10-K: PSEG Appoints Charles McFeaters as President and Chief Nuclear Officer, Outlines Compensation

PSEG has appointed Charles McFeaters as President and Chief Nuclear Officer of PSEG Nuclear LLC, outlining his compensation package including a base salary, incentive plan eligibility, and long-term equity grants.

Summary

• Charles McFeaters has been appointed President and Chief Nuclear Officer of PSEG Nuclear LLC, effective May 20, 2023.
• His base annual salary will be $650,000, with the next salary review scheduled for January 2024.
• McFeaters will be eligible for the PSEG Management Incentive Compensation Plan (MICP), with a target incentive award of 75% of his base salary.
• His MICP award for 2023 will be prorated based on his promotion date, with a 60% target for the period of January 1, 2023 through May 19, 2023, and a 75% target for the remainder of the year.
• He will also continue to participate in the PSEG 2021 Long-Term Incentive Plan (LTIP), receiving a supplemental 2023 LTIP grant of $450,000, bringing his total 2023 LTIP grant to $1,000,000.
• The 2023 LTIP grant will be in the form of 30% Restricted Stock Units (RSUs) and 70% Performance Share Units (PSUs).
• McFeaters will continue to be eligible for the PSEG Equity Deferral Plan and the PSEG Deferred Compensation Plan.
• He will continue to be designated as a Schedule C participant in the Key Executive Severance Plan.
• McFeaters will receive a monthly vehicle stipend of $1,000 and is required to own company stock commensurate with his new position, currently at 2x his base salary.
• His nonqualified deferred compensation payments will be delayed for six months following termination of employment if he is determined to be a specified employee under Section 409A of the Internal Revenue Code.
• The letter is not a contract of employment and his employment is at-will.
• McFeaters is required to complete a FERC/BPU interlock questionnaire and sign a Confidentiality, Non-Competition, Non-Solicitation and Intellectual Property Agreement, and an Arbitration Agreement.

Sentiment

Score: 7

Explanation: The document is a standard offer letter outlining compensation for a new executive, which is generally positive. The terms are competitive and align with industry standards, but the at-will employment and potential delay in deferred compensation payments temper the overall sentiment.

Positives

• The appointment of a new President and Chief Nuclear Officer provides leadership for PSEG Nuclear LLC.
• The compensation package includes a competitive base salary, incentive opportunities, and long-term equity grants.
• The inclusion of a vehicle stipend and participation in deferred compensation plans are attractive benefits.
• The supplemental LTIP grant demonstrates a commitment to McFeaters' long-term contribution to the company.

Negatives

• The document explicitly states that the employment is at-will and not a contract, which provides no job security.
• Nonqualified deferred compensation payments may be delayed for six months following termination of employment if he is determined to be a specified employee under Section 409A of the Internal Revenue Code.

Risks

• The document is not a contract of employment, and employment can be terminated at any time, for any reason.
• The MICP award is not guaranteed and is contingent upon the successful completion of goals and objectives.
• Nonqualified deferred compensation payments may be delayed for six months following termination of employment if he is determined to be a specified employee under Section 409A of the Internal Revenue Code.
• The required minimum level of company stock ownership is currently 2x base salary for this position, which could be a financial risk for the employee.

Future Outlook

All future grants under the LTIP will be subject to the terms of the LTIP and the related grant award agreements.

Management Comments

• I am pleased to offer you the position of President and Chief Nuclear Officer for PSEG Nuclear LLC.
• The purpose of this letter is to set forth the terms of your new position with the Company; it is not a contract of employment, nor does it guarantee your employment with the Company for any period of time.

Industry Context

This appointment reflects the ongoing importance of nuclear power within PSEG's energy portfolio and the need for experienced leadership in this sector.

Comparison to Industry Standards

• The base salary of $650,000 is competitive for a President and Chief Nuclear Officer role in the utility industry, particularly for a company of PSEG's size and scope.
• The 75% target incentive award under the MICP is a common practice for executive-level positions, aligning compensation with company performance.
• The $1,000,000 LTIP grant, consisting of RSUs and PSUs, is a standard method for incentivizing long-term value creation and retention of key executives.
• The vehicle stipend is a common benefit for executive-level positions.
• The requirement to own company stock equal to 2x base salary is a common practice to align executive interests with shareholder value.

Management Changes

Stakeholder Impact

• Shareholders: The appointment of a new executive is intended to improve the company's performance and value.
• Employees: The appointment of a new executive may impact the company's culture and operations.
• Customers: The appointment of a new executive may impact the company's service delivery and customer experience.

Next Steps

• Charles McFeaters is required to complete the attached FERC/BPU interlock questionnaire.
• Charles McFeaters is required to sign the enclosed Confidentiality, Non-Competition, Non-Solicitation and Intellectual Property Agreement.
• Charles McFeaters is required to sign the enclosed Arbitration Agreement.

Key Dates

Keywords

PSEG Nuclear LLC, Charles McFeaters, Chief Nuclear Officer, Management Incentive Compensation Plan, Long-Term Incentive Plan, Restricted Stock Units, Performance Share Units, Deferred Compensation, Executive Compensation, Nuclear Power