grant practices are appropriate and effectively eliminate any question regarding “timing” of grants in anticipation of material events.

Compensation Committee Interlocks and Insider Participation

During Fiscal 2024, Messrs. Longhi (until December 2023), Marrazzo (Chair), and Seage, and Ms. Cindy Miller (until March 2024) served as members of the Compensation and Management Development Committee. None of the current or former members: (i) were former or current officers or employees of the Company or any of its subsidiaries while serving as a member of the Compensation and Management Development Committee, (ii) were executive officers of another company where an executive officer of UGI Corporation was a director, or (iii) had any relationship requiring disclosure under Item 404 of Regulation S-K.

Further, none of our executive officers served as a member of a compensation committee or board of directors of any other entity of which any member of our Board was an executive officer.

Communications with the Board

You may contact the Board of Directors, an individual independent Director, or the independent Directors as a group, by writing to them c/o Corporate Secretary, UGI Corporation, 500 North Gulph Road, King of Prussia, Pennsylvania 19406.

Any communications directed to the Board, an individual independent Director, or the independent Directors as a group from employees or others that concern complaints regarding accounting, financial statements, internal controls, ethical or auditing matters will be handled in accordance with procedures adopted by the Audit Committee.

All other communications directed to the Board, an individual independent Director, or the independent Directors as a group are initially reviewed by the Corporate Secretary.  In the event the Corporate Secretary has any question as to whether the Directors should be made aware of any issue raised, the Corporate Secretary shall be entitled to consult with the Chair of the Board in making such determination. The Corporate Secretary will distribute communications to the Board, an individual Director, or to selected Directors, depending on the content of the communication.

Typically, we do not forward to our Board communications from our shareholders or other parties that are of a personal nature or are not related to the duties and responsibilities of the Board, including, but not limited to, junk mail and mass mailings, resumes and other forms of job inquiries, opinion surveys and polls and business solicitations or advertisements.

​

​

​

​

DETERMINATION OF NON-EMPLOYEE DIRECTOR COMPENSATION

Our Board of Directors plays a critical role to guide our strategic direction and create and sustain long-term value for our shareholders, with intense focus on corporate governance best practices. In order to attract and retain highly qualified, skilled, diverse and experienced public company directors to effectively guide the Company and address the risks and responsibilities associated with a company of size and complexity similar to UGI, it is necessary to provide a competitive director compensation program. Our non-employee Directors are compensated based upon their service as a Director as well as their respective roles on Board Committees. Our employee Directors receive no separate compensation for their service as Directors.

Our director compensation is overseen by the Corporate Governance Committee, which makes recommendations to our Board of Directors on the structure of our non-employee director compensation program and the appropriate amount of compensation. Our Board of Directors is responsible for approval of our non-employee director compensation program and the compensation paid to our non-employee Directors. In establishing director compensation, our Corporate Governance Committee and our Board of Directors rely on market comparables and assess the vital strategic skills and qualifications of the Board to fulfill our Company’s short- and long-term goals.

The Corporate Governance Committee retained Pay Governance as its independent compensation consultant to assist with the review of our non-employee director compensation and incentive programs for Fiscal 2024. In connection therewith, Committee member and chair retainers, the number of Board and Committee meetings, stock-based compensation, share ownership requirements and total cash and equity compensation were reviewed.

For our non-employee Directors, other than our Board Chair, we referenced market data provided to us by Pay Governance that compared our non-employee director compensation to similarly-sized companies in the General Industry (weighted 75%) and Energy Services (weighted 25%) sectors. This methodology is consistent with the methodology used to benchmark the compensation of our named executive officers. We seek to position our non-employee director compensation (other than the Board Chair) within 10% of the median total compensation of the directors included in the databases referenced by Pay Governance. See COMPENSATION DISCUSSION AND ANALYSIS – Determination of Competitive Compensation for additional information on the methodology used to benchmark the compensation of our named executive officers.

DETERMINATION OF BOARD CHAIR COMPENSATION

As discussed in greater detail below, the Corporate Governance Committee and Board of Directors (with the Board Chair recusing himself from discussions and decisions regarding incremental Chair compensation) rely on market data as well as a number of other factors in determining independent Chair compensation. The size and complexity of the Company’s business, including that we operate domestic and international LPG businesses, a domestic natural gas and electric utility business, and domestic and international midstream businesses, drives the need for our Board Chair to dedicate a significant amount of time to Company-related matters. In addition, we believe that our Board Chair’s duties and responsibilities are significantly more strategic and expansive than those of a typical board chair.

Our Board of Directors considers it to be a best practice from a corporate governance standpoint to have an independent chair of the board of directors. Because a significant majority of the companies included in the Energy Services Database have an executive chair of their board of directors rather than an independent chair, as independence is defined under New York Stock Exchange rules, we do not believe that sufficient comparable data exists to appropriately determine compensation for UGI’s independent Chair using the methodology applied to our director compensation generally. As a result, for Fiscal 2022 UGI Board Chair compensation, Pay Governance referenced a comparator group selected from the General Industry Database based on: (i) a combination of median revenue and market capitalization similar to those of the Company and (ii) a representation of a variety of industries that reflect a cross-section of operations that are reflective of the Company’s complexity. Since the Corporate Governance Committee did not consider changing Chair Compensation for Fiscal 2024, an updated analysis with respect to Chair compensation was not requested from Pay Governance.

Consistent with the aforementioned methodology, the following comparator group (with similar median revenue and market capitalization as UGI for the same period reviewed) was referenced for purposes of determining the Fiscal 2022 compensation of our Board Chair (again, there was no change in Chair compensation for Fiscal 2024):

​

In addition to referencing the above general industry comparator group, the Corporate Governance Committee and Board of Directors (with the Board Chair recusing himself from the discussion and decision regarding incremental Chair compensation) considered a number of other factors in determining the compensation for the Board’s independent Chair within a range of 10% of the $440,000 Fiscal 2022 median total compensation of the comparator group. These factors include the significant time commitment spent by the Board Chair on Company-related matters in light of the size and complexity of the Company’s business, including domestic and international LPG businesses, a domestic natural gas and electric utility business, and domestic and international midstream businesses. Furthermore, UGI’s Board Chair role involves a variety of significant strategic responsibilities that drive value for our shareholders, including merger and acquisition activities, business transformation projects, capital project investment reviews, chief executive officer succession planning, regular discussions with management regarding the Company’s strategic direction and communications, and direct engagement with the Company’s investors. We view the role of UGI’s Board Chair as a highly strategic role with duties and responsibilities over and above traditional Chair activities, which would include chairing meetings, setting meeting agendas and facilitating discussions with other directors on the board in between meetings.

ELEMENTS OF NON-EMPLOYEE DIRECTOR COMPENSATION

For Fiscal 2024, our non-employee director compensation program consisted of: (i) annual cash retainers for Board service and for service as the chair or member of one of the standing Board Committees and (ii) long-term equity awards granted on an annual basis to non-employee Directors immediately following the Company’s Annual Meeting of Shareholders, or following their initial appointment to the Board for new directors. Our non-employee Directors did not receive any Board or Committee meeting fees in Fiscal 2024 and Mr. Longhi did not receive an annual cash retainer or long-term equity award for Board or Committee service during the time that he served as the Company’s Interim President and Chief Executive Officer.

​

​

In Fiscal 2024, the Company paid its non-employee Directors an annual base retainer of $102,500 for Board service and paid an additional annual retainer of $12,500 to members of the Audit Committee, other than the chair of the Committee. The Company also paid an annual retainer to the chair of each of the Committees, other than the Executive Committee, as follows:

​

In addition, the Company paid Mr. Harris an additional cash retainer of $30,000 for his service as Presiding Director for Fiscal 2024.

​

Each non-employee Director continuing to serve as a Director after the adjournment of the 2024 Annual Meeting of Shareholders received long-term equity grants consisting of 4,470 UGI stock units and 12,890 UGI stock options. Mr. Seage received an additional 3,700 UGI stock options and 1,280 UGI stock units in Fiscal 2024 which represents a pro-rated grant of awards for the period of time he provided service as a Director in calendar year 2023. Our philosophy is to pay a higher percentage of total compensation in equity, rather than cash, to more closely align the interests of our non-employee Directors with those of our shareholders. In addition, all non-employee Directors are required to own Company common stock, together with stock units, in an aggregate amount equal to five times the Director’s base annual cash retainer.

The UGI stock units and stock options were granted under the UGI Corporation 2021 Incentive Award Plan (the “2021 Plan”). Each stock unit represents the right to receive a share of stock and dividend equivalents when the Director ends his or her service on the Board. Stock units earn dividend equivalents on each record date for the payment of a dividend by the Company on its shares. Accrued dividend equivalents are converted to additional stock units annually, on the last date of the calendar year, based on the closing stock price for the Company’s shares on the last trading day of the year. All stock units and dividend equivalents are fully vested when credited to the Director’s account. Account balances become payable 65% in shares and 35% in cash, based on the value of a share, upon retirement or termination of service, unless a deferral election to defer payout of the stock units was made pursuant to the UGI Corporation 2009 Deferral Plan. In the case of a change in control of the Company, the stock units and dividend equivalents will be paid in cash based on the fair market value of the Company’s common stock on the date of the change in control.

For UGI stock options, the option exercise price is not less than 100% of the fair market value of the common stock on the effective date of the grant. The term of each option is generally 10 years, which is the maximum allowable term. The options are fully vested on the effective date of the grant. All options are nontransferable and generally exercisable only while the Director is serving on the Board, with exceptions for exercise following disability, death or retirement. If termination of service occurs due to disability, the option term is shortened to the earlier of the third anniversary of the date of such termination of service or the original expiration date. In the event of death, the option term will be shortened to the earlier of the expiration of the 12-month period following the Director’s death or the original expiration date. If termination of service occurs due to retirement, as defined in the 2021 Plan, the option remains exercisable through its original expiration date.

​

DIRECTOR COMPENSATION TABLE

The table below shows the components of director compensation for Fiscal 2024.

​

each Director’s account as of September 30, 2024, see SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS — SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS, page 72.

STOCK OWNERSHIP GUIDELINES AND EQUITY PLAN LIMITS FOR INDEPENDENT DIRECTORS

All independent Directors are required to own Company common stock, together with stock units, in an aggregate amount equal to five times the Director’s base annual cash retainer and to achieve the target level of common stock ownership within five years after joining the Board.

The Company has a $500,000 annual limit with respect to individual Director equity awards. In establishing this limit, the Board of Directors considered competitive pay levels as well as the need to retain its current Directors and attract new directors with the relevant skills and attributes desired in director candidates.

​

​

​

The Board of Directors has adopted a written policy that applies to transactions with related parties. The policy applies to any transaction in which (i) the Company or any of its subsidiaries is a participant, (ii) any related person has a direct or indirect material interest, and (iii) the amount involved exceeds $120,000, except for any such transaction that does not require disclosure under SEC regulations. The Audit Committee of the Board of Directors, with assistance from the Company’s Corporate Secretary, is responsible for reviewing, approving and ratifying related person transactions. The Audit Committee intends to approve or ratify only those related person transactions that are in, or not inconsistent with, the best interests of the Company and its shareholders.

​

​

​

​

The Audit Committee is composed of independent Directors as defined by the rules of the New York Stock Exchange and Securities and Exchange Commission audit committee membership requirements. The Audit Committee has certain duties and powers as described in its written charter adopted by the Board of Directors. A copy of the charter can be found on the Company’s website at www.ugicorp.com (Company — Leadership and Governance — Committees and Charters — Audit Committee). As described more fully in its charter, the role of the Committee is to assist the Board of Directors in its oversight of the quality and integrity of the Company’s financial reporting process. The Committee also has the sole authority to appoint, retain, fix the compensation of, and oversee the work of, the Company’s independent auditors, as well as review the services performed by the Company’s internal audit department.

In this context, the Committee has met and held discussions with management and the independent auditors to review and discuss the Company’s internal control over financial reporting, the interim unaudited financial statements, and the audited financial statements for Fiscal 2024. The Committee also reviewed management’s report on internal control over financial reporting, required under Section 404 of the Sarbanes-Oxley Act of 2002. As part of this review, the Committee reviewed the bases for management’s conclusions in that report and the report of the independent registered public accountants on the effectiveness of the Company’s internal control over financial reporting. The Committee has also discussed with the independent auditors the matters required to be discussed by Auditing Standard No. 1301, Communications with Audit Committees, issued by the Public Company Accounting Oversight Board (“PCAOB”). In addition, the Committee has received the written disclosures and the letter from the independent auditors required by applicable requirements of the PCAOB regarding the independent accountant’s communications with the Audit Committee concerning independence, and discussed with the independent auditors their independence.

Management has primary responsibility for the financial reporting process, including the system of internal controls, and for preparation of consolidated financial statements in accordance with accounting principles generally accepted in the United States of America. The Company’s independent auditors are responsible for auditing those financial statements and expressing an opinion as to their conformity with accounting principles generally accepted in the United States of America.

The members of the Committee are not professionally engaged in the practice of auditing or accounting. The members of the Committee rely, without independent verification, on the information provided to them and on the representations made by management and the independent auditors. Accordingly, the Committee’s considerations and discussions referred to above do not assure that the audit of the Company’s financial statements has been carried out in accordance with auditing standards generally accepted in the United States of America, that the financial statements are presented in accordance with accounting principles generally accepted in the United States of America or that our auditors are, in fact, “independent.”

Ernst & Young LLP served as the Company’s independent registered public accounting firm for Fiscal 2024 and its audit report appears in our Annual Report on Form 10-K for the fiscal year ended September 30, 2024.  As a result of a comprehensive competitive process for audit services that was conducted during Fiscal 2024, the Committee approved KPMG LLP as the Company’s independent registered public accounting firm for the 2025 fiscal year.

Based upon the reviews and discussions described in this report, the Committee recommended to the Board of Directors, and the Board of Directors approved, that the audited financial statements be included in the Company’s Annual Report on Form 10-K for Fiscal 2024 for filing with the SEC.

​

Audit Committee

M. Shawn Bort, Chair

Theodore A. Dosch

Kelly A. Romano

​

​

​

​

In the course of its meetings, the Audit Committee considered whether the provision by Ernst & Young LLP of the professional services described below was compatible with Ernst & Young LLP’s independence. The Committee concluded that our independent registered public accounting firm is independent from the Company and its management.

Consistent with SEC policies regarding auditor independence, the Audit Committee has responsibility for appointing, setting the compensation of and overseeing the work of the Company’s independent accountants. In recognition of this responsibility, the Audit Committee has a policy of pre-approving  audit  and permissible non-audit services provided by the independent accountants. The Audit Committee has also delegated limited approval authority to its chair, such authority to be exercised in the intervals between meetings, in accordance with the Audit Committee’s pre-approval policy.

Prior to engagement of the Company’s independent registered public accounting firm for the next year’s audit, management submits to the Audit Committee for approval a list of services expected to be rendered during that year, and fees related thereto. The aggregate fees billed by Ernst & Young LLP, the Company’s independent registered public accountants in Fiscal 2024 and 2023, were as follows:

Audit Fees

Fees for Audit services and related expenses totaled approximately $9.0 million in Fiscal 2024 and approximately $8.4 million in Fiscal 2023, including (i) the annual audit of the consolidated financial statements of the Company, (ii) statutory audits, (iii) review of the interim financial statements included in the Company’s Quarterly Reports on Form 10-Q and (iv) services that only the independent registered public accounting firm can reasonably be expected to provide, including the issuance of comfort letters.

Audit-Related fees

Fees for Audit-Related services totaled approximately $0.3 million in Fiscal 2024 and approximately $0.3 million in Fiscal 2023. Audit-Related Fees for Fiscal 2024 and Fiscal 2023 were for audits of subsidiary financial statements, debt compliance letters, and other attest services related to financial reporting not required by statute or regulation.

Tax fees

No Tax fees were incurred for Fiscal 2024. Tax Fees for Fiscal 2023 totaled approximately $0.03 million and were for tax compliance or advisory services at the Company and the Company’s international subsidiaries.

All Other fees

Fees for All Other services not included above totaled approximately $0.01 million in Fiscal Year 2024 and in Fiscal Year 2023. In both years, all other fees were for software license fees.

​

​

​

​

The Committee has reviewed and discussed with management the Compensation Discussion and Analysis included in this Proxy Statement. Based on this review and discussion, the Committee recommended to the Company’s Board of Directors, and the Board of Directors approved, the inclusion of the Compensation Discussion and Analysis in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2024 and the Company’s Proxy Statement for the 2025 Annual Meeting of Shareholders.

​

Compensation and Management

Development Committee

William J. Marrazzo, Chair

Santiago Seage

​

Notwithstanding anything to the contrary, the reports of the Audit Committee and the Compensation and Management Development Committee shall not be deemed incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), except to the extent that the Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under such Acts.

​

​

​

​

​

​

INTRODUCTION

In this Compensation Discussion and Analysis, we address the compensation paid or awarded to the following executive officers: Mario Longhi, our Interim President and Chief Executive Officer through October 31, 2024 and our current Chair of the Board of Directors; Sean P. O’Brien, our Chief Financial Officer; Robert F. Beard, our Chief Operations Officer; John Koerwer, our Chief Information Officer; Kathleen Shea Ballay, our General Counsel and Chief Legal Officer; Judy A. Zagorski, our former Chief Human Resources Officer; and Roger Perreault, our former President and Chief Executive Officer. We refer to these executive officers as our “named executive officers” for Fiscal 2024.

Compensation decisions for Messrs. Longhi and Perreault were made by the independent members of our Board of Directors after receiving the recommendations of its Compensation and Management Development Committee (the “Committee”), while compensation decisions for Messrs. O’Brien, Beard, and Koerwer and Mses. Shea Ballay and Zagorski were made by the Committee. For ease of understanding, we will use the term “we” to refer to UGI Corporation, UGI International, LLC (“UGI International”), UGI Utilities, Inc. (“UGI Utilities”), and UGI Energy Services, LLC (“Energy Services”) in the relevant compensation discussions, unless the context indicates otherwise.

Effective December 12, 2023, Mr. Perreault ceased to serve as President and Chief Executive Officer of the Company and as a member of the Board. In connection with Mr. Perreault’s departure, the Board appointed Mr. Longhi as Interim President and Chief Executive Officer, who served in this capacity through Fiscal 2024 and until he was succeeded by Robert C. Flexon, the Company’s current President and Chief Executive Officer, on November 1, 2024.  As a result of the timing of Mr. Perreault’s departure, he did not receive any long-term incentive compensation awards in Fiscal 2024.  Additionally, due to the interim nature of Mr. Longhi’s service as an executive officer, the disclosure regarding long-term incentive compensation excludes Mr. Longhi.  Mr. Longhi’s long-term incentive compensation is separately addressed in this Compensation Discussion and Analysis.  Ms. Zagorski left the Company on July 1, 2024.  As previously announced, Mr. Beard intends to retire from his position as Chief Operations Officer, effective December 31, 2024.  In connection with his departure and the subsequent elimination of the Chief Operations Officer position, Mr. Beard’s departure will be treated as an involuntary termination.    

​

EXECUTIVE SUMMARY

Our compensation program for named executive officers is designed to provide a competitive level of total compensation; motivate and encourage our executives to contribute to our financial success; retain talented and experienced executives; and reward our executives for leadership excellence and performance that promotes sustainable growth in shareholder value. As set forth in this Compensation Discussion and Analysis, the level of compensation received by the Company’s named executive officers in Fiscal 2024 reflects the Company’s performance during Fiscal 2024.

​

The following chart summarizes the principal elements of our Fiscal 2024 executive compensation program. We describe these elements, as well as retirement, separation and other benefits, in more detail later in this Compensation Discussion and Analysis.

¹UGI Corporation’s Fiscal 2024 diluted earnings per share were adjusted to exclude (i) the impact of changes in unrealized gains and losses on commodity and certain foreign currency derivative instruments not associated with current period transactions ($.18 gain per diluted share), (ii) restructuring costs ($.26 loss per diluted share); (iii) disposal of UGI International energy marketing businesses ($.32 loss per diluted share), (iv) AmeriGas Propane operations enhancement for growth project ($.09 loss per diluted share), (v) debt extinguishment ($.03 loss per diluted share), (vi) impairment of AmeriGas Propane goodwill ($.89 loss per diluted share); (vii) loss on disposal of UGI Development Company ($.26 loss per diluted share) and (viii) impairment of equity method investments and assets ($.14 loss per diluted share).

​

​

Principal Components of Compensation Paid to Named Executive Officers in Fiscal 2024

​

​

​

The Committee sets rigorous goals for our executive officers that are directly tied to the Company’s financial performance and our total return to our shareholders. We believe that the performance-based components of our compensation program, namely our annual bonuses, stock options and performance units, have effectively linked our executives’ compensation to our financial performance.  In Fiscal 2024, the Committee continued the use of a second performance unit metric, Adjusted EPS, which was introduced in Fiscal 2023.  Performance units comprised 60% of the target long-term incentive award for named executive officers in Fiscal 2024.  The Committee recognizes the criticality of Adjusted EPS and included Adjusted EPS as a financial metric in both the short-term and long-term incentive compensation plans for Fiscal 2024. The following charts set forth the Company’s Adjusted EPS performance from Fiscal 2022 through Fiscal 2024 as well as the Company’s three-year stock performance compared to the (i) S&P Utilities Index and (ii) UGI Performance Peer Group, which is the peer group referenced by the Committee for purposes of the Company’s long-term compensation plan.  

​

​

The Summary Compensation Table reflects the grant-date fair value for equity awards, as required. However, we believe that a better assessment of amounts earned through equity awards can be made by considering our executives’ realizable pay. UGI Corporation relative TSR performance unit awards resulted in no payout for the UGI Corporation performance unit awards cycle ended December 31, 2020, December 31, 2021, December 31, 2022 and December 31, 2023. In addition, the current relative TSR cycle scheduled to end December 31, 2024 is tracking towards no payout.  For the Fiscal 2023 performance units tied to Adjusted EPS, 81% of target was achieved for the two-year performance period ended September 30, 2024.  However, these performance units are subject to an additional one-year time-vesting requirement ending on September 30, 2025.  Further, all outstanding stock option awards except for the January 1, 2024 grant are “underwater” as of September 30, 2024, meaning that the exercise price for those option awards was higher than the market price of UGI Corporation common stock on that date (the “in-the-money” value of the January 1, 2024 option grant is $0.42 per option). None of our named executive officers received a performance unit payout in Fiscal 2024 or exercised any “in-the-money” stock options in Fiscal 2024.

Short-Term Incentives — Annual Bonuses

Our annual bonuses are directly tied to key financial metrics as well as safety performance and, beginning in Fiscal 2024, achievement of an excess free cash flow goal (“EFCF goal”) and an Operating Expense reduction goal (“OpEx goal”). Additional details on the components of the annual bonuses for our named executive officers are set forth in more detail in this Compensation Discussion and Analysis.

As illustrated in the chart below, when the Company’s Adjusted EPS is below the targeted goal, the annual bonus percentage paid to a named executive officer is less than the targeted payout amount. Similarly, when Adjusted EPS exceeds the targeted goal, the annual bonus percentage paid to a named executive officer exceeds the targeted payout amount. The Committee has discretion under our executive annual bonus plans to (i) adjust Adjusted EPS for extraordinary items or other events as the Committee deems appropriate, (ii) determine whether a participant has earned a bonus, and the amount of any such bonus earned, and (iii) increase or decrease the amount of an award determined to be payable under the bonus plan by up to 50% based on a participant’s individual performance. See COMPENSATION DISCUSSION AND ANALYSIS — Elements of Compensation — Annual Bonus Awards, beginning on page 44. The following table

demonstrates the strong link between Company financial performance and bonus payout percentages by illustrating that the Company’s Adjusted EPS (as compared to the targeted Adjusted EPS range) during each of the last three fiscal years directly correlates to the bonus payouts for our executives.

​

​

Long-Term Incentive Compensation

Our long-term incentive compensation program, principally comprised of stock options, restricted stock units, and performance units, is intended to create a strong financial incentive for achievement of the Company’s long-term performance goals. In addition, linking equity to compensation aligns our executives’ interests with shareholder interests.

Long-Term Incentives — Stock Options

In Fiscal 2024, stock options comprised 20% of the target long-term incentive award for our named executive officers. Stock option values reported in the Summary Compensation Table reflect the valuation methodology mandated by regulations established by the SEC, which is based on grant date fair value as determined under U.S. generally accepted accounting principles (“GAAP”). Therefore, the amounts shown under “Option Awards” in the Summary Compensation Table do not reflect performance of the underlying shares subsequent to the grant date. From our executives’ perspectives, the value of a stock option is based on the excess of the market price of the underlying shares over the exercise price (sometimes referred to as the “intrinsic value”) and, therefore, is directly affected by market performance of the Company’s common stock. As a result of the Company’s recent performance, the fiscal year-end intrinsic value of the options granted to our executives in Fiscal 2023 and Fiscal 2022 is zero and the fiscal year-end intrinsic value for options granted in Fiscal 2024 is $0.42 per share. The table below illustrates the intrinsic value of the stock options granted to Mr. Beard, a named executive officer who received stock option awards in the last three fiscal years.

​