UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. )
Filed
by the Registrant ☒
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 under §240.14a-12
WEC
Energy Group, Inc.
(Name
of Registrant as Specified In Its Charter)
(Name
of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment
of Filing Fee (Check all boxes that apply):
☒ 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.
This
Page Intentionally Left Blank
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| WEC
Energy Group |
P-2 |
2024
Proxy Statement |
Dear
Fellow Stockholders
On
behalf of our Board of Directors, I cordially invite you to attend WEC Energy Group’s Annual Meeting of Stockholders. We look forward
to hosting this year’s meeting in virtual format.
Throughout
the year 2023, our Board of Directors and management team maintained a clear focus on the fundamentals of our business — delivering
an exceptional year on virtually every meaningful measure.
Below
are several highlights that demonstrate our commitment to grow long-term stockholder value, pursue a clean energy future, support our
employees and communities, and ensure the diversity and experience of our Board of Directors.
Financial
Performance
•Delivered
solid net income and earnings per share.
•Returned
more cash to stockholders than in any other year in company history.
•Declared
a 7 percent increase in our dividend in January of 2024 — the twenty-first consecutive year of dividend increases for our stockholders.
•Developed
the largest five-year capital investment plan in the Company’s history.
Environmental
Stewardship
•Announced
plan to eliminate coal as a fuel source three years earlier — by the end of 2032.
•Made
significant progress on the transition of our regulated fleet, including the addition of solar power, highly efficient natural gas generation
and liquefied natural gas storage.
•Began
leading a pilot project to test a new form of long-duration battery storage, incorporating environmentally friendly materials, in partnership
with EPRI and CMBlu Energy.
Social
Initiatives
•Achieved
record employee safety performance for days away, restricted or transferred (DART).
•Contributed
through our charitable organizations more than $20 million to worthy organizations across our service areas. Our major focus areas continue
to be: education, community and neighborhood development, arts and culture, and the environment.
•Named
one of America’s greatest workplaces for diversity – Five Star – by Newsweek magazine.
Responsible
Governance
•Finalized
a plan to transition the role of Executive Chairman to Non-Executive Chairman, effective after the Annual Meeting of Stockholders, and
to transfer executive management duties currently held by the Executive Chairman to the CEO.
•Added
a director with significant utility experience to the Board, making her the fifth new independent director in the past five years.
•Extended
our track record of strong linkage between pay and performance, with challenging financial, operational and social metrics in our compensation
program. Received 95.48 percent support from stockholders for our executive compensation program at the 2023 annual meeting, the highest
favorable result since this annual proposal began in 2011.
We
ask for your support of the proposals requiring a vote at this year’s meeting. And, as always, we welcome your engagement. Thank
you for your confidence in WEC Energy Group.
Gale
E. Klappa
Executive
Chairman
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| WEC
Energy Group |
P-3 |
2024
Proxy Statement |
Notice
of 2024 Annual Meeting of Stockholders
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Date
and Time
Thursday, May 9, 2024 at
1:30 p.m., Central time.
Location
WEC Energy Group will hold
a virtual annual stockholders meeting, held exclusively online at www.meetnow.global/M4ACHZT. Access to the meeting begins at 1:15
p.m., Central time.
Items
to be voted
1.Election
of 12 directors-terms expiring in 2025.
2.Ratification
of Deloitte & Touche LLP as independent auditors for 2024.
3.Advisory
vote to approve compensation of the named executive officers.
4.Amendment
of our Restated Articles of Incorporation to increase the number of authorized shares of common stock.
5.Stockholder
proposal regarding simple majority vote.
In addition, we will consider
and act upon any other business as may properly come before the Annual Meeting or any adjournment or postponement thereof.
How
to attend the 2024 Annual Meeting
This year’s Annual
Meeting will take place entirely online. If you would like to participate in the meeting, including voting, submitting a question, or
examining our list of stockholders, you will need to visit our meeting site, located at www.meetnow.global/M4ACHZT, and enter your
control number. Consistent with our prior virtual meetings, we will offer stockholder rights and participation opportunities.
Registered
Stockholders. If your
shares are registered in your name, your 15-digit control number was included on your Notice of Internet Availability of Proxy Materials,
your proxy card or on the instructions that accompanied your proxy materials.
Beneficial
Owners. If you own shares
in “street name” (that is, through a broker, bank or other nominee), you must register in advance to obtain a control number.
For more information, see Annual Meeting Attendance and Voting Information, which begins on P-78.
Your
vote is very important to us. We
urge you to review the proxy statement carefully and exercise your right to vote. Even if you plan to attend the Annual Meeting, please
vote your shares as soon as possible using one of the voting methods outlined in this notice. If you vote in advance, you are still entitled
to vote at the Annual Meeting, which would have the effect of revoking any prior votes. |
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Voting
methods |
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Use
the Internet
Vote
shares online.
See
page P-79.
Mobile
Device
Scan
this QR code.
Call
Toll-Free
In
the U.S. or Canada call 1-800-652-8683.
Mail
your Proxy Card
Follow
the instructions on your voting form. |
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Record Date
Stockholders of record
as of close of business on March 11, 2024 (Record Date), will be entitled to vote. Each share of common stock is entitled to one vote
for each director position and one vote for each of the other proposals.
On or about March 28, 2024,
the Proxy Statement and 2023 Annual Report are being mailed or made available online to stockholders.
Important Notice Regarding
the Availability of Proxy Materials for the Stockholder Meeting to Be Held on May 9, 2024: The
Proxy Statement and 2023 Annual Report are available at www.envisionreports.com/WEC. |
Margaret
C. Kelsey
Executive
Vice President, General Counsel and Corporate Secretary
March
28, 2024
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| WEC
Energy Group |
P-4 |
2024
Proxy Statement |
Table
of Contents
Forward-Looking
Statements P-6
Proxy
Summary P-6
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Proposal 1
P-12 |
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Election of 12
Directors-Terms Expiring in 2025 |
Board
Composition P-13
Succession
Planning/Director Nomination Process P-16
2024
Director Nominees for Election P-18
Governance P-24
Primary
Role and Responsibilities of our Board P-24
Our
Environmental, Social and Governance
Commitment P-27
Stockholder
Engagement P-29
Board
Leadership Structure P-30
Board
and Committee Practices P-30
Board
Evaluation Process P-31
Board
Committees P-32
Compensation
Committee Interlocks and
Insider Participation P-34
Additional
Governance Matters P-34
Communications
with the Board P-35
Where
to Find More Information on Governance P-35
Director
Compensation P-36
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Proposal 2
P-38 |
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Ratification
of Deloitte & Touche LLP as Independent Auditors for 2024 |
Independent
Auditors' Fees and Services P-39
Audit
and Oversight Committee Report P-40
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Proposal 3
P-41 |
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Advisory
Vote to Approve Compensation of the Named Executive Officers |
Compensation
Discussion and Analysis P-42
Executive
Summary P-42
Components
of Our Executive Compensation
Program P-44
Determination
of Market Median P-46
Annual
Base Salary P-46
Annual
Cash Incentive Compensation P-46
Long-Term
Incentive Compensation P-49
Compensation
Recoupment Policy P-53
Stock
Ownership Guidelines P-54
Prohibition
on Hedging and Pledging P-54
Limited
Trading Windows P-54
Retirement
Programs P-54
Other
Benefits, Including Perquisites P-54
Tax
Gross-Up Policy P-55
Severance
Benefits and Change in Control P-55
Impact
of Prior Compensation P-56
Tax
and Accounting Considerations P-56
Compensation
Committee Report P-56
Executive
Compensation Tables P-56
Summary
Compensation Table P-56
Grants
of Plan-Based Awards for Fiscal Year 2023 P-58
Outstanding
Equity Awards at Fiscal Year-End 2023 P-59
Option
Exercises and Stock Vested for
Fiscal Year 2023 P-60
Pension
Benefits at Fiscal Year-End 2023 P-61
Retirement
Plans P-61
Nonqualified
Deferred Compensation for
Fiscal Year 2023 P-64
Potential
Payments Upon Termination or
Change in Control P-66
Pay
Ratio Disclosure P-68
Risk
Analysis of Compensation Policies and Practices P-69
Pay
versus Performance Disclosure P-69
WEC
Energy Group Common Stock
Ownership P-73
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Proposal 4
P-75 |
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Amendment
of our Restated Articles of Incorporation to increase the number of authorized shares of common stock |
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Proposal 5
P-77 |
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Stockholder
Proposal Regarding Simple Majority Vote |
Annual Meeting Attendance
and Voting
Information P-78
Business
of the 2024 Annual Meeting of Stockholders P-78
Voting
Information P-78
Access
to Proxy Materials P-80
Annual
Meeting Attendance P-80
Stockholder
Nominees and Proposals P-81
Availability
of Form 10-K P-82
Appendix
A P-83
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| WEC
Energy Group |
P-5 |
2024
Proxy Statement |
Forward-Looking
Statements
The statements contained
in this proxy statement about our future performance, including, without limitation, future financial and operational results, strategic
initiatives, execution of our capital plan, emissions reduction goals and all other statements that are not purely historical, are "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
There are a number of risks and uncertainties that could cause actual results to differ materially from any forward-looking statements
made herein. A discussion of some of these risks and uncertainties is contained in our Annual Report on Form 10-K for the year ended December
31, 2023, and subsequent filings with the Securities and Exchange Commission ("SEC"). These reports address in further detail
our business, industry issues and other factors that could cause actual results to differ materially from those indicated in this proxy
statement. Except as may be required by law, we disclaim any obligation to publicly update or revise any forward-looking statements.
Other
reports and website references.
In this proxy statement we identify certain reports, including our climate reports, and materials that are available on or through our
website or those of our subsidiaries. These reports and the information contained on, or available through WEC Energy Group's website
and the websites of its subsidiaries, are not "soliciting material," are not deemed filed with the SEC, and are not, nor shall
they be deemed to be, incorporated by reference.
Proxy Summary
This summary highlights
selected information related to items to be voted on at the annual meeting of stockholders. This summary does not contain all of the information
that you should consider when deciding how to vote. Please read the entire proxy statement before voting. Additional information regarding
WEC Energy Group, Inc.'s (the "Company" or "WEC Energy Group") 2023 performance can be found in our Annual Report on Form
10-K for the year ended December 31, 2023.
The 2024 Annual Meeting
of Stockholders will be a virtual-only meeting via live webcast. There will not be a physical meeting location. Stockholders are encouraged
to participate online by logging into www.meetnow.global/M4ACHZT where you will be able to listen to the meeting live, submit questions
and vote your shares. Please see page P-78 for more information.
Voting
Matters and Recommendations
The
following proposals are scheduled to be presented at our upcoming 2024 Annual Meeting of Stockholders:
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Item
to be Voted on |
Board’s
recommendation |
Page |
| Proposal
1 |
Election
of 12 Directors-terms expiring in 2025 |
FOR
each nominee |
P-12 |
| Proposal
2 |
Ratification
of Deloitte & Touche LLP as independent auditors for 2024 |
FOR |
P-38 |
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Proposal
3 |
Advisory
vote to approve executive compensation of the named executive officers |
FOR |
P-41 |
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Proposal
4 |
Amendment
of our Restated Articles of Incorporation to increase the number of authorized shares of common stock |
FOR |
P-75 |
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Proposal
5 |
Stockholder
proposal regarding simple majority vote |
None |
P-77 |
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| WEC
Energy Group |
P-6 |
2024
Proxy Statement |
An
Energy Industry Leader
WEC Energy Group is a
leading Midwest electric and natural gas holding company with subsidiaries serving 4.7 million customers in Wisconsin, Illinois, Michigan
and Minnesota. We also maintain majority ownership in American Transmission Company LLC, a for-profit electric transmission company regulated
by FERC and certain state regulatory commissions. In addition, as part of our non-utility energy infrastructure segment, we own majority
interests in a growing fleet of renewable generation facilities outside our regulated footprint. Our 7,000 employees are focused on providing
affordable, reliable and clean energy for a sustainable future.
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| WEC
Energy Group |
P-7 |
2024
Proxy Statement |
Our
2023 Performance Highlights
Throughout 2023, the Company
remained steadfast in executing its fundamentals — safety, reliability, customer satisfaction, financial discipline and environmental
stewardship. It ended the year having achieved solid financial and operational results, while delivering continued long-term value for
stockholders and customers.
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| Business
Highlights / Awards and Recognition |
Financial Highlights
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Announced
plans to eliminate coal as an energy source by the end of 2032 — three years earlier than the Company’s original goal.
Made
significant progress on the clean energy transition and the capital plan.
•Badger
Hollow Solar Park’s second phase went into service, completing the largest solar project in Wisconsin history. Together, We Energies
and Wisconsin Public Service own a total of 200 megawatts of solar capacity from this project.
•Work
continued on projects to support reliable service, including liquefied natural gas (LNG) storage facilities and highly efficient natural
gas generation using reciprocating internal combustion engines (RICE).
•The
Company brought 128 megawatts of new RICE generation online at its existing Weston power plant site and completed construction of the
Bluff Creek LNG storage facility in Wisconsin.
•As
part of an innovative pilot program, renewable natural gas entered the Company’s distribution system in Wisconsin. Dairy farms are
supplying methane that would otherwise have gone to waste, replacing a portion of conventional natural gas and reducing the environmental
impact of agricultural activity.
•Began
leading a pilot project to test a new form of long-duration energy storage, incorporating environmentally friendly materials, in partnership
with the Electric Power Research Institute ("EPRI") and CMBlu Energy.
Spent
a record $333.7 million with certified minority-, women-, veteran- or service-disabled-owned businesses.
Included
as a constituent of FTSE Russell’s FTSE4Good Index Series, which is made up of companies that reflect strong environmental, social
and governance practices.
Honored
by the Wisconsin Department of Workforce Development with the Vets Ready Employer Initiative award for supporting veterans in the workforce
and the community.
Named
among “America’s Greatest Workplaces” and “America’s Greatest Workplaces for Diversity” by Newsweek.
Presented
with the inaugural Paving the Pathway award by M3, a collaboration between Milwaukee Public Schools, Milwaukee Area Technical College
and University of Wisconsin-Milwaukee, in recognition of We Energies’ “commitment to strengthening Wisconsin’s future
workforce through work-based learning.”
Recognized
by the Minnesota Safety Council with the Outstanding Achievement Award for Minnesota Energy Resources’ occupational safety performance.
Presented
with the Regents Business Partnership Award for the Company’s longstanding support of University of Wisconsin-Milwaukee and its
students.
Recognized
by the Chicago Minority Supplier Development Council, which named Peoples Gas and North Shore Gas its 2023 Corporation of the Year.
Ranked
first among investor-owned utilities in the 2023 E Source Large Business Customer Satisfaction Study.
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$4.63
earnings per share, on
an adjusted basis
___________________________
7%
dividend growth
___________________________
$984
million
cash
returned to stockholders
___________________________
20
consecutive years raising
the dividend (2004-2023)
___________________________
81
consecutive years of
delivering quarterly dividends (1942-2023) |
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| WEC
Energy Group |
P-8 |
2024
Proxy Statement |
How
our Compensation Program Supports our Business Strategy
An
important aspect of the Board’s oversight responsibilities is to hold the executive management team accountable to achieving the
Company’s goals and objectives, and reward them appropriately when they do. This includes oversight of executive compensation.
Since
2004, our executive compensation program has included metrics that link a substantial portion of executive pay to achieving financial,
operational and social targets tied to our business fundamentals. These targets are linked to key objectives that underpin the company’s
sustainability.
Social
Matters
Incentive
targets associated with operational and social goals are tied to strategic priorities, which include, among other things, a focus on employee
safety, customer satisfaction, and workforce and supplier diversity.
Environmental
Matters
Delivering
a cleaner energy future to our customers while maintaining affordability and reliability, is one of our core responsibilities and a major
focus of our capital plan. The Compensation Committee assesses management’s performance against environmental goals through the
execution of its capital plan. Management annually refreshes the capital plan, discusses it with the Board, including a preview of anticipated
capital spending over five years, and then publicly discloses its plan during the fourth quarter each year.
The
Company’s ability to fund its substantial capital plan, which it was able to do without issuing equity through 2023, has been directly
linked with the Company’s ability to consistently deliver on its financial plan, including meeting the targets associated with the
financial metrics used in the Company’s compensation program. These financial metrics are key performance indicators underlying
our executives’ incentive compensation. During the remainder of 2024, the Compensation Committee will continue ongoing discussions
with its independent compensation consultant and management about the potential integration of the Company's environmental goals, including
emissions reduction targets, goals and other climate-related measures, into future performance metrics used in the Company's executive
compensation program.
Our
Efficiency, Sustainability and Growth Progress Plan
The Company’s 2024-2028
capital plan, referred to as our
ESG Progress Plan, details planned significant investments in low- and no-carbon generation and modernization
of the Company’s electric and natural gas infrastructure aimed at helping to reduce the emission of greenhouse gases (carbon and
methane). These investments are the building blocks for the Company’s carbon dioxide emission reduction goals from our electric
generation — 60% below 2005 levels by the end of 2025, 80% below 2005 levels by the end of 2030, and net carbon neutral by 2050.
The plan also supports the Company’s goal to achieve net-zero methane emissions from natural gas distribution lines in its network
by the end of 2030.
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| WEC
Energy Group |
P-9 |
2024
Proxy Statement |
Accountability
to our stockholders is critical to our long-term success. We routinely evaluate and enhance our governance practices to maintain alignment
with evolving best practices. Highlights of our governance framework and matters with which the Board was involved during 2023 are noted
below.
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Governance Framework
Board
Independence/Composition
•10
of 12 director nominees are independent
•Independent
Lead Director with defined duties, elected by other independent directors
•Independent
Audit, Compensation, Finance and Governance Committees
•Opportunity
for executive sessions at every board and committee meeting
•50%
of Board nominees are diverse by gender or race/ethnicity
Board
Oversight
•Short-
and long-term strategy and major strategic initiatives
•Leadership
succession planning
•Code
of Business Conduct
•Corporate
sustainability, including risks and opportunities created by climate change
•Regular
reporting from Board committees on specific risk oversight responsibilities
Board
and Committee Practices
•Separate
Chairman and CEO
•Ongoing
Board refreshment
•Annual
Board and committee evaluations
•Strategy
and risk oversight discussion at every regular Board meeting
•Ongoing
education programs by internal and third-party experts
•Stock
ownership requirements for directors and executives
•Recoupment
(“clawback”) policies for incentive-based compensation to executives and officers
•Responsible
overboarding restrictions
Stockholder
Rights
•Annual
election of all directors
•Majority
voting standard for uncontested elections
•One-share,
one-vote standard
•Proxy
access and special meeting provisions in bylaws
•Annual
“say-on-pay” advisory vote |
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Oversight
of 2023 Strategic Initiatives
The
Board is actively engaged in the oversight of the Company’s strategy, providing advice and counsel as warranted and holding management
accountable for making sound decisions in executing important matters affecting its stakeholders. Examples during 2023 included:
•ESG
Progress Plan, updated to reflect the Company’s anticipated capital expenditures over 2024-2028, allocated across strategies aimed
at delivering efficiency, sustainability and growth, while providing transparency to investors.
•Announced
plan to eliminate coal as an energy source by end of 2032 rather than 2035, three years earlier than previously planned.
•Capital
projects, investments and research tied to the execution of the Company’s ESG Progress Plan, including completion of a pilot program
to test hydrogen as a fuel source for power generation, and the continued mitigation of the effects of supply chain disruptions on renewable
energy project timelines and costs.
•Mitigation
of the continued impact of macro-economic and other trends on the utility sector.
•Regulatory
matters, including rate case reviews across all state jurisdictions.
2023
Governance Highlights
The
Board is committed to ensuring the Company conducts its business with the highest standards of ethics, integrity and transparency. Governance
highlights from 2023, which occurred at the Board’s direction, include:
•Developed
leadership succession plans, including the upcoming transition of the current Executive Chairman, Gale E. Klappa, to the role of Non-Executive
Chairman following the 2024 annual meeting of stockholders, subject to annual Board nomination and shareholder approval.
•Added
5 new independent directors from 2019 through 2023.
•Adopted
revisions to all committee charters, except for the Executive Committee, to reflect best practices and expanding risk oversight responsibilities.
•Updated
governance practices and disclosures to reflect new SEC rules, including those related to universal proxy provisions, insider trading
policies, clawback of incentive-based executive compensation, and cybersecurity incidents.
•Updated
the Corporate Governance Guidelines to reflect non-management director retirement age of 75, with the exception of any such directors
who, as of October 19, 2023, had accumulated more than ten years of service on the Board.
•Approved
updates to the Code of Business Conduct.
•Established
independent board director fees consistent with market, as recommended by outside advisor.
•Focused
on expanding and enhancing public disclosures of interest to stakeholders:
◦Issued
new position statements to address the social and economic elements of the low-carbon transition and our commitment to human rights.
◦Published
the Company's electric utility energy mix and emission rates.
◦Issued
corporate responsibility report in alignment with the Sustainability Accounting Standards Board ("SASB") industry standards.
◦Published
the Company’s consolidated EEO-1 Report.
◦Enhanced
the public disclosure of the Company’s political activities, corporate political donations and lobbying, including the Company’s
first Trade Association and Climate Engagement Report. |
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| WEC
Energy Group |
P-10 |
2024
Proxy Statement |
The
Director Nominees at a Glance
The following table provides
an overview of the director nominees, current as of January 18, 2024. All of the director nominees were elected at the 2023 Annual Meeting
of Stockholders. Additional information regarding our director nominees, including a detailed skills matrix, begins on P-12.
See P-14 for diversity characteristics self-identified by each director.
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| WEC
Energy Group |
P-11 |
2024
Proxy Statement |
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PROPOSAL
1: ELECTION OF DIRECTORS
– TERMS EXPIRING IN 2025 |
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What
am I voting on?
Stockholders are being
asked to elect 12 director nominees each for a one-year term. |
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Voting
Recommendation:
✓
FOR the election of each Director Nominee.
The
Board of Directors and Corporate Governance Committee believe the 12 director nominees possess the experience and qualifications necessary
to provide effective oversight of the Company and the long-term interests of its stockholders. |
WEC Energy Group’s
bylaws require each director to be elected annually
to hold office for a
one-year term. Acting on the recommendation of the Corporate Governance Committee, the Board is recommending the following 12 nominees
for election as directors at our annual meeting. Each nominee, if elected, will serve until the 2025 Annual Meeting of Stockholders, or
until a successor is duly elected and qualified.
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| 1.
Ave M. Bie |
5.
Cristina A. Garcia-Thomas |
9.
Scott J. Lauber |
| 2.
Curt S. Culver |
6.
Maria C. Green |
10.
Ulice Payne, Jr. |
| 3.
Danny L. Cunningham |
7.
Gale E. Klappa |
11.
Mary Ellen Stanek |
| 4.
William M. Farrow III |
8.
Thomas K. Lane |
12.
Glen E. Tellock |
•All
director nominees currently serve as directors on our Board. All nominees were elected by our stockholders at our 2023 Annual Meeting
of Stockholders, each having received at least 91.73% of the votes cast.
•All
director nominees are independent with the exception of Directors Klappa and Lauber, who are employees of the Company. If elected, Director
Klappa will transition from Executive Chairman to Non-Executive Chairman of the Board following the Company's annual stockholder meeting.
While Director Klappa will no longer be an employee of the company, he will remain non-independent due to his prior service as an executive
officer.
•Each
nominee has consented to being nominated and to serve if elected. In the unlikely event that any nominee becomes unable to serve for any
reason, the proxies will be voted for a substitute nominee selected by the Board upon the recommendation of the Corporate Governance Committee.
•This
is an uncontested election; therefore, our majority vote standard for election of directors will apply. Under this standard, each
director nominee will be elected only if the number of votes cast favoring such nominee’s election exceeds the number of votes cast
opposing that nominee’s election, as long as a quorum is present. Therefore, presuming a quorum is present, shares not voted, whether
by broker non-vote, abstention, or otherwise, have no effect on the election of directors. Proxies may not be voted for more than 12 persons
in the election of directors.
The process through which
the Board arrived at these director nominees is the result of the Board’s regular assessment of its composition and its focused
attention to ongoing succession planning, as described in the following pages.
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| WEC
Energy Group |
P-12 |
2024
Proxy Statement |
BOARD
COMPOSITION
The
Corporate Governance Committee and the Board evaluate director nominees in light of the Board’s current members, with the goal of
recommending nominees with diverse backgrounds and experiences who, together with the current directors, can best perpetuate the success
of WEC Energy Group’s business and represent stockholder interests. Director nominees are evaluated on the basis of certain key
attributes, core competencies, diversity, age/tenure, existing time commitments and independence. By following this process, the Board
is able to ensure that its director candidates bring a broad range of perspectives and experiences, will effectively contribute to the
Board, and will complement the other directors.
The Corporate Governance
Committee and the Board determined that the director nominees' complementary breadth of characteristics are suited to executing the duties
of the Board and, when taken together, embody the personal qualities, qualifications, skills, and diversity of background that best serve
our Company and its stockholders.
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| ———————————————— |
2024
BOARD OF DIRECTORS — 12
NOMINEES |
————————————————–– |
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Gender
diversity |
Racial/Ethnic
diversity |
Average
age |
Average
tenure |
Independence |
| 33% |
33% |
66
years |
8.5
years |
83% |
Key
Attributes Required of All Directors
The
Corporate Governance Committee routinely evaluates the expertise and needs of the Board to determine its proper membership and size. As
described in the Corporate Governance Guidelines, The Board believes that all directors must demonstrate certain key attributes, as noted
below.
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•Proven
integrity
•Ability
to appraise problems objectively
•Relevant
technological, civic, economic, and or social cultural experience
•Familiarity
with domestic and international issues affecting the Company's business
•Vision
and imagination |
•Mature
and independent judgment
•Ability
to evaluate strategic options and risks
•Social
consciousness
•Contribution
to the Board's desired collective diversity |
•Willingness
to dedicate sufficient time to board service
•Sound
business experience/acumen
•Achievement
of prominence in career
•Availability
to serve for five years before reaching retirement age |
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Core
Competencies
The
Board regularly evaluates director qualifications and core competencies in the context of the Board’s oversight of strategic initiatives,
financial and operational performance objectives, and material risks. To that end, the Board seeks directors whose collective knowledge,
experience and skills provide a broad range of perspectives and leadership expertise in domains particularly relevant to our business
including: highly complex and regulated industries, strategic planning, financial strategy, utility/energy industry, technology
and security, audit oversight and financial controls, human capital management, corporate governance, sustainability matters (including
those associated with climate strategy), public policy, and other areas important to executing the Company’s strategy.
With
that in mind, the Corporate Governance Committee and Board have determined that the Board’s composition should consist of candidates
that collectively possess a specific set of core competencies, as listed below, in alphabetical order, in order to effectively carry out
its oversight function.
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•Audit
Oversight/Financial Reporting
•Senior
Leadership/CEO Expirence
•Corporate
Governance
•Financial
Strategy/Investment Management/Investor Relations |
•Government/Public
Policy
•Human
Capital Management/Exec Comp
•Regulated
Industry Knowledge
•Risk
Management and Oversight |
•Strategic
Planning
•Sustainability
Matters
•Technology
and Security
•Utility/Energy
Industry Experience |
|
During the fourth quarter
of 2023, the Corporate Governance Committee and Board evaluated and affirmed this set of competencies. Each director performed a self-assessment
of his/her level of knowledge in each skill area using the following 3-point scale: “1” Limited knowledge (e.g., no
direct experience, primary exposure comes from Board or Committee reports); “2” Intermediate knowledge (e.g., general
managerial/oversight experience or broad exposure as a Board or Committee member); “3” Advanced knowledge (e.g., direct
experience; subject matter expert). A summary of the Board’s level of knowledge with respect to each of the core competencies
is shown on the following page.
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| WEC
Energy Group |
P-13 |
2024
Proxy Statement |
*Diversity
characteristics based on information self-identified by each director.
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Diversity
Diversity
has been a major focus of the Corporate Governance Committee for decades when identifying director nominees. It is committed to actively
seeking highly qualified individuals from underrepresented communities as it strives to cast a wide net and recommend candidates who bring
unique perspectives to the Board, which contributes to its collective diversity - diversity of knowledge, skills, experiences, thought,
gender, race/ethnicity, retirement age and tenure. We believe this diversity improves the overall effectiveness of the Board as it
carries out its oversight role. |
Age
and Tenure
Under the Corporate Governance
Guidelines, a non-management director shall not be nominated for election to the Board after attaining the age of 75, unless nominated
by the Board for special circumstances. The foregoing shall not apply to current non-management directors who, as of October 19, 2023,
had accumulated more than ten years of service on the Board; such individuals shall not be nominated for election to the Board after
attaining the age of 72, unless nominated by the Board for special circumstances. Director nominees Culver, Payne and Stanek are subject
to this age-72 restriction.
The Board does not believe
it is appropriate or necessary to limit the number of terms a director may serve. The Board values the participation and insight of directors
who have developed an increased understanding of the Company and the specific issues it faces doing business in a complex, regulated industry,
as well as those directors who bring fresh and varied perspectives, resulting in a Board with a balanced tenure.
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| WEC
Energy Group |
P-14 |
2024
Proxy Statement |
Time
Commitment
Our
Corporate Governance Committee recommends and the Board nominates candidates whom they believe are capable of devoting the time necessary
to carefully fulfill their fiduciary duties. The Corporate Governance Committee regularly reviews stockholders’ views on the appropriate
number of public company boards on which directors may serve, which the Board takes into consideration each year as it reviews its Corporate
Governance Guidelines.
The Corporate Governance
Guidelines limit the maximum number of public company boards on which a WEC Energy Group director may serve to four public companies (including
our Board), and specify that any public company chief executive officer who serves as a director on our Board may not serve on more than
two public company boards (including our Board). Limited exceptions may be made with Corporate Governance Committee approval.
Independence
Our
Corporate Governance Guidelines state that to be independent, the Board should consist of at least a two-thirds majority of independent
directors. In order to be deemed independent, the individual must have no material relationship with the Company that would interfere
with the exercise of good judgment in carrying out his or her responsibilities as a director.
The
independence standards found in our Corporate Governance Guidelines are not only in compliance with the listing standards of the New York
Stock Exchange (“NYSE”), but are actually more stringent than the NYSE rules. Our director independence guidelines are located
in Appendix A of our Corporate Governance Guidelines, which are available on the Corporate Governance section of the Company’s website
at www.wecenergygroup.com/govern/governance.htm.
Prior
to initial and annual election, all directors complete a detailed questionnaire that elicits information that is used to ensure compliance
with the Board’s and the NYSE’s standards of independence. The Corporate Governance Committee also reviews potential conflicts
of interest, including related-party transactions, interlocking directorships, and substantial business, civic and/or social relationships
with other members of the Board that could impair the prospective Board member’s ability to act independently from the other Board
members and management. The Board also considers whether a director’s immediate family members meet the independence criteria outlined
in the Corporate Governance Guidelines, as well as whether a director has certain relationships with WEC Energy Group’s affiliates,
when determining the director’s independence.
The Board has affirmatively
determined that Directors Bie, Culver, Cunningham, Farrow, Garcia-Thomas, Green, Lane, Payne, Stanek, and Tellock are independent. Directors
Klappa and Lauber are not independent due to their employment with the Company as previously described on page P-12.
Director
Stanek
Since 2005, WEC Energy
Group has engaged Baird Financial Group ("Baird") primarily to provide consulting services for investments held in the Company’s
various benefit plan trusts. Baird also provides certain related administrative services. The Board reviewed the terms of this engagement,
including the $883,519
in
fees paid to Baird in 2023 (which are less than one-tenth of 1% of Baird’s total revenue), and
Director Stanek’s position at Baird, and concluded that such engagement is not material and did not impact Director Stanek’s
independence. Director Stanek is not involved with and does not consult on the contract with or recommendations made by Baird and receives
no direct financial benefit from these services. WEC Energy Group management evaluates Baird’s services against market standards
for overall quality and value on a regular basis. Neither the Board nor Director Stanek plays a role in the retention of Baird for these
services or any related negotiation of commercial terms. In addition, WEC Energy Group’s pension trusts and other benefit accounts
do not hold any investments in Baird funds.
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| WEC
Energy Group |
P-15 |
2024
Proxy Statement |
SUCCESSION
PLANNING AND DIRECTOR NOMINATION PROCESS
Board
Succession Planning
Our Board is regularly
engaged in rigorous discussions about the Board’s plans for ongoing succession, taking into consideration matters such as: current
inventory of director skills and qualifications; diversity, including gender, race/ethnicity, retirement age and tenure; and
future competencies needed to support appropriate oversight of the Company's long-term strategy and related risks and opportunities. These
discussions are co-facilitated by the Executive Chairman and Independent Lead Director during the Board’s executive sessions.
Guided by the Board’s
succession planning discussions, the Corporate Governance Committee, comprised entirely of independent directors, is responsible for identifying
and recommending director candidates to our Board for nomination.
Director
Nomination Process
The Corporate Governance
Committee is responsible for recommending a slate of nominees to the Board for election at each Annual Meeting of Stockholders using the
formal process detailed below.
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| 1 |
Board
Succession Planning |
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2 |
Identify
Candidates |
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3 |
Evaluate
Candidate Recommendations |
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4 |
Meet
with
Candidates |
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5 |
Recommend
Candidate Nomination |
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| Develop
list of skills and qualifications sought in new directors and evaluate current Board composition |
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Proposed
by stockholders, directors, and/or others |
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Screen
qualifications, assess impact on Board composition, and review independence |
|
Multiple meetings scheduled
with the Executive Chairman and Independent Lead Director, members of Corporate Governance Committee, and other members of the Board |
|
Corporate
Governance Committee considers feedback and makes recommendation to the Board |
1.Board
succession planning.
The Corporate Governance
Committee facilitates the director recruitment and nomination process through the lens of the Board’s ongoing director succession
planning process, as described above. The Corporate Governance Committee seeks to fulfill its duty to stockholders to consistently maintain
a Board that is comprised of directors who each embody key attributes, and who, as a group, have the skills and experiences to effectively
oversee management's strategy for operating in a complex industry while performing their fiduciary obligations.
2.
Identify candidates.
Candidates for director nomination may be proposed in a number of ways, including by stockholders, the Corporate Governance Committee,
and other members of the Board. The Corporate Governance Committee may retain a third party to identify qualified candidates. No such
firm was engaged with respect to the nominees listed in this proxy statement.
The
Corporate Governance Committee will consider director candidates recommended by stockholders provided that the stockholders comply with
the requirements and procedures set forth in our bylaws. Stockholders may also nominate or recommend director candidates by following
the procedures outlined on page P-81. No formal stockholder nominations or recommendations for director candidates were received in connection
with the 2024 Annual Meeting of Stockholders.
3.
Evaluate candidate recommendations.
The Committee follows an established process for evaluating all director candidates whether recommended by directors, stockholders or
others. During this process, the Corporate Governance Committee reviews publicly available information regarding each identified candidate
to assess whether that person should be considered further. The Corporate Governance Committee considers whether each individual embodies
the key attributes listed above, as well as the person's qualifications, experience, skills, outside affiliations, age, gender, race and
ethnicity. The Committee will utilize third parties if and as needed to assist with these activities.
As
part of the evaluation process, the Corporate Governance Committee takes steps to ensure that the pool of director nominees contains the
attributes, skills and experiences identified during Board succession planning discussions. If the Corporate Governance Committee determines
that a candidate warrants further consideration, the Executive Chairman or another member of the Board of Directors contacts the prospective
director.
Generally,
if a recommended candidate expresses a willingness to be considered and to serve on the Board, the Corporate Governance Committee will
seek the Board’s concurrence in moving the candidate forward to the interview stage of the nomination process. Further, it will
instruct management to solicit from the candidate information used to review the candidate’s independence as well as assess any
potential conflicts of interest or reputational risk.
4.
Meet with candidates. Candidates
initially meet with the Executive Chairman, Independent Lead Director and members of the Corporate Governance Committee. Upon agreement
that a candidate has the attributes, skills and other identified factors the Board is seeking for its desired composition, all Board members
are provided an opportunity to meet with the candidate and provide feedback to the Corporate Governance Committee.
5.
Recommend candidate nomination.
The Corporate Governance Committee will review feedback received from the meetings with the candidates and engage in constructive dialogue,
following which it will make a recommendation regarding nomination for the Board's discussion and final determination.
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| WEC
Energy Group |
P-16 |
2024
Proxy Statement |
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RESULTS
è |
Board
Refreshment
2019
- 2023 added 5 independent
directors |
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——
ADDITIONS —— |
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Oct.
2019
Maria
C. Green |
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Jan.
2020
Thomas
K. Lane |
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Jan.
2021
Cristina
A. Garcia-Thomas |
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Jan.
2022
Glen
E. Tellock |
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Jan.
2023
Ave
M. Bie |
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All
have advanced levels
of competency in
•
Senior Leadership
•
Strategic Planning
•
Corporate Governance |
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Areas
and/or attributes of particular focus during recruitment included:
✓ Diverse Board composition
✓ Technology and cybersecurity
knowledge
✓ Experience with sustainability
matters, including risks and opportunities of climate change
✓ Human capital management
✓ Audit / financial
/ risk oversight expertise
✓ Regulated and utility
industry background |
Included in each director
nominee’s biography that follows are career highlights and other public directorships, along with the key qualifications, skills
and expertise that we believe each director contributes to the Board. Our Board considered all of these factors,
as well as the results
of our annual Board evaluation, when deciding to re-nominate these directors.
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| WEC
Energy Group |
P-17 |
2024
Proxy Statement |
2024
DIRECTOR NOMINEES FOR ELECTION
The following 12 individuals
have been nominated for election to the Board of Directors at the 2024 Annual Meeting of Stockholders. Biographical information for each
director nominee is set forth below. Ages are as of January 18, 2024, the date each person was designated as a nominee of the Board
for election at the Meeting.
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Age:
66
Director
Since: 2023
Board
Committee: Audit
and Oversight
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Professional
Experience
Quarles & Brady LLP
– Retired Partner, 2005 to 2022. Quarles is a law firm serving a diverse list of domestic and international clients of all sizes,
in both large industrial sectors and small entrepreneurial settings.
Other
Public Directorships
None
Director
Qualifications
A retired business law,
utilities and energy attorney who spent her legal career counseling utilities and independent power producers, Director Bie brings to
our Board of Directors extensive industry experience across all aspects of the utility industry, from government relations and permitting
to counseling on infrastructure and long-range planning. At the time of her retirement in 2022, she was a partner at the Quarles law firm,
where, for over 20 years she focused on developing regulatory strategies to address critical infrastructure and renewable portfolio standards.
While at Quarles, she developed the firm’s corporate and social responsibility initiatives, leading the firm's efforts for five
years. Prior to joining Quarles, Director Bie served for seven years as the Chair of the Public Service Commission of Wisconsin, addressing
both transmission and generation infrastructure issues, including the review and approval of utility projects. The Board also greatly
benefits from the insights Director Bie has gained as a member of (and past Chair and Vice Chair) of the board of the New York Independent
System Operator, which operates the New York state bulk electricity grid and administers competitive wholesale markets, conducts comprehensive
long-term planning and advances the technological and security infrastructure of the electric system serving New York. As a member of
our Audit and Oversight Committee, Director Bie applies these experiences, along with her 25+ years of leadership roles in utility and
regulatory trade groups, to the committee’s risk oversight responsibilities, including those matters pertaining to legal and regulatory
risks and compliance, as well as data privacy and cybersecurity.
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| Curt
S. Culver |
Independent |
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Age:
71
Director
Since: 2004
Board
Committees: Corporate
Governance; Executive; Finance (Chair)
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Professional
Experience
MGIC Investment Corporation
and Mortgage Guaranty Insurance Corporation - Non-Executive Chairman of the Board since 2015. MGIC Investment Corporation is the parent
company of Mortgage Guaranty Insurance Corporation, a private mortgage insurance company.
Other
Public Directorships
Director
of MGIC Investment Corporation since 1999.
Director
Qualifications
Having served for 15 years
as the CEO of Mortgage Guaranty Insurance Corporation and its parent company, MGIC Investment Corporation, Director Culver brings to our
Board of Directors a strong working knowledge of the strategic, operational, financial, and public policy issues facing a large, regulated,
publicly-held company headquartered in Milwaukee Wisconsin. His expertise in risk management and oversight is particularly valuable in
his service as chair of the Finance Committee, while his insurance industry experience puts him in a position to lead the Committee’s
evaluation of the Company's overall financial risk management program. Director Culver's broad corporate governance experience, developed
from his extensive past and present service on the MGIC boards, as well as those of several highly-visible Milwaukee-area non-profit entities
and two private for-profit organizations, is of great value to the Board as it carries out its oversight responsibilities, including the
duties of the Corporate Governance Committee, of which he is a member.
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| WEC
Energy Group |
P-18 |
2024
Proxy Statement |
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| Danny
L. Cunningham |
Independent |
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Age: 68
Director Since: 2018
Board Committees: Audit
and Oversight (Chair); Executive |
Professional Experience
Deloitte & Touche LLP
- Retired Partner and Chief Risk Officer. Served as Partner, 2002 to 2015, and as Chief Risk Officer, 2012 to January 2016. Deloitte &
Touche is an industry-leading audit, consulting, tax, and advisory firm.
Other
Public Directorships
Director of Enerpac Tool
Group Corp. since 2016.
Director
Qualifications
Director Cunningham brings
to our Board of Directors more than 30 years of experience serving public audit clients in a broad array of industries, including manufacturing
and financial services, as well as a deep understanding of the business, economic, compliance, and regulatory environment in which the
Company and many of its major customers operate. Director Cunningham applies his strong expertise in financial reporting, accounting,
internal controls, and audit functions to his responsibilities as WEC Energy Group’s Audit and Oversight Committee Chair. This experience
also contributes great value to the Board as it fulfills its responsibility for oversight of the Company's accurate preparation of financial
statements and disclosures, and compliance with legal and regulatory requirements. Having served as chief risk officer at Deloitte &
Touche, Director Cunningham gained insights into the complexities of risk management, and applies this expertise in assessing the effectiveness
of the Company's practices and policies to mitigate enterprise-wide risks. Director Cunningham’s multi-national experience brings
the added diversity of a global perspective to the Board as it evaluates its strategic objectives.
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| William
M. Farrow III |
Independent
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Age:
68
Director
Since: 2018
Board
Committees: Compensation;
Corporate Governance (Chair); Executive |
Professional Experience
Winston
and Wolfe, LLC - Retired Chairman and Chief Executive Officer, 2010 to 2023. Winston and Wolfe was a privately held technology development
and advisory company.
Other
Public Directorships
Director
of CBOE Global Markets Inc. since 2016; Lead Director
May
2023 to September 2023 and Non-Executive Chairman since September 2023.
Director of Echo Global
Logistics Inc., May 2017 to November 2021.
Director
Qualifications
In serving as Chair of
the Corporate Governance Committee, Director Farrow brings to our Board of Directors over 40 years of senior leadership experience in
managing business operations, technology development, enterprise risk, and strategy. His extensive professional experience in the highly
regulated banking and financial markets, accompanied by knowledge acquired from his service on the boards of CBOE Global Markets and the
Federal Reserve Bank of Chicago, enable him to add significant value to our Board’s oversight of the Company’s financial management
strategy. His firsthand experience and perspectives in addressing advances in information technology, coupled with the experience he has
gained serving as the non-executive chairman for CBOE Global Markets, is particularly valuable to the Board as WEC Energy Group companies
address complex risks, including those associated with protecting operating systems and assets against physical and cyber threats. Having
spent his career in Chicago, Director Farrow is able to provide the Board with economic, social, and public policy insight to conducting
business in Chicago, which is further enhanced by the strong relationships he has developed with key leaders while serving on the boards
of several highly visible Chicago-area private, not-for-profit and community organizations.
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| WEC
Energy Group |
P-19 |
2024
Proxy Statement |
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| Cristina
A. Garcia-Thomas |
Independent
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Age:
54
Director
Since: 2021
Board
Committee: Corporate
Governance |
Professional
Experience
Advocate
Health (formerly Advocate Aurora Health) - Senior Vice President and Chief Diversity, Equity and Inclusion Officer since December 2022;
Chief External Affairs Officer, April 2018 to December 2022. Advocate Health, the fifth-largest non-profit integrated health system in
the nation, operates across Alabama, Georgia, Illinois, North Carolina, South Carolina and Wisconsin.
Advocate
National Center for Health Equity, President since December 2022. Advocate National Center for Health Equity is a non-profit center innovating
strategies for equitable health and health care for all.
Other
Public Directorships
None
Director
Qualifications
Director Garcia-Thomas
brings to our Board of Directors significant leadership experience, particularly in the areas of customer and community relations, and
diversity, equity and inclusion. Since joining Advocate Health - the largest employer in the Milwaukee region - in 2011, she has successfully
addressed complex business issues in a highly regulated environment. As the Chief External Affairs Officer from 2018 to December 2022,
Director Garcia-Thomas was responsible for shaping the overall experience for patients, employees and community partners. She held oversight
responsibility for diversity, equity and inclusion, community relations, community health, community programs and the charitable foundation,
through which she has utilized and expanded her deep understanding of public policy, social priorities and challenges, and corporate governance.
Through her executive and civic leadership, Director Garcia-Thomas has established a strong network in the Company’s Wisconsin and
Illinois service areas, giving her keen insights into the needs of our customers. She contributes her experience in these areas to her
service on our Corporate Governance Committee, and to the Board’s oversight responsibilities and strategic discussions on sustainable
value creation, customer care and human capital management.
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| Maria
C. Green |
Independent
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Age:
71
Director
Since: 2019
Board
Committees: Audit
and Oversight; Finance
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Professional
Experience
Ingersoll Rand plc - Retired
Senior Vice President and General Counsel, 2015 to June 2019. Ingersoll Rand is a diversified industrial manufacturer with market-leading
brands serving customers in global commercial, industrial and residential markets.
Other
Public Directorships
Director
of Tennant Co. since 2019.
Director
of Littelfuse Inc. since 2020.
Director of Fathom Digital
Manufacturing Corporation since
2021.
Director
Qualifications
Director Green brings to
our Board of Directors senior leadership experience accumulated during her 35-year career in law and business, including extensive public
company experience in strategic planning, acquisitions, enterprise risk management and shareholder relations, from which she provides
valuable insights in her service as a member of both our Finance and Audit and Oversight Committees. Director Green has substantial experience
with respect to corporate sustainability matters, including oversight responsibility for environmental compliance and corporate responsibility
reporting, as well as engagement with investors on these matters. Having served in the role of corporate secretary for several public
companies, Director Green’s deep corporate governance experience is of tremendous value to our Board as it carries out its evolving
oversight responsibilities. Director Green also contributes valuable insights into the economic, educational and social matters impacting
the greater Chicago community, where the Company has two utility subsidiaries. In particular, these insights come from having served for
18 years at Illinois Tool Works, a Fortune 200 global diversified manufacturing company headquartered in the northern suburbs of Chicago,
and as a member (and past chairman) of the Chicago Urban League executive committee.
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| WEC
Energy Group |
P-20 |
2024
Proxy Statement |
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| Gale
E. Klappa |
Executive
Chairman |
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Age:
73
Director
Since: 2003
Board
Committee: Executive
(Chair)
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Professional Experience
WEC
Energy Group, Inc. - Executive Chairman since February 2019; Chairman of the Board and CEO, 2004 to May 2016 and October 2017 to February
2019; Non-Executive Chairman of the Board, May 2016 to October 2017; President, 2003 to August 2013.
Wisconsin
Electric Power Company (subsidiary of WEC Energy Group) - Chairman of the Board, 2004 to May 2016 and January 2018 to February 2019;
CEO, 2003 to May 2016 and January 2018 to February 2019; President, 2003 to June 2015.
Director
of Wisconsin Electric Power Company, 2003 to May 2016 and January 2018 to April 2024 (planned).
Chairman
Klappa also serves (until May 2024) as a director of several other major subsidiaries of WEC Energy Group.
Other
Public Directorships
Director
of Associated Banc-Corp since 2016.
Director
of Badger Meter, Inc. 2010 to April 2023.
Director
Qualifications
Chairman Klappa has more
than 45 years of experience working in the public utility industry, including more than 30 at a senior executive level. He first retired
as the Company's CEO in May 2016, at which time he assumed the role of Non-Executive Chairman of the Board. Chairman Klappa again served
as the Company's CEO between October 2017 and February 2019. Prior to joining the Company in 2003, Chairman Klappa served in various executive
leadership roles at The Southern Company, a public utility holding company headquartered in the southeastern United States. Under his
leadership, WEC Energy Group successfully completed its 2015 acquisition of Integrys Energy Group, which nearly doubled the employee and
customer population, and increased the Company’s geographic footprint to four states. With his extensive experience in the business
operations and C-suite leadership of publicly regulated utilities, his service as a board member for several other public companies, and
his contributions to significant economic development initiatives in southeastern Wisconsin, Chairman Klappa has led our Board with a
deep understanding of the financial, operational, and investment decisions and public policy issues facing large public companies. His
deep knowledge of the Company’s industry, customers, stockholders, and management team is of great value to our Board. If elected,
Director Klappa will transition from Executive Chairman to Non-Executive Chairman of the Board following the Company's Annual Meeting
of Stockholders.
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| Thomas
K. Lane |
Independent
Lead Director |
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Age:
67
Director
Since: 2020
Board
Committees: Audit
and Oversight; Compensation; Executive
|
Professional Experience
Energy Capital Partners
LLC - Vice Chairman since 2017; Partner, 2005 to 2017. Energy Capital Partners is a private equity firm that focuses on investing
in power generation, midstream gas, electric transmission and energy and environmental services sectors of North America's energy infrastructure.
Other
Public Directorships
Director
of Summit Midstream Partners, LP, 2009 to May 2020.
Director
of USD Partners, LP, 2014 to April 2020.
Director
Qualifications
In serving as WEC Energy
Group's Independent Lead Director, Director Lane brings to our Board of Directors more than 30 years of broad financial experience focused
within the energy sector, which provides him with a deep understanding of the complexities inherent to delivering strong financial performance
in a regulated industry. His experience in this area includes 17 years in the Investment Banking Division at Goldman Sachs where he held
senior-level coverage responsibility for electric and gas utilities, independent power companies and midstream energy companies throughout
the United States. Director Lane has significant experience in assessing the individual components of a company’s financial performance
and how it relates to a company’s compensation program, experience he gained over the course of his career, which has been focused
within the energy sector, and which is very valuable to his service as a member of our Compensation Committee. Since 2017, Director Lane
has served as Vice Chairman of Energy Capital Partners, following 12 years as a partner of the firm. During this tenure, he has held responsibility
for establishing and executing the firm’s investment strategies, which include projects encompassing power generation and renewables,
as well as midstream and environmental infrastructure. This experience enables him to add significant value to the Board’s oversight
of the Company’s long-term growth strategy, as does his substantial experience planning and executing merger and acquisition strategies.
Having testified before the House Energy Subcommittee on energy-related matters, Director Lane also brings to our Board an understanding
of the formulation of energy policy at the federal government level. His strong financial reporting experience within a regulated industry,
combined with his broad understanding of the risks facing the utility sector, provide tremendous value in his service as a member of our
Audit and Oversight Committee.
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| WEC
Energy Group |
P-21 |
2024
Proxy Statement |
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| Scott
J. Lauber |
President
and CEO |
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Age:
58
Director
Since: 2022
Board
Committee: None |
Professional Experience
WEC
Energy Group - President and CEO since February 2022; Senior Executive Vice President and Chief Operating Officer from June 2020 to
January 2022; Senior Executive Vice President and CFO from October 2019 to June 2020; Senior Executive Vice President, CFO and
Treasurer from February 2019 to October 2019; Executive Vice President, CFO and Treasurer from October 2018 to February 2019;
Executive Vice President and CFO from April 2016 to October 2018.
Wisconsin
Electric Power Company (wholly owned subsidiary of WEC Energy Group) - Chairman of the Board and CEO since February 2022; President
since January 2022; Executive Vice President from June 2020 to December 2021; Executive Vice President and CFO from April 2016
to October 2018 and from October 2019 to June 2020; Executive Vice President, CFO and Treasurer from October 2018 to October 2019.
Director
of Wisconsin Electric Power Company since April 2016.
Director
Lauber also serves as an executive officer and/or director of several other major subsidiaries of WEC Energy Group.
Other
Public Directorships
None
Director
Qualifications
Director Lauber has more
than 30 years of experience working at WEC Energy Group and/or its subsidiaries and has held senior leadership levels for the past
12 years. A certified public accountant, Director Lauber first joined the Company in 1990 and held positions of increasing responsibility
in the areas of financial planning and management, accounting, and internal controls. In April 2016, he was named Executive Vice President
and Chief Financial Officer for WEC Energy Group, and added the Treasurer responsibilities in October 2018. From there, he advanced through
multiple executive leadership positions, including as Executive Vice President and Chief Operating Officer, a position that included oversight
responsibility for Information Technology, Enterprise Risk Management, Major Projects, Power Generation, Supply Chain, Supplier Diversity,
and WEC Infrastructure and Fuels. Effective February 2022, Director Lauber was named President and Chief Executive Officer of WEC Energy
Group and appointed to the Board of Directors. As President and Chief Executive Officer of WEC Energy Group’s major utilities in
Wisconsin, Michigan and Minnesota, Director Lauber is directly responsible for business operations in those jurisdictions. With his deep
expertise in financial and investment matters, in addition to his extensive knowledge and experience in the broad scope of the Company's
business operations critical to its continuing success as a leading Midwest public utility holding company, Director Lauber contributes
substantive insight into the Company’s strategies, objectives, risks and opportunities.
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| Ulice
Payne, Jr. |
Independent
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Age:
68
Director
Since: 2003
Board
Committees: Compensation
(Chair); Executive; Finance
|
Professional Experience
Addison-Clifton, LLC -
Managing Member since 2004. Addison-Clifton provides global trade compliance advisory services.
Other
Public Directorships
Director
of Foot Locker, Inc. since 2016.
Director
of Manpower Group since 2007.
Director
Qualifications
Director Payne brings to
our Board of Directors strong senior leadership and public service experience within the greater Milwaukee community and State of Wisconsin,
having previously served in roles that included the Securities Commissioner for the State of Wisconsin, managing partner of the Milwaukee
office of the law firm Foley & Lardner LLP, and president and CEO of the Milwaukee Brewers Baseball Club, Inc. In addition, Director
Payne is involved in numerous Milwaukee-area non-profit entities, making him well-positioned to provide the Board with perspective on
the economic and social issues affecting the greater Milwaukee area, as well as a broad spectrum of the Company's customers. As founder
and President of Addison-Clifton, LLC, which provides global trade compliance consulting, Director Payne understands the importance of
providing clients with exceptional customer service, a focus that is critical to the execution of WEC Energy Group's strategic initiatives.
Director Payne applies his senior leadership, governance and risk management capabilities, and significant managerial, operational, financial
and global experiences to his role as chair of our Compensation Committee and as a member of our Finance Committee.
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| WEC
Energy Group |
P-22 |
2024
Proxy Statement |
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| Mary
Ellen Stanek |
Independent
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Age:
67
Director
Since: 2012
Board
Committee: Finance |
Professional Experience
Baird
Financial Group - Managing Director and Director of Asset Management since 2000. Baird Financial Group provides wealth management, capital
markets, private equity, and asset management services to clients worldwide.
Baird
Advisors - Co-Chief Investment Officer since 2022; Chief Investment Officer 2000 to 2022. Baird Advisors is an institutional fixed
income investment advisor.
Baird
Funds, Inc. - President since 2000. Baird Funds is a publicly registered investment company.
Other
Public Directorships
Trustee
of The Northwestern Mutual Life Insurance Company 2009 to June 2023.
Director
Qualifications
Director Stanek, who is
a Chartered Financial Analyst, brings to our Board of Directors extensive financial and investment strategy expertise, resulting from
over 40 years of investment management experience. As Managing Director and Director of Asset Management of Baird Financial Group, a position
she has held since 2000, Director Stanek's expertise in fixed income investments provides our Board and management with invaluable financial
strategy insight relative to WEC Energy Group and its subsidiaries, which customarily issue debt securities as a means of raising capital.
As a member of the WEC Energy Group Finance Committee, she also offers valuable perspective on insurance risk matters, having served for
15 years as a director of West Bend Mutual Insurance Company. In addition to her recognition as a prominent business leader in Milwaukee's
financial community, Director Stanek has dedicated significant time to serving on the boards of a large number of Milwaukee-area non-profit
organizations, through which she has developed strong relationships with key community leaders and stakeholders. From these experiences,
she brings our Board insightful perspectives on issues impacting the culture and viability of today’s workforce, as well as a deep
understanding of corporate governance matters.
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| Glen
E. Tellock |
Independent
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Age:
62
Director
Since: 2022
Board
Committee: Audit
and Oversight |
Professional Experience
Lakeside
Foods Inc. - Retired President and Chief Executive Officer, May 2016 to June 2021. Lakeside Foods is a privately held, industry-leading
international food processing company based in Wisconsin.
Other
Public Directorships
Director
of Astec Industries, Inc. 2006 to July 2023.
Director
of Badger Meter, Inc. since 2017.
Director of Nicolet Bankshares,
Inc., since May 2023.
Director
Qualifications
Director Tellock brings
to our Board of Directors extensive executive leadership experience, having retired in 2021 as president and CEO of Lakeside Foods, a
privately held, international food processor headquartered in Wisconsin. This follows a 24-year career at The Manitowoc Company, a manufacturer
of construction and commercial food service equipment, where he served in a variety of leadership roles, including CFO, president and
CEO and, ultimately, chairman, president and CEO. He brings to our Board decades of experience throughout which he has developed a deep
understanding of audit oversight, financial reporting, risk management, business operations and strategic planning.
Mr. Tellock is a certified
public accountant with experience serving as an audit manager of a major accounting firm, which contributes to his active service on our
Audit and Oversight Committee. He also brings to our Board significant corporate governance experience, having served on numerous non-profit
boards dedicated to community causes, as well as public company boards.
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| WEC
Energy Group |
P-23 |
2024
Proxy Statement |
Governance
PRIMARY
ROLE AND RESPONSIBILITIES OF OUR BOARD
Our Board is responsible
for providing oversight with respect to matters of concern to our stockholders. Those responsibilities include, among other things, oversight
of (i) the selection of the Chief Executive Officer and ongoing succession planning for senior leadership, (ii) long-term strategy and
execution, and (iii) the Company’s risk environment and associated management policies and practices.
Leadership
Succession Planning
Company leaders are responsible
for developing the talent across the organization through the broadening and deepening of business and leadership knowledge. Succession
planning and internal talent development are strategic priorities of the Company and integral components of our approach to human capital
management, which includes engagement at all levels of the organization, and with the Board.
The Compensation Committee
has primary oversight for executive succession planning and development, and periodically reviews and assesses the Company’s strategies
and initiatives relating to human capital management. The Committee regularly reports to and engages with the Board about these matters.
2023
Highlights
Throughout 2023, the Board
was actively engaged in oversight of the senior and executive management succession planning process. The Board spent considerable time
discussing management's plans to foster a deep talent bench and oversee the implementation of its plan for leadership succession, including
the upcoming transition of the current Executive Chairman, Gale E. Klappa, to the role of Non-Executive Chairman following the 2024 annual
meeting of stockholders.
Oversight
of Strategy
The Board believes that
a fundamental, collective understanding of the issues facing the Company is imperative to its ability to carry out its strategic oversight
responsibilities. Throughout the year, the Board engages in substantive discussions with management about the Company’s strategy.
Elements of strategy are discussed within the Board committee meetings and at every regularly scheduled Board meeting. This includes updates
from management on the Company’s financial performance and the status of operational and social goals and performance, and the internal
and external factors that influence performance and sustainability.
At least annually, the
Board engages in significant educational sessions that include briefings and presentations from the Company’s senior leadership
team, other members of management, and outside advisors and subject matter experts. These sessions help the Board to understand the environment
within which the Company operates and the risks and opportunities presented thereby, and inform and shape the Board’s understanding
of management’s decision-making, leading to more effective oversight of the Company’s short-, medium- and long-term strategies
and operational objectives.
2023
Highlights
Under the Board's oversight
in 2023, we delivered another solid year of results, from customer satisfaction, to financial performance to safety and record spend with
diverse suppliers, while also returning more cash to stockholders than in any other year in Company history. In addition, we were able
to successfully fund the Company’s capital plan while maintaining our solid investment grade credit ratings in the current high
interest rate environment. We also released the largest 5-year capital plan in the Company’s history, continuing the Company’s
transition to a clean energy future. Consistent with this strategic focus, we announced our plan to eliminate coal as an energy source
by the end of 2032 rather than 2035, three years earlier than previously planned. In addition, we expect to use coal only as a backup
fuel by the end of 2030. In support of our net zero methane emission goal, renewable natural gas has started flowing in our Wisconsin
gas distribution system.
Oversight
of Risk Management
Our Board of Directors
is responsible for providing oversight with respect to our major strategic initiatives, which requires ongoing dialogue with our senior
management team about opportunities and risks, and the processes through which senior management maintains focus on the organization’s
key financial and business objectives, corporate policies, and overall economic, environmental and social performance. Senior management,
in turn, is responsible for effectively planning and executing daily operations within a strong risk framework.
With that in mind, the
Company has created a framework from which management is able to provide meaningful information to the Board to aid in its oversight responsibility.
Included below is a high-level overview of that structure.
Audit
Services
As a standing corporate
practice, each year, management systematically evaluates the Company's risk areas. Our Audit Services department conducts an annual enterprise
risk assessment, whereby business leaders identify existing, new or emerging issues or changes within their business areas that could
have enterprise implications. Risk areas are then mapped to create a cumulative assessment of their significance and likelihood, taking
into consideration industry benchmarking information, as appropriate. The mapping also identifies lines of responsibility for managing
the risks to ensure accountability and focus.
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| WEC
Energy Group |
P-24 |
2024
Proxy Statement |
Enterprise
Risk Steering Committee
Chaired by the Chief Executive
Officer and consisting of other senior-level management employees, our Enterprise Risk Steering Committee ("ERSC") regularly reviews
the Company’s key risk areas and provides input into the development and implementation of effective compliance and risk management
practices. On a bimonthly basis, the ERSC discusses findings of Audit Services’ annual enterprise risk assessment, holds in-depth
discussions with members of management on identified subjects, and tracks the status of ongoing progress. The Chief Executive Officer
provides the Board with routine updates on the Company’s key risk areas during the Board meetings, including summaries from the
bimonthly discussions held by the ERSC.
Given the significant risks
and opportunities associated with climate change, management has created a separate committee under the guidance of the Chief Executive
Officer. The Climate Risk Committee brings together senior-level officers responsible for overall climate-related corporate strategy.
This committee meets at least quarterly to review and discuss climate-related goals, risks and opportunities.
Our cybersecurity governance
model includes oversight by senior management from our Enterprise Risk Steering Committee, along with steering committees for information
security, operational technology security, third-party vendor security controls, Sarbanes-Oxley security controls, and North American
Electric Reliability Corporation Critical Infrastructure Protection (NERC CIP) compliance. The Chief Executive Officer and Chief Administrative
Officer report regularly to the board and its Audit and Oversight committee about cybersecurity matters and risks.
Board
Committees
To carry out its oversight
function, the Board is organized into five standing committees with specific duties and risk-monitoring responsibilities: Audit and
Oversight, Compensation, Corporate Governance, Executive and Finance. With the exception of the Executive Committee, the Board and each
of its committees meet regularly throughout the year, and receive regular briefings prepared by management and outside advisors on specific
areas of current and emerging risks to the enterprise, which are identified and monitored through the Company's enterprise risk management
framework, as described above.
The Committees routinely
report to the full Board on matters that fall within designated areas of responsibility as described in their charters. Examples of risk
monitoring activity that have been designated to the full Board and its committees are shown in the chart on the next page. More information
on the committees' duties and responsibilities begins on page P-32.
Board
of Directors
While the Board delegates
specified duties to its committees, the Board retains collective responsibility for comprehensive risk oversight, including short- and
long-term critical risks that could significantly impact the Company. The Board believes that certain matters should be contemplated by
the diverse perspective of its full membership. This includes oversight of environmental, social and governance risks that have the potential
to result in significant financial or reputational consequences that could impact the Company’s brand, limit its sustainability
or jeopardize its value to stockholders.
As part of the Board’s
approach to risk oversight and management, the Chief Executive Officer provides reports to the Board at each Board meeting and routinely
calls upon members of the management team to provide detailed reports to the Board in their respective areas of responsibility, including
matters of enterprise risk.
Executive
Sessions
Executive sessions for
the non-management directors are generally held at every regularly scheduled Board and committee meeting, during which directors have
direct access to, and meet as desired with, Company representatives to discuss matters of interest, including those related to risk management.
Outside of scheduled meetings,
the Board, its committees and individual Board members have full access to executives, senior managers and other key employees, including
the Executive Chairman, Chief Executive Officer, Chief Financial Officer, General Counsel, Executive Vice President External Affairs,
Chief Audit Officer, Compliance Officer, Chief Administrative Officer and Controller. They are also free to engage as needed with the
leaders of our utility companies and our corporate center departments, including customer service, environmental, enterprise security,
human resources, investor relations, tax and treasury.
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| WEC
Energy Group |
P-25 |
2024
Proxy Statement |
Risk Oversight Responsibilities
The Board believes that
its leadership structure, in combination with management's enterprise risk management program, effectively supports the Board’s
risk oversight function.
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Board
Oversight |
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•Short-
and long-term strategy and strategic initiatives
•Risk
management processes
•Leadership
succession planning
•Code
of Business Conduct |
•Mergers
and acquisitions
•Sustainability
matters, including climate and emissions reduction strategies
•Regular
reporting from Board committees on specific risk oversight responsibilities |
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Committees |
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Audit
and Oversight |
Compensation
|
Corporate
Governance |
Finance
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•External
auditor independence
•Ethics
and compliance program
•Financial
reporting
•Legal
and regulatory risks and compliance, including:
•Data
privacy and security, including cyber, physical and operating technology
•Electric
reliability standards
•Environmental
•Government
relations, including political spending and lobbying
•Litigation
|
•Compensation
practices and programs
•CEO
performance
•Executive
succession planning
•Human
capital management and development |
•Board
performance
•Board
succession planning
•Director
independence
•Governance
structure and practices |
•Capital
allocation
•Capital
structure and financings
•Employee
retirement and benefit plan assets
•Insurance
management |
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Management
Responsibilities |
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•Design
and operate enterprise risk management program, including risk identification, assessment and prioritization
•Conduct
regular, executive-level committee review of key risk areas with updates to Board
•Engage
with Board and committee chairs on areas of assigned risk oversight |
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| WEC
Energy Group |
P-26 |
2024
Proxy Statement |
OUR
ENVIRONMENTAL, SOCIAL AND GOVERNANCE COMMITMENT
The Board’s oversight
of the Company’s strategic direction includes reviewing with senior management our approach to environmental, social and governance
matters. The Board is mindful of management’s responsibility to provide safe, reliable and affordable energy, to preserve the Company’s
long-term value and to make decisions that take into account not only the Company’s stockholders, but also the interests of its
other stakeholders, including our employees and the well-being of the communities we serve, now and in the future.
Our Board is focused on
maintaining a board composition that has the professional experience, core competencies, and diversity to provide effective oversight
of the complex matters the Company faces in the highly regulated utility industry. Between 2019 and 2023, five new independent directors
have been added to the Board. This has enhanced the Board’s collective core competencies and oversight expertise in key risk areas
including technology and cybersecurity, enterprise risk, renewable energy investment strategy, corporate sustainability, and diversity,
equity and inclusion initiatives, while simultaneously increasing its overall ethnic, racial and gender diversity, and decreasing overall
Board tenure.
The Board consistently
engages with the Company’s senior management team to discuss opportunities and risks, as well as key business objectives, corporate
policies, and overall economic, environmental and social performance.
Priority
sustainability issues
Company leadership and
the Board continue to look to our priority sustainability issues as a guide for corporate efforts and reporting. In 2020, the Company
partnered with the Electric Power Research Institute ("EPRI") in a formal assessment process, to identify the sustainability issues
that are most important to the Company and its stakeholders, considering both current and potential long-term impacts, as well as input
and validation from both internal and external stakeholders.
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Our
priority sustainability issues (alphabetical
order) |
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•Climate
strategy
•Community
engagement
•Customer
satisfaction
•Cybersecurity
•Economic
development |
•Empowered
employees
•Energy
affordability
•Energy
reliability
•Environmental
responsibility |
•Financial
discipline
•Government
relations
•Innovation
•Operational
performance |
•Safety
and health
•Stakeholder
transparency
•Strategic
governance
•Supply
chain integrity |
Following are some highlights
from 2023 that demonstrate the Company’s and the Board’s commitment to ensuring that the Company’s goals and practices
are aligned with a strong focus on these priority issues. Additional details on Company performance in key areas are available in the
Compensation Discussion and Analysis under the heading “2023 WEC Energy Group Operational and Social Performance Goals under the
STPP,” which begins on page P-48.
Delivering
a clean energy future
ESG Progress
Plan: A Road Map for Investment in Efficiency, Sustainability and Growth
In
advance of publicly announcing the Company's five-year (2024-2028) capital plan, management reviewed the ESG Progress Plan with the Board.
Management and the Board
discussed the foundation underlying the $23.7 billion in projected investments over five years (2024-2028) that are designed to set the
Company on the course to meet its long-term emission reduction targets while also ensuring continued focus on business fundamentals. Those
discussions included criteria such as underlying customer preferences and needs, regulatory environment, financial implications, and technological
advancements that will influence the trajectory of the plan’s execution, and resulted in the Board’s approval of management’s
strategic vision and recommendations.
Climate
strategy and emissions reporting
The Company continues to
report its progress toward its climate reduction goals through the annual Corporate Responsibility Report and other disclosures. In 2023,
three of the Company’s utility subsidiaries, Wisconsin Electric Power Company, Wisconsin Public Service Corporation and Upper Michigan
Energy Resources Corporation, began reporting on their respective websites further details about each utility’s energy mix and emissions
rates. In
addition, a new position statement was published to articulate how the Company considers and seeks to address the social and economic
implications of the low-carbon transition: Supporting Our Stakeholders in the Transition of Our Electric Generation Fleet.
Since 2019, the Company
has issued separate climate reports as needed to illustrate its approach to reducing greenhouse gas emissions and to present an analysis
of factors that could affect future decision-making, including risks, opportunities and uncertainties across the enterprise.
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| WEC
Energy Group |
P-27 |
2024
Proxy Statement |
Trade
Association and Climate Engagement Report
In 2023, the Company published
its first Trade Association and Climate Engagement Report. The report reviews the major trade associations to which the Company belongs
and their climate policies, including how those policies align with the Company's, and the Paris Agreement.
Supporting
our colleagues and communities
Human
Capital Management
We strive to make our companies
great places to work, with programs for individual development, initiatives to promote our core values of diversity, equity and inclusion,
and targeted recruitment as we build the workforce of the future. During 2023, we demonstrated this commitment through many initiatives
focused on, among other priorities: employee education; significant support for and leveraging of our nine business resource groups;
promoting workforce diversity in our senior leadership; meeting our vigorous health and safety expectations; training and development
opportunities for employees at all levels of the organization; our robust talent review and succession planning process that ensures
we have a talent pipeline for the future; and charitable giving to diverse communities to improve local employment opportunities.
Supplier
Diversity
We have had a supplier
diversity program under the watchful guidance of senior leadership since 2002. In 2023, we spent a record $333.7 million with diverse
suppliers, including certified minority-, women-, veteran- and service disabled-owned businesses.
Community
Support
Management and the Board
have always embraced the Company’s role as a leader in the communities we are privileged to serve. During 2023, our companies and
foundations contributed more than $20 million in charitable grants to support non-profits hard at work helping others.
Commitment
to reporting transparency
We value the importance
our stakeholders place on understanding how we manage risks and opportunities associated with sustaining our enterprise. In addition to
engaging directly with stakeholders on environmental and social issues, we are committed to transparent reporting on these matters through
a variety of mechanisms, including those noted below. Further, we routinely respond to data verification and survey requests from a substantial
number of third-party organizations seeking input regarding our environmental, social and governance-related performance, programs and
policies.
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•Corporate
Responsibility Report
•Climate
Report, aligned with TCFD recommendations
•Trade
Association and Climate Engagement Report
•EEI
and AGA ESG/Sustainability Reporting Template
•Sustainability
Accounting Standards Board ("SASB") industry standards |
•CDP
responses
•EEO-1
reporting
•Semiannual
disclosure of political activities
•Disclosure
of Environmental Policy
•Independent
assurance of climate data |
To learn more, please access
our Corporate Responsibility web page at www.wecenergygroup.com/crs/index.htm
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| WEC
Energy Group |
P-28 |
2024
Proxy Statement |
STOCKHOLDER
ENGAGEMENT
Accountability
to stockholders is critical to the Company’s long-term success. We have systems in place to ensure that management and the Board
hear, understand, and consider the issues that matter most to our stockholders and other key constituents. Our year-round engagement program
provides valuable insight into how the Company’s practices and policies are externally perceived, shapes the processes used to evaluate
goals and expectations, and helps to highlight emerging issues that may affect our governance practices.
Company
leaders, including the Executive Chairman, Chief Executive Officer and Chief Financial Officer, regularly engage with stakeholders on
matters of specific interest about the Company’s business results, strategic direction and environmental, social and governance
practices. This provides valuable feedback to management and the Board about the perspectives of its stockholders.
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Who
we engage
Institutional
and retail stockholders
Industry
thought leaders
Sustainability-centered
coalitions and activists
Proxy
advisory firms
Environmental,
social and governance rating firms |
Who
participates in engagement
Members
of the Board
Senior
management
Employees
from disciplines across the enterprise, including investor relations, legal, environmental, government affairs and corporate affairs |
|
Year-round
governance engagement process
Summer
Review
results from Annual Meeting of Stockholders
Seek
feedback from stockholders on voting decisions
Assess
governance and executive compensation practices
Provide
Board with feedback and recommendations
Fall
Discuss
executive compensation practices and environmental, social and governance topics with investors
Consider
enhancements to our practices and disclosures
Share
investor feedback and recommendations with Board
Winter
Continue
discussions with investors on executive compensation practices and environmental, social and governance topics
Board
approves, as needed, changes or enhancements to practices and disclosures
Develop
disclosures for the proxy statement
Publish
Form 10-K
Spring
Publish
Annual Report and Proxy Statement
Hold
Annual Meeting of Stockholders |
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How
we engage
Quarterly
investor calls, conferences, presentations
Standalone
presentations regarding environmental, social and governance matters
Ad
hoc in-person and virtual meetings
Participation
in industry associations and forums
Timely
disclosures filed with the SEC and publication of other significant corporate reports on our website
Process
for stockholders to directly correspond with individual directors via the Corporate Secretary |
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Topics
of engagement in 2023
Corporate
strategy
Financial
and operational performance plans
Management
succession planning
Board
composition and refreshment
Executive
compensation metrics and targets |
Climate
change and decarbonization
Human
capital management
Diversity,
equity and inclusion efforts
Safety
Priority
sustainability issues
Community
engagement and charitable giving |
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Throughout 2023 we
engaged with key constituents across the broader investment community, a sample of which is provided below.
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Jan/Feb
4th
Quarter and Full Year 2022 Earnings Call
Evercore
ISI Utility CEO Conference
Non-Deal
Roadshow- Guggenheim
Morgan
Stanley Global Energy and Power Conference
March/April
Bank
of America Merrill Lynch Boston Power, Utilities and Clean Energy Conference
Global
Listed Infrastructure Organization Conference – Meetings and Chairman Fireside Chat
Redburn
Atlantic Equities European Investor Meetings (Virtual)
Non-Deal
Roadshow - UBS
Non-Deal
Roadshow – Wolfe Research
Scotia
Bank Utilities & Renewables Conference
J.P.
Morgan Midwest Utilities & Midstream Forum
Morgan
Stanley Retail Shout-Down |
May/June
1st
Quarter Earnings Call
American
Gas Association Financial Forum Conference
JP
Morgan Conference
Non-Deal
Roadshow - Mizuho
Evercore
ISI investor meetings and plant tours
July/Aug
2nd
Quarter Earnings Call
Wells
Fargo Non-Deal Roadshow
UBS
Midwest Utilities Conference
Baltimore
Investor Meetings – T Rowe Price Investment, T Rowe Price Associates
Corporate
Responsibility Report published
Submitted
responses to CDP
Trade
Association Report published |
Sept/Oct
Wolfe
Utilities & Energy Conference/Chairman Fireside Chat
Barclay’s
CEO Energy-Power Conference
Non-Deal
Roadshow - Redburn Atlantic
UBS
European Conference
UBS
CEO Fireside Chat & Retail Radio Show
Nov/Dec
3rd
Quarter Earnings Call
Edison
Electric Institute Financial Conference
KeyBanc
Non-Deal Roadshow
BMO
Growth and ESG Conference |
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| WEC
Energy Group |
P-29 |
2024
Proxy Statement |
BOARD
LEADERSHIP STRUCTURE
Roles
of the Chairman and CEO
Consistent with WEC Energy
Group’s bylaws and Corporate Governance Guidelines, the Board has discretion to combine and separate the offices of the Chief Executive
Officer and Chairman of the Board. The Board believes the current leadership structure of separate CEO and Chairman positions is in the
best interests of the Company’s stockholders at this time. This structure has allowed Mr. Lauber to focus on implementing the Company’s
operating plans and leading the day-to-day management of our seven customer-facing utilities, while in his role as Executive Chairman,
Mr. Klappa has focused on leading the Board in its oversight, advisory and risk management roles, with added leadership responsibility
for Company strategy, capital allocation, investor relations and economic development matters. Upon Mr. Klappa’s transition to Non-Executive
Chairman following the 2024 Annual Meeting of Stockholders, Mr. Klappa will continue
to lead the Board in its oversight, advisory and risk management roles, while primary responsibility for Company strategy, capital allocation
and investor relations matters will transfer to Mr. Lauber. Mr. Klappa will remain available to provide advice, input and assistance to
Mr. Lauber.
Independent
Lead Director
The
independent members of the Board elect the Independent Lead Director, with an expectation that the individual elected will serve in that
capacity for three years, subject to continuing election by stockholders in annual director elections. The independent members of the
Board may adjust the Independent Lead Director’s length of service in that role, including extending it beyond three years, at their
discretion. Annually, the independent members of the board complete a performance evaluation of his or her effectiveness.
In
May 2023, the Board elected Thomas K. Lane to serve as the Independent Lead Director; he also is a member of the Audit and Oversight
and Compensation Committees.
Duties of the Independent
Lead Director include:
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•presides
at all meetings of the Board at which the Chairman is not present, including executive sessions of the independent directors without any
management present;
•serves
as liaison between the CEO and the independent directors under most circumstances, although each individual director has full access to
the CEO;
•authority
to call meetings of the independent directors;
•reviews
and approves meeting schedules and agendas for the Board and its committees for content and to assure there is sufficient time for discussion
of all agenda items; |
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•reviews
all proposed changes to committee charters;
•leads
the annual Board evaluation;
•provides
input to the Chairman on the scope, quality and timeliness of information provided to the Board;
•authority
to attend all committee meetings, as appropriate;
•be
available for consultation and communication with significant stockholders and other interested parties, if needed; and
•any
other duties as may be prescribed by the Board. |
BOARD
AND COMMITTEE PRACTICES
Board
Meetings and Attendance
During
2023, the Board met seven times and executed four written unanimous consents. All directors attended more than 75% of the total number
of meetings of the Board and Board committees on which each served, with average director attendance at more than 99.4%. Generally, all
directors are expected to attend the Company’s Annual Meetings of Stockholders. All directors standing for election in 2024 attended
the 2023 Annual Meeting of Stockholders.
Executive
Sessions
At
every regularly scheduled Board and committee meetings, executive sessions are scheduled, and are generally held, for the non-management
directors to meet without management present. In 2023, an executive session of independent, non-management directors was held at all regularly
scheduled Board meeting and at most committee meetings.
Director
Orientation and Continuing Education
Management
takes seriously its responsibility to onboard new directors and provide ongoing education for existing directors on the unique and complex
issues inherent in operating a public company in the regulated utility industry.
Management
has created a robust orientation program that introduces new directors to the Company’s organizational structure, businesses, strategies,
risks and opportunities, which includes in-house and field programs such as walking tours of the Company's generating facilities and project
sites, senior management presentations and individual sessions with senior leaders. These activities assist new directors in developing
and/or enhancing their Company and industry knowledge to optimize their service on the Board. To ensure that our directors have self-directed
access to governance-related resources and director training opportunities, all of our directors are members of the National Association
of Corporate Directors ("NACD").
During
2023, management provided significant educational opportunities for the Board to better understand the external environment within which
the Company operates, including briefings and presentations provided by outside advisors and other stakeholders.
Annual
Performance Evaluations
CEO
Performance
The
Compensation Committee, on behalf of the Board, annually evaluates the performance of the CEO and reports the results to the Board. The
CEO is evaluated in a number of areas including leadership, vision, financial stewardship, strategy development and
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| WEC
Energy Group |
P-30 |
2024
Proxy Statement |
execution,
management development, effective communication with constituencies, demonstrated integrity and effective representation of the Company
in community and industry affairs.
As part of this practice,
the Compensation Committee Chair individually obtains from each non-management director his or her input on the CEO’s performance,
which is summarized and discussed with the Compensation Committee members, followed by discussion in executive session with all non-management
directors. The Compensation Committee Chair then shares the evaluation results with the CEO. This procedure allows the Board to evaluate
the CEO and to communicate the Board’s expectations. The Compensation Committee considers the input of all non-management directors
in determining appropriate compensation for the CEO. This process was completed and the Compensation Committee approved a 2024 compensation
package for Mr. Lauber in December 2023.
Executive
Chairman Performance
Under
the same process and timing as the CEO performance evaluation, the Compensation Committee Chair facilitated the annual performance evaluation
of Mr. Klappa in his role as Executive Chairman. The results were discussed with the Compensation Committee members, followed by discussion
with all non-management directors in executive session and, ultimately, with Mr. Klappa. This process was completed and the Compensation
Committee approved a 2024 compensation package for Mr. Klappa, in his role as Executive Chairman, in December 2023.
Independent
Lead Director Performance
On an annual basis, the
Independent Lead Director is evaluated on the effectiveness in carrying out his or her duties, which are outlined in the Corporate Governance
Guidelines. This evaluation is led by the Chairman of the Board, who references the NACD Lead Director Assessment framework to facilitate
individual conversations with the non-management directors to capture feedback. The Independent Lead Director is evaluated in several
areas including his facilitation of discussions between and amongst the Chairman and the directors during open sessions with management,
during executive sessions, and outside of board meetings, and his collaboration with the Chairman in identifying key topics, issues and
concerns that directors wish to be addressed during board meetings and executive sessions. The Chairman uses this input to provide the
Independent Lead Director feedback in carrying out his or her duties in the upcoming year.
Board
Performance
The
Board recognizes that self-reflection and continuous improvement are key to remaining an effective governing body. Led by the Independent
Lead Director, the Corporate Governance Committee is charged with overseeing the Board’s annual evaluation process, a process which
is reviewed periodically, and includes discussion on whether to utilize a third-party facilitator. In December 2023, the Board evaluated
its performance utilizing a framework of questions developed by the NACD, in addition to several broad “reflection” questions.
The Corporate Governance Committee and the Board discussed the Board evaluation process and results at their meetings in January 2024.
It is standard practice for the Corporate Governance Committee to use the results of this process to foster continuous improvement of
the Board's governance activities.
BOARD
EVALUATION PROCESS
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| 1 |
Self-Reflection
Questionnaire |
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2 |
One-on-One
Discussion with Independent Lead Director |
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3 |
Discussion
of Key Take-Aways and Governance Enhancements |
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Directors
contemplated the Board’s performance across the following elements:
·
board composition and leadership
·
board committees
·
board meetings
·
overall effectiveness of the Board
·
overall effectiveness of the Board with regard to management. |
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The
Independent Lead Director engaged in one-on-one discussions with each director on elements of the Board’s performance, allowing
each director an opportunity to speak candidly. |
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Having
captured a summary of the feedback from these discussions, the Independent Lead Director led the Board during its Executive Session through
group discussions of key takeaways and recommended enhancements to its governance practices. |
Committee
Performance
Each
committee, except the Executive Committee, conducts an annual performance evaluation of its own activities and reports the results to
the Board. During this evaluation, each committee compares its performance against the requirements of its charter and its annual planning
calendar; contemplates a series of questions related to the qualifications and performance of committee members; considers the
quality and quantity of information provided to the committee in advance of its meetings; and evaluates the effectiveness of the processes
the committee uses to carry out its oversight responsibilities. The results of the annual evaluations are used by each committee to identify
its strengths and areas where its governance practices can be improved. Each committee may recommend changes to its charter to the full
Board based upon the evaluation results.
It
is also standard practice for the Corporate Governance Committee annually to conduct a holistic review of all of the committees' charters
and annual planning calendars, taking into consideration evolving and new best practices with respect to risk oversight. Recommendations
are routed to the appropriate Committee Chair, as needed, for consideration.
Following this holistic
review during 2023, all of the Board committees, with the exception of the Executive Committee, adopted changes to their charters.
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| WEC
Energy Group |
P-31 |
2024
Proxy Statement |
BOARD
COMMITTEES
The
Board of Directors has the following committees: Audit and Oversight, Compensation, Corporate Governance, Executive and Finance. Each
committee, except the Executive Committee, operates under a charter approved by the Board, which can be found on our website at www.wecenergygroup.com/govern/committee-comp.htm.
With the exception of the Executive Committee, only independent directors serve on the standing committees.
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| Audit
and Oversight |
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| Members |
Key
Responsibilities |
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Danny
L. Cunningham, Chair
Ave
M. Bie
Maria
C. Green
Thomas
K. Lane
Glen
E. Tellock
2023
Meetings: 5 |
•Oversee
the integrity of the financial statements.
•Oversee
management compliance with legal and regulatory requirements.
•Oversee
management’s strategy for data privacy and security, including cyber and physical.
•Review
the Company's environmental and compliance programs, including its Ethics and Compliance program and Code of Business Conduct.
•Review,
approve, and evaluate the independent auditor's qualifications, independence and services.
•Oversee
the performance of the internal audit function and independent auditors.
•Discuss
risk management and major risk exposures and steps taken to monitor and control such exposures.
•Establish
procedures for the submission and treatment of complaints and concerns regarding the Company’s accounting controls and auditing
matters.
•Prepare
the audit committee report required by the SEC for inclusion in the proxy statement. |
The
Audit and Oversight Committee is a separately designated committee established in accordance with Section 3(a)(58)(A) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). The Audit and Oversight Committee consists solely of independent directors
who meet the independence requirements of the SEC, NYSE and the Board's Corporate Governance Guidelines. In addition, the Board has determined
that all of the members of the Audit and Oversight Committee are financially literate as required by NYSE rules and that Directors Cunningham,
Lane and Tellock qualify as audit committee financial experts within the meaning of SEC rules.
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| Compensation |
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| Members |
Key
Responsibilities |
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Ulice
Payne, Jr., Chair
William
M. Farrow III
Thomas
K. Lane
2023
Meetings: 7* |
•Determine
and annually review the Compensation Committee’s compensation philosophy.
•Oversee
the development of competitive, performance-based executive and director compensation programs.
•Review
and approve the compensation paid to select employees, including the Company’s executive officers (including base salaries, incentive
compensation, and benefits).
•Establish
and administer the CEO and Executive Chairman compensation packages.
•Set
performance goals relevant to the CEO and Executive Chairman compensation.
•Annually
evaluate CEO and Executive Chairman performance and determine compensation adjustments.
•Annually
assess whether any risks arising from the compensation program are reasonably likely to have a material adverse effect on the Company.
•Review
the Company’s plans for leadership and succession planning of executive officers.
•Periodically
review and assess the Company’s strategy for human capital management initiatives.
•Review
and approve the implementation or revision of any clawback policy allowing the Company to recoup compensation paid to officers and other
employees.
•Prepare
the report required by the SEC for inclusion in the proxy statement.
•Review
the results of the most recent stockholder advisory vote on compensation of the named executive officers. |
*Included
one joint meeting with the Corporate Governance Committee.
The
Compensation Committee consists solely of independent directors who meet the independence requirements of the SEC, NYSE and the Board's
Corporate Governance Guidelines.
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| WEC
Energy Group |
P-32 |
2024
Proxy Statement |
The
Compensation Committee is charged with administering the compensation package of WEC Energy Group’s non-management directors. The
Compensation Committee meets with the Corporate Governance Committee annually to review the compensation package of WEC Energy Group’s
non-management directors and to determine the appropriate amount of such compensation.
Compensation
Advisor: The Compensation
Committee, which has authority to retain advisers and consultants at WEC Energy Group’s expense, retained Frederic W. Cook &
Co., Inc. ("FW Cook") to analyze and help develop the Company’s executive compensation program, and to assess whether the
compensation program is competitive and supports the Committee’s objectives. FW Cook also assesses and provides recommendations
on non-management director compensation, as discussed in more detail on pages P36-P37. FW Cook is engaged solely by the Compensation Committee
to provide non-management director and executive compensation consulting services, and does not provide any additional services to the
Company.
In
connection with its retention of FW Cook, the Compensation Committee reviewed FW Cook’s independence, including: (1) the
amount of fees received by FW Cook from WEC Energy Group as a percentage of FW Cook’s total revenue; (2) FW Cook’s
policies and procedures designed to prevent conflicts of interest; and (3) the existence of any business or personal relationships
that could impact independence. After reviewing these and other factors, the Compensation Committee determined that FW Cook is independent
and the engagement did not present any conflicts of interest. FW Cook also determined that it was independent from the Company’s
management, which was confirmed in a written statement delivered to the Compensation Committee.
For
more information regarding our director and executive compensation processes and procedures, please refer to "Director Compensation",
beginning on page P-36, and "Compensation Discussion and Analysis," beginning on page P-42, respectively.
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| Corporate
Governance |
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| Members |
Key
Responsibilities |
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William
M. Farrow III, Chair
Curt
S. Culver
Cristina
A. Garcia-Thomas
2023
Meetings: 4* |
•Establish
and annually review the Corporate Governance Guidelines to verify that the Board is effectively performing its fiduciary responsibilities
to stockholders.
•Periodically
review the charters of each committee of the Board and make recommended changes as appropriate.
•Establish
and annually review director candidate selection criteria, as well as the Board and each committee’s structure, size, composition
and leadership.
•Identify
and recommend candidates to be named as nominees of the Board for election as directors.
•Perform
annual review of the Company's Related Party Transaction Policy, and where appropriate, review and approve related party transactions
in accordance with the policy.
•Oversee
the annual review of the Board’s performance.
•Review
and determine the compensation package of non-management directors in conjunction with the Compensation Committee. |
*Included
one joint meeting with the Compensation Committee.
The
Corporate Governance Committee consists solely of independent directors who meet the independence requirements of the NYSE and the Board's
Corporate Governance Guidelines.
The
Board also has an Executive Committee, which may exercise all powers vested in the Board except action regarding dividends or other distributions
to stockholders, filling Board vacancies, and other powers which by law may not be delegated to a committee or actions reserved for a
committee comprised of independent directors. The members of the Executive Committee are Gale E. Klappa (Chair), Curt S. Culver, Danny
L. Cunningham, William M. Farrow III, Thomas K. Lane and Ulice Payne, Jr. The Executive Committee did not meet in 2023.
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| Finance |
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Key
Responsibilities |
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Curt
S. Culver, Chair
Maria
C. Green
Ulice
Payne, Jr.
Mary
Ellen Stanek
2023
Meetings: 3 |
•Review
and monitor the Company’s current and long-range financial policies and strategies, including our capital structure and dividend
policy.
•Authorize
the issuance of corporate debt within limits set by the Board.
•Discuss
policies and financial programs with respect to financial risk management.
•Approve
the Company’s financial plan, including the capital budget.
•Review
updates from the chair of the Investment Trust Policy Committee regarding the investment performance and operations of employee retirement
and benefit plan assets. |
The
Finance Committee consists solely of independent directors who meet the independence requirements of the NYSE and the Board's Corporate
Governance Guidelines.
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| WEC
Energy Group |
P-33 |
2024
Proxy Statement |
COMPENSATION
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None
of the persons who served as members of the Compensation Committee during 2023 was an officer or employee of the Company during 2023 or
at any time in the past, nor had reportable transactions with the Company.
During 2023, none of the
Company's executive officers served as a member of the Compensation Committee or as a director of another entity, one of whose executive
officers served on the Compensation Committee or as a director of the Company.
ADDITIONAL
GOVERNANCE MATTERS
Political
Activities
We
advocate on behalf of our customers, stockholders and employees for affordable, reliable and clean energy before local, state and federal
elected officials and government agencies. We maintain governmental and regulatory relations offices in Chicago, Illinois; Rosemount,
Minnesota; Madison, Green Bay and Milwaukee, Wisconsin; and Washington, D.C. We also hire contract lobbyists and work with trade
organizations to assist in advocacy activities. Our lobbyists are lawfully registered in each jurisdiction where they perform services
for us.
We
have multiple political action committees ("PACs"). Our PACs are registered with their regulating governments (state or federal)
and authorized by elections laws to collect voluntary contributions from employees who choose to participate. The money, in turn, is used
to support candidates running for federal, state and local offices. Contribution amounts are limited by law. All of our PACs are administered
by a committee that combines appointed and elected members. Oversight committees make decisions on how and where dollars are spent.
We
have a corporate policy on political contributions and reporting (the "Government Relations Policy"), and periodically conduct
training on compliance with lobbying laws. As part of its oversight function, the Board’s Audit and Oversight Committee, which consists
solely of independent directors, conducts an annual review of this policy. The committee also reviews a summary of political activities
and associated reporting excerpted from our Corporate Responsibility Report in advance of its publication each year.
Consistent
with best practices, among other things, the Government Relations Policy:
•addresses
our interactions with public officials, outlining expectations, requirements, restrictions and prohibitions;
•requires
Compliance Officer review of any requests for corporate political contributions to confirm they comply with applicable election laws and
regulations; and
•requires
the Executive Vice President-External Affairs to submit a quarterly report to the Audit and Oversight Committee that addresses activities
covered by the Government Relations Policy.
Corporate Political Donations
The Government Relations
Policy sets forth the standards and requirements that govern the Company’s interactions with public officials, and addresses the
process for requesting and authorizing contributions to organizations operating under Section 527 of the Internal Revenue Code and organizations
that qualify as national political committees. Corporate contributions are required to adhere to all applicable federal and state laws
where we do business. We use corporate funds to support candidates and causes to benefit energy safety, reliability and affordability,
without regard for executives’ personal political preferences.
Lobbying
The Company files federal
quarterly lobbying reports and semiannual contribution reports with the clerk of the U.S. House of Representatives and the secretary of
the U.S. Senate. Our direct lobbying is conducted in support of our corporate initiatives and targets, including our greenhouse gas reduction
goals, and is consistent with the goals of the Paris Agreement, including restricting global temperature rise to 1.5 degrees Celsius.
Public Disclosure
Our
website provides details on: (1) contributions made by our PACs; (2) corporate contributions to state party legislative committees
and elected officials; (3) links to federal and state lobbying reports; and (4) trade organization memberships, including annual
dues and contributions to trade associations and coalitions.
To learn more, please access
our "Political Activities" web page at www.wecenergygroup.com/csr/political-activities.htm.
Code
of Business Conduct
WEC
Energy Group’s Code of Business Conduct (the “Code”) is the foundation of the Company’s Ethics and Compliance
program, as it sets the standards for creating and sustaining a culture of ethics and integrity. The Compliance Officer oversees the management
and operations of the program, about which she provides regular update reports to the Board’s Audit and Oversight Committee. All
WEC Energy Group directors, executive officers and employees, including the principal executive, financial and accounting officers, have
a responsibility to comply with the Code, to seek advice in doubtful situations and to report suspected violations. All those subject
to the Code, including the Company's non-management directors, are required to participate in annual training on the elements of the Code.
The
Code addresses expectations for Company culture, including among other things: non-retaliation for raising concerns; safety;
diversity, equity and inclusion; conflicts of interest; confidentiality; fair dealing; protection and proper use of Company
resources, assets and information; and compliance with laws, rules and regulations (including political contribution and insider trading
laws). The Code is available on our website at the following address: www.wecenergygroup.com/govern/codeofbusinessconduct.pdf.
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| WEC
Energy Group |
P-34 |
2024
Proxy Statement |
The
Company provides multiple ways individuals can report concerns and raise questions concerning the Code and other Company policies. The
Company has contracted with a third-party so that individuals can confidentially and anonymously report suspected violations of the Code
or other concerns, including those regarding accounting, internal accounting controls or auditing matters. The Company has not provided
any waiver to the Code for any director, executive officer or other employee.
Related Party Transactions
WEC
Energy Group has a written policy on the review, approval or ratification of transactions with related persons, which is overseen by the
Corporate Governance Committee, as delegated by the Board.
The
policy provides that the Committee will review any proposed, existing, or completed related party transaction in which the amount involved
exceeds $120,000, and in which any related party had, has, or will have a direct or indirect material interest. In general, a "related
party" includes all directors and executive officers of WEC Energy Group and their immediate family members, as well as stockholders
beneficially owning 5% or more of WEC Energy Group’s outstanding stock as defined in SEC rules. Legal Services reviews relevant
information on transactions, arrangements, and relationships disclosed and makes a determination as to the existence of a related party
transaction as defined by SEC rules and the policy. Related party transactions that are in, or are not inconsistent with, the best interests
of WEC Energy Group or its subsidiaries, as applicable, are approved by the Corporate Governance Committee and reported to the Board.
Related party transactions are disclosed in accordance with applicable SEC and other regulatory requirements.
In
addition, the Code addresses, among other things, how to identify and report potential conflicts of interest. The Code lists the following
as examples of potentially problematic situations: (1) family members who are a supplier, contractor or customer of the Company or
work for one; (2) obtaining any financial interest in or participating in any business relationship with any company or individual,
or concern doing business with WEC Energy Group or any of its subsidiaries that might influence the individual’s decisions or job
performance; (3) participating in any joint venture, partnership or other business relationship with WEC Energy Group or any of its
subsidiaries; and (4) serving as an officer or member of the Board of any substantial, outside for-profit organization.
Because
the Board is mindful of the expectation of its directors to devote the time necessary to fulfill their fiduciary duties, the Corporate
Governance Guidelines contain additional requirements for directors seeking to join other Boards. For example, all directors must notify
the Company’s Corporate Secretary before accepting a nomination for a position on the Board of another public company and the CEO
must obtain the approval of the full Board before accepting such a position.
To
further backstop such discussions and approvals, bi-annually all directors and executive officers are required to complete a questionnaire
that asks about any business relationship that may give rise to a related party transaction or other conflict of interest and all transactions
in which the Company or one of its subsidiaries is involved and in which the director or executive officer, or a relative or affiliate
of such director or executive officer, has a direct or indirect material interest. Director nominees under consideration by the Board
for election are required to complete the same questionnaire. The Corporate Secretary discusses the results of this diligence with the
Corporate Governance Committee.
Since January 1, 2023,
there have been no related-party transactions, and there are no currently proposed related-party transactions, required to be disclosed
pursuant to SEC rules.
COMMUNICATIONS
WITH THE BOARD
Stockholders and other
interested parties who wish to communicate with members of the Board, including the Independent Lead Director or the other non-management
directors individually or as a group, may send correspondence to them in care of the Corporate Secretary, Margaret C. Kelsey, at the Company’s
principal executive offices, PO Box 1331, Milwaukee, Wisconsin 53201. All communications received as set forth above will be opened by
the Corporate Secretary for the sole purpose of confirming the contents represent a message to the Company’s directors. Pursuant
to instructions from the Board, all communication, other than advertising, promotion of a product or service, or patently offensive material,
will be forwarded promptly to the addressee.
WHERE
TO FIND MORE INFORMATION ON GOVERNANCE
You can find our Corporate
Governance Guidelines, Code of Business Conduct, and other corporate governance materials, including WEC Energy Group’s Restated
Articles of Incorporation, bylaws, Board committee charters and Board contact information, on the Corporate Governance section of our
website at www.wecenergygroup.com/govern/governance.htm. You can request copies of these materials from the Corporate Secretary
at the address provided above in “Communications with the Board."
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| WEC
Energy Group |
P-35 |
2024
Proxy Statement |
DIRECTOR
COMPENSATION
Consistent
with its charter, the Compensation Committee seeks to maintain a competitive director compensation program that enables the Company to
attract and retain key individuals and to motivate them to help the Company achieve its short- and long-term goals. As such, the Committee
is responsible for reviewing key market-based trends in director compensation and benefits packages and for recommending changes to the
Board, as appropriate, that will attract and retain quality directors. The Committee’s charter authorizes it to engage consultants
or advisors in connection with its review and analysis of director compensation. The Compensation Committee used FW Cook for this purpose
during 2023. Directors who are also employees of the Company do not receive additional compensation for service as a director.
2023
Compensation of the Board of Directors
The following table describes
the components of the non-management director compensation program during 2023. Elements of compensation remained unchanged from 2022.
The Compensation Committee
believes that this program:
•is
equitable based upon the work required of directors serving an entity of the Company’s size and scope, and
•ties
the majority of director compensation to stockholder interests because the value of the equity awards fluctuates depending upon the Company’s
stock price.
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| Compensation
Element |
2023
Non-Management Director Compensation Program |
| Annual
Cash Retainer Fee |
$110,000
paid in $27,500 quarterly increments |
|
Annual Independent Lead
Director Retainer Fee |
$30,000
paid in $7,500 quarterly increments |
| Annual
Equity Retainer |
$150,000
in restricted stock, which vests one year from grant date |
| Annual
Committee Chair Fees |
|
|
Audit
and Oversight |
$20,000
paid in $5,000 quarterly increments |
|
Compensation |
$20,000
paid in $5,000 quarterly increments |
|
Corporate
Governance |
$15,000
paid in $3,750 quarterly increments |
|
Finance |
$15,000
paid in $3,750 quarterly increments |
| Board
and Committee Meeting Fees |
None |
|
Stock
Ownership Guideline |
Ownership
of common stock or deferred stock units that have a value equal to five times the annual cash retainer for non-management directors to
be satisfied within five years of joining the Board |
Insurance
is also provided by the Company for director liability coverage, fiduciary and employee benefit liability coverage, and travel accident
coverage for director travel on Company business. The premiums paid for this insurance are not included in the amounts reported in the
table located on the next page.
The
Company reimburses directors for all out-of-pocket travel expenses. These reimbursed amounts are also not reflected in the table located
on the next page.
Deferred
Compensation Plan
Non-management directors
may defer all or a portion of their cash fees pursuant to the Directors’ Deferred Compensation Plan. Directors have two investment
options in the plan - the Company's phantom stock measurement fund or a prime rate fund. The value of the phantom stock measurement fund
appreciates or depreciates based upon market performance of the Company's common stock, and it also grows through the accumulation of
reinvested dividend equivalents. Deferral amounts are credited in the name of each participating director to accounts on the books of
WEC Energy Group that are unsecured and are payable only in cash at the time elected by the director. Deferred amounts will be paid out
of general corporate assets or the assets of the Wisconsin Energy Corporation 2014 Rabbi Trust addressed later in this proxy statement.
Legacy
Charitable Awards Program
Directors elected prior
to January 1, 2007, participate in a Directors’ Charitable Awards Program under which the Company intends to contribute up to $100,000
per year for 10 years to one or more charitable organizations chosen by each participating director, including employee directors, following
the director’s death. Charitable donations under the program will be paid out of general corporate assets. Directors derive no financial
benefit from the program, and all income tax deductions accrue solely to the Company. The tax deductibility of these charitable donations
may mitigate the net cost to the Company. The Directors’ Charitable Awards Program has been eliminated for any new directors elected
after January 1, 2007. Current directors participating in the program are Directors Culver, Klappa and Payne.
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| WEC
Energy Group |
P-36 |
2024
Proxy Statement |
Director
Compensation Table
The following table summarizes
the total compensation received during 2023 by each director serving as a non-management director of WEC Energy Group at any time in 2023.
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| Name |
Fees
Earned or Paid
In
Cash |
(1)
Stock
Awards |
Option
Awards |
Non-Equity
Incentive Plan
Compensation |
Change
in Pension Value and Nonqualified Deferred Compensation Earnings |
All
Other Compensation |
Total |
| ($) |
($) |
($) |
($) |
($) |
($) |
($) |
|
Ave M. Bie |
110,000 |
150,000 |
— |
— |
— |
— |
260,000 |
| Curt
S. Culver |
125,000 |
150,000 |
— |
— |
— |
21,947 |
296,947 |
| Danny
L. Cunningham |
130,000 |
150,000 |
— |
— |
— |
— |
280,000 |
| William
M. Farrow III |
140,000 |
150,000 |
— |
— |
— |
— |
290,000 |
| Cristina
A. Garcia-Thomas |
110,000 |
150,000 |
— |
— |
— |
— |
260,000 |
| Maria
C. Green |
110,000 |
150,000 |
— |
— |
— |
— |
260,000 |
| Thomas
K. Lane |
130,000 |
150,000 |
— |
— |
— |
— |
280,000 |
| Ulice
Payne, Jr. |
130,000 |
150,000 |
— |
— |
— |
20,509 |
300,509 |
| Mary
Ellen Stanek |
110,000 |
150,000 |
— |
— |
— |
— |
260,000 |
| Glen
E. Tellock |
110,000 |
150,000 |
— |
— |
— |
— |
260,000 |
(1) Each
director held 1,661 shares of restricted stock as of the close of business on December 31, 2023.
Fees
Earned or Paid in Cash
The amounts reported in
the Fees Earned or Paid in Cash column include annual cash-based retainers for each non-management director and applicable annual committee
chair fees earned during 2023 regardless of whether such retainers and fees were paid in cash or deferred.
Stock
Awards
On January 3, 2023, each
current non-management director received his or her 2023 annual equity retainer in the form of restricted stock equal to a value of $150,000.
The amounts reported in the Stock Awards column include the aggregate grant date fair value, as computed in accordance with Financial
Accounting Standards Board Accounting Standards Codification ("FASB ASC") Topic 718, excluding estimated forfeitures, of the restricted
stock awarded. Each reported restricted stock award vests in full one year from the grant date.
All Other
Compensation
All amounts reported in
the All Other Compensation column represent costs attributed to the director for the Directors’ Charitable Awards Program. See “Legacy
Charitable Awards Program” above for additional information.
2024
Compensation of the Board of Directors
In December 2023, the Compensation
Committee completed its annual review of director compensation and determined that, based upon research provided by FW Cook, total non-management
director compensation delivered in a combination of cash-based retainers and equity awards was below market median. The Compensation Committee
recommended, and the Board approved, an increase of $20,000 in total annual non-management director compensation to be delivered as $10,000
in cash-based retainers and $10,000 in equity. As a result, the annual cash-based retainer was raised from $110,000 to $120,000 and the
value of the annual restricted stock equity award was increased from $150,000 to $160,000 effective January 1, 2024. The Compensation
Committee concluded that it was appropriate for the lead director and all committee chair fees to remain unchanged from 2023 levels.
In January 2024, the Compensation
Committee completed its review of compensation associated with Mr. Klappa’s planned transition from serving as the Executive Chairman
to the role of Non-Executive Chairman, following completion of the Company’s annual meeting. Consistent with recommendations from
FW Cook, the Committee recommended, and the Board approved, that in this role, Mr. Klappa will be entitled to receive director compensation
consistent with that provided to non-management directors, namely an annual retainer fee of $120,000 and an annual restricted stock award
equal to a value of $160,000. In recognition of his service as Non-Executive Chairman of the Board, and the additional duties that entails,
the Committee determined Mr. Klappa will receive an additional annual retainer fee of $187,500. For 2024, Mr. Klappa will receive prorated
amounts of the fees to recognize his service as Non-Executive Chairman for part of the year. Mr. Klappa will not receive any restricted
stock in 2024 in connection with his service as Non-Executive Chairman.
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| WEC
Energy Group |
P-37 |
2024
Proxy Statement |
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PROPOSAL
2: RATIFICATION
OF DELOITTE & TOUCHE LLP AS INDEPENDENT AUDITORS FOR 2024 |
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What
am I voting on?
Stockholders
are being asked to vote to ratify the appointment of Deloitte & Touche LLP, a registered public accounting firm, to serve as the Company’s
independent auditors for the fiscal year ending December 31, 2024.
|
|
Voting
Recommendation:
✓
FOR the ratification
of Deloitte & Touche LLP as independent auditors for 2024.
Although
the Audit and Oversight Committee has the sole authority to appoint the independent auditors, as a matter of good corporate governance,
the Board submits its selection of the independent auditors to our stockholders for ratification. If the stockholders do not ratify the
appointment of Deloitte & Touche LLP, the Audit and Oversight Committee will reconsider the appointment. |
The Audit and Oversight
Committee of the Board of Directors has sole authority to appoint, evaluate, and, where appropriate, terminate and replace the independent
auditors. The Audit and Oversight Committee has appointed Deloitte & Touche LLP as the Company’s independent auditors for the
fiscal year ending December 31, 2024. The Audit and Oversight Committee believes that stockholder ratification of this matter is important
in light of the critical role the independent auditors play in maintaining the integrity of the Company’s financial statements.
If stockholders do not ratify the selection of Deloitte & Touche LLP, the Audit and Oversight Committee will reconsider the appointment.
Deloitte & Touche LLP
has served as the independent auditors for the Company for the last 22 fiscal years beginning with the fiscal year ended December 31,
2002. The members of the Audit and Oversight Committee and the other members of the Board believe that the continued retention of Deloitte
& Touche LLP to serve as the Company’s independent external auditor is in the best interests of the Company and its stockholders.
Ratification of Deloitte
& Touche LLP as the Company's independent auditors requires the affirmative vote of a majority of the votes cast in person or by proxy
at the Meeting. Presuming a quorum is present, shares not voted, whether by abstention or otherwise, have no effect on the outcome of
this matter.
Representatives of Deloitte
& Touche LLP are expected to be present at the Meeting. They will have an opportunity to make a statement if they so desire and are
expected to respond to appropriate questions that may be directed to them. Information concerning Deloitte & Touche LLP can be found
in the following pages.
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| WEC
Energy Group |
P-38 |
2024
Proxy Statement |
INDEPENDENT
AUDITORS’ FEES AND SERVICES
Pre-Approval
Policy
The Audit and Oversight
Committee has a formal policy delineating its responsibilities for reviewing and approving, in advance, all audit, audit-related, tax,
and other services of the independent auditors. As such, the Audit and Oversight Committee is responsible for the audit fee negotiations
associated with the Company’s retention of independent auditors.
The Audit and Oversight
Committee is committed to ensuring the independence of the auditors, both in appearance as well as in fact. In order to assure continuing
auditor independence, the Audit and Oversight Committee periodically considers whether there should be a regular rotation of the independent
external audit firm. In addition, the Audit and Oversight Committee is directly involved in the selection of Deloitte & Touche LLP’s
lead audit partner.
Under the pre-approval
policy, before engagement of the independent auditors for the next year’s audit, the independent auditors will submit (1) a description
of all services anticipated to be rendered, as well as an estimate of the fees for each of the services, for the Audit and Oversight Committee
to approve, and (2) written confirmation that the performance of any non-audit services is permissible and will not impact the firm’s
independence. Annual pre-approval will be deemed effective for a period of twelve months from the date of pre-approval, unless the Audit
and Oversight Committee specifically provides for a different period. A fee level will be established for all permissible, pre-approved
non-audit services. Any additional audit service, audit-related service, tax service, and other service must also be pre-approved.
The Audit and Oversight
Committee delegated pre-approval authority to the Committee’s Chair. The Audit and Oversight Committee Chair is required to report
any pre-approval decisions at the next scheduled Audit and Oversight Committee meeting. Under the pre-approval policy, the Audit and Oversight
Committee may not delegate to management its responsibilities to pre‑approve services performed by the independent auditors.
Under the pre-approval
policy, prohibited non-audit services are services prohibited by the SEC or by the Public Company Accounting Oversight Board (United States)
to be performed by the Company’s independent auditors. These services include: bookkeeping or other services related to the
accounting records or financial statements of the Company; financial information systems design and implementation; appraisal
or valuation services; fairness opinions or contribution-in-kind reports; actuarial services; internal audit outsourcing services;
management functions, or human resources, broker-dealer, investment advisor or investment banking services; legal services and expert
services unrelated to the audit; services provided for a contingent fee or commission; and services related to planning, marketing,
or opining in favor of the tax treatment of a confidential transaction or an aggressive tax position transaction that was initially recommended,
directly or indirectly, by the independent auditors. In addition, the Audit and Oversight Committee has determined that the independent
auditors may not provide any services, including personal financial counseling and tax services, to any officer or other employee of the
Company who serves in a financial reporting oversight role or to the Audit and Oversight Committee chair or to an immediate family member
of these individuals, including spouses, spousal equivalents, and dependents.
Fee Table
The following table shows
the fees, all of which were approved by the Audit and Oversight Committee, for professional audit services provided by Deloitte &
Touche LLP for the audit of the annual financial statements of the Company and its subsidiaries for fiscal years 2023 and 2022, and fees
for other services rendered during those periods. No fees were paid to Deloitte & Touche LLP pursuant to the “de minimus”
exception to the pre-approval policy permitted under the Securities Exchange Act of 1934, as amended.
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2023 |
|
2022 |
|
Audit Fees (1) |
$ |
6,499,633 |
|
|
$ |
5,599,442 |
|
|
Audit-Related Fees (2) |
148,761 |
|
|
575,410 |
|
|
Tax Fees (3) |
224,533 |
|
|
125,916 |
|
|
All Other Fees (4) |
3,790 |
|
|
3,790 |
|
| Total |
$ |
6,876,717 |
|
|
$ |
6,304,558 |
|
1.Audit
Fees consist of fees
for professional services rendered in connection with the audits of: (1) the annual financial statements of the Company and its subsidiaries,
(2) the effectiveness of internal control over financial reporting, and (3) with other non-recurring audit work. This category also includes
reviews of financial statements included in Form 10‑Q filings of the Company and its subsidiaries and services provided in connection
with statutory and regulatory filings or engagements.
2.Audit-Related
Fees consist of fees
for professional services that are reasonably related to the performance of the audit or review of the Company’s financial statements
and are not reported under "Audit Fees".
3.Tax
Fees consist of fees
for professional services rendered with respect to federal and state tax compliance and tax advice. This can include preparation of tax
returns, claims for refunds, payment planning, and tax law interpretation.
4.All
Other Fees consist of
costs for certain employees to attend accounting/tax seminars hosted by Deloitte & Touche LLP plus the subscription cost for the
use of a Deloitte & Touche LLP accounting research tool.
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| WEC
Energy Group |
P-39 |
2024
Proxy Statement |
AUDIT
AND OVERSIGHT COMMITTEE REPORT
The Audit and Oversight
Committee, which is comprised solely of independent directors, oversees the integrity of the financial reporting process on behalf of
the Board of WEC Energy Group, Inc. In addition, the Audit and Oversight Committee oversees compliance with legal and regulatory requirements.
The Audit and Oversight Committee operates under a written charter approved by the Board, which can be found in the “Governance”
section of the Company’s website at wecenergygroup.com.
The Audit and Oversight
Committee is also directly responsible for the appointment, compensation, retention, and oversight of the Company’s independent
auditors, as well as the oversight of the Company’s internal audit function.
In order to assure continuing
auditor independence, the Audit and Oversight Committee periodically considers whether there should be a regular rotation of the independent
external audit firm. For 2024, the Audit and Oversight Committee has appointed Deloitte & Touche LLP to remain as the Company’s
independent auditors, subject to stockholder ratification. The members of the Audit and Oversight Committee and other members of the Board
believe that the continued retention of Deloitte & Touche LLP to serve as the Company’s independent external auditor is in the
best interests of the Company and its stockholders.
The Audit and Oversight
Committee is directly involved in the selection of Deloitte & Touche LLP’s lead audit partner in conjunction with a mandated
rotation policy and is also responsible for audit fee negotiations with Deloitte & Touche LLP.
Management is responsible
for the Company’s financial reporting process, the preparation of consolidated financial statements in accordance with generally
accepted accounting principles, and the system of internal controls and procedures designed to provide reasonable assurance regarding
compliance with accounting standards and applicable laws and regulations. The Company’s independent auditors are responsible for
performing an independent audit of the Company’s consolidated financial statements in accordance with the standards of the Public
Company Accounting Oversight Board (United States) (the “PCAOB”) and issuing a report thereon.
The Audit and Oversight
Committee held five meetings during 2023. Meetings are designed to facilitate and encourage open communication among the members of the
Audit and Oversight Committee, management, the internal auditors, and the Company’s independent auditors, Deloitte & Touche
LLP. During these meetings, we reviewed and discussed with management, among other items, the Company’s unaudited quarterly and
audited annual financial statements and the system of internal controls designed to provide reasonable assurance regarding compliance
with accounting standards and applicable laws.
We have reviewed and discussed
with management and the Company’s independent auditors the Company’s audited consolidated financial statements and related
footnotes for the fiscal year ended December 31, 2023, and the independent auditor’s report on those financial statements. Management
represented to us that the Company’s financial statements were prepared in accordance with generally accepted accounting principles.
Deloitte & Touche LLP presented the matters required to be discussed with the Audit and Oversight Committee by PCAOB Auditing Standard
No. 1301, Communications with Audit Committees. This review included a discussion with management and the independent auditors about the
quality of the Company’s accounting principles, the reasonableness of significant estimates and judgments, and the disclosures in
the Company’s financial statements, as well as the disclosures relating to critical accounting policies and the auditor’s
discussion about critical audit matters in its report on the audited consolidated financial statements.
In addition, we received
from Deloitte & Touche LLP the written disclosures and correspondence relative to the auditors’ independence, as required by
applicable requirements of the PCAOB regarding Deloitte & Touche LLP’s communications with the Audit and Oversight Committee
concerning independence. The Audit and Oversight Committee discussed with Deloitte & Touche LLP its independence and also considered
the compatibility of non-audit services provided by Deloitte & Touche LLP with maintaining its independence.
Based on these reviews
and discussions, the Audit and Oversight Committee recommended to the Board that the audited financial statements be included in WEC Energy
Group’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 and filed with the Securities and Exchange Commission.
Respectfully submitted
to WEC Energy Group stockholders by the Audit and Oversight Committee of the Board.
The
Audit and Oversight Committee
Danny
L. Cunningham, Committee Chair
Ave
M. Bie
Maria
C. Green
Thomas
K. Lane
Glen
E. Tellock
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| WEC
Energy Group |
P-40 |
2024
Proxy Statement |
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PROPOSAL
3: ADVISORY VOTE
TO APPROVE COMPENSATION OF THE NAMED EXECUTIVE OFFICERS |
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What
am I voting on?
Stockholders
are being asked to approve, on an advisory basis, the compensation of the Named Executive Officers, as described in the Compensation Discussion
and Analysis beginning on page P-42 and the Executive Compensation Tables beginning on page P-56.
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Voting
Recommendation:
✓
FOR the advisory vote
on Executive Compensation.
The
Compensation Committee takes seriously its role in the governance of the Company’s compensation programs and values thoughtful input
from stockholders. The Compensation Committee will take into account the outcome of this advisory vote when considering future executive
compensation decisions. |
Pursuant to Section
14A of the Exchange Act, the Company seeks your advisory vote on the approval of the compensation paid to our named executive officers
(commonly referred to as "Say-on-Pay") as described in the Compensation Discussion and Analysis and the related tables included
in this proxy statement. Approval, on a non-binding, advisory basis, of the compensation of the named executive officers requires the
affirmative vote of a majority of the votes cast in person or by proxy at the 2024 Annual Meeting of Stockholders. Presuming a quorum
is present, shares not voted, whether by broker non-vote, abstention, or otherwise, have no effect on the outcome of this matter. Because
your vote is advisory, it will not be binding on the Board or the Company. However, the Compensation Committee will review the voting
results and take them into consideration when making future decisions regarding executive compensation.
As described in the Compensation
Discussion and Analysis on pages P-42 through P-55 of this proxy statement, the Compensation Committee has structured the Company’s
executive compensation program with the following objectives in mind:
•offer
a competitive, performance-based plan;
•enable
the Company to attract and retain key individuals;
•reward
achievement of the Company’s short-term and long-term goals; and
•align
with the interests of the Company’s stockholders and customers.
As described in this proxy
statement, the Company believes that the compensation paid to our named executed officers in 2023 was well-tailored to achieve these objectives,
tying a significant portion of total pay to performance and aligning the interests of the named executive officers with those of stockholders
and customers. We encourage you to carefully review the Compensation Discussion and Analysis and related tables included in this proxy
statement, which describe in greater detail WEC Energy Group’s compensation philosophy and programs, as well as the 2023 compensation
levels, in connection with approval of the following resolution:
“RESOLVED,
that the stockholders approve, on an advisory basis, the compensation paid to the Company’s named executive officers as disclosed
in the Proxy Statement for the 2024 Annual Meeting of Stockholders.”
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| WEC
Energy Group |
P-41 |
2024
Proxy Statement |
Compensation Discussion
and Analysis
The
following discussion provides an overview and analysis of our executive compensation program, including the role of the Compensation Committee
of our Board, the elements of our executive compensation program, the purposes and objectives of these elements, and the manner in which
we established the compensation of our named executive officers ("NEOs") for fiscal year 2023.
References to “we,”
“us,” “our,” "Company," and “WEC Energy Group” in this discussion and analysis mean WEC Energy
Group, Inc. and its management, as applicable.
EXECUTIVE
SUMMARY
Overview
The primary objective of
our executive compensation program is to provide a competitive, performance-based plan that enables the Company to attract and retain
key individuals and to reward them for achieving both the Company’s short-term and long-term goals without creating an incentive
for our NEOs to take excessive risks. Our program has been designed to provide a level of compensation that is strongly dependent upon
the achievement of short-term and long-term goals that are aligned with the interests of our stockholders and customers. To that end,
a substantial portion of pay is at risk, and generally, the value will only be realized upon strong corporate performance.
We also value the input
of our stockholders and recognize the increasing investor desire for companies to link environmental, social and governance factors to
compensation. Environmental, social and governance initiatives are firmly entrenched in our executive compensation program. Since 2004,
our performance metrics have included operational and social metrics, including those related to customer satisfaction, supplier and workforce
diversity, and safety.
2023
Business Highlights
For an overview of the
Company, see "An Energy Industry Leader" on page P-7. During 2023, the Company achieved solid results and continued to create
long-term value for our stockholders and customers by focusing on the fundamentals of our business:
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• |
World-class
reliability |
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• |
Operating
efficiency |
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• |
Employee
safety |
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• |
Financial
discipline |
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• |
Exceptional
customer care |
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• |
Environmental
stewardship |
Commitment
to Stockholder Value Creation. In
2023, WEC Energy Group again delivered solid earnings growth, generated strong cash flow, and increased the dividend for the 20th
consecutive year. In January 2023, the Board raised the quarterly dividend 7.2% to $0.780 per share, equivalent to an annual rate of $3.12
per share. In January 2024, the Board again increased the quarterly dividend 7.0% to $0.835 per share, which is equivalent to an annual
rate of $3.34 per share, in line with our plan to maintain a dividend payout ratio of 65% to 70% of earnings. The Company also turned
in strong performances in customer satisfaction, safety and supplier and workforce diversity during 2023, while continuing to maintain
effective cost controls throughout its operations.
ESG Progress
Plan. We introduced our
capital investment plan for efficiency, sustainability and growth, referred to as our ESG Progress Plan, in November 2020. Our plan, which
we have updated annually since that time, calls for emission reductions, maintaining superior reliability, delivering significant long-term
savings for customers and growing our investment in the future of energy. In November 2023, we announced our planned capital investment
for the next five-year period (2024-2028) of the ESG Progress Plan, which we updated on February 1, 2024. We expect to invest approximately
$23.7 billion over the five-year period in our regulated and non-utility energy infrastructure businesses, including approximately $7.0
billion of regulated renewable investment. We have already retired more than 1,900 megawatts (MW) of coal-fired generation since the beginning
of 2018, and expect to retire approximately 1,800 MW of additional fossil-fueled generation by the end of 2031. By the end of 2030 we
expect to use coal only as a backup fuel for the power we supply to our customers, and plan to eliminate coal as an energy source by the
end of 2032.
In addition to our carbon
dioxide emission reductions, we also continue to reduce our methane emissions by improving our natural gas distribution system. We have
set a target across our natural gas distribution operations to achieve net-zero methane emissions by the end of 2030.
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| WEC
Energy Group |
P-42 |
2024
Proxy Statement |
Other specific Company
achievements for 2023 include:
2023
Financial Highlights
•Achieved
fully diluted earnings per share and adjusted earnings per share of $4.22 and $4.63, respectively.*
•Returned
approximately $984 million to WEC Energy Group stockholders through dividends.
•Announced
largest 5-year capital plan in the Company's history.
Diluted Earnings Per Share
**
For 2023, excludes a $0.41 per share non-cash charge to earnings related to the Illinois Commerce Commission's disallowance of certain
capital costs. See Appendix A on page P-83 for a full reconciliation of non-GAAP measures.
2023
Performance
Highlights
•Announced
that we now plan to eliminate coal as an energy source by the end of 2032, three years earlier than previously planned.
•Ended
2023 with the most diverse leadership team in Company history.*
•Named
one of America's greatest workplaces for diversity by Newsweek magazine.*
•Ranked
number one in the nation for customer satisfaction in an independent survey of large commercial and industrial energy users.*
•Spent
a record $333.7 million with diverse suppliers.*
•Achieved
record employee safety performance based on DART-recordable injuries.*
•Added
renewable gas into our natural gas distribution system for the first time.
*
These measures are a component of our short-term incentive compensation program.
Long-Term
Stockholder Returns
Over the past decade, WEC
Energy Group has consistently delivered among the best total returns in the industry.
Five-Year Cumulative Return***
***
The Five-Year Cumulative Return Chart shows a comparison of the cumulative total return, assuming reinvestment of dividends, over the
past five years had $100 been invested at the close of business on December 31, 2018. Changes were made to the Custom Peer Index Group.
For information about the Custom Peer Index Group, including the changes made, see "Performance Graph" in the Company's 2023 Annual
Report.
Total
Stockholder Returns
Source:
Bloomberg; assumes all dividends are reinvested and returns are compounded daily.
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| WEC
Energy Group |
P-43 |
2024
Proxy Statement |
Consideration
of 2023 Stockholder Advisory Vote and Stockholder Outreach
At the 2023 Annual Meeting
of Stockholders, the Company’s stockholders approved the compensation of our named executive officers, with 95.5% of the votes cast
supporting the say-on-pay proposal. The Compensation Committee considered this outcome as well as the feedback received during meetings
we again held with many of our institutional stockholders. During 2023, we communicated with stockholders representing approximately 42%
of the Company’s outstanding common stock about our environmental, social, governance and compensation practices. For additional
information about our stockholder outreach efforts, see "Stockholder Engagement" beginning on page P-29. In light of the significant
stockholder support our executive compensation program received in 2023 and the payout levels under our performance-based program for
2023, the Compensation Committee believes that the overall compensation program structure is competitive, aligned with our financial and
operational performance goals, and in the best interests of the Company, stockholders, and customers.
COMPONENTS
OF OUR EXECUTIVE COMPENSATION PROGRAM
We
have three primary elements of total direct compensation: (1) base salary; (2) annual incentive awards; and (3) long-term
incentive awards consisting of a mix of performance units, stock options, and restricted stock. The Compensation Committee again retained
Frederic W. Cook & Co., Inc. ("FW Cook") as its independent compensation consultant to advise the Compensation Committee with
respect to our executive compensation program. The Compensation Committee generally relied upon the recommendations of FW Cook in its
development of the 2023 program.
As shown in the charts
below, 87% of Mr. Lauber's 2023 total direct compensation and an average of 82% of the other NEOs’ 2023 total direct compensation
was tied to Company performance and was not guaranteed.
In addition to the components
of total direct compensation identified above, our retirement programs are another important component of our compensation program.
This Compensation Discussion
and Analysis contains a more detailed discussion of each of the above components for 2023, including FW Cook’s recommendations with
respect to each component.
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| WEC
Energy Group |
P-44 |
2024
Proxy Statement |
Compensation
Governance and Practices
The Compensation Committee
annually reviews and considers the Company’s compensation policies and practices to ensure our executive compensation program aligns
with our compensation philosophy. Highlighted below is an overview of our current compensation practices.
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What
We Do |
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•Our
compensation program focuses on key Company results (financial, safety, customer satisfaction, diversity) that are aligned with our strategic
goals.
•A
substantial portion of compensation is at risk and tied to Company performance.
•The
compensation program has a long-term orientation aligned with stockholder interests.
•We
include strong linkage to environmental, social and governance priorities in our compensation program.
•The
Compensation Committee retains an independent compensation consultant to help design the Company’s compensation program and determine
competitive levels of pay.
•The
Compensation Committee's independent compensation consultant reviews competitive employment market data from two general industry surveys
and a comparison group of companies similar to WEC Energy Group. |
•We
have clawback policies that provide for the recoupment of incentive-based compensation.
•Annual
incentive-based compensation contains multiple, pre-established performance metrics aligned with stockholder and customer interests.
•The
2023 Performance Unit Plan award payouts (including dividend equivalents) are based on the following measures selected by the Compensation
Committee at the time of the award: 1) stockholder return as compared to an appropriate peer group, 2) authorized return on equity,
and 3) price to earnings ratio as compared to an appropriate peer group.
•The
Performance Unit Plan and the Omnibus Stock Incentive Plan require a separation from service following a change in control for award vesting
to occur.
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•Meaningful
stock ownership levels are required for senior executives.
•Perquisites
are reviewed annually by the Compensation Committee.
•Ongoing
engagement with investors takes place to ensure that compensation practices are responsive to stockholder interests.
•We
prohibit hedging and pledging of WEC Energy Group common stock.
•We
prohibit entry into any new arrangements that obligate the Company to pay directly or reimburse individual tax liability for benefits
provided by the Company.
•We
prohibit repricing of stock options without stockholder approval. |
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Competitive
Benchmarking
As
a general matter, we believe the labor market for WEC Energy Group executive officers is consistent with that of general industry. Although
we recognize our business is focused on the energy services industry, our goal is to have an executive compensation program that will
allow us to be competitive in recruiting the most qualified candidates to serve as executive officers of the Company, including individuals
who may be employed outside of the energy services industry. Further, in order to retain top performing executive officers, we believe
our compensation practices must be competitive with those of general industry.
To
confirm that our annual executive compensation is competitive with the market, FW Cook reviewed general industry executive compensation
survey data obtained from WTW, formerly known as Willis Towers Watson, and Aon Radford. FW Cook also analyzed the compensation data from
a peer group of 19 companies similar to WEC Energy Group in size and business model. The methodology used by FW Cook to determine the
peer group of companies is described below.
FW
Cook started with U.S. companies in the Standard & Poor’s database, and then limited those companies to the same line of business
as WEC Energy Group as indicated by the Global Industry Classification Standards. This list of companies was then further limited to companies
with revenues between $2.8 billion and $25.6 billion (approximately one-third to three times the size of WEC Energy Group’s revenues),
and that were within a reasonable size range in various other measures such as operating income, total assets, total employees, and market
capitalization. From this list, FW Cook selected companies similar in overall size to WEC Energy Group with consideration given to companies
that met one or more of the following criteria:
•Diversified,
technically sophisticated utility operations (e.g., multiple utilities, electric utilities); and
•Minimal
non-regulated business.
These
criteria resulted in a comparison group of 19 companies with median revenues and market capitalization of approximately $11.2 billion
and $21.5 billion, respectively.
The comparison group utilized
for purposes of 2023 compensation includes the same 19 companies as the previous year’s comparison group, which are listed below.
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| • Alliant
Energy Corporation |
• Consolidated
Edison, Inc. |
• Evergy,
Inc. |
• PPL
Corp. |
| • Ameren
Corporation |
• Dominion
Energy, Inc. |
• Eversource
Energy |
• Pinnacle
West Capital Corp. |
| • American
Electric Power Company |
• DTE
Energy Co. |
• FirstEnergy
Corp. |
• The
Southern Company |
| • CMS
Energy Corporation |
• Edison
International |
• NiSource
Inc. |
• Xcel
Energy Inc. |
| • CenterPoint
Energy |
• Entergy
Inc. |
• PG&E
Corporation |
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The
Compensation Committee approved this comparison group.
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| WEC
Energy Group |
P-45 |
2024
Proxy Statement |
DETERMINATION
OF MARKET MEDIAN
In
order to determine the “market median” for our NEOs, FW Cook recommended that the survey data from WTW and Aon Radford receive
a 75% weighting and the comparison group of 19 companies receive a 25% weighting. The Compensation Committee agreed with this recommendation.
The survey data received a higher weighting because we consider the labor market for our executives to be consistent with that of general
industry. Using this methodology, FW Cook recommended, and the Compensation Committee approved, the appropriate market median for each
of our NEOs.
The
comparison of each component of compensation with the appropriate market median when setting the compensation levels of our NEOs generally
drives the allocation of cash versus non-cash compensation and short-term versus long-term incentive compensation.
ANNUAL
BASE SALARY
The
annual base salary component of our executive compensation program provides each executive officer with a fixed level of annual cash compensation.
We believe that providing annual cash compensation through a base salary is an established market practice and is a necessary component
of a competitive compensation program.
Based
upon the market data analyzed by FW Cook, we generally target base salaries to be at or near the market median for each NEO. However,
the Compensation Committee may, in its discretion, set base salaries at a different amount when the Compensation Committee deems it appropriate.
Actual
salary determinations are made taking into consideration factors such as the relative levels of individual experience, performance, responsibility,
market compensation data and contribution to the results of the Company’s operations. At the beginning of each year, our CEO develops
a list of goals for WEC Energy Group and our employees to achieve during the upcoming year. The Compensation Committee takes the Company’s
performance against these goals into consideration when establishing our CEO’s and Executive Chairman's compensation for the upcoming
year. Our CEO undertakes a similar process with the other NEOs, who develop individual goals related to the achievement of the Company’s
goals. At the end of the year, each officer’s performance is measured against these goals. The CEO and Executive Chairman discuss
these results and based on this performance assessment, a compensation recommendation is made to the Compensation Committee for the upcoming
year for each executive officer.
2023
Salary Determination Process
Mr.
Lauber's 2023 annual base salary was set at $1,076,303, an increase of 5.0% over his 2022 base salary.
In
October 2020, Mr. Klappa entered into a letter agreement to serve as Executive Chairman until May 2024. This agreement provides that Mr.
Klappa's compensation will be determined in the same manner and subject to the same timing as the Compensation Committee utilizes for
all other NEOs. As a result, Mr. Klappa's 2023 base salary was set at $1,183,291 by the Compensation Committee, an increase of 5.0% over
his 2022 base salary. Pursuant to a new letter agreement entered into in November 2023, Mr. Klappa will continue to serve as Executive
Chairman until the 2024 Annual Meeting of Stockholders, at which time he will transition to Non-Executive Chairman. Mr. Klappa's base
salary will be prorated for the portion of the year that he serves as Executive Chairman. For information about Mr. Klappa’s compensation
as Non-Executive Chairman, see "Director Compensation" on page P-37.
With
respect to the 2023 base salaries of Mmes. Liu and Kelsey, and Mr. Garvin, in December 2022, recommendations were made to the Compensation
Committee based upon a review of the market compensation data provided by FW Cook and the other factors described above. The Compensation
Committee approved the recommendations, which represented an average increase in annual base salary of approximately 4.3%. The annual
base salary of each NEO was at or near the market median.
ANNUAL
CASH INCENTIVE COMPENSATION
We
provide annual cash incentive compensation through our Short-Term Performance Plan (“STPP”). The STPP provides for annual
cash awards to our executive officers and other key employees based upon the achievement of pre-established stockholder-, customer- and
employee-focused objectives. All payments under the STPP are at risk. Payments are made only if performance goals are achieved, and awards
may be less or greater than targeted amounts based upon actual performance. Payments under the STPP are intended to reward achievement
of short-term goals that contribute to stockholder and customer value, as well as individual contributions to successful operations.
2023
Target Awards. Each year,
the Compensation Committee approves a target level of compensation under the STPP for each of our NEOs. This target level of compensation
is expressed as a percentage of base salary.
The year-end 2023 target
awards for each NEO are set forth in the chart below.
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| Executive
Officer |
Target
STPP Award as a Percentage of Base Salary |
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Mr.
Lauber |
140% |
| Ms.
Liu |
80% |
| Mr.
Klappa |
140% |
| Ms.
Kelsey |
75% |
| Mr.
Garvin |
70% |
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| WEC
Energy Group |
P-46 |
2024
Proxy Statement |
The
target award levels of each NEO reflect median incentive compensation practices as indicated by the market data.
For
2023, the possible payout for any NEO ranged from 0% of the target award to 210% of the target award, based upon Company performance.
Supporting
Business Fundamentals and Environmental, Social and Governance Commitments.
The financial, operational and social goals established under the STPP are linked to key objectives that support the Company’s sustainability.
Delivering
a cleaner energy future is one of the fundamentals of our business and a major focus of the Company’s capital plan. The Compensation
Committee assesses management’s performance in achieving long-term strategic sustainability goals through the execution of the Company’s
capital spending plan. Our ability to fund the capital plan, which we were able to do without issuing equity through 2023, has been directly
linked with our ability to consistently deliver on the Company’s financial plan, which includes meeting the financial goals established
under the STPP. These financial measures, which are discussed in more detail below, are key performance indicators underlying our NEOs'
incentive compensation, linking achievement of the Company’s long-term strategy through our focus on short-term priorities. In order
to help fund the incremental growth in our new 5-year capital plan (2024-2028), we plan to issue new equity through our stock purchase
and dividend reinvestment plan, benefit plans, and an at-the-market program, which we believe will continue to support our ability to
deliver on the Company's financial plan.
The
operational and social goals established under the STPP are tied to achievement of strategic objectives, which include a focus on customer
satisfaction, employee safety, and workforce and supplier diversity.
2023
Financial Goals under the STPP.
The Compensation Committee adopted the 2023 STPP with a continued focus on financial results. In December 2022, the Compensation Committee
approved WEC Energy Group’s earnings per share (75% weight) and cash flow (25% weight) as the primary performance measures to be
used in 2023. We continue to believe earnings per share and cash flow are key indicators of financial strength and performance, and are
recognized as such by the investment community.
In
January 2023, the Compensation Committee approved the performance goals under the STPP for WEC Energy Group’s earnings per share
as set forth in the chart below.
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| Earnings
Per Share Performance Goal |
Earnings
Per Share CAGR |
Payout
Level |
| $4.56 |
5.8% |
25% |
| $4.57 |
6.0% |
50% |
| $4.58 |
6.3% |
100% |
| $4.60 |
6.7% |
135% |
| $4.62 |
7.2% |
200% |
If
the Company’s performance falls between these levels, the payout level with respect to earnings per share is determined by interpolating
on a straight line basis the appropriate payout level.
At
the time the Compensation Committee established the earnings per share performance goals for 2023, the Company’s 5-year growth plan
called for a compound annual growth rate ("CAGR") in earnings per share of 6.5% to 7.0% over that period, measured off a 2022
base of $4.31 per share, which represented the mid-point of the original 2022 annual earnings guidance. We believe that achievement of
our projected CAGR, plus our continued growth in dividends, supports a premium valuation as compared to the Company’s peers. The
Compensation Committee recognized that achievement of earnings per share within the Company's 2023 guidance range of $4.58 to $4.62 per
share would be in-line with meeting the Company's 5-year CAGR growth plan. Therefore, the Committee tied the target (100%) and maximum
payout levels (200%) to 6.3% and 7.2% CAGRs, respectively, which would equate to earnings per share at the low and high ends of the Company's
2023 guidance range. The above-target payout level was tied to achievement of a 6.7% CAGR, or earnings per share of $4.60, the mid-point
of the Company's guidance range.
In
January 2023, the Compensation Committee approved the performance goals under the STPP for WEC Energy Group’s cash flow as set forth
in the chart below ($ in millions).
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| Cash
Flow |
Payout
Level |
| $1,950 |
25% |
| $2,000 |
50% |
| $2,050 |
100% |
| $2,100 |
135% |
| $2,175 |
200% |
If
the Company’s performance falls between these levels, the payout level with respect to cash flow is determined by interpolating
on a straight-line basis the appropriate payout level.
The Compensation Committee
based the cash flow performance level goals on WEC Energy Group’s “net cash provided by operating activities” and adjusting
for certain accruals and other items related to capital spending as well as proceeds from asset sales ("Adjusted Cash From Operations").
GAAP requires the accruals and other items to be recorded as part of cash from operations, but management views them as related to the
Company’s capital expenditure program. Therefore, the Compensation Committee excludes these items when measuring the Company's cash
flow performance. Management invests the cash received from asset sales into the Company,
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Energy Group |
P-47 |
2024
Proxy Statement |
incurring operation and
maintenance (“O&M”) costs. Because the O&M costs are recorded in “net cash provided by operating activities”
on the cash flow statement, for purposes of measuring cash flow performance, the Compensation Committee determined that the cash received
to fund those costs should also be treated as cash from operations. Pursuant to GAAP, proceeds from asset sales are recorded as part of
net cash used in/provided by investing activities. The Compensation Committee believes that basing the cash flow performance goals
on Adjusted Cash From Operations provides a more accurate measurement of the cash generated by the Company’s operations that is
available for capital investment, which is the Company’s primary driver for earnings growth, and to fund O&M. Adjusted Cash
From Operations is not a measure of financial performance under GAAP, and the Company's calculation may differ from similarly titled measures
used by other companies or securities rating agencies.
2023
Financial Performance under the STPP.
In January 2024, the Compensation Committee reviewed our actual performance for 2023 against the financial, operational and social performance
goals established under the STPP, subject to final audit.
WEC
Energy Group’s 2023 financial performance satisfied the maximum payout level established for earnings per share and cash flow. WEC
Energy Group’s earnings per share on a GAAP basis were $4.22 for 2023, which includes a $0.41 per share non-cash charge to earnings
related to the Illinois Commerce Commission’s (the “ICC”) disallowance of $178.9 million of previously incurred capital
costs as part of its decisions in the rate cases of the Company’s Illinois utilities. Excluding this charge, WEC Energy Group’s
adjusted earnings per share were $4.63. The ICC’s disallowance of previously incurred capital costs is highly unusual and not indicative
of WEC Energy Group’s operating performance. As a result, the Compensation Committee determined that the Company’s performance
against the earnings per share targets should be measured using adjusted earnings per share. WEC Energy Group’s cash flow, based
on Adjusted Cash From Operations, was $3,032.0 million. In addition, our cash flow result is not a measure of financial performance under
GAAP.
By satisfying the maximum
payout level with respect to these financial measures, the NEOs earned 200% of the target award from the financial goal component of the
STPP.
2023
WEC Energy Group Operational and Social Performance Goals under the STPP.
In December 2022 and January 2023, the Compensation Committee also approved operational and social performance measures and targets under
the STPP that promote certain of the Company's priorities. The Compensation Committee identified commitment to customer satisfaction,
supplier and workforce diversity, and safety as critical to the success of the Company. For that reason, annual incentive awards could
be increased or decreased by up to 10% based upon WEC Energy Group’s performance in the areas of customer satisfaction (5% weight),
safety (2.5% weight), and supplier and workforce diversity (2.5% weight).
The
Compensation Committee measures customer satisfaction levels based upon the results of surveys that an independent third party conducts
of customers who had direct contact with our utilities during the year, which measure (i) customers’ satisfaction with the respective
utility overall, and (ii) customers’ satisfaction with respect to the particular transactions with the applicable utility.
Safety
is measured based upon performance against the number of lost-time injuries and Days Away, Restricted or Transferred ("DART")
recordable incidents. DART is a metric that focuses on the more significant injuries and measures how many workplace injuries and illnesses
resulted in employees missing work, required restricted work activities or resulted in job transfers. Using this measure is consistent
with the trend in the Company's industry to focus safety practices and efforts on preventing the most severe injuries.
The
operational performance measures are based upon recommendations from management and take into consideration both current-year performance
and our longer-term objective of achieving top quartile performance of all of our principal utilities. The Compensation Committee reviews
management's recommendations and may make adjustments to the performance measures if it determines changes are necessary. The following
table provides the operational and social goals approved by the Compensation Committee for 2023, as well as WEC Energy Group’s performance
against these goals:
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| Operational
Measure |
Below
Goal |
Goal |
Above
Goal |
Final
Result |
| Customer
Satisfaction Percentage of "Highly Satisfied": |
-5.00% |
0.00% |
+5.00% |
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| Company |
<79.5% |
79.5%
- 82.3% |
>82.3% |
82.8% |
| Transaction |
<82.1% |
82.1%
- 84.3% |
>84.3% |
85.5% |
| Safety: |
-2.50% |
0.00% |
+2.50% |
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| DART-recordable
injuries |
>126 |
71
- 126 |
<71 |
70 |
| Lost-time
injuries |
>48 |
24
- 48 |
<24 |
31 |
| Diversity: |
-2.50% |
0.00% |
+2.50% |
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| Supplier
($ in Millions) |
<193.0 |
193.0
- 252.0 |
>252.0 |
333.7 |
| Workforce
- Assessment |
Not
Met |
Met |
Exceeded |
Exceeded |
WEC
Energy Group’s performance against the customer satisfaction, safety and diversity goals generated an 8.75% increase to the compensation
awarded under the STPP for 2023. With respect to the safety goals, performance against the goals for DART recordable injuries generated
a 1.25% increase while performance against the lost-time injury goals did not increase or decrease the compensation awarded.
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| WEC
Energy Group |
P-48 |
2024
Proxy Statement |
The
Compensation Committee retains the right to exercise discretion in adjusting awards under the STPP when it deems appropriate, but did
not factor individual contributions into determining the amount of the awards for the NEOs for 2023. Because the Company’s performance
against the financial, operational and social goals resulted in significant STPP awards in 2023, the Compensation Committee determined
that no further adjustments based upon individual contributions or otherwise were appropriate.
Based upon the Company’s
performance against the financial, operational and social goals established by the Compensation Committee, Mr. Lauber received annual
incentive cash compensation under the STPP of $3,145,494 for 2023. This represented 290% of his annual base salary. Mmes. Liu and Kelsey,
and Messrs. Klappa and Garvin, each received annual cash incentive compensation for 2023 under the STPP equal to 166%, 155%, 290%, and
144% of their respective annual base salaries, representing 208.75% of the target award for each officer.
LONG-TERM
INCENTIVE COMPENSATION
The
Compensation Committee administers our WEC Energy Group Omnibus Stock Incentive Plan, amended and restated, effective as of May 6, 2021
(the "OSIP"), which is a stockholder-approved, long-term incentive plan designed to link the interests of our executives and other
key employees to creating long-term stockholder value. It allows for various types of awards tied to the performance of our common stock,
including stock options, stock appreciation rights, and restricted stock. The Compensation Committee also administers the WEC Energy Group
Performance Unit Plan, under which the Compensation Committee may award performance units. The Compensation Committee primarily uses (1)
performance units, including dividend-equivalents, (2) stock options, and (3) restricted stock to deliver long-term incentive opportunities.
Performance
Units. Each year, the
Compensation Committee makes annual grants of performance units under the performance unit plan. The performance units are designed to
provide a form of long-term incentive compensation that aligns the interests of management with those of a typical utility stockholder
who is focused not only on stock price appreciation but also on dividends. On December 1, 2022, the Compensation Committee amended and
restated the Performance Unit Plan, effective as of January 1, 2023 (the “Amended PUP”). After consulting with FW Cook, the
Compensation Committee determined that changes to the plan were necessary in order to achieve our compensation philosophy and offer a
competitive compensation package. The prior version of the performance unit plan (the "Prior PUP") provided for a singular, relative
measure and had a maximum vesting percentage lower than our compensation peer group. Under the Amended PUP, the Compensation Committee
has greater flexibility when establishing the number and type of performance measures, and the maximum vesting percentage results in a
more competitive compensation package.
Pursuant
to the Amended PUP, performance units will vest based upon the Company’s performance during a three-year period against one or more
performance measures selected by the Compensation Committee at the beginning of the performance period. The Compensation Committee may
determine achievement of a performance measure on an annual basis or over the entire three-year performance period. The Compensation Committee
will determine the vesting percentages of the performance units, and performance measures may have the same or different weightings with
respect to performance unit vesting. Achievement within a performance measure may be determined based upon the Company’s rank in
comparison to a peer group of companies or by reaching stated levels of performance. The Compensation Committee will also select the target(s)
for each performance measure and the potential impact to the vesting percentage based on achievement of the performance measure(s) relative
to the selected target(s). In no event will the vesting percentage over the three-year performance period be less than zero or more than
200%.
The
Amended PUP governs the terms of performance units starting with the 2023 award. The performance units awarded in January 2021 and 2022
were awarded under the Prior PUP, the terms of which are described herein.
All
performance units are settled in cash.
Short-Term
Dividend Equivalents.
Pursuant to the terms of the Amended PUP, we increase the number of unvested performance units as of any date that we declare a cash dividend
on our common stock by the amount of short-term dividend equivalents a participant is entitled to receive. Short-term dividend equivalents
are calculated by multiplying (a) the number of unvested performance units held by a plan participant as of the related dividend record
date by (b) the amount of cash dividend payable by the Company on a share of common stock; and (c) dividing the result by the closing
price for a share of the Company's common stock on the dividend payment date. In effect, short-term dividend equivalents are credited
and accumulated as reinvested dividends on each performance unit so that the performance units and accumulated dividends will be paid
out at the end of the three-year performance period, rather than paying out the dividend equivalents annually on unearned performance
units.
Short-term
dividend equivalents are treated as additional unvested performance units and are subject to the same vesting, forfeiture, payment, termination,
and other terms and conditions as the original performance units to which they relate. In addition, outstanding short-term dividend equivalents
are treated as unvested performance units for purposes of calculating future short-term dividend equivalents.
Stock
Options. Each year,
the Compensation Committee also makes annual stock option grants as part of our long-term incentive program. These stock options have
an exercise price equal to the fair market value of our common stock on the date of grant and expire on the 10th anniversary of the grant
date. Since management benefits from a stock option award only to the extent our stock price appreciates above the exercise price of the
stock option, stock options align the interests of management with those of our stockholders in attaining long-term stock price appreciation.
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| WEC
Energy Group |
P-49 |
2024
Proxy Statement |
Restricted
Stock. The Compensation
Committee also awards restricted stock as part of the long-term incentive plan, consistent with market practice. Similar to performance
units, restricted stock aligns the interests of management with a typical utility stockholder who is focused on stock price appreciation
and dividends.
Aggregate
2023 Long-Term Incentive Awards.
Generally, when establishing the target value of long-term incentive awards and the appropriate mix of performance units, stock options,
and restricted stock for each NEO, the Compensation Committee reviews the market compensation data and analysis provided by FW Cook. After
considering FW Cook’s analysis, for 2023 the Compensation Committee determined that the long-term incentive awards would be weighted
65% performance units, 20% stock options, and 15% restricted stock for the NEOs, other than Mr. Klappa. These weightings also apply to
all other eligible employees. Target values also were presented to and approved by the Compensation Committee in December 2022.
Consistent
with prior years, the Compensation Committee determined that Mr. Klappa’s 2023 long-term incentive award would be weighted 25% performance
units, 15% stock options, and 60% restricted stock. Mr. Klappa's tenure as the Company's Executive Chairman is scheduled to end in May
2024. Therefore, after consultation with FW Cook, the Compensation Committee again determined that there should not be any changes to
the mix of Mr. Klappa's long-term awards.
Based
upon the market data provided by FW Cook, we customarily target the long-term incentive award to be at or near the market median value
of long-term incentive compensation for each executive officer’s position. All of the NEOs’ long-term incentive awards were
within this target range for 2023. The following provides the 2023 target long-term incentive award value for each NEO:
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| Executive
Officer |
Target
LTI Award as a Percentage of Base Salary |
| Mr.
Lauber |
414% |
| Ms.
Liu |
240% |
| Mr.
Klappa |
350% |
| Ms.
Kelsey |
160% |
| Mr.
Garvin |
160% |
Effective
for the 2024 long-term incentive awards, the Compensation Committee adjusted the weighting of the awards. Performance units will continue
to be weighted 65% and restricted stock and stock options will be weighted 20% and 15%, respectively. After considering FW Cook's market
compensation and data analysis, the Compensation Committee determined this weighting was more closely aligned with current market trends.
2023
Stock Option Grants.
In December 2022, the Compensation Committee approved the grant of stock options to each of our NEOs and established an overall pool of
options that were granted to approximately 165 other employees. The annual option grants to the NEOs were made effective January 3, 2023,
the first trading day of 2023.
All
such options were granted with an exercise price equal to the average of the high and low prices reported on the NYSE for shares of WEC
Energy Group common stock on the grant date. The January 2023 options were granted in accordance with our standard practice of making
annual stock option grants effective on the first trading day of each year, and the timing of all of the grants was not tied to the timing
of any release of material information.
All
2023 stock options have a term of 10 years and vest 100% on the third anniversary of the date of grant. The vesting of the stock options
may be accelerated in connection with a termination of employment due to a change in control or an executive officer’s termination
of employment under certain circumstances. See “Potential Payments upon Termination or Change in Control” beginning on page
P-66 for additional information. Subject to the limitations of the OSIP, the Compensation Committee has the power to amend the terms of
any option (with the participant’s consent). However, without stockholder approval, the Committee may not reduce the exercise price
of existing options or cancel outstanding options in exchange for cash, other awards or options or stock appreciation rights with an exercise
price that is less than the exercise price of the original options.
For
purposes of determining the appropriate number of options to grant to a particular NEO, the value of an option was determined based upon
the Black-Scholes option pricing model. The following table provides the number of options granted to each NEO in 2023:
|
|
|
|
|
|
| Executive
Officer |
Options
Granted |
| Mr.
Lauber |
46,270 |
| Ms.
Liu |
19,855 |
| Mr.
Klappa |
32,255 |
| Ms.
Kelsey |
10,070 |
| Mr.
Garvin |
8,965 |
2023
Restricted Stock Awards.
In December 2022, the Compensation Committee also approved the grant of restricted stock to each of our NEOs and established an overall
pool of restricted stock that was granted to approximately 165 other employees. The grants were made effective January 3, 2023.
Other than the shares granted
to Mr. Klappa, the restricted stock vests in three equal annual installments beginning on the one year anniversary of the applicable grant
date. The shares of restricted stock granted to Mr. Klappa vest in full on the one year anniversary of the grant date, consistent with
the restricted stock awards he has received each year since returning to the Company. In light of
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| WEC
Energy Group |
P-50 |
2024
Proxy Statement |
Mr.
Klappa's expected tenure as Executive Chairman, and after consultation with FW Cook, the Compensation Committee again determined not to
make any changes to the vesting schedule.
Subject
to very limited exceptions, restricted stock awarded to the Company's executive officers, including the NEOs, is subject to a minimum
one-year holding period following the vesting date. The vesting of the restricted stock may be accelerated in connection with a termination
of employment due to a change in control, death or disability, or by action of the Compensation Committee. See “Potential Payments
upon Termination or Change in Control” beginning on page P-66 for additional information. Tax withholding obligations related to
vesting may be satisfied, at the option of the executive officer, by withholding shares otherwise deliverable upon vesting or by cash.
The NEOs have the right to vote the restricted stock and to receive cash dividends when the Company pays a dividend to its stockholders.
For
purposes of determining the appropriate number of shares of restricted stock to grant to a particular NEO, the Compensation Committee
used a value of $96.496 per share. This value was based upon the volume-weighted price of WEC Energy Group’s common stock for the
ten trading days beginning on December 1, 2022, and ending on December 14, 2022. The Compensation Committee uses the volume-weighted price
for annual awards in order to minimize the impact of day-to-day volatility in the stock market.
The measurement period
is customarily early- to mid-December for annual awards in order to shorten the timeframe between the calculation of the awards and the
actual grant date. The following table provides the number of shares of restricted stock granted to each NEO in 2023:
|
|
|
|
|
|
| Executive
Officer |
Restricted
Stock Granted |
| Mr.
Lauber |
6,926 |
| Ms.
Liu |
2,972 |
| Mr.
Klappa |
25,751 |
| Ms.
Kelsey |
1,507 |
| Mr.
Garvin |
1,342 |
2023
Performance Units. In
December 2022, the Compensation Committee approved the grant of performance units to each of our NEOs and approved a pool of performance
units that were granted to approximately 165 other employees.
The
Compensation Committee believes that the performance measures selected in accordance with the terms of the Amended PUP should link the
interests of our executives to creating long-term stockholder value. Therefore, the measures chosen by the Committee, discussed in more
detail below, balance critical operating metrics with the delivery of strong stockholder returns.
With
respect to the 2023 performance units, the amount of the benefit that ultimately vests will be dependent upon 1) the Company’s total
stockholder return over the three-year period ending December 31, 2025, as compared to the total stockholder return of the custom peer
group described below (55% weight), and 2) the weighted average authorized return on equity ("ROE") of all WEC Energy Group's
utility subsidiaries for the three-year performance period (45% weight). Pro-rata adjustments will be made to account for any changes
to authorized ROE approved by the relevant public service commissions during the performance period. In addition, the Compensation Committee
may increase the ultimate vesting percentage based upon the Company's price to earnings ("P/E") ratio, ranked in comparison
to the same custom peer group, as determined at the end of the three-year performance period.
Upon
vesting, the performance units will be settled in cash in an amount determined by multiplying the number of performance units that have
vested by the closing price of the Company’s common stock on the last trading day of the performance period.
The 2023 performance unit
peer group against which WEC Energy Group's performance will be measured includes:
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|
• Alliant Energy
Corporation |
• Consolidated Edison,
Inc. |
• Eversource Energy |
• Pinnacle West Capital
Corp. |
|
• Ameren Corporation |
• Dominion Energy,
Inc. |
• Exelon Corporation |
• PPL Corporation |
|
• American Electric
Power Company |
• DTE Energy Co. |
• FirstEnergy Corp. |
• The Southern Company |
|
• CenterPoint Energy,
Inc. |
• Duke Energy Corp. |
• NiSource Inc. |
• Xcel Energy Inc. |
|
• CMS Energy Corporation |
• Evergy, Inc. |
• OGE Energy Corp. |
|
The
peer group is chosen by the Compensation Committee, based upon management’s recommendation and with the concurrence of FW Cook.
This peer group was chosen because we believe these companies are similar to WEC Energy Group in terms of business model, long-term strategies
and risk profile, with a primary focus on regulated utility operations rather than a non-regulated business model. There is significant
overlap between the performance unit peer group and the comparison group developed by FW Cook for purposes of benchmarking compensation
levels. However, there are several companies that are different among the two groups because FW Cook places significant weight on the
financial metrics of the companies included in its comparison group, whereas we focus more on operational measures for the performance
unit peer group.
In
December 2022, the Compensation Committee determined that Edison International (“EIX”) was no longer an appropriate peer comparison
and approved the removal of EIX from the custom peer group for the 2023 performance unit awards. EIX is a public utility holding company
whose primary operating subsidiary sells and delivers electricity to customers located in Southern California. As a result, EIX is subject
to a significantly increased financial risk than the Company from wildfires and other natural disasters.
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| WEC
Energy Group |
P-51 |
2024
Proxy Statement |
Also
in December 2022, the Compensation Committee added CenterPoint Energy, Exelon Energy and PPL Energy into the peer group for the 2023 performance
unit awards. Each of these companies had completed various transactions to shift their business models towards more fully-regulated utility
operations making them more comparable to WEC.
Under
the Amended PUP, total stockholder return is the calculation of total return (stock price appreciation plus reinvestment of dividends)
based upon an initial investment of $100 made at the beginning of the three-year performance period. The required percentile ranking for
3-year total stockholder return and the applicable vesting percentage are set forth in the chart below.
|
|
|
|
|
|
| Performance
Percentile Rank |
Vesting
Percent |
|
<
25th
Percentile |
0% |
|
25th
Percentile |
25% |
|
Target
(50th
Percentile) |
100% |
|
85th
Percentile or above |
200% |
If
the Company’s rank is between the benchmarks identified above, the vesting percentage will be determined by interpolating on a straight
line basis the appropriate vesting percentage.
In
determining the total payout, achievement of this performance metric will receive 55% weight.
The
ROE target is based upon a formulaic calculation that varies each year based on our past and planned investments among our utilities,
as well as each utility's authorized ROE. For the 2023 performance unit awards, the ROE targets and corresponding payout levels were set
as follows for 2023:
|
|
|
|
|
|
|
If
Actual Earned ROE is |
Payout
Percentage |
| ≥
9.50% |
200% |
| 9.35% |
100% |
| 9.20% |
25% |
| <
9.20% |
0% |
If
the Company’s performance falls between these levels, the payout percentage is determined by interpolating on a straight line basis
the appropriate vesting percentage. In determining the total payout, the final award will be based on the average of the payout percentage
achieved in each year of the three-year performance period and will receive 45% weight.
At
the end of the three-year performance cycle, the Compensation Committee may increase the total vesting percentage based upon the Company's
P/E ratio, as compared to the peer group described above. In no event will the vesting percentage over the three-year performance
period be more than 200%. For the 2023 performance unit awards, the target P/E ratio and potential adjustments are as follows:
|
|
|
|
|
|
|
Quartile
Rank |
Additional
Percentage |
|
1st
Quartile |
25% |
|
2nd
Quartile |
15% |
|
Below
2nd
Quartile |
0% |
A
P/E ratio below the 2nd quartile would likely indicate a significant drop in WEC Energy Group's stock price, driving a lower vesting
percentage with respect to the total stockholder return component of the awards. Therefore, the Compensation Committee determined that
the Company's performance against the P/E ratio measure should not result in a further decrease of the final award.
Unvested
performance units generally are immediately forfeited upon a NEO’s cessation of employment with WEC Energy Group prior to completion
of the three-year performance period. However, the performance units will vest immediately at the target 100% rate upon the termination
of the NEO’s employment (1) by reason of disability or death or (2) after a change in control of WEC Energy Group. In addition,
a prorated number of performance units (based upon the target 100% rate) will vest upon the termination of employment of the NEO by reason
of retirement prior to the end of the three-year performance period.
For
purposes of determining the appropriate number of performance units to grant to a particular NEO, the Compensation Committee used a value
of $96.496 per unit, the same value used for the 2023 restricted stock granted in January 2023.
The
following table provides the number of performance units granted to each NEO in 2023, at the 100% target level:
|
|
|
|
|
|
| Executive
Officer |
Performance
Units Granted |
| Mr.
Lauber |
30,015 |
| Ms.
Liu |
12,880 |
| Mr.
Klappa |
10,730 |
| Ms.
Kelsey |
6,535 |
| Mr.
Garvin |
5,815 |
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|
|
| WEC
Energy Group |
P-52 |
2024
Proxy Statement |
2023
Payouts under Long-Term Incentive Awards Granted in 2021.
The Compensation Committee granted performance unit awards to participants in the Prior PUP in 2021. The ultimate vesting amount of the
2021 performance unit awards is dependent upon the Company's total stockholder return over the three-year period ending December 31, 2023,
as compared to the total stockholder return of the 2021 performance unit peer group which included the following: Alliant Energy Corporation;
Ameren Corporation; American Electric Power Company; CMS Energy Corporation; Consolidated Edison; DTE Energy Corporation;
Duke Energy Corp.; Edison International; Evergy, Inc.; Eversource Energy; FirstEnergy Corporation; NiSource, Inc.;
OGE Energy Corporation; Pinnacle West Capital Corporation; The Southern Company; and Xcel Energy.
The
required percentile ranking for the three-year stockholder return and the applicable vesting percentage are set forth in the chart below.
|
|
|
|
|
|
| Performance
Percentile Rank |
Vesting
Percent |
|
<
25th
Percentile |
0% |
|
25th
Percentile |
25% |
|
Target
(50th
Percentile) |
100% |
|
75th
Percentile |
125% |
|
90th
Percentile |
175% |
If
the Company’s rank is between the benchmarks identified above, the vesting percentage is determined by interpolating on a straight
line basis the appropriate vesting percentage. In addition, similar to the 2023 performance unit awards, the 2021 performance unit awards
accumulate short-term dividend equivalents. See "Long-Term Incentive Compensation - Short-Term Dividend Equivalents" above for
additional information.
WEC
Energy Group's total stockholder return for the three-year performance period ended December 31, 2023 was at the 18.8th
percentile of the peer group, resulting in no performance units vesting.
Pursuant
to the terms of the Prior PUP, the vesting percentage of the performance units may be adjusted downwards or upwards based upon the Company's
performance against an Additional Performance Measure, if any, selected by the Compensation Committee. The Additional Performance Measure
for the 2021 and 2022 performance unit awards was the weighted average authorized ROE of all WEC Energy Group's utility subsidiaries.
The Company’s performance against this measure may decrease or increase the vesting percentage of the performance units up to 10%
over the three-year performance period. Similar to the 2023 performance unit awards, the ROE target is based upon a formulaic calculation
that varies each year based on our past and planned investments among our utilities, as well as each utility's authorized ROE. For the
2021 and 2022 performance unit awards, the ROE targets and potential adjustments for 2023 were set as follows:
|
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|
|
|
|
|
|
|
If
Actual Annual ROE is |
The
Annual Adjustment is |
ROE
Ranges |
|
<
20 bp below the Authorized ROE |
+
3.33% |
≥
9.45% |
|
21
- 30 bp below the Authorized ROE |
0% |
9.44%
- 9.35% |
|
>
30 bp below the Authorized ROE |
(3.33)% |
<
9.35% |
WEC
Energy Group’s utility subsidiaries achieved a weighted average authorized ROE of 10.02% for 2023, which resulted in a 3.33% increase
in the vesting percentage of the 2021 and 2022 performance unit awards. The actual authorized ROE for Peoples Gas and North Shore Gas
was adjusted to include the impact of the ICC disallowance. This adjustment is reflected in the weighted average authorized ROE.
For the 2021 performance
units, the cumulative three-year impact of the Company's performance against the Additional Performance Measure was a 10% increase in
the vesting percentage of the performance units, which represents the total vesting level of the 2021 performance unit awards. The actual
payouts were determined by multiplying the number of vested performance units by the closing price of our common stock ($84.17) on December
29, 2023, the last trading day of the performance period. The actual payout to each NEO is reflected in the “Option Exercises and
Stock Vested for Fiscal Year 2023” table.
COMPENSATION
RECOUPMENT POLICY
Pursuant to Section 10D
and Rule 10D-1 of the Securities Exchange Act of 1934, as amended (“Rule 10D-1”) and NYSE Listed Company Manual Section 303A.14,
the Compensation Committee has adopted a clawback policy (the "Clawback Policy") that provides for the recoupment of incentive-based
compensation in the event WEC Energy Group is required to prepare an accounting restatement due to material noncompliance with any financial
reporting requirement under the securities laws. Pursuant to the Clawback Policy, the Compensation Committee will recover from any current
or former executive officer who has received incentive-based compensation during the three completed fiscal years immediately preceding
the date on which the Board, or committee thereof, concludes (or reasonably should have concluded) that WEC Energy Group is required to
prepare the accounting restatement, any portion of the incentive-based compensation paid in excess of what would have been paid to the
executive officer under the restated financial results. In addition, the Company may also recover from any officer, including an executive
officer, that is terminated for cause or that violates a noncompetition or other restrictive covenant, incentive-based compensation received
within three years prior to such termination or violation. We believe that officers engaging in conduct that is fraudulent, harmful to
the Company's reputation or otherwise materially violates the Company's policies would lead to "for cause" termination.
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| WEC
Energy Group |
P-53 |
2024
Proxy Statement |
STOCK
OWNERSHIP GUIDELINES
The
Compensation Committee believes that an important adjunct to the long-term incentive program is significant stock ownership by officers
who participate in the program, including the NEOs. Accordingly, the Compensation Committee has implemented stock ownership guidelines
requiring officers who participate in the long-term incentive program to hold an amount of Company common stock and other equity-related
Company securities that varies depending upon such officer's level.
In
addition to shares owned outright, holdings of each of the following are included in determining compliance with our stock ownership guidelines:
restricted stock; WEC Energy Group phantom stock units held in the Executive Deferred Compensation Plan and Non-Qualified Retirement
Savings Plan; WEC Energy Group stock held in WEC Energy Group's 401(k) plans; and shares held in a brokerage account, jointly
with an immediate family member or in a trust.
The
guidelines require each executive officer, including the NEOs, to acquire (generally within five years of appointment as an executive
officer) and hold common stock and other equity-related securities of the Company having a minimum fair market value ranging from 250%
to 600% of base salary. The Compensation Committee believes these stock ownership guidelines discourage unreasonable risk-taking by Company
officers.
During its annual review
of the guidelines in October 2023, the Compensation Committee approved the removal of unvested performance units at target from the definition
of stock holdings in order to align with evolving market guidelines which favor a narrower definition of stock ownership. The primary
drivers in the Compensation Committee's decision include the fact that unvested performance units may not vest at target and the award
is settled in cash, not stock. The Committee also determined executive officers, including the NEOs, will have five years to comply with
these revised guidelines.
PROHIBITION
ON HEDGING AND PLEDGING
WEC Energy Group’s
Corporate Securities Trading Policy prohibits Directors and active employees (including officers) or any of their designees from using
any strategies or products (including derivatives, short-selling techniques, prepaid variable forward contracts, equity swaps, collars,
and exchange funds) that hedge or offset, or are designed to hedge or offset, any potential changes in the value of WEC Energy Group’s
common stock. The policy applies to WEC Energy Group common stock granted to the employees or Directors by the Company as part of their
compensation or held directly or indirectly by employees or Directors. The policy also prohibits the holding of WEC Energy Group securities
in a margin account, as well as the pledging of WEC Energy Group securities as collateral for a loan.
LIMITED
TRADING WINDOWS
Officers, including the
NEOs, other identified employees, and the Company’s Directors may only transact in WEC Energy Group securities during approved trading
windows after satisfying mandatory pre-clearance requirements, or subject to a 10b5-1 trading plan approved and entered into during an
open trading window.
RETIREMENT
PROGRAMS
We also maintain retirement
plans in which our NEOs participate: a defined benefit pension plan of the cash balance type, a supplemental pension plan, individual
letter agreements with some of the NEOs, a 401(k) plan, and a non-qualified retirement savings plan. We believe our retirement plans are
a valuable benefit in the attraction and retention of our employees, including the NEOs. We believe that providing a foundation for long-term
financial security for our employees, beyond their employment with the Company, is a valuable component of our overall compensation program
which will inspire increased loyalty and improved performance. For more information about our retirement plans, see "Pension Benefits
at Fiscal Year-End 2023" and "Retirement Plans" beginning on page P-61.
OTHER
BENEFITS, INCLUDING PERQUISITES
We
provide our executive officers, including the NEOs, with employee benefits and a limited number of perquisites. Except as specifically
noted elsewhere in this proxy statement, the employee benefits programs in which executive officers participate (which provide benefits
such as medical coverage, retirement benefits, annual contributions to a qualified savings plan, and moving and relocation costs) are
generally the same programs offered to substantially all of the Company’s management employees.
The
perquisites made available to executive officers include financial planning, membership in a service that provides health care and safety
management when traveling outside the United States, reimbursement for expenses related to annual physical exam costs not covered by insurance,
and limited spousal travel for business purposes. The Company also pays periodic dues and fees for club memberships for designated officers.
Mr. Garvin is the only NEO eligible for the club membership perquisite.
We
customarily review market data regarding executive perquisite practices on an annual basis. For 2023, the Compensation Committee again
reviewed our package of perquisites with FW Cook and decided not to make any changes. WEC Energy Group has a legacy group of executives
who are still eligible for gross-ups. We reimburse those executives for taxes paid on income attributable to the financial planning benefits
provided to the executives only if the executive uses either of the Company’s identified preferred providers, Annex Wealth Management
or AYCO. We believe the use of the preferred financial advisers provides administrative benefits and eases communication between Company
personnel and the financial advisers.
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| WEC
Energy Group |
P-54 |
2024
Proxy Statement |
We
pay periodic dues and fees for certain club memberships as we have found that the use of these facilities helps foster better customer
and community relationships. Officers are expected to use clubs for which the Company pays dues primarily for business purposes. We do
not pay any additional expenses incurred for personal use of these facilities, and officers are required to reimburse the Company to the
extent that it pays for any such personal use. We do not permit personal use of the airplane available to the Company. We do allow spousal
travel if an executive’s spouse is accompanying the executive on business travel and the airplane is not fully utilized by Company
personnel. There is no incremental cost to the Company for this travel, other than the reimbursement for taxes paid on imputed income
attributable to the executives for this perquisite, as the airplane cost is the same regardless of whether or not an executive’s
spouse travels. Any tax reimbursement is subject to the Company’s Tax Gross-Up Policy discussed below.
In addition, each of our
executive officers is eligible to participate in an officer life insurance benefit. If an executive officer chooses to participate, upon
such officer’s death while employed by the Company, a benefit is paid to his or her designated beneficiary in an amount equal to
the value of three times the officer’s base salary at the time of death.
TAX
GROSS-UP POLICY
The
Compensation Committee adopted a formal policy that prohibits entry into any contract, agreement, or arrangement with any officer of the
Company that obligates the Company to pay directly or reimburse the officer for any portion of the officer’s individual tax liability
for benefits provided by the Company. Excluded from this policy are (1) agreements or arrangements entered into prior to December 2014
when the policy was adopted, (2) agreements or arrangements entered into prior to, and assumed by the Company in connection with, any
merger or acquisition, or (3) plans or policies applicable to Company employees generally.
SEVERANCE
BENEFITS AND CHANGE IN CONTROL
None
of the NEOs have entered into an employment agreement that provides for severance and change in control benefits. However, they are eligible
to participate in the Company's Severance Pay Plan. For a discussion of the severance benefits available to our executive officers generally,
see “Potential Payments upon Termination or Change in Control" located on page P-66.
In addition, our supplemental
pension plan provides that in the event of a change in control, participants will be entitled to a lump sum payment of amounts due under
the plan if employment is terminated within 18 months of the change in control.
IMPACT
OF PRIOR COMPENSATION
The Compensation Committee
does not believe it is appropriate to consider the amounts realized or realizable from prior incentive compensation awards when establishing
future levels of short-term and long-term incentive compensation.
TAX
AND ACCOUNTING CONSIDERATIONS
When reviewing and adjusting
the Company’s compensation program, the Compensation Committee considers factors that may have an impact on the Company’s
financial performance, including tax and accounting rules. Section 162(m) of the Internal Revenue Code limits the tax deductibility of
compensation that the Company pays to certain covered employees, generally including the NEOs, to
$1 million in any year
per person. Although the Compensation Committee takes into consideration the provisions of Section 162(m), it believes that maintaining
tax deductibility is only one consideration among many in the design of an effective executive compensation program. Accordingly, achieving
the desired flexibility in the design and delivery of compensation may result in compensation that in certain cases is not deductible
for federal income tax purposes.
COMPENSATION
COMMITTEE REPORT
The Compensation Committee
has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management
and, based on such review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis
be included in this proxy statement.
|
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|
The
Compensation Committee |
|
Ulice
Payne, Jr., Committee Chair
William
M. Farrow III
Thomas
K. Lane |
|
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|
|
| WEC
Energy Group |
P-55 |
2024
Proxy Statement |
Executive Compensation
Tables
The following table summarizes
total compensation awarded to, earned by, or paid to WEC Energy Group’s Chief Executive Officer ("CEO"), Chief Financial
Officer ("CFO"), and each of the other individuals identified in the table below (the “NEOs”).
SUMMARY
COMPENSATION TABLE
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(4) |
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Name
and
Principal
Position |
Year |
Salary |
Bonus |
(1)
Stock
Awards |
(2)
Option
Awards |
(3)
Non-Equity
Incentive
Plan
Compensation |
Change
in
Pension
Value
and Nonqualified Deferred Compensation Earnings |
(5)(6)
All
Other
Compensation |
Total |
Total
Without Change in Pension Value |
|
($) |
($) |
($) |
($) |
($) |
($) |
($) |
($) |
($) |
|
Scott J. Lauber
President and CEO |
2023 |
1,085,199 |
|
— |
3,461,002 |
|
905,967 |
|
3,145,494 |
|
449,977 |
|
504,540 |
|
9,552,179 |
|
9,230,552 |
|
| 2022 |
1,027,925 |
|
— |
2,822,085 |
|
854,960 |
|
2,832,628 |
|
177,482 |
|
434,381 |
|
8,149,461 |
|
8,047,466 |
|
| 2021 |
921,719 |
|
— |
1,577,250 |
|
615,740 |
|
1,555,544 |
|
199,430 |
|
117,568 |
|
4,987,251 |
|
4,833,031 |
|
|
Xia Liu
Executive Vice President
and CFO |
2023 |
803,226 |
|
— |
1,485,174 |
|
388,761 |
|
1,330,391 |
|
26,767 |
|
474,059 |
|
4,508,378 |
|
4,508,378 |
|
| 2022 |
766,549 |
|
— |
1,424,199 |
|
431,459 |
|
1,244,278 |
|
965 |
|
446,979 |
|
4,314,429 |
|
4,314,429 |
|
| 2021 |
739,450 |
|
— |
1,279,120 |
|
499,356 |
|
1,174,535 |
|
812 |
|
356,739 |
|
4,050,012 |
|
4,050,012 |
|
|
Gale E. Klappa
Executive Chairman |
2023 |
1,193,072 |
|
— |
3,417,905 |
|
631,553 |
|
3,458,169 |
|
2,099,785 |
|
351,817 |
|
11,152,301 |
|
9,282,886 |
|
| 2022 |
1,136,835 |
|
— |
2,796,924 |
|
598,182 |
|
3,118,817 |
|
139,266 |
|
333,813 |
|
8,123,837 |
|
8,123,837 |
|
| 2021 |
1,098,334 |
|
— |
2,512,072 |
|
692,261 |
|
2,944,006 |
|
479,972 |
|
286,747 |
|
8,013,392 |
|
7,639,967 |
|
|
Margaret C. Kelsey
Executive Vice President,
General Counsel and Corporate Secretary |
2023 |
611,271 |
|
— |
753,455 |
|
197,171 |
|
949,173 |
|
7,625 |
|
168,789 |
|
2,687,484 |
|
2,687,484 |
|
| 2022 |
593,767 |
|
— |
785,663 |
|
238,023 |
|
904,973 |
|
683 |
|
162,781 |
|
2,685,890 |
|
2,685,890 |
|
| 2021 |
579,232 |
|
— |
712,544 |
|
278,150 |
|
862,542 |
|
858 |
|
160,981 |
|
2,594,307 |
|
2,594,307 |
|
|
Robert M. Garvin
Executive Vice President
- External Affairs |
2023 |
547,418 |
|
— |
670,539 |
|
175,535 |
|
788,508 |
|
156,520 |
|
67,336 |
|
2,405,856 |
|
2,278,785 |
|
| 2022 |
522,428 |
|
— |
685,978 |
|
207,823 |
|
684,792 |
|
123,272 |
|
84,402 |
|
2,308,695 |
|
2,201,990 |
|
| 2021 |
500,873 |
|
— |
539,076 |
|
210,461 |
|
646,410 |
|
105,142 |
|
82,217 |
|
2,084,179 |
|
1,987,652 |
|
Note:
In order to show the effect that the year-over-year change in pension value had on total compensation, as determined under applicable
SEC rules, we have included an additional column to show total compensation minus the change in pension value. The amounts reported in
the Total Without Change in Pension Value column may differ substantially from the amounts reported in the Total column required under
SEC rules and are not a substitute for total compensation. Total Without Change in Pension Value represents total compensation, as determined
under applicable SEC rules, minus the change in pension value reported in the Change in Pension Value and Nonqualified Deferred Compensation
Earnings column. The change in pension value is subject to many external variables, such as interest rates, that are not related to Company
performance. Therefore, we believe that total compensation minus the change in pension value provides helpful additional information for
comparative purposes.
(1) The
amounts reported reflect the aggregate grant date fair value, as computed in accordance with FASB ASC Topic 718 excluding estimated forfeitures,
of performance units and/or restricted stock awarded to each NEO in the respective year for which such amounts are reported. The amounts
reported for the performance units are based upon the probable outcome as of the grant date of associated performance and market conditions,
and are consistent with our estimate, as of the grant date, of aggregate compensation cost to be recognized over the three-year performance
period. The actual value received by the executives from these awards may range from $0 to greater than the reported amounts, depending
upon the Company’s performance and the executive’s number of additional years of service with the Company.
The
value of the performance unit awards as of the grant date, assuming achievement of the highest level of performance and excluding any
performance units resulting from short-term dividend equivalents, for each of Messrs. Lauber, Klappa, and Garvin, and Mmes. Liu and Kelsey,
is $5,624,211, $2,010,587, $1,089,615, $2,413,454, and $1,224,528, respectively, for the 2023 awards. The value of the performance unit
awards as of the grant date, assuming achievement of the highest level of performance and excluding any performance units resulting from
short-term dividend equivalents and the Additional Performance Measure, for each of Messrs. Lauber, Klappa, and Garvin, and Mmes. Liu
and Kelsey, is $4,012,630, $1,439,469, $975,427, $2,024,994, and $1,117,079, respectively, for the 2022 awards. See “Option Exercises
and Stock Vested For Fiscal Year 2023” for the amount of the actual payout with respect to the 2021 award of performance units.
(2) The
amounts reported reflect the aggregate grant date fair value, as computed in accordance with FASB ASC Topic 718 excluding estimated forfeitures,
of options awarded to each NEO in the respective year for which such amounts are reported. The actual value received by the executives
from these awards may range from $0 to greater than the reported amounts, depending upon Company performance. In accordance with FASB
ASC Topic 718, we made certain assumptions in our calculation of the grant date fair value of the stock options. See “Stock Options”
in Note 1(n) -- Stock-Based Compensation, in the Notes to Consolidated Financial Statements in our 2023 Annual Report on Form 10-K for
a description of these assumptions. For 2023, the assumptions made in connection with the valuation of the stock options are the same
as described in Note 1(n). The grant date fair value of each option awarded was $19.58.
(3) Consists
of the annual incentive compensation earned under WEC Energy Group’s STPP.
(4) The
amounts reported for 2023, 2022, and 2021 reflect the aggregate change in the actuarial present value of each applicable NEO’s accumulated
benefit under all defined benefit plans from December 31, 2022 to December 31, 2023, December 31, 2021 to December 31, 2022, and December
31, 2020 to December 31, 2021, respectively. The amounts reported for all three years also include above-market earnings on compensation
that is deferred by the NEOs into the Prime Rate Fund under WEC Energy Group’s Executive Deferred Compensation Plan and, for Mr.
Klappa, under the WEC Energy Group Non-Qualified Retirement Savings Plan. Above-market earnings represent the difference between the interest
rate used to calculate earnings under the Plans and 120% of the applicable federal long-term rate prescribed by the Internal Revenue Code.
The amounts earned for 2023 are shown below.
|
|
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|
|
|
|
|
|
| WEC
Energy Group |
P-56 |
2024
Proxy Statement |
|
|
|
|
|
|
|
|
|
|
|
|
| Name |
Change
in
Pension Value |
Non-Qualified
Deferred Compensation Earnings |
Total |
| ($) |
($) |
($) |
| Scott
J. Lauber |
321,627 |
128,350 |
449,977 |
| Xia
Liu |
— |
26,767 |
26,767 |
| Gale
E. Klappa |
1,869,415 |
230,370 |
2,099,785 |
| Margaret
C. Kelsey |
— |
7,625 |
7,625 |
| Robert
M. Garvin |
127,071 |
29,449 |
156,520 |
For
2023, 2022, and 2021, the applicable discount rate used to value pension plan liabilities moved from 5.50% to 5.20%, 2.95% to 5.50%, and
2.65% to 2.95%, respectively. As the discount rate decreases, the Company’s pension funding obligation increases, and vice versa.
The changes in the actuarial present values of the NEOs’ pension benefits do not constitute cash payments to the NEOs.
The
pension values reported represent only WEC Energy Group’s obligation of the aggregate change in the actuarial present value of each
NEO’s accumulated benefit under all defined benefit plans. Mr. Klappa is entitled to receive pension benefits from a prior employer.
To the extent such prior employer is unable to pay his pension obligations, WEC Energy Group may be obligated to pay the total amount.
(5) During
2023, each NEO received financial planning services and the cost of an annual physical exam; Messrs. Lauber and Klappa, and Ms. Liu,
were provided with membership in a service that provides healthcare and safety management when traveling outside the United States. Although
Mr. Klappa utilized the benefit of spousal travel for business purposes in 2023, there was no associated cost to the Company as Mr. Klappa
was not eligible to receive reimbursement for taxes paid on imputed income attributable for such travel.
(6) For
Mr. Klappa, the amount reported in All Other Compensation for 2023 includes $23,374 attributable to WEC Energy Group’s Directors’
Charitable Awards Program in connection with Mr. Klappa’s service on the Company’s Board. See “Director Compensation”
for a description of the Directors’ Charitable Awards Program.
All
Other Compensation for Messrs. Lauber, Klappa, and Garvin, and Mmes. Liu and Kelsey, for 2023 also consists of:
•Employer
matching of contributions into the WEC Energy Group 401(k) plan in the amount of $13,200 for each NEO;
•Employer
contributions into the WEC Energy Group 401(k) plan in the amount of $19,800 for Mr. Klappa and Mmes. Liu and Kelsey, and into the WEC
Energy Group Non-Qualified Retirement Savings Plan in the amount of $102,611 for Ms. Liu, $238,261 for Mr. Klappa, and $70,853 for Ms.
Kelsey. These payments are in lieu of participation in the Company’s pension plan;
•“Make-whole”
payments under the Executive Deferred Compensation Plan that provides a match at the same level as the WEC Energy Group 401(k) plan (4%
for up to 7% of wages) for all deferred salary and bonus not otherwise eligible for a match in the amounts of $143,118 for Mr. Lauber,
$68,408 for Ms. Liu, $40,177 for Mr. Klappa, $47,236 for Ms. Kelsey, and $17,493 for Mr. Garvin;
•Retention
credit contributed to a nonqualified account in the amount of $315,000 for Mr. Lauber. See "Mr. Lauber's Retention Agreement"
on page P-63 for a description of this benefit;
•Retirement
income supplement contributed to a nonqualified account in the amount of $259,888 for Ms. Liu. See "Ms. Liu's Retirement Income Supplement"
on page P-63 for a description of this benefit;
•Tax
reimbursements or “gross-ups” for all applicable perquisites in the amount of $13,963 and $17,222 for Messrs. Lauber and Garvin,
respectively.
|
|
|
|
|
|
|
|
|
| WEC
Energy Group |
P-57 |
2024
Proxy Statement |
GRANTS
OF PLAN-BASED AWARDS FOR FISCAL YEAR 2023
The following table shows
additional data regarding incentive plan awards to the NEOs for 2023.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Name |
Grant
Date |
Action
Date (1) |
Estimated
Future Payouts Under Non-Equity Incentive Plan Awards (2) |
Estimated
Future Payouts Under Equity Incentive Plan Awards (3) |
All
Other Stock Awards: Number of Shares of Stock or Units (4)
(#) |
All
Other Option Awards (5) |
Grant
Date Fair Value of Stock and Option Awards
($) |
|
Threshold
($) |
Target
($) |
Maximum
($) |
Threshold
(#) |
Target
(#) |
Maximum
(#) |
Number
of Securities Underlying Options
(#) |
Exercise
or Base Price (6)
($/Sh) |
Closing
Market Price
($/Sh) |
| Scott
J. Lauber |
1/19/23 |
— |
376,706 |
1,506,824 |
3,164,330 |
— |
— |
— |
— |
— |
— |
— |
— |
|
| 1/3/23 |
12/1/22 |
— |
— |
— |
7,504 |
30,015 |
60,030 |
— |
— |
— |
— |
2,812,105 |
|
| 1/3/23 |
12/1/22 |
— |
— |
— |
— |
— |
— |
6,926 |
— |
— |
— |
648,897 |
|
| 1/3/23 |
12/1/22 |
— |
— |
— |
— |
— |
— |
— |
46,270 |
93.69 |
93.76 |
905,967 |
|
| Xia
Liu |
1/19/23 |
— |
159,328 |
637,313 |
1,338,357 |
— |
— |
— |
— |
— |
— |
— |
— |
|
| 1/3/23 |
12/1/22 |
— |
— |
— |
3,220 |
12,880 |
25,760 |
— |
— |
— |
— |
1,206,727 |
|
| 1/3/23 |
12/1/22 |
— |
— |
— |
— |
— |
— |
2,972 |
— |
— |
— |
278,447 |
|
| 1/3/23 |
12/1/22 |
— |
— |
— |
— |
— |
— |
— |
19,855 |
93.69 |
93.76 |
388,761 |
|
| Gale
E. Klappa |
1/19/23 |
— |
414,152 |
1,656,608 |
3,478,877 |
— |
— |
— |
— |
— |
— |
— |
— |
|
| 1/3/23 |
12/1/22 |
— |
— |
— |
2,683 |
10,730 |
21,460 |
— |
— |
— |
— |
1,005,294 |
|
| 1/3/23 |
12/1/22 |
— |
— |
— |
— |
— |
— |
25,751 |
— |
— |
— |
2,412,611 |
|
| 1/3/23 |
12/1/22 |
— |
— |
— |
— |
— |
— |
— |
32,255 |
93.69 |
93.76 |
631,553 |
|
| Margaret
C. Kelsey |
1/19/23 |
— |
113,674 |
454,694 |
954,857 |
— |
— |
— |
— |
— |
— |
— |
— |
|
| 1/3/23 |
12/1/22 |
— |
— |
— |
1,634 |
6,535 |
13,070 |
— |
— |
— |
— |
612,264 |
|
| 1/3/23 |
12/1/22 |
— |
— |
— |
— |
— |
— |
1,507 |
— |
— |
— |
141,191 |
|
| 1/3/23 |
12/1/22 |
— |
— |
— |
— |
— |
— |
— |
10,070 |
93.69 |
93.76 |
197,171 |
|
| Robert
M. Garvin |
1/19/23 |
— |
94,432 |
377,728 |
793,229 |
— |
— |
— |
— |
— |
— |
— |
— |
|
| 1/3/23 |
12/1/22 |
— |
— |
— |
1,454 |
5,815 |
11,630 |
— |
— |
— |
— |
544,807 |
|
| 1/3/23 |
12/1/22 |
— |
— |
— |
— |
— |
— |
1,342 |
— |
— |
— |
125,732 |
|
| 1/3/23 |
12/1/22 |
— |
— |
— |
— |
— |
— |
— |
8,965 |
93.69 |
93.76 |
175,535 |
|
(1) On
December 1, 2022, the Compensation Committee awarded the annual 2023 stock option, restricted stock, and performance unit grants effective
the first trading day of 2023 (January 3, 2023).
(2) Non-equity
incentive plan awards consist of annual incentive awards under WEC Energy Group’s STPP. For a more detailed description of the STPP,
see the Compensation Discussion and Analysis.
(3) Consists
of performance units awarded under the WEC Energy Group Performance Unit Plan. WEC Energy Group’s Performance Unit Plan provides
for short-term dividend equivalents. The number of performance units awarded will be increased as of any date that WEC Energy Group declares
a cash dividend on its common stock by the amount of short-term dividend equivalents awarded. In effect, short-term dividend equivalents
will be credited and accumulated as reinvested dividends on each performance unit so that the performance units and accumulated dividends
will be paid out at the end of the performance units’ three-year performance period, contingent upon the Company’s performance.
Therefore, the number of performance units reported at each of the threshold, target, and maximum levels in this table will increase by
the number of short-term dividend equivalents earned. For a more detailed description of the performance units and short-term dividend
equivalents, see the Compensation Discussion and Analysis.
(4) Consists
of restricted stock awarded under the Omnibus Stock Incentive Plan. For a more detailed description of the terms of the restricted stock,
see the Compensation Discussion and Analysis.
(5) Consists
of non-qualified stock options to purchase shares of WEC Energy Group common stock pursuant to the Omnibus Stock Incentive Plan. For a
more detailed description of the terms of the options, see the Compensation Discussion and Analysis.
(6) The
exercise price of the option awards is equal to the fair market value of WEC Energy Group’s common stock on the date of grant. Fair
market value is the average of the high and low prices of WEC Energy Group common stock, which is listed on the New York Stock Exchange,
reported by Bloomberg L.P. on the grant date.
|
|
|
|
|
|
|
|
|
| WEC
Energy Group |
P-58 |
2024
Proxy Statement |
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END 2023
The
following table reflects the number and value of exercisable and unexercisable options as well as the number and value of other equity
awards held by the NEOs at fiscal year-end 2023.
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
| Name |
Option
Awards |
Stock
Awards |
|
Number
of Securities Underlying Unexercised Options: Exercisable
(#) |
Number
of Securities Underlying Unexercised Options: Unexercisable (1)
(#) |
Equity
Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options
(#) |
Option
Exercise Price
($) |
Option
Expiration Date |
Number
of Shares or Units of Stock that Have Not Vested (2)
(#) |
Market
Value of Shares or Units of Stock that Have Not Vested
($) |
Equity
Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that Have Not Vested
(#) |
Equity
Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights that Have Not Vested (3)
($) |
| Scott
J. Lauber |
5,330 |
— |
— |
52.895 |
1/2/25 |
— |
— |
— |
— |
| 6,720 |
— |
— |
50.925 |
1/4/26 |
— |
— |
— |
— |
| 17,320 |
— |
— |
58.305 |
1/3/27 |
— |
— |
— |
— |
| 26,465 |
— |
— |
66.015 |
1/2/28 |
— |
— |
— |
— |
| 30,560 |
— |
— |
68.175 |
1/2/29 |
— |
— |
— |
— |
| 32,420 |
— |
— |
91.4875 |
1/2/30 |
— |
— |
— |
— |
| 5,750 |
— |
— |
88.5475 |
7/1/30 |
— |
— |
— |
— |
| — |
46,647 |
— |
91.06 |
1/4/31 |
— |
— |
— |
— |
| — |
58,121 |
— |
96.035 |
1/3/32 |
— |
— |
— |
— |
| — |
46,270 |
— |
93.69 |
1/3/33 |
— |
— |
— |
— |
| — |
— |
— |
— |
— |
11,684 |
983,442 |
— |
— |
| — |
— |
— |
— |
— |
— |
— |
25,502 |
679,589 |
| — |
— |
— |
— |
— |
— |
— |
31,129 |
5,240,340 |
| Xia
Liu |
36,705 |
— |
— |
92.315 |
6/1/30 |
— |
— |
— |
— |
| — |
37,830 |
— |
91.06 |
1/4/31 |
— |
— |
— |
— |
| — |
29,331 |
— |
96.035 |
1/3/32 |
— |
— |
— |
— |
| — |
19,855 |
— |
93.69 |
1/3/33 |
— |
— |
— |
— |
| — |
— |
— |
— |
— |
5,704 |
480,106 |
— |
— |
| — |
— |
— |
— |
— |
— |
— |
12,869 |
342,909 |
| — |
— |
— |
— |
— |
— |
— |
13,358 |
2,248,686 |
| Gale
E. Klappa |
50,000 |
— |
— |
52.895 |
1/2/25 |
— |
— |
— |
— |
| 46,074 |
— |
— |
50.925 |
1/4/26 |
— |
— |
— |
— |
| 115,960 |
— |
— |
66.015 |
1/2/28 |
— |
— |
— |
— |
| 33,180 |
— |
— |
68.175 |
1/2/29 |
— |
— |
— |
— |
| 36,190 |
— |
— |
91.4875 |
1/2/30 |
— |
— |
— |
— |
| — |
52,444 |
— |
91.06 |
1/4/31 |
— |
— |
— |
— |
| — |
40,665 |
— |
96.035 |
1/3/32 |
— |
— |
— |
— |
| — |
32,255 |
— |
93.69 |
1/3/33 |
— |
— |
— |
— |
| — |
— |
— |
— |
— |
25,751 |
2,167,462 |
— |
— |
| — |
— |
— |
— |
— |
— |
— |
9,148 |
243,756 |
| — |
— |
— |
— |
— |
— |
— |
11,128 |
1,873,372 |
| Margaret
C. Kelsey |
18,380 |
— |
— |
66.015 |
1/2/28 |
— |
— |
— |
— |
| 20,147 |
— |
— |
68.175 |
1/2/29 |
— |
— |
— |
— |
| 20,477 |
— |
— |
91.4875 |
1/2/30 |
— |
— |
— |
— |
| — |
21,072 |
— |
91.06 |
1/4/31 |
— |
— |
— |
— |
| — |
16,181 |
— |
96.035 |
1/3/32 |
— |
— |
— |
— |
| — |
10,070 |
— |
93.69 |
1/3/33 |
— |
— |
— |
— |
| — |
— |
— |
— |
— |
3,019 |
254,109 |
— |
— |
| — |
— |
— |
— |
— |
— |
— |
7,100 |
189,214 |
| — |
— |
— |
— |
— |
— |
— |
6,778 |
1,140,924 |
| Robert
M. Garvin |
14,185 |
— |
— |
58.305 |
1/3/27 |
— |
— |
— |
— |
| 14,705 |
— |
— |
66.015 |
1/2/28 |
— |
— |
— |
— |
| 14,931 |
— |
— |
68.175 |
1/2/29 |
— |
— |
— |
— |
| 15,471 |
— |
— |
91.4875 |
1/2/30 |
— |
— |
— |
— |
| — |
15,944 |
— |
91.06 |
1/4/31 |
— |
— |
— |
— |
| — |
14,128 |
— |
96.035 |
1/3/32 |
— |
— |
— |
— |
| — |
8,965 |
— |
93.69 |
1/3/33 |
— |
— |
— |
— |
| — |
— |
— |
— |
— |
2,605 |
219,263 |
— |
— |
| — |
— |
— |
— |
— |
— |
— |
6,199 |
165,226 |
| — |
— |
— |
— |
— |
— |
— |
6,031 |
1,015,259 |
(1) All
options reported in this column were granted ten years prior to their respective expiration date and vest 100% on the third anniversary
of the grant date.
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| WEC
Energy Group |
P-59 |
2024
Proxy Statement |
(2) Effective
January 4, 2021, Messrs. Lauber and Garvin, and Mmes. Liu and Kelsey, were granted restricted stock awards of 3,248; 1,110;
2,634; and 1,467 shares, respectively, which began vesting in three equal annual installments on January 4, 2022. Effective January
3, 2022, Messrs. Lauber and Garvin, and Mmes. Liu and Kelsey, were granted restricted stock awards of 5,510; 1,339; 2,781;
and 1,534 shares, respectively, which began vesting in three equal annual installments on January 3, 2023. Effective January 3, 2023,
Messrs. Lauber and Garvin, and Mmes. Liu and Kelsey, were granted restricted stock awards of 6,926; 1,342; 2,972; and 1,507
shares, respectively, which began vesting in three equal annual installments on January 3, 2024. Effective January 3, 2023, Mr. Klappa
was granted a restricted stock award of 25,751 shares. Mr. Klappa's 2023 restricted stock grant vested 100% on January 3, 2024. The vesting
of the restricted stock granted to Messrs. Lauber and Garvin, and Mmes. Liu and Kelsey, may be accelerated in connection with a termination
of employment due to a change in control, death or disability, or by action of the Compensation Committee.
(3) The
number of performance units reported were awarded in 2022 (first line) and 2023 (second line) and vest at the end of the three-year performance
period ending December 31, 2024 and December 31, 2025, respectively. The number of performance units reported and their corresponding
value are based upon a payout at the threshold amount for 2022 and maximum amount for 2023. The number and value of the 2022 and 2023
performance units includes performance units resulting from the grant of short-term dividend equivalents. The number and value of the
2022 performance units also includes performance units resulting from the achievement of the Additional Performance Measure in 2022 and
2023.
OPTION
EXERCISES AND STOCK VESTED FOR FISCAL YEAR 2023
This
table shows the number and value of (1) stock options that were exercised by the NEOs, (2) restricted stock awards that vested, and (3)
performance units that vested in 2023.
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| Name |
Option
Awards |
Stock
Awards |
|
Number
of Shares Acquired on Exercise
(#) |
Value
Realized on Exercise
($) |
Number
of Shares Acquired on Vesting
(1)
(#) |
Value
Realized on Vesting (2)(3)
($) |
| Scott
J. Lauber |
— |
— |
3,848 |
361,016 |
| — |
— |
1,549 |
130,391 |
| Xia
Liu |
— |
— |
4,114 |
370,070 |
| — |
— |
1,256 |
105,745 |
| Gale
E. Klappa |
— |
— |
20,559 |
1,926,173 |
| — |
— |
893 |
75,179 |
| Margaret
C. Kelsey |
— |
— |
1,503 |
141,354 |
| — |
— |
700 |
58,909 |
| Robert
M. Garvin |
— |
— |
1,195 |
112,367 |
| — |
— |
529 |
44,566 |
(1) Reflects
the number of shares of restricted stock that vested in 2023 (first line) and the number of performance units that vested as of December
31, 2023, the end of the applicable three-year performance period (second line). The performance units were settled in cash.
(2) Restricted
stock value realized is determined by multiplying the number of shares of restricted stock that vested by the fair market value of
WEC
Energy Group common stock on the date of vesting. We compute fair market value as the average of the high and low prices of WEC Energy
Group common stock reported by Bloomberg L.P. on the vesting date.
(3) Performance
units value realized is determined by multiplying the number of performance units that vested by the closing market price of WEC Energy
Group common stock on December 29, 2023, the last trading day of the year.
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| WEC
Energy Group |
P-60 |
2024
Proxy Statement |
PENSION
BENEFITS AT FISCAL YEAR-END 2023
The
following table sets forth information for each NEO regarding their pension benefits at fiscal year-end 2023 under WEC Energy Group’s
three different retirement plans discussed below.
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| Name |
Plan
Name |
Number
of Years Credited Service (1)
(#) |
Present
Value of Accumulated Benefit (4)(5)
($) |
Payments
During Last Fiscal Year (6)
($) |
|
Scott
J. Lauber |
WEC
Energy Group Plan |
33.50 |
609,053 |
— |
| SERP |
33.50 |
977,374 |
— |
| Individual
Letter Agreement |
— |
— |
— |
|
Xia
Liu(2) |
WEC
Energy Group Plan |
— |
— |
— |
| SERP |
— |
— |
— |
| Individual
Letter Agreement |
— |
— |
— |
|
Gale
E. Klappa(3) |
WEC
Energy Group Plan |
13.00 |
285,884 |
— |
| SERP |
— |
2,581,588 |
263,731 |
| Individual
Letter Agreement |
38.67 |
18,105,589 |
1,849,639 |
|
Margaret
C. Kelsey(2) |
WEC
Energy Group Plan |
— |
— |
— |
| SERP |
— |
— |
— |
| Individual
Letter Agreement |
— |
— |
— |
| Robert
M. Garvin |
WEC
Energy Group Plan |
12.67 |
292,740 |
— |
| SERP |
12.67 |
662,042 |
— |
| Individual
Letter Agreement |
12.67 |
94,873 |
— |
(1)Years
of service are computed as of December 31, 2023, the pension plan measurement date used for financial statement reporting purposes.
Prior
to his initial retirement in May 2016, Mr. Klappa was credited with 25.67 years of service pursuant to the terms of his ILA. The increase
in the aggregate amount of Mr. Klappa’s accumulated benefit under all of WEC Energy Group’s retirement plans resulting from
the additional years of credited service is $19,015,615.
(2)Mmes.
Liu and Kelsey are not eligible to receive pension benefits under the WEC Energy Group Plan.
(3)Upon
his initial retirement in May 2016, Mr. Klappa’s ILA terminated. At that time, the number of years of credited service and the accumulated
benefit effectively transferred to the WEC Energy Group Plan and the supplemental executive retirement plan ("SERP"). Payments
related to the ILA were actually paid under the WEC SERP. Mr. Klappa is not accruing additional benefits under these plans in connection
with his current service.
(4)The
key assumptions used in calculating the actuarial present values reflected in this column are:
•Earliest
projected unreduced retirement age based upon projected service:
–For
Mr. Lauber, age 60.
–For
Mr. Klappa, age 65.67 (actual age at initial retirement in 2016).
–For
Mr. Garvin, age 57.42.
•Discount
rate of 5.20%.
•Cash
balance interest crediting rate of 5.00%.
•Form
of payment:
–Mr.
Lauber: WEC Energy Group Plan 50% lump sum / 50% life annuity; SERP - Ten Year Annual Installment
–Mr.
Klappa's actual form of payment elected at initial retirement: WEC Energy Group Plan, SERP, and ILA - Single Life annuity
–Mr.
Garvin: WEC Energy Group Plan 50% lump sum / 50% life annuity; SERP and ILA - Five Annual Installments
•Mortality
Table for life annuity - Pri-2012/Male/White Collar as published by the Society of Actuaries with modified MP2020 projection.
(5)WEC
Energy Group’s pension benefit obligation to Mr. Klappa will be partially offset by pension benefits he is entitled to receive from
his former employer. The amount reported for Mr. Klappa represents only WEC Energy Group’s obligation of the aggregate actuarial
present value of his accumulated benefit under all of the plans. The total aggregate actuarial present value of Mr. Klappa’s accumulated
benefit under all of the plans is $24,551,384, $3,578,323 of which we estimate the prior employer is obligated to pay. If Mr. Klappa's
former employer becomes unable to pay its portion of his respective accumulated pension benefit, WEC Energy Group may be obligated to
pay the total amount.
(6)Mr.
Klappa continues to receive retirement benefits under the SERP; however, payments under the WEC Energy Group Plan were suspended for
Mr. Klappa at the time he resumed his role as an executive officer with the Company.
RETIREMENT
PLANS
WEC
Energy Group maintains four different plans providing for retirement payments and benefits for the NEOs: a defined benefit pension
plan of the cash balance type (“WEC Energy Group Plan”); a supplemental executive retirement plan (“SERP”);
ILAs; and the WEC Energy Group Retirement Savings Plan, which is a 401(k) plan, for those individuals who are not eligible to participate
in the WEC Energy Group Plan. The compensation considered for purposes of the retirement plans for Messrs. Lauber and Garvin is $3,907,945
and $1,223,910 respectively, of which $330,000 is applied to the WEC Energy Group Plan and the remainder to the SERP. These amounts represent
their 2023 base salary, plus their 2022 STPP award paid in 2023. As of December 31, 2023, Messrs. Lauber and Garvin currently have 33.5
and 12.67 credited years of service, respectively, under the various plans described below. Messrs. Lauber and Garvin were not granted
additional years of credited service. See below for a discussion of the contributions made to the WEC Energy Group Retirement Savings
Plan on behalf of Mr. Klappa and Mmes. Liu and Kelsey, who do not participate in the WEC Energy Group Plan.
The
WEC Energy Group Plan
Many
of our regular full-time and part-time employees, including several of the NEOs, participate in the WEC Energy Group Plan. The WEC Energy
Group Plan bases a participant’s defined benefit pension on the value of a hypothetical account balance. For individuals participating
in the WEC Energy Group Plan as of December 31, 1995, a starting account balance was created equal to the present
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Energy Group |
P-61 |
2024
Proxy Statement |
value
of the benefit accrued as of December 31, 1994, under the plan benefit formula prior to the change to a cash balance approach. That formula
provided a retirement income based on years of credited service and average compensation (consisting of base salary and annual incentive
compensation) for the 36 highest consecutive months, with an adjustment to reflect the Social Security integrated benefit. In addition,
individuals participating in the WEC Energy Group Plan as of December 31, 1995, received a special one-time transition credit amount equal
to a specified percentage varying with age multiplied by credited service and 1994 base pay.
The
present value of the accrued benefit as of December 31, 1994, plus the transition credit, was also credited with interest at a stated
rate. For 1996 through 2007, a participant received annual credits to the account equal to 5% of base pay (including WEC Energy Group
401(k) plan pre-tax deferrals and other items), plus an interest credit on all prior accruals equal to 4% plus 75% of the annual time-weighted
trust investment return for the year in excess of 4%. From 2008 through 2013, the interest credit percentage was set at either the long-term
corporate bond third segment rate, published by the Internal Revenue Service, or 4%, whichever was greater.
Effective
January 1, 2014, participants receive an annual credit to the account equal to 6% of base pay (including WEC Energy Group 401(k) plan
pre-tax deferrals and other items), plus an interest credit on all prior accruals equal to a 5% fixed rate. For participants in the WEC
Energy Group Plan on December 31, 2007 and December 31, 2013, their WEC Energy Group Plan benefit will never be less than the benefit
accrued as of December 31, 2007 and December 31, 2013, respectively. The WEC Energy Group Plan benefit will be calculated under all three
formulas to provide participants with the greater benefit; however, in calculating a participant’s benefit accrued as of December
31, 2007 and December 31, 2013, interest credits as defined under each of the prior WEC Energy Group Plan formulas will be taken into
account but not any additional pay credits.
Participants
who were “grandfathered” as of December 31, 1995, as discussed below, will still receive the greater of the grandfathered
benefit or the cash balance benefit.
The
life annuity payable under the WEC Energy Group Plan is determined by converting the hypothetical account balance credits into annuity
form.
Individuals
who were participants in the WEC Energy Group Plan on December 31, 1995 were “grandfathered” so that they will not receive
any lower retirement benefit than would have been provided under the formula in effect through December 31, 1995, had it continued. This
amount continued to increase until December 31, 2010, at which time it was frozen. Upon retirement, participants will receive the greater
of this frozen amount or the accumulated cash balance.
For
Mr. Lauber, estimated benefits under the cash balance plan formula are higher than under the grandfathered formula. Mr. Garvin does not
participate in the grandfathered formula.
Under
the WEC Energy Group Plan, participants receive unreduced pension benefits upon reaching one of the following three thresholds: (1)
age 65; (2) age 62 with 30 years of service; or (3) age 60 with 35 years of service.
Pursuant
to the Internal Revenue Code, only $330,000 of pension eligible earnings (base pay and annual incentive compensation) could be considered
for purposes of the WEC Energy Group Plan in 2023.
Supplemental
Executive Retirement Plans and Individual Letter Agreements
Designated
officers of WEC Energy Group, including all of the NEOs (other than Mmes. Liu and Kelsey) participate in the SERP, which is part of the
Supplemental Pension Plan (the “SPP”) adopted to comply with Section 409A of the Internal Revenue Code. The SERP provides
monthly supplemental pension benefits to participants, which will be paid out of unsecured corporate assets, or the grantor trust described
below, in an amount equal to the difference between the actual pension benefit payable under the WEC Energy Group Plan and what such pension
benefit would be if calculated without regard to any limitation imposed by the Internal Revenue Code on pension benefits or covered compensation,
including amounts deferred to the WEC Energy Group Executive Deferred Compensation Plan. Except for a “change in control”
of WEC Energy Group, as defined in the SPP, and pursuant to the terms of the ILAs discussed below, no payments are made until after the
participant’s retirement at or after age 60 or death. If a participant in the SERP dies prior to age 60, his or her beneficiary
is entitled to receive retirement benefits under the SERP. Although Mr. Klappa remains a participant in the SPP, he no longer accrues
any benefits under the plan as a result of his earlier retirement in 2016.
WEC
Energy Group entered into an individual letter agreement with Mr. Klappa when he first commenced employment in 2003 to provide him with
supplemental retirement benefits upon retirement at or after age 60. The supplemental retirement payments are intended to make the total
retirement benefits payable to Mr. Klappa comparable to that which would have been received under the WEC Energy Group Plan as in effect
on December 31, 1995, had the defined benefit formula then in effect continued until his retirement, calculated without regard to Internal
Revenue Code limits, and as if Mr. Klappa had started participation in the WEC Energy Group Plan at age 27. As a result, pursuant to the
terms of the agreement, which terminated upon Mr. Klappa’s retirement in May 2016, Mr. Klappa had 38.67 years of credited service
under the WEC Energy Group Plan and the SERP upon his retirement.
The
Company entered into an agreement with Mr. Garvin when he was hired in April 2011 that provides for a supplemental pension benefit account,
which was credited with $50,000. This account is credited with interest annually at the same rate as the WEC Energy Group Plan. The account
balance vested in April 2021, when Mr. Garvin completed 10 years of service.
The
purpose of these agreements was to ensure that Messrs. Klappa and Garvin did not lose pension earnings by joining the executive management
team at WEC Energy Group they otherwise would have received from their former employers. Without providing a means to retain these pension
benefits, it would have been difficult for WEC Energy Group to attract these officers.
The
SPP provides for a mandatory lump sum payment upon a change in control if the executive’s employment is terminated within 18 months
after the change in control. The Wisconsin Energy Corporation 2014 Rabbi Trust, a grantor trust, funds certain non-qualified
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Energy Group |
P-62 |
2024
Proxy Statement |
benefits,
including the SPP and the ILAs, as well as the Executive Deferred Compensation Plan and the Directors’ Deferred Compensation Plan.
See “Potential Payments upon Termination or Change in Control” later in this proxy statement for additional information.
Ms.
Liu's Retirement Income Supplement
WEC
Energy Group entered into an employment agreement with Ms. Liu when she commenced employment in June 2020 that provides for a retirement
income supplement. Pursuant to the agreement, WEC Energy Group will credit $225,000 annually to a nonqualified account. The annual credit
plus interest will continue until the year in which Ms. Liu ceases employment or reaches age 62. The balance at separation or age 62 will
be frozen and will not exceed $3,000,000. Effective January 1 of each year, the account will be credited with interest at the annual average
prime rate, not to exceed 5%. Amounts credited to the account will vest at age 55, and will be distributed at Ms. Liu’s retirement
or other separation. Administration of this benefit is intended to comply with Section 409A of the Internal Revenue Code. The purpose
of providing this benefit under Ms. Liu's agreement was to ensure that she did not lose retirement benefits by joining the executive management
team at the Company she otherwise would have accrued and received from her former employer.
Mr.
Lauber's Retention Agreement
Due
to unforeseen medical circumstances in 2017 involving the Company’s then-CEO, the Company, under the Board’s careful oversight,
was required to adjust its CEO succession plan and accelerate the development of the next generation of Company leadership.
With
his appointment, effective February 1, 2022, Mr. Lauber became the Company’s fourth CEO in six years. In order to provide sufficient
time for longer term succession planning, the Compensation Committee determined it was in the Company’s best interest to incentivize
Mr. Lauber, age 56 at that time, to remain with the Company until his retirement.
On
February 21, 2022, the Company and Mr. Lauber entered into a letter agreement, which was approved by the Compensation Committee after
consideration of input from FW Cook. Pursuant to the terms of this agreement, the Company will credit an annual contribution of $300,000
to a nonqualified account beginning February 21, 2022. So long as Mr. Lauber remains employed by the Company, an additional $300,000 will
be credited annually on February 1, until a maximum of 10 contributions have been made. In addition, the account will be credited with
interest at a rate of 5% annually, which is equivalent to the interest crediting rate under the Company’s cash balance pension plan.
The account would vest upon the sixth such contribution, at which time Mr. Lauber will be 61, or upon Mr. Lauber’s death or disability.
WEC
Energy Group Retirement Savings Plan
Effective
January 1, 2015, all newly hired management employees, including executive officers, will receive an annual contribution equal to 6% of
pension-eligible wages from the Company into WEC Energy Group’s 401(k) plan rather than participate in the WEC Energy Group Plan.
Pension-eligible wages consist of annual base salary and STPP payouts. In connection with this plan, the Compensation Committee adopted
the WEC Energy Group Non-Qualified Retirement Savings Plan to address Internal Revenue Code limits on the amount of money that can be
contributed to a 401(k) plan. For additional details, see "Non-Qualified Retirement Savings Plan" below.
Since
Mr. Klappa was considered a new employee upon his return as CEO in 2017, he no longer accrues additional benefits under the WEC Energy
Group Plan.
Mr.
Klappa, along with Mmes. Liu and Kelsey, are entitled to receive Company contributions to the 401(k) plan and Non-Qualified Retirement
Savings Plan.
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| WEC
Energy Group |
P-63 |
2024
Proxy Statement |
NONQUALIFIED
DEFERRED COMPENSATION FOR FISCAL YEAR 2023
The following table reflects
activity by the NEOs during 2023 in WEC Energy Group’s Executive Deferred Compensation Plan (the "EDCP") and Non-Qualified
Retirement Savings Plan (the "NQRSP"), which are discussed below.
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Name |
Plan
Name |
Executive
Contributions in
Last
Fiscal Year (1) |
Registrant
Contributions in
Last
Fiscal Year (1) |
Aggregate
Earnings
in
Last Fiscal Year
(2) |
Aggregate
Withdrawals / Distributions |
Aggregate
Balance at Last Fiscal Year-End (3) |
| ($) |
($) |
($) |
($) |
($) |
| Scott
J. Lauber |
EDCP |
305,816 |
143,118 |
337,966 |
— |
4,506,267 |
| Xia
Liu |
EDCP |
1,020,095 |
68,408 |
13,111 |
— |
2,600,021 |
|
NQRSP |
— |
102,611 |
(7,856) |
— |
166,225 |
| Gale
E. Klappa |
EDCP |
73,273 |
40,177 |
320,987 |
1,208,446 |
3,115,375 |
|
NQRSP |
— |
238,261 |
79,906 |
— |
1,058,145 |
| Margaret
C. Kelsey |
EDCP |
105,762 |
47,236 |
(45,669) |
— |
970,665 |
| NQRSP |
— |
70,853 |
(18,490) |
— |
292,019 |
| Robert
M. Garvin |
EDCP |
47,935 |
17,493 |
22,693 |
— |
1,498,313 |
(1)All
of the amounts are reported as compensation in the "Summary Compensation Table" of this proxy statement. The NQRSP contributions
were earned in 2023, with the actual contribution being made in 2024.
(2)$128,350,
$230,370, $29,449, $26,767, and $7,625 of the reported amounts, which represent above-market interest on deferred compensation, are reported
in the "Summary Compensation Table" of this proxy statement for Messrs. Lauber, Klappa, and Garvin, and Mmes. Liu and Kelsey,
respectively.
(3)$2,151,622,
$4,210,371, $763,622, $1,424,767, and $548,580 of the reported amounts in the EDCP were reported as compensation in the Summary Compensation
Tables in prior proxy statements for Messrs. Lauber, Klappa, and Garvin, and Mmes. Liu and Kelsey, respectively. The amount reported in
this column for Mr. Klappa is lower than the previously reported amount because Mr. Klappa has been receiving distributions under the
WEC Energy Group Executive Deferred Compensation Plan for several years. $172,590, $291,198, and $914,939 of the reported amounts in the
NQRSP were reported as compensation in the Summary Compensation Tables in prior proxy statements for Mmes. Liu and Kelsey, and Mr. Klappa,
respectively.
Executive
Deferred Compensation Plan
WEC
Energy Group maintains two executive deferred compensation plans in which the NEOs participate: the Legacy WEC Energy Group Executive
Deferred Compensation Plan (the “Legacy EDCP”), and the WEC Energy Group Executive Deferred Compensation Plan (the “EDCP”)
adopted effective January 1, 2005 to comply with Section 409A of the Internal Revenue Code. The Legacy EDCP provides that (1) amounts
earned, deferred, vested, credited, and/or accrued as of December 31, 2004 are preserved and frozen (subject to appreciation in value
of such amounts) so that these amounts are exempt from Section 409A and (2) no new employees may participate in the Legacy EDCP as of
January 1, 2005. Since January 1, 2005, all deferrals have been made to the EDCP. The provisions of the EDCP as in effect on December
31, 2023 are described below, as are the payout provisions of the Legacy EDCP.
The
EDCP. Under the plan,
a participant may defer up to 50% of his or her base salary, annual incentive compensation and vested awards of performance units. Stock
option gains and vested restricted stock may not be deferred into the EDCP. Generally, deferral elections are made annually by each participant
for the upcoming plan year. The Company maintains detailed records tracking each participant’s “account balance.” In
addition to deferrals made by the participants, the Company may also credit each participant’s account balance by matching a certain
portion of each participant’s deferral. Such deferral matching is determined by a formula taking into account the matching rate
applicable under the Company’s 401(k) plan, the percentage of compensation subject to such matching rate, the participant’s
gross compensation eligible for matching, and the amount of eligible compensation actually deferred. Also, in our discretion, the Company
may credit any other amounts, as appropriate, to each participant’s account.
Participants
may elect to participate in the WEC Energy Group Common Stock Fund and/or the Prime Rate Fund. The Company tracks each participant’s
account balance as though the balance was actually invested in these funds. Fund elections are not actual investments, but are elections
chosen only for purposes of calculating market gain or loss on deferred amounts for the duration of the deferral period. Each participant
may select the amount of deferred compensation to be allocated among the two measurement funds. Contributions and deductions may be made
to each participant’s account based on the performance of the measurement fund(s) elected.
The
annual rate of return for the calendar year ended December 31, 2023 for the WEC Energy Group Common Stock Fund and the Prime Rate Fund
was -7.00% and 8.15%, respectively.
Each
participant’s account balance is debited or credited periodically based on the performance of the measurement fund(s) elected by
the participant. Subject to certain restrictions, participants may periodically make changes to their measurement fund elections.
At
the time of his or her deferral election, each participant may designate a prospective payout election for any or the entire amount deferred,
plus any amounts debited or credited to the deferred amount as of the designated payout. Amounts deferred into the EDCP may not be withdrawn
at the discretion of the participant and a change to the designated payout delays the initial payment at least five years beyond the originally
designated payout date. In addition, the Company may not limit payout amounts in order to deduct such amounts under Section 162(m) of
the Internal Revenue Code.
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Energy Group |
P-64 |
2024
Proxy Statement |
The
balance of a participant’s account is payable on his or her retirement in either a lump sum payout or in annual installments, at
the election of the participant. Upon the death of a participant after retirement, payouts are made to the deceased participant’s
beneficiary in the same manner as though such payout would have been made to the participant had the participant survived. In the event
of a participant’s termination of employment prior to retirement, the participant may elect to receive a payout beginning the year
after termination in the amount of his or her account balance as of the termination date either in a lump sum or in annual installments
over a period of five years. Disability is not itself a payment event until the participant terminates employment with WEC Energy Group
or its subsidiaries. A participant’s account balance will be paid out in a lump sum if the participant separates from service with
WEC Energy Group or its subsidiaries within 18 months after a change in control of WEC Energy Group, as defined in the plan. The deferred
amounts will be paid out of the general corporate assets or the assets of the Wisconsin Energy Corporation 2014 Rabbi Trust.
The
Legacy EDCP. At the time
of his or her deferral election, each participant designated a prospective payout election for any or the entire amount deferred, plus
any amounts debited or credited to the deferred amount as of the designated payout. A participant may elect, at any time, to withdraw
part (a minimum of $25,000) or all of his or her account balance, subject to a withdrawal penalty of 10%. Payout amounts may be limited
to the extent to which they are deductible by the Company under Section 162(m) of the Internal Revenue Code.
The
balance of a participant’s account is payable on his or her retirement in either a lump sum payout or in annual installments, at
the election of the participant. Upon the death of a participant after retirement, payouts are made to the deceased participant’s
beneficiary in the same manner as though such payout would have been made to the participant had the participant survived. In the event
of a participant’s termination of employment prior to retirement, the participant may elect to receive a payout beginning the year
after termination in the amount of his or her account balance as of the termination date either in a lump sum or in annual installments
over a period of five years. Any participant who suffers from a continued disability will be entitled to the benefits of plan participation
unless and until the committee administering the plan determines that the participant has been terminated for purposes of continued participation
in the plan. Upon any such determination, the disabled participant is paid out as though the participant had retired. Except in certain
limited circumstances, participants’ account balances will be paid out in a lump sum (1) upon the occurrence of a change in control,
as defined in the plan, or (2) upon any downgrade of the Company’s senior debt obligations to less than “investment grade.”
The deferred amounts will be paid out of the general corporate assets or the assets of the Wisconsin Energy Corporation 2014 Rabbi Trust.
Non-Qualified
Retirement Savings Plan
WEC
Energy Group maintains the WEC Energy Group Non-Qualified Retirement Savings Plan (the “NQRSP”) to provide benefits to a select
group of management and highly compensated employees who are subject to the maximum compensation limits and the annual benefit limits
for a tax-qualified defined contribution plan as established by the Internal Revenue Service. Effective January 1, 2015, all newly hired
management employees receive an annual contribution equal to 6% of pension eligible wages (annual base salary and STPP payout) from the
Company into WEC Energy Group’s 401(k) plan, which is a tax-qualified defined contribution plan. The NQRSP provides “make-whole”
benefits to address the Internal Revenue Code limits on the amount of money that can be contributed to the 401(k) plan. Without the NQRSP,
officers would receive a lower benefit as a percent of eligible compensation than the benefit received by other participants in the 401(k)
plan.
In
addition to the compensation requirements, in order to be eligible to participate in the NQRSP the employee must be employed by WEC Energy
Group or one of its subsidiaries on the last day of the plan year and have completed 1,000 hours of service during that year.
Participants
may elect to participate in the WEC Common Stock Fund or the Prime Rate Fund. The Company tracks each participant’s account balance
as though the balance was actually invested in these funds. Fund elections are not actual investments, but are elections chosen only for
purposes of calculating market gain or loss on contributed amounts until the account balance is paid out in full. Each participant may
select the amounts to be allocated among the two measurement funds. Contributions and deductions may be made to each participant’s
account based on the performance of the measurement fund(s) elected. The annual rate of return for the calendar year ended December 31,
2023 for the WEC Energy Group Common Stock Fund and the Prime Rate Fund was -7.00% and 8.15%, respectively.
A
participant’s account vests upon the earliest to occur of (i) completion of one year of service, (ii) a change in control of WEC
Energy Group, (iii) death or (iv) reaching age 59-1/2. Based upon a participant’s payout election, account balances will be
paid or begin to be paid upon a participant’s separation from service or death in either a lump sum or installments of two to 10
years. In the event of a termination of employment within 18 months of a change in control of WEC Energy Group, the participant’s
account balance will be paid in a lump sum. Account balances will be paid out of the general corporate assets or the assets of the Wisconsin
Energy Corporation 2014 Rabbi Trust.
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| WEC
Energy Group |
P-65 |
2024
Proxy Statement |
POTENTIAL
PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
The
tables below reflect the amount of compensation payable to each of our NEOs in the event of termination of each executive’s employment.
These amounts are in addition to each NEO’s aggregate balance in the EDCP and/and, as applicable the NQRSP at fiscal year-end
2023, as reported in the "Aggregate Balance at Last Fiscal Year-End" column under “Nonqualified Deferred Compensation for
Fiscal Year 2023.” The amount of compensation payable to each NEO upon voluntary termination, normal retirement, for-cause termination,
involuntary termination (by the Company for any reason other than cause, death or disability or by the executive for “good reason”),
termination following a “change in control,” disability, and death are set forth below. The amounts shown assume that such
termination was effective as of December 31, 2023 and include amounts earned through that date, and are estimates of the amounts
which would be paid out to the NEOs upon termination. The amounts shown under “Normal Retirement” assume the NEOs were retirement
eligible with no reduction of retirement benefits. The amounts shown under “Termination Upon a Change in Control” assume the
NEOs terminated employment as of December 31, 2023, which was within 18 months of a change in control of WEC Energy Group. The amounts
reported in the row titled “Retirement Plans” in each table below are not in addition to the amounts reflected under “Pension
Benefits at Fiscal Year-End 2023.” The actual amounts to be paid out can only be determined at the time of an officer’s termination
of employment.
Payments
Made Upon Voluntary Termination or Termination for Cause, Death or Disability
In
the event a NEO voluntarily terminates employment or is terminated for cause, death, or disability, the officer will receive:
•accrued
but unpaid base salary and, for termination by death or disability, prorated annual incentive compensation;
•401(k)
plan and EDCP account balances and, with respect to Mr. Klappa and Mmes. Liu and Kelsey, their Non-Qualified Retirement Savings Plan balances;
•the
WEC Energy Group Plan cash balance;
•in
the case of death or disability, full vesting in all outstanding stock options, restricted stock, and performance units (otherwise, the
ability to exercise already vested options within three months of termination) as well as vesting in the SERP and ILAs; and
•if
voluntary termination occurs after age 60, such termination is treated as a normal retirement.
In
addition, certain individuals designated by the Company, including the NEOs, are eligible to receive a supplemental disability benefit
pursuant to the terms of the WEC Energy Group Supplemental Long-Term Disability Plan, in an amount equal to the difference between the
actual amount of the benefit payable under the long term disability plan applicable to all employees and what such disability benefit
would have been if calculated without regard to any limitation imposed by the broad-based plan on annual compensation recognized thereunder.
NEOs
are also entitled to the value of unused vacation days, if any, and for termination by death, benefits payable under the officer life
insurance benefit if the NEO participates in such benefit.
Payments
Made Upon Normal Retirement
In
the event of the retirement of a NEO, the officer will receive:
•accrued
but unpaid base salary and prorated annual incentive compensation;
•full
vesting in all outstanding stock options and a prorated amount of performance units;
•full
vesting in all retirement plans, including the WEC Energy Group Plan, SERP, and ILAs (Ms. Liu would be entitled to full vesting of her
retirement income supplement);
•401(k)
plan and EDCP account balances and, with respect to Mr. Klappa and Mmes. Liu and Kelsey, their Non-Qualified Retirement Savings Plan balances;
and
•the
value of unused vacation days, if any.
Payments
Made Upon Termination of Employment in Connection with a Change in Control
Pursuant
to the terms of the SPP, retirement benefits are paid to all participating NEOs upon termination of employment within 18 months of a change
in control.
Pursuant
to the terms of the WEC Energy Group Omnibus Stock Incentive Plan, amended and restated effective as of May 6, 2021, in the event the
NEO's termination of employment occurs within 24 months following a change in control:
•all
outstanding stock options will vest and become immediately exercisable, and
•all
unvested shares of restricted stock will vest as of the date of termination.
Pursuant
to the terms of the WEC Energy Group Performance Unit Plan, amended and restated effective as of January 1, 2023, in the event an NEO’s
employment is terminated after a change in control without cause or by the NEO for good reason, all unvested performance units will vest
immediately at the target 100% rate.
Payments
under the Severance Pay Plan
None
of the NEOs have entered into an agreement that provides for severance benefits upon a change in control or otherwise. These officers
are eligible to participate in the Company’s Severance Pay Plan, in which all management employees are eligible to participate.
In the event a participant is involuntarily terminated, other than for cause, death, disability, retirement, or resignation, the participant
is entitled to receive severance pay in an amount equal to the sum of: (1) 4% of the participant’s annual base salary and
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| WEC
Energy Group |
P-66 |
2024
Proxy Statement |
target
bonus, plus (2) 4% of the participant’s annual base salary and target bonus multiplied by his or her completed years of service
with the Company. The maximum amount of severance pay that can be received under the plan is twelve months of a participant’s annual
base salary and target bonus.
Payments
under Retention Agreement
See
"Retirement Plans" for a discussion of the terms of a retention agreement between the Company and Mr. Lauber.
Potential
Payments to Named Executive Officers Upon Termination or Change in Control of the Company
The following tables show
the potential payments upon termination or a change in control of the Company for:
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|
Executive
Benefits and
Payments Upon Separation |
Voluntary
Termination
($) |
Normal
Retirement
($) |
For
Cause
Termination
($) |
Involuntary
Termination
($) |
Termination
Upon Change in Control
($) |
Disability
($) |
Death
($) |
| Scott
J. Lauber |
| Compensation: |
|
|
|
|
|
|
|
| Cash
Severance |
— |
— |
— |
2,583,127 |
|
2,583,127 |
|
— |
— |
| Retention
Agreement |
— |
— |
— |
— |
— |
615,000 |
|
615,000 |
|
|
Long-Term
Incentive Compensation: |
|
|
|
|
|
|
|
| Performance
Units |
— |
2,304,322 |
|
— |
— |
4,766,631 |
|
4,766,631 |
|
4,766,631 |
|
| Restricted
Stock |
— |
— |
— |
— |
983,442 |
|
983,442 |
|
983,442 |
|
|
Options
(1) |
— |
— |
— |
— |
— |
— |
— |
| Benefits
& Perquisites: |
|
|
|
|
|
|
|
| Retirement
Plans |
1,586,427 |
|
1,586,427 |
|
1,586,427 |
|
1,586,427 |
|
1,586,427 |
|
1,586,427 |
|
1,580,536 |
|
| Health
and Welfare Benefits |
— |
— |
— |
10,780 |
|
10,780 |
|
— |
— |
| Death
Benefit |
— |
— |
— |
— |
— |
— |
— |
| Total |
1,586,427 |
3,890,749 |
|
1,586,427 |
4,180,334 |
|
9,930,407 |
|
7,951,500 |
|
7,945,609 |
|
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|
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|
|
|
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|
|
|
|
|
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|
|
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| Xia
Liu |
| Compensation: |
|
|
|
|
|
|
|
| Cash
Severance |
— |
— |
— |
229,433 |
|
229,433 |
|
— |
— |
|
Long-Term
Incentive Compensation: |
|
|
|
|
|
|
|
| Performance
Units |
— |
1,096,988 |
|
— |
— |
2,207,585 |
|
2,207,585 |
|
2,207,585 |
|
| Restricted
Stock |
— |
— |
— |
— |
480,106 |
|
480,106 |
|
480,106 |
|
|
Options
(1) |
— |
— |
— |
— |
— |
— |
— |
| Benefits
& Perquisites: |
|
|
|
|
|
|
|
| Retirement
Plans |
— |
957,644 |
|
— |
— |
— |
— |
— |
| Health
and Welfare Benefits |
— |
— |
— |
10,780 |
|
10,780 |
|
— |
— |
| Death
Benefit |
— |
— |
— |
— |
— |
— |
2,390,000 |
|
| Total |
— |
2,054,632 |
|
— |
240,213 |
|
2,927,904 |
|
2,687,691 |
|
5,077,691 |
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
| Gale
E. Klappa |
| Compensation: |
|
|
|
|
|
|
|
| Cash
Severance |
— |
— |
— |
2,271,919 |
|
2,271,919 |
|
— |
— |
|
Long-Term
Incentive Compensation: |
|
|
|
|
|
|
|
| Performance
Units |
— |
825,539 |
|
— |
— |
1,706,684 |
|
1,706,684 |
|
1,706,684 |
|
| Restricted
Stock |
— |
— |
— |
— |
2,167,462 |
|
2,167,462 |
|
2,167,462 |
|
|
Options
(1) |
— |
— |
— |
— |
— |
— |
— |
| Benefits
& Perquisites: |
|
|
|
|
|
|
|
| Retirement
Plans |
20,973,061 |
|
20,973,061 |
|
20,973,061 |
|
20,973,061 |
|
20,973,061 |
|
20,973,061 |
|
— |
| Health
and Welfare Benefits |
— |
— |
— |
10,780 |
|
10,780 |
|
— |
— |
| Death
Benefit |
— |
— |
— |
— |
— |
— |
— |
| Total |
20,973,061 |
|
21,798,600 |
|
20,973,061 |
|
23,255,760 |
|
27,129,906 |
|
24,847,207 |
|
3,874,146 |
|
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|
| WEC
Energy Group |
P-67 |
2024
Proxy Statement |
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|
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|
|
|
Executive
Benefits and
Payments Upon Separation |
Voluntary
Termination
($) |
Normal
Retirement
($) |
For
Cause
Termination
($) |
Involuntary
Termination
($) |
Termination
Upon Change in Control
($) |
Disability
($) |
Death
($) |
| Margaret
C. Kelsey |
| Compensation: |
|
|
|
|
|
|
|
| Cash
Severance |
— |
— |
— |
297,066 |
|
297,066 |
|
— |
— |
|
Long-Term
Incentive Compensation: |
|
|
|
|
|
|
|
| Performance
Units |
— |
588,517 |
|
— |
— |
1,168,049 |
|
1,168,049 |
|
1,168,049 |
|
| Restricted
Stock |
— |
— |
— |
— |
254,109 |
|
254,109 |
|
254,109 |
|
|
Options
(1) |
— |
— |
— |
— |
— |
— |
— |
| Benefits
& Perquisites: |
|
|
|
|
|
|
|
| Retirement
Plans |
— |
— |
— |
— |
— |
— |
— |
| Health
and Welfare Benefits |
— |
— |
— |
10,780 |
|
10,780 |
|
— |
— |
| Death
Benefit |
— |
— |
— |
— |
— |
— |
1,819,000 |
|
| Total |
— |
588,517 |
|
— |
307,846 |
|
1,730,004 |
|
1,422,158 |
|
3,241,158 |
|
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|
|
|
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| Robert
M. Garvin |
| Compensation: |
|
|
|
|
|
|
|
| Cash
Severance |
— |
— |
— |
477,017 |
|
477,017 |
|
— |
— |
|
Long-Term
Incentive Compensation: |
|
|
|
|
|
|
|
| Performance
Units |
— |
517,056 |
|
— |
— |
1,029,410 |
|
1,029,410 |
|
1,029,410 |
|
| Restricted
Stock |
— |
— |
— |
— |
219,263 |
|
219,263 |
|
219,263 |
|
|
Options
(1) |
— |
— |
— |
— |
— |
— |
— |
| Benefits
& Perquisites: |
|
|
|
|
|
|
|
| Retirement
Plans |
1,049,655 |
|
1,049,655 |
|
1,049,655 |
|
1,049,655 |
|
1,049,655 |
|
1,049,655 |
|
1,046,776 |
|
| Health
and Welfare Benefits |
— |
— |
— |
10,780 |
|
10,780 |
|
— |
— |
| Death
Benefit |
— |
— |
— |
— |
— |
— |
1,619,000 |
|
| Total |
1,049,655 |
1,566,711 |
|
1,049,655 |
1,537,452 |
|
2,786,125 |
|
2,298,328 |
|
3,914,449 |
|
(1) The
closing price of WEC Energy Group stock on December 29, 2023 was lower than the strike prices of the unvested stock options granted to
Messrs. Lauber, Klappa, and Garvin, and Mmes. Liu and Kelsey in 2021, 2022 and 2023.
PAY
RATIO DISCLOSURE
The
primary objective of our executive compensation program is to provide a competitive, performance-based plan that enables the Company to
attract and retain key individuals and to reward them for achieving both the Company’s short-term and long-term goals without creating
an incentive for our NEOs to take excessive risks. In line with this objective, the Company’s general pay practice for all management
employees is to target the median pay for each individual’s position at comparably sized companies.
For
2023, the annual total compensation of Mr. Lauber of $9,552,179, as shown in the Summary Compensation Table above (“CEO Compensation”),
was approximately 73 times the annual total compensation of the median employee of $131,029.
We
identified the median employee as of December 31, 2022, using total wages and earnings paid during the rolling 12-month period ended December
31, 2022, as reflected in our internal payroll records (including, without limitation, base salary, wages plus overtime, and annual cash
incentive payments, as applicable), for all individuals who were employed by us or any of our consolidated subsidiaries on December 31,
2022 (whether employed on a full-time, part-time, seasonal or temporary basis and including union and non-union employees). After identifying
the median employee, we calculated annual total compensation for such employee using the same methodology we use for our CEO Compensation,
which includes annual salary, bonus, change in pension value and 401(k) matching by the Company. We decided to use December 31, the last
day of our fiscal year, for administrative convenience to align with other fiscal year-end calculations.
To
provide further context to our pay practices, due to the complexity of the work associated with operating public utilities, our workforce
tends to be more highly skilled than workforces at companies in other industries. Additionally, our employees often work for the Company
for long periods of time; our average employee tenure is 13.5 years.
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| WEC
Energy Group |
P-68 |
2024
Proxy Statement |
RISK
ANALYSIS OF COMPENSATION POLICIES AND PRACTICES
As
part of its process to determine the 2023 compensation of WEC Energy Group’s NEOs, the Compensation Committee analyzed whether WEC
Energy Group’s compensation program taken as a whole, for all employees including the NEOs, creates risks that are reasonably likely
to have a material adverse effect on the Company. The Compensation Committee concluded it does not.
All
management employees (both officers and non-officers) above a certain level are provided with substantially the same mix of compensation
as the NEOs. Incentive opportunities provided under our annual cash incentive plan and long-term equity incentive plan are dependent upon
the achievement of certain performance levels by the Company and largely are "at-risk". Based upon the value of each of these
elements to the overall target compensation program, the relative value each has to the other, and the mix between fixed and variable
pay, we believe the Company’s compensation program is appropriately balanced. In addition, we believe that the mix of short- and
long-term awards minimizes risks that may be taken, as risks taken for short-term gains could ultimately jeopardize the Company’s
ability to meet the long-term performance objectives. Given the current balance of compensation elements, we do not believe WEC Energy
Group’s compensation program incentivizes unreasonable risk-taking by management.
Furthermore,
policies are in place to mitigate compensation-related risk, such as our stock ownership guidelines, prohibitions against hedging and
pledging, and clawback policies.
As
part of this analysis, we also considered the nature of WEC Energy Group’s business as a public utility holding company and the
fact that substantially all of the Company’s earnings and other financial results are generated by, or relate to, regulated public
utilities. The highly regulated nature of WEC Energy Group’s business, including limits on the amount of profit the Company’s
public utility subsidiaries (and therefore, WEC Energy Group) may earn, significantly reduces any incentive to engage in conduct that
would be reasonably likely to have a material adverse effect on the Company.
PAY
VERSUS PERFORMANCE DISCLOSURE
As
described in more detail in “Compensation Discussion and Analysis,” the Company’s executive compensation program has
been designed to provide a level of compensation that is strongly dependent upon the achievement of short-term and long-term goals that
are aligned with the interests of our stockholders and customers. As such, a substantial portion of pay will only be realized upon strong
corporate performance. The Compensation Committee has not designed the compensation program to specifically align the Company’s
performance measures with "compensation actually paid" ("CAP") (as computed in accordance with Item 402(v) of Regulation
S-K) for a particular year. For example, the Company utilizes several performance measures to align executive compensation with Company
performance that are not presented in the Pay versus Performance table below.
The
following tables and supplemental graphical and narrative information present information about CAP, as defined by Item 402(v) of Regulation
S-K, and compares CAP to various performance measures, also in accordance with such rules. CAP is a supplemental measure to be viewed
alongside performance measures as an addition to the philosophy and strategy of compensation-setting discussed in “Compensation
Discussion and Analysis,” and not in replacement thereof.
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| Year | (1) Summary Compensation Table (SCT) Total for PEO ($) | (1,2) Compensation Actually Paid (CAP) to PEO ($) | (3) Average SCT total for non-PEO NEOs ($) | (2,3) Average Compensation Actually Paid to non-PEO NEOs ($) | Value of Initial Fixed $100 investment based on: ($) | Net Income ($) (in millions) | Company Selected Measure |
| Lauber | Fletcher | Lauber | Fletcher | (4) WEC TSR | (5) Peer Group TSR | (6) Adjusted Earnings Per Share (diluted) ($) |
| 2023 | 9,552,179 | — | 5,707,745 | — | 5,188,505 | 2,920,498 | 103.04 | 105.56 | 1,331.7 | 4.63 |
| 2022 | 8,149,461 | 8,151,511 | 9,721,228 | 17,332,947 | 4,358,213 | 5,256,205 | 110.80 | 113.90 | 1,408.1 | 4.45 |
| 2021 | — | 18,481,871 | — | 14,249,651 | 4,911,241 | 4,273,523 | 111.34 | 111.43 | 1,300.3 | 4.11 |
| 2020 | — | 18,136,171 | — | 15,590,856 | 4,686,918 | 4,030,865 | 102.49 | 95.16 | 1,199.9 | 3.79 |
(1)
(2)
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| WEC
Energy Group |
P-69 |
2024
Proxy Statement |
(3)
(4)
(5)
(6)
Most
Important Performance Measures
The
following represents the most important financial performance measures used by WEC Energy Group to link compensation actually paid to
each NEO for 2023, the most recently completed fiscal year, to company performance:
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| | | | | | |
| Adjusted Earnings Per Share | | Net Income | | Cash Flow | | Return on Equity |
Achievement
of the Company’s goals with respect to the financial measures highlighted above should drive strong TSR performance for the Company
relative to its peers, which is an important component of our compensation program as more fully described in “Compensation Discussion
and Analysis – Long-Term Incentive Compensation".
Supplemental
Graphs
The
following graphs and descriptions are provided in accordance with Item 402(v) of Regulation S-K to show the relationships between the
compensation actually paid for each of the PEOs, as well as the other NEOs as a group, to 1) the cumulative TSR of the Company as it relates
to the TSR of the Custom Peer Index Group, 2) net income, and 3) adjusted earnings per share, which is also the Company-selected performance
measure for the 2023 fiscal year.
In
2022, Mr. Fletcher was succeeded by Mr. Lauber as CEO. Mr. Fletcher’s “compensation actually paid” includes the accelerated
vesting of all unvested long-term incentive awards upon his retirement.
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| WEC
Energy Group |
P-70 |
2024
Proxy Statement |
CAP
v. TSR
As
demonstrated in the following graph, the amount of compensation paid to the PEOs and the average compensation paid to the other NEOs was
aligned with the Company’s TSR performance. A substantial portion of the compensation awarded to each of the NEOs is long-term incentive
compensation. For most of the NEOs, performance unit awards comprise 65% of the long-term incentive compensation granted each year, with
vesting primarily based upon the Company’s TSR performance against its peer group. As discussed further in “Compensation Discussion
and Analysis,” the performance units granted in 2021, which vested at the end of the three-year performance period ended December
31, 2023, provided a payout that was significantly less than target. See the Five-Year Cumulative Return and Total Stockholder Returns
graphs in “Compensation Discussion and Analysis – Executive Summary” for information on the Company’s TSR performance
over the 5- and 10-year periods ended December 31, 2023, which exceeded the performance of its peer group.
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| WEC
Energy Group |
P-71 |
2024
Proxy Statement |
CAP
v. WEC Net Income and Adjusted Earnings Per Share (Company-Selected Measure)
As
demonstrated by the following graphs, during the cumulative four-year period ended December 31, 2023, the compensation paid to the PEOs
and the average compensation paid to the other NEOs was aligned with the Company’s net income and EPS performance. In 2023, WEC
Energy Group's EPS performance is shown on an adjusted (non-GAAP) basis. Pursuant to the terms of the Company’s short-term performance
plan, in 2023, almost 75% of the payout was based upon the Company’s adjusted EPS performance, and almost 25% was based upon the
Company’s performance against cash flow goals. As discussed further in “Compensation Discussion and Analysis,” for 2023,
the maximum level payout under the Company’s short-term performance plan with respect to EPS was set at the top of the Company’s
EPS guidance range for 2023. The Company’s strong performance against the EPS and cash flow goals in 2023 resulted in maximum level
payouts for each measure.
WEC Energy Group’s
earnings per share on a GAAP basis were $4.22 for 2023, which includes a $0.41 per share non-cash charge to earnings related to the Illinois
Commerce Commission’s (the “ICC”) disallowance of an aggregate of $178.9 million of previously incurred capital costs
as part of its decisions in the rate cases of the Company’s Illinois utilities. Excluding this charge, WEC Energy Group’s
adjusted earnings per share were $4.63. The ICC’s disallowance of previously incurred capital costs of this nature is highly unusual
and not indicative of WEC Energy Group’s operating performance. As a result, the Compensation Committee determined that the Company’s
performance against the earnings per share targets should be measured using adjusted earnings per share. See Appendix A for net income
presented on an adjusted basis (non-GAAP) along with a reconciliation to net income, presented on a GAAP basis. In the graph below, net
income is presented on a GAAP basis. EPS is presented on an adjusted (non-GAAP) basis for 2023 and on a GAAP basis for years prior to
2023.
*
Earnings per share for 2020, 2021 and 2022 are presented on a GAAP basis.
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| WEC
Energy Group |
P-72 |
2024
Proxy Statement |
WEC Energy Group Common
Stock Ownership
Beneficial
Ownership. The following
table lists the beneficial ownership of WEC Energy Group common stock of each director, director nominee, NEO, and of all of the directors
and executive officers as a group as of January 31, 2024. In general, “beneficial ownership” includes those shares as
to which the indicated persons have voting power or investment power and stock options that are exercisable currently or within 60 days
of January 31, 2024. Included are shares owned by each individual’s spouse, minor children, or any other relative sharing the
same residence, as well as shares held in a fiduciary capacity or held in WEC Energy Group’s Stock Plus Investment Plan and WEC
Energy Group’s 401(k) plans. None of these persons beneficially owns more than 1% of the outstanding common stock.
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| Name |
Shares
Beneficially Owned (1) |
|
Shares
Owned (2)
(3) (4) |
Option
Shares Exercisable Within 60 Days |
Total |
| Ave
M. Bie |
3,543 |
|
— |
3,543 |
|
|
| Curt
S. Culver |
5,326 |
|
— |
5,326 |
|
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| Danny
L. Cunningham |
6,710 |
|
— |
6,710 |
|
|
| William
M. Farrow III |
6,032 |
|
— |
6,032 |
|
|
| Cristina
A. Garcia-Thomas |
3,991 |
|
— |
3,991 |
|
|
| Robert
M. Garvin |
13,759 |
|
75,236 |
88,995 |
|
|
| Maria
C. Green |
1,968 |
|
— |
1,968 |
|
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| Margaret
C. Kelsey |
13,134 |
|
80,076 |
93,210 |
|
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| Gale
E. Klappa |
278,929 |
|
333,848 |
612,777 |
|
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| Thomas
K. Lane |
11,377 |
|
— |
11,377 |
|
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| Scott
J. Lauber |
49,423 |
|
171,212 |
220,635 |
|
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| Xia
Liu |
17,391 |
|
74,535 |
91,926 |
|
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| Ulice
Payne, Jr. |
22,830 |
|
— |
22,830 |
|
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| Mary
Ellen Stanek |
4,483 |
|
— |
4,483 |
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| Glen
E. Tellock |
6,253 |
|
— |
6,253 |
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|
All directors and executive
officers as a group (22 persons) (5) |
494,615 |
(6) |
887,050 |
1,381,665 |
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(7) |
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(1)Information
on beneficially owned shares is based on data furnished by the specified persons and is determined in accordance with Rule 13d-3
under the Securities Exchange Act of 1934, as amended, as required for purposes of this proxy statement. It is not necessarily to
be construed as an admission of beneficial ownership for other purposes.
(2)Certain
directors, NEOs, and other executive officers also hold share units in the WEC Energy Group phantom common stock account under
WEC
Energy Group’s deferred compensation plans, and with respect to Mmes. Kelsey and Liu, under the Non-Qualified Retirement Savings
Plan, as indicated: Director Culver (126,391), Director Cunningham (14,745), Director Farrow (6,750), Director Garcia-Thomas
(5,165), Mr. Garvin (7,117), Director Green (6,750), Ms. Kelsey (14,847), Director Lane (9,539), Director Lauber (1,423),
Ms. Liu (14,628), Director Payne (2,458), Director Stanek (43,081), and all directors and executive officers as a group (266,112).
Share units are intended to reflect the performance of WEC Energy Group common stock and are payable in cash. While these units do not
represent a right to acquire WEC Energy Group common stock, have no voting rights, and are not included in the number of shares reflected
in the “Shares Owned” column in the table above, the Company listed them in this footnote because they represent an additional
economic interest of the directors, NEOs, and other executive officers that is tied to the performance of WEC Energy Group common stock.
(3)Each
individual has sole voting and investment power as to all shares listed for such individual, except the following individuals have shared
voting and/or investment power (included in the table above) as indicated: Director Culver (1,837), Chairman Klappa (244,243),
Director Stanek (2,601), Director Tellock (4,371), and all directors and executive officers as a group (256,382). In addition,
Director Lane disclaims beneficial ownership of (i) 7,715 shares held by a limited liability company, which is owned by two trusts for
the benefit of Director Lane's immediate family members and (ii) 45 shares held by three family trusts for the benefit of Director Lane's
immediate family members.
(4)The
directors and executive officers hold shares of restricted stock (included in the table above) over which the holders have sole voting
but no investment power: Director Bie (1,882), Director Culver (1,882), Director Cunningham (1,882), Director Farrow (1,882),
Director Garcia-Thomas (1,882), Mr. Garvin (3,618), Director Green (1,882), Ms. Kelsey (4,050), Chairman Klappa (30,539),
Director Lane (1,882), Director Lauber (19,276), Ms. Liu (7,804), Director Payne (1,882), Director Stanek (1,882), and
Director Tellock (1,882), and all directors and executive officers as a group (95,114).
(5)Includes
director, director nominees and current executive officers.
(6)None
of the shares beneficially owned by the directors, NEOs, or all directors and executive officers as a group are pledged as security.
(7)Represents
approximately 0.44% of total WEC Energy Group common stock outstanding on January 31, 2024.
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| WEC
Energy Group |
P-73 |
2024
Proxy Statement |
Owners
of More than 5%. The
following table shows stockholders who reported beneficial ownership of more than 5% of WEC Energy Group common stock, based on the information
they have reported. This information is based upon Schedule 13G filed with the SEC and reflects stock holdings as of December 31,
2023. These holdings have not been otherwise adjusted for stock activity that may have occurred since December 31, 2023, if any.
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Name and Address (1) |
Voting
Authority |
Dispositive
Authority |
Total
Shares
Beneficially Owned |
Percent
of WEC
Common Stock |
| Sole |
Shared |
Sole |
Shared |
The
Vanguard Group
100 Vanguard Blvd.
Malvern, PA 19355 |
— |
545,123 |
40,168,623 |
|
1,499,458 |
41,668,081 |
|
13.21% |
|
BlackRock, Inc.
50 Hudson Yards
New York, NY 10001 |
27,209,302 |
|
— |
28,785,394 |
|
— |
28,785,394 |
|
9.10% |
|
State Street Corporation
1 Congress Street, Suite
1
Boston, MA 02114 |
— |
10,975,455 |
|
— |
17,806,217 |
|
17,860,650 |
|
5.66% |
(1)Filed
on behalf of itself and certain of its subsidiaries.
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| WEC
Energy Group |
P-74 |
2024
Proxy Statement |
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PROPOSAL
4: AMENDMENT OF
OUR RESTATED ARTICLES OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK |
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What
am I voting on?
The
Board has adopted and approved, and is recommending to stockholders for approval, an amendment to our Restated Articles of Incorporation,
as amended (the “Restated Articles”), to increase the number of authorized shares of common stock from 325 million to 650
million and a corresponding increase to the number of authorized shares of all classes of capital stock from 340 million to 665 million.
The proposed amendment would not affect the number of authorized shares of preferred stock, which would remain unchanged at 15 million
shares. |
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Voting
Recommendation:
✓
FOR the amendment of
our Restated Articles of Incorporation to Increase the Number of Authorized Shares of Common Stock
The
Board recommends a vote FOR this proposal. The affirmative vote of a majority of the outstanding shares of our common stock is needed
to approve the amendment to the Restated Articles. Proxies submitted without direction pursuant to this solicitation will be voted “FOR”
approval of the amendment. Shares not voted, whether by abstention or otherwise, will have the effect of votes against this matter. |
Under our Restated Articles,
the total number of shares of all classes of stock which the Company has the authority to issue is 340 million. Of these authorized shares,
common stock comprises 325 million shares and preferred stock comprises 15 million shares. As of January 31, 2024, 315,561,510 shares
of common stock were issued, with 3,524,021 shares of common stock reserved for possible future issuance under our omnibus stock incentive
plan, stock purchase and dividend reinvestment plan, and employee retirement savings plans. Approximately 5,914,469 authorized shares
of common stock remain available for issuance for future purposes and the Board deems it advisable to increase our authorized shares of
common stock. The adoption of the proposed amendment would provide for an additional 325 million shares of common stock for future issuance.
We do not have any shares of preferred stock outstanding.
The
following table sets forth the number of authorized, outstanding, and reserved shares of common stock, as of January 31, 2024:
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Total Authorized Shares
of Common Stock |
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325,000,000 |
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Less: Issued and Outstanding
Shares, including Treasury |
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315,561,510 |
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Shares of Common Stock
Available for Future Issuance |
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9,438,490 |
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Shares of Common Stock
Reserved for Future Issuance Under: |
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Omnibus
Stock Incentive Plan |
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2,022,799 |
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Stock
Purchase and Dividend Reinvestment Plan |
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746,122 |
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Employee
Retirement Savings Plans |
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755,100 |
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Total Shares of Common
Stock Reserved for Future Issuance |
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3,524,021 |
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Shares Available for Future
Issuance, Less Reserved Shares |
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5,914,469 |
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We continue to make significant
investment in our electric generation, distribution and transmission and natural gas distribution networks to better serve our nearly
4.7 million utility customers, as well as invest in renewable energy projects through our non-utility energy infrastructure segment. Those
investments are expected to total approximately $23.7 billion during the five-year period of 2024 through 2028. We expect to finance those
investments primarily through a combination of cash from operations and the issuance of additional debt and equity securities. Effective
January 1, 2024, we started to issue new shares of common stock through our stock plans, and we expect to issue additional equity, including
through at-the-market programs, to fund the incremental needs of our capital plan in the coming years, as well as to maintain quality
credit metrics as our investments continue.
The Board believes that
it is advisable and in the best interests of our stockholders to increase the number of authorized shares of common stock to provide us
with greater flexibility in considering and planning for future business needs, including raising additional capital through the sale
of equity securities and other equity-linked securities, satisfying purchases under our employee retirement savings plans and stock purchase
and dividend reinvestment plan, granting equity incentive awards to employees (subject to any required future stockholder approvals under
equity plans), potential strategic transactions, stock dividends, stock splits, and other general corporate purposes. Approval of this
amendment by stockholders at the Annual Meeting will enable us to take timely advantage of market conditions and other opportunities that
may become available to us without the expense and delay of arranging a special meeting of stockholders in the future. If the proposed
amendment is adopted, we would be permitted to issue the authorized shares of common stock without further stockholder approval, except
to the extent otherwise required by law, any rules or listing requirements of the NYSE, or by the Restated Articles.
Existing holders of shares
of our common stock have no preemptive rights under our Restated Articles to purchase any additional shares of common stock issued by
the Company. The additional shares of common stock, if and when issued, would have the same
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| WEC
Energy Group |
P-75 |
2024
Proxy Statement |
rights and privileges as
the shares of common stock currently authorized. Approval of this proposal and the issuance of additional authorized shares of common
stock would not affect the rights of the holders of currently outstanding shares of our common stock, except for the effects incidental
to increasing the number of shares outstanding. The effects include dilution of voting power of existing stockholders and decreased earnings
per share.
We have not proposed the
increase in the authorized number of shares of common stock with the intention of using the additional shares for anti-takeover purposes,
although an issuance of additional shares could, in certain circumstances, make an attempt to acquire control of the Company more difficult.
Although this proposal to increase the authorized number of common shares has been prompted by business and financial considerations and
not by the threat of any known or threatened takeover attempt, shareholders should be aware that approval of this proposal could facilitate
future efforts by the Company to oppose change in control of the Company and perpetuate the Company’s management, including transactions
in which the shareholders might otherwise receive a premium for their shares over the then-current market price.
The Board has approved,
and is now submitting for approval by our stockholders, an amendment to Article III of the Restated Articles to increase the number of
authorized shares of common stock from 325 million to 650 million and a corresponding increase to the number of authorized shares of capital
stock from 340 million to 665 million. The Board has determined that the amendment is advisable and in the best interest of our stockholders.
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| WEC
Energy Group |
P-76 |
2024
Proxy Statement |
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PROPOSAL
5: STOCKHOLDER PROPOSAL
REGARDING SIMPLE MAJORITY VOTE |
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Mr.
John Chevedden, 2215 Nelson Avenue, No. 205, Redondo Beach, CA 90278, holder of at least 60 shares of WEC Energy Group’s common
stock, has notified us that he intends to present the proposal set forth below at the Annual Meeting. We are not responsible for any inaccuracies
or omissions in the proposal or supporting statement, both of which are exactly as submitted by Mr. Chevedden. |
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Voting
Recommendation:
The
Board of Directors is not recommending a vote for or against the proposal.
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RESOLVED,
Shareholders request that our board take each step necessary so that each voting requirement in our charter and bylaws (that is explicit
or implicit due to default to state law) that calls for a greater than simple majority vote be replaced by a requirement for a majority
of the votes cast for and against applicable proposals, or a simple majority in compliance with applicable laws. If necessary this means
the closest standard to a majority of the votes cast for and against such proposals consistent with applicable laws. This includes making
the necessary changes in plain English.
Shareholders
are willing to pay a premium for shares of companies that have excellent corporate governance. Supermajority voting requirements have
been found to be one of 6 entrenching mechanisms that are negatively related to company performance according to "What Matters in
Corporate Governance" by Lucien Bebchuk, Alma Cohen and Allen Ferrell of the Harvard Law School. Supermajority requirements are used
to block initiatives supported by most shareowners but opposed by a status quo management.
This
proposal topic won from 74% to 88% support at Weyerhaeuser, Alcoa, Waste Management, Goldman Sachs, FirstEnergy, McGraw-Hill and Macy's.
These votes would have been higher than 74% to 88% if more shareholders had access to independent proxy voting advice. This proposal topic
also received overwhelming 98%-support each at the 2023 annual meetings of American Airlines (AAL) and The Carlyle Group (CG).
This
is a corporate governance improvement proposal that the WEC Energy Group Board of Directors should have put to a shareholder vote on its
own initiative years ago.
Board
Response and Recommendation
Although we disagree with
some of the opinions in the proposal’s supporting statement, the Board of Directors is not recommending a vote for or against the
proposal. Rather, the Board of Directors is interested in the viewpoints of the Company’s stockholders and will evaluate the voting
results on the proposal, together with additional stockholder input received in the course of our regular stockholder engagement program,
in determining what actions it will take.
Approval, on a non-binding
advisory basis, of the request that the Board take the steps necessary to have each voting requirement in our charter and bylaws be a
majority vote standard as described in the proposal, requires the affirmative vote of a majority of the votes cast in person or by proxy
at the 2024 Annual Meeting of Stockholders. Presuming a quorum is present, shares not voted, whether by broker non-vote, abstention, or
otherwise, have no effect on the outcome of this matter. Stockholders should note this proposal is advisory in nature only and approval
of this proposal would not, by itself, implement a majority vote standard as described in the proposal.
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| WEC
Energy Group |
P-77 |
2024
Proxy Statement |
Annual
Meeting Attendance and Voting Information
BUSINESS
OF THE 2024 ANNUAL MEETING OF STOCKHOLDERS
Proposal
1: Election of Twelve Directors for Terms Expiring in 2025.
The Board recommends a vote FOR
each of the nominees. The twelve individuals will be elected as directors if the number of votes cast favoring such nominee’s election
exceeds the number of votes cast opposing that nominee’s election. Presuming a quorum is present, shares not voted, whether by broker
non-vote, abstention, or otherwise, have no effect on the outcome of this matter.
Proposal
2: Ratification of Deloitte & Touche LLP as Independent Auditors for 2024.
The Board recommends
a vote FOR
this proposal. Ratification of the independent auditors requires the affirmative vote of a majority of the votes cast. Presuming a quorum
is present, shares not voted, whether by abstention or otherwise, have no effect on the outcome of this matter.
Proposal
3: Advisory Vote to Approve Compensation of the Named Executive Officers, Commonly Referred to as a “Say-on-Pay” Vote.
The Board recommends a vote FOR
this proposal. Approval, on a non-binding, advisory basis, of the compensation of the NEOs requires the affirmative vote of a majority
of the votes cast. Presuming a quorum is present, shares not voted, whether by broker non-vote, abstention, or otherwise, have no effect
on the outcome of this matter. Because your vote is advisory, it will not be binding on the Board or the Company. However, the Compensation
Committee will review the voting results and take them into consideration when making future compensation decisions.
Proposal
4: Amendment of our Restated Articles of Incorporation to increase the Number of Authorized Shares of Common Stock.
The Board recommends
a vote FOR
this proposal. The affirmative vote of a majority of the outstanding shares of our common stock is needed to approve the amendment to
the Restated Articles. Proxies submitted without direction pursuant to this solicitation will be voted FOR approval of the amendment.
Shares not voted, whether by abstention, or otherwise, will have the effect of votes against this matter.
Proposal
5: Stockholder Proposal Regarding Simple Majority Vote.
Although we disagree
with some of the opinions in the proposal’s supporting statement, the Board is not recommending a vote for or against the proposal.
Rather, the Board is interested in the viewpoints of the Company’s stockholders and will evaluate the voting results on the proposal,
together with additional stockholder input received in the course of our regular stockholder engagement program, in determining what actions
it will take. Approval, on a non-binding, advisory basis, of the request that the Board take the steps necessary to have each voting requirement
in our charter and bylaws be a majority voting standard as described in the proposal, requires the affirmative vote of a majority of the
votes cast. Presuming a quorum is present, shares not voted, whether by broker non-vote, abstention, or otherwise, have no effect on the
outcome of this matter. Stockholders should note that as this proposal is advisory in nature only, approval of this proposal would not,
by itself, implement a majority vote standard.
The
Company is not aware of any other matters that will be voted on. If a matter does properly come before the 2024 Annual Meeting of Stockholders
(the "Meeting"), the persons named as the proxies in the form of proxy will vote the proxy at their discretion.
VOTING
INFORMATION
Who can vote?
Stockholders
of record as of the close of business on March 11, 2024 (the “Record Date”) can vote. Each outstanding share of WEC Energy
Group common stock is entitled to one vote upon each matter presented.
A
list of stockholders entitled to vote at the Meeting will be available for inspection by stockholders at 231 W. Michigan Street, Milwaukee,
Wisconsin 53203, prior to the Meeting. Please email us at Stockholder-Services@wecenergygroup.com to arrange to inspect the list.
The list will also be available on the virtual meeting website during the Meeting for individuals logged into the Meeting as stockholders.
What is the difference
between being a registered stockholder and a beneficial owner?
Registered
Stockholder: If on
the Record Date, your shares were registered directly in your name with our transfer agent, Computershare, then you are considered the
stockholder of record with respect to those shares. There are several ways for you to vote your shares or submit your proxy, as detailed
below under “How do I vote?”.
Beneficial
Owner:
If on the Record Date,
your shares were held in an account with a brokerage firm, bank or other nominee, then you are the beneficial owner of the shares, and
those shares are considered to be held in “street name.” Your brokerage, bank or other nominee is considered the stockholder
of record with respect to those shares. As a beneficial owner, you have the right to direct your broker or bank on how to vote the shares
held in your account as explained below under “How do I vote?”. Your broker is permitted to vote your shares on routine
matters such as the ratification of the independent auditors, even if it does not receive voting instructions from you. However, for matters
considered non-routine, which includes proposals 1, 3, and 5, your broker will not be permitted to vote your shares unless you submit
your voting instruction form to your broker, bank or other nominee. Alternatively, you may vote during the Meeting only if you registered
in advance with Computershare to attend the Meeting, as described below under the heading "How do I register in advance to participate
in the Meeting?”.
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| WEC
Energy Group |
P-78 |
2024
Proxy Statement |
How do I vote?
Registered
Stockholder: If you
are a registered stockholder, there are several ways for you to vote your shares or submit your proxy:
By
Internet before
the Meeting. The Company
encourages you to vote this way. Please visit www.envisionreports.com/WEC and follow the instructions on the secure site.
By
Internet during
the
Meeting. You may vote
your shares online during the Meeting by following the instructions provided on the meeting website: www.meetnow.global/M4ACHZT.
Even if you plan to attend the virtual Meeting, we recommend that you vote by Internet, phone or mail before the Meeting.
By
phone. In the U.S. or
Canada you can vote your shares toll-free by calling 1-800-652-8683.
By
mail. You can vote by
completing, signing and dating each proxy card received and returning it in the prepaid envelope. Sign your name exactly as it appears
on the proxy card.
Beneficial
Owner:
Follow the voting instructions
you receive from your broker, bank or other nominee. If you would like to be able to vote during the Meeting, you must register with Computershare
in advance. See the heading titled “How
do I register in advance to participate in the Meeting?” for more information.
Special
Instructions for Shares Held in the Company’s Stock Plus Plan and ESOP Fund.
If you are a participant in WEC Energy Group’s Stock Plus Investment Plan ("Stock Plus") or own shares through investments
in the WEC Energy Group Common Stock ESOP Fund in any of WEC Energy Group’s 401(k) plans, your proxy will serve as voting instructions
for your shares held in those plans. The administrator for Stock Plus and the trustee for WEC Energy Group’s 401(k) plans will vote
your shares as you direct. If a proxy is not returned for shares held in Stock Plus, the administrator will not vote those shares. If
a proxy is not returned for shares held in WEC Energy Group’s 401(k) plans, the trustee will vote those shares in the same proportion
that all shares in the WEC Energy Group Common Stock ESOP Fund in each respective 401(k) plan, for which voting instructions have been
received, are voted.
Can
I change my vote?
Registered
Stockholder: You
may change your vote or revoke your proxy by any of the following methods:
•Entering
a new vote by Internet or phone before the polls close;
•Returning
a later-dated proxy card that is received prior to the Meeting;
•Entering
a new vote online during the Meeting before the polls close; or
•Notifying
WEC Energy Group’s Corporate Secretary by written revocation letter that is received prior to the Meeting. Any revocation should
be filed with the Corporate Secretary, Margaret C. Kelsey, at WEC Energy Group’s principal business office, PO Box 1331,
Milwaukee, Wisconsin 53201.
Beneficial
Owner:
You may submit new voting
instructions by contacting your broker, bank, or other nominee. You may also change your vote or revoke your voting instructions during
the Meeting if you registered in advance with Computershare to participate in the Meeting. See the sub-heading titled “How
do I register in advance to participate in the Meeting?” under "Annual Meeting Attendance" for more information.
What does it mean if I
get more than one Notice Regarding the Availability of Proxy Materials (the “Notice”), proxy card, or voting instruction form?
It
means your shares are held in more than one stock account. For each Notice you receive, please enter your vote on the Internet for each
control number you have been assigned. If you receive paper copies of proxy materials, please provide voting instructions for all proxy
cards and voting instruction forms you receive.
What constitutes a quorum?
As
of the Record Date, there were 315,434,531 shares of WEC Energy Group common stock outstanding. In order to conduct the Meeting, a majority
of the outstanding shares entitled to vote must be represented virtually or by proxy. This is known as a “quorum.” Abstentions
and broker non-votes are counted as “present” for the purpose of determining the presence of a quorum. Shares voted by a broker,
bank, or other nominee who has discretionary voting power and exercises such discretion to vote your shares on a proposal where you did
not provide voting instructions are known as “broker non-votes.”
Who conducts the proxy
solicitation?
The
Board is soliciting these proxies. WEC Energy Group will bear the cost of the solicitation of proxies. The Company contemplates that proxies
will be solicited principally through the use of the mail, but employees of WEC Energy Group or our subsidiaries may solicit proxies by
phone, personally, or by other communications, without compensation apart from their normal salaries. WEC Energy Group has retained Morrow
Sodali LLC to assist in the solicitation of proxies for a fee of $24,000 plus reimbursement of expenses. WEC Energy Group will also reimburse
brokers, banks, and other nominees for forwarding proxy materials to beneficial stockholders.
Who will count the votes?
A
representative of Computershare will tabulate the votes and act as the inspector of election.
Where can I find the voting
results from the Meeting?
The Meeting voting results
will be published in a Form 8-K that will be filed within four business days of the Meeting. SEC filings are available under the "Investors"
section on the Company’s website at www.wecenergygroup.com.
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| WEC
Energy Group |
P-79 |
2024
Proxy Statement |
ACCESS
TO PROXY MATERIALS
Why did I receive a separate
Notice instead of printed proxy materials?
Pursuant
to rules adopted by the SEC, we are providing access to our proxy materials over the Internet. Accordingly, we began mailing a separate
Notice to stockholders on or about March 28, 2024, instead of a full set of our printed proxy materials. The Notice is not a proxy card
and cannot be used to vote your shares. However, the Notice includes instructions on how to access our proxy materials online and vote
your shares.
If
you are a registered stockholder, you may request a printed set of proxy materials by (1) logging on to www.envisionreports.com/WEC
and following the applicable instructions, (2) calling 866-641-4276, or (3) sending an email requesting a paper copy of current meeting
materials to investorvote@computershare.com with "Proxy Materials WEC Energy Group" in the subject line and include your full
name and address plus the number located in the shaded bar on the Notice.
If
you are a beneficial owner, please refer to the instructions provided by your broker, bank or other nominee on how to access our proxy
materials and vote.
What practices may stockholders
follow that are friendly to the environment and help reduce printing and postage costs?
Stockholders
may wish to participate in the following:
•View
the following documents online at www.envisionreports.com/WEC
•Notice
of Annual Meeting
•Proxy
Statement
•2023
Annual Report
•Form
of Proxy
•Vote
your proxy by phone or Internet. Page P-4
•Choose
to receive future proxy materials and annual reports electronically instead of receiving paper copies.
If you are a registered stockholder and received a paper copy of our proxy materials or a paper notice this year, you may elect to receive
access to future copies of these documents and other stockholder communications (e.g., investment plan statements, tax documents, and
more) electronically by (1) following the instructions when voting by Internet or by phone, or (2) registering for our eDelivery paperless
communication program. If you are a beneficial owner, please refer to the instructions provided by your broker, bank or other nominee
on how to elect to receive online access to our future proxy materials and annual reports.
•Choose
our eDelivery paperless communication program for all your stockholder needs.
Electronic distribution gives stockholders faster delivery of account documents and saves the Company and our stockholders the cost of
printing and mailing these materials. eDelivery also provides you with fast and secure 24/7 online access to proxy materials, investment
plan statements, tax documents, and more. You may access your registered stockholder account and sign up for eDelivery at www.computershare.com/investor.
•Sign
up for Householding.
“Householding” is a delivery method that allows for only one paper copy of the Annual Report and Proxy Statement to be delivered
to stockholders who reside at the same address. If you are a registered stockholder and received multiple paper copies of the Annual Report
and Proxy Statement, you may wish to contact the Company’s transfer agent, Computershare, at 800-558-9663, to request householding,
or you may provide written instructions to WEC Energy Group, c/o Computershare, PO Box 43078, Providence, RI 02940-3078. If you wish
to receive separate copies of the Annual Report and Proxy Statement now or in the future, or to discontinue householding entirely, you
may contact Computershare using the contact information provided above. Upon request, the Company will promptly send a separate copy of
the document. Whether or not a stockholder is householding, each stockholder will continue to receive a proxy card. If your shares are
held through a bank, broker, or other holder of record, you may request householding by contacting the holder of record.
ANNUAL
MEETING ATTENDANCE
What is the date, time
and place of the Meeting?
The
Meeting will be held at 1:30 p.m. Central time on Thursday, May 9, 2024. The Meeting will be a virtual-only meeting via live webcast
at www.meetnow.global/M4ACHZT. No physical meeting will be held. Consistent with our prior virtual meetings, we will offer stockholder
rights and participation opportunities during the Meeting that are similar to our past in-person annual meetings. As discussed below,
stockholders who are registered for the Meeting may attend the Meeting, vote, submit questions and examine the stockholders list.
How can I participate in
the Meeting?
The
Meeting will take place online at www.meetnow.global/M4ACHZT. In order to be admitted to participate in the Meeting, including to
vote, submit a question, or examine the stockholders list, you must be registered for the Meeting. Registered stockholders (as described
under the sub-heading “What is the difference between being a registered stockholder and a beneficial owner?” under "Voting
Information" above) will be automatically registered to participate in the Meeting. You will need to enter the 15-digit control number
located in the shaded bar on the Notice, proxy card or email notification that you received in order to enter the Meeting. If you are
a beneficial owner and registered in advance to participate in the Meeting, you will need to enter the control number that you received
from Computershare in order to be admitted to participate in the Meeting. If you have questions about your control number, please contact
Computershare at 800-558-9663.
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| WEC
Energy Group |
P-80 |
2024
Proxy Statement |
If
you have misplaced your control number on the Meeting date, are a beneficial owner who did not register in advance, or are not a stockholder,
you may access the Meeting by going to www.meetnow.global/M4ACHZT and entering as a guest, but you will not be able to vote, ask questions,
or inspect the stockholders list.
We encourage you to log
in 15 minutes early to ensure ample time for the check-in process. Access to the online meeting will begin at 1:15 p.m. Central time.
A replay of the Meeting will be made available under the "Investors" section on WEC Energy Group’s website at
www.wecenergygroup.com/invest/annualmtg.htm
following the Meeting and will remain available until WEC Energy Group’s 2025 Annual Meeting of Stockholders. Recording of the Meeting
by camera, sound, or video recording devices is strictly prohibited.
How do I register in advance
to participate in the Meeting?
If
you are a registered stockholder, you do not need to register in advance to participate in the Meeting. However, please have your control
number available on the Meeting date, which can be found on the Notice, proxy card or email notification that you received.
If
you are a beneficial owner you must register and obtain a control number in advance to participate in the Meeting, including to vote,
submit a question, or examine the stockholders list. First, follow the instructions provided to you by your broker, bank or other nominee
for obtaining a legal proxy, or contact them to request a legal proxy form. Once you have received a legal proxy from that entity, you
must submit proof of the legal proxy to Computershare. The request must be labeled as “Legal Proxy” and be received by Computershare
no later than 5:00 p.m. Eastern time on May 6, 2024 at the email address or physical address below. Upon receipt of your registration
materials, Computershare will provide you with a confirmation of your registration and a control number.
•By
mail: send your legal proxy to Computershare at the following address:
•By
email: send an email with your legal proxy to legalproxy@computershare.com, labeled as “Legal Proxy.”
Computershare
WEC
Energy Group Legal Proxy
PO
Box 43001
Providence,
RI 02940-3001
What if I have trouble
accessing the Meeting?
The
virtual meeting website is fully supported across most browsers (MS Edge, Firefox, Chrome and Safari) and devices (desktops, laptops,
tablets and cell phones) running the most up-to-date version of applicable software and plugins. Participants should ensure that they
have a strong WiFi connection wherever they intend to participate in the Meeting. We encourage you to access the Meeting prior to the
start time. A link on the main virtual meeting website will provide further assistance should you need it or you may call 888-724-2416.
Can I ask questions during
the Meeting?
If
you are registered to participate in the Meeting and enter a control number, you will be able to submit questions live during the Meeting
on the virtual meeting site. We look forward to answering your questions during the Meeting. In the unlikely event there are any questions
that cannot be addressed due to time constraints, we will post answers to such questions on our company website, where you will also be
able to access a complete audio replay of the Meeting. All questions must comply with the rules of conduct, which will be posted on the
virtual meeting website. If we receive substantially similar questions, we may group such questions together and provide a single response
to avoid repetition and allow more time for other questions. Questions that are repetitious, not relevant to the business of the Company,
or otherwise out of order or not suitable for Meeting conduct will not be addressed. If you have a matter of individual concern, please
feel free to email us at Stockholder-Services@wecenergygroup.com.
Who do I contact if I have
questions about the meeting?
If you need more information
about the Meeting, email us at Stockholder-Services@wecenergygroup.com, or write to Stockholder Services, PO Box 1331, Milwaukee,
Wisconsin 53201.
STOCKHOLDER NOMINEES AND
PROPOSALS
Stockholders
wishing to propose director candidates for consideration and recommendation by the Corporate Governance Committee for election at the
2025 Annual Meeting of Stockholders must submit the candidates' names and qualifications to the Corporate Governance Committee no later
than November 1, 2024 via the Corporate Secretary, Margaret C. Kelsey. Stockholders may also propose director candidates for consideration
and recommendation by the Board by following the guidelines outlined in the Company's bylaws and summarized below.
Stockholders
who intend to have a proposal considered for inclusion in the Company’s proxy materials for presentation at the 2025 Annual Meeting
of Stockholders must submit the proposal to the Company no later than November 28, 2024.
Under
our proxy access bylaw, if a stockholder (or a group of up to 20 stockholders) who has owned at least 3% of our shares of common stock
for at least three years and has complied with the other requirements set forth in the Company’s bylaws wants us to include director
nominees (up to the greater of two nominees or 20% of the Board) in our proxy statement for the 2025 Annual Meeting of Stockholders, the
nominations must be received by our Corporate Secretary and must arrive at the Company in a timely manner, between 120 and 150 days prior
to the anniversary of the date our proxy statement was first sent to stockholders in connection with our last annual meeting, which would
be no earlier than October 29, 2024 and no later than November 28, 2024.
Stockholders
who intend to present a proposal or director nominee at the 2025 Annual Meeting of Stockholders without inclusion of such proposal or
nominee in the Company’s proxy statement, are required to provide notice of such proposal or nomination, containing the information
and representations required by the Company’s bylaws, to the Company at least 70 days and not more than 100 days prior to the scheduled
date of the 2025 Annual Meeting of Stockholders. The 2025 Annual Meeting of Stockholders is tentatively
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| WEC
Energy Group |
P-81 |
2024
Proxy Statement |
scheduled
for Thursday, May 8, 2025. Therefore, any such notice is due not earlier than January 28, 2025, and not later than February 27, 2025.
In
addition to satisfying the foregoing requirements under the Company’s bylaws, stockholders who intend to solicit proxies in support
of director nominees other than the Company’s nominees must also comply with the provisions of Rule 14a-19 under the Exchange Act
and provide reasonable evidence of compliance to the Company no later than 5 p.m. central time on the 7th business day prior to the 2025
Annual Meeting of Stockholders.
Correspondence
regarding the above should be directed to the Corporate Secretary, Margaret C. Kelsey, at the Company’s principal business office,
PO Box 1331, Milwaukee, Wisconsin 53201.
Availability of Form 10-K
A copy (without exhibits)
of WEC Energy Group’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 as filed with the SEC, is available
without charge to any stockholder of record or beneficial owner of WEC Energy Group common stock by writing to the Corporate Secretary,
Margaret C. Kelsey, at the Company’s principal business office, PO Box 1331,
Milwaukee, Wisconsin 53201. The WEC Energy Group consolidated financial statements and certain other information found in the Form
10-K are provided in our 2023 Annual Financial Statements and Review of Operations. The Form 10-K, along with this proxy statement and
all of WEC Energy Group’s other filings with the SEC, is also available in the “Investors” section of the Company’s
Website at wecenergygroup.com.
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| WEC
Energy Group |
P-82 |
2024
Proxy Statement |
Appendix A
GAAP Reconciliation
A reconciliation of GAAP
net income and earnings per share to adjusted net income and earnings per share is included below for the full year ended December 31,
2023.
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|
2023
Net Income
(in
millions) |
|
WEC Energy Group GAAP |
$ |
1,331.70 |
|
|
Impairment related to ICC
disallowances pre-tax |
178.9 |
|
Tax
Impact |
-49.1 |
|
WEC Energy Group Adjusted
net income |
$ |
1,461.50 |
|
|
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|
|
2023
Earnings
per
Share |
| WEC
Energy Group GAAP |
$ |
4.22 |
|
|
Impairment related to ICC
disallowances |
0.41 |
|
WEC Energy Group Adjusted
earnings per share |
$ |
4.63 |
|
WEC Energy Group provided
adjusted earnings (non-GAAP earnings) in this proxy statement as a complement to, and not as an alternative to, reported earnings presented
in accordance with GAAP. The adjusted earnings exclude a non-cash impairment charge related to certain previously incurred capital costs
that were disallowed by the Illinois Commerce Commission (the "ICC"). The ICC's disallowance of costs of this nature is highly
unusual and not indicative of WEC Energy Group's operating performance. Therefore, WEC Energy Group believes that the presentation of
adjusted earnings is relevant and useful to investors to understand its operating performance. Management uses such measures internally
to evaluate the Company's performance and manage its operations.
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Energy Group |
P-83 |
2024
Proxy Statement |
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Page Intentionally Left Blank
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Energy Group |
P-84 |
2024
Proxy Statement |
WEC
Energy Group, Inc.
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v3.24.0.1
Pay vs Performance Disclosure
|
12 Months Ended |
23 Months Ended |
25 Months Ended |
|
Dec. 31, 2023
USD ($)
|
Dec. 31, 2022
USD ($)
|
Dec. 31, 2021
USD ($)
|
Dec. 31, 2020
USD ($)
|
Dec. 31, 2023 |
Jan. 31, 2022 |
| Pay vs Performance Disclosure |
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| Pay vs Performance Disclosure, Table |
|
PAY
VERSUS PERFORMANCE DISCLOSURE
As
described in more detail in “Compensation Discussion and Analysis,” the Company’s executive compensation program has
been designed to provide a level of compensation that is strongly dependent upon the achievement of short-term and long-term goals that
are aligned with the interests of our stockholders and customers. As such, a substantial portion of pay will only be realized upon strong
corporate performance. The Compensation Committee has not designed the compensation program to specifically align the Company’s
performance measures with "compensation actually paid" ("CAP") (as computed in accordance with Item 402(v) of Regulation
S-K) for a particular year. For example, the Company utilizes several performance measures to align executive compensation with Company
performance that are not presented in the Pay versus Performance table below.
The
following tables and supplemental graphical and narrative information present information about CAP, as defined by Item 402(v) of Regulation
S-K, and compares CAP to various performance measures, also in accordance with such rules. CAP is a supplemental measure to be viewed
alongside performance measures as an addition to the philosophy and strategy of compensation-setting discussed in “Compensation
Discussion and Analysis,” and not in replacement thereof.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Year | (1) Summary Compensation Table (SCT) Total for PEO ($) | (1,2) Compensation Actually Paid (CAP) to PEO ($) | (3) Average SCT total for non-PEO NEOs ($) | (2,3) Average Compensation Actually Paid to non-PEO NEOs ($) | Value of Initial Fixed $100 investment based on: ($) | Net Income ($) (in millions) | Company Selected Measure | | Lauber | Fletcher | Lauber | Fletcher | (4) WEC TSR | (5) Peer Group TSR | (6) Adjusted Earnings Per Share (diluted) ($) | | 2023 | 9,552,179 | — | 5,707,745 | — | 5,188,505 | 2,920,498 | 103.04 | 105.56 | 1,331.7 | 4.63 | | 2022 | 8,149,461 | 8,151,511 | 9,721,228 | 17,332,947 | 4,358,213 | 5,256,205 | 110.80 | 113.90 | 1,408.1 | 4.45 | | 2021 | — | 18,481,871 | — | 14,249,651 | 4,911,241 | 4,273,523 | 111.34 | 111.43 | 1,300.3 | 4.11 | | 2020 | — | 18,136,171 | — | 15,590,856 | 4,686,918 | 4,030,865 | 102.49 | 95.16 | 1,199.9 | 3.79 | (1)On
February 1, 2022, Mr. Lauber succeeded Mr. Fletcher as CEO.
(2)Represents
the CAP to each of Messrs. Lauber and Fletcher, and the average CAP to the non-PEO NEOs as a group, each as computed in accordance with
Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual amount of compensation earned or paid during the applicable
fiscal years. To calculate the CAP to Messrs. Lauber, and the average CAP to our non-PEO NEOs for the 2023 fiscal year, the following
adjustments were made to the SCT total compensation:
SCT
to CAP Reconciliation
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Year | SCT Total ($) | Deductions from SCT Total | Additions to SCT Total | CAP ($) | | Change in Pension Value ($) | (a) Equity-based awards Grant Date Fair Value ($) | (b) Pension Benefit Service Costs ($) | (c)(i) Change in Value of Covered Fiscal Year Awards Unvested at Covered Fiscal Year-End ($) | (c)(ii) Change in Value of Prior Years' Awards Unvested at Fiscal Year-End ($) | (c)(iii) Value of Awards Granted and Vested in Covered Fiscal Year ($) | (c)(iv) Change in Value of Prior Years' Awards that Vested in Fiscal Year ($) | | Lauber SCT to CAP Reconciliation | | 2023 | 9,552,179 | 321,627 | 4,366,969 | 50,930 | 4,459,392 | (2,280,649) | — | (1,385,511) | 5,707,745 | | Average Non-PEO NEOs SCT to CAP Reconciliation | | 2023 | 5,188,505 | 499,122 | 1,930,023 | 17,390 | 1,874,977 | (936,873) | — | (794,356) | 2,920,498 | (a) Represents
the grant date fair value of equity awards as reflected in the "Stock Awards" and "Option Awards" columns of the SCT.
(b) Represents
the actuarially determined value of the pension benefit accrual for services rendered by each NEO during the applicable year. There were
no costs of benefits granted pursuant to a plan amendment during any covered fiscal year that were attributed by the plan's benefit formula
to services rendered in periods prior to the plan amendment.
(c) Represents
(i) the covered fiscal year-end value of any equity awards granted in the covered fiscal year that were outstanding and unvested as of
the end of such year; (ii) the amount of the change as of the covered fiscal year-end (from the end of the prior fiscal year) in fair
value of any awards granted in prior years that were outstanding and unvested as of the end of the covered fiscal year; (iii) the
fair value as of the vesting date of awards granted in a covered fiscal year that vested in the same covered fiscal year; and (iv)
the amount equal to the change as of the vesting date (from the end of the prior fiscal year) in fair value for awards granted in prior
years that vested during the covered fiscal year. The valuation assumptions used to calculate fair values did not materially differ from
those disclosed at the time of grant.
(3)
The
non-PEO NEOs for each of the years shown were as follows:
•2022
and 2023: Messrs. Klappa and Garvin, and Mmes. Liu and Kelsey
•2021:
Messrs. Klappa and Lauber, and Mmes. Liu and Kelsey
•2020:
Messrs. Lauber, Klappa, Garvin, and Kuester, and Mmes. Liu, and Kelsey
(4)
Assumes
an investment of $100 at the beginning of the measurement period and reinvestment of all dividends. The “measurement period”
for each covered fiscal year is the period from December 31, 2019 through the end of such covered fiscal year.
(5) Represents
the Total Shareholder Return ("TSR") of the Custom Peer Index Group, weighted according to the respective companies' stock market
capitalization at the beginning of each period for which a return is indicated. For 2023, the Compensation Committee determined that Edison
International was no longer an appropriate peer comparison because of its increased financial risk from wildfires and other natural disasters
as compared to the Company and removed it from the Custom Peer Index Group. At the same time, the Committee approved the addition of CenterPoint
Energy, Exelon Energy and PPL Energy as those companies completed various transactions to shift their business models towards more fully-regulated
utility operations. Prior to these changes, the Custom Peer Index Group TSR would have been $95.59, $109.71, $111.03 and $104.31 for 2020,
2021, 2022, and 2023, respectively. For information about the Custom Peer Index Group, including the changes made, see "Performance
Graph" in the Company's 2023 Annual Report.
(6) For
2023, the Company Selected Measure was adjusted (non-GAAP) earnings per share which excludes a $0.41 per share non-cash charge to earnings
related to the Illinois Commerce Commission's disallowance of certain capital costs. See Appendix A on page P-83 for a full reconciliation
of GAAP to non-GAAP earnings per share. The prior years reported in this table each show the Company's earnings per share on a GAAP basis.
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Adjusted Earnings Per Share (diluted)
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| Named Executive Officers, Footnote |
|
The
non-PEO NEOs for each of the years shown were as follows: •2022
and 2023: Messrs. Klappa and Garvin, and Mmes. Liu and Kelsey •2021:
Messrs. Klappa and Lauber, and Mmes. Liu and Kelsey •2020:
Messrs. Lauber, Klappa, Garvin, and Kuester, and Mmes. Liu, and Kelsey
|
|
|
|
|
|
|
| Peer Group Issuers, Footnote |
|
Represents
the Total Shareholder Return ("TSR") of the Custom Peer Index Group, weighted according to the respective companies' stock market
capitalization at the beginning of each period for which a return is indicated. For 2023, the Compensation Committee determined that Edison
International was no longer an appropriate peer comparison because of its increased financial risk from wildfires and other natural disasters
as compared to the Company and removed it from the Custom Peer Index Group. At the same time, the Committee approved the addition of CenterPoint
Energy, Exelon Energy and PPL Energy as those companies completed various transactions to shift their business models towards more fully-regulated
utility operations. Prior to these changes, the Custom Peer Index Group TSR would have been $95.59, $109.71, $111.03 and $104.31 for 2020,
2021, 2022, and 2023, respectively. For information about the Custom Peer Index Group, including the changes made, see "Performance
Graph" in the Company's 2023 Annual Report.
|
|
|
|
|
|
|
| Adjustment To PEO Compensation, Footnote |
|
Represents
the CAP to each of Messrs. Lauber and Fletcher, and the average CAP to the non-PEO NEOs as a group, each as computed in accordance with
Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual amount of compensation earned or paid during the applicable
fiscal years. To calculate the CAP to Messrs. Lauber, and the average CAP to our non-PEO NEOs for the 2023 fiscal year, the following
adjustments were made to the SCT total compensation:
SCT
to CAP Reconciliation
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Year | SCT Total ($) | Deductions from SCT Total | Additions to SCT Total | CAP ($) | | Change in Pension Value ($) | (a) Equity-based awards Grant Date Fair Value ($) | (b) Pension Benefit Service Costs ($) | (c)(i) Change in Value of Covered Fiscal Year Awards Unvested at Covered Fiscal Year-End ($) | (c)(ii) Change in Value of Prior Years' Awards Unvested at Fiscal Year-End ($) | (c)(iii) Value of Awards Granted and Vested in Covered Fiscal Year ($) | (c)(iv) Change in Value of Prior Years' Awards that Vested in Fiscal Year ($) | | Lauber SCT to CAP Reconciliation | | 2023 | 9,552,179 | 321,627 | 4,366,969 | 50,930 | 4,459,392 | (2,280,649) | — | (1,385,511) | 5,707,745 | | Average Non-PEO NEOs SCT to CAP Reconciliation | | 2023 | 5,188,505 | 499,122 | 1,930,023 | 17,390 | 1,874,977 | (936,873) | — | (794,356) | 2,920,498 | (a) Represents
the grant date fair value of equity awards as reflected in the "Stock Awards" and "Option Awards" columns of the SCT. (b) Represents
the actuarially determined value of the pension benefit accrual for services rendered by each NEO during the applicable year. There were
no costs of benefits granted pursuant to a plan amendment during any covered fiscal year that were attributed by the plan's benefit formula
to services rendered in periods prior to the plan amendment. (c) Represents
(i) the covered fiscal year-end value of any equity awards granted in the covered fiscal year that were outstanding and unvested as of
the end of such year; (ii) the amount of the change as of the covered fiscal year-end (from the end of the prior fiscal year) in fair
value of any awards granted in prior years that were outstanding and unvested as of the end of the covered fiscal year; (iii) the
fair value as of the vesting date of awards granted in a covered fiscal year that vested in the same covered fiscal year; and (iv)
the amount equal to the change as of the vesting date (from the end of the prior fiscal year) in fair value for awards granted in prior
years that vested during the covered fiscal year. The valuation assumptions used to calculate fair values did not materially differ from
those disclosed at the time of grant.
|
|
|
|
|
|
|
| Non-PEO NEO Average Total Compensation Amount |
[1] |
$ 5,188,505
|
|
$ 4,358,213
|
$ 4,911,241
|
$ 4,686,918
|
|
|
| Non-PEO NEO Average Compensation Actually Paid Amount |
[1],[2] |
$ 2,920,498
|
|
5,256,205
|
4,273,523
|
4,030,865
|
|
|
| Adjustment to Non-PEO NEO Compensation Footnote |
|
Represents
the CAP to each of Messrs. Lauber and Fletcher, and the average CAP to the non-PEO NEOs as a group, each as computed in accordance with
Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual amount of compensation earned or paid during the applicable
fiscal years. To calculate the CAP to Messrs. Lauber, and the average CAP to our non-PEO NEOs for the 2023 fiscal year, the following
adjustments were made to the SCT total compensation:
SCT
to CAP Reconciliation
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Year | SCT Total ($) | Deductions from SCT Total | Additions to SCT Total | CAP ($) | | Change in Pension Value ($) | (a) Equity-based awards Grant Date Fair Value ($) | (b) Pension Benefit Service Costs ($) | (c)(i) Change in Value of Covered Fiscal Year Awards Unvested at Covered Fiscal Year-End ($) | (c)(ii) Change in Value of Prior Years' Awards Unvested at Fiscal Year-End ($) | (c)(iii) Value of Awards Granted and Vested in Covered Fiscal Year ($) | (c)(iv) Change in Value of Prior Years' Awards that Vested in Fiscal Year ($) | | Lauber SCT to CAP Reconciliation | | 2023 | 9,552,179 | 321,627 | 4,366,969 | 50,930 | 4,459,392 | (2,280,649) | — | (1,385,511) | 5,707,745 | | Average Non-PEO NEOs SCT to CAP Reconciliation | | 2023 | 5,188,505 | 499,122 | 1,930,023 | 17,390 | 1,874,977 | (936,873) | — | (794,356) | 2,920,498 | (a) Represents
the grant date fair value of equity awards as reflected in the "Stock Awards" and "Option Awards" columns of the SCT. (b) Represents
the actuarially determined value of the pension benefit accrual for services rendered by each NEO during the applicable year. There were
no costs of benefits granted pursuant to a plan amendment during any covered fiscal year that were attributed by the plan's benefit formula
to services rendered in periods prior to the plan amendment. (c) Represents
(i) the covered fiscal year-end value of any equity awards granted in the covered fiscal year that were outstanding and unvested as of
the end of such year; (ii) the amount of the change as of the covered fiscal year-end (from the end of the prior fiscal year) in fair
value of any awards granted in prior years that were outstanding and unvested as of the end of the covered fiscal year; (iii) the
fair value as of the vesting date of awards granted in a covered fiscal year that vested in the same covered fiscal year; and (iv)
the amount equal to the change as of the vesting date (from the end of the prior fiscal year) in fair value for awards granted in prior
years that vested during the covered fiscal year. The valuation assumptions used to calculate fair values did not materially differ from
those disclosed at the time of grant.
|
|
|
|
|
|
|
| Compensation Actually Paid vs. Total Shareholder Return |
|
CAP
v. TSR As
demonstrated in the following graph, the amount of compensation paid to the PEOs and the average compensation paid to the other NEOs was
aligned with the Company’s TSR performance. A substantial portion of the compensation awarded to each of the NEOs is long-term incentive
compensation. For most of the NEOs, performance unit awards comprise 65% of the long-term incentive compensation granted each year, with
vesting primarily based upon the Company’s TSR performance against its peer group. As discussed further in “Compensation Discussion
and Analysis,” the performance units granted in 2021, which vested at the end of the three-year performance period ended December
31, 2023, provided a payout that was significantly less than target. See the Five-Year Cumulative Return and Total Stockholder Returns
graphs in “Compensation Discussion and Analysis – Executive Summary” for information on the Company’s TSR performance
over the 5- and 10-year periods ended December 31, 2023, which exceeded the performance of its peer group.  |
|
|
|
|
|
|
| Compensation Actually Paid vs. Net Income |
|
CAP
v. WEC Net Income and Adjusted Earnings Per Share (Company-Selected Measure) As
demonstrated by the following graphs, during the cumulative four-year period ended December 31, 2023, the compensation paid to the PEOs
and the average compensation paid to the other NEOs was aligned with the Company’s net income and EPS performance. In 2023, WEC
Energy Group's EPS performance is shown on an adjusted (non-GAAP) basis. Pursuant to the terms of the Company’s short-term performance
plan, in 2023, almost 75% of the payout was based upon the Company’s adjusted EPS performance, and almost 25% was based upon the
Company’s performance against cash flow goals. As discussed further in “Compensation Discussion and Analysis,” for 2023,
the maximum level payout under the Company’s short-term performance plan with respect to EPS was set at the top of the Company’s
EPS guidance range for 2023. The Company’s strong performance against the EPS and cash flow goals in 2023 resulted in maximum level
payouts for each measure. WEC Energy Group’s
earnings per share on a GAAP basis were $4.22 for 2023, which includes a $0.41 per share non-cash charge to earnings related to the Illinois
Commerce Commission’s (the “ICC”) disallowance of an aggregate of $178.9 million of previously incurred capital costs
as part of its decisions in the rate cases of the Company’s Illinois utilities. Excluding this charge, WEC Energy Group’s
adjusted earnings per share were $4.63. The ICC’s disallowance of previously incurred capital costs of this nature is highly unusual
and not indicative of WEC Energy Group’s operating performance. As a result, the Compensation Committee determined that the Company’s
performance against the earnings per share targets should be measured using adjusted earnings per share. See Appendix A for net income
presented on an adjusted basis (non-GAAP) along with a reconciliation to net income, presented on a GAAP basis. In the graph below, net
income is presented on a GAAP basis. EPS is presented on an adjusted (non-GAAP) basis for 2023 and on a GAAP basis for years prior to
2023.  |
|
|
|
|
|
|
| Compensation Actually Paid vs. Company Selected Measure |
|
CAP
v. WEC Net Income and Adjusted Earnings Per Share (Company-Selected Measure) As
demonstrated by the following graphs, during the cumulative four-year period ended December 31, 2023, the compensation paid to the PEOs
and the average compensation paid to the other NEOs was aligned with the Company’s net income and EPS performance. In 2023, WEC
Energy Group's EPS performance is shown on an adjusted (non-GAAP) basis. Pursuant to the terms of the Company’s short-term performance
plan, in 2023, almost 75% of the payout was based upon the Company’s adjusted EPS performance, and almost 25% was based upon the
Company’s performance against cash flow goals. As discussed further in “Compensation Discussion and Analysis,” for 2023,
the maximum level payout under the Company’s short-term performance plan with respect to EPS was set at the top of the Company’s
EPS guidance range for 2023. The Company’s strong performance against the EPS and cash flow goals in 2023 resulted in maximum level
payouts for each measure. WEC Energy Group’s
earnings per share on a GAAP basis were $4.22 for 2023, which includes a $0.41 per share non-cash charge to earnings related to the Illinois
Commerce Commission’s (the “ICC”) disallowance of an aggregate of $178.9 million of previously incurred capital costs
as part of its decisions in the rate cases of the Company’s Illinois utilities. Excluding this charge, WEC Energy Group’s
adjusted earnings per share were $4.63. The ICC’s disallowance of previously incurred capital costs of this nature is highly unusual
and not indicative of WEC Energy Group’s operating performance. As a result, the Compensation Committee determined that the Company’s
performance against the earnings per share targets should be measured using adjusted earnings per share. See Appendix A for net income
presented on an adjusted basis (non-GAAP) along with a reconciliation to net income, presented on a GAAP basis. In the graph below, net
income is presented on a GAAP basis. EPS is presented on an adjusted (non-GAAP) basis for 2023 and on a GAAP basis for years prior to
2023.  *
Earnings per share for 2020, 2021 and 2022 are presented on a GAAP basis.
|
|
|
|
|
|
|
| Tabular List, Table |
|
Most
Important Performance Measures
The
following represents the most important financial performance measures used by WEC Energy Group to link compensation actually paid to
each NEO for 2023, the most recently completed fiscal year, to company performance:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | Adjusted Earnings Per Share | | Net Income | | Cash Flow | | Return on Equity | Achievement
of the Company’s goals with respect to the financial measures highlighted above should drive strong TSR performance for the Company
relative to its peers, which is an important component of our compensation program as more fully described in “Compensation Discussion
and Analysis – Long-Term Incentive Compensation".
|
|
|
|
|
|
|
| Total Shareholder Return Amount |
[3] |
$ 103.04
|
|
110.8
|
111.34
|
102.49
|
|
|
| Peer Group Total Shareholder Return Amount |
[4] |
105.56
|
|
113.9
|
111.43
|
95.16
|
|
|
| Net Income (Loss) |
|
$ 1,331.7
|
|
$ 1,408,100,000
|
$ 1,300,300,000
|
$ 1,199,900,000
|
|
|
| Company Selected Measure Amount |
[5] |
4.63
|
|
4.45
|
4.11
|
3.79
|
|
|
| PEO Name |
|
|
|
|
|
|
Mr. Lauber
|
Mr. Fletcher
|
| Measure:: 1 |
|
|
|
|
|
|
|
|
| Pay vs Performance Disclosure |
|
|
|
|
|
|
|
|
| Name |
|
Adjusted Earnings Per Share
|
|
|
|
|
|
|
| Measure:: 2 |
|
|
|
|
|
|
|
|
| Pay vs Performance Disclosure |
|
|
|
|
|
|
|
|
| Name |
|
Net Income
|
|
|
|
|
|
|
| Measure:: 3 |
|
|
|
|
|
|
|
|
| Pay vs Performance Disclosure |
|
|
|
|
|
|
|
|
| Name |
|
Cash Flow
|
|
|
|
|
|
|
| Measure:: 4 |
|
|
|
|
|
|
|
|
| Pay vs Performance Disclosure |
|
|
|
|
|
|
|
|
| Name |
|
Return on Equity
|
|
|
|
|
|
|
| Lauber [Member] |
|
|
|
|
|
|
|
|
| Pay vs Performance Disclosure |
|
|
|
|
|
|
|
|
| PEO Total Compensation Amount |
[6] |
$ 9,552,179
|
[5] |
$ 8,149,461
|
|
|
|
|
| PEO Actually Paid Compensation Amount |
[2],[6] |
5,707,745
|
|
9,721,228
|
|
|
|
|
| Fletcher [Member] |
|
|
|
|
|
|
|
|
| Pay vs Performance Disclosure |
|
|
|
|
|
|
|
|
| PEO Total Compensation Amount |
[6] |
|
|
8,151,511
|
18,481,871
|
18,136,171
|
|
|
| PEO Actually Paid Compensation Amount |
[2],[6] |
|
|
$ 17,332,947
|
$ 14,249,651
|
$ 15,590,856
|
|
|
| PEO | Lauber [Member] | Change in Pension Value [Member] |
|
|
|
|
|
|
|
|
| Pay vs Performance Disclosure |
|
|
|
|
|
|
|
|
| Adjustment to Compensation, Amount |
|
(321,627)
|
|
|
|
|
|
|
| PEO | Lauber [Member] | Equity-based Awards Grant Date Fair Value [Member] |
|
|
|
|
|
|
|
|
| Pay vs Performance Disclosure |
|
|
|
|
|
|
|
|
| Adjustment to Compensation, Amount |
|
(4,366,969)
|
|
|
|
|
|
|
| PEO | Lauber [Member] | Pension Benefit Service Costs [Member] |
|
|
|
|
|
|
|
|
| Pay vs Performance Disclosure |
|
|
|
|
|
|
|
|
| Adjustment to Compensation, Amount |
|
50,930
|
|
|
|
|
|
|
| PEO | Lauber [Member] | Change in Value of Covered Fiscal Year Unvested [Member] |
|
|
|
|
|
|
|
|
| Pay vs Performance Disclosure |
|
|
|
|
|
|
|
|
| Adjustment to Compensation, Amount |
|
4,459,392
|
|
|
|
|
|
|
| PEO | Lauber [Member] | Change in Value of Prior Years Unvested [Member] |
|
|
|
|
|
|
|
|
| Pay vs Performance Disclosure |
|
|
|
|
|
|
|
|
| Adjustment to Compensation, Amount |
|
(2,280,649)
|
|
|
|
|
|
|
| PEO | Lauber [Member] | Value of Awards Granted and Vested in Covered Fiscal Year [Member] |
|
|
|
|
|
|
|
|
| Pay vs Performance Disclosure |
|
|
|
|
|
|
|
|
| Adjustment to Compensation, Amount |
|
|
|
|
|
|
|
|
| PEO | Lauber [Member] | Change in Value of Prior Years Vested [Member] |
|
|
|
|
|
|
|
|
| Pay vs Performance Disclosure |
|
|
|
|
|
|
|
|
| Adjustment to Compensation, Amount |
|
(1,385,511)
|
|
|
|
|
|
|
| Non-PEO NEO | Change in Pension Value [Member] |
|
|
|
|
|
|
|
|
| Pay vs Performance Disclosure |
|
|
|
|
|
|
|
|
| Adjustment to Compensation, Amount |
|
(499,122)
|
|
|
|
|
|
|
| Non-PEO NEO | Equity-based Awards Grant Date Fair Value [Member] |
|
|
|
|
|
|
|
|
| Pay vs Performance Disclosure |
|
|
|
|
|
|
|
|
| Adjustment to Compensation, Amount |
|
(1,930,023)
|
|
|
|
|
|
|
| Non-PEO NEO | Pension Benefit Service Costs [Member] |
|
|
|
|
|
|
|
|
| Pay vs Performance Disclosure |
|
|
|
|
|
|
|
|
| Adjustment to Compensation, Amount |
|
17,390
|
|
|
|
|
|
|
| Non-PEO NEO | Change in Value of Covered Fiscal Year Unvested [Member] |
|
|
|
|
|
|
|
|
| Pay vs Performance Disclosure |
|
|
|
|
|
|
|
|
| Adjustment to Compensation, Amount |
|
1,874,977
|
|
|
|
|
|
|
| Non-PEO NEO | Change in Value of Prior Years Unvested [Member] |
|
|
|
|
|
|
|
|
| Pay vs Performance Disclosure |
|
|
|
|
|
|
|
|
| Adjustment to Compensation, Amount |
|
(936,873)
|
|
|
|
|
|
|
| Non-PEO NEO | Value of Awards Granted and Vested in Covered Fiscal Year [Member] |
|
|
|
|
|
|
|
|
| Pay vs Performance Disclosure |
|
|
|
|
|
|
|
|
| Adjustment to Compensation, Amount |
|
|
|
|
|
|
|
|
| Non-PEO NEO | Change in Value of Prior Years Vested [Member] |
|
|
|
|
|
|
|
|
| Pay vs Performance Disclosure |
|
|
|
|
|
|
|
|
| Adjustment to Compensation, Amount |
|
$ (794,356)
|
|
|
|
|
|
|
|
|
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Grafico Azioni WEC Energy (NYSE:WEC)
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