01—Abstract
Summary
Summary of the 10-K/A filed April 30, 2009. Cited figures are marked; the original filing is the authoritative source.
This NRG Energy, Inc. filing supplies Part III disclosures covering directors and executive officers, executive compensation, security ownership, related-person transactions, director independence, and principal accountant fees for fiscal 2008.
The Board has 14 directors in three classes, and four Class III directors stand for election at the 2009 Annual Meeting. On February 18, 2009, management was reorganized: Robert Flexon returned as Chief Financial Officer, John Ragan became Chief Operating Officer, and Clint Freeland moved to Senior Vice President, Strategy, Financial Structure. The filing states that Gerald Luterman joined the Board in April 2009 and Kirbyjon Caldwell in March 2009.
For 2008, the Annual Incentive Plan targets were exceeded. The Adjusted Free Cash Flow target was $850 milliona and the Consolidated Adjusted EBITDA target was $2,200 million, with an AIP threshold of $700 million. The Committee made adjustments that, on a net basis, reduced 2008 Adjusted Free Cash Flow performance against target by $336 million.
David Crane's total 2008 compensation was reported as $7,283,557b in the Summary Compensation Table. The Committee reported a potential dilution rate of approximately 7.2% and an actual dilution rate of 4.3% at year-end 2008, with a run rate of less than 1%. The filing lists principal stockholders including FMR LLC (9.9%), Janus Capital Management LLC (9.1%), T.
Rowe Price Associates (9.1%), Solus Alternative Asset Management (6.0%), Massachusetts Financial Services (5.8%), and Prudential Financial (5.2%). All directors and executive officers as a group held 1.1% of common stock. The filing reports no related-person transactions for 2008 and KPMG LLP fees of $8,027 thousandc for 2008, compared with $8,264 thousand for 2007.
02—Key points
Key Highlights
- 2008 Annual Incentive Plan targets were exceeded: Adjusted Free Cash Flow target of $850 million and Consolidated Adjusted EBITDA target of $2,200 million, with a $700 million AIP threshold.
- Adjustments to 2008 Adjusted Free Cash Flow reduced performance versus target by a net $336 million, according to the Compensation Committee.
- February 18, 2009 management changes: Robert Flexon returned as CFO, John Ragan became COO, and Clint Freeland moved to Senior Vice President, Strategy, Financial Structure.
- David Crane's 2008 total compensation was $7,283,557; his amended employment agreement sets a base salary of $1,100,000 through December 31, 2009.
- Potential dilution was approximately 7.2% at year-end 2008, with an actual dilution rate of 4.3% and a run rate of less than 1%.
- Largest reported holders included FMR LLC at 9.9% and Janus Capital Management and T. Rowe Price Associates at 9.1% each; directors and executive officers as a group held 1.1%.
- KPMG LLP billed $8,027 thousand in total fees for 2008, including audit fees of $6,961 thousand, compared with $8,264 thousand in 2007.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2008, NRG Energy kept $0.18.
- Revenue$6.88B100.0%
- Cost of revenue−$3.60B52.3%
- Gross profit$3.29B47.7%
- Operating costs−$1.01B14.7%
- Operating income$2.27B33.0%
- Interest, other & tax−$1.05B15.2%
- Net income$1.23B17.8%
Where FY2008 revenue went
$6.88B- Cost of revenue: $3.60B, 52% of revenue
- Net income: $1.23B, 18% of revenue
- Interest, other & tax: $1.05B, 15% of revenue
- SG&A: $319.0M, 4.6% of revenue
- Other operating costs: $695.0M, 10% of revenue
Kept 18% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-K/AFY2008filed April 30, 2009Financial Statements
FY2008 against FY2007
| Line item | FY2008FY2007 | Change |
|---|---|---|
| Revenue | $6.88B$5.99B | +15.0% |
| Cost of Revenue | $3.60B$3.38B | +6.5% |
| Gross Profit | $3.29B$2.61B | +25.9% |
| SG&A Expenses | $319.00M$309.00M | +3.2% |
| Operating Expenses | $4.61B$4.45B | +3.7% |
| Operating Income | $2.27B$1.56B | +45.7% |
| Interest Expense | $583.00M$702.00M | −17.0% |
| Net Income | $1.23B$573.00M | +113.8% |
| EPS (Basic) | $4.98$2.16 | +130.6% |
| EPS (Diluted) | $4.43$1.96 | +126.0% |
| Shares Outstanding (Basic) | 235.00M240.00M | −2.1% |
| Shares Outstanding (Diluted) | 275.00M288.00M | −4.5% |
05—Questions
Frequently Asked Questions
Who is on the Board, and which directors are up for election in 2009?
The Board is set at 14 directors in three staggered classes. The four Class III directors (John F. Chlebowski, Howard E. Cosgrove, William H. Hantke and Anne C. Schaumburg) are nominees for three-year terms expiring at the 2012 Annual Meeting. Howard Cosgrove is non-executive Chairman, and David Crane serves as President and CEO.
How was 2008 executive incentive pay tied to company performance?
Annual incentives were based on Adjusted Free Cash Flow and Consolidated Adjusted EBITDA, with a $700 million Adjusted Free Cash Flow threshold for any payout. Both Target levels were exceeded for 2008. David Crane earned an annual incentive of $1,923,706, and the Committee reported that a $336 million net reduction from its Adjusted Free Cash Flow adjustments was applied to 2008 performance.
Did NRG have any related-person transactions or independence concerns in 2008?
The filing states there were no Related Person Transactions for 2008. The Board determined that all directors other than David Crane are independent under NYSE standards. Paul Hobby was noted for a sister-in-law who is a partner at KPMG LLP, the company's auditor. The Board concluded that business relationships involving William Hantke and Thomas Weidemeyer were immaterial.
What are the company's largest outside stockholders?
The filing lists FMR LLC at 9.9%, Janus Capital Management LLC at 9.1%, T. Rowe Price Associates at 9.1%, Solus Alternative Asset Management LP at 6.0%, Massachusetts Financial Services Company at 5.8%, and Prudential Financial at 5.2%. Ownership percentages for directors and executive officers as a group were 1.1%.
06—Continue