What is the primary purpose of the new incentive plans announced?

The primary purpose of the 2016 Annual Incentive Plan and the 2016 Long-Term Incentive Program is to incentivize Dominion Energy's officers, including named executive officers, by linking their compensation to the company's financial and operational performance, thereby aligning their interests with those of shareholders.

How will the 2016 Annual Incentive Plan payouts be determined?

Payouts for the 2016 Annual Incentive Plan are determined by the achievement of consolidated financial operating earnings goals, which influence the overall funding of the plan (ranging from 0% to 200% of target). For most officers, individual payouts are further contingent on achieving applicable consolidated financial, business unit financial, and operating goals, including safety and diversity objectives. However, for named executive officers, payouts are based solely on the funding goals, subject to the committee's discretion, to ensure tax deductibility.

What are the components of the 2016 Long-Term Incentive Program and how is it measured?

The 2016 Long-Term Incentive Program consists of two equal-value components: a restricted stock grant with a three-year cliff vesting period, and a cash-based performance grant. The performance grant's payout is determined by two equally weighted metrics: total shareholder return relative to peer companies in the Philadelphia Stock Exchange Utility Index and return on invested capital. The committee has the discretion to reduce payouts.

D 8-K: Leadership Changes

Q: Does the Compensation Committee have control over the incentive payouts?

Yes, the Compensation, Governance and Nominating Committee retains significant discretion ('negative discretion') over the payouts for both the 2016 Annual Incentive Plan and the 2016 Long-Term Incentive Program. This allows the committee to reduce the amounts funded or paid out as it deems appropriate, ensuring alignment with company performance and shareholder interests.

Summary

Dominion Energy, Inc. (D) filed an 8-K on January 21, 2016, to announce the approval of its 2016 Annual Incentive Plan and the 2016 Long-Term Incentive Program. These plans are designed to provide performance-based compensation to the company's officers, including named executive officers, aligning their incentives with the company's financial and operational performance. The Annual Incentive Plan is a cash award program based on a percentage of base salary, with payouts contingent on consolidated financial operating earnings goals and individual performance objectives. The Long-Term Incentive Program includes both restricted stock grants and a cash-based performance grant. The restricted stock has a three-year cliff vesting period, while the performance grant's payout is tied to total shareholder return relative to the Philadelphia Stock Exchange Utility Index and return on invested capital. Both programs grant the Compensation, Governance and Nominating Committee the discretion to adjust payouts, ensuring alignment with shareholder interests and potential tax deductibility benefits.

Key Highlights

1Approval of the 2016 Annual Incentive Plan for officers, offering performance-based cash awards.
2Target incentive award percentages for named executive officers range from 70% to 125% of base salary.
3Annual Incentive Plan funding is based on consolidated financial operating earnings goals, with potential payouts from 0% to 200% of target.
4Approval of the 2016 Long-Term Incentive Program for officers, comprising restricted stock and a cash-based performance grant.
5Restricted stock under the Long-Term Incentive Program has a three-year cliff vesting period.
6Long-Term Incentive Program performance grant payouts are based on relative total shareholder return and return on invested capital.
7The Compensation, Governance and Nominating Committee retains negative discretion to adjust payouts under both incentive plans.

DOMINION ENERGY, INC 8-K Report, Executive Changes (Jan 21, 2016)

Summary

Key Highlights

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