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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Evergy, Inc.

(Name of Registrant as Specified in its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

 

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Evergy, Inc.

One Kansas City Place

1200 Main Street

Kansas City, Missouri 64105

March 24, 2021

Dear Shareholder:

We are pleased to invite you to the annual meeting of shareholders of Evergy, Inc. For the health and safety of our shareholders and employees during the COVID-19 pandemic, the meeting will be held via live audio webcast and using online shareholder tools at 10:00 a.m. Central Daylight Time, on Tuesday, May 4, 2021, at www.virtualshareholdermeeting.com/EVRG2021.

At this meeting, you will be asked to:

 

1.	Elect the nominees named in the attached proxy statement as directors;

 

2.	Provide an advisory non-binding vote to approve the 2020 compensation of our named executive officers;

 

3.	Ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for 2021; and

 

4.	Transact any other business as may properly come before the meeting or any adjournments or postponements thereof.

The attached notice of annual meeting and proxy statement describe the business to be transacted at the meeting. Please review these materials and vote your shares.

Your vote is important. I encourage you to complete, sign, date and return your proxy card or use telephone or internet voting prior to the annual meeting so that your shares will be represented and voted at the meeting even if you cannot attend.

 

Sincerely,

David A. Campbell

President and Chief Executive Officer

		A Letter from Your Board of Directors

Dear Fellow Shareholders:

We join David in inviting you to Evergy’s 2021 annual shareholder meeting. We are proud of the financial and operational results that we delivered in 2020 and are humbled by Evergy’s tireless essential employees who helped keep the lights safely on during the pandemic.

 

		CEO Succession Planning

One of our primary responsibilities is to ensure that the right leadership exists at your company. We welcomed David Campbell as Evergy’s new President and Chief Executive Officer in 2021 and are excited to have David as a member of the Board. David brings a wealth of utility experience to Evergy and, along with the management team, will help ensure Evergy delivers results that support and enhance value creation and the long term success of this company.

 

		Strategic Oversight

The Sustainability Transformation Plan (“STP”) we introduced in 2020 is designed to increase value for all stakeholders while advancing our longstanding commitment to deliver clean, safe, affordable and reliable energy. The plan focuses on cost management and investments to improve reliability, lower operating costs, provide further access to renewable energy and enhance the customer experience. Since 2005, Evergy has retired more than 2,400 megawatts of fossil generation and added or contracted for over 4,600 megawatts of renewables. The STP seeks to build on this track record and accelerate our transition to a clean energy provider, building on our already extensive success toward that goal.

 

		Responsible Board Refreshment

We understand the importance of fresh ideas, and have been diligent in ensuring that the Board is bringing new perspectives at a responsible pace. To that end, we added Art Stall, Paul Keglevic and Kirk Andrews to the Board in 2019 and 2020. And, earlier this year, we added Senator Mary Landrieu and John Wilder. Kirk stepped down from the Board in 2021 to become our Executive Vice President and Chief Financial Officer, and we are thrilled to be able to continue to reap the benefits of his deep utility, leadership and capital markets experience in his new role. Rick Hawley is not standing for re-election at the 2021 Annual Meeting for personal reasons, and we thank him for his many years of exemplary service.

 

		Social and Governance Leadership

We produce nearly a third of our customers’ power annually from renewable sources, and over half the power to homes and businesses we serve comes from emission-free sources. In 2020, Evergy achieved a reduction of carbon emissions of approximately 50% from 2005 levels and we have ambitious goals included in our plan to drive further reductions. Our Board is also independent and committed to the adoption and application of shareholder-positive governance practices. We encourage you to take the time to read about these practices in this proxy statement and, as always, we welcome your engagement and ideas on these matters.

Thank you for investing in Evergy and we hope to see you soon.

Sincerely,

Evergy, Inc. Board of Directors

 

Mark A. Ruelle		Thomas D. Hyde		David A. Campbell
Chair of the Board		Lead Independent Director		President and Chief Executive Officer
Mollie Hale Carter		Richard L. Hawley		B. Anthony Isaac
Paul M. Keglevic		Mary L. Landrieu		Sandra A.J. Lawrence
Ann D. Murtlow		Sandra J. Price		S. Carl Soderstrom Jr.
J. Arthur Stall		C. John Wilder

TABLE OF CONTENTS

 

Notice of Annual Meeting of Shareholders			1
Proxy Statement Summary			2
PROPOSAL 1: ELECTION OF DIRECTORS			7
Corporate Governance Matters			16
Board Structure			16
Corporate Governance Practices			21
Director Independence			23
Other Matters			24
Director Compensation			25
PROPOSAL 2: ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION			27
Executive Summary of Compensation Matters			28
2020 Compensation Program Summary			28
Management Succession			30
Stakeholder-Focused Modifications to 2021 Compensation Program			30
Strong Compensation Governance Practices			30
Compensation Discussion and Analysis			31
Compensation Philosophy, Objectives and Process			31
Summary and Analysis of Executive Compensation			33
Compensation Committee Report			44
Executive Compensation Tables			45
Summary Compensation Table			45
Grants of Plan-Based Awards			47
Outstanding Equity Awards at Fiscal Year-End			48
Option Exercises and Stock Vested			49
Pension Benefits			50
Nonqualified Deferred Compensation			52
Potential Payments Upon Termination or Change-in-Control			53
CEO Pay Ratio			58
PROPOSAL 3: RATIFICATION OF APPOINTMENT OF DELOITTE  & TOUCHE LLP			59
Information Regarding Audit Matters			59
Audit Committee Report			61
Security Ownership of Directors, Management and Beneficial Owners			63
Frequently Asked Questions			65
Appendix A — Non-GAAP Reconciliation for Results			A-1
Appendix B — GAAP to non-GAAP Financial Metric Reconciliation			B-1
Appendix C — Information Regarding Legacy Change-in-Control Agreements			C-1

Cautionary Statements Regarding Certain Forward-Looking Information

Statements made in this proxy statement that are not based on historical facts are forward-looking, may involve risks and uncertainties, and are intended to be as of the date when made. Forward-looking statements include, but are not limited to, statements relating to our strategic plan, including, without limitation, those related to earnings per share, dividend, operating and maintenance expense and capital investment goals; the outcome of legislative efforts and regulatory and legal proceedings; future energy demand; future power prices; plans with respect to existing and potential future generation resources; the availability and cost of generation resources and energy storage; targeted emissions reductions; and other matters relating to expected financial performance or affecting future operations. Forward-looking statements are often accompanied by forward-looking words such as “anticipates,” “believes,” “expects,” “estimates,” “forecasts,” “should,” “could,” “may,” “seeks,” “intends,” “proposed,” “projects,” “planned,” “target,” “outlook,” “remain confident,” “goal,” “will” or other words of similar meaning. Forward-looking statements involve risks, uncertainties and other factors that could cause actual results to differ materially from the forward-looking information. Factors that might cause such differences include, but are not limited to, those described in Part I, Item 1.A. of our Annual Report on Form 10-K for the year ended December 31, 2020. Additional risks and uncertainties are discussed from time to time in current, quarterly and annual reports we file with the Securities and Exchange Commission (“SEC”). We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law.

Evergy, Inc.

One Kansas City Place

1200 Main Street

Kansas City, Missouri 64105

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

WHEN

Tuesday, May 4, 2021

Check-In Time: 9:45 a.m. (Central Daylight Time)

Meeting Time: 10:00 a.m. (Central Daylight Time)

WHERE

Virtual format only via live audio webcast at www.vitrualshareholdermeeting.com/EVRG2021.

For the health and safety of our shareholders and employees during the COVID-19 pandemic, the meeting will be held via live audio webcast and using online shareholder tools. There will be no physical meeting location.

PROXY STATEMENT

This proxy statement, the accompanying proxy card and our 2020 annual report are made available to, and mailed, beginning on or about March 24, 2021, to holders of our common stock for the solicitation of proxies by our Board of Directors (“Board”) for the 2021 annual meeting of shareholders (the “2021 Annual Meeting”). Shareholders of record at the close of business on March 18, 2021, are entitled to notice of, and to vote at, the 2021 Annual Meeting or any adjournment thereof. The Board encourages you to read this document carefully and take this opportunity to vote on the matters to be decided at the 2021 Annual Meeting.

In this proxy statement, we refer to Evergy, Inc. as “we,” “us,” “our,” “Company,” or “Evergy,” unless the context clearly indicates otherwise.

By Order of the Board of Directors,

 

 

Heather A. Humphrey

Senior Vice President, General Counsel and Corporate Secretary

 

 

 

 

Notice of Annual Meeting of Shareholders    Proxy Statement  |  Evergy 2021 Proxy Statement   1  

 

 

 

Proxy Statement Summary  |  Evergy 2021 Proxy Statement   2  

 

 

 

Proxy Statement Summary  |  Evergy 2021 Proxy Statement   3  

 

 

 

Proxy Statement Summary  |  Evergy 2021 Proxy Statement   4  

 

 

 

Proxy Statement Summary  |  Evergy 2021 Proxy Statement   5  

 

 

 

Proxy Statement Summary  |  Evergy 2021 Proxy Statement   6  

Proposal 1		Election of Directors
		☑  The Board recommends a vote FOR each of the director nominees

 

Director Nominee Biographies

The following summarizes the business experience of each nominee for at least the last five years, and the specific experience, qualifications, attributes and skills that led the Board to conclude that each nominee should serve as a director. The Board believes that the items noted for each nominee demonstrate his or her superior leadership, high performance standards, mature judgment, strategic planning capabilities and ability to understand and oversee the Company’s strategies, operations and management.

David A. Campbell

Director Since: 2021

Age: 52

Committee Membership: Finance

Mr. Campbell was appointed as Evergy’s President and Chief Executive Officer and as a member of the Board effective January 4, 2021. Mr. Campbell previously served as Executive Vice President and Chief Financial Officer of Vistra Corp. (“Vistra”) (NYSE: VST) (2019-2020), a multi-state electricity generation and retail electric provider headquartered in Dallas, Texas. As chief financial officer of Vistra, Mr. Campbell had broad responsibility for Vistra’s accounting, financial, risk, tax, planning, investor relations, strategy and merger and acquisition activities. Prior to joining Vistra, Mr. Campbell served as president and chief executive officer and member of the board of directors of InfraREIT (“InfraREIT”) (NYSE: HIFR) (2014-2019), a real estate investment trust that owned and leased rate-regulated electric transmission assets in Texas. Mr. Campbell also served as president and chief executive officer of Sharyland Utilities (2016-2019), a Texas-based electric transmission utility. Mr. Campbell originally joined TXU Corp. (“TXU”) (a predecessor of Vistra and Energy Future Holdings) in 2004 as executive vice president of planning, strategy and risk, and became chief financial officer of TXU in 2006 and chief executive officer of Luminant, a wholly-owned competitive power generation subsidiary of TXU, serving in the latter position from 2008 to 2012. Before joining TXU, he was a partner in the Dallas office of McKinsey & Company, where he led the Texas and Southern Region hubs of McKinsey’s corporate finance and strategy practice. Mr. Campbell earned a Bachelor of Arts from Yale University and a J.D. from Harvard Law School. Also, he graduated with a master’s degree from Oxford University, where he studied as a Rhodes Scholar.

Mr. Campbell’s qualifications to serve as our director include his substantial leadership, financial and utility industry experience; and his experience serving as a director of a public company.

 

 

 

Proposal 1 - Election of Directors  |  Director Nominee Biographies  |  Evergy 2021 Proxy Statement   7  

Mollie Hale Carter

Director Since: 2003

Age: 59

Committee Membership: Compensation and Leadership Development (Chair) and Nuclear and Power Supply

Ms. Carter is Chairman of the Board of Directors, Chief Executive Officer and President of FirstSun Capital Bancorp (formerly Sunflower Financial) (since 1996) and Executive Chairman of the Board of Directors of Sunflower Bank (since 2005), a regional community bank now headquartered in Denver, Colorado. She serves on the board of directors of Lockton Companies Inc., a privately-held, global insurance brokerage firm headquartered in Kansas City, Missouri (since 2020). She also serves on the board of directors and is President of Star A, Inc., a privately-held business with Kansas agricultural and other investment interests (since 1996). She previously served as Senior Investment Officer at John Hancock Mutual Life Insurance Company (1986-1996), and on the board of directors of Archer-Daniels-Midland Company, a global food processing and commodities trading corporation located in Chicago, Illinois (1996-2017). She serves on the board of directors of the Kansas Health Foundation and is a recent past director of the Heartland Chapter of the National Association of Corporate Directors. Ms. Carter is a graduate of Dartmouth College, receiving her Bachelor of Arts degree in economics. She obtained her Master of Business Administration from Harvard Business School.

Ms. Carter’s qualifications to serve as our director include her substantial leadership experience as a chief executive officer, her financial expertise and her significant experience serving as a director of a large public company. Ms. Carter also has extensive experience with corporate governance and with complicated regulatory and compliance environments.

Thomas D. Hyde

Director Since: 2011

Age: 72

Committee Membership: Audit (Chair), Nominating, Governance, and Corporate Responsibility

Mr. Hyde served as Executive Vice President, Legal, Compliance, Ethics and Corporate Secretary of Wal-Mart Stores, Inc. (“Wal-Mart”), an international retail store operator (2005-2010). Mr. Hyde previously served as Executive Vice President, Legal and Corporate Affairs and Corporate Secretary of Wal-Mart (2003-2005), and as Executive Vice President, Senior General Counsel of Wal-Mart (2001-2003). Mr. Hyde also previously served on the board of directors and as chair of the audit committee of Vail Resorts, Inc., a mountain resort company located in Broomfield, Colorado (2006-2012). Mr. Hyde received his Bachelor of Arts in English from the University of Kansas, his Juris Doctor from the University of Missouri-Kansas City and holds a Master of Business Administration in finance from the University of Kansas.

Mr. Hyde’s qualifications to serve as our director include his experience in legal and leadership roles for the largest publicly-traded retailer in the world. Additionally, he provides deep insight and understanding on corporate governance matters. He also has experience as a director of a public company.

 

 

 

Proposal 1 - Election of Directors  |  Director Nominee Biographies  |  Evergy 2021 Proxy Statement   8  

B. Anthony Isaac

Director Since: 2003

Age: 68

Committee Membership: Compensation and Leadership Development, Finance and Nuclear and Power Supply

Mr. Isaac was Senior Vice President and Head of Select Service Strategy and Development at Hyatt Hotels Corporation, a global hotel management, franchising, ownership and development company based in Chicago, Illinois with properties worldwide (2011-2015). He served as President of LodgeWorks, a Wichita, Kansas-based hotel management and development company (2000-2011). Before helping found LodgeWorks, Mr. Isaac served as President of the All-Suites Division of Wyndham Hotels and Resorts, an international hotel and resort chain based in Parsippany, New Jersey. He held the position of President of Summerfield Hotel Corp. prior to Summerfield’s merger with Patriot American Hospitality/Wyndham International. He sits on the board of directors of CorePoint Lodging (NYSE: CPLG), a real estate investment trust focused on the hotel industry that is located in Irving, Texas (since 2018), where he serves as chair of the nominating and corporate governance committee and a member of the capital committee. Mr. Isaac holds a Bachelor of Science degree in civil engineering from the Massachusetts Institute of Technology and a Master of Business Administration from Harvard University.

Mr. Isaac’s qualifications to serve as our director include his extensive leadership experience both as the chief executive officer of a privately-held company and as an executive with other large companies in the hotel industry, and his substantial experience with strategic planning and financial matters. He also has experience as a director of a public company and with corporate governance matters.

Paul M. Keglevic

Director Since: 2020

Age: 67

Committee Membership: Audit, Finance and Power Delivery and Safety

Mr. Keglevic has over 40 years of experience with public companies across several industry sectors, including utilities, telecom, transportation and real estate. Mr. Keglevic served as Chief Executive Officer (2016-2018) and Executive Vice President, Chief Financial Officer and Chief Risk Officer (2008-2016) of Energy Future Holdings, the majority owner of a regulated transmission and distribution business. Prior to that, Mr. Keglevic served as an audit partner at PricewaterhouseCoopers LLP (PwC) (2002-2008), where he was the U.S. utility sector leader for six years. Prior to PwC, Mr. Keglevic led the utilities practice for Arthur Andersen, where he was a partner for 15 years. Mr. Keglevic serves on the board of directors of Frontier Communications Corporation (Nasdaq: FTR) (since 2019), a national telecommunications company located in Norwalk, Connecticut, where he serves on the finance committee and audit committee. He also serves on the board of directors of Bonanza Creek Energy, Inc. (NYSE: BCEI) (since 2017), an oil and gas company located in Denver, Colorado, where he serves as chair of the audit committee and also serves as chair of the nominating and corporate governance committee. He previously served on the boards of directors of Ascena Retail Group, Inc. (Nasdaq: ASNA) (2019-2021), Clear Channel Outdoor Holdings, Inc., PetSmart, Inc., Stellus Capital Management, Cobalt International Energy, Inc., Philadelphia Energy Services and Energy Future Holdings and several of its subsidiaries. Mr. Keglevic has served as a member of the board of directors of the Dallas and State of California Chambers of Commerce and several other charitable and advisory boards. He was named a board leadership fellow and is a certified director of the National Association of Corporate Directors. Mr. Keglevic received his Bachelor of Science in accounting from Northern Illinois University and is a certified public accountant.

Mr. Keglevic was initially appointed as a Director on March 3, 2020 pursuant to an Agreement, dated February 28, 2020, with affiliates of Elliott Management Corporation related to, among other things, appointment of additional Directors to the Board; however, the Agreement with Elliott Management Corporation has expired, and Mr. Keglevic has been nominated by the Board upon the recommendation by the Nominating, Governance and Corporate Responsibility Committee.

Mr. Keglevic’s qualifications to serve as our director include his extensive experience with public companies, finance, accounting, regulatory issues, transactional and merger and acquisition activities and governance matters.

 

 

 

Proposal 1 - Election of Directors  |  Director Nominee Biographies  |  Evergy 2021 Proxy Statement   9  

Mary L. Landrieu

Director Since: 2021

Age: 65

Committee Membership: Compensation and Leadership Development, Finance and Nuclear and Power Supply

Senator Landrieu is a senior policy advisor at Van Ness Feldman, LLP, a Washington D.C.- based law firm (since 2015). She also serves on the advisory board of Earnin Company (since 2020), a community-supported financial platform, and on the board of directors of Tyler Technologies (NYSE: TYL) (since 2015), a technology solution provider. She previously served on the Board of Directors of CenturyLink, Inc., now Lumen Technologies Inc. (NYSE: LUMN) (2015-2020), a U.S.-based communications provider to global enterprise customers. Previously, Ms. Landrieu served as a United States Senator for the State of Louisiana (1996 to 2014), where she chaired the Senate Committee on Energy and Natural Resources, served on the Senate Committee on Appropriations, chaired the Subcommittees on Homeland Security, Financial Services and General Government, and the District of Columbia, chaired the Senate Committee on Small Business and Entrepreneurship. In her work on Homeland Security, Senator Landrieu led the disaster recovery efforts after Hurricane Katrina and the Gulf restoration efforts after the BP oil spill. She also was elected as Louisiana treasurer (1987-1995), and served as a member of the Louisiana legislature (1979-1987). Ms. Landrieu currently serves on the board of trustees or board of directors of several national organizations supporting sustainable resource management and promoting education or children’s welfare.

She is a graduate of Louisiana State University, receiving her Bachelor of Arts degree. Senator Landrieu was appointed as a Director on March 1, 2021 pursuant to the Bluescape Agreement related to, among other things, appointment of additional Directors to the Board. See “Recent Events” on page 3 for more information.

Senator Landrieu’s qualifications to serve as our director include her extensive experience with federal and state regulation and compliance, community and political relations, strategy development, customer experience, alignment of company culture and compensation and leadership development and finance.

Sandra A.J. Lawrence

Director Since: 2004

Age: 63

Committee Membership: Compensation and Leadership Development and Nominating, Governance, and Corporate Responsibility (Chair)

Ms. Lawrence was the Executive Vice President and Chief Administrative Officer (2016-2019) and Executive Vice President and Chief Financial Officer (2005-2016) of Children’s Mercy Hospital, a comprehensive pediatric medical center in Kansas City, Missouri. Previously, she was the Chief Financial Officer (2005) and Senior Vice President and Treasurer (2004-2005) of Midwest Research Institute, an independent, non-profit, contract research organization located in Kansas City, Missouri. Prior to that Ms. Lawrence spent twenty-six years in professional or management positions in the architecture, real estate, financial services, packaging and medical research industries. She is on the board of directors of American Shared Hospital Services (NYSE American: AMS), a provider of radiosurgical and radiation therapy equipment based in San Francisco, California, where she serves as chair of the audit committee and as a member of the nominating and corporate governance committee. She is also chair of the board of directors of the Heartland Chapter of the National Association of Corporate Directors, was named an NACD board leadership fellow, and serves on the boards of directors of various charitable, non-profit and civic organizations, including the Hall Family Foundation and Women Corporate Directors. Ms. Lawrence serves as a trustee of the Ivy and Waddell and Reed Mutual Funds Complex Trust (NYSE: WDR/IVH). Ms. Lawrence is a graduate of Vassar College, receiving her Bachelor of Arts in psychology. She also received a Master of Architecture from the Massachusetts Institute of Technology and a Master in Business Administration from Harvard Business School.

Ms. Lawrence’s qualifications to serve as our director include her substantial financial expertise, her extensive service as a director in a diverse range of organizations, her experience as a public company director and her knowledge of corporate governance. Ms. Lawrence also has extensive knowledge of the Kansas City metropolitan area and Topeka, Kansas, two of our largest service territories.

 

 

 

Proposal 1 - Election of Directors  |  Director Nominee Biographies  |  Evergy 2021 Proxy Statement   10  

Ann D. Murtlow

Director Since: 2013

Age: 60

Committee Membership: Audit and Power Delivery and Safety (Chair)

Ms. Murtlow is a member of the board of directors, President and Chief Executive Officer of the United Way of Central Indiana, a non-profit community impact organization (since 2013). Previously, she spent twenty-four years with AES Corporation, a holding company for electric utilities located in Arlington, Virginia, and served for over twelve years in various senior leadership and officer roles including as Vice President and Group Manager of AES and President, Chief Executive Officer and Director of Indianapolis Power & Light Company, an integrated electric utility, and its parent company, IPALCO Enterprises, both located in Indianapolis, Indiana. Ms. Murtlow currently serves on the board of directors of Wabash National Corporation (NYSE: WNC), a diversified industrial manufacturing company in Lafayette, Indiana (since 2013), where she chairs the nominating and corporate governance committee and serves on the compensation committee. She previously served on the board of directors of First Internet Bancorp and its subsidiary, First Internet Bank, a financial institution in Fishers, Indiana (2013-2020), and on the boards of directors of the Federal Reserve Bank of Chicago, Herff Jones, a manufacturer of educational recognition and achievement products and motivational materials located in Indianapolis, Indiana, and AEGIS Insurance Services, Inc., a mutual insurance company in East Rutherford, New Jersey. Ms. Murtlow was also named a board leadership fellow by the National Association of Corporate Directors. Ms. Murtlow received her Bachelor of Science in chemical engineering from Lehigh University.

Ms. Murtlow’s qualifications to serve as our director include her extensive and varied senior management leadership experience and accomplishments and deep insight and knowledge about the operations and challenges of a vertically integrated, regulated electric utility with nuclear generation.

Sandra J. Price

Director Since: 2016

Age: 62

Committee Membership: Compensation and Leadership Development, Nominating, Governance, and Corporate Responsibility and Nuclear and Power Supply

Ms. Price is the former Senior Vice President, Human Resources of Sprint Corporation (2006-2016), a global telecommunications company headquartered in Kansas City, Missouri prior to its acquisition by T-Mobile. Previously, she served as Senior Vice President Designee for the Human Resources, Communications and Brand Management functions of the Sprint Local Telephone Division and a variety of other human resource roles (1993-2006). Prior to Sprint, she was a principal in the Blue Valley School District, Overland Park, Kansas, and in the Jenks Public School District, Tulsa, Oklahoma. She served as co-chair of KC Rising (2017-2018), a non-profit organization focused on economic development in the Kansas City metropolitan area. Ms. Price is a member of the board of directors of the US Infrastructure Corporation (USIC), a privately-held company that provides locating services for underground utilities based in Indianapolis, Indiana. She also serves on the board of directors of the Heartland Chapter of the National Association of Corporate Directors, was named an NACD board leadership fellow, and serves on the board of directors of the Kansas City Metropolitan Community College Foundation. Ms. Price was named to the Kansas City Business Journal’s “Women Who Mean Business” list and to the Profiles in Diversity Journal’s “Women Worth Watching.” Ms. Price received her Bachelor of Arts in special education from Oral Roberts University and a Master of Arts in education and administration from the University of Tulsa.

Ms. Price’s qualifications to serve as our director include her diverse senior management and leadership experience, her deep understanding of human resources and talent development and her knowledge of our Kansas City service territory.

 

 

 

Proposal 1 - Election of Directors  |  Director Nominee Biographies  |  Evergy 2021 Proxy Statement   11  

Mark A. Ruelle

Director Since: 2011

Age: 59

Committee Membership: Nuclear and Power Supply

Mr. Ruelle is Chairman of the Board. Mr. Ruelle served as a member of the board of directors, President and Chief Executive Officer of Westar Energy prior to the merger with Great Plains Energy that resulted in the formation of Evergy (2011-2018). Mr. Ruelle was also previously Executive Vice President and Chief Financial Officer of Westar Energy (2003-2011), and had held other financial, strategic planning and corporate development positions with Westar Energy. Mr. Ruelle also served as Senior Vice President, Chief Financial Officer and Treasurer of Sierra Pacific Resources and its integrated electric utility subsidiary, Sierra Pacific Power Company (1997-2001), and, following its acquisition by Sierra Pacific Resources, President of Nevada Power Company (2001-2002), in Las Vegas, Nevada. He is on the board of directors of Stormont-Vail Health Care and various charitable and civic organizations. Mr. Ruelle previously served on the board of directors of Houston Wire & Cable Company (Nasdaq: HWCC), a provider of industrial electrical and mechanical wire and cable products (2014-2018). Mr. Ruelle received both a Bachelor of Arts degree and a Master of Arts degree in economics from the University of North Dakota and has completed the Institute of Nuclear Power Operations Nuclear Reactor Technology Course for Executives at the Massachusetts Institute of Technology.

Mr. Ruelle’s qualifications to serve as our director and Chairman of the Board include his leadership experience, his financial expertise and his extensive utility industry experience, including with nuclear generation. He also has experience as a public company director and with corporate governance. Mr. Ruelle has deep connections in our Kansas service territory and, in particular, the business community in Topeka, Kansas, one of our significant markets and our Kansas operational headquarters.

S. Carl Soderstrom Jr.

Director Since: 2010

Age: 67

Committee Membership: Audit, Nominating, Governance, and Corporate Responsibility and Power Delivery and Safety

Mr. Soderstrom is the former Senior Vice President and Chief Financial Officer of ArvinMeritor, an automotive and commercial vehicle components manufacturer based in Troy, Michigan (2001-2004). Previously, he served as Senior Vice President, Engineering, Quality and Procurement for the company (1997-2001). Mr. Soderstrom held executive/management positions at Rockwell International (1986-1998), General Electric Company (1980-1986) and Emerson Electric (1977-1980). He is a member of the board of directors of Lydall Inc. (NYSE: LDL), a technology and manufacturing company headquartered in Manchester, Connecticut (since 2003), where he serves as chair of the governance committee and a member of the audit review committee. Mr. Soderstrom was previously a member of the board of directors of FreightCar America Inc., a railcar manufacturing company located in Chicago, Illinois (2005-2018). Mr. Soderstrom graduated from Duke University and holds a Bachelor of Science in mechanical engineering and economics. He received his Master of Business Administration from the University of Michigan.

Mr. Soderstrom’s qualifications to serve as our director include his substantial financial expertise, his operations and engineering knowledge from his experience at other large public companies and his substantial experience serving as a director of other public companies.

 

 

 

Proposal 1 - Election of Directors  |  Director Nominee Biographies  |  Evergy 2021 Proxy Statement   12  

John Arthur Stall

Director Since: 2019

Age: 66

Committee Membership: Nuclear and Power Supply (Chair)

Mr. Stall is an independent member of the board of directors of Wolf Creek Nuclear Operating Corporation (“Wolf Creek”), which operates Evergy’s Wolf Creek nuclear generating station (since 2011). Mr. Stall retired from NextEra Energy, Inc., the largest electric utility holding company in the United States located in Juno Beach, Florida, in 2010, where he served in numerous nuclear leadership roles. He served as President of NextEra’s nuclear division (2009-2010), as Senior Vice President and Chief Nuclear Officer of NextEra (2001-2009), as Vice President, Nuclear Engineering of NextEra (2000-2001) and Vice President of NextEra’s St. Lucie nuclear generating station (1996-2000). He also served in leadership roles at Dominion Energy, Inc.’s North Anna nuclear generating station (1977-1996). Mr. Stall provides consulting services related to the nuclear industry, including serving as an arbitrator in complicated nuclear disputes and providing expert witness testimony to regulatory bodies. He served as the chair of an independent nuclear safety advisory committee for a publicly-traded electric utility that operates multiple nuclear generating units. He served as a member of the Institute of Nuclear Power Operations National Academy of Nuclear Training Accrediting Board (2008-2019). Mr. Stall graduated from the University of Florida and holds a Bachelor of Science in nuclear engineering. He received his Master of Business Administration from Virginia Commonwealth University.

Mr. Stall’s qualifications to serve as our director include his substantial nuclear expertise, his operations and engineering knowledge from his experience at other large electric utilities and his leadership experience.

C. John Wilder

Director Since: 2021

Age: 63

Committee Membership: Finance (Chair) and Power Delivery and Safety

Mr. Wilder is the Executive Chairman of Bluescape, founded in 2007 as an alternative investment firm that leverages its private capital, global network, and deep domain expertise to deliver differentiated long-term investment performance in the energy and utility sectors. He has served on the boards of many private and public companies, including Bluescape Opportunities Acquisition Corporation (NYSE: BOAC) (since 2020), NRG Energy, Inc. (NYSE: NRG) and TXU Corp. and Exco Resources, Inc. (2015-2017), and in executive officer roles at TXU Corp., Entergy Corp., and Royal Dutch/Shell Group.

Mr. Wilder started in the energy business in Texas over 40 years ago with the Royal Dutch/Shell Group, where he rose to the position of Chief Executive Officer of Shell Capital in London. Mr. Wilder’s vision and execution spearheaded the industry’s three most successful financial and operational turnarounds at NRG (Board of Directors, 2017-2018), TXU (Board Chairman and Chief Executive Officer, 2004-2007) and Entergy (Chief Financial Officer, 1998-2004) moving struggling companies from the bottom quartile to the top quartile across a variety of performance dimensions. For his achievements at TXU, the Harvard Business Review named Mr. Wilder twice as one of the Best-Performing CEOs in the World, ranking 24th among 2,000 CEOs from publicly traded companies in 33 countries in 2010, and 74th among 3,143 CEOs from publicly traded companies in 50+ countries in 2013. No other United States power company executive was honored in either of these rankings. During Mr. Wilder’s leadership, TXU delivered 65% annualized shareholder returns and ranked 5th best among the S&P 500. In addition, Mr. Wilder was named to Ten Best CEOs in America by Institutional Investor in 2004 and was named Best CEO and CFO in the Electric Power Sector in multiple years by Institutional Investor.

Mr. Wilder is on the advisory boards of the McCombs School of Business at the University of Texas at Austin and the A.B. Freeman School of Business at Tulane University. He is a former advisory board member of the Global Energy Management Institute, University of Houston, and the Energy

 

 

 

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Management and Innovation Center, University of Texas. Mr. Wilder is also Chairman of the Board of Trustees of Texas Health Resources and is a past member of the National Petroleum Council, a U.S. Secretary of Energy appointment.

Mr. Wilder graduated magna cum laude from Southeast Missouri State University with a bachelor’s degree in business administration, and he has received the university’s Distinguished Alumni Award. He earned a master’s degree in business administration from the University of Texas.

Mr. Wilder was appointed as a Director on March 1, 2021 pursuant to the Bluescape Agreement related to, among other things, the appointment of additional Directors to the Board. See “Recent Events” on page 3, for more information.

Mr. Wilder’s qualifications to serve as our director include his long-term and extensive leadership experience in the energy industry. He also provides deep insight and expertise on financial, transactional, regulatory and operations matters facing the Company.

 

 

The 13 nominees for director have been recommended to the Board by the Nominating, Governance, and Corporate Responsibility Committee and nominated by the Board to serve as directors until the next annual meeting of shareholders and until their successors are duly elected and qualified. Each nominee has consented to stand for election, and the Board does not anticipate that any nominee will be unavailable to serve. In the event that one or more of the director nominees should become unavailable to serve at the time of the annual meeting, shares represented by proxy may be voted for the election of a nominee to be designated by the Board. Alternatively, in lieu of designating a substitute, the Board may reduce the number of directors. Proxies cannot be voted for more than 13 nominees.

Director Nominating Process

The Nominating, Governance, and Corporate Responsibility Committee is responsible for identifying potential director nominees and evaluating and recommending director nominees to the Board. The Committee takes into account a number of factors when considering director nominees, as described in our Corporate Governance Guidelines and as discussed in greater detail below. Director nominees identified by shareholders for our consideration will be evaluated in the same way as nominees identified by the Nominating, Governance, and Corporate Responsibility Committee.

Shareholders who wish to identify director nominees for consideration by the Nominating, Governance, and Corporate Responsibility Committee should write to our Nominating, Governance, and Corporate Responsibility Committee at the address provided in “Communicating with the Board” on page 24. Shareholders who wish to nominate a director nominee, including pursuant to our proxy access By-law provisions, may do so by following instructions set forth in “How can I nominate a director or submit a proposal for the 2022 annual meeting?” on page 67.

Director Nominee Qualifications

The Board oversees the shareholders’ interests in the long-term health and success of the Company’s business, and directs, oversees and monitors the performance of management. The Board believes that its effectiveness in carrying out its responsibilities depends not only upon the particular experience, qualifications, attributes and skills that each director possesses, but also upon their ability to function well as a collegial body and to work collaboratively.

The Board’s objective is to have a well-rounded and diverse membership possessing, in the aggregate, skill sets and core competencies that are conducive to long-term success. The Board considers diversity in the broadest sense, reflecting geography, age, gender and ethnicity, as well as other factors. The Board believes that a diverse group of directors is desirable to expand the Board’s collective knowledge and expertise, as well as to evaluate management and positively influence the Company’s performance.

 

 

 

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The success of the Company depends not only on expertise-based competencies, but equally on the personal qualities and attributes of the directors, both individually and as a group. Attributes that directors should possess include, among others, practical wisdom and thoughtfulness in decision-making; mature and sound judgment; financial acumen and business experience; the highest level of personal and professional ethics, integrity and values; sufficient time and availability; commitment to representing the interests of shareholders, customers and their communities; critical analysis skills; collegiality, a collaborative and cooperative spirit and the ability to both lead and work within a team environment; and the courage to act constructively and independently. Non-management directors should also be able to meet the independence requirements of the New York Stock Exchange (“NYSE”) listing standards and our Corporate Governance Guidelines.

The Board concluded that the following competencies are conducive to sustainable long-term shareholder and customer value: strategy development; federal and state regulation and compliance; alignment of company culture and compensation and leadership development; accounting, finance and investment management; risk management; operational oversight; customer experience; and community and political relations. Each director nominee provided a self-evaluation against these core competencies, and the Board evaluated the contribution level of each director nominee, using the categories of “experienced,” “moderate experience,” “minimal experience” and “no experience.” Twelve of the director nominees rated himself or herself as being either “experienced” or “moderately experienced” in each of the core competencies as shown below, with ten of the director nominees identifying himself or herself as “experienced” in each of the core competencies.

 

 

 

 

 

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Corporate Governance Matters

 

Board Structure

Board Leadership Structure. We have separated the roles of Chairman of the Board and Chief Executive Officer, with Mr. Mark A. Ruelle serving as our Chair and Mr. David A. Campbell serving as our Chief Executive Officer. The Board believes that this structure is an appropriate corporate governance structure for the Company. However, the Board believes it is important to maintain flexibility to combine the roles in the future if it determines at a later date that a different Board structure would be in the long-term interests of our shareholders.

Chairman of the Board

The Chair is responsible for presiding over all Board meetings and all executive sessions of the Board that include only non-management directors. The Chair may also call special meetings of the Board or shareholders, and also presides over Evergy’s shareholder meetings.

The Chair approves Board meeting agendas, which are prepared by the Chief Executive Officer reflecting input, if any, of the Chair and Lead Independent Director. The Chief Executive Officer and Chair also discuss the quality, quantity and timeliness of the flow of information from management.

The Chair also serves as the principal liaison between management, acting through or in consultation with the Chief Executive Officer, and the Board. He is also responsible for soliciting information from the non-management members of the Board regarding the performance of the Chief Executive Officer.

The Chair is also available for discussion with individual directors regarding key issues, individual director performance or any other matters relating to effectiveness of the Board. He may also interface from time to time with the public, including shareholders.

Working with the Nominating, Governance, and Corporate Responsibility Committee, the Lead Independent Director and the Chief Executive Officer, the Chair is also responsible for interviewing all potential new candidates and recommending new candidates for the Board. Among these other duties, the Chair is also responsible for helping to set the tone for ethics and integrity at Evergy.

Lead Independent Director

The Lead Independent Director is responsible for developing agendas for executive sessions of independent directors and calling and presiding over the same. He also serves as a liaison between the Chair and the independent directors, reviews meeting agendas and reviews meeting schedules.

The Board appointed Mr. Hyde to serve as Lead Independent Director to ensure that Evergy’s independent directors are represented and have formal mechanisms in place to exercise their governance role.

Independent Board. The Board has determined that 11 of the 13 nominees are independent.

Executive Sessions. Time is reserved on each Board meeting agenda for all directors to meet in executive session, with no members of management (other than the Chief Executive Officer) present. Time is also reserved on each Board meeting agenda for the non-management directors to meet in executive session, presided over by our Chair, and for the independent directors to meet in executive session, presided over by the Lead Independent Director, in each case with no members of management present. Time is also reserved at each regular committee meeting for committee members to meet in executive session with no members of management present.

Board Meetings and Director Attendance. The Board held fourteen meetings in 2020. Each incumbent director nominee attended 100% of the aggregate number of meetings of the Board and committees on which he or she served.

Board Committees. We have a robust committee structure, with six standing committees.

Each committee is led by an independent director. In addition, four of the standing committees, including the committees required by NYSE standards, consist solely of independent directors. For

 

 

 

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2020, there were also two special purpose committees: the Strategic Review & Operations Committee and the CEO Search Committee. Information regarding each of the standing committees is summarized below.

Each standing committee is governed by a committee charter that enumerates the committee’s responsibilities. Each charter is reviewed annually, updated as appropriate, and available on the Company’s website at investors.evergy.com. Information on, or that can be accessed through our website is not a part of this proxy statement and is not incorporated into any other SEC filings we make.

Summary of 2020 Committee Developments

 

•

On February 28, 2020, the Board established the Strategic Review & Operations Committee to advise the Board and management on ways to enhance long-term shareholder value, including through opportunities for a strategic combination and enhancements to our long-term standalone plan and strategy. The committee charter required that the committee meet every other week, a requirement that the committee exceeded, until it completed its responsibilities. The work of this committee culminated in the STP that we announced in August 2020.

 

•

On May 5, 2020, the Board established two new standing committees to replace the Nuclear, Operations, and Environmental Oversight Committee: the Nuclear and Power Supply Committee and the Power Delivery and Safety Committee. For additional information, see the description below.

 

•

On August 27, 2020, the Board established the CEO Search Committee to direct the search for Mr. Bassham’s replacement as President and Chief Executive Officer, as disclosed in the Company’s Current Report on Form 8-K filed on August 27, 2020 with the SEC. This special purpose search committee completed its duties and disbanded upon the successful engagement of Mr. Campbell.

 

 

 

 

 

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Audit Committee

 

Meetings in 2020: 7		Primary responsibilities: •  Oversee processes related to the integrity of Evergy’s financial statements, including internal control over financial reporting; •  Oversee the independent auditor and the internal audit services department; •  Oversee the preparation of all reports and other disclosures required of the Audit Committee by the SEC; and •  Review Evergy’s compliance with legal and regulatory requirements and its Code of Ethics.
Members:* Mr. Hyde (Chair) Mr. Hawley Mr. Keglevic Ms. Murtlow Mr. Soderstrom

The Board has determined that (i) each member of the committee is independent under the NYSE listing standards and Rule 10A-3(b)(1) under the Securities Exchange Act of 1934, as amended (“Exchange Act”); (ii) each member of the committee is financially literate; and (iii) Mr. Hawley, Mr. Hyde, Mr. Keglevic, Ms. Murtlow and Mr. Soderstrom are “audit committee financial experts” within the meaning of SEC regulations. No member of the committee serves on the audit committee of more than three public companies.

*Mr. Hawley served on the committee in 2020, and is not standing for re-election for personal reasons. Mr. Keglevic was appointed to serve on the committee effective March 1, 2021.

 

Compensation and Leadership Development Committee

 

Meetings in 2020: 6		Primary responsibilities: •  Oversee alignment of compensation philosophy with shareholder interests; •  Evaluate, and recommend for approval by the non-management members of the Board, CEO compensation; •  Approve named executive officer compensation (other than the CEO); •  Advise the CEO on compensation for other officers; •  Oversee human capital resources; •  Review the culture of Evergy; and •  Review whether our compensation program encourages excessive risk taking.
Members:* Ms. Carter (Chair) Mr. Isaac Sen. Landrieu Ms. Lawrence Ms. Price

The Board has determined that each member of the committee is independent under the NYSE listing standards, including the enhanced independence standards for members of the compensation committee and a “non-employee director” as defined in Rule 16b-3 promulgated under the Exchange Act.

*Sen. Landrieu was appointed to serve on the committee effective March 1, 2021.

 

 

 

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Nominating, Governance, and Corporate Responsibility Committee

 

Meetings in 2020: 6		Primary responsibilities: •  Identify nominees for election to our Board; •  Oversee corporate governance principles and practices; •  Oversee the evaluation of the Board and each committee; •  Review Evergy’s corporate responsibility activities; and •  Oversee and set compensation for members of the Board.
Members:* Ms. Lawrence (Chair) Mr. Hawley Mr. Hyde Ms. Price Mr. Soderstrom

The Board has determined that each member of the committee is independent under the NYSE listing standards.

*Ms. Carter served on the committee in 2020 and moved off effective March 1, 2021, when Messrs. Hawley and Soderstrom were appointed to the committee. Mr. Hawley served on the committee in 2021, and is not standing for re-election for personal reasons.

 

Finance Committee

 

Meetings in 2020: 5		Primary responsibilities:
Members:* Mr. Wilder (Chair) Mr. Campbell Mr. Isaac Mr. Keglevic Sen. Landrieu		•  Assist the Board with the management and review of matters relating to the financial condition and financing plans of Evergy; •  Review Evergy’s financial strategies; •  Review Evergy’s capital requirements, capital structure and capital allocation; •  Review Evergy’s annual budget; •  Review risks and mitigation strategies related to budgeting, financing, credit exposures and energy trading and marketing; •  Review Evergy’s investor relations program; •  Oversee corporate insurance, and employee benefits and nuclear decommissioning trusts; •  Review Evergy’s tax strategy and treasury practices, and related risks; and •  Review the key performance indicators for the STP measured on an absolute basis, changes over time, and benchmark against peer groups.

The Board has determined that each member of the committee is independent under the NYSE listing standards.

*Messrs. Hawley, Soderstrom and Stall and Ms. Murtlow served on the committee in 2020 and moved off effective March 1, 2021, when Messrs. Wilder and Campbell, and Sen. Landrieu were appointed to the committee.

 

 

 

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Nuclear and Power Supply Committee

 

Meetings in 2020: 2		Primary responsibilities:
Members:* Mr. Stall (Chair) Ms. Carter Mr. Isaac Sen. Landrieu Ms. Price Mr. Ruelle		•  Assist the Board with oversight of Wolf Creek; •  Review Evergy’s power supply strategy and plans; •  Review Evergy’s compliance with laws, regulations and standards, including those related to environmental matters, related to Evergy’s power supply resources; and •  Review power supply risk and mitigation matters.

The Board has determined that each member of the committee, other than Mr. Ruelle, is independent under the NYSE listing standards. Due to his extensive operational experience, including with respect to Wolf Creek, the Board determined that having Mr. Ruelle on the committee is beneficial to the long-term interests of shareholders, customers and the community.

The committee was formed on May 5, 2020, along with the Power Delivery and Safety Committee, as a result of a split of the Nuclear, Operations, and Environment Oversight Committee. The committee first met on October 26, 2020.

*Sen. Landrieu was appointed to serve on the committee effective March 1, 2021.

 

Power Delivery and Safety Committee

 

Meetings in 2020: 2		Primary responsibilities:
Members:* Ms. Murtlow (Chair) Mr. Hawley Mr. Keglevic Mr. Soderstrom Mr. Wilder		•  Advise and assist the Board with respect to oversight of Evergy’s power delivery, customer service and information technology functions, and the overall safety of Evergy’s operations; •  Review Evergy’s strategy with respect to transmission and distribution assets; and •  Review operations risks, including physical and cybersecurity risks, and management risk mitigation activities.

The Board has determined that each member of the committee is independent under the NYSE listing standards.

*Mr. Andrews and Ms. Lawrence served on the committee in 2020 and moved off effective March 1, 2021, when Messers. Keglevic and Wilder were appointed to the committee. Mr. Hawley served on the committee in 2020, and is not standing for re-election for personal reasons.

 

 

 

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Corporate Governance Practices

We are committed to strong corporate governance practices that support the regulated nature of our business and the long-term interests of our shareholders.

Corporate Governance Guidelines. The Board has adopted a set of Corporate Governance Guidelines to provide a framework for our corporate governance initiatives. Our guidelines address, among other things, Board responsibilities and leadership, risk oversight, committee composition and director qualifications. The Nominating, Governance, and Corporate Responsibility Committee is responsible for overseeing and reviewing the Corporate Governance Guidelines and for recommending any changes to the guidelines to the Board.

Code of Ethics. Our Board has adopted a Code of Ethics to set the tone for our expectation that all directors, officers and employees act in an ethical and lawful manner. We also expect all parties who work on Evergy’s behalf to embrace the spirit of the Code of Ethics. Other parts of our process to ensure lawful and ethical business conduct include policies and procedures, compliance monitoring and reporting and periodic training on various areas of the law and corporate policies. We have also established a “ConcernsLine,” which is independently administered and is available 24 hours a day, every day, for the confidential and anonymous reporting of concerns and complaints.

Our Corporate Governance Guidelines and the Code of Ethics are available on the Company’s website at investors.evergy.com. These documents are also available in print to any shareholder upon request. Requests should be directed to Corporate Secretary, Evergy, Inc., 1200 Main Street, Kansas City, Missouri 64105. We will disclose any change in the Code of Ethics, or any waiver from a provision in the Code of Ethics granted to a director or an executive officer, by posting such information on our website.

Annual Election of Directors. Our directors are elected on an annual basis and serve until their respective successors have been duly elected and qualified.

Majority Voting Policy. Pursuant to our majority voting policy, each director nominee is required to tender in advance of the annual meeting an irrevocable letter of resignation that will take effect if that nominee fails to receive, in an uncontested election, the vote of a majority of votes cast by shareholders at the meeting. In the event that any nominee fails to obtain the required majority vote, the Board will decide, through a process managed by the Nominating, Governance, and Corporate Responsibility Committee and excluding the nominee in question, whether to accept the resignation. Absent a compelling reason for the director to remain on the Board, the Board shall accept the resignation.

Proxy Access. Subject to the requirements and limitations contained in our By-laws, an eligible shareholder, or a group of up to 20 eligible shareholders, can have nominees included in future proxy statements. In general, a shareholder must have continuously owned at least 3% of Evergy’s outstanding shares for at least three years as of the date that the shareholder(s) notify Evergy of the intent to utilize proxy access. Ownership of our predecessor companies – Great Plains Energy and Westar Energy – qualify as counting toward the holding period requirement. An eligible shareholder may use proxy access to nominate up to 25% of the total number of directors who are members of the Board as of the date that the shareholder(s) notify Evergy of the intent to utilize proxy access.

Annual Self-Assessments. The Board and each committee conduct annual self-assessments to determine whether the Board and the committees are functioning effectively. The self-assessment process is based on written Board and committee surveys that are completed by all Board members. The self-assessment topics generally include, among other matters, Board composition and Board and committee structure, meeting topics and process, quality and timeliness of information, diversity, risk management, succession planning and access to management. The Chair of the Nominating, Governance, and Corporate Responsibility Committee meets with each director to discuss the survey, and the process allows Board members to provide input on individual Board member effectiveness. Each Board committee receives and discusses the results of its self-assessment, and the Nominating, Governance, and Corporate Responsibility Committee receives and discusses the results of the Board and all committee self-assessments. The Board discusses the results of the self-assessment process and, as appropriate, oversees the implementation of enhancements and other modifications identified during the process.

 

 

 

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Board Oversight of Risk Management. The Board is responsible for the oversight of all major risks (as well as mitigation plans), including strategic, financial, operational and compliance risks. In an effort to ensure appropriate and in-depth oversight of risk, the Board has delegated some specific risk oversight responsibility to its committees, as summarized below and as described in those committees’ charters. The Nominating, Governance, and Corporate Responsibility Committee is charged with ensuring that risk oversight roles have been properly allocated, and the Audit Committee reviews Evergy’s policies with respect to risk assessment and risk management. Management is responsible for developing and implementing appropriate risk management practices on a day-to-day basis.

At least once each year, the full Board receives a report from management of key business and compliance risks and related mitigation plans. The full Board also receives updates on significant events and the status of, and changes in, the risks and mitigation plans. In addition, management makes regular presentations to the Board focusing on significant risk areas and corresponding mitigation plans and activities.

Board Attendance at Annual Meeting. Our Corporate Governance Guidelines provide that all directors are encouraged to attend annual meetings of shareholders. All incumbent directors attended the 2020 annual meeting of shareholders.

Mandatory Retirement / Tenure Policy. Each member of our Board as of June 4, 2018 is not eligible to stand for election or re-election at the annual meeting of shareholders following his or her 75^th birthday. Any director appointed after June 4, 2018 will not be able to stand for election or re-election at the annual meeting of shareholders following the earlier of (i) his or her 72^nd birthday or (ii) 16 years of service. In addition, any director who experiences a significant change in primary employment since election to the Board will offer to resign, which offer will be evaluated by the Board in light of the individual circumstances.

Stock Ownership Requirements. Our Corporate Governance Guidelines provide that non-employee directors are expected, within five years of their initial election to the Board, to acquire and hold Evergy stock with a value equal to at least five times the amount of the annual non-employee director cash retainer. All director nominees are in compliance with the policy.

No Hedging / Pledging. Our securities trading policy, which was adopted by the Board and is overseen by our Nominating, Governance, and Corporate Responsibility Committee, prohibits all employees, officers and directors from trading in options, warrants and puts and calls related to Evergy. Our policy also prohibits all employees, officers and directors from purchasing financial instruments (including prepaid variable forward contracts, equity swaps, collars, and exchange funds), or otherwise engaging in transactions that hedge or offset, or are designed to hedge or offset, any decrease in the market value of Evergy securities. The policy also prohibits all employees, officers and directors from holding Evergy securities in a margin account or pledging Evergy securities as collateral.

Oversight and Disclosure of Political Contributions. Our Nominating, Governance, and Corporate Responsibility Committee reviews and approves the annual political contribution budget, and reviews reports on political expenditures. Our website, investors.evergy.com, also contains a copy of our policy with respect to political contributions and information regarding certain political expenditures.

Leader in Environmental Stewardship. Evergy is committed to a long-term strategy to reduce carbon dioxide emissions in a cost-effective and reliable manner. In 2020, Evergy achieved a reduction of carbon dioxide emissions of approximately 50% from 2005 levels and announced a goal to achieve an 80% reduction from 2005 levels by 2050. In August 2020, Evergy also announced a five-year STP, which seeks to optimize and enhance value creation for stakeholders and has the potential to reduce carbon dioxide emissions by as much as 85% by 2030 compared to 2005 levels. The STP expedites carbon dioxide emission reductions by pursuing constructive legislative and regulatory recovery mechanisms to facilitate the retirement of coal-fired generation and expansion of Evergy’s wind and solar footprint, while maintaining reliability. The pace of carbon dioxide emission reductions will ultimately be defined by continued collaboration with stakeholders as part of Evergy’s triennial integrated resource plan. Further, the trajectory and timing for reaching this goal could be impacted by political, legal and regulatory actions and applicable technology developments.

 

 

 

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Diversity, Equity and Inclusion. To advance our mission to empower a better future and our vision to become the best energy company, we must continue to cultivate a company culture that respects others, allows for a questioning attitude and strives to do the right thing every time. We believe that to maintain sustainable success, we need a team with a variety of backgrounds, perspectives and skills, and our goal is to be a diverse workforce that is representative of the communities we serve. We are committed to celebrating diversity and building a team where everyone – regardless of race, color, religion, gender, gender identity or expression, sexual orientation, national origin, genetics, disability, age, or veteran status – has a voice and can bring their best every day. With this in mind, our director of diversity and inclusion reports directly to our CEO. Evergy’s active supplier diversity program has been in place for more than 30 years and involved $156 million of diverse supplier spending in 2020. To further promote and reinforce our commitment in 2021, we added a discretionary diversity, equity, and inclusion modifier to the annual incentive plan intended to direct improvement in areas such as supplier diversity, talent development and engagement, among others.

 

Director Independence

Our Corporate Governance Guidelines require that a majority of our directors be independent, as determined in accordance with the NYSE listing standards, as well as other independence standards that the Board may adopt. The NYSE listing standards provide that no director can qualify as independent unless the Board affirmatively determines that the director has no material relationship with the listed company. The Board has adopted director qualification standards that are contained in our Corporate Governance Guidelines to assist in making director independence determinations. Our Corporate Governance Guidelines are available on our website, investors.evergy.com. Our director qualification standards are consistent with the NYSE objective independence standards.

The Nominating, Governance, and Corporate Responsibility Committee reviewed the applicable legal standards for Board and committee member independence and the director qualification standards. The Nominating, Governance, and Corporate Responsibility Committee also reviewed an analysis of the information provided by each director in an annual questionnaire and a report of transactions between Evergy and director-affiliated entities. The Nominating, Governance, and Corporate Responsibility Committee reported its independence determination recommendations to the full Board, and the Board made its independence determinations based on the Nominating, Governance, and Corporate Responsibility Committee’s report and the supporting information. In making its independence determinations, the Board considered ordinary course commercial, charitable and other transactions, none of which were material or affected the independence of a director nominee.

In evaluating independence, the Board considered that Ms. Carter is a director of Lockton Companies Inc., a privately-held insurance and benefits broker and advisor, which Evergy uses for employee benefits and insurance brokerage services in the ordinary course of business. The Board also considered that Ms. Price is a director of US Infrastructure Company, a privately-held company that provides underground utility locating services, which the Company uses for services in the ordinary course of its business. Considering all the facts and circumstances, including that these arrangements were made on an arms-length basis and neither Ms. Carter nor Ms. Price, as applicable, was involved in, or had a material interest in, the dealings with Evergy, the Board determined that the transactions did not affect either director’s independence.

Some of our directors serve as trustees or directors of non-profit and community organizations on which other directors or officers also serve or to which we donate money. In each case, payments by us or our predecessor companies were less than the greater of $1 million or 2% of the entity’s consolidated gross revenue.

Based on this review, the Board affirmatively determined that all directors (including nominees for directors at the annual meeting of shareholders) are independent under the NYSE listing standards and the director qualification standards, except for Messrs. Ruelle and Campbell, due to the former and current position of each as a chief executive officer of Westar Energy and Evergy, respectively.

 

 

 

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Other Matters

Related Party Transactions

The Board has adopted a written policy governing the identification, review, approval, consideration or ratification of related party transactions. The policy applies to any transaction in which Evergy (including any of its subsidiaries) was, is or will be a participant, the amount involved exceeds $120,000 in the aggregate, and any related party had, has or will have a direct or indirect material interest, but excludes any transaction that meets the preapproval thresholds set forth in our related party transaction policy. Pursuant to this policy, related party transactions are to be submitted to the Nominating, Governance, and Corporate Responsibility Committee for consideration at the next committee meeting or, if it is not practicable or desirable for the Company to wait until the next committee meeting, to the committee Chair. The Chair reports to the committee at its next meeting any approval under the related party transactions policy pursuant to delegated authority. There were no related party transactions in 2020.

Compensation Committee Interlocks and Insider Participation

None of the members of our Compensation and Leadership Development Committee is or was an officer or employee of Evergy or its subsidiaries. None of our executive officers served as a director or was a member of the compensation committee (or equivalent body) of any entity where a member of our Board or Compensation and Leadership Development Committee was also an executive officer.

Communicating with the Board

The Board values input from shareholders and the many constituents that are impacted by Evergy’s activities. Communications relating to corporate governance, succession planning, executive compensation and general oversight of the Board can be sent to:

Chair, Nominating, Governance, and Corporate Responsibility Committee

Evergy, Inc.

Attention: Corporate Secretary

1200 Main St.

Kansas City, Missouri 64105

Communications can also be sent by e-mail to board@evergy.com. All relevant communications will be forwarded to the Chair of the Nominating, Governance, and Corporate Responsibility Committee to be handled on behalf of the Board. The Board believes that communications relating to general business operations, financial results, strategic direction and similar matters are appropriately addressed by management, and relevant communications that relate to these topics will be shared with appropriate members of management.

The Audit Committee has established procedures for the receipt, retention and treatment of complaints or concerns regarding accounting, internal accounting controls or auditing matters affecting Evergy. Complaints or concerns may be submitted on a confidential and anonymous basis either through the “ConcernsLine” (1-866-266-7595) or by letter addressed to:

Chair, Audit Committee

Evergy, Inc.

Attention: Corporate Secretary

1200 Main St.

Kansas City, Missouri 64105

All complaints or concerns will be forwarded to the Chair of the Audit Committee. Confidentiality will be maintained to the fullest extent practicable, consistent with the need to conduct an adequate investigation and applicable legal requirements.

 

 

 

Corporate Governance Matters  |  Other Matters  |  Evergy 2021 Proxy Statement   24  

Director Compensation

Our Nominating, Governance, and Corporate Responsibility Committee, which is comprised entirely of independent directors, is responsible for reviewing and approving compensation for our non-employee directors. The committee seeks to provide an overall non-employee director compensation program that is generally aligned with the 50^th percentile of our peer group. However, due to the variation in peer company non-employee director compensation, and the fact that director compensation is not changed each year, in any given year overall non-employee director compensation may be above, at or below the market median. The committee reviews non-employee director compensation at our peer companies and relies in part on the advice of an independent compensation consultant.

Non-Employee Director Compensation

The Nominating, Governance, and Corporate Responsibility Committee, based in part on a review of compensation practices at our peer companies and the advice of an independent compensation consultant, Meridian Compensation Partners, LLC (“Meridian”), approved a compensation structure for non-employee directors that provides for the following: each non-employee director, other than the Chair and the Lead Independent Director, receives an annual cash retainer of $100,000, paid quarterly, and an annual stock award with a value of $130,000. The Chair receives an annual cash retainer of $155,000, paid quarterly, and an annual stock grant award with a value of $185,000. The Lead Independent Director receives an annual cash retainer of $125,000, paid quarterly, and an annual stock award with a value of $130,000, which is the same as other non-employee directors. Committee chairs receive an additional annual cash retainer, paid quarterly, of $20,000 for each of the chairs of the Audit Committee and the Compensation and Leadership Development Committee, and $15,000 for each of the chairs of the Finance Committee, the Nominating, Governance, and Corporate Responsibility Committee, the Nuclear and Power Supply Committee and the Power Delivery and Safety Committee. In 2020, a one-time cash retainer of $10,000 was issued to each member of the Strategic Review & Operations Committee and the CEO Search Committee.

Election to Defer Compensation

Non-employee directors may defer the receipt of all or part of their cash retainers through our non-qualified deferred compensation plan (“DCP”) or all or part of the equity retainer through issuance of Deferred Share Units (“DSU”) under the Evergy, Inc. Long-Term Incentive Plan (“LTIP”).

Non-employee directors may also elect to have all, or a part, of their cash retainers converted into DSUs under the LTIP.

As of the date any dividend is paid to common stock shareholders, each DSU account is credited with additional DSUs equal to the number of shares of common stock that could have been purchased (at the closing price of our common stock on that date) with the amount which would have been paid as dividends on the number of shares equal to the number of DSUs.

Expense Reimbursement

Members of the Board will also receive standard reimbursements for expenses incurred in connection with meeting attendance and professional education.

Charitable Contribution Matching

We also match up to $10,000 per year of charitable donations made by each director to 501(c)(3) organizations that meet our strategic giving priorities.

Liability Insurance

Consistent with our peer group and other public companies, we provide liability insurance to our directors under our directors and officers insurance policies. We have also entered into standard indemnification agreements with each of our directors.

 

 

 

Corporate Governance Matters  |  Director Compensation  |  Evergy 2021 Proxy Statement   25  

Stock Ownership Requirements

Our Corporate Governance Guidelines provide that non-employee directors are expected, within five years of their initial election to the Board, to acquire and hold Evergy stock with a value equal to at least five times the amount of the annual non-employee director cash retainer. As for December 31, 2020, all of our non-employee directors are in compliance with this requirement.

2020 Director Compensation

The following table outlines all compensation paid to our non-employee directors in 2020. We have omitted the columns titled “Option Awards” and “Non-Equity Incentive Plan Compensation” because our non-employee directors did not receive such compensation in 2020.

 

Current Directors		Fees Earned or Paid in Cash(1) ($)				Stock Awards(2) ($)				Nonqualified Deferred Compensation Earnings(3) ($)				All Other Compensation(4) ($)				Total ($)
Mollie Hale Carter(5)(6)			123,333				126,753				10,086				10,000				270,172
Richard L. Hawley			100,000				126,753				—				—				226,753
Thomas D. Hyde(6)(7)			146,667				126,753				34,595				—				308,015
B. Anthony Isaac			115,000				126,753				3,123				10,000				254,876
Paul M. Keglevic(6)(8)(9)(10)			101,250				129,025				1,972				—				232,247
Sandra A.J. Lawrence(6)			125,000				126,753				6,964				—				258,717
Ann D. Murtlow(6)(12)			125,000				126,753				—				—				251,753
Sandra J. Price			100,000				126,753				—				10,000				236,753
Mark A. Ruelle(6)			165,000				180,360				9,255				10,000				364,615
S. Carl Soderstrom Jr.			100,000				126,753				—				—				226,753
John Arthur Stall(9)(11)			120,000				126,753				—				—				246,753
Former Directors(13)
Kirkland B. Andrews (8)(9)(14)			85,000				129,025				—				—				214,025
Charles Q. Chandler IV			62,500				126,753				34,405				—				223,658
Gary D. Forsee			50,000				126,753				27,630				20,000				224,383
Scott D. Grimes			50,000				126,753				—				—				176,753
John J. Sherman			60,000				126,753				—				—				186,753

 

(1)

The amount represents cash retainers for service on the Board and its committees. As discussed in ‘‘Election to Defer Compensation’’ above, directors can elect to (i) convert all or part of their cash retainers into DSUs, or (ii) defer receipt of all or part of their cash retainer.

 

(2)

The amount shown is the aggregate grant date fair value of equity granted in 2020 computed in accordance with the Financial Accounting Standards Board (‘‘FASB’’) Accounting Standards Codification (‘‘ASC’’) Topic 718. The amounts reflect the value of equity retainers issued by the Company in 2020, and, as discussed in “Election to Defer Compensation” above, may have been deferred by the director for receipt in a subsequent year.

 

(3)

The amounts shown represent the above-market earnings during 2020 on nonqualified deferred compensation.

 

(4)

The amounts shown reflect matches by the Company for qualifying charitable contributions made by the directors.

 

(5)

Ms. Carter was appointed as the new Compensation and Leadership Development Committee Chair on May 5, 2020, and her cash retainer was pro rated.

 

(6)

A one-time cash retainer of $10,000 was issued to members of the CEO Search Committee in November 2020.

 

(7)

Mr. Hyde was appointed as the new Lead Independent Director on May 5, 2020, and his cash retainer was pro rated.

 

(8)

Messrs. Keglevic and Andrews were elected to the Board on March 3, 2020, and their cash retainers were pro rated.

 

(9)

A one-time cash retainer of $10,000 was issued to members of the Strategic Review and Operations Committee in July 2020.

 

(10)

Mr. Keglevic was appointed Finance Committee Co-Chair in August 2020, and his cash retainer was pro rated.

 

(11)

Mr. Stall was appointed the Power Delivery and Safety Committee Chair on May 5, 2020, and his cash retainer was pro rated.

 

(12)

Ms. Murtlow, formerly the Nuclear, Operations, and Environmental Oversight Committee Chair, was appointed Power Delivery and Safety Committee Chair on May 5, 2020. There was no change in her cash retainer for that committee change.

 

(13)

The directors listed below, except Mr. Andrews, did not stand for re-election at the Company’s annual meeting of shareholders held on May 5, 2020, and ceased to be directors of the Company as of that date.

 

(14)

Mr. Andrews served as a director in 2020 and resigned concurrently with his appointment as Executive Vice President and Chief Financial Officer on February 22, 2021.

 

 

 

Corporate Governance Matters  |  Director Compensation  |  Evergy 2021 Proxy Statement   26  

 

Proposal 2		Approve on an advisory basis the compensation of the Company’s named executive officers, as disclosed in the Compensation Discussion and Analysis section, the compensation tables, related footnotes and narrative discussion of this proxy statement.
		☑   The Board recommends a vote FOR the approval of the executive compensation on an advisory basis.

Public companies are required to provide their shareholders with the opportunity to approve, on an advisory and non-binding basis, the compensation of their named executive officers. In 2020, approximately 97% of our voting shareholders approved the compensation of our named executive officers. We believe this strong shareholder support demonstrates the alignment of shareholder interests with our executive compensation program and philosophy.

The Board believes that providing shareholders with an annual advisory vote on executive compensation can produce useful and timely information on investors’ views of the Company’s executive compensation program. Although the vote is advisory and non-binding, we value the opinions of our shareholders and the Compensation and Leadership Development Committee will consider this vote when making future compensation decisions.

As discussed below, our executive compensation program is designed to support achievement of our business strategy without encouraging excessive risk-taking, to attract and retain highly qualified executives, pay for performance, reward long-term growth and sustained profitability and encourage teamwork. The Board strongly endorses our executive compensation program and recommends that our shareholders vote in favor of the following resolution:

“RESOLVED, that the shareholders of the Company approve, on an advisory basis, the compensation of the Company’s named executive officers, as disclosed Company’s proxy statement for the 2021 Annual Meeting of Shareholders pursuant to the rules of the SEC, including the Compensation Discussion and Analysis section, the Executive Compensation section, the 2020 compensation tables, related footnotes and narrative discussion of this proxy statement.”

We currently intend to hold the next non-binding advisory vote to approve the compensation of our named executive officers at our next annual meeting of shareholders, unless our Board modifies its current policy of holding this vote on an annual basis.

 

 

 

 

Proposal 2 – Advisory Vote on Executive Compensation  |  Evergy 2021 Proxy Statement   27  

 

 

 

Executive Summary of Compensation Matters  |  Evergy 2021 Proxy Statement   28  

 

 

 

Executive Summary of Compensation Matters  |  Evergy 2021 Proxy Statement   29  

 

 

 

Executive Summary of Compensation Matters  |  Evergy 2021 Proxy Statement   30  

Compensation Discussion and Analysis

 

Compensation Philosophy, Objectives and Process

Compensation Philosophy and Objectives

Evergy’s executive compensation program is designed to support achievement of our business strategy without encouraging excessive risk-taking. The primary objectives of our compensation program are to:

 

•

Attract and Retain Highly Qualified Executives. Attract and retain highly qualified executive officers using a competitive pay package, with target total compensation positioned around the market median and opportunities to earn higher levels of total compensation through performance-based incentives.

 

•

Pay for Performance. A majority of executive officer compensation is “at-risk” and granted in the form of short-term and long-term incentives. This approach ties executive compensation to the achievement of key financial and operational objectives and creates a strong link between executive officers’ pay and Evergy’s performance.

 

•

Reward Long-Term Growth and Sustained Profitability. Align the economic interests of executive officers with those of our shareholders by delivering a significant portion of total compensation in the form of equity-based compensation with long-term vesting that rewards growth and sustained profitability and the creation of shareholder value.

 

•

Encourage Teamwork. Reward teamwork and collaboration among executives to benefit customers and shareholders through the alignment of incentives across the executive team.

Independent Compensation Consultant

For 2020, the Compensation and Leadership Development Committee retained Meridian to evaluate and provide advice with respect to our executive compensation program. At the Committee’s request, Meridian reviews the Company’s executive compensation and benefit programs, advises on potential peer companies, analyzes base salaries and variable pay relative to market data and peer companies, advises on compensation practices of peer companies and performs other activities related to executive compensation as requested by the Committee. Meridian neither determines, nor recommends, the amount of any executive’s compensation. The Committee retains the sole authority to select, retain, direct or dismiss any executive compensation consultant engaged by the Committee. In addition, annually, the Committee reviews the performance of any compensation consultant engaged by the Committee and confirms that any such consultant remains independent and free from conflicts of interest that would prevent the consultant from independently representing the Committee.

Role of Peer Group

The Committee evaluates the Company’s compensation program against peer companies because the Committee believes that peer companies are generally representative of the types of companies with which Evergy competes for executive-level talent and capital and have similar businesses as Evergy. To select the peer companies, the Committee identifies companies with a size and business mix similar to the Company and then assesses those potential peer companies by annual revenues, market value and percentage of total revenues from regulated electric operations. The Committee used the following peer group in connection with 2020 compensation decisions.

 

Alliant Energy Corporation		DTE Energy Company		Pinnacle West Capital Corporation
Ameren Corporation		Entergy Corporation		Portland General Electric Company
Black Hills Corporation		Eversource Energy		PPL Corporation
CenterPoint Energy, Inc		NiSource Inc.		WEC Energy Group, Inc.
CMS Energy Corporation		OGE Energy Corp.		Xcel Energy Inc.

 

 

 

Executive Compensation  |  Compensation Philosophy, Objectives and Process  |  Evergy 2021 Proxy Statement   31  

The Compensation Process

Our Compensation and Leadership Development Committee charter provides that, on an annual basis, the Committee is responsible for evaluating, and recommending for approval by the non-management members of the Board, Chief Executive Officer compensation, incentives and benefits. The charter further provides that, on an annual basis, the Committee is responsible for evaluating and approving the same for our other NEOs and for evaluating and advising our Chief Executive Officer on compensation, incentives and benefits for all other officers.

In 2019, the management team retained Willis Towers Watson, PLC (“Willis Towers Watson”) to conduct a competitive market assessment of our executive officer compensation program. The competitive market assessment reviewed base salary and target short-term incentives, long-term incentives, total cash compensation and total direct compensation. To conduct this analysis, Willis Towers Watson provided market data from its 2019 Energy Services Executive Compensation Database, which is an annual compilation of compensation for executive officer positions at a broad group of energy and utility companies nationwide. Willis Towers Watson obtained data from its database for positions that in its judgment most closely corresponded to the duties and responsibilities associated with each of our officer positions. Willis Towers Watson then adjusted the data to account for the different total revenues of the companies in its database as compared to our projected revenues.

Meridian reviewed the work of Willis Towers Watson and provided input on the benchmark matches and methodologies. Meridian also reviewed data derived from the 2019 annual proxy statements and other public filings for companies in our peer group. The data was used to compare the proposed compensation levels of our executive officers against the compensation of corresponding executive officers of companies in the peer group. These comparisons allowed for determining the overall market competitiveness of our proposed executive officer compensation program. The Committee and Board had full authority to adjust any of the recommendations and provide final decisions with respect to compensation.

Based on the foregoing work and analysis, the Committee approved the 2020 salaries, target short-term incentive compensation (expressed as a percentage of base salary) and target long-term incentive compensation (expressed as a percentage of base salary) for each of the officers, other than the Chief Executive Officer. In addition, based on the foregoing work and analysis, and on the Committee’s recommendation, the non-management members of the Board approved the 2020 salary, target short-term incentive compensation (expressed as a percentage of base salary) and target long-term incentive compensation (expressed as a percentage of base salary) for the Chief Executive Officer.

Role of Executive Officers

While the Chief Executive Officer at times attends meetings of the Committee, he is not a member and does not vote on Committee matters. In addition, there are portions of Committee meetings when the Chief Executive Officer is not present, such as when the Committee meets in closed executive session or discusses the Chief Executive Officer’s performance or individual compensation. The Chief Executive Officer’s compensation levels and performance goals are recommended by the Committee for approval by the non-management members of the Board. In the ordinary course of their job responsibilities, the Chief Executive Officer and other executive officers play a role in the design and evaluation of the Company’s compensation programs and policies. For example, because of their extensive knowledge of the Company and its operations, these executives are in a position to suggest to the Committee operational and financial measures that align annual compensation with value for shareholders and customers. Notwithstanding this involvement, all compensation decisions for the Chief Executive Officer and the other NEOs are ultimately made by the Committee or the non-management members of the Board.

 

 

 

 

Executive Compensation  |  Compensation Philosophy, Objectives and Process  |  Evergy 2021 Proxy Statement   32  

Summary and Analysis of Executive Compensation

The primary elements of our executive compensation program are summarized below.

 

Compensation Component		Description		Objective
Cash Compensation
Base Salary		◾ Fixedcompensation that is reviewed annually taking into consideration peer compensation information and individual performance ◾ Alignedwithin a reasonable range of market median		◾ Providecompetitive level of fixed cash compensation ◾ Recognizejob responsibilities and proficiency in role ◾ Attractand retain talent
Short-Term Incentives		◾ Variablecompensation earned based on performance against pre-established objectives		◾ Incentivizebehaviors that contribute to achievement of annual financial and operational performance goals in pursuit of shareholder value ◾ Attractand retain talent
Equity Compensation
Restricted Equity Incentives		◾ 75%of incentives are performance-based, and 25% are time-based restricted stock units ◾ Equityincentives with three year “cliff” vesting		◾ Incentivizecreation of long-term shareholder value ◾ Aligncompensation with shareholder interests ◾ Buildstock ownership and create forfeitable retention incentive ◾ Attractand retain talent
Other Compensation Components
Deferred Compensation		◾ Unfunded,non-qualified plan that allows all officers to defer the receipt of certain cash compensation		◾ Providecompensation deferrals in a tax-efficient manner ◾ Attractand retain talent
Retirement Benefits		◾ Pensionplan* ◾ Supplementalexecutive retirement plans ◾ 401(k)plan		◾ Providecompetitive total compensation package ◾ Attractand retain talent
Change-in-Control Benefits		◾ Paymentsin the event of (i) change-in-control and (ii) termination of employment		◾ Alignexecutive interests with shareholder interests ◾ Attractand retain talent
Executive Severance Benefits		◾ Paymentsin the event of termination of employment without cause		◾ Alignexecutive interests with shareholder interests ◾ Facilitatesmooth transitions ◾ Attractand retain talent
Other Benefits		◾ Financialplanning services / health physicals ◾ Standardbenefits, such as medical, life insurance and disability		◾ Providecompetitive total compensation package ◾ Attractand retain talent

*	The pension plans were closed to new hires at Kansas City Power & Light Company as of January 1, 2014 and Westar Energy, Inc. as of May 5, 2018.

 

 

 

Executive Compensation  |  Summary and Analysis of Executive Compensation  |  Evergy 2021 Proxy Statement   33  

Cash Compensation

Cash compensation for our NEOs includes a market-competitive base salary and performance-based short-term incentives. The Committee believes that, in general, cash compensation should comprise an increasingly smaller percent of total compensation as officers move to higher levels of responsibility.

Base Salary

The Committee reviewed market data in December 2019 and, based in part on the market data, the Committee approved the following salaries for 2020.

 

Name		2020
Mr. Bassham Former President and Chief Executive Officer		$	950,000
Mr. Bryant Executive Vice President and Chief Operating Officer		$	570,000
Mr. Greenwood Executive Vice President – Strategy and Chief Administrative Officer		$	520,000
Mr. Somma Former Executive Vice President and Chief Financial Officer		$	515,000
Ms. Humphrey Senior Vice President, General Counsel and Corporate Secretary		$	500,000

Annual Incentive Plan

Our annual incentive plan (also referred to as “AIP”) is based upon a mix of financial and operational metrics that the Committee believes drive the creation of shareholder value and customer satisfaction. Because of their extensive knowledge of the Company and its operations, management recommends objectives in the AIP to the Committee. The Committee reviews management’s recommendation and provides input and feedback, as appropriate, and final recommendations are reviewed and approved by the Committee. As part of the review, the Committee analyzes risks associated with the short-term incentive plan. In establishing final objectives and targets, the Committee seeks to ensure that:

 

•

incentives are aligned with the strategic goals approved by the Board;

 

•

targets are sufficiently ambitious, but strike an acceptable balance between risk and reward; and

 

•

incentive payments, assuming target levels are met, will be consistent with the compensation objectives established by the Committee.

The 2020 short-term incentive plan provided for financial and operational objectives each weighted at 50%.

 

 

 

Executive Compensation  |  Summary and Analysis of Executive Compensation  |  Evergy 2021 Proxy Statement   34  

The short-term incentive plan provides for 100% payout for target performance for each objective, 50% for threshold performance, 150% for stretch performance and 200% for maximum or superior performance. Objective performance is interpolated between performance levels. Objective performance achievement that is less than threshold achievement results in a zero payment for that objective. Additional information and results for the 2020 short-term incentive plan are described below.

 

Objective ($ millions)		Weight				Threshold 50%				Target 100%				Stretch 150%				Superior 200%				Actual Result				Payout
Adjusted Net Income for Incentive Compensation			25%				$669.7				$692.3				$703.7				$715.0				$694.5				109.6%
Total Adjusted Non-Fuel Operating and Maintenance Expense for Incentive Compensation			25%				$1,118.6				$1,091.3				$1,077.6				$1,064.0				$1,042.4				200.0%
SAIDI (System Average Interruption Duration Index)			15%				111.27				103.64				100.14				96.00				96.74				191.1%
DART (Days Away, Restricted, or Transferred) Rate			10%				1.02				0.91				0.82				0.34				0.55				178.1%
Customer Experience – Evergy			10%				710				714				720				724				736				100.0%
Commercial Availability Factor – Coal			10%				64.7%				81.0%				91.1%				92.4%				80.8%				99.4%
NERC Start Reliability – Gas / Oil			3%				96.0%				97.0%				98.0%				99.0%				99.0%				200.0%
Plant Availability Factor – Nuclear			2%				90.7%				96.5%				98.4%				99.4%				99.5%				200.0%
Weighted Achievement %																											153.8%

Adjusted Net Income Attributable to Evergy for Incentive Compensation. Due to the importance of delivering earnings growth, the Committee weighted 25% of the short-term incentive plan on the achievement of adjusted net income. The goals established for 2020 were generally consistent with the Company’s publicly-disclosed earnings guidance. Threshold was set at a level that equated to the bottom of the range, target was set at a level that equated to the mid-point of the range and superior was set at a level that equated to the upper end of the range, with stretch being set at the mid-point between target and superior. Adjusted net income for incentive compensation in 2020 was $694.5 million, resulting in a payout of 109.6%.

Adjusted net income attributable to Evergy for incentive compensation is a financial measure that is not calculated in accordance with GAAP. Adjusted net income for incentive compensation is defined as net income attributable to Evergy without (1) voluntary severance expenses, (2) advisor expenses, (3) incentive compensation expense above or below the amount of budget and (4) the tax benefits attributable to these costs. See Appendix A to this proxy statement for a reconciliation of this measure to net income attributable to Evergy, the most directly comparable measure computed in accordance with GAAP.

Total Adjusted Non-Fuel Operating and Maintenance Expense for Incentive Compensation. The Company’s primary subsidiaries are fully-integrated regulated electric utilities, and prices are generally set by regulators. The Company’s regulators generally allow the Company to recover in prices fuel and purchased power costs and prudently-incurred capital expenses. Accordingly, non-fuel operating and maintenance expenses, which are variable, impact the Company’s financial results. Realizing non-fuel operating and maintenance expense savings is a key component of Evergy’s strategy. Due to the importance of these savings, Evergy weighted 25% of the short-term incentive plan on achieving these savings in 2020.

Adjusted non-fuel operating and maintenance expense for incentive compensation is a financial measure that is not calculated in accordance with GAAP. Adjusted non-fuel operating and maintenance expense for incentive compensation, as used by the Company, is defined as non-fuel operating and maintenance expense less (1) voluntary severance expenses, (2) advisor expenses and (3) incentive compensation expenses.

The target amount of adjusted non-fuel operating and maintenance expense as defined above, was set at the 2020 budget. Actual adjusted non-fuel operating and maintenance expense for incentive compensation resulted in a 200.0% payout for this metric. See Appendix A to this proxy statement for a reconciliation of this measure to operating and maintenance expense, the most directly comparable measure computed in accordance with GAAP.

 

 

 

Executive Compensation  |  Summary and Analysis of Executive Compensation  |  Evergy 2021 Proxy Statement   35  

SAIDI. System average interruption duration index (“SAIDI”) is an objective system reliability metric created by the Institute of Electrical and Electronics Engineers that measures, in minutes, the average outage duration for each customer that experienced an outage. The Committee used a probabilistic analysis to set performance levels, with the target goal as the mathematical mean of historical results. The Company achieved a SAIDI of 96.74 minutes, resulting in a 191.1% payout for this metric.

Safety Metric – DART. Days away, restricted, or transferred rate (“DART”) is intended to incentivize maintaining a safety-conscious work environment, and measures the percentage of working days that were missed due to injuries. The threshold was set at a 1.02% DART rate (2019 performance), target was set at a 0.91% DART rate (a 10% improvement over 2019 performance), stretch was set at a 0.82% DART rate (a 20% improvement over 2019 performance) and superior was set at a 0.34% DART rate (an EEI tier 1 performance rate). DART payout would be reduced by 50% in the event of a fatality. The Company DART rate was 0.55 in 2020, resulting in a 178.1% payout for this metric.

Customer Experience – Evergy. Customer experience for 2020 was based on results of the J.D. Power Residential Customer Satisfaction Index (“CSI”), which measures residential customer satisfaction with large and midsized utility companies across six factors: power quality and reliability, price, billing and payment, communications, corporate citizenship and customer care. These surveys are conducted quarterly online through a third party. All targets required improvement from 2019 results, and Evergy’s CSI improved significantly from 2019. However, relative results remained in the fourth quartile and the resulting payout was capped at 100.0%.

Commercial Availability Factor – Coal. Commercial availability factor was a new metric for 2020, replacing the plant availability factor that was used in 2019. The Committee believes this metric promotes operational flexibility and fiscal responsibility and rewards baseload generation availability when it is economical to do so without penalty for downtime when running a unit is not economical. The program of flexible commercial availability is also a factor that promotes decreased carbon dioxide emissions.

The Committee set performance goals for this metric based on an average of the preceding 6 years of commercial availability. Threshold was set at 64.7% (90% probability of achievement), target at 81.0% (50% probability of achievement), stretch at 91.1% (10% probability of achievement), and superior was set at 92.4% (5% probability of achievement). Coal unit commercial availability factor was 80.8%, resulting in a payout of 99.4%.

NERC Start Reliability – Gas/Oil. The NERC start reliability metric is based on NERC standards that define reliability requirements for planning and operating the North American bulk power system and are developed using a results-based approach focusing on performance, risk management, and entity capabilities. The Committee set target at a level that was consistent with historical averages, and slightly widened the metric range in 2020 to incentivize remote startup and operations, which reduce costly callouts and overtime while allowing for flexible operations around the next day market. NERC Start Reliability for gas and oil units was 99.0%, resulting in a payout of 200.0%.

Plant Availability Factor – Nuclear. This metric measures available capacity as a percentage of maximum possible generation. It promotes having a low-cost, baseload unit like Wolf Creek available for production as base load without derate or outage interruption. Target for our Wolf Creek nuclear generating station was set at 2020 availability projected by management, which was set based on the average preceding 10 years of availability. Threshold was set at 90.7% (94% of target), target at 96.5%, stretch at 98.4% (102% of target), and superior was set at 99.4% (103% of target). Plant Availability – Nuclear was 99.5% resulting in a payout of 200.0%.

 

 

 

Executive Compensation  |  Summary and Analysis of Executive Compensation  |  Evergy 2021 Proxy Statement   36  

Targets and awards earned by each NEO for the 2020 short-term incentive plan are shown below.

 

Name		Base Salary				2020 Incentive Award at Target (Percent of Annual Base Salary)		2020 Actual Award As a Percent of Target bonus				2020 Actual Award Paid ($)
Mr. Terry Bassham Former President and Chief Executive Officer		$	950,000			100%			153.8	%		$	1,461,100
Mr. Kevin E. Bryant Executive Vice President and Chief Operating Officer		$	570,000			80%			153.8	%		$	701,328
Mr. Greg A. Greenwood Executive Vice President — Strategy and Chief Administrative Officer		$	520,000			80%			153.8	%		$	639,808
Mr. Anthony D. Somma Former Executive Vice President and Chief Financial Officer		$	515,000			80%			153.8	%		$	633,656
Ms. Heather A. Humphrey Senior Vice President, General Counsel and Corporate Secretary		$	500,000			65%			153.8	%		$	499,850

Discretionary Cash or Stock Awards

From time to time, the Committee may grant a discretionary cash or stock award to an NEO or other officer for special accomplishments or achievements. Mr. Greenwood received an $8,000 discretionary cash award in 2020 in lieu of a base salary adjustment.

Equity Compensation

General

The Committee approves long-term incentive compensation for our officers who are in positions to make positive contributions to our long-term performance and to create shareholder value. The Committee believes restricted share units accomplish our executive compensation program objectives because they:

 

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align the interests of management directly with those of our shareholders;

 

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focus management’s efforts on performance that will create long-term shareholder value and sustain increases in the price of our common stock and our ability to pay dividends;

 

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provide a competitive long-term incentive opportunity;

 

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offer clear, transparent accounting; and

 

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provide a retention incentive for key employees because the restricted share units vest over time and will be forfeited in whole or in part if an officer’s employment terminates prior to vesting.

Equity awards, which are made under our shareholder-approved LTIP, are generally targeted near the median range of awards granted to officers at our peer group companies. While our NEOs are eligible for equity awards under the LTIP, none of them has any right to be granted awards.

The Committee grants equity incentives generally effective within the first few business days in March of each year and uses a mix of time-based restricted stock units (25% for 2020) and performance-based restricted stock units (75% for 2020) that are paid on the basis of the attainment of performance goals and satisfaction of other standard criteria. Restricted stock units generally “cliff” vest in three years from the respective dates of grant, subject to satisfaction of the award terms, such as continued employment through the vesting date. Accumulated dividend equivalents on performance-based restricted stock units are paid in cash at the same time as the vesting of the earned performance-based restricted stock units, if any. Dividend and/or dividend equivalents accrued on all time-based restricted stock or restricted stock units are reinvested during the vesting period and are subject to the same restrictions as the associated restricted stock unit.

 

 

 

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Performance-based restricted stock units can be earned at the end of the performance period from 0% to 200% of the target number of restricted stock units granted, depending on actual performance. The performance is measured over a 3-year performance period beginning on January 1 of the grant year and ending on December 31 of the third year following the grant year. Performance is measured on a calendar year basis to align with Evergy’s fiscal year. Accordingly, at the end of any given calendar year, the performance objective related to performance-based units may be satisfied, but the performance-based units will not vest, if at all, until the following March, subject to satisfaction of the award terms.

The sole performance objective for 2020 performance-based restricted stock units is Evergy’s TSR relative to the companies included in the EEI index of electric utility companies over the three-year performance period. Specific performance targets, as shown below, were set by the Committee; if actual performance falls between the specified performance levels, linear interpolation will be used to determine payouts. To appropriately balance absolute performance and relative performance, any payout for the performance period would be capped at the target number of restricted stock units granted (100%) if Evergy’s absolute TSR performance is negative.

 

Performance Objective		Weighting (Percent)		Threshold (50%)		Target (100%)		Stretch (150%)		Superior (200%)
Three Year TSR versus Companies in the EEI Index		100%		30th Percentile		50th Percentile		70th Percentile		90th Percentile

Equity incentives granted to each NEO in 2020 are shown below. For 2020, 25% of the NEOs’ long-term incentive was in the form of time-based RSUs and, to incentivize performance and align the NEOs’ interests with those of shareholders, 75% was in the form of performance-based RSUs.

 

		2020 Time-Based RSUs						2020 Performance-Based RSUs (Target)
Name		Dollars				Units(1)		Dollars				Units(1)
Mr. Bassham		$	1,000,000			14,069		$	3,000,000				42,205
Mr. Bryant		$	249,375			3,509		$	748,125				10,525
Mr. Greenwood		$	195,000			2,744		$	585,000				8,230
Mr. Somma		$	206,000			2,899		$	618,000				8,695
Ms. Humphrey		$	175,000			2,462		$	525,000				7,386

 

(1)	The number of units is calculated using the average closing price of our common stock for the calendar month immediately preceding the grant date that occurs on or around the first business day in March, or $71.08 per share for 2020.

2018 Performance Shares

In early 2018, performance shares were awarded by Great Plains Energy Incorporated (“Great Plains Energy”) for the 2018 to 2020 performance period to Messrs. Bassham and Bryant and Ms. Humphrey. Mr. Somma and Mr. Greenwood were not employees of Great Plains Energy at the time of these grants in 2018 and therefore did not participate in the program. The performance objective for the 2018 performance shares was the same as the performance objective for the 2020 performance-based restricted stock units described above – TSR relative to the companies included in the EEI index of electric utility companies over the three-year performance period. Payouts for the 2018 performance shares are earned according to the following schedule:

 

Performance Objective		Weighting (Percent)		Threshold (50%)		Target (100%)		Stretch (150%)		Superior (200%)
Three Year TSR versus Companies in the EEI Index		100%		30th  Percentile		50th  Percentile		70th  Percentile		90th  Percentile

The 2018 performance shares were adjusted in 2018 to reflect the fact that, as part of the merger, each share of Great Plains Energy common stock was converted into 0.5981 shares of Evergy common stock. In addition, the Committee determined that in connection with the merger, performance for a pro rata portion of the performance shares (14.1%) would be measured and “locked in” based on the TSR of Great Plains Energy common stock relative to the companies in the

 

 

 

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EEI index of electric utility companies from the beginning of the performance period up to the closing of the merger. The remainder of the award (85.9%) was subject to the TSR of Evergy common stock relative to the companies in the EEI index of electric utility companies from the closing of the merger until the end of the performance period. In total, a payout equal to 66.4% of target number of shares granted was earned for the performance period.

As a result, in March 2021, Mr. Bassham, Mr. Bryant and Ms. Humphrey earned the number of shares noted in the table below.

 

 

(1)	Based on the closing price per share of Evergy common stock on December 31, 2020, or $55.51, which was the last day of the performance period.

(2)	For additional information, see “Extension of Vesting of Mr. Bassham’s 2018 Restricted Stock and Performance Share Awards” below.

Extension of Vesting of Mr. Bassham’s 2018 Restricted Stock and Performance Share Awards

In March 2018, the Great Plains Energy Board of Directors granted equity awards to Mr. Bassham that were scheduled to vest on March 1, 2021. Those Great Plains Energy award agreements did not include provisions for the treatment of the award upon a qualifying retirement and therefore the awards would be forfeited upon termination of employment. Evergy’s current form of award agreement, however, does provide for treatment of awards upon a qualifying retirement: if a grant recipient attains the age of 60 and has been employed by Evergy (or one of its predecessor companies) for ten or more years, a grant recipient will be entitled to pro rata vesting of equity awards.

On December 16, 2020, in connection with Mr. Bassham’s upcoming retirement on January 4, 2021, in order to acknowledge the substantial contributions of Mr. Bassham to Evergy and its predecessor companies, and as an inducement for ensuring a smooth transition to a new president and chief executive officer of Evergy, the Committee recommended and the independent directors determined to fully vest Mr. Bassham’s 2018 grants at the time the grants would otherwise vest, following his retirement. Performance shares will vest based on actual satisfaction of performance conditions that were established on the grant date.

Mr. Bassham’s 2019 and 2020 Evergy restricted stock unit awards will be treated consistent with the retirement provisions in the respective award agreements. In accordance with SEC disclosure rules, the incremental fair value of the awards, as of the modification date of $1,134,083, is reported in the Summary Compensation Table and Grants of Plan-Based Awards Table below. This amount does not represent additional compensation granted to Mr. Bassham, nor does it represent the amount to be realized from those grants.

Deferred Compensation

The Company’s DCP allows all officers, including NEOs, to defer the receipt of up to 50% of base salary and 100% of any cash incentive award. The earnings rate on deferral amounts is annually determined by the Committee and based on the Company’s weighted average cost of capital. A discussion of the DCP begins on page 52.

Retirement Benefits

Our NEOs participate in one of our tax-qualified, noncontributory defined benefit plans, and participate in other retirement plans depending on whether they were previously an officer of Great Plains Energy (Messrs. Bassham and Bryant and Ms. Humphrey) or Westar Energy, Inc. (“Westar Energy”) (Messrs. Greenwood and Somma).

 

 

 

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Legacy Great Plains Energy NEOs

NEOs that were officers of Great Plains Energy participate in a defined benefit plan sponsored by Kansas City Power & Light Company (“KCP&L”), which became the Evergy Retirement Plan on June 4, 2018 (the “Evergy Retirement Plan”), and was available to all KCP&L non-union employees hired or rehired on or before December 31, 2013. Benefits under the Evergy Retirement Plan are based on each employee’s years of service and the average annual base salary over a specified period.

Evergy also has an unfunded Supplemental Executive Retirement Plan (“KCP&L SERP”) for executives who were formerly officers of Great Plains Energy. This unfunded plan provides the difference between the amount that would have been payable under the KCP&L Pension Plan (now the Evergy Retirement Plan) in the absence of Internal Revenue Service (“IRS”) tax code limitations and the amount actually payable under the KCP&L Pension Plan (now the Evergy Retirement Plan). It also provides a slightly higher benefit accrual rate than the KCP&L Pension Plan.

Legacy Westar Energy NEOs

NEOs who were officers of Westar Energy participated in a defined benefit plan sponsored by Westar Energy. That plan was merged with the Evergy Retirement Plan on November 30, 2019 and was available to all Westar Energy employees hired or rehired on or before May 30, 2018.

NEOs who were officers of Westar Energy also participate in a Retirement Benefit Restoration Plan (the “Westar Restoration Plan”). This unfunded plan provides the difference between the amount that would have been payable under the Westar Pension Plan (now the Evergy Retirement Plan) in the absence of IRS tax code limitations and the amount actually payable under the Westar Pension Plan (now the Evergy Retirement Plan).

Change-in-Control Severance Agreements

The Committee believes that change-in-control severance agreements help ensure the continued service, dedication and objectivity of our officers, including our NEOs, in the event of a transaction that would result in a change-in-control of the Company. These agreements support the objective assessment and execution of potential changes in Evergy’s strategy and enhance retention by reducing concerns about employment continuity. We believe these change-in-control arrangements also create incentives for our officer team to build shareholder value and to obtain the highest value possible should we engage in a transaction, despite the risk of losing employment and potentially not having the opportunity to otherwise vest in equity awards. These agreements provide for payments and other benefits if the officer’s employment terminates for a qualifying event or circumstance, such as being terminated without “Cause” or leaving employment for “Good Reason,” as these terms are defined in the agreements. All the agreements require a double trigger so that both a change-in-control and a termination (actual or constructive) of the executive’s employment must occur to trigger benefits. The agreements do not provide for a “gross up” payment to cover any excise taxes that could be payable in connection with payments and benefits received under the agreement.

Additional information, including a quantification of benefits that would have been received by NEOs had termination occurred on December 31, 2020, is found under the heading “Potential Payments Upon Termination or Change-in-Control” starting on page 53.

No Employment Agreements

None of the Company’s executive officers, including the NEOs, has a written employment agreement.

Perquisites and Generally Available Employee Benefits

Our NEOs are eligible to receive modest perquisites provided by or paid for by Evergy. These perquisites are generally consistent with those offered to executives at our peer group companies, and the Committee believes that they are important for retention and recruitment. The Committee also believes that Evergy, in general, benefits from these perquisites because the perquisites help promote the financial and physical health of our NEOs, thereby allowing them to focus on their jobs.

 

 

 

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As shown in the Summary Compensation Table on page 45, all NEOs are eligible for comprehensive financial planning services and executive health physicals. The NEOs are also eligible for employment benefits that are generally available to all employees, such as participation in a 401(k) plan and medical and life insurance.

Committee Consideration of Compensation Program Risk

The Committee reviewed an analysis conducted by Meridian that analyzed the risks associated with Evergy’s compensation programs, including those for executive officers. This analysis concluded that the risks associated with Evergy’s compensation programs are not likely to have a material adverse effect on Evergy, and instead encourage overall balanced performance that supports sustainable shareholder value. Among the items the Committee considered were:

 

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The annual incentive plans for all employees (including officers) contain a diverse array of measures that focus on the fundamental aspects of our business.

 

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The performance measures for all incentive compensation programs are directly tied to Evergy’s annual and long-term financial results and/or business plans.

 

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The maximum amount payable to non-officer employees under our annual incentive plan are modest and balanced.

 

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The design and administration of Evergy’s Energy Partners’ incentive plan includes appropriate risk mitigators, including a mixture of formulaic funding and the discretionary allocation of individual payments by an oversight committee, funding based on multiple metrics and a mandatory deferral of 25% of the award.

 

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The officer compensation program design provides a balanced mix of cash and equity, annual and long-term incentives and diverse performance objectives.

 

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Evergy currently does not grant stock options.

 

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Evergy (for non-officers) and the Committee (for officers) have the ability to adjust cash and equity incentive program payouts if the payouts are not justified by performance.

 

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Evergy has the ability to “clawback” officer annual incentive compensation and LTIP performance awards in the event of a restatement of or other inaccuracy in our financial statements.

 

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Officers are subject to share ownership and retention guidelines.

 

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The Board oversees Evergy’s enterprise risk management and mitigation programs, including the possible impacts of variables on the earnings of Evergy, which are important aspects of Evergy’s incentive compensation plans.

 

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The officers’ annual incentive plan and LTIP performance grants have a “stretch” performance level to flatten the steepness of the performance payout curve and further reinforce the appropriate behavioral incentives.

 

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Under the LTIP, any payout is capped at target or 100% if TSR performance is negative even if a greater award is prescribed by the performance objectives.

Tax and Accounting Implications

In addition to our executive compensation objectives and design principles, we consider tax and accounting implications when designing and administering our compensation programs. One such consideration is Internal Revenue Code Section 162(m), which limits our ability to deduct compensation paid to each covered officer for tax purposes to $1.0 million annually. Section 162(m) was amended and expanded under the federal tax bill enacted at the end of 2017. Beginning in 2018, covered employees include the principal executive officer, principal financial officer and next three highest paid named executive officers, and once an individual becomes a covered employee, that individual will remain a covered employee for all future years. As a result, beginning in 2018, compensation paid to our covered employees in excess of $1 million, including annual and long-term incentive and equity awards, is not deductible for tax purposes unless it qualifies for transition relief applicable to certain binding written performance-based compensation arrangements in place as of November 2, 2017. No assurance can be given that any future compensation will qualify for the

 

 

 

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transition relief. Although the Committee considers tax deductibility in making its compensation decisions, the Committee does not believe that compensation decisions should be determined solely by how much compensation is deductible for federal income tax purposes. As a result, the Committee retains the discretion to authorize payments that may not be deductible. The Committee also considers the accounting consequences of its compensation decisions.

Compensation Governance Practices

We believe our 2020 executive compensation decisions demonstrate our commitment to paying for performance and such decisions are further supplemented by sound compensation policies and practices, including:

 

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Independent Committee. The Committee was comprised of five directors at the end of 2020, each of whom is independent under the NYSE listing standards, including the enhanced independence standards for members of the compensation committee, and a “non-employee director” under the Exchange Act.

 

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Independent Consultant. For 2020, the Committee directly retained Meridian, an independent compensation consultant, to evaluate, and provide advice with respect to, our executive compensation program.

 

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Executive Sessions. Time is allocated at each regular Committee meeting for the Committee to meet in executive session without the presence of management. The Committee at times will include its independent compensation consultant or other advisors for all or a part of these sessions.

 

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Board Oversight of Succession. Our Committee and Board regularly review succession plans for our executive officers, including our NEOs.

 

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Stock Ownership Guidelines. We have significant stock ownership and holding guidelines for all of our executive officers, to be achieved within five (5) years of their initial appointment as an executive. Our Chief Executive Officer is expected to hold Evergy common stock equal to at least five times base salary. Other executive officers, including the other NEOs, are expected to hold Evergy common stock equal to either two or three times their base salaries, as applicable.

 

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Clawback Policy. We have the ability to recover cash incentive compensation and equity awards from senior executives in the event of a restatement of or other inaccuracy in our financial statements.

 

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Risk Assessment of Compensation Plans. We annually conduct or review a risk assessment to evaluate whether our compensation program creates any risks that may have a material adverse effect on us.

 

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“Double Trigger” Change-in-Control Agreements. Our Change-in-Control Severance Agreements have a “double trigger” that requires both a change-in-control and termination of employment prior to the payment of severance benefits, if any.

 

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No Tax “Gross-Ups” in Change-in-Control Agreements. The Change-in-Control Severance Agreements that govern future transactions do not contain any excise tax gross-up features.

 

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No Employment Contracts. We do not have employment contracts with any of our executive officers, including the NEOs.

 

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Standardized Equity Grant Schedule. Our annual equity grants occur in early March, which is after we release financial results for the prior fiscal year. In addition, equity incentives that are expressed as a dollar target are converted into equity awards using an average closing price of our stock over the preceding month, which minimizes the ability to use equity grants for speculative purposes.

 

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Generally No Dividend Payments for Unvested Awards. Dividend and/or dividend equivalents are generally not paid on unvested performance awards, unless and until such awards vest. In addition, for time-based equity incentives, dividends that are reinvested in the form of additional time-based equity incentives are forfeited if the incentive does not vest.

 

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No Stock Options. We do not currently grant stock options.

 

 

 

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