What is the primary purpose of the 2018 incentive plans announced by Dominion Energy?

The primary purpose of these plans is to align executive compensation with the company's financial performance and shareholder value creation. The annual plan focuses on operational and financial achievements within the year, while the long-term plan incentivizes performance over a multi-year period, particularly through stock performance and capital efficiency.

How is executive compensation tied to company performance under these plans?

Under the 2018 Annual Incentive Plan, compensation is tied to the achievement of consolidated financial operating earnings goals. For the 2018 Long-Term Incentive Program, compensation is linked to Total Shareholder Return (TSR) relative to peer companies and Return on Invested Capital (ROIC). Named executive officers' annual incentive payouts are solely based on the achievement of these funding goals, subject to the Compensation, Governance and Nominating Committee's discretion.

What is the vesting schedule for the restricted stock component of the Long-Term Incentive Program?

The restricted stock grants awarded under the 2018 Long-Term Incentive Program are subject to a three-year cliff vesting period. This means the stock will vest in full at the end of the three-year period, rather than gradually over time.

What happens if the company does not meet its performance goals under the incentive plans?

If the company does not meet its consolidated financial operating earnings goals, the funding for the Annual Incentive Plan could be as low as 0%, meaning no cash awards would be paid. Similarly, under the Long-Term Incentive Program, achievement of relative TSR and ROIC targets is necessary for payouts to be made. The Compensation, Governance and Nominating Committee also retains negative discretion to reduce payouts even if performance targets are met.

D 8-K: Leadership Changes

Summary

Dominion Energy, Inc. (D) announced its 2018 incentive compensation plans for its officers, including named executive officers, on January 25, 2018. The 2018 Annual Incentive Plan is a performance-based cash award program where target incentives are set as a percentage of base salary, with the CEO having the highest target at 140%. The funding of this plan is directly tied to the achievement of consolidated financial operating earnings goals, with the potential for funding to range from 0% to 200% of the target. Payouts for most officers are further contingent on meeting specific financial, business unit, operating, and stewardship goals, including safety, diversity, and environmental targets, though named executive officers' payouts are solely based on funding goals, subject to committee discretion. Furthermore, the 2018 Long-Term Incentive Program, also approved on the same date, comprises two elements: 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 relative total shareholder return (TSR) compared to peer companies and return on invested capital, both weighted at 50%. An additional performance component is based on absolute TSR and price-earnings ratio. The performance period for this grant extends to December 31, 2020, with payments due by March 15, 2021. These plans signal the company's focus on aligning executive compensation with financial performance and shareholder value creation.

Key Highlights

1Dominion Energy approved its 2018 Annual Incentive Plan and 2018 Long-Term Incentive Program on January 25, 2018.
2Annual incentive targets are set as a percentage of base salary, with the CEO at 140% and the CFO at 110%.
3The 2018 Annual Incentive Plan is funded based on consolidated financial operating earnings goals, with potential funding from 0% to 200% of targets.
4Payouts for named executive officers under the annual plan are solely based on funding goals, subject to committee discretion.
5The Long-Term Incentive Program includes a restricted stock grant with a three-year cliff vesting period.
6The performance grant within the long-term program is based on relative Total Shareholder Return (TSR) and Return on Invested Capital, each weighted at 50%.
7The performance grant has a performance period ending December 31, 2020, with payouts by March 15, 2021.

DOMINION ENERGY, INC 8-K Report, Executive Changes (Jan 31, 2018)

Summary

Key Highlights

Frequently Asked Questions