8-K/ALeadership ChangesExhibits & Filings

CENTERPOINT ENERGY INC 8-K/A Report, Executive Changes (Mar 6, 2020)

Filed March 6, 2020For Securities:CNP

Summary

This 8-K/A filing from CenterPoint Energy, Inc. (CNP) amends a prior filing and details the compensation arrangements for its Interim President and CEO, John W. Somerhalder II. The key focus is on the financial package approved for Mr. Somerhalder following his appointment on February 19, 2020. This includes a significant base salary, a target cash incentive, and a substantial restricted stock unit (RSU) award that vests immediately but has its shares paid out over a three-year period, or upon separation from the company if earlier. Investors should note the structure of the RSU award, which provides immediate vesting but staggered share delivery, potentially aligning the executive's interests with long-term shareholder value. The filing also mentions that Mr. Somerhalder is not eligible for the Change in Control Plan and introduces a new form of RSU award agreement under the Long Term Incentive Plan (LTIP) with specific provisions for vesting, distribution, and change in control scenarios. This information is crucial for understanding executive compensation and potential incentives during a period of interim leadership.

Key Highlights

  • 1John W. Somerhalder II appointed Interim President and CEO on February 19, 2020.
  • 2Compensation Committee approved annualized base salary of $1,000,000 for Mr. Somerhalder.
  • 3Annualized target cash incentive of $1,000,000 approved, payable pro-rata at term end, subject to Compensation Committee discretion.
  • 4Approved a fully-vested Restricted Stock Unit (RSU) award valued up to $1,375,000 per quarterly grant, with shares paid out ratably over three years or upon earlier separation.
  • 5Mr. Somerhalder is not eligible for the CenterPoint Energy, Inc. Change in Control Plan.
  • 6A new form of RSU award agreement under the LTIP has been approved, featuring immediate vesting and provisions for share distribution upon termination or change in control.

Frequently Asked Questions

Mr. Somerhalder's compensation package includes an annualized base salary of $1,000,000, an annualized target cash incentive of $1,000,000, and a Restricted Stock Unit (RSU) award of up to $1,375,000 per quarterly grant, with shares paid out over three years. The total direct compensation can be substantial, especially considering the RSU component.

The shares underlying the RSU award are paid out ratably over three years following the grant date. However, if Mr. Somerhalder separates from the Company earlier in a manner where he is neither an employee nor a director, any remaining unpaid shares under the award will be payable upon his separation.

Yes, the payout of the annualized target cash incentive of $1,000,000 is payable pro-rata at the end of his term as Interim President and Chief Executive Officer and is subject to the Compensation Committee's discretion.

Yes, the newly approved form of RSU award agreement provides for the distribution of underlying shares upon a change in control of the Company, as defined in the LTIP, if the RSU award is not assumed, continued, or substituted with a substantially equivalent award by the surviving or successor entity.