8-KLeadership ChangesExhibits & Filings

CENTERPOINT ENERGY INC 8-K Report, Executive Changes (Jul 22, 2021)

Filed July 22, 2021For Securities:CNP

Summary

CenterPoint Energy, Inc. (CNP) announced significant leadership and governance changes effective July 22, 2021. The company has eliminated the Executive Chairman position and created a new Independent Chair of the Board role, appointing Martin H. Nesbitt to this position. This move aims to enhance the company's independent leadership structure, aligning with recent board refreshes. As part of these changes, Executive Chairman Milton Carroll has departed from his employee and director roles, with his tenure as a board member concluding by September 30, 2021. His departure is not due to any disagreements concerning the company's operations or financials. In parallel, CenterPoint Energy has entered into a retention incentive arrangement with President and CEO David J. Lesar to ensure his continued leadership and align his interests more closely with shareholders. This arrangement includes the grant of up to 1 million shares of common stock over several years, with staggered vesting schedules, and associated dividend equivalent rights. These incentives are designed to be non-recurring and are separate from Mr. Lesar's regular compensation. The company also established a new director compensation level for the Independent Chair role at $500,000 annually.

Key Highlights

  • 1Creation of a new Independent Chair of the Board position, filled by Martin H. Nesbitt.
  • 2Elimination of the Executive Chairman role previously held by Milton Carroll.
  • 3Accelerated departure of Executive Chairman Milton Carroll, effective July 21, 2021, with board departure by September 30, 2021.
  • 4Milton Carroll's departure is amicable and not related to any operational, financial, or disclosure disagreements.
  • 5Retention incentive agreement entered with CEO David J. Lesar, involving up to 1 million shares of common stock over time.
  • 6CEO's retention award includes staggered vesting of restricted stock units and dividend equivalent rights.
  • 7New Independent Chair of the Board role will receive $500,000 in additional annual director compensation.

Frequently Asked Questions

The creation of the Independent Chair of the Board role and the appointment of Martin H. Nesbitt signifies a move towards a strengthened independent leadership structure for CenterPoint Energy. This aligns with the company's objective to separate the roles of Board Chair and Chief Executive Officer, promoting greater board independence and oversight.

Milton Carroll is departing from his roles as Executive Chairman, employee, and director as part of the company's implementation of a new independent leadership and governance structure. This also includes the elimination of the Executive Chairman position. The filing explicitly states that his departure is not the result of any disagreements regarding the company's operations, policies, or financial matters.

The retention incentive agreement with CEO David J. Lesar includes the potential grant of up to 1 million shares of CenterPoint Energy's common stock over several years, with staggered vesting periods. It also includes dividend equivalent rights on these shares and provisions for cash payments under certain circumstances. This arrangement is intended to align Mr. Lesar's interests with those of the shareholders and is separate from his regular compensation.

Under the Separation Agreement, Milton Carroll will receive a lump sum cash payment of $28,072,000. His separation is also being treated as an 'enhanced retirement' for purposes of his outstanding 2019, 2020, and 2021 equity award agreements.