UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No.)

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March 16, 2023​

Fellow Stockholders:

We are pleased to invite you to attend NRG Energy, Inc.’s Annual Meeting of Stockholders, which will be held virtually via the Internet at 9:00 a.m. Eastern Time on Thursday, April 27, 2023 at www.virtualshareholdermeeting.com/NRG2023.

Details regarding attendance and the business to be conducted at the Annual Meeting are more fully described in the accompanying Notice of Annual Meeting of Stockholders and Proxy Statement.

Your vote is important. Whether or not you plan to attend the Annual Meeting, we hope you will vote as soon as possible. Information about voting methods is set forth in the accompanying Notice of Annual Meeting of Stockholders and Proxy Statement.

On behalf of everyone at NRG, I thank you for your ongoing interest and investment in NRG Energy, Inc. We are committed to acting in your best interests. If you have any questions with respect to voting, please call our proxy solicitor, MacKenzie Partners, Inc., at (800) 322-2885 (toll free).

Sincerely,

Chair of the Board

THIS PROXY STATEMENT AND THE PROXY CARD ARE
BEING DISTRIBUTED ON OR ABOUT MARCH 16, 2023.

 

NRG Energy, Inc.
910 Louisiana Street, Houston, Texas 77002

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

When: Thursday, April 27, 2023, 9:00 a.m. Eastern Time

Where: Via the internet at www.virtualshareholdermeeting.com/NRG2023

We are pleased to invite you to join our Board of Directors and senior leadership at the NRG Energy, Inc. 2023 Annual Meeting of Stockholders. For more information about the Annual Meeting, including how stockholders can ask questions during the Annual Meeting, please see page 92 of the accompanying Proxy Statement.

 

Table of Contents

2023 ANNUAL MEETING OF STOCKHOLDERS
PROXY STATEMENT

​	PROXY STATEMENT HIGHLIGHTS	​	​	​	​	1	​	​
​	PROXY STATEMENT	​	​	​	​	5	​	​
​	GOVERNANCE OF THE COMPANY	​	​	​	​	8	​	​
​	PROPOSALS TO BE VOTED ON	​	​	​	​	35	​	​
​	Proposal No. 1: Election Of Directors	​	​	​	​	35	​	​
​	Director Compensation	​	​	​	​	41	​	​
​	Proposal No. 2: Adoption of the NRG Energy, Inc. Amended and Restated Employee Stock Purchase Plan	​	​	​	​	44	​	​
​	Proposal No. 3: Advisory Vote To Approve Executive Compensation	​	​	​	​	48	​	​
​	Proposal No. 4: Advisory Vote on Frequency of Advisory Vote on Executive Compensation	​	​	​	​	49	​	​
​	Proposal No. 5: Ratification Of Independent Registered Public Accounting Firm For The 2023 Fiscal Year	​	​	​	​	50	​	​
​	EXECUTIVE OFFICERS	​	​	​	​	51	​	​
​	STOCK OWNERSHIP OF DIRECTORS, NAMED EXECUTIVE OFFICERS AND CERTAIN BENEFICIAL OWNERS	​	​	​	​	53	​	​
​	CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS	​	​	​	​	56	​	​
​	EXECUTIVE COMPENSATION	​	​	​	​	57	​	​
​	COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION	​	​	​	​	88	​	​
​	COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION	​	​	​	​	88	​	​
​	AUDIT COMMITTEE REPORT	​	​	​	​	89	​	​
​	INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	​	​	​	​	90	​	​
​	Audit Fees	​	​	​	​	90	​	​
​	Audit-Related Fees	​	​	​	​	90	​	​

​	Tax Fees	​	​	​	​	90	​	​
​	All Other Fees	​	​	​	​	90	​	​
​	Policy On Audit Committee Pre-Approval	​	​	​	​	91	​	​
​	QUESTIONS AND ANSWERS	​	​	​	​	92	​	​
​	What Is The Purpose Of The Annual Meeting?	​	​	​	​	92	​	​
​	Who Is Entitled To Vote At The Annual Meeting?	​	​	​	​	92	​	​
​	How Many Votes Do I Have?	​	​	​	​	93	​	​
​	What Are The Recommendations Of The Board Of Directors?	​	​	​	​	93	​	​
​	How Many Votes Must Be Present To Hold The Annual Meeting?	​	​	​	​	93	​	​
​	What Vote Is Required To Approve Each Proposal?	​	​	​	​	93	​	​
​	What Are Abstentions And Broker Non-Votes And How Are They Treated?	​	​	​	​	94	​	​
​	How Do I Vote Before The Annual Meeting?	​	​	​	​	95	​	​
​	May I Change My Vote?	​	​	​	​	95	​	​
​	How Can I Vote During The Annual Meeting?	​	​	​	​	95	​	​
​	What Happens If I Do Not Provide Instructions As To How To Vote?	​	​	​	​	96	​	​
​	Where Can I Obtain The List Of Stockholders Entitled To Vote?	​	​	​	​	96	​	​
​	How Can I Ask Questions During The Annual Meeting?	​	​	​	​	96	​	​
​	Who Pays The Cost Of Solicitation Of Proxies?	​	​	​	​	96	​	​
​	Who Is The Company’s Transfer Agent?	​	​	​	​	96	​	​
​	Why Did I Receive A One-Page Notice In The Mail Regarding The Internet Availability Of Proxy Materials Instead Of A Full Set Of Proxy Materials?	​	​	​	​	96	​	​
​	What Is “Householding”?	​	​	​	​	97	​	​
​	How Can I Request Additional Materials?	​	​	​	​	97	​	​
​	Whom Should I Call If I Have Questions About The Annual Meeting?	​	​	​	​	97	​	​
​	STOCKHOLDER PROPOSALS AND DIRECTOR NOMINATIONS FOR THE 2024 ANNUAL MEETING OF STOCKHOLDERS	​	​	​	​	98	​	​
​	APPENDIX A — NRG ENERGY, INC. AMENDED AND RESTATED EMPLOYEE STOCK PURCHASE PLAN	​	​	​	​	A-1	​	​

 

Proxy Statement Highlights

This summary highlights information contained elsewhere in this Proxy Statement. This summary does not contain all of the information that you should consider, and you should read the entire Proxy Statement before voting. For more complete information regarding NRG Energy, Inc.’s 2022 performance, please review NRG Energy, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2022.

ROADMAP OF VOTING MATTERS

Stockholders are being asked to vote on the following matters at the 2023 Annual Meeting of Stockholders (Annual Meeting) of NRG Energy, Inc. (NRG or the Company):

 

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CORPORATE GOVERNANCE HIGHLIGHTS

We are committed to maintaining the highest standards of corporate governance, which promote the long-term interests of our stockholders, strengthen Board and management accountability, and help build public trust in the Company. On December 1, 2022, we updated our Corporate Governance Guidelines and the charter for the Governance and Nominating Committee to clarify our Board and Committee responsibilities in connection with our evaluation of directors and director nominees, including with respect to their time commitments and service on other public company boards. The Governance of the Company section beginning on page 8 describes our corporate governance framework, which includes the following:

 

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SUMMARY OF DIRECTOR NOMINEES

QUESTIONS AND ANSWERS

Please see the Questions and Answers section beginning on page 92 for important information about the proxy materials, voting and the 2023 Annual Meeting of Stockholders. Additional questions may be directed to our proxy solicitor, MacKenzie Partners, Inc., at (800) 322-2885 or proxy@mackenziepartners.com.

LEARN MORE ABOUT OUR COMPANY

You can learn more about the Company, view our governance materials and much more by visiting our website, www.nrg.com. Information contained on our website is not incorporated into or a part of this Proxy Statement.

Please also visit our 2023 Annual Meeting of Stockholders website at www.proxyvote.com to easily access the Company’s proxy materials or vote through the Internet.

 

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Proxy Statement

We are providing these proxy materials to you in connection with the solicitation of proxies by the Board of directors of NRG Energy, Inc. (Board) for the 2023 Annual Meeting of Stockholders (Annual Meeting) and for any adjournment or postponement of the Annual Meeting. The Annual Meeting will be held virtually via the Internet on Thursday, April 27, 2023, 9:00 a.m. Eastern Time at www.virtualshareholdermeeting.com/NRG2023. In this Proxy Statement, “we,” “us,” “our,” “NRG” and the “Company” refer to NRG Energy, Inc.

You are receiving this Proxy Statement because you own shares of our common stock, par value $0.01 per share that entitle you to vote at the Annual Meeting. By use of a proxy, you can vote whether or not you attend the Annual Meeting. This Proxy Statement describes the matters on which we would like you to vote and provides information on those matters.

Each of the Notice of Annual Meeting, this Proxy Statement and our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (Annual Report on Form 10-K) is available at www.proxyvote.com. If you would like to receive, without charge, a paper copy of our Annual Report on Form 10-K, including the financial statements and the financial statement schedules, please send your request to Investor Relations, 804 Carnegie Center, Princeton, New Jersey 08540.

Forward-Looking Statements. This Proxy Statement contains information that may constitute “forward-looking statements.” Generally, the words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “project,” “will” and similar expressions identify forward-looking statements, which generally are not historical in nature. However, the absence of these words or similar expressions does not mean that a statement is not forward-looking. All statements that address operating performance, events or developments that we expect or anticipate will occur in the future, including statements expressing general views about future operating results, are forward-looking statements. Management believes that these forward-looking statements are reasonable as and when made. However, caution should be taken not to place undue reliance on any such forward-looking statements because such statements speak only as of the date when made. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. In addition, forward-looking statements are subject to certain risks and uncertainties that could cause the Company’s actual results to differ materially from historical experience and present expectations or projections. These risks and uncertainties include, but are not limited to, those described in Item 1A — Risk Factors in our Annual Report on Form 10-K and those described from time to time in our future reports filed with the Securities and Exchange Commission (SEC).

 

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ABOUT NRG

NRG is a consumer services company built on dynamic retail brands. NRG brings the power of energy to customers by producing and selling energy and related products and services nationwide in the U.S. and Canada in a manner that delivers value to all of NRG’s stakeholders. NRG sells power, natural gas, and home and power services and develops innovative, sustainable solutions, predominately under the brand names NRG, Reliant, Direct Energy, Green Mountain Energy, Stream, and XOOM Energy. The Company has a customer base that includes approximately 5.4 million residential, services, and municipal customers as well as commercial, industrial, and wholesale customers, supported by approximately 16 GW of generation as of December 31, 2022.

On December 6, 2022, NRG and Vivint Smart Home, Inc. (Vivint) announced the entry into a definitive agreement under which the Company will acquire Vivint, a smart home platform company, in an all-cash transaction. We expect the acquisition to accelerate the realization of NRG’s consumer-focused growth strategy and create a leading essential home services platform fueled by market-leading brands, unparalleled insights, proprietary technologies and complementary sales channels. The acquisition closed on March 10, 2023.

NRG sold 155 TWhs of electricity and 1,918 MMDth of natural gas in 2022, making it one of the largest competitive energy retailers in the U.S. As of the end of 2022, NRG had recurring electricity and/or natural gas sales in 24 U.S. states, the District of Columbia, and 8 provinces in Canada. NRG’s retail brands, collectively, have the largest share of competitively served residential electric customers in Texas and nationwide.

The following chart represents NRG’s sales volumes for the year ended December 31, 2022:

 

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COMPANY STRATEGY

NRG’s strategy is to maximize stakeholder value through the safe production and sale of reliable electricity and natural gas to its customers in the markets it serves, while positioning the Company to provide innovative solutions to the end-use energy or service customer. This strategy is intended to enable the Company to optimize its integrated model to generate stable and predictable cash flow, significantly strengthen earnings and cost competitiveness, and lower risk and volatility. Sustainability is a philosophy that underpins and facilitates value creation across NRG’s business for its stakeholders. It is an integral piece of NRG’s strategy and ties directly to business success, reduced risks and enhanced reputation.

To effectuate the Company’s strategy, NRG is focused on: (i) serving the energy needs of end-use residential, commercial, industrial, and wholesale counterparties in competitive markets through multiple brands and channels; (ii) offering a variety of energy products and services, including renewable energy solutions, that are differentiated by innovative features, premium service, sustainability, and loyalty/affinity programs; (iii) excellence in operating performance of its assets; (iv) optimal hedging of its portfolio; and (v) engaging in disciplined and transparent capital allocation.

The Company announced in 2021 a four-year plan that began in 2022 to spend $2 billion in order to achieve growth through optimization of the Company’s core power and natural gas sales, as well as integrated solution sales within its core network in both power and home services. The acquisition of Vivint will be the primary growth vehicle to achieve this plan.

 

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Governance of the Company

CORPORATE GOVERNANCE GUIDELINES AND CHARTERS

The Board has adopted Corporate Governance Guidelines (Guidelines) that, along with the Amended and Restated Certificate of Incorporation, as amended, the Sixth Amended and Restated By-Laws (Bylaws) and the charters of the committees of the Board (Committees), provide the framework for the governance of the Company. The Board’s Governance and Nominating Committee is responsible for periodically reviewing the Guidelines and recommending any proposed changes to the Board for approval. The Guidelines are available on the Governance section of the Company’s investor relations website at https://investors.nrg.com, along with the charters of all of the Committees and the Company’s Code of Conduct. The Guidelines, the charters of all of the Committees and the Code of Conduct are also available in print to any stockholder upon request. Stockholders who desire to receive such items in print may request them from the Company’s Corporate Secretary by writing to NRG Energy, Inc., 804 Carnegie Center, Princeton, New Jersey 08540.

GOVERNANCE PRACTICES

The Board and Company are committed to maintaining the highest standards of corporate governance practices and principles. The Board has taken a proactive approach in applying leading governance practices to its structure. Furthermore, as described in the Guidelines, the Board follows a series of governance practices that it believes foster effective Board oversight and accountability to you, our stockholders. These practices include:

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Executive and director stock ownership guidelines to align interests with our stockholders;

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Ongoing succession planning for the Chief Executive Officer (CEO) and other senior management;

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Annual performance evaluations of the Board and each of its standing Committees, as well as peer review for individual directors;

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Director orientation and continuing education program, including Company site visits and information sessions with Company management;

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Access to and engagement of outside advisors and consultants to assist the Board and the Committees in the performance of their duties, as appropriate; and

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Active engagement with our stockholders regarding governance practices and other matters.

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PROXY ACCESS

To facilitate engagement with our stockholders, our Bylaws provide for proxy access. Under the proxy access provisions in our Bylaws, a stockholder (or group of up to 20 stockholders) continuously owning at least 3% of our outstanding common stock for a period of at least three years prior to the date of the nomination may nominate and include in our proxy materials for the following annual meeting director nominees constituting up to 20% of the Board. To do so, the stockholder must submit the information required by Article II, Section 15 of our Bylaws to the Company’s Corporate Secretary as described further under “Director Nominees for Inclusion in the Proxy Materials for the 2024 Annual Meeting of Stockholders (Proxy Access).”

 

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RISK OVERSIGHT

The Board performs its risk oversight function in several ways. The Board monitors, reviews and reacts to strategic and corporate risks through reports by management, including the Enterprise Risk Management team, which is further described below, and through the Committees of the Board. While several Committees of the Board have responsibilities for addressing risk, the Board primarily conducts this oversight function through the Finance and Risk Management Committee. The Finance and Risk Management Committee is responsible for company-wide enterprise risk management. The Company’s Enterprise Risk Management team, comprised of senior management and key personnel in and around the finance, commercial operations and risk functions, reports to the Board’s Finance and Risk Management Committee on a regular basis.

 

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BOARD COMMITTEES RISK OVERSIGHT FOCUS

The table below summarizes the significant role the various Committees play in carrying out the risk oversight function.

The Chairs of each of the Committees regularly report to the Board on all matters reviewed by their respective Committees, thereby providing the Board with the opportunity to identify and discuss any risk-related issues or request additional information from management or the Committees that may assist the Board in its risk oversight role. To this end, risk-related issues presented to the Committees are routinely presented to the full Board to ensure proper oversight.

INFORMATION SECURITY

As noted above, the Finance and Risk Management Committee oversees the overall review of our policies and procedures with respect to risk assessment and risk management, and has oversight of information technology and security matters, which includes information security strategies and risks, as well as data privacy, protection and risk mitigation strategies (Information Security). On a bi-annual basis, our Senior Vice President, Information Technology reports to the Board or the Finance and Risk Management Committee on the Information Security program and recent developments. Our Senior Vice President, Information Technology oversees a dedicated

 

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Information Security team, which works in partnership with our internal audit department to review information technology-related internal controls, built on the NIST Cybersecurity Framework, with our external auditors as part of the overall internal controls process. Annual third-party reviews are also conducted, including PCI compliance, penetration testing and overall review of the cybersecurity program. We currently maintain a cyber-insurance policy that provides coverage for security breaches.

Our Information Security program includes:

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Policies and security awareness training, including quarterly employee phishing simulations;

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Identification and remediation of Information Security risks and vulnerabilities in our information technology systems;

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Security operations training including logging, monitoring and response technologies and procedures;

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Testing of incident response procedures; and

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Due diligence of third-party vendors’ information security programs.

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BOARD STRUCTURE AND LEADERSHIP

Directors stand for election annually. Each director will hold office until his or her successor has been elected and qualified or until the director’s earlier death, resignation or removal. As part of our ongoing Board succession planning, Mr. Weidemeyer is not standing for reelection but will continue to serve as a director until the expiration of his term at the Annual Meeting. Consequently, the Board will be reduced to ten (10) members on the date of the Annual Meeting.

The Guidelines provide that non-executive directors meet in executive session regularly following Board meetings. The Company’s Non-Executive Chair, Mr. Coben, presides over these sessions. Also, pursuant to the Company’s Bylaws, Mr. Coben has been designated as an “alternate member” of all Committees to replace any absent or disqualified members of a Committee.

Directors are encouraged to attend the annual meetings of stockholders. All of the directors attended the 2022 Annual Meeting of Stockholders. During the 2022 fiscal year, each director attended more than 75% of the total number of Board meetings and meetings of the Committees on which they served.

Since December 2003, NRG’s governance structure has been led by a separate CEO and Chair of the Board. Irrespective of the Company’s current practice, the Board believes that an effective board leadership structure is highly dependent on the experience, skills and personal interaction between persons in leadership roles. As stated in the Guidelines, the Board believes that it is in the best interest of the Company for the Board to make a determination regarding separation of the roles of Chair and CEO based upon the present circumstances.

 

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Our President and CEO, Mr. Gutierrez, and Chair of the Board, Mr. Coben, work closely together in complementary roles. Mr. Gutierrez focuses on the day-to-day operations of the Company and establishes the Company’s strategic plan. Mr. Coben leads the Board’s responsibilities for reviewing, approving and monitoring fundamental financial and business strategies and major corporate actions, assessing major risks facing the Company and management, and overseeing succession planning, most notably at the CEO level, and he presides over the Board and its Committees as they perform their broad and varied oversight functions. The Board believes that these complementary roles provide the appropriate governance structure for the Company at this time.

DIRECTOR INDEPENDENCE

Under the Guidelines and the New York Stock Exchange (NYSE) listing standards, a majority of the Board must be composed of independent directors. The Board determines the independence of our directors by applying the independence principles and standards established by the NYSE. These standards provide that a director is independent only if the Board affirmatively determines that such director does not have a direct or indirect material relationship with the Company, which may include commercial, industrial, consulting, legal, accounting, charitable, familial and other business, professional and personal relationships.

The Board conducts a review of the independence of the Company’s directors (other than Mr. Gutierrez) on an annual basis. In its most recent review, the Board considered, among other things:

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Any employment relationships between the Company and its directors or their immediate family members;

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Any affiliations of the Company’s directors or their immediate family members with the Company’s independent registered public accounting firm, compensation consultants, legal counsel and other consultants and advisors;

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Any transactions that would require disclosure as a related person transaction or that qualify for review under our related person transactions policy;

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Any transactions made in the ordinary course of business with a company in which a director serves on the board or as a member of the executive management team;

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Any transactions involving payments made by the Company to educational institutions; and

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Any general factors that may impact the independence of the Company’s directors in the view of the Board.

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In addition, because the Company provides retail electricity services through certain of its subsidiaries, the Board also considered instances where certain of its directors either received electricity services from the Company or serve as directors of businesses that received electricity services from the Company.

The Board has determined that all of the Company’s directors are independent under the Guidelines and the NYSE listing standards, with the exception of Mr. Gutierrez, our President and CEO.

Each of the Audit, Compensation, Governance and Nominating, and Finance and Risk Management Committees is made up solely of independent directors. In accordance with the Guidelines and NYSE listing standards, all members of the Audit and Compensation Committees meet additional independence standards applicable to audit and compensation committee members, respectively.

 

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BOARD AND COMMITTEE EVALUATIONS

The Board conducts an annual performance evaluation of the Board as a whole and each of its Committees. All directors are required to assess whether the Board and the Committees are functioning effectively. The evaluation process provides an opportunity for the members of the Board to reflect upon their service and assess the effectiveness of the Board as a whole and each of the Committees in an effort to determine if improvements are warranted.

The Governance and Nominating Committee is responsible for the design and overall structure of the evaluation process. The process entails members of the Board considering responses to a broad range of questions regarding the functioning and effectiveness of the Board. The Chair of the Governance and Nominating Committee then holds individual interview sessions with each of the directors to elicit feedback concerning the collective performance of the Board and its Committees and gather information about areas where the Board may improve its effectiveness and performance. These discussion topics include, but are not limited to, the Board’s mix of skills, expertise, and experience; the effectiveness of the Committees; the transparency and communication of management with the Board; and specific feedback for other Board directors. Following completion of the interviews, the Chair of the Governance and Nominating Committee summarizes the responses of the directors on an anonymous basis for discussion by the Board as a whole. Through this process, the Board can identify and then consider themes or issues that have emerged.

At the Committee level, members of each Committee complete an anonymous questionnaire with open-ended questions. The questions give each director an opportunity to provide candid observations and feedback to their peers and management. Responses from all directors are combined to create an anonymous summary. The summary is used to promote open dialogue during the executive sessions of the February Board and Committee meetings.

The Board believes this process evokes meaningful responses because it provides directors with the opportunity to share feedback in multiple formats at each of the Board, Committee, and individual levels. The process highlights the Board’s commitment to continuous self-improvement by identifying issues that may require honest and difficult conversations and supports the Board’s nomination and refreshment practices.

 

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DIRECTOR NOMINEE SELECTION PROCESS

The Governance and Nominating Committee is responsible for identifying individuals whom the Committee believes are qualified to be Board members, in accordance with criteria set forth in the Guidelines, as well as the assessment, on an ongoing basis, of the members of the Board for purposes of continued service to the Board and Company.

The Governance and Nominating Committee provides its recommendations to the Board for approval based on considerations of certain criteria. Such criteria include an individual’s business experience and skills, independence, judgment, integrity, and ability to commit sufficient time and attention to the activities of the Board. Our Guidelines utilize a sliding scale for service on other public company boards, with consideration given to public company leadership roles and outside commitments. A director who also serves as our CEO may not serve on more than one board of a public company in addition to our Board, a director who also serves as Chair of our Board should not serve on more than two boards of public companies in addition to our Board, and other directors should not serve on more than three other boards of public companies in addition to our Board.

Each year, in considering the qualifications of potential Board nominees, the Governance and Nominating Committee reviews the number of boards on which the candidate sits, and each of our directors affirmatively disclose the number of public company boards on which they serve in connection with completing their annual director questionnaire.

In evaluating potential nominees, the Governance and Nominating Committee does not assign specific weights to particular criteria and no particular criterion is necessarily applicable to all Board members. The Governance and Nominating Committee considers the Company’s strategy and the particular skills, experiences and other qualifications that should be represented on the Board as a whole in light of the Company’s strategic direction. In addition to the factors listed above, the Governance and Nominating Committee considers an understanding of and experience in the retail and wholesale competitive energy market, customer expertise, finance, operations, executive leadership, age, and gender and ethnic diversity. The Governance and Nominating Committee also assesses whether a nominee’s background, experience, personal characteristics, or skills will advance the Board’s goal of creating and sustaining a Board that can support and oversee management’s execution of the Company’s strategic priorities. The Board takes into account all of these factors when evaluating the Governance and Nominating Committee’s recommendations.

 

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Listed below are summaries of specific qualifications that the Governance and Nominating Committee and the Board believe should be represented on the Board among other qualifications that a director may bring.

The Governance and Nominating Committee’s process for identifying and evaluating director nominees includes consultation with all directors, solicitation of proposed nominees from all directors, the engagement of one or more professional search firms, if deemed appropriate, interviews with prospective nominees by the Committee (and other directors, if deemed appropriate) and recommendations regarding qualified candidates to the full Board.

As noted above, the Board is continually evaluating the need for Board refreshment and has been focused on identifying individuals whose skills and experiences will enable them to make meaningful contributions to the Company in light of the Company’s evolving strategy and direction. The Board also aims to strike a balance between the knowledge and understanding of the business that comes from longer-term service on the Board with the ideas and perspectives that can come from adding new members.

 

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BOARD SKILLS AND EXPERIENCE

Our director nominees represent a diverse mix of skills, experiences and viewpoints that are relevant to our Company and facilitate effective oversight. To illustrate the complementary nature of each director nominee’s skills and experience, the table below identifies six primary skills and experiences that the director nominees bring to the Board. In identifying these skills and experiences, each director nominee is limited to selecting six such areas. The table below therefore does not include all of the skills, experiences, and qualifications that each director nominee offers, and even though a particular skill, experience, or qualification is not listed, a director nominee may yet possess that skill, experience, or qualification. We believe identifying six primary skills and experiences is a more meaningful presentation of the complementary contributions and value that each director nominee brings to their service on the Board and to the Company’s stockholders. See “Proposal No. 1 Election of Directors” for the biographies of our director nominees and a description of the skills and viewpoints that each director nominee brings to bear in their service to the Board and Committees.

 

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BOARD ATTRIBUTES

Our director nominees have a balance of tenure, age, and diversity, which provides our Board with a complementary mix of experience and perspective. In addition, nine of our ten director nominees are independent.

 

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BOARD DIVERSITY

The Board is committed to maintaining a diverse and inclusive membership. Of our ten director nominees, seven (70%) are diverse, including four female directors and three male directors with ethnically diverse backgrounds.

Our Guidelines specify that the Governance and Nominating Committee must seek to maintain a diversity of skills, experiences and backgrounds on the Board. In its recruitment process, the Governance and Nominating Committee and the Board seek to reflect gender and ethnic diversity in the pool of director candidates. Diversity also goes beyond race and gender and includes diversity of viewpoints and tenure. The differences in experience and expertise allow the Board to hear various perspectives from its members, leading to better outcomes and a robust decision-making process.

BEYOND THE BOARDROOM

Members of the Board participate in engagement opportunities outside of Board meetings, which allows them to gain greater insight into the Company’s businesses and industries. Engagement outside of Board meetings also allows directors to gain a deeper understanding of NRG’s strategic goals, as well as the performance of the Company, our President and CEO and other members of management, and the Board as a whole. In addition, the Board receives regular updates from the President and CEO.

Directors hold individual discussions among themselves and with our President and CEO, along with informal individual and small group meetings with other members of senior management. This practice allows members of the Board to gain insight into NRG’s management development program and to assist with succession planning.

Additionally, the Chair of the Board and Committee Chairs regularly hold discussions among themselves and with members of management to plan future meetings. Members of the Board also participate in presentations and trainings as part of NRG’s continuing education program to stay informed on current topics of interest.

BOARD COMMITTEES

The Board has the following five standing Committees: Audit, Compensation, Governance and Nominating, Finance and Risk Management and Nuclear Oversight.

The membership and the functions of each Committee are described below. Each of the Committees has adopted a charter that describes each such Committee’s roles and responsibilities. The charters of all of the Committees are available on the Governance section of the Company’s investor relations website at https://investors.nrg.com.

 

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The Audit Committee represents and assists the Board with respect to matters involving the accounting, auditing, financial reporting, internal controls, and legal compliance functions of the Company and its subsidiaries, including assisting the Board in its oversight of the integrity of the Company’s financial statements, the qualifications, independence, and performance of the Company’s independent auditors, the performance of the Company’s internal audit function, the Company’s compliance with legal and regulatory requirements, and effectiveness of the Company’s legal and regulatory compliance functions. Among other things, the Audit Committee:

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appoints, retains, oversees, evaluates, and compensates the independent auditors;

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reviews the annual audited and quarterly consolidated financial statements;

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reviews major issues regarding accounting principles and financial statement presentations;

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reviews earnings press releases and earnings guidance provided to analysts and rating agencies;

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reviews with the independent auditors the scope of the annual audit, and approves all audit and permitted non-audit services provided by the independent auditors;

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considers the adequacy and effectiveness of the Company’s internal control and reporting system;

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with the advice and assistance of the Finance and Risk Management Committee, reviews in a general manner the processes by which the Company assesses and manages risk; provided, however, the Audit Committee is not required to duplicate the work of the Finance and Risk Management Committee;

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reviews periodically the Company’s tax policies and any pending audits or assessments;

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reports regularly to the Board regarding its activities and prepares and publishes required annual Audit Committee reports;

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establishes procedures for the receipt, retention, and treatment of complaints and concerns regarding accounting, internal accounting controls, or auditing matters;

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oversees the internal audit and corporate compliance functions; and

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annually evaluates the performance of the Audit Committee and the adequacy of its charter.

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Until April 2022, the Audit Committee was comprised of Anne C. Schaumburg (Chair), Antonio Carrillo, Matthew Carter, Jr., and Elisabeth B. Donohue.

 

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The Compensation Committee oversees the Company’s overall compensation structure, policies, and programs. Among other things, the Compensation Committee:

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reviews and recommends to the Board annual and long-term goals and objectives relevant to the compensation of the President and CEO, evaluates the performance of the President and CEO in light of those goals and objectives, and determines, approves, and recommends to the Board for approval the compensation level of the President and CEO based on such evaluation;

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reports to the Board its review of annual and long-term goals and objectives relevant to the compensation of the Chief Financial Officer (CFO), the Executive Vice Presidents and any other officer designated by the Board, the evaluation of those officers’ performance in light of those goals and objectives, the determination and approval of compensation levels based on such evaluations and the review and approval of employment arrangements, severance arrangements and benefits plans;

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reviews and recommends to the Board the compensation, incentive compensation and equity-based plans that are subject to Board approval;

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reviews and approves stock incentive awards for executive officers other than the President and CEO;

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makes recommendations regarding, and monitors compliance by officers and directors with, the Company’s stock ownership guidelines;

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reviews and recommends to the Board the compensation of directors for service on the Board and its Committees;

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oversees the evaluation of management and annually reviews the Company’s senior management succession plans;

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reviews and approves employment agreements and severance arrangements, benefit plans not otherwise subject to Board approval, and corporate goals and objectives for officers other than the President and CEO;

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reviews and discusses with management the Compensation Discussion and Analysis (CD&A) to be included in the Company’s proxy statement or annual report on Form 10-K, and based on such review and discussions, recommends to the Board that the CD&A be included in the Company’s proxy statement or annual report on Form 10-K, as applicable;

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evaluates any conflicts of interest and the independence of any outside advisors engaged by the Compensation Committee;

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reviews and oversees the Company’s overall compensation strategy, structure, policies, programs, risk profile and any stockholder advisory votes on the Company’s compensation practices and assesses whether the compensation structure establishes appropriate incentives for management and employees;

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annually evaluates the performance of the Compensation Committee and the adequacy of its charter; and

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performs such other responsibilities as may be delegated to it by the Board from time to time that are consistent with its purpose.

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The Compensation Committee may delegate to one or more subcommittees such power and authority as the Compensation Committee deems appropriate. No subcommittee shall consist of fewer than two members, and the Compensation Committee may not delegate to a subcommittee any power or authority that is required by any law, regulation or listing standard to be exercised by the Compensation Committee as a whole.

The Compensation Committee has the authority to retain at the expense of the Company such outside counsel, experts, and other advisors as it determines appropriate to assist it in the full performance of its functions, including sole authority to retain and terminate any compensation consultant used to assist the Compensation Committee in the evaluation of directors, or, if applicable, CEO or senior executive compensation, and to approve the consultant’s fees and other retention terms.

Pay Governance, the Compensation Committee’s independent compensation consultant for fiscal year 2022, assisted with executive pay decisions and worked with the Compensation Committee to formulate the design of the executive compensation program for 2022.

Until April 2022, the Compensation Committee was comprised of E. Spencer Abraham (Chair), Antonio Carrillo, Heather Cox, and Anne C. Schaumburg.

The Governance and Nominating Committee recommends director candidates to the Board for election at the annual meetings of stockholders, periodically reviews the Guidelines and recommends changes to the Board, and provides guidance to the Board with respect to governance related matters. Among other things, the Governance and Nominating Committee:

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identifies and reviews the qualifications of potential nominees to the Board consistent with criteria approved by the Board, and assesses the contributions and independence of incumbent directors in determining whether to recommend them for re-election;

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establishes and reviews procedures for the consideration of Board candidates recommended by the Company’s stockholders;

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makes recommendations to the Board concerning the structure, composition, and functioning of the Board and its Committees;

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reviews and assesses the channels through which the Board receives information, and the quality and timeliness of information received;

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reviews and recommends to the Board retirement and other tenure policies for directors;

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reviews and approves Company policies applicable to the Board, the directors and officers subject to Section 16 of the Securities Exchange Act of 1934, as amended (Exchange Act);

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reviews and reports to the Board regarding potential conflicts of interests of directors;

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recommends to the Board director candidates for the annual meeting of stockholders, and candidates to be elected by the Board as necessary to fill vacancies and newly created directorships;

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oversees the Company’s strategies and efforts to manage its environmental, economic and social impacts, including, but not limited to, the Company’s environmental, climate change and sustainability policies and programs;

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oversees the evaluation of the Board, each of its Committees and management;

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annually monitors directorships in other public companies held by directors and senior officers of the Company;

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annually evaluates the performance of the Governance and Nominating Committee and the appropriateness of its charter;

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reviews the Company’s political contribution policy and the Company’s memberships in trade associations or other business associations that engage in lobbying activities or make independent expenditures relating to political campaigns or initiatives;

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reviews the Company’s charitable giving policy;

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oversees the orientation process for new directors and programs for the continuing education of existing directors; and

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performs such other responsibilities as may be delegated to it by the Board from time to time that are consistent with its purpose.

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Until April 2022, the Governance and Nominating Committee was comprised of Thomas H. Weidemeyer (Chair), Matthew Carter, Jr., Heather Cox, and Alexandra Pruner.

The Finance and Risk Management Committee assists the Board in fulfilling its responsibilities with respect to the oversight of trading, power marketing and risk management issues at the Company, and reviews and approves certain financial transactions. Among other things, the Finance and Risk Management Committee:

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reviews, reports and makes recommendations to the Board on management recommendations or proposals regarding the Company’s and its subsidiaries’: (i) capital structure, (ii) liquidity, (iii) need for credit or debt or equity financing, (iv) amounts, timing and sources of capital market transactions, and (v) financial hedging and derivative activities;

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reviews and approves, or authorizes officers to approve, the pricing and other terms and conditions of transactions relating to debt or equity financings, financial hedging and derivatives activities, and other similar financial activities, in each case which have been reviewed and approved by the Board;

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reviews and approves, or authorizes officers to approve, repurchases, early redemption or other similar actions with respect to the Company’s securities;

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reviews and approves, or authorizes officers to approve, the pricing and other terms and conditions of financing transactions related to mergers, acquisitions, tender offers, and reorganizations which have been reviewed and approved by the Board;

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reviews and approves, or authorizes officers to approve, the pricing and other terms and conditions of securities offerings which have been reviewed and approved by the Board;

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approves determinations of the fair market value of assets and investments of the Company for purposes of the Company’s note indentures, senior secured credit agreement or other similar financing documents where fair market value is required to be determined by the Board or by a Committee of the Board;

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reviews with management, on a periodic basis, contributions to employee benefit retirement plans of the Company, investment performance, funding, asset allocation policies and other similar performance measures of the employee benefit retirement plans of the Company;

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oversees the Company’s policies and procedures established by management to assess, monitor, manage and control the Company’s material risk exposures, including operational, business, financial and commodity market (including marketing and trading of fuel, transportation, energy and related products and services, and hedging of generation portfolio obligations), strategic, credit, liquidity and reputational risks;

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oversees matters related to the security of and risks related to information technology systems and procedures, including the Company’s data privacy and security practices, cyber-security program and cyber- related risks;

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advises and assists the Audit Committee in its review of the processes by which management and the Committee assess the Company’s exposure to risk;

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approves, as appropriate, the Company’s power marketing and trading transactions, limits, policies, practices and procedures, and counter-party credit limit and policies, and approves exceptions to policies, as necessary;

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annually evaluates the performance of the Finance and Risk Management Committee and the appropriateness of its charter;

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reviews and approves transactions exceeding the President and CEO’s individual authority limits under the Company’s risk management policies; and

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performs such other responsibilities as may be delegated to it by the Board from time to time that are consistent with its purpose.

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Until April 2022, the Finance and Risk Management Committee was comprised of Paul W. Hobby (Chair), Elisabeth B. Donohue, and Thomas H. Weidemeyer.

 

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The Nuclear Oversight Committee consists of all of the members of the Board, each of whom are citizens of the United States and meet the requirements of applicable law to serve on the Committee. Nine of the ten members of the Nuclear Oversight Committee are independent as defined under the NYSE listing standards and as affirmatively determined by the Board.

Until April 2022, the Nuclear Oversight Committee, in addition to all current members of the Board, included Thomas H. Weidemeyer.

 

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SUSTAINABILITY AT NRG

Sustainability is a philosophy that underpins and facilitates value creation across our business for all of our stakeholders, including our stockholders. It is an integral piece of our corporate strategy and ties directly to business success, reduced risk, and enhanced reputation. Our sustainability foundation spans five key pillars — business, customers, workplace, operations, and suppliers — that embed sustainability into the culture and fabric of NRG.

We are committed to positively affecting the communities in which our customers and employees live and work and to reducing the environmental footprint of our operations while ensuring the long-term reliability, competitiveness, and success of NRG. These efforts include providing sustainable energy solutions to customers, optimizing our generation on an ongoing basis to drive incremental efficiency gains, reducing the carbon footprint of our operations, leveraging cleaner energy technologies such as battery storage and the incorporation of renewables, and supporting the advancement of our employees through health, safety, personal and professional growth and DEI initiatives.

 

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SUSTAINABLE BUSINESS

We have a long history of sustainability initiatives and disclosures, beginning in 2009 when we submitted our first report to the Climate Disclosure Project (now known as CDP). Since then, we have promoted transparency and reported on our efforts as discussed in the timeline below.

 

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SUSTAINABLE CUSTOMERS

Our expertise brings customers closer to achieving their energy and sustainability goals through a range of retail renewable electricity plans, tailored demand response programs, active energy management tools, and energy efficiency consulting and products. Our long-term strategy includes additional personalized products and services allowing for more connected devices within a residence.

Our residential retail brands, including NRG, Reliant, Green Mountain Energy and Direct Energy, offer zero- emission or low-emission retail electricity rate plans as well as carbon offsets and adjacent services through partner companies for rooftop solar installation and the purchase and charging of electric vehicles.

For our commercial and industrial customers, we act as an intermediary between renewable power developers and electricity customers. Our Renewable Select retail product delivers renewable energy through a unique simple contract and no on-site infrastructure. In addition, to support large customers’ energy management, as well as to enable grid stability in times of high demand, we provide energy load reduction through business demand response programs.

NRG’s strategy is not to become a developer, owner, or operator of large-scale renewable energy generation as a pathway to decarbonization, but rather to be the preferred conduit to help our customers become more sustainable. We leverage our market expertise to partner with renewable energy developers to bring new, additional renewable electricity to the grid through short and medium-term Power Purchase Agreements (PPAs). As of December 31, 2022, NRG has entered into Renewable PPAs totaling approximately 2.4 GW with third-party project developers and other counterparties, of which approximately 45% are operational. The average tenure of these agreements is twelve years. As this renewable power comes online, it is made available to residential, small business, and large commercial customers. This asset-light approach to procuring renewables allows us to stay agile and meet customer needs for sustainable energy solutions while supporting our business strategy. NRG expects to continue evaluating and executing similar agreements that support the needs of the business.

SUSTAINABLE WORKPLACE

OUR EMPLOYEES

Employees power the work of NRG. We provide comprehensive compensation and benefits to our colleagues, including employees represented by labor unions, as well as tools and resources to help them thrive in their personal lives and grow in their careers. We negotiate with labor unions in good faith and are proud of the cooperative relationships we have built together over the years.

 

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SAFETY

DIVERSITY, EQUITY AND INCLUSION

We recognize that we must live our values to serve our customers and our communities. One of our core Power Values (as defined on page 61) includes seeking to create work environments where our colleagues are treated fairly and with respect, and where each voice matters. We are building on that position by reshaping our hiring and promotions practices, by continually improving our policies to be more inclusive and by increasing the number of our Business Resource Groups where employees can share, learn and receive support from colleagues with whom they have an affinity based on shared backgrounds or interests. We strive to be a place of equitable access for employee growth that celebrates the individual while together championing our diversity.

In furtherance of our DEI initiatives, during 2022, we:

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Created our Talent Acquisition, Development, and Diversity team focusing on sourcing and hiring diverse talent as well as supporting the growth and development of our existing workforce. These efforts are conducted through a lens of DEI to create a workforce that reflects our customers and communities while championing our employees’ individuality.

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Conducted, as part of The CEO Pledge, our second “Day of Understanding” virtual event, featuring author and speaker Deepa Purushothaman. Over 1,200 employees participated in the event, which included a live online discussion.

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Conducted “Embracing Diversity & Inclusion” training available to all employees, including executives, with over 94% participation.

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TALENT DEVELOPMENT

We deploy various talent development strategies and programs with the goal of developing leaders who can execute on our strategy and drive value for all stakeholders. The Board regularly engages with management on leadership development and succession planning, including providing feedback on development plans and bench strength for key senior leader positions. In 2022, we launched an Emerging Leaders Program to strengthen the identified pipeline of future leaders and create a cohort of high potential candidates to work on active Company challenges. We also launched an Internship Program to identify future talent and create a pipeline of candidates. We also have a performance management tool that emphasizes a continuous feedback loop to all our employees, and a robust online training curriculum that covers topics such as leadership, communication, and productivity.

 

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EMPLOYEE ENGAGEMENT

In 2022, we actively engaged employees with virtual, hybrid and in-person activities. Throughout the year we hosted meditation, yoga and high intensity interval training classes as well as hosted our annual walking challenge to support health and wellbeing. On Employee Appreciation Day, we held a virtual team building challenge where employees competed on teams to solve trivia questions. We also welcomed employees back into the offices with terrarium building stations where employees created landscapes to decorate their desks with plants and other natural elements. We continued our annual survey of employees on well-being, with a focus on understanding how employees perceive their physical, emotional, and financial well-being and intend to address matters as they arise.

TOTAL REWARDS

We seek to provide market competitive compensation and benefits, benchmarked against the industries in which we operate: energy, consumer services, and where appropriate, the entire market. To ensure incentives are properly aligned with business needs and can attract and retain qualified employees, the Compensation Committee actively reviews our total rewards programs, including benchmarking, risk assessment, and program design. We offer full-time employees incentives designed to motivate and reward success. We continue to evaluate our offerings, taking into consideration the needs of our employees to ensure they are competitive and best serve our employees. In 2022, management conducted a comprehensive benchmarking on Total Rewards across energy, general business, and consumer products and services and shared those results with the Compensation Committee. As a result of this effort, certain key employee programs were enhanced for 2023, several new programs were added to our voluntary benefits offerings, NRG’s retirement savings plan match was increased by 50% in the U.S. and 100% in Canada, and paid parental leave was increased to six weeks regardless of gender.

For several years, we have invested in the well-being of our employees and their families, providing programs that holistically support their physical, emotional and financial wellness. Through these programs, NRG empowers employees to take control of their well-being and focus on what matters most to them for a healthy, secure future.

For the 2022 plan year, we included well-being goals in the Annual Incentive Plan (AIP), tying a portion of incentive compensation directly to improvements in their physical, emotional and financial well-being. For the first time, we conducted a month-long, cross-departmental initiative on suicide prevention.

We continued our support of employees by partnering with the National Council for Behavioral Health to initiate our Mental Health First Aid program. This program safely, respectfully, and effectively opens the conversation about mental illness and addiction, encourages employees to recognize and take responsibility for their mental health, teaches managers to recognize and speak to employees about mental health concerns, and complements and supports existing benefit and wellness programs and Company policies and procedures.

 

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COMMUNITY AND PHILANTHROPY

We are committed to having positive impacts on people, communities, and the environment. Our social responsibility efforts reflect what it means to lead by example in our industry and our desire to make the world brighter. It is through NRG’s philanthropic program, positiveNRG, that we create a workplace that empowers employees by supporting communities, causes and organizations that they elect to champion. The platform offers multiple touchpoints that allow for engagement with non-profit organizations, via volunteering and donations, and internal employee team building.

We encourage employees at every level of our organization to participate in positiveNRG Week, our annual week of giving, which in 2022 celebrated its fifteenth anniversary. As the COVID-19 pandemic continued to create hardship and instability for millions, positiveNRG Week continued to focus on strengthening food security. Meeting employees where they are, volunteer opportunities ranged from virtual events to unloading food deliverables and sorting donating goods at local food pantries, packaging meals and maintenance work with local community gardens. Collectively, over 203,000 pounds of food was donated, packed or prepared.

 

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SUSTAINABLE OPERATIONS

Since environmental responsibility is instilled at every level of NRG, we have adopted an Environment-Over-Production policy, which empowers our colleagues to take actions that are necessary to comply with environmental requirements even if such actions result in reduced production at our facilities.

As part of our ongoing operations, NRG complies with numerous environmental requirements. In addition, we carefully measure and track compliance with environmental requirements and our own more stringent standards using Environmental Key Performance Indicators (EKPIs) so that we can improve continually. These measures are reported internally to management and our Board, and externally in our annual sustainability report.

We integrate environmental considerations into strategic and operational decisions. We have demonstrated our commitment by reducing our impact on the environment in several areas. Our annual SOx and NOx air emissions have declined significantly since 2014. In addition, we established industry leading 2 degree Celsius-aligned GHG emission reduction goals in 2015 and became the first power company to earn certification of these goals from the Science Based Targets initiative (SBTi). At that time, our goals were to reduce GHG emissions by 50% by 2030 and by 90% by 2050. In 2019, NRG announced the acceleration of its goals to align with prevailing climate science, which urged limiting global warming in the post-industrial era to 1.5 degree Celsius. These updated goals target a 50% reduction by 2025 from our current 2014 base year, and net-zero emissions by 2050.

In March 2021, SBTi certified these updated goals as 1.5 degree Celsius-aligned. The Company is continuing to target a 50% reduction in greenhouse gas emissions by 2025; however, assuming no mitigating events occur, current power market forecasts suggest that the projected reduction in our greenhouse gas emissions at that time will be less than the targeted goal. The Company expects these forecasts to continue to evolve over time given recent and expected future changes in regulatory policies and volatility in electricity and natural gas markets. The Company continues to actively monitor and explore various options to meet the goal when both economically and legally feasible.

 

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The chart to the right presents carbon dioxide equivalent (CO2e) emissions and generation output from our domestic generation portfolio, including leased facilities and those accounted for through equity method investments. Prior year information was adjusted to remove divested assets. Since our base year of 2014, CO2e emissions have fallen by 25 million metric tons of CO2e or 42%, equivalent to avoiding more than 62 billion miles driven by an average passenger vehicle. The decrease is attributed to reductions in fleet-wide annual net generation and a market-driven shift away from coal as a primary fuel to natural gas. The increase in emissions in 2022, as compared to 2021, was primarily due to increased generation driven by power market conditions and weather. The generation in the chart includes generation from all fuels represented in our portfolio — coal, natural gas, nuclear, oil, and renewables — which is discussed further in our Annual Report on Form 10-K. In 2022, 10.4 TWh or 20.0% of U.S. Generation was from nuclear and renewables and therefore had zero emissions.1

In furtherance of our sustainability commitment, in 2021, we added a new sustainability goal to electrify 100% of company-owned light duty fleet vehicles by 2030. NRG also joined the Climate Group’s EV100 initiative to share best practices with other organizations electrifying their fleets and to support our customers in their transition to electric vehicles.

SUSTAINABLE SUPPLIERS

Our supply chain initiatives include evaluating risks and opportunities in our purchased goods and services, enhancing the ways we select suppliers, including a focus on DEI, developing strong manufacturing standards and internal policies, and promoting environmental disclosure practices for those with whom we do business. The importance we place on supply chain transparency has also led us to pursue external collaboration with other companies in our sector through organizations such as the Natural Gas Supply Collaborative, a voluntary collaborative of natural gas purchasers, which promote safe and responsible practices for natural gas supply.

NRG has a robust Supplier Code of Conduct as well as a Human Rights & Social Responsibility in Manufacturing Standards Policy. We require all contract manufacturers (including subcontractors) to adhere to this policy. Third-party audits are conducted regularly, and we report the results of such third-party manufacturing audits to the Audit Committee.

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Renewables generation is equivalent to the figure shown in the Net Generation table in the Annual Report on Form 10-K plus the net generation from NRG’s 54.5% ownership of Ivanpah, a concentrated solar thermal plant, which is accounted for separately as an equity method investment. Ivanpah also uses natural gas to start up its steam plant and to supplement load under certain weather conditions; in 2022, emissions associated with Ivanpah’s natural gas use represented less than 0.1% of NRG’s total power plant emissions.

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STOCKHOLDER AND STAKEHOLDER ENGAGEMENT

We have a broad outreach program to discuss NRG’s long-term strategy and sustainability goals, as well as to review and seek feedback on our governance, sustainability, and compensation practices. During 2022, one or more members of management spoke with stockholders representing more than 50% of our shares outstanding.

We regularly engage with stockholders concerning our Board, governance, and executive compensation practices with the specific goal of seeking stockholder feedback. Our stockholder engagement is important to our Board’s decision-making process and has driven changes to our governance and compensation practices. We greatly value the views of our stockholders and look forward to continuing the dialogue.

In addition, we regularly engage with our stakeholders (including our stockholders) on sustainability issues. We strive to provide current, credible, and comparable data to sustainability ratings agencies while engaging investors and investor advocacy organizations on these issues. We believe that engagement with stockholders, non-government organizations (NGOs), community and industry groups, and academia, among others, helps us identify and pursue potential opportunities to decarbonize our business and better serve our customers. In support of this effort, NRG is a member of Ceres, a non-profit organization whose mission is to “mobilize investor and business leadership to build a thriving, sustainable, global economy.” With Ceres, we are able to set up a formal stakeholder advisory body, which may include key stockholders, customers, leading NGOs, policy groups, and energy experts. Additionally, we proactively engage with other leading companies and organizations to help advance standards, share best practices and drive action toward a sustainable economy.

NRG also actively supports the climate-tech community through various initiatives highlighted below, to help identify technologies and partners that could further assist in the decarbonization of our business.

 

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Finally, NRG participates in several multi-stakeholder group consortia working to scale various decarbonization pathways.

COMMUNICATION WITH DIRECTORS

Stockholders and other interested parties may communicate with the Board by writing to the Corporate Secretary, NRG Energy, Inc., 804 Carnegie Center, Princeton, New Jersey 08540. Communications intended for a specific director or directors should be addressed to their attention to the Corporate Secretary at the address provided above. Communications received are forwarded directly to Board members as part of the materials mailed in advance of the next scheduled Board meeting following receipt of the communications. The Board has authorized the Corporate Secretary, in her discretion, to forward communications on a more expedited basis if circumstances warrant or to exclude a communication if it is illegal, unduly hostile or threatening, or similarly inappropriate. Advertisements, solicitations for periodical or other subscriptions, and other similar communications generally will not be forwarded to the directors.

 

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Proposals to be Voted On

PROPOSAL NO. 1

ELECTION OF DIRECTORS

The Board is comprised of 11 members, 10 of whom will stand for election at the Annual Meeting. As part of our ongoing Board succession planning, Mr. Weidemeyer will not stand for reelection. Mr. Weidemeyer will continue to serve as a director until the expiration of his term at the Annual Meeting. Our Bylaws provide that the number of directors will be determined by the Board of Directors, and the number of directors is currently set at eleven. We will reduce the number of directors to ten following the Annual Meeting.

Each director will hold office until his or her successor has been elected and qualified or until the director’s earlier death, resignation, or removal. Each of the nominees for director named in this Proxy Statement have been recommended and nominated by the Governance and Nominating Committee.

The persons named as proxies on the proxy card intend to vote the proxies for the election of the nominees to the Board listed below. Each nominee listed below has consented to being named in this Proxy Statement and to serve as a director if elected. The biography for each director includes the specific experience, qualifications, attributes, and skills that led the Board to conclude that the nominee should serve as a director. The Board believes that each of the director nominees has valuable individual skills and experiences that, taken together, provide the Company with the variety and depth of knowledge, judgment, and vision necessary to provide effective oversight of the Company.

 

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DIRECTOR COMPENSATION

ELEMENTS OF DIRECTOR COMPENSATION

The total annual compensation received by our directors for their service as Board members and Chairs of the Committees of the Board, if applicable, is described in the chart below.

A non-employee director who is newly appointed to the Board, other than in connection with an annual meeting of stockholders, receives the Annual Equity Retainer and a pro rata portion of the Annual Cash Retainer upon appointment.

With respect to Board Chair and Committee Chair Retainers, 50% is received in the form of cash and 50% is received in the form of Deferred Stock Units (DSUs). Directors may, however, elect to receive the cash portion of their annual compensation as DSUs. Each DSU is equivalent in value to one share of NRG’s common stock and represents the right to receive one such share of common stock payable at the time elected by the director or immediately if no such election is made, or in the event the director does not make an election with respect to payment in a particular year, in accordance with his or her prior deferral election. In the event that a director’s service with the Company is terminated for any reason other than cause, DSU awards are payable in accordance with such director’s deferral election. If a director’s service with the Company is terminated for cause, the award is forfeited. In connection with the grants of the DSUs, each non-employee director also receives dividend equivalent rights (DERs) which become exercisable proportionately with the DSUs to which they relate.

DETERMINATION OF BOARD CHAIR COMPENSATION

As discussed in greater detail below, the Compensation Committee and Board (with the Chair of the Board recusing himself from discussions and decisions on Chair compensation) rely on market data as well as other factors in determining independent Chair compensation.

In 2021, in order to provide a comprehensive view of the market, Pay Governance compiled competitive market data for our Chair of the Board based on a general industry sample of 20 companies with independent, non-executive chairs as well as the two remaining publicly traded independent power companies of comparable scope to NRG at that time (AES Corporation and Vistra Corp.). The general industry sample included companies in a broad cross-section of industries that have a combination of revenue and market cap similar to NRG. For 2021, NRG’s average ranking on a revenues and market cap basis was at the 51st percentile of the general industry group. While more comparable from an industry perspective, during 2021, total revenue reported by Vistra Corp. and AES Corporation was less than half of the total revenue reported by NRG. Relative to the market data, total direct compensation (sum of all cash and equity retainers) for our Chair of the Board was just below the 50th percentile (median) of the general industry group, modestly above Vistra Corp. and close to AES Corporation, at the time of the analysis.

 

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In addition to the market data, the Compensation Committee and Board consider the following factors in determining the compensation for the Board’s independent Chair: the Chair’s role in a variety of significant strategic initiatives; the time commitment spent by the Chair on Company-related matters; participation in all Board and Committee meetings; participation in the CEO evaluation process and succession planning; and engagement and frequency of discussions with management regarding the Company’s strategic direction.

DIRECTOR COMPENSATION FISCAL YEAR ENDED DECEMBER 31, 2022

 

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The following table sets forth the aggregate number of stock awards (DSUs and DERs) held by each of the non-employee directors as of December 31, 2022. The non-employee directors did not own any option awards as of December 31, 2022.

DIRECTOR STOCK OWNERSHIP GUIDELINES

Directors are required to retain all stock received as compensation for the duration of their service on the Board, although they may sell shares as necessary to cover tax liability associated with the conversion of DSUs to common stock. Exceptions to these requirements may be made by the Board under special circumstances. No exceptions to such requirements were made for 2022.

 

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PROPOSAL NO. 2

ADOPTION OF THE NRG ENERGY, INC. AMENDED AND RESTATED EMPLOYEE STOCK PURCHASE PLAN

On February 23, 2023, the Board approved an amendment and restatement of the ESPP which includes a reduction in the price at which our employees may purchase shares of the Company pursuant to the ESPP from 95% to 90% of the fair market value of the shares on the applicable date, adds 4,400,000 shares to the ESPP, and makes other technical amendments, including the allowance of a refund of a participant’s account balance if the amount is less than the fair market value of a share of common stock and the participant has not elected to make payroll deductions. Upon approval, the Board directed that the ESPP with amendments be submitted for stockholder adoption at the Annual Meeting. If this proposal to adopt the ESPP is approved by stockholders at the Annual Meeting, the ESPP, as amended and restated, will be effective as of April 1, 2023.

The ESPP is intended to qualify as an “employee stock purchase plan” under Section 423 of the Internal Revenue Code (Code). The Board believes that the ESPP is a key benefit to employees and an important part of our total rewards program. It provides a convenient way for our employees to purchase shares of our common stock at a discounted price, which gives employees a vested interest in our success and aligns their interests with that of our stockholders. The closing price of NRG’s common stock on March 6, 2023 was $34.38.

HISTORY OF THE ESPP

The ESPP, established July 1, 2008, is designed to attract and retain talented employees necessary for our continued growth and success. As initially established, the Board authorized, and stockholders approved, an aggregate of 500,000 shares of our common stock for issuance under such plan. In 2012, the ESPP was amended to add 1,000,000 shares. In 2014, the ESPP was amended and restated to add 800,000 more shares, modify the definition of  “option price,” expand the definition of  “compensation,” extend the term of the ESPP to December 31, 2023, and make other technical changes. In 2017, the ESPP was amended to add 3,000,000 shares, extend the term of the ESPP to December 31, 2026, and make other technical changes.

DESCRIPTION OF THE ESPP

The following provides a summary of the principal features of the ESPP. The ESPP is set forth in its entirety as Appendix A to this Proxy Statement. The following summary is qualified in its entirety by reference to Appendix A.

PURPOSE

The purpose of the ESPP is to increase employee alignment with stockholders by facilitating and encouraging share ownership by our eligible employees and those of our subsidiaries, and providing a mechanism to assist officers and other key employees to meet any applicable stock ownership guidelines.

ELIGIBILITY

Each employee of the Company or any designated subsidiary who, as of an “offering date,” has or will have at least 60 days of continuous service prior to the start of the next option period under the ESPP may become a participant in the ESPP (Participant). Participation is documented through executing and delivering a Participation Election notice to the Company prior to such offering date. Approximately 6,500 employees will be eligible for the ESPP as of March 6, 2023. No employee may participate in the ESPP if such employee, immediately after an offering date, would be deemed for purposes of Section 423(b)(3) of the Code to possess 5% or more of the total combined voting power or value of all classes of stock of the Company, its parent (if applicable) or any subsidiary.

 

44

OFFERING PERIODS

There are two offering periods each year. An offering date occurs each April 1 and October 1, and commences an offering period. An option period is the six month period beginning on each offering date. The last day of an offering period (September 30 and March 31) is an exercise date on which shares of common stock are purchased for the completed offering period.

ADMINISTRATION

Subject to oversight by the Board, the ESPP Committee has the authority to administer the ESPP and to make and adopt rules and regulations consistent with the provisions of the ESPP and the Code and provide all notices required by the ESPP. Its interpretations and decisions with respect to the ESPP will be final and conclusive. The ESPP Committee has the authority to appoint an employee as plan manager and to delegate to the plan manager such authority with respect to the administration of the ESPP as the ESPP Committee, in its sole discretion, deems advisable from time to time.

SHARES AVAILABLE UNDER THE ESPP

As amended, there are 9,700,000 treasury shares reserved for the ESPP. The aggregate number of shares which may be purchased under the ESPP will not exceed the number of shares reserved for the ESPP. As of March 6, 2023, 2,806,626 shares have been issued under the ESPP, thereby leaving 6,893,374 shares available for issuance following the adoption of the ESPP by stockholders at the Annual Meeting.

In the event that adjustments are made in the number of outstanding shares of our common stock or such shares are exchanged for a different class of our stock or for shares of stock of any other corporation by reason of merger, consolidation, stock dividend, stock split or otherwise, the Board must make appropriate adjustments in (a) the number and class of shares or other securities that may be reserved for purchase, or purchased, under the ESPP, and (b) the option price. All such adjustments will be made in the sole discretion of the Board, and its decisions will be binding and conclusive.

ENROLLMENT AND CONTRIBUTIONS

Payment for shares of our common stock purchased under the ESPP will be made by authorized payroll deductions from each payment of a Participant’s compensation in accordance with instructions received from a Participant for an option period. Deductions will be expressed as a whole number percentage which will be at least 1% but not more than 10% of eligible compensation. To the extent authorized by the ESPP Committee for any full calendar year under the ESPP (Plan Year), a Participant may authorize a deduction from his or her cash bonus compensation. During an option period, a Participant may discontinue payroll deductions but have the payroll deductions previously made during that option period remain in the Participant’s account to purchase common stock on the next exercise date, as long as he or she is an employee as of that exercise date. Any Participant who discontinues payroll deductions during an option period may again become a Participant for a subsequent option period by executing and filing another Participant Election form.

PURCHASE OF SHARES

As amended, the option price per share of the common stock sold to Participants under the ESPP is equal to the lesser of  (a) 90% of the fair market value of a share on the offering date (first day) of an option period, and (b) 90% of the fair market value of a share on the exercise date (last day) of an option period. As long as our common stock is traded on an exchange, the fair market value equals the closing price of the common stock on such exchange. In no event can the option price per share be less than the par value of the common stock.

On each exercise date, the amount in a Participant’s account will be charged with the aggregate option price of the whole number of shares of common stock which can be purchased with such amount. The balance, if any, in

 

45

such account is carried forward to the next succeeding option period, unless (i) the Participant requests that excesses be refunded, or (ii) as amended, if the Participant does not elect to make payroll deductions for the next option period, in which case the balance will be refunded.

No employee will be granted an option under the ESPP if, immediately after the grant, such employee’s right to purchase shares under all employee stock purchase plans (as described in Section 423 of the Code) of the Company and any subsidiary or parent of the Company would accrue at a rate which exceeds the lesser of: (a) $25,000 or (b) an amount equal to 10% of the employee’s annualized base salary in effect at the start of such offering period, in each case based on the fair market value of such shares (determined at the time such option is granted); provided, however, that for any Plan Year in which such option would be outstanding at any time, the employee’s right to purchase shares under all employee stock purchase plans (as described in Section 423 of the Code) of the Company and any subsidiary or parent of the Company may not accrue at a rate which exceeds twenty-five thousand dollars ($25,000) in the aggregate (as determined at the time such option is granted). Neither we nor any subsidiary currently has any other employee stock purchase plan in place.

Unless otherwise determined by the Compensation Committee, any shares purchased by a Participant are subject to a one year holding period from the date of purchase.

TERMINATION OF PARTICIPATION

A Participant may withdraw from the ESPP at any time by filing a notice of withdrawal prior to the close of business on an exercise date. Upon withdrawal, the entire amount, if any, that remains in the Participant’s account to purchase common stock is refunded to the Participant without interest. Any Participant who withdraws from the ESPP may again become a Participant in accordance with plan rules at the start of the next option period.

If a Participant ceases to be eligible to participate in the ESPP for any reason, the amount in such Participant’s account will be refunded or distributed to the Participant, or in the case of death, the Participant’s designated beneficiary or estate, or otherwise disposed of in accordance with policies and procedures prescribed by the ESPP Committee in cases where such a refund or distribution may not be possible.

NUMBER OF SHARES PURCHASED BY CERTAIN INDIVIDUALS AND GROUPS

Given that the number of shares of common stock that may be purchased under the ESPP is determined by the fair market value of the common stock on the offering date or exercise date and given that participation in the ESPP is voluntary on the part of eligible employees, the actual number of shares that may be purchased by any individual is not determinable. All Participants, however, are subject to the limitations on the amount that can be invested, as set forth in the ESPP and described above.

AMENDMENT AND TERMINATION

The Board or the Compensation Committee may at any time, or from time to time, amend, modify, or terminate the ESPP in any respect, except that, without approval of the stockholders, no amendment may increase the aggregate number of shares reserved under the ESPP, materially increase the benefits accruing to Participants (as amended, other than the purchase price of the shares) or materially modify the requirements as to eligibility for participation in the ESPP. Any amendment of the ESPP must be made in accordance with applicable provisions of the Code and/or any regulations issued thereunder, any other applicable law or regulations, and the requirements of the principal exchange upon which the common stock is listed.

Unless otherwise terminated by the Board or the Compensation Committee, the ESPP will terminate on December 31, 2026.

 

46

U.S. TAX ASPECTS

Neither the grant of an option, nor the exercise of an option, under the ESPP will have any tax consequences to Participants or us under federal tax laws. Tax consequences for a Participant will not arise until the Participant disposes of the common stock acquired under the ESPP. The tax treatment on disposition of common stock will depend on whether the Participant disposes of the common stock before or after the expiration of the “statutory holding period,” i.e., the later of two years after the grant of the option or one year after the option is exercised.

If the Participant disposes of common stock acquired under the ESPP after the expiration of the statutory holding period, he or she will recognize ordinary income equal to the lesser of: (a) the excess of the fair market value of the common stock on the grant date over the option price and (b) the excess of the amount realized on the disposition of common stock over the option price. Any additional gain realized from the disposition of the shares will be treated as capital gain. If the Participant disposes of the common stock acquired under the ESPP before the expiration of the statutory holding period, he or she will recognize ordinary income equal to the excess of the fair market value of the common stock on the exercise date, over the option price. Any additional gain realized from the disposition will be treated as capital gain. We will be entitled to a deduction equal to the amount of ordinary income recognized by the Participant in the event of a disposition before the expiration of the statutory holding period.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
AS OF DECEMBER 31, 2022

 

47

PROPOSAL NO. 3

ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION

Under Section 14A of the Exchange Act, the stockholders of the Company are entitled to vote at this year’s Annual Meeting to approve the compensation of the Company’s named executive officers, as disclosed in this Proxy Statement pursuant to Item 402 of Regulation S-K of the rules and regulations under the Securities Act of 1933, as amended (Securities Act). Currently, this vote is conducted every year. Subject to the results of the Say on Frequency Proposal, the next vote will occur at the 2024 Annual Meeting of Stockholders.

As described more fully in the CD&A beginning on page 57, the Company’s executive compensation program is designed to attract, retain and reward top executive talent. The intent of the Company’s compensation program is to reward the achievement of the Company’s annual goals and objectives while supporting the Company’s long- term business strategy.

This proposal, commonly known as a “say on pay” proposal, gives stockholders the opportunity to express their views on the Company’s named executive officers’ compensation. This vote is not intended to address any specific item of compensation, but rather the overall compensation of the named executive officers as described in this Proxy Statement. Accordingly, the Board recommends that stockholders vote in favor of the following resolution:

“RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.”

The say on pay vote is advisory and therefore not binding on the Company, the Board or the Compensation Committee. However, the Board and the Compensation Committee value the opinions of the stockholders and to the extent there is a significant number of votes against the named executive officer compensation as disclosed in this Proxy Statement, stockholders’ concerns will be considered, and the Board and the Compensation Committee will evaluate actions necessary to address those concerns.

 

48

PROPOSAL NO. 4

ADVISORY VOTE ON FREQUENCY OF ADVISORY VOTE ON EXECUTIVE COMPENSATION

As described in Proposal No. 3, the Company’s stockholders are provided the opportunity to cast an advisory vote to approve the compensation of the Company’s named executive officers, that is, the “say on pay” vote. Section 14A of the Exchange Act also affords stockholders the opportunity to cast an advisory vote on how often the Company should include the say on pay vote in its proxy materials for future annual stockholder meetings (or other meetings of stockholders at which directors will be elected). Under this Proposal No. 4, stockholders may vote to have the say on pay vote every one year, two years, or three years, or abstain from the vote. At the Company’s 2017 Annual Meeting of Stockholders, the stockholders voted to have the say on pay vote annually.

Although the vote is non-binding, the Board and the Compensation Committee value the opinions of the stockholders and will consider the outcome of the vote when determining the frequency of the say on pay vote.

The Board has determined that an annual say on pay vote is the best approach for the Company and its stockholders because the Board believes that a one-year frequency provides the highest level of accountability and communication by and between the Board and the stockholders. An annual say on pay vote enables stockholders to approve the compensation of the named executive officers with the most recent executive compensation information presented in the Proxy Statement for the annual meeting of stockholders. In addition, the Board recognizes the importance of receiving regular, direct input from stockholders on important issues such as the Company’s compensation philosophy, policies and practices as disclosed in the Proxy Statement every year. An annual vote is consistent with Company policies of annually seeking input from, and engaging in discussions with, the stockholders on corporate governance matters and executive compensation philosophy, policies and practices.

For the reasons stated above, the Board recommends a vote for a “one year” frequency for the say on pay vote. Please note that stockholders are not voting to approve or disapprove the best approach determined by the Board with respect to this proposal. Rather, stockholders may cast their vote on their preferred voting frequency by choosing the option of one year, two years, or three years, or by abstaining from the vote.

Because this is only an advisory vote, the Board may decide that it is in the best interests of the stockholders and the Company to hold the say on pay vote more or less frequently than the option selected by the stockholders.

 

49

PROPOSAL NO. 5

RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE 2023 FISCAL YEAR

The Audit Committee is directly responsible for the appointment, compensation, retention and oversight of the independent registered public accounting firm retained to audit the Company’s consolidated financial statements. To execute this responsibility, the Audit Committee engages in a thorough annual evaluation of  (i) the independent registered public accounting firm’s qualifications, performance and independence, (ii) whether the independent registered public accounting firm should be rotated, and (iii) the advisability and potential impact of selecting a different independent registered public accounting firm.

The Audit Committee appointed the firm of KPMG LLP, an independent registered public accounting firm, to audit the consolidated financial statements of the Company and its subsidiaries for the 2023 fiscal year at a meeting held in February. KPMG LLP has been retained as the Company’s independent registered public accounting firm continuously since May 2004. In accordance with SEC rules and KPMG LLP policies, audit partners are subject to rotation requirements to limit the number of consecutive years an individual partner may provide audit services to the Company. For lead and concurring review audit partners, the maximum number of consecutive years of service in that capacity is five years. The Audit Committee is involved in the selection of KPMG LLP’s lead audit partner.

The Audit Committee and the Board believe that the continued retention of KPMG LLP to serve as the Company’s independent registered public accounting firm for the 2023 fiscal year is in the best interests of the Company and its stockholders. If the stockholders do not ratify the appointment of KPMG LLP, the Audit Committee will reconsider its selection. Representatives of KPMG LLP are expected to attend the Annual Meeting where they will be available to respond to questions and, if they desire, to make a statement.

 

50

Executive Officers

Our executive officers are elected by the Board annually to hold office until their successors are elected and qualified. The biographical information for each of the executive officers is provided below.

Mauricio Gutierrez

Age 52
President and Chief Executive Officer

For biographical information for Mauricio Gutierrez, see “Nominations for Director.”

Alberto Fornaro

Age 58
Executive Vice President and Chief Financial Officer

Mr. Fornaro has served as our Executive Vice President and Chief Financial Officer since June 2021. Before joining us, he was Chief Financial Officer of Coupang, Inc. (Coupang) from February 2020 to December 2020 and had served as a Senior Advisor to Coupang from December 2020 to May 2021. Prior to that, he served in various positions at International Gaming Technology plc (IGT) from 2011 to January 2020, where he had most recently served as Executive Vice President and Chief Financial Officer since 2013. Before IGT, Mr. Fornaro was Group CFO and President of the Europe, Middle East, and Africa division at Doosan Infracore Construction Equipment. Mr. Fornaro also served as General Manager and CFO of Technogym and spent 12 years in finance at CNH Global/​Fiat Group in Italy and in the United States.

Bruce Chung

Age 49
Executive Vice President, Strategy, M&A and NRG Services

Mr. Chung has served as our Executive Vice President, Strategy, M&A, and NRG Services since July 2022. Prior to his service as Executive Vice President, Mr. Chung served as Senior Vice President of Strategy, M&A, and NRG Services from August 2016 to July 2022. Mr. Chung served as a Managing Director at Energy Impact Partners, a private equity firm focused on energy technology investments, in 2016. Prior to his employment with Energy Impact Partners, Mr. Chung served in a number of different capacities focused on large-scale project and new business development at NRG from May 2008 to January 2016. Prior to his initial employment with us, Mr. Chung served as a director in the investment banking division of Citigroup and its predecessor firms providing capital markets advisory and M&A services to a number of regulated and unregulated power companies. During his banking career, Mr. Chung worked on a number of large capital markets and M&A transactions, including multiple assignments for the Company.

Brian Curci

Age 45
Executive Vice President, Legal and General Counsel

Mr. Curci has served as our Executive Vice President, General Counsel since March 2021. He also served as our Senior Vice President and General Counsel from March 2018 to March 2021 and Senior Vice President and Deputy General Counsel from April 2017 to March 2018. Since joining us in 2007, Mr. Curci has served in various other legal roles, including as Corporate Secretary from October 2011 to July 2018. Prior to joining us, Mr. Curci was a corporate associate with the law firm Saul Ewing LLP in Philadelphia.

 

51

Robert J. Gaudette

Age 49
Executive Vice President, NRG Business

Mr. Gaudette has served as our Executive Vice President, NRG Business since April 2022. Prior to that, Mr. Gaudette served as Senior Vice President, Business Solutions since December 2013. Prior to December 2013, Mr. Gaudette was Senior Vice President, C&I and Origination, starting in August 2013, and Senior Vice President, Product Development & Origination following the acquisition of GenOn in December 2012. Mr. Gaudette served as Senior Vice President and Chief Commercial Officer at GenOn from December 2010 to December 2012 and served as Vice President of Mirant’s Mid-Atlantic business unit from August 2009 to December 2010. During his career at Mirant, which began in 2001, Mr. Gaudette worked in various other capacities including Director of West Power, Director of NYMEX Trading, Assistant to the Chief Operating Officer and NYMEX natural gas trader. Mr. Gaudette serves on the advisory board of Shift, an early stage company that provides a platform advising veterans on job prospects and linking them to opportunities.

Elizabeth Killinger

Age 53
Executive Vice President, NRG Home

Ms. Killinger has served as Executive Vice President, NRG Home since February 2016. Prior to that, she had served as Senior Vice President in various Retail Operations roles with us since December 2010. Ms. Killinger has been with us and our predecessors since 2002 and has held various operational and business leadership positions within the retail organization. Prior to joining us, Ms. Killinger spent a decade providing strategy, management and systems consulting to energy, oilfield services and retail distribution companies across the U.S. and in Europe.

Christopher Moser

Age 52
Head of Competitive Markets and Policy

Mr. Moser has served as our Head of Competitive Markets and Policy since March 2022. Mr. Moser served as our Executive Vice President, Operations from January 2018 to March 2022. He previously served as Senior Vice President, Operations of NRG, with responsibility for Plant Operations, Commercial Operations, Business Operations and Engineering and Construction, beginning in March 2016. From June 2010 to March 2016, Mr. Moser served as Senior Vice President, Commercial Operations. In this capacity, he was responsible for the optimization of our wholesale generation fleet. Mr. Moser serves on the board of trustees of the Princeton- Blairstown Center, a New Jersey non-profit that provides adventure-based, experiential education to historically marginalized youth.

Emily Picarello

Age 42
Corporate Controller

Ms. Picarello has served as our Principal Accounting Officer since February 2022. Ms. Picarello joined the Company in December 2018 and served as Assistant Controller for the Company through November 2021, when she was promoted to Vice President and Corporate Controller. Prior to her employment with the Company, Ms. Picarello spent over seven years with PVH Corp., a global apparel company, first as the Director of Financial Reporting and then as the Vice President, Financial Reporting. Prior to Ms. Picarello’s time with PVH Corp., she was an auditor with KPMG LLP for over eight years, holding various positions including Audit Senior Manager. Ms. Picarello is a certified public accountant.

 

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Stock Ownership of Directors, Named Executive Officers

and Certain Beneficial Owners

STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth information concerning beneficial ownership of the Company’s common stock as of March 6, 2023, for: (a) each director and the nominees for director; (b) named executive officers (NEOs); and (c) all current directors and executive officers as a group. The percentage of beneficial ownership is based on 232,269,883 shares of common stock outstanding as of March 6, 2023. The percentage of beneficial ownership also includes any shares that such person has the right to acquire within 60 days of March 6, 2023. Unless otherwise indicated, each person has sole voting and dispositive power with respect to the shares set forth in the following table.

The address of the directors and executive officers is c/o NRG Energy, Inc., 804 Carnegie Center, Princeton, New Jersey 08540.

 

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STOCK OWNERSHIP OF PRINCIPAL STOCKHOLDERS

The following table sets forth information for each person known to the Company to own more than five percent of the Company’s common stock, as of the date of their most recent Schedule 13D or Schedule 13G filing, as applicable, with the SEC. Percentage of beneficial ownership is based on 232,269,883 shares of common stock outstanding as of March 6, 2023. Unless otherwise indicated, each person has sole investment and voting power with respect to the shares set forth in the following table.

 

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Certain Relationships and Related Person Transactions

REVIEW, APPROVAL OR RATIFICATION OF TRANSACTIONS WITH RELATED PERSONS

The Board has adopted written policies and procedures to address potential or actual conflicts of interest and the appearance that decisions are based on considerations other than the best interests of NRG that may arise in connection with transactions with certain persons or entities (Related Person Policy). The Related Person Policy operates in conjunction with our Code of Conduct and is applicable to all “Related Person Transactions,” which are all transactions, arrangements or relationships in which:

•

the aggregate amount involved will or may be expected to exceed $50,000 in any calendar year;

​

•

the Company is a participant; and

​

•

any Related Person (as that term is defined below) has or will have a direct or indirect interest.

​

A “Related Person” is:

•

any person who is, or at any time during the applicable period was, a director of the Company or a nominee for director or an executive officer;

​

•

any person who is known to the Company to be the beneficial owner of more than 5% of the outstanding common stock;

​

•

any immediate family member of any of the persons referenced in the preceding two bullets, which means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law of the director, nominee for director, executive officer or more than 5% beneficial owner of common stock, and any person (other than a tenant or employee) sharing the household of such director, nominee for director, executive officer or more than 5% beneficial owner of common stock; and

​

•

any firm, corporation or other entity in which any of the foregoing persons is a partner or principal or in a similar position or in which such person has a 10% or greater beneficial ownership interest.

​

A Related Person Transaction is subject to review and approval or ratification by the Governance and Nominating Committee. If the aggregate amount involved is expected to be less than $500,000, the transaction may be approved or ratified by the Chair of the Governance and Nominating Committee. As part of its review of each Related Person Transaction, the Governance and Nominating Committee will take into account, among other factors it deems appropriate, whether the transaction is on terms no less favorable than the terms generally available to an unaffiliated third-party under the same or similar circumstances and the extent of the Related Person’s interest in the transaction. This Related Person Policy also provides that certain transactions, based on their nature and/or monetary amount, are deemed to be pre-approved or ratified by the Governance and Nominating Committee and do not require separate approval or ratification.

Transactions involving ongoing relationships with a Related Person will be reviewed and assessed at least annually by the Governance and Nominating Committee to ensure that such Related Person Transactions remain appropriate and in compliance with the Governance and Nominating Committee’s guidelines. The Governance and Nominating Committee’s activities with respect to the review and approval or ratification of all Related Person Transactions are reported periodically to the Board.

 

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Executive Compensation

COMPENSATION DISCUSSION AND ANALYSIS

​	EXECUTIVE SUMMARY	​	​	​	​	58	​	​
​	Key Governance Features of Our Executive Compensation Program	​	​	​	​	60	​	​
​	EXECUTIVE COMPENSATION PROGRAM	​	​	​	​	61	​	​
​	2022 Named Executive Officers	​	​	​	​	61	​	​
​	Goals and Objectives of the Program	​	​	​	​	61	​	​
​	THE COMPENSATION PROCESS	​	​	​	​	62	​	​
​	Compensation Consultant	​	​	​	​	62	​	​
​	Survey Analysis for Executive Compensation	​	​	​	​	62	​	​
​	ELEMENTS OF COMPENSATION	​	​	​	​	62	​	​
​	Base Salary	​	​	​	​	63	​	​
​	Annual Incentive Compensation	​	​	​	​	63	​	​
​	Overview	​	​	​	​	63	​	​
​	2022 AIP Award Performance Criteria	​	​	​	​	64	​	​
​	2022 AIP Results and Payments	​	​	​	​	66	​	​
​	Long-Term Incentive Compensation	​	​	​	​	67	​	​

​	LTIP Award Opportunity	​	​	​	​	67	​	​
​	LTIP Awards	​	​	​	​	67	​	​
​	Relative Performance Stock Units	​	​	​	​	67	​	​
​	Restricted Stock Units	​	​	​	​	68	​	​
​	Dividend Equivalent Rights	​	​	​	​	68	​	​
​	Clawbacks	​	​	​	​	68	​	​
​	Benefits	​	​	​	​	69	​	​
​	Potential Severance and Change-in-Control Benefits	​	​	​	​	69	​	​
​	OVERSIGHT OF RISKS RELATED TO COMPENSATION POLICIES	​	​	​	​	70	​	​
​	ANTI-HEDGING AND ANTI-PLEDGING POLICIES	​	​	​	​	70	​	​
​	OTHER MATTERS	​	​	​	​	71	​	​
​	Stock Ownership Guidelines	​	​	​	​	71	​	​
​	Tax and Accounting Considerations	​	​	​	​	71	​	​

OTHER ITEMS

​	COMPENSATION TABLES	​	​	​	​	72	​	​
​	Summary Compensation Table for Fiscal Year Ended December 31, 2022	​	​	​	​	72	​	​
​	Grants of Plan-Based Awards for Fiscal Year Ended December 31, 2022	​	​	​	​	74	​	​
​	Outstanding Equity Awards at Fiscal Year-End for Fiscal Year Ended December 31, 2022	​	​	​	​	77	​	​
​	Option Exercises and Stock Vested for Fiscal Year Ended December 31, 2022	​	​	​	​	78	​	​

​	Pension Benefits for Fiscal Year Ended December 31, 2022	​	​	​	​	79	​	​
​	EMPLOYMENT AGREEMENTS	​	​	​	​	79	​	​
​	SEVERANCE AND CHANGE-IN-CONTROL.	​	​	​	​	79	​	​
​	CEO PAY RATIO	​	​	​	​	82	​	​
​	PAY VERSUS PERFORMANCE	​	​	​	​	82	​	​

 

57

EXECUTIVE SUMMARY

The objectives of our executive compensation program are to align executive pay with stockholder value and to motivate executives to achieve our corporate goals. This CD&A describes the elements, implementation, and 2022 results of our executive compensation program.

At our 2022 Annual Meeting of Stockholders, we received 97% support for our say on pay proposal. As a result, we believe that our stockholders understand that our pay practices demonstrate our commitment to pay for performance and that our compensation program, policies, and practices align with this commitment. Our Board and Compensation Committee consider the results of the say on pay proposal each year in informing annual compensation decisions.

In 2022, we made significant strides in our evolution as a consumer services company. In December 2022, we announced entry into an agreement to acquire Vivint Smart Home, Inc. (Vivint), a transaction that we believe will accelerate the realization of our consumer-focused growth strategy. Through this acquisition, which closed on March 10, 2023, the combined company is expected to be the leading essential home solutions provider with an extensive network of approximately 7.4 million customers across North America. We expect the integration of Vivint’s operations to strengthen our core platform and diversify our financial profile with more predictable earnings through Vivint’s subscription-based model and long customer tenure of nine years. Following the acquisition, the combined company has approximately 18,000 employees, including Vivint’s seasonal direct sales and installation force.

While continuing to execute on our disciplined capital allocation plan, we also produced the following results in line with our business strategy in 2022:

•

Continued to optimize our portfolio with the planned retirement of Astoria and related land sale, and the disposition of the Watson generating facility.

​

•

Realized $259 million of synergies from the Direct Energy acquisition, equivalent to 86% of our targeted goal of  $300 million by the end of 2023.

​

•

Maintained top decile safety performance and increased performance against our EKPIs.

​

 

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Our compensation program ties a significant portion of our NEOs’ overall compensation to the achievement of increases in TSR through our long-term compensation program. NEOs receive two-thirds of their equity awards in RPSUs. The quantity of shares received by NEOs upon the vesting of an RPSU award is a function of the Company’s TSR performance relative to our performance peer group over a three year-period. The most recent three-year cycle ended January 2, 2023 (based on a common stock price as of December 31, 2022) and the Company’s TSR (as calculated in accordance with the terms of the outstanding RPSUs) decreased by 6.57%. As a result, the RPSU awards scheduled to vest on January 2, 2023, were forfeited. The decrease in TSR at the end of 2022 followed the announcement of NRG’s acquisition of Vivint. While the Compensation Committee acknowledged that, prior to the announcement, the RPSUs were projected to vest at 112% of target, it did not make any adjustments, thereby allowing the compensation program to function as envisioned.

As described in this CD&A, awards under our Annual Incentive Plan (AIP) are based on certain Company performance metrics, the results of which are reviewed and applied to the AIP awards given to the NEOs. For 2022, the Adjusted EBITDA achievement was below target at 86%, the Adjusted Free Cash Flow and Credit Ratio both failed to achieve threshold performance and were therefore at 0%, and the ESG achievement was above target at 156%. Based on these results and the weighting approved by our Compensation Committee, the Company achieved an overall performance of 53% of target. As a result, our NEOs received AIP awards at 53% of target, commensurate with Company performance for 2022.

 

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KEY GOVERNANCE FEATURES OF OUR EXECUTIVE COMPENSATION PROGRAM

Our compensation program, policies and practices incorporate several key governance features, aligning with the following compensation best practices in 2022:

​	✓   What We Do:	​
​	✓ Pay for performance, including: ​ ◦ Providing for a large portion of NEO compensation that is variable and at risk, ​ ◦ Delivery of a substantial majority of long-term incentive compensation using performance-based equity and ​ ◦ Requiring above-median performance for vesting of long-term incentive compensation awards at target ​	​
​	✓ Require a double trigger for the payment of cash severance and the vesting of equity upon a change-in-control ​	​
​	✓ Include clawback policies in our compensation plans ​	​
​	✓ Maintain robust stock ownership guidelines for our NEOs ​	​
​	✓ Provide market-level retirement benefits ​	​
​	✓ Denominate and settle all long-term incentive awards in equity ​	​
​	✓ Engage an independent compensation consultant to advise us on matters surrounding our compensation plans and settle all long-term incentive awards in equity ​	​
​	✓ Ensure our compensation practices do not encourage undue risk taking (e.g., engage in robust risk monitoring and limiting payments made under our AIP and performance equity program) ​	​
​	✓ Engage in a comprehensive performance evaluation process for all NEOs and annual management succession and leadership development efforts ​	​
​	✓ Hold an annual say on pay vote ​	​
​	✓ Conduct a gender and race pay equity survey at least every three years ​	​

​	×   What We Don’t Do:	​
​	× No excise tax gross-ups upon a change-in-control and no tax gross-ups on perquisites or benefits ​	​
​	× No pledging or hedging of the Company’s stock by NEOs or directors ​	​
​	× No employment agreements for executive officers with the exception of our CEO ​	​
​	× No guaranteed bonus payments for our NEOs ​	​
​	× No guaranteed salary increases for NEOs ​	​
​	× No supplemental executive retirement plans ​	​
​	× No grants below 100% of fair market value ​	​
​	× No loans to executives for purchases of Company securities on margin ​	​
​	× No backdating or repricing of stock options ​	​
​	× No dividend equivalent rights on unearned equity awards ​	​
​	× No trades of our stock by our officers and directors without preclearance ​	​
​	× No excessive perquisites ​	​

 

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EXECUTIVE COMPENSATION PROGRAM

2022 NAMED EXECUTIVE OFFICERS

This CD&A describes our executive compensation program for our NEOs in 2022. For 2022, the NEOs were as follows:

GOALS AND OBJECTIVES OF THE PROGRAM

Our Compensation Committee designs and implements an executive compensation program that is intended to:

•

closely align our executive compensation with stockholder value creation, avoiding plans that encourage executives to take excessive risk;

​

•

support our long-term business strategy, while rewarding our executive team for their contributions to Company results and their individual accomplishments;

​

•

allow us to recruit and retain a top-tier executive team in a competitive industry and to motivate our executive team to achieve superior performance over sustained periods;

​

•

provide competitive compensation opportunities while adhering to market standards for compensation; and

​

•

complement and advance NRG’s power values, which are an integral part of our company culture and include safety and well-being, customer-focus, collaboration, accountability, and diversity, equity and inclusion (Power Values).

​

The Compensation Committee is committed to aligning executives’ compensation with performance. The Compensation Committee’s objectives are achieved through the use of both short-term and long-term incentives. For 2022, pay for our NEOs was targeted at the median of the market. In addition, through the AIP, our NEOs are rewarded for achieving annual corporate and individual goals. Our long-term incentive compensation program is designed to reward our NEOs for long-term TSR outperformance.

 

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THE COMPENSATION PROCESS

COMPENSATION CONSULTANT

Pursuant to its charter, the Compensation Committee is authorized to engage, at the expense of the Company, a compensation consultant to provide independent advice, support, and expertise to assist the Compensation Committee in overseeing and reviewing our overall executive compensation strategy, structure, policies and programs, and to assess whether our compensation structure establishes appropriate incentives for management and other key employees.

Pay Governance, the Compensation Committee’s independent compensation consultant since 2015, assists with executive and director pay assessments and works with the Compensation Committee to review the design of the executive compensation program.

Pay Governance reports directly to the Compensation Committee and provides no other remunerated services to the Company. Pay Governance does not provide services to any of our affiliates. In accordance with SEC rules and requirements, the Company has affirmatively determined that no conflicts of interest exist between the Company and Pay Governance (or any individuals working on the Company’s account on behalf of Pay Governance).

SURVEY ANALYSIS FOR EXECUTIVE COMPENSATION

Given the consolidation within the deregulated power industry, as well as NRG’s asset-light, consumer-driven business strategy, the Compensation Committee, with guidance from Pay Governance, reviews size-adjusted compensation survey data for the three major industry sectors in which the Company competes for talent: energy industry, consumer products industry and general industry.

ELEMENTS OF COMPENSATION

Our Compensation Committee considers a variety of components in its evaluation of compensation packages. While a portion of our compensation is fixed, a significant percentage is risk-based and payable and/or realizable only if certain milestones or objectives are met. The following charts illustrate the breakdown of our NEOs’ target compensation opportunities, namely Mr. Gutierrez (our CEO), Mr. Fornaro (our CFO) and Mr. Curci, Ms. Killinger and Mr. Moser.

 

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BASE SALARY

Base salary compensates NEOs for their level of experience and expertise, for the responsibilities of their individual position and for the continued expectation of superior performance. Recommendations on increases to base salary take into account, among other factors, prevailing market data for the position as provided by Pay Governance, the NEO’s individual performance, the general contributions of the NEO to overall corporate performance, and the level of responsibility of the NEO with respect to his or her specific position. In 2022, consistent with the industry trend and in order to maintain market competitiveness, the CEO recommended (except for himself), and the Compensation Committee approved, modest increases to base salaries of 3% for Mr. Curci and Ms. Killinger, while Mr. Fornaro’s salary increase was less than 2%, as described below. Mr. Moser’s salary was adjusted as a result of his transition to a newly created leadership role as Head of Competitive Markets and Policy. The increase of 3% to the base salary of Mr. Gutierrez was approved by the Board based on the recommendation of the Compensation Committee.

For 2022, the base salary for each NEO was as follows:

ANNUAL INCENTIVE COMPENSATION

OVERVIEW

Annual performance-based compensation awards are made under our AIP. AIP awards are short-term compensation designed to reward NEOs for meeting annual individual goals and Company financial and non-financial goals. The annual incentive compensation opportunity is defined as a percentage of each NEO’s annual base salary. This year, AIP awards were based on the results of the achievement of the Company’s AIP performance metrics, rather than a combination of a threshold Adjusted Free Cash Flow performance metric and the Company’s AIP performance metrics.

 

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2022 AIP AWARD PERFORMANCE CRITERIA

The quantitative AIP award performance criteria applicable to all NEOs is based upon our 2022 corporate business strategy and individual contributions. The table below sets forth the 2022 AIP performance criteria and weightings applicable to all NEOs.

 

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In addition to the quantitative financial and non-financial metrics, each NEO is evaluated on his or her achievement of individual performance criteria that align with Company goals. The Compensation Committee assesses performance of each NEO relative to the performance criteria applicable to each NEO and multiplies the total formulaic AIP award for each NEO by an individual performance factor of up to plus or minus 20%. These criteria are established at the beginning of each fiscal year and include measures tied to the leadership of the business. During 2022, such measures included financial and operational commitments as well as our Power Values that include advancing the customer experience, maintaining an enriching culture and strengthening employee engagement. We believe that these Power Values are the pillars that guide our Company and fuel our growth. The dedication of our NEOs to our Power Values, in combination with their focus on the Company goals, is integral to our success. The Compensation Committee adjusts the total AIP award for the CEO based on its own assessment of the performance criteria applicable to the CEO and recommends such award to the Board for approval. With respect to all other NEOs, the Compensation Committee considers the CEO recommendations for the NEOs and retains the ability to approve the AIP awards. The Compensation Committee retains sole discretion under the AIP to adjust the amount of, or eliminate any, awards that are otherwise payable under the AIP.

The 2022 target AIP award opportunities for the NEOs, expressed as a percentage of base salary, as of December 31, 2022, are set forth in the table below.

Actual AIP payouts can range from 50% of the target percentage to 200% of the target percentage, which reflect the threshold and maximum AIP award opportunities, respectively. For each individual metric, there will be a 0% achievement unless the result meets the threshold level of performance.

 

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2022 AIP RESULTS AND PAYMENTS

The following table details the quantitative financial and non-financial performance goals and results for 2022, as approved by the Compensation Committee:

As noted above, with respect to AIP awards for 2022, after due consideration, the Compensation Committee approved a final AIP result of 53%, in accordance with the Company’s performance metrics results and did not make any adjustments based on individual performance for the CEO or other NEOs.

The AIP awards paid to each of the NEOs for 2022 were as follows:

 

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LONG-TERM INCENTIVE COMPENSATION

LTIP AWARD OPPORTUNITY

The 2022 target LTIP award opportunities for the NEOs, as of the date of the annual LTIP grant on January 2, 2022, are set forth in the table below.