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
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Spire Inc.
2018 Proxy Statement
Notice of Annual Meeting of Shareholders
Table of contents
What’s
new ? |
|
This year, we’ve updated our proxy statement
to further explain Spire’s governance and compensation practices. We believe that providing a broader and deeper understanding
of Spire and a transparent look at our perspective on governance and compensation will be beneficial as you vote this year. Inside,
you’ll find updates, including:
• Reorganized content and the addition
of several charts and graphics to make information more accessible;
• The ratio of the annual total
compensation of Ms. Sitherwood, president and chief executive officer of Spire, to the annual total compensation of the median
employee of the company, together with an explanation of how this ratio was calculated; and
• A robust description of the qualifications
necessary to serve as a member of our Board and the process by which the directors evaluate the annual performance for the Board
as a whole, each committee and each Board member.
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Dear fellow shareholders and employees,
Thank you for your investment in Spire and for
the confidence you have placed in the Board to oversee your interests in the Company.
Strategy
The Board considers it a privilege to be stewards
of this Company, playing an essential role in overseeing Spire’s long-term growth strategy. At our annual Board strategy
session and at meetings throughout the year, we leverage our diverse backgrounds, broad-based experience and unique insights
into strategy development and execution to guide Spire’s strategic imperatives, key priorities and long-range plans.
We are steadfastly focused on achieving results and delivering on our promises.
Diversity of thought, experience and background
As Spire’s long-term strategy evolves,
so do the skills, qualifications and experience our Board looks for in its director nominees. We regularly review the mix of skills,
qualifications and experience of our current directors and seek to identify individuals who can help us shape Spire’s long-term
growth strategy.
As part of this effort, we strive to maintain
an appropriate balance of experience, tenure and diversity on the Board. Refreshing the Board is a priority, because new directors
bring new perspectives and ideas. At the same time, the Board believes it is equally important to benefit from the valuable experience
and continuity that longer-serving directors bring.
“We strive to maintain an appropriate balance
of experience, tenure and diversity on the Board.”
Commitment to strong corporate governance
Our Board has adopted comprehensive corporate
governance standards and policies to govern our activities and practices and to facilitate accountability for our actions. We believe
strong corporate governance and an ethical culture are important drivers of financial integrity and sustainable performance that,
in turn, lead to investor confidence. As directors, we are fully accountable to you, the shareholders, and ultimately, we believe
that this accountability is integral to our success.
On behalf of our Board of Directors, thank you
again for your investment and for your continued support.
Sincerely,
![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsrx3x1.jpg)
Edward L. Glotzbach
Chairman
of the Board
Spire Inc.
![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsrx3x2.jpg)
Spire Inc. | 2018 Proxy
Statement ![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/footer.jpg) |
1 |
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Notice of
Annual Meeting
of
Shareholders
January 31, 2019
10 a.m. Central Standard Time
700 Market Street
St. Louis, MO 63101
Important notice
Your vote is important. To assure your representation
at the annual meeting, please vote your shares as promptly as possible over the internet at www.ProxyVote.com or by telephone at
800-690-6903. Alternatively, you may request a paper proxy card, which you may complete, sign and return by mail.
Admission to meeting
Admission to the annual meeting is limited to
those who were shareholders of record on November 30, 2018 or who bring documentation to the meeting that shows their beneficial
ownership of our common stock through a broker, bank or other nominee as of November 30, 2018.
To the shareholders of Spire Inc.:
The annual meeting of shareholders
of Spire Inc. (“Spire” or the “Company”) will be held on Thursday, January 31, 2019, at 10 a.m. Central
Standard Time, at 700 Market Street, St. Louis, MO 63101, for the following purposes:
1. |
To elect three members of the Board of Directors each to serve for a three-year term and one member
of the Board of Directors to serve for a two-year term. |
2. |
To provide an advisory vote to approve the compensation of our named executive officers. |
3. |
To ratify the appointment of Deloitte & Touche LLP as our independent registered public accountant
for the 2019 fiscal year. |
4. |
To transact such other business as may properly come before the meeting and any adjournment or postponement. |
You can vote if you were a common shareholder
of record on November 30, 2018.
To assure your representation at the annual meeting,
you are urged to cast your vote, as instructed in the Notice of Internet Availability of Proxy Materials, via the internet or by
telephone. You also may request a paper proxy card to submit your vote by mail, if you prefer.
If your shares are held by a broker, bank or
nominee, please follow their voting instructions for your vote to count.
By Order of the Board of Directors,
![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsrx5x2.jpg)
Ellen L. Theroff
Corporate Secretary
December 14, 2018
Spire Inc. | 2018 Proxy
Statement ![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/footer.jpg) |
3 |
Proxy statement summary
This summary highlights information contained
elsewhere in this proxy statement. This summary does not contain all of the information that you should consider, and you should
read the entire proxy statement carefully before voting.
Spire at a glance
Our
company |
Our
mission |
Our strategy |
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|
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Fifth largest publicly traded natural gas company in the country serving customers in Alabama, Mississippi and Missouri. Our gas-related businesses include gas marketing and gas storage services. |
Answer every challenge, advance every community and enrich every life through the strength of our energy. |
We are committed to transforming our business
and pursuing growth through:
• Growing organically
• Investing in infrastructure
• Acquiring and integrating
• Innovation and technology
|
About Spire
Spire (NYSE: SR) serves 1.7 million customers
every day making us the fifth largest publicly traded natural gas company in the country. We help families and business owners
fuel their daily lives through our gas utilities serving Alabama, Mississippi and Missouri. Our other gas-related businesses include
Spire Marketing, which provides natural gas marketing and related services, Spire STL Pipeline and Spire Storage. We are transforming
our business and pursuing growth through 1) growing organically, 2) investing in infrastructure, 3) acquiring and integrating,
and 4) innovation and technology.
Our energy
At Spire, we believe energy exists to help people.
To warm their homes, grow their businesses and advance their communities. It’s a simple idea, but it’s at the heart
of what we do.
It’s this belief that guides us as we explore
new and better ways to serve our customers. From how we upgrade infrastructure to how we answer a customer’s call, we’re using
our energy to move our industry forward and redefine what it means to serve.
Transforming our business
In 2018, we continued to grow our business, adding
value for customers and shareholders.
• |
We continued to focus on organic growth, adding customers and increasing our margins |
• |
We further refined our approach to economic development and increased our investment in new business by more than 40 percent |
• |
We invested nearly $500 million in capital during 2018 to further grow and advance our businesses |
• |
We upgraded our utility infrastructure to enhance the safety, reliability and efficiency of our distribution system |
• |
We made enhancements to our information technology platforms to improve customer service and operations and to further integrate
our utility businesses |
• |
We invested in pipeline and storage assets to build a foundation for future growth |
• |
We are poised to invest $2.6 billion in capital in our businesses for the five-year period 2018-2022 to support our targeted
long-term annual net economic earnings per share growth of 4 to 7 percent |
Spire’s fiscal year 2018 corporate performance
The following table provides information on the
Company’s performance in the last two fiscal years, which was a critical consideration in the Company’s determination
of appropriate executive compensation. For the fiscal year ended September 30, 2018, the Company reported an increase in consolidated
net income to $214.2 million from $161.6 million for fiscal year 2017. Net income and earnings per share are determined in accordance
with accounting principles generally accepted in the United
www.SpireEnergy.com |
Spire Inc. | 2018 Proxy
Statement ![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/footer.jpg) |
4 |
States of America (“GAAP”). Management
also uses the non-GAAP measures of net economic earnings and net economic earnings per share when internally evaluating and reporting
results of operations as discussed on pages 29 and 30 in the Company’s Annual Report on Form 10-K for the year ended September
30, 2018 (the “2018 10-K”). Net economic earnings for 2018 were $183.7 million, up from $167.6 million for 2017.
The increase in net income was primarily due
to the effects of the Tax Cuts and Jobs Act and much stronger results from the Gas Marketing segment. The net economic earnings
improvement reflects increases for both the Gas Marketing segment and the Gas Utility segment. The results are discussed further
beginning on page 32 of the 2018 10-K.
In
millions, except per share amounts | |
Gas Utility | | |
Gas Marketing | | |
Other | | |
Consolidated | | |
Per diluted share | |
Year ended September
30, 2018 | |
| | |
| | |
| | |
| | |
| |
Net
income [GAAP] | |
$144.4 | | |
$24.9 | | |
$44.9 | | |
$214.2 | | |
$4.33 | |
Adjustments, pre-tax: | |
| | |
| | |
| | |
| | |
| |
Missouri regulatory
adjustments | |
30.6 | | |
— | | |
— | | |
30.6 | | |
0.62 | |
Unrealized gain
on energy-related derivatives | |
— | | |
(4.0 | ) | |
— | | |
(4.0 | ) | |
(0.08 | ) |
Realized gain on economic hedges prior to the sale of the physical commodity | |
— | | |
(0.3 | ) | |
— | | |
(0.3 | ) | |
(0.01 | ) |
Acquisition, divestiture
and restructuring activities | |
0.2 | | |
— | | |
13.4 | | |
13.6 | | |
0.28 | |
Income tax effect
of adjustments* | |
(9.1 | ) | |
1.2 | | |
(2.4 | ) | |
(10.3 | ) | |
(0.21 | ) |
Effect of the Tax
Cuts and Jobs Act | |
17.0 | | |
1.1 | | |
(78.2 | ) | |
(60.1 | ) | |
(1.21 | ) |
Net economic earnings
(loss) [non-GAAP] | |
$183.1 | | |
$22.9 | | |
$(22.3 | ) | |
$183.7 | | |
$3.72 | |
Year ended September
30, 2017 | |
| | |
| | |
| | |
| | |
| |
Net income (loss)
[GAAP] | |
$180.5 | | |
$3.4 | | |
$(22.3 | ) | |
$161.6 | | |
$3.43 | |
Adjustments, pre-tax: | |
| | |
| | |
| | |
| | |
| |
Unrealized loss
on energy-related derivatives | |
0.1 | | |
5.9 | | |
— | | |
6.0 | | |
0.13 | |
Realized gain on economic hedges prior to the sale of the physical commodity | |
— | | |
(0.3 | ) | |
— | | |
(0.3 | ) | |
(0.01 | ) |
Acquisition, divestiture
and restructuring activities | |
1.5 | | |
— | | |
2.5 | | |
4.0 | | |
0.09 | |
Income tax effect
of adjustments* | |
(0.6 | ) | |
(2.2 | ) | |
(0.9 | ) | |
(3.7 | ) | |
(0.08 | ) |
Net economic earnings
(loss) [non-GAAP] | |
$181.5 | | |
$6.8 | | |
$(20.7 | ) | |
$167.6 | | |
$3.56 | |
* |
Income tax effect is calculated by applying federal, state and local income tax rates applicable to ordinary income to the amounts
of the pre-tax reconciling items and then adding any estimated effects of enacted state or local income tax laws for periods before
the related effective date. |
Our
2018 results
Consolidated Net Income |
Diluted Earnings per Share |
Declared Dividends per Share |
$214.2M |
$4.33 |
$3.72 |
$2.25 |
GAAP |
GAAP |
NON-GAAP |
Up from $2.10 for FY17 |
Up from $161.6 million for FY17 |
Up from $3.43 for FY17 |
Up from $3.56 for FY17 |
|
Executive compensation
The Company is committed to its pay-for-performance
philosophy. Basic net economic earnings per share is the key metric used to determine funding under our Annual Incentive Plan (“AIP”)
in 2018. The Company also emphasizes pay-for-performance by placing most of the executives’ target total direct compensation
(“TTDC”) at risk through the annual and equity incentive plans. TTDC includes the current base salary, the 2018 target
AIP opportunity and the market value of the equity awards made during fiscal year 2018. Further, the largest portion of incentive
pay, which is represented by the equity incentive award, focuses on long-term performance.
Spire Inc. | 2018 Proxy
Statement ![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/footer.jpg) |
5 |
Corporate social
responsibility |
During fiscal year 2017, we established our Corporate Social Responsibility (“CSR”) Council, which supports the implementation of the Company’s promise to answer every challenge, advance every community and enrich every life through the strength of our energy. In last year’s proxy statement, we noted that we planned to issue our first-ever CSR report in 2018 and that our report would summarize our activities and performance in the area of sustainability, including how we are operating responsibly from an environmental, social and governance perspective. So that we may issue a report that includes fiscal 2018 information, we have pushed back our planned issuance to the third quarter of fiscal 2019. |
Annual meeting of shareholders
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Time and date
10 a.m., Central Standard Time,
on Thursday, January 31, 2019 |
Place
700 Market Street
St. Louis, MO 63101 |
Record date
November
30, 2018 |
How to vote
Shareholders as of the record date are entitled
to vote. Each share of common stock is entitled to one vote for each director nominee and one vote for each of the proposals.
![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsrx8x4.jpg) |
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By internet
www.proxyvote.com
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By telephone
800-690-6903
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By mail
Mark your proxy card or voting
instruction card, date and sign it, and return it in the postage-paid envelope provided.
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In person
If you decide to attend the
meeting in person, you will need to register upon your arrival.
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Voting matters
Proposal |
Board vote
recommendation |
Page reference
(for more detail) |
Election of four directors |
FOR |
9 |
Provide advisory vote to approve the compensation of our named executive officers |
FOR |
24 |
Ratification of Deloitte & Touche LLP (“Deloitte”) as our independent registered public accounting firm for fiscal year 2019 |
FOR |
51 |
www.SpireEnergy.com |
Spire Inc. | 2018 Proxy
Statement ![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/footer.jpg) |
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Nominees for election (page 9)
![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsr9x1.jpg)
The following chart includes summary bios and
key aspects of our Board of Directors, including directors who are nominees this year. We believe the competencies currently possessed
by our directors represent a solid mix of backgrounds and experiences for the Company.
![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsrx9x9.jpg) |
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![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsr9x10.jpg) |
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Mark A. Borer
Retired Chief Executive Officer and
Board Member DCP Midstream Partners LP |
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Maria V. Fogarty
Retired Senior Vice President, Internal
Audit and Compliance NextEra Energy, Inc. |
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Edward L. Glotzbach
Retired Vice Chairman, Mergers and
Acquisitions Information Services Group
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Age: 64 |
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Age: 59 |
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Age: 70 |
Director since: 2014 |
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Director since: 2014 |
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Director since: 2005 |
Committees: |
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Committees: |
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Committees: |
![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsrx9x26.jpg) |
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![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsrx9x27.jpg) |
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![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsr9x13.jpg) |
Nominee |
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![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsr9x14.jpg) |
Nominee |
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Rob L. Jones
Retired Co-Head Bank of America Merrill
Lynch Commodities, Inc. |
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Brenda D. Newberry
Retired Chairman of the Board The Newberry Group |
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Stephen S. Schwartz
President and
Chief Executive Officer Brooks Automation,
Inc. |
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Age: 60 |
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Age: 65 |
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Age: 59 |
Director since: 2016 |
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Director since: 2007 |
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Director since: 2018 |
Committees: |
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Committees: |
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Committees: None |
![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsrx9x29.jpg) |
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![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsrx9x30.jpg) |
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![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsr9x15.jpg) |
Nominee |
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![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsr9x16.jpg) |
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![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsr9x17.jpg) |
Nominee |
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Suzanne Sitherwood
President and Chief Executive Officer
Spire Inc. |
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John P. Stupp Jr.
Chairman, President and Chief Executive
Officer Stupp Bros., Inc. |
|
Mary Ann Van Lokeren
Retired Chairman and
Chief Executive Officer Krey Distributing Co. |
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Age: 58 |
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Age: 68 |
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Age: 71 |
Director since: 2011 |
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Director since: 2005 |
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Director since: 2000 |
Committees: |
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Committees: |
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Committees: |
![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsrx9x31.jpg) |
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![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsrx9x32.jpg) |
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![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsrx9x33.jpg) |
Chair
Audit
Compensation
Corporate
Governance
Strategy
Spire Inc. | 2018 Proxy Statement ![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/footer.jpg) |
7 |
Advisory vote to approve the compensation of our
named executive officers (page 24)
As we do every year, we are again seeking shareholder
advisory approval of the Company’s compensation of our named executive officers as disclosed in this proxy statement. Although
the vote on this proposal is advisory and nonbinding, the compensation committee and
Board will review the results of the vote and consider the collective views of our shareholders in future determinations concerning
our executive compensation program.
Independent registered public accountant (page
51)
We are asking shareholders to ratify the selection
of Deloitte as our independent registered public accountant for fiscal year 2019. The table contains summary information with respect
to Deloitte’s fees for services provided in fiscal years 2018 and 2017.
| |
2018 | | |
2017 | |
Audit fees | |
$ | 2,200,000 | | |
$ | 2,200,000 | |
Audit-related fees | |
| 147,800 | | |
| 142,000 | |
Tax fees | |
| 29,256 | | |
| 31,484 | |
All other fees | |
| 1,895 | | |
| 1,895 | |
Total | |
$ | 2,378,951 | | |
$ | 2,375,379 | |
www.SpireEnergy.com |
Spire Inc. | 2018 Proxy
Statement ![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/footer.jpg) |
8 |
Proposal 1: Election of directors
The Board of Directors is divided into three classes.
Directors Newberry, Sitherwood and Van Lokeren, whose terms will expire upon the election of directors at the meeting on January
31, 2019, have been nominated to stand for reelection for terms expiring upon the election of their successors in January 2022
or their earlier removal or resignation from office. In November, the Board appointed Stephen S. Schwartz to serve as a director
until the annual meeting on January 31, 2019 and nominated him to stand for reelection for a term expiring upon the election of
his successor in January 2021 or his earlier removal or resignation from office. The persons named as proxies intend to vote FOR
the election of the four nominees.
If any nominee becomes unavailable to serve for any reason before the meeting, which is not anticipated, the proxies will vote the shares indicated for that nominee for a person to be selected by our Board of Directors. |
Information about the nominees and directors
Nominees for terms expiring in 2022
Brenda D. Newberry |
![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsr9x13.jpg)
Age: 65
Director
since: 2007
Independent
Committees:
![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsrx11x3.jpg)
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Ms. Newberry retired in May 2010 as chairman of the board of The Newberry Group, a provider of information technology consulting services on a global basis, specializing in information systems, technology infrastructure, data and network security and project management services. Ms. Newberry founded The Newberry Group in 1996 with her husband. Between 2007 and 2014, she also served as a director of Enterprise Financial Services Corp.
Skills relevant to Spire:
Ms. Newberry provides insight into the Company’s
information technology strategy and related risks and exposures. Further, her experience in creating and building her own businesses
assists the Company as it considers growth opportunities, and her government contractor experience provides insight into conducting
business in a highly regulated industry.
Other public directorships: None
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Suzanne Sitherwood |
![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsr9x15.jpg)
Age: 58
Director
since: 2011
Management
Committee:
![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsrx11x4.jpg)
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Ms. Sitherwood has served as the Company’s president since September 1, 2011 and chief executive officer since February 1, 2012.
Skills relevant to Spire:
Ms. Sitherwood has more than 37 years’
experience in the natural gas industry. Over the course of her career, Ms. Sitherwood has gained extensive management and
operational experience and has demonstrated a strong track record of leadership, strategic vision and business acumen. Under Ms. Sitherwood’s
leadership, the Company’s natural gas utility business has grown from 625,000 customers to nearly 1.7 million customers,
and the Company’s enterprise value has grown from $1.3 billion in 2012 to $6.3 billion as of November 1, 2018.
Other public directorships: Alcoa Corporation, where she sits on the Audit Committee and Safety, Sustainability and Public Issues Committee, and the Federal Reserve Bank of St. Louis, where she serves as deputy chair of the board.
|
Chair
Audit
Compensation
Corporate
Governance
Strategy
Spire Inc. | 2018 Proxy Statement ![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/footer.jpg) |
9 |
Mary Ann Van Lokeren |
![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsr9x17.jpg)
Age: 71 Director since: 2000
Independent
Committees:
![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsrx12x3.jpg)
|
Ms. Van Lokeren retired as
chairman and chief executive officer of Krey Distributing Co., an Anheuser-Busch wholesaler, in October 2006. She served in that capacity from December 1986.
Skills relevant to Spire:
With her prior experience as CEO of one of the largest
Anheuser-Busch wholesalers in Missouri, Ms. Van Lokeren has business and leadership expertise that assists the Board as it
evaluates the Company’s financial and operational risks, controls and strategy. Further, her prior experience on other public
company boards provides insight as to the Board’s role in oversight of management as well as corporate governance.
Other public directorships: Retired from the board of Masco Corporation in May 2018.
|
Nominee for term expiring in 2021
Stephen S. Schwartz |
![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsr9x14.jpg)
Age: 59 Director since: 2018
Independent
Committees:
None |
Dr. Schwartz joined Brooks Automation, Inc. in April 2010 as president
and continued to serve in that role until August 2013. He was re-appointed president in May 2016. On October 1, 2010, he became chief executive officer and continues to
serve in that role. Dr. Schwartz had previously served, from August 2002 until April 20, 2009, as chief executive officer and a director of Asyst Technologies, Inc., a
manufacturer of integrated hardware and software automation systems primarily directed at the semiconductor manufacturing industry. He was elected chairman of Asyst in
January 2003. Asyst filed for bankruptcy protection under Chapter 11 of the United States bankruptcy act on April 24, 2009, and Asyst’s assets have since been liquidated.
Skills relevant to Spire:
Dr. Schwartz has extensive leadership, operational,
strategic, and financial management and reporting experience as chief executive officer of a successful public company and brings
to the Board a unique perspective with regard to innovation and technology based on his experience in the automation manufacturing
space.
Other public directorships: Brooks Automation, Inc.
|
Chair
Audit
Compensation
Corporate Governance
Strategy
![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/check1.jpg) |
Your
Board of Directors recommends a vote “FOR” election
of the above nominees as directors. |
www.SpireEnergy.com |
Spire Inc. | 2018 Proxy
Statement ![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/footer.jpg) |
10 |
Directors with terms expiring in 2020
Edward L. Glotzbach |
![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsr9x11.jpg)
Age: 70
Director
since: 2005
Independent
Committees:
![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsrx13x4.jpg)
|
Mr. Glotzbach served as vice chairman, mergers and acquisitions, of Information Services Group from November 2007, when it acquired Technology Partners International, Inc., until his retirement in March 2012. From December 2004 to November 2007, he served as president and chief executive officer of Technology Partners International, Inc., an organization that assists clients with the evaluation, negotiation, implementation and management of information technology and business process sourcing initiatives. From October 2003 to December 2004, he served as vice president and chief financial officer of the firm. From 1970 to September 2003, he served in many positions with SBC Communications, with his most recent position there being executive vice president and chief information officer for six years.
Skills relevant to Spire:
Mr. Glotzbach brings to the Board business and leadership experience as an executive of a public company, regulated utility experience as a former executive of a telephone utility regulated by the Missouri Public Service Commission, financial expertise having served as a chief financial officer at other companies, and information technology expertise given his experience at Information Services Group and his chief information officer experience at a major telephone company. He also provides insight to the Company as to potential exposures and risks in those areas.
Other public directorships: None
|
Rob L. Jones |
![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsr9x12.jpg)
Age: 60
Director
since: 2016
Independent
Committees:
![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsrx13x5.jpg)
|
Mr. Jones is currently an executive in residence at the McCombs School of Business at the University of Texas. He served as co-head of Bank of America Merrill Lynch Commodities, Inc. (MLC) from 2007 until his retirement in March 2012. MLC is a global commodities trading business and a wholly owned subsidiary of Bank of America Merrill Lynch. Prior to taking leadership of MLC, he served as head of Merrill Lynch’s Global Energy and Power Investment Banking Group. An investment banker with Merrill Lynch and The First Boston Corporation for over 20 years, Mr. Jones worked extensively with a variety of energy and power clients, with a particular focus on the natural gas and utility sectors.
Skills relevant to Spire:
Mr. Jones’ experience in financial roles in the energy banking industry, with a particular focus on the natural gas and utility sectors, as well as his experience as a lead independent director of a publicly traded partnership, add a unique dimension to the Board and provide insight into the capital markets and financial risks and strategies.
Other public directorships: Served as lead independent director for Susser Petroleum Partners, L.P. (SUSP), a publicly traded partnership, from 2012 to 2014, and since 2014 he has served on the board of directors of Shell Midstream Partners GP LLC, which is the general partner of Shell Midstream Partners, L.P. He also chairs its audit committee and serves on its conflicts committee. |
John P. Stupp Jr. |
![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsr9x16.jpg)
Age: 68
Director
since: 2005
Independent
Committees:
![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsrx13x6.jpg)
|
Mr. Stupp has been president of Stupp Bros., Inc. since March 2004 and chairman and chief executive officer since March 2014 and chief executive officer of Stupp Corporation since August 1995. Through its subsidiaries, Stupp Bros., Inc. fabricates steel highway and railroad bridges, produces pipe for natural gas and oil transmission pipelines, and offers general, steel and industrial construction services. Mr. Stupp serves as a director of Stupp Bros., Inc.
Skills relevant to Spire:
As chairman, CEO and president of Stupp Bros., Inc., one of the Company’s largest shareholders with a long-term investment relationship with the Company, Mr. Stupp has historic institutional knowledge of the Company and directly represents shareholder interests. Further, his experience with the various subsidiaries and investments of Stupp Bros., Inc. provides insight as to the pipeline and other infrastructure industries on a national basis as well as insight into the regional economy.
Other public directorships: Atrion Corp., where he serves on the compensation committee and chairs the audit committee. |
Chair
Audit
Compensation
Corporate
Governance
Strategy
Spire Inc. | 2018 Proxy
Statement ![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/footer.jpg) |
11 |
Directors with terms expiring in 2021
Mark A. Borer |
![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsrx9x9.jpg)
Age: 64
Director
since: 2014
Independent
Committees:
![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsrx14x3.jpg)
|
Mr. Borer served as chief executive officer as well as a member of the board of directors of DCP Midstream Partners LP from November 2006 through his retirement in December 2012. DCP Midstream Partners LP is a public midstream master limited partnership that is engaged in all stages of the midstream business for both natural gas and natural gas liquids.
Skills relevant to Spire:
Mr. Borer’s experience in the midstream natural gas business gives him hands-on knowledge of the industry. His service as a CEO and member of the board of a public entity that grew significantly under his leadership provides him with experience in the operations of an energy company and the capital markets, and he possesses business and leadership expertise that assists the Board as it evaluates the Company’s financial and operational risks and strategy.
Other public directorships: Altus Midstream Company, formerly known as Kayne Anderson Acquisition Corp., where he serves on the audit committee and conflicts committee. |
Maria V. Fogarty |
![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsr9x10.jpg)
Age: 59
Director
since: 2014
Independent
Committees:
![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsrx14x4.jpg)
|
Ms. Fogarty served as the senior vice president of internal audit and compliance at NextEra Energy, Inc. from 2011 through her retirement in June 2014. She previously served as vice president of internal audit at that company from 2005 to 2010 and director of internal audit from April 1993 through 2004. NextEra Energy, Inc. is a leading clean energy company and the parent company of Florida Power & Light, the largest rate-regulated electric utility in Florida.
Skills relevant to Spire:
Ms. Fogarty’s prior experience leading the audit function at a public energy company provides her knowledge of the audit and Sarbanes-Oxley requirements facing public companies today. Her industry experience at a company that grew significantly during her tenure benefits the Board, as she can provide insights into the risks, opportunities and challenges created by growth.
Other public directorships: None |
Chair
Audit
Compensation
Corporate
Governance
Strategy
www.SpireEnergy.com |
Spire Inc. | 2018 Proxy
Statement ![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/footer.jpg) |
12 |
Governance
Corporate governance at a glance
Board independence |
• Eight out of our nine directors are
independent |
• Our CEO is the only management director |
• Among other duties, our chairman leads executive sessions of the independent directors
to discuss certain matters without management present |
Board composition and diversity |
• Currently, the Board has fixed the number of directors
at nine |
• Currently, the Board consists of four women and five men |
• The Board regularly assesses its performance through Board and committee self-evaluation,
as well as peer reviews of individual directors |
• The corporate governance committee regularly leads the full Board in considering
Board competencies and refreshment in light of Company strategy |
Board committees |
• We have four Board committees—audit, compensation,
corporate governance and strategy |
• We have a cybersecurity subcommittee that reports to the audit committee |
• All committees (with the exception of the strategy committee on which our CEO serves)
are composed entirely of independent directors |
Leadership structure |
• Our chairman is an independent director |
• The Board members elect our chairman annually |
Risk oversight |
• Our full Board is responsible for risk oversight
and has designated specific committees to lead the oversight efforts with regard to certain key risks |
• Our Board oversees management as it fulfills its responsibilities for the assessment
and management of risks |
Open communication |
• We encourage open communication and strong working
relationships among the chairman, the CEO and the other directors |
• Our directors have access to management
and employees |
Director stock ownership |
• Our directors are required to own shares of our
common stock equal in value to at least five times their annual cash retainer, or $425,000 |
Accountability to
shareholders |
• We use majority voting in director elections |
• We actively reach out to our shareholders through our engagement program |
• Shareholders can contact our Board, chairman
or management by regular mail |
Management succession planning |
• The Board actively monitors our succession planning
and people development and receives regular updates on employee engagement matters |
Board and committee structure
Our Board currently consists of nine directors,
eight of whom are independent. Under our Corporate Governance Guidelines, the chair may be an officer or may be an independent
member of the Board, at the discretion of the Board. The Board believes it should be free to use its business judgment to determine
what it believes is best for the Company in light of all the circumstances. Mr. Glotzbach is currently chairman of the Board.
Ms. Sitherwood, as chief executive officer,
focuses on setting the strategy for the Company, overseeing daily operations, developing our leaders and promoting employee engagement
throughout the Company. As chairman, Mr. Glotzbach leads the Board in the performance of its duties by working with the chief
executive officer to establish meeting agendas and content, engaging with the leadership team between meetings and providing overall
guidance as to the Board’s views and perspective.
During the 2018 fiscal year, there were seven
meetings of our Board of Directors. All directors attended 75 percent or more of the aggregate number of meetings of the Board
and applicable committee meetings, and all directors attended the last annual meeting of shareholders.
The standing committees of the Board of Directors
include the audit, compensation, corporate governance and strategy committees.
Spire Inc. | 2018 Proxy
Statement ![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/footer.jpg) |
13 |
Qualifications required of all directors
The Board requires that each director be a person
of high integrity with a proven record of success in his or her field and have the ability to devote the time and effort necessary
to fulfill his or her responsibilities to the Company. Generally, the Board looks for persons who evidence personal characteristics
of the highest personal and professional ethics, integrity and values; an inquiring and independent mind and practical wisdom
and mature judgment; and expertise that is useful to the Company and complementary to the background and experience of other Board
members.
In addition, the Board conducts interviews of
potential director candidates to assess intangible qualities, including the individual’s ability to ask difficult questions
and to work collegially and collaboratively. The Board does not have a specific diversity policy, but considers diversity of race,
ethnicity, gender, age, cultural background and professional experience in evaluating candidates for Board membership. Diversity
is important because the Board believes that a variety of points of view contribute to a more effective decision-making process.
When recommending director nominees for election
by shareholders, the Board and the corporate governance committee focus on how the experience and skill set of each director nominee
complements those of fellow directors to create a balanced Board with diverse viewpoints and deep expertise.
Board evaluation process
How we evaluate our Board and committee performance
![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsrx16x1.jpg)
Questionnaire
Each director completes and submits
a written questionnaire for the Board
and each committee on which the
director serves, providing numeric
ratings and feedback regarding
various aspects of the composition
and performance of the Board and
the committees.
Results shared
The results are reviewed and assembled
into documents for the Board and
for each committee by the corporate
secretary and included in the Board
and committee meeting materials.
Feedback incorporated
The Board and each committee reviews
and discusses its respective results and
determines whether it is appropriate to
make membership or process changes.
How we evaluate our directors
Each year, the corporate governance committee
and Board engages in discussions regarding whether the Board possesses the skills and experiences that it needs to provide oversight
and direction to the business. As part of this discussion, the directors are asked to provide specific input regarding the individual
directors whose terms expire at the next annual meeting.
The feedback is shared with the individual directors
and serves as the basis for the Board determining whether to include these directors as a nominee in the proxy statement.
www.SpireEnergy.com |
Spire Inc. | 2018 Proxy
Statement ![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/footer.jpg) |
14 |
Board committees and their membership
The following chart shows the fiscal year 2018
membership and chairs of our Board committees, committee meetings and committee member attendance.
|
Number of
meetings held |
Borer |
Fogarty |
Glotzbach |
Jones |
Newberry |
Sitherwood |
Stupp |
Van
Lokeren |
Audit |
4 |
|
|
4 |
|
3 |
|
2 |
(1) |
4 |
|
|
4 |
|
Compensation |
5 |
5 |
|
|
|
5 |
|
|
|
|
|
|
5 |
4 |
Corporate governance |
4 |
|
|
4 |
|
|
|
4 |
|
4 |
|
|
|
3 |
Strategy |
6 |
6 |
![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/bulestar.jpg) |
|
|
6 |
|
6 |
|
|
|
6 |
6 |
|
![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/bulestar.jpg) |
Chair |
(1) |
Mr. Jones joined the audit committee
in April. |
Audit committee
Members
Ms. Fogarty (Chair)
Mr. Glotzbach
Mr. Jones
Ms. Newberry
Mr. Stupp
Meetings in fiscal 2018:
4
|
|
Key responsibilities:
The audit committee assists the Board
of Directors in fulfilling the Board’s oversight responsibilities with respect to the quality and integrity of the
financial statements, financial reporting process and systems of internal controls, and cybersecurity. The audit committee
also assists the Board in monitoring the independence and performance of the independent registered public accountant,
the internal audit department and the operation of ethics and compliance programs.
|
|
All audit committee members were determined
by the Board to be independent and financially literate in accordance with New York Stock Exchange requirements. Ms. Fogarty
has been determined to be the financial expert for the audit committee.
The audit committee report is included
on page 51.
|
Compensation committee
Members
Mr. Glotzbach (Chair)
Mr. Borer
Mr. Stupp
Ms. Van Lokeren
Meetings in fiscal 2018:
5
|
|
Key responsibilities:
The compensation committee assists the
Board in the discharge of its responsibility relative to the compensation of the Company’s executives, reviews and
makes recommendations to the Board relative to the Company’s incentive compensation and equity-based plans, reviews
management’s risk assessment of the Company’s compensation practices and programs, and assists the Board in
the oversight of succession planning for executive officers. The committee also oversees the investments of the defined
benefit qualified pension plans.
|
|
All compensation committee members were
determined by the Board to be independent in accordance with the New York Stock Exchange requirements. The committee engaged
Semler Brossy Consulting Group LLC as its independent compensation consultant for fiscal year 2018.
Compensation Committee
Interlocks and Insider Participation: There are no compensation committee interlocks and no insiders are members of the
committee.
The compensation committee report is
included on page 39.
|
Spire Inc. | 2018 Proxy
Statement ![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/footer.jpg) |
15 |
Corporate governance committee
Members
Ms. Newberry (Chair)
Ms. Fogarty
Mr. Jones
Ms. Van Lokeren
Meetings in fiscal 2018:
4
|
|
Key responsibilities:
The corporate governance committee:
• Considers and makes recommendations
to the Board relative to corporate governance and its Corporate Governance Guidelines;
• Assists the Board in annually
assessing what skills would be beneficial to the Company for the Board to possess and whether those skills are represented
sufficiently by the existing members and identifying individuals qualified to become Board members;
• Makes recommendations to the
Board regarding director compensation;
• Assists the Board in identifying
appropriate educational opportunities for Board members and encouraging periodic attendance;
• Periodically arranges for Board
education sessions addressing timely governance topics;
• Reviews and approves any related-party
transactions;
• Recommends committee chair
and member appointments to the full Board; and
• Oversees periodic outreach
to institutional shareholders regarding governance topics to assist the Board in staying informed.
|
|
All corporate governance committee members were determined by the Board to be independent
in accordance with New York Stock Exchange requirements. |
Strategy committee
Members
Mr. Borer (Chair)
Mr. Glotzbach
Mr. Jones
Ms. Sitherwood
Mr. Stupp
Meetings in fiscal 2018:
6
|
|
Key responsibilities:
The strategy committee oversees the Company’s
long-range plan, investment strategies, capital structure and financial needs, including leverage, liquidity and funding
sources and related matters in the context of the corporate strategy.
|
Risk oversight
Management is responsible for assessing and managing
risk exposures on a day-to-day basis, and the Board is responsible for overseeing the Company’s risk management. In its
oversight role, the Board and its committees ensure that the Company promotes a risk-aware culture and decision-making process.
Several of the Board’s committees assist the Board in its risk oversight: the audit committee oversees the financial reporting,
cybersecurity and related risks; the compensation committee oversees the compensation and pension plan funding risks; and the
strategy committee oversees the Company’s long-range plan, investment strategies, capital structure and financial needs,
including leverage, liquidity and funding sources and related matters in the context of the corporate strategy and the risks related
to the Company’s corporate development strategies, capital structure and financial needs.
At the management level, the Company has an officer
charged with overseeing the implementation of the enterprise risk management process at the Company. Her efforts are supported
by a disclosure committee that meets at least quarterly and assists in identifying, prioritizing and monitoring risks. Because
of the use of commodity-based derivatives by three of the Company’s subsidiaries, there is also a smaller risk committee
that focuses on the risks and exposures in the commodity-based derivatives markets.
www.SpireEnergy.com |
Spire Inc. | 2018 Proxy
Statement ![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/footer.jpg) |
16 |
Compensation risk assessment
During the past year, management, with oversight
by the compensation committee, conducted a risk assessment of its overall compensation program. This risk assessment included
consideration of the mix and amount of compensation:
• |
in cash and equity; |
• |
with short-term and long-term performance goals; |
• |
with individual, business unit and corporate performance objectives; and |
• |
dependent on financial and non-financial performance measurement. |
The assessment also considered the risk mitigation
impact of stock ownership guidelines and retention requirements, the use of multiple types of metrics, the caps set on incentive
compensation, the role of the compensation committee and its independent consultant as well as the use of the internal audit department
to assess documentation of performance on the incentive-based metrics. Management regularly assesses risks related to our compensation
programs, including our executive compensation programs. At the compensation committee’s direction, its independent compensation
consultant Semler Brossy Consulting Group LLC and management provide ongoing information regarding compensation factors that could
mitigate or encourage excessive risk-taking.
Management determined, and the committee agreed,
that the risks relative to the Company’s compensation policies and practices would not result in a material adverse effect
on the Company.
Director independence
The Board of Directors believes that a majority
of the directors should be independent and determined that the following members were independent: Borer, Fogarty, Glotzbach,
Jones, Newberry, Schwartz, Stupp and Van Lokeren. Ms. Sitherwood, president and chief executive officer, is the only non-independent
member of the Board. In determining the independence of directors, the Board found that none of the directors, other than Ms. Sitherwood,
have any material relationship with the Company other than as a director. In making these determinations, the Board considers
all facts and circumstances as well as certain prescribed standards of independence, which are included with our Corporate Governance
Guidelines at www.SpireEnergy.com in the Investors/Governance section. The Director Independence Standards adopted by the Board
largely reflect the New York Stock Exchange standards, except that our adopted standards provide that the Board need not consider
material the provision of natural gas service to any director or immediate family member of the director or director-related company
pursuant to the tariffed rates of the Company’s utilities.
The independent members of the Board meet in
executive session at least quarterly, which sessions are led by Mr. Glotzbach, the current chairman of the Board. Each quarter,
the chairman solicits from other Board members topics for discussion in those sessions. Topics include, from time to time, the
performance of the chief executive officer, executive succession planning, executive compensation matters and the Company’s
strategy.
All of the members of the audit, compensation
and corporate governance committees are independent under our Director Independence Standards as well as under the standards of
the New York Stock Exchange.
Corporate governance documents
Our key corporate governance documents include:
• |
Corporate Governance Guidelines; |
• |
Charters of each of the audit, compensation and corporate governance committees; |
• |
Code of Business Conduct; |
• |
Financial Code of Ethics; |
• |
Related Party Transaction Policy and Procedures; |
• |
Policy Regarding the Approval of Independent Registered Public Accountant Provision of Audit
and Non-Audit Services; and |
• |
Director Independence Standards. |
Spire Inc. | 2018 Proxy
Statement ![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/footer.jpg) |
17 |
All of these documents, other than the Policy
Regarding the Approval of Independent Registered Public Accountant Provision of Audit and Non-Audit Services, are available at
www.SpireEnergy.com in the Investors/ Governance section, and a copy of any of these documents will be sent to any shareholder
upon request.
Corporate Governance Guidelines
The Board generally conducts itself in accordance
with its Corporate Governance Guidelines. The guidelines, among other matters, provide:
• |
the independent directors may elect a lead director if there is no independent
chair; |
• |
the corporate governance committee will review with the Board, on an annual basis, the requisite
skills, characteristics and qualifications to be sought in new Board members as well as the composition of the Board as a
whole, including assessments of members’ qualification as independent and consideration of diversity, age, skills and
experience in the context of the needs of the Board; |
• |
a director who retires, changes employment or has any other significant change in his or
her professional roles and responsibilities must submit a written offer to resign from the Board; the corporate governance
committee will then make a recommendation to the Board regarding appropriate action, taking into account the circumstances
at that point in time; |
• |
directors must limit their service to a total of three boards of publicly traded companies
(including our Company) and should advise the chairman of the Board and the corporate governance committee chair before accepting
an invitation to serve on another public company board; |
• |
directors are expected to attend the annual meeting of shareholders and meetings of the Board
and the committees on which they serve, and to spend the time needed, and to meet as frequently as necessary, to properly
discharge their responsibilities; |
• |
the Board and its committees conduct annual assessments of their performance as well as assessments
of the performance of each individual director whose term expires at the next annual shareholder meeting who desires to stand
for reelection; |
• |
directors have access to executives of the Company; |
• |
the Board and each committee have the ability to hire independent legal, financial or other
advisors as they may deem necessary, at the Company’s expense, without consulting or obtaining the approval of any officer
of the Company; and |
• |
all new directors participate in the Company’s orientation for new directors, and directors
are encouraged to attend educational programs. |
Related Party Transaction Policy and Procedures
We have adopted a written Related Party Transaction
Policy and Procedures, which is used by our corporate governance committee to determine whether to pre-approve transactions involving
more than $100,000 with our directors, executive officers, five percent or greater shareholders, and their immediate family members.
Based on its consideration of all of the relevant facts and circumstances, the committee will decide whether or not to approve
the transaction and will approve only those transactions that it determines to be in the best interest of the Company. If the
Company becomes aware of an existing transaction with a related party that has not been approved under the policy, the matter
will be referred to the committee. The committee will evaluate all options available including ratification, revision or termination
of such transaction. While the committee generally reviews and considers approval or ratification of related party transactions,
the Board has delegated to the corporate governance committee chair the authority to pre-approve or ratify, as applicable, any
related party transaction involving an aggregate amount of less than $100,000. The policy also includes certain transactions that
are deemed pre-approved because they do not pose a significant risk of a conflict of interest. Such pre-approved transactions
include the provision of natural gas service to any of the related parties by our utility subsidiaries in accordance with their
respective tariffed rates and those transactions at such a level as not to be material to the Company or the related party. There
were no related party transactions in fiscal year 2018 requiring committee action.
www.SpireEnergy.com |
Spire Inc. | 2018 Proxy
Statement ![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/footer.jpg) |
18 |
Policy regarding the approval of independent
registered public accountant provision of audit and non-audit services
Consistent with Securities and Exchange Commission
(“SEC”) requirements regarding accountant independence, the audit committee recognizes the importance of maintaining
the independence, in fact and appearance, of our independent registered public accountant. To this end, the audit committee adopted
a policy to pre-approve all audit and permissible non-audit services provided by the independent accountant. Under the policy,
the committee or its designated member must pre-approve services prior to commencement of the specified service. Any pre-approvals
by the designated member between meetings will be reported to the audit committee at its next meeting. The requests for pre-approval
are submitted to the audit committee or its designated member, as applicable, by both the independent accountant and the Company’s
chief financial officer or designee and must include (a) a written description of the services to be provided in detail sufficient
to enable the audit committee to make an informed decision with regard to each proposed service and (b) a joint statement as to
whether, in their view, the request or application is consistent with the SEC’s and Public Company Accounting Oversight
Board’s (“PCAOB”) rules on auditor independence. The pre-approval fee levels are established and reviewed by
the audit committee periodically, primarily through a quarterly report provided to the audit committee by management. Any proposed
services exceeding these levels require specific pre-approval by the audit committee. Generally, after review of the pre-approved
services incurred each quarter, the audit committee resets the pre-approval dollar level. At each regularly scheduled audit committee
meeting, the audit committee shall review the following:
• |
A report provided by management summarizing the pre-approved services,
or grouping of related services, including fees; and |
• |
A listing of newly pre-approved services since its last regularly scheduled meeting. |
Shareholder nominee recommendations and nominee
qualifications
Shareholders who wish to recommend nominees to
the corporate governance committee should make their submission to the committee by October 2 preceding the annual meeting by
submitting it to:
Corporate Governance Committee Chair
c/o Spire Inc.
700 Market Street
St. Louis, MO 63101
Attn: Corporate Secretary
Candidates properly recommended by shareholders
will be evaluated by the committee using the same criteria as applied to other candidates as described on page 14.
Correspondence with the Board
Those who desire to communicate with the independent
directors should send correspondence addressed to:
Chairman of the Board
c/o Spire Inc.
700 Market Street
St. Louis, MO 63101
Attn: Corporate Secretary
All appropriate correspondence is forwarded directly
to the chairman of the Board. The Company does not, however, forward spam, sales, marketing or mass mailing materials; product
or service complaints or inquiries; new product or service suggestions; resumes and other forms of job inquiries; or surveys.
However, any filtered information is available to any director upon request.
Spire Inc. | 2018 Proxy
Statement ![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/footer.jpg) |
19 |
Directors’ compensation
The corporate governance committee periodically
reviews director compensation relative to data of the Company’s comparator group provided by the compensation committee’s
independent consultant, which was Semler Brossy Consulting Group LLC during fiscal year 2018. The basic retainers and fees payable
in fiscal year 2018 are set forth below. No retainers or fees are paid to directors who are executives or employees of the Company
and its subsidiaries.
Annual
cash Board retainer |
$ 85,000 |
Chair of the
Board annual retainer |
75,000 |
Audit committee
chair annual retainer |
15,000 |
Compensation
committee chair annual retainer |
10,000 |
Corporate
Governance committee chair annual retainer |
10,000 |
Other committee
chair annual retainer |
10,000 |
Annual stock
Board retainer |
100,000 |
Board and committee fees and retainers
The amount and form of the annual Board retainer
are fixed from time to time by vote of the Board. For 2018, the annual retainer was $185,000, of which $85,000 was payable in
cash and $100,000 was payable in shares of our common stock. The number of shares is determined by dividing $100,000 by the average
closing stock price of our common stock during the 30-day period preceding the grant date and rounding to the nearest ten shares.
There are no additional per-meeting fees. Beginning February 1, 2019, the annual Board retainer will be $205,000, of which $95,000
will be payable in cash and $110,000 will be payable in shares of our common stock; the Board chair annual retainer will be $100,000;
and the compensation committee chair retainer will be $12,500. The Board has imposed a limit of $400,000 per director on the annual
amount of the restricted stock retainer that could be approved by the Board for payment to independent directors. The table below
discloses the compensation paid or earned by all those who served as Company directors in fiscal year 2018. Not included in the
table is the Retirement Plan for Non-Employee Directors in which participation and benefits have been frozen since November 1,
2002. Under that plan, a non-employee director who had at least five years of service as a director as of November 1, 2002 qualified
for an annual payment after retirement in an amount equal to the Board retainer at November 1, 2002 ($18,000), with such payments
being made for the longer of 10 years or life. The only current director eligible for benefits under the plan is Ms. Van
Lokeren.
Name |
Fees earned or paid in cash |
Stock
awards |
(1) |
Nonqualified deferred compensation earnings |
(2) |
Total |
Borer |
$ 95,000 |
$88,480 |
|
$ 13,329 |
|
$196,809 |
Fogarty |
100,000 |
88,480 |
|
6,116 |
|
194,596 |
Glotzbach |
170,000 |
88,480 |
|
100,037 |
|
358,517 |
Jones |
85,000 |
88,480 |
|
– |
|
173,480 |
Newberry |
95,000 |
88,480 |
|
7,376 |
|
190,856 |
Stupp Jr. |
85,000 |
88,480 |
|
– |
|
173,480 |
Van Lokeren |
85,000 |
88,480 |
|
115,922 |
|
289,402 |
(1) |
Amounts calculated are the grant date fair value of awards granted during
the fiscal year using the provisions of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC)
Topic 718, “Compensation-Stock Compensation” (FASB ASC Topic 718). See Note 2, Stock-Based Compensation of the
Notes to Consolidated Financial Statements in the 2018 10-K for a discussion regarding the manner in which the fair value
of these awards is calculated, including assumptions used. |
www.SpireEnergy.com |
Spire Inc. | 2018 Proxy
Statement ![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/footer.jpg) |
20 |
The table below provides more details relative
to the restricted stock awards made under the Restricted Stock Plan for Non-Employee Directors and the 2015 Equity Incentive Plan
that have not yet vested:
Name |
No. of shares awarded
in fiscal year 2018 |
Aggregate no. of shares
awarded
and not vested at 2018 fiscal year end |
Borer |
1,400 |
– |
Fogarty |
1,400 |
– |
Glotzbach |
1,400 |
– |
Jones |
1,400 |
– |
Newberry |
1,400 |
8,950 |
Stupp Jr. |
1,400 |
– |
Van Lokeren |
1,400 |
– |
|
The February 2018 grants of 1,400 restricted shares under the 2015 Equity
Incentive Plan had a six-month vesting requirement and vested on August 1, 2018 for all directors. |
(2) |
Represents above-market earnings in fiscal year 2018 on deferrals of fees and retainers by
participating directors in the Deferred Income Plans. |
Stock awards to directors were made under the
Company’s Restricted Stock Plan for Non-Employee Directors, amended and approved by shareholders in January 2009, until
February 1, 2012. Under these awards, participants receive cash dividends on the Company’s common stock and may vote the
shares awarded even while the shares are restricted, but the restricted shares may not be sold, pledged or otherwise transferred,
except in accordance with the terms of the plan. Directors Glotzbach, Stupp and Van Lokeren are fully vested in their awards under
the plan. The table below shows the vesting schedule for Director Newberry’s shares.
Name |
Half
of plan shares vested |
All
of plan shares vest |
Newberry |
On 65th birthday in October 2018 |
Annual meeting January 2019 |
The directors are eligible to participate under
the 2015 Equity Incentive Plan, and no further grants have been or will be made under the Restricted Stock Plan for Non-Employee
Directors. As noted above, currently each non-employee director is awarded an annual fixed-value stock grant in the amount of
$100,000. This amount will increase to $110,000 in 2019.
Beneficial ownership of Spire common stock
The following table shows, as of November 1,
2018, the number of shares of our common stock beneficially owned by (i) each person known to the Company to be the beneficial
owner of more than five percent of the Company’s common stock, (ii) each current director and director nominee, (iii) each
named executive officer listed in the “Summary compensation table” and (iv) all directors, nominees and executive
officers as a group.
Spire Inc. | 2018 Proxy
Statement ![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/footer.jpg) |
21 |
Amount and nature of ownership
Name |
Shares
beneficially owned |
(1) |
Percent
of class |
M.
A. Borer |
8,440 |
|
* |
|
M.
C. Darrell |
49,998 |
(2) |
* |
|
M.
V. Fogarty |
8,440 |
|
* |
|
M.
C. Geiselhart |
23,522 |
|
* |
|
E.
L. Glotzbach |
25,124 |
|
* |
|
R.
L. Jones |
4,640 |
|
* |
|
S.
L. Lindsey |
36,183 |
(2) |
* |
|
B.
D. Newberry |
19,290 |
(3) |
* |
|
S.
P. Rasche |
27,099 |
(2) |
* |
|
S.
S. Schwartz |
– |
|
* |
|
S.
Sitherwood |
102,787 |
(2) |
* |
|
J.
P. Stupp Jr. |
1,119,690 |
(4) |
2.2 |
% |
M.
A. Van Lokeren |
25,025 |
|
* |
|
BlackRock,
Inc. |
6,273,333 |
(5) |
13.0 |
% |
American
Century Companies, Inc. |
3,429,663 |
(6) |
7.1 |
% |
The
Vanguard Group, Inc. |
4,643,836 |
(7) |
9.61 |
% |
All
directors and executive officers as a group (13) |
1,450,238 |
|
2.9 |
% |
*Less than one percent.
(1) |
Except as otherwise indicated, each person has sole voting and investment
power with respect to all of the shares listed. |
(2) |
Includes restricted non-vested shares granted under the 2015 Equity Incentive Plan, as to
which a recipient has sole voting power and no current investment power as follows: M. C. Darrell – 4,730; M. C. Geiselhart
– 3,450; S. L. Lindsey – 6,530; S. P. Rasche – 5,510; S. Sitherwood – 18,840. Includes 2,106 shares
held by Mr. Rasche’s account in the 401(k) plan. |
(3) |
Includes 4,475 restricted, non-vested shares granted under the Restricted Stock Plan for
Non-Employee Directors, as to which Ms. Newberry has sole voting power and no current investment power. |
(4) |
Includes 1,104,000 shares owned by Stupp Bros., Inc. Mr. Stupp is a director and executive
officer of Stupp Bros., Inc. and has an interest in a voting trust that controls 100 percent of the stock of Stupp Bros.,
Inc., which is located at 3800 Weber Road, St. Louis, MO 63125. The Stupp Bros., Inc. shares are subject to a negative pledge. |
(5) |
Information provided as of December 31, 2017 in Schedule 13G filed on January 23, 2018 by
BlackRock, Inc., whose address is 55 East 52nd Street, New York, NY 10055. The report indicates that it has 6,169,364
shares with sole voting power, 6,273,333 shares with sole investment power, and no shares with shared voting power or shared
investment power. The subsidiaries included in the report were as follows: |
|
BlackRock
(Netherlands) B.V. |
BlackRock
Fund Advisors† |
|
BlackRock
Advisors, LLC |
BlackRock Institutional Trust Company, N.A. |
|
BlackRock
Asset Management Canada Limited |
BlackRock Investment Management (Australia) Limited |
|
BlackRock
Asset Management Ireland Limited |
BlackRock Investment Management (UK) Limited |
|
BlackRock
Asset Management Schweiz AG |
BlackRock Investment Management, LLC |
|
BlackRock
Financial Management, Inc. |
BlackRock Life Limited |
|
† |
BlackRock Fund Advisors is a subsidiary of BlackRock, Inc. and beneficially
owns 5 percent or greater of the outstanding shares of the Company’s stock according to the report. No other subsidiary
included in the report owns 5 percent or greater of the outstanding shares of the Company’s stock according to the report. |
(6) |
Information provided as of December 31, 2017 in Schedule 13G filed on
February 9, 2018 by American Century Companies, Inc. (“ACC”), whose address is 4500 Main Street, 9th Floor,
Kansas City, MO 64111. The report indicates that it has 3,292,690 shares with sole voting power and 3,429,663 shares with
sole investment power, and no shares with shared voting power or shared investment power. ACC is controlled by Stowers Institute
for Medical Research, which is a beneficial owner of securities that are the subject of the report. American Century Investment
Management, Inc. is a wholly owned subsidiary of ACC and an investment adviser registered under §203 of the Investment
Advisers Act of 1940. American Century Capital Portfolios, Inc. is a subsidiary of ACC and an investment company registered
under §8 of the Investment Company Act of 1940. |
(7) |
Information provided as of December 31, 2017 in Schedule 13G filed on February 12, 2018 by
The Vanguard Group, Inc., whose address is 100 Vanguard Blvd., Malvern, PA 19355. The report indicates that it has 58,268
shares with sole voting power, 4,579,116 shares with sole investment power, 16,644 shares with shared voting power and 64,720
shares with shared investment power. The subsidiaries in the report, none of which owns 5 percent or greater of the Company’s
shares, were: |
|
Vanguard
Fiduciary Trust Company |
Vanguard Investments
Australia, Ltd. |
www.SpireEnergy.com |
Spire Inc. | 2018 Proxy
Statement ![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/footer.jpg) |
22 |
The following table sets forth aggregate information
regarding the Company’s equity compensation plan as of September 30, 2018.
Plan category |
Number of securities
to be issued
upon exercise of
outstanding options,
warrants and rights
(a) |
Weighted average
exercise price
of outstanding
options,
warrants
and rights
(b) |
Number of securities
remaining available for
future
issuance under
equity compensation plans
(excluding securities
reflected in column (a))
(c) |
Equity
compensation plans approved by security holders(1) |
635,764 |
$ – |
315,209 |
Equity compensation plans not approved by security holders |
– |
– |
– |
Total |
635,764 |
$ – |
315,209 |
(1) |
Reflects the Company’s 2015 Equity Incentive Plan. |
Information on the above-referenced equity incentive
plan is set forth in Note 2, Stock-based Compensation, of the Notes to Consolidated Financial Statements in the 2018 10-K.
Stock ownership guidelines and holding requirements
for non-employee directors and executive officers
To provide a direct link between director, executive
officer and shareholder interests, the Company adopted a stock ownership policy. The table below indicates the number of shares
directors and executive officers are expected to own under the policy.
Directors must retain 90 percent and executive
officers must retain 75 percent of the net shares awarded to them under Company plans until they meet the stock ownership requirements.
All directors and executive officers are currently in compliance with the stock ownership policy.
Stock ownership guidelines
Directors |
5x annual cash
retainer |
Chief executive
officer |
4x base salary |
Executive
vice presidents |
3x base salary |
Senior vice
presidents |
2x base salary |
All other
officers |
1x base salary |
Section 16(a) beneficial ownership reporting
compliance
Section 16(a) of the Securities Exchange Act
of 1934, as amended, requires our directors and executive officers to file reports of holdings and transactions in Spire shares
with the SEC and the New York Stock Exchange. Based on our records and information, in fiscal year 2018, our directors and executive
officers met all applicable SEC reporting requirements.
Spire Inc. | 2018 Proxy
Statement ![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/footer.jpg) |
23 |
Proposal 2: Advisory vote to approve the
compensation of our named executive officers
As required pursuant to Section 14A of the Securities
Exchange Act of 1934, as amended, we are seeking your approval of the Company’s compensation of the named executive officers
as disclosed in this proxy statement. Although the vote on this proposal is advisory and nonbinding, the compensation committee
and Board will review the results of the vote and consider the collective views of our shareholders in future determinations concerning
our executive compensation program generally and the compensation of our named executive officers in particular.
As noted in the following Compensation Discussion
and Analysis (“CD&A”), the Company’s philosophy is to pay for performance by making compensation decisions
based on what promotes our corporate strategy, creates shareholder value and remains equitable for the Company, its employees
and its shareholders. In the process of making these decisions, we also consider the types and levels of compensation in the marketplace.
We urge you to read the Compensation Discussion and Analysis section of this proxy statement, which discusses in more detail our
compensation policies and procedures. Throughout the year, our compensation committee assesses our compensation programs to ensure
they are consistent with our pay philosophy. In determining how to vote on this proposal, please consider our compensation governance
and pay structure:
• |
Recoupment: Our policy addresses recoupment
of amounts from employees’ performance-based awards under the annual and equity incentive plans to the extent that they
would have been materially less due to inaccurate financial statements, fraud or intentional, willful or gross misconduct. |
• |
Prohibition of hedging/pledging of stock: Our policy
on the purchase and sale of securities generally prohibits our executive officers and directors pledging or hedging their
positions in our stock so that their interests are similarly aligned with that of our shareholders. Any exceptions for an
executive officer to this pledging prohibition must be approved by the chief executive officer and chairman of the Board or
lead director as applicable. |
• |
Stock ownership requirements: Our stock ownership requirements,
which are outlined on page 23, further strengthen the alignment of our executives with our shareholders. |
• |
Compensation balance: Most of the compensation to the
named executive officers is aligned with corporate performance in areas related to our customers, our shareholders and our
employees. The Company seeks to balance short-term and longer-term compensation opportunities to ensure that the Company meets
short-term objectives while continuing to produce value for its shareholders over the long term. |
• |
Independent compensation consultant: The compensation
committee’s consultant is independent. |
• |
Modest perquisites: The Company’s use of perquisites
is modest. |
• |
Caps on incentive awards: We have limits on incentive
compensation, which cap all potential annual incentive plan awards at 150 percent of target and all equity incentive plan
awards at 200 percent of target. |
• |
No employment agreements or excise tax gross-up: The
Company does not enter into employment agreements or provide excise tax gross-up protections. |
• |
No additional years of service credited: The supplemental
pension plans are traditional plans that cover the compensation not included in the qualified pension plan due solely to tax
limitations, and do not otherwise factor in additional compensation or additional years of service. |
The Board of Directors is asking shareholders
to support the Company’s named executive officer compensation as disclosed in this proxy statement. The compensation committee
and the Board of Directors believe the compensation program effectively implements the Company’s compensation principles
and policies, achieves the Company’s compensation objectives, and aligns the interests of the executives and shareholders.
Accordingly, the Board asks shareholders to cast a nonbinding vote “FOR” the following resolution:
“RESOLVED, that the shareholders approve
the compensation of the Company’s named executive officers as disclosed in this proxy statement for the annual meeting of
shareholders, including the Compensation Discussion and Analysis, compensation tables and other related disclosures.”
![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/check1.jpg) |
Your Board of Directors recommends a vote “FOR”
advisory approval of the compensation of our named executive officers. |
www.SpireEnergy.com |
Spire Inc. | 2018 Proxy
Statement ![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/footer.jpg) |
24 |
Executive compensation
Compensation Discussion and Analysis
This CD&A contains a detailed description of
the Company’s executive compensation program, including our compensation philosophy, the elements of compensation that we
provide to our named executive officers (“NEOs”), the process that is undertaken to determine awards of compensation,
and the actual compensation provided to our NEOs in fiscal year 2018.
Our named executive officers
The Company’s NEOs for fiscal year 2018 were:
![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsrx27x1a.jpg) |
|
![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsrx27x2a.jpg) |
|
|
|
![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsrx27x4a.jpg) |
|
![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsrx27x5a.jpg) |
|
|
|
|
|
|
|
|
|
Suzanne Sitherwood
President and Chief
Executive Officer |
|
Steven P. Rasche
Executive Vice
President, Chief
Financial Officer |
|
Steven L. Lindsey
Executive Vice
President, Chief
Operating Officer of
Distribution
Operations |
|
Mark C. Darrell
Senior Vice President,
General Counsel and
Chief Compliance
Officer |
|
Michael C. Geiselhart
Senior Vice President,
Strategic Planning and
Corporate Development |
Spire Inc. | 2018 Proxy
Statement |
25 |
Executive summary
2018 Company performance
The compensation committee (“Committee”)
believes that the actions taken by the Company’s chief executive officer (“CEO”) and management team throughout
fiscal year 2018 positively impacted the Company’s results and positioned the Company for continued success.
For the fiscal year ended September 30, 2018, the
Company reported an increase in consolidated net income to $214.2 million from $161.6 million for fiscal year 2017. Net economic
earnings for 2018 were $183.7 million ($3.73 per basic share), up from $167.6 million for 2017 ($3.57 per basic share).
Net income and earnings per share are determined
in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Management also
uses the non-GAAP measures of net economic earnings and net economic earnings per share when internally evaluating and reporting
results of operations as discussed on pages 29 and 30 in the Company’s Annual Report on Form 10-K for the year ended September
30, 2018 (the “2018 10-K”).
The increase in net income was primarily due to the
effects of the Tax Cuts and Jobs Act and much stronger results from the Gas Marketing segment. The net economic earnings improvement
reflects increases for both the Gas Marketing segment and the Gas Utility segment. The results are discussed further beginning
on page 31 of the 2018 10-K.
Consolidated Net Income |
|
|
Basic Net Economic Earnings per
Share |
|
|
Declared Dividends per Share |
|
|
|
|
|
|
|
$214.2M |
|
|
$3.73 |
|
|
$2.25 |
GAAP |
|
|
NON-GAAP |
|
|
Up from $2.10 for FY17 |
Up from $161.6 million for FY17 |
|
|
Up from $3.57 for FY17 |
|
|
|
Alignment of pay and performance
The graph below evidences the Company’s commitment
to the pay-for-performance philosophy as it compares the Company’s basic net economic earnings per share to the Annual Incentive
Plan (“AIP”) amounts earned by the NEOs. Given that Mr. Geiselhart became an NEO for the first time for fiscal year
2017, the graph excludes his AIP amounts for the performance periods prior to such dates. However, the graph reflects AIP amounts
for the NEO that preceded him in fiscal years 2013 through 2016.
Basic net economic earnings per share is the key
metric used to determine funding under the Company’s AIP. It is calculated like GAAP basic earnings per share except net
income is replaced by net economic earnings and the weighted average shares outstanding are adjusted to exclude the impact, in
the fiscal year of issuance, of shares issued to finance acquisitions that have yet to be included in net economic earnings. The
earnings in the graph are based on operations for the respective years reflected in the graph. Further explanation of net economic
earnings is provided on pages 31 and 32 of this proxy statement.
![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsrx28x1.jpg)
www.SpireEnergy.com |
Spire Inc. | 2018 Proxy
Statement ![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/footer.jpg) |
26 |
The Company also emphasizes pay for performance by
placing a majority of the NEOs’ target total direct compensation (“TTDC”) at risk through the annual and long-term
incentive plans. TTDC includes base salary at the end of fiscal year 2018, the 2018 target AIP opportunity, and the market value
(target shares multiplied by grant date stock price) of awards made under the 2015 Equity Incentive Plan (“EIP”) during
fiscal year 2018. Furthermore, the equity incentive award, the largest portion of incentive pay, focuses on long-term performance.
The graph to the right shows the mix of fixed (base pay) and at-risk (annual and long-term incentive) pay.
![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsrx29x1.jpg)
Compensation overview and philosophy
The Committee establishes the executive compensation
philosophy and assists the Board in the development and oversight of all aspects of executive compensation.
Our pay-for-performance compensation philosophy promotes
our corporate strategy and creates shareholder value, while remaining equitable for the Company, its executives and its shareholders.
The Committee believes that its compensation practices reflect a responsible pay-for-performance culture. The Committee seeks to
deliver a total compensation package that balances short-term and longer-term compensation opportunities to ensure that the Company
meets short-term objectives while continuing to produce value for its shareholders over the long term.
The Committee also promotes a competitive compensation
program to attract, motivate and retain key executives. Each year, the Committee reviews the Company’s pay program for its
executive officers to evaluate total compensation in relation to the Company’s peer group. The Company’s compensation
philosophy is to target total compensation in the median range of its peer comparator data, with actual pay dependent on Company
results and the executive’s performance, skills and experience.
![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsrx29x2.jpg)
Pay-for-Performance
The compensation program should
promote our corporate strategy and
create shareholder value.
Balance
Annual and long-term incentive
opportunities should reward the
appropriate balance of short- and
long-term financial, strategic and
operational business results.
Competitiveness
The compensation program should
be sufficiently competitive to attract,
retain and motivate a leadership team
capable of maximizing Company
performance.
The Committee considered the results of the advisory
“say-on-pay” proposal in January 2018 when making compensation decisions. A majority (98 percent) of the votes cast
approved the compensation program described in the Company’s proxy statement. The considered judgment of the Committee, which
included taking into account the support from the shareholder vote, was that no significant changes to the executive compensation
program were warranted.
Spire Inc. | 2018 Proxy
Statement ![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/footer.jpg) |
27 |
Best practices in executive compensation
Our executive compensation program reflects the following
best practices, which ensure effective compensation governance and align interests between shareholders and executives.
What we do |
![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsrx30x1.jpg) |
Executive annual incentive plan (AIP) awards are capped at 150%
of target. |
![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsrx30x1.jpg) |
Total grant value under the equity incentive plan (EIP) is capped
at 200% of target. |
![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsrx30x1.jpg) |
A majority (75%) of long-term incentive compensation (shares
and value) is performance-contingent. |
![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsrx30x1.jpg) |
Time-based equity awards are granted with a three-year cliff vesting
schedule. |
![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsrx30x1.jpg) |
Non-vested equity awards are not accelerated after a change in
control unless the executive is terminated, or the award is not assumed or substituted
by the successor company. |
![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsrx30x1.jpg) |
Executives and directors are subject to stock ownership guidelines
and retention requirements. |
![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsrx30x1.jpg) |
Our executive severance program standardizes severance benefits,
and limits benefit triggers to termination by the Company without cause or the participant’s
termination for good reason. |
![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsrx30x1.jpg) |
Our recoupment policy applies to all executive officers for performance-contingent
awards made under the AIP and EIP. |
What we don’t do |
![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsrx30x2.jpg) | No employment agreements with executives. |
![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsrx30x2.jpg) | No excise tax gross-ups for executives. |
![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsrx30x2.jpg) | No dividends on performance-contingent stock awards prior to
vesting. |
![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsrx30x2.jpg) | No hedging or pledging of Company stock without approval of
Board chair and CEO. |
![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsrx30x2.jpg) | No excessive perquisites for executives. |
Components of executive compensation
The table below provides the components and objectives
of the Company’s executive compensation program.
Element |
|
Purpose/Objective |
|
Key features |
|
Performance measures |
Base salary |
|
Designed to attract and retain key executive talent
and to reward leadership effectiveness |
|
Fixed portion of annual compensation |
|
Based on factors deemed relevant by the Company, including:
• job responsibilities and performance in his or her
position
• level of experience and expertise in a given area
• role in developing and executing corporate strategy
• current leadership
• comparison of salaries for similarly situated positions
|
Annual cash incentive |
|
Designed to motivate and reward short-term, annual
results tied to corporate, business unit and individual
performance objectives |
|
Targets are a percentage of base
salary, and awards are paid in cash
Actual payouts may range between
0%-150% of target, based on actual results relative
to metrics |
|
Varied weightings of corporate, business unit and individual performance
metrics, depending on the individual’s role and position within the Company |
Long-term incentives |
|
Designed to encourage retention and further tie
executive compensation |
|
25% time-based restricted shares |
|
Three-year cliff vesting period to encourage retention and further
tie executive compensation to stock appreciation during that vesting period |
|
|
to stock appreciation and long-term company performance |
|
75% performance-contingent stock units |
|
Performance-contingent stock units vest based on the average net
economic earnings per share over a three-year period, as well as total shareholder return
performance relative to peer group, with each metric weighted at 50% |
After reviewing market and peer group data, as well
as other analysis from the Committee’s independent compensation consultant, and considering the role, experience and expertise
of each executive officer, the Committee determines the appropriate balance among the components of executive compensation in the
total compensation package. Generally, the Committee determines whether to make certain market adjustments to base salaries and
sets target opportunities under the annual and long-term incentive programs that, when combined, produce TTDC that is consistent
with the Company’s compensation philosophy.
www.SpireEnergy.com |
Spire Inc. | 2018 Proxy
Statement ![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/footer.jpg) |
28 |
Summary of 2018 compensation decisions for NEOs
Suzanne Sitherwood | President
and Chief Executive Officer
![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsrx27x1.jpg)
Age: 58
Spire experience:
7 years
|
![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsrx31x2.jpg) |
Individual performance:
• Led the executive team in another transformative year for the Company, including the activation of the Spire masterbrand across all Spire companies and regions.
• Emphasized a company-wide focus on safety to produce an improved safety record.
• Led the Company to produce financial results that met budget targets.
• Oversaw the expansion of the Company’s gas-related businesses in Wyoming and Texas.
• Continued to promote a strong internal culture of inclusion, collaboration and respect. |
Base salary: The salary for Ms. Sitherwood was increased to $875,000 from $850,000, a 3% increase.
Annual incentive: Ms. Sitherwood received an annual incentive award of $858,000, representing a 98% payout against the target. Ms. Sitherwood’s annual incentive target was increased to 100% of base salary for fiscal year 2018 from 90% of base salary for fiscal year 2017.
Long-term incentive: Ms. Sitherwood received a long-term incentive grant in November 2017 valued at $1,904,893, split into 75 percent PCSUs and 25 percent TBRSs.
|
Steven P. Rasche | Executive
Vice President, Chief Financial Officer
![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsrx27x2.jpg)
Age: 58
Spire experience:
9 years
|
![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsrx31x4.jpg) |
Individual performance:
• Continued to lead the financial, information technology and supply chain organizations to deliver shared service excellence.
• Led the finance team to continue to develop and optimize financial initiatives that improve and maintain the Company’s financial health through an optimization of cash flow, capital structure, capital expenditures and infrastructure upgrades.
• Led the information technology team to successfully leverage technology to improve internal processes and better meet the needs of our business and customers.
|
Base salary: The
salary for Mr. Rasche was increased to $414,000 from $390,000, a 6% increase.
Annual incentive: Mr. Rasche
received an annual incentive award of $243,546, representing a 98% payout against the target. Mr. Rasche’s annual incentive
target remained at 60% of base salary for fiscal year 2018.
Long-term incentive: Mr. Rasche
received a long-term incentive grant in November 2017 valued at $504,689, split into 75 percent PCSUs and 25 percent TBRSs. |
Spire Inc. | 2018 Proxy
Statement ![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/footer.jpg) |
29 |
Steven L. Lindsey | Executive
Vice President, Chief Operating Officer of Distribution Operations
![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsrx27x3.jpg)
Age: 52
Spire experience:
6 years
|
![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsrx32x2.jpg) |
Individual performance:
• Led operations team to continue to achieve record-breaking performance in infrastructure upgrades, including performing more than 382 miles of pipeline replacement, improving leak response times and damage prevention rates, and reducing the number of leaks across our system.
• Continued to improve the service levels for the 1.7 million customers we serve.
• Implemented field crisis management training as well as a program to further reduce workplace injuries.
|
Base salary: The
salary for Mr. Lindsey was increased to $441,500 from $420,000, a 5% increase.
Annual incentive: Mr. Lindsey
received an annual incentive award of $254,514, representing a 96% payout against the target. Mr. Lindsey’s annual incentive
target remained at 60% of base salary for fiscal year 2018.
Long-term incentive: Mr. Lindsey
received a long-term incentive grant in November 2017 valued at $617,715, split into 75 percent PCSUs and 25 percent TBRSs. |
Mark C. Darrell | Senior Vice
President, General Counsel and Chief Compliance Officer
![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsrx27x4.jpg)
Age: 60
Spire experience:
14 years
|
![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsrx32x4.jpg) |
Individual performance:
• Provided legal support for the Company’s 2018 Missouri rate cases, which increased the rate base $66.2 million and made important changes to our regulatory framework in Missouri.
• Led the legal team responsible for the successful approval of increases in Missouri Infrastructure System Replacement Surcharge (ISRS) cases, as well as other regulatory approvals across our footprint.
• Continued to oversee improvements in areas of compliance, security, risk enterprise and audit.
• Supported growth of captive insurance company.
• Provided comprehensive legal support surrounding the Spire STL Pipeline project.
|
Base salary: The
salary for Mr. Darrell was increased to $387,000 from $367,000, a 5% increase.
Annual incentive: Mr. Darrell
received an annual incentive award of $189,220, representing a 98% payout against the target. Mr. Darrell’s annual incentive
target remained at 50% of base salary for fiscal year 2018.
Long-term incentive: Mr. Darrell
received a long-term incentive grant in November 2017 valued at $433,038, split into 75 percent PCSUs and 25 percent TBRSs.
|
www.SpireEnergy.com |
Spire Inc. | 2018 Proxy
Statement ![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/footer.jpg) |
30 |
Michael C. Geiselhart | Senior Vice
President, Strategic Planning and Corporate Development
![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsrx27x5.jpg)
Age: 59
Spire experience:
12 years
|
![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsrx33x2.jpg) |
Individual performance:
• Exceeded financial targets for Gas Marketing segment, taking advantage of market opportunities.
• Received Federal Energy Regulatory Commission certification for the Spire STL Pipeline.
• Completed successful acquisitions of Ryckman Creek Resources, LLC and Clear Creek Storage Company, L.L.C. to expand the Company’s presence in the natural gas storage industry.
|
Base salary: The
salary for Mr. Geiselhart was increased to $400,000 from $350,000, a 14% increase. This increase was a market adjustment to
achieve a competitive salary for his role.
Annual incentive: Mr. Geiselhart
received an annual incentive award of $192,261, representing a 96% payout against the target. Mr. Geiselhart’s annual
incentive target remained at 50% of base salary for fiscal year 2018.
Long-term incentive: Mr. Geiselhart
received a long-term incentive grant in November 2017 valued at $411,550, split into 75 percent PCSUs and 25 percent TBRSs. |
Analysis of 2018 compensation decisions and
actions
Base salary
In November 2017, the Committee approved merit
increases to NEO salaries for fiscal year 2018. The Committee also approved a market adjustment to Mr. Geiselhart’s
salary. The salary increases for the NEOs are detailed above in the “Summary of 2018 compensation decisions for NEOs.”
The Committee determined that these salary adjustments properly reflected the NEOs’ contributions to the successful business
growth while continuing to focus within the NEOs’ functional areas.
Annual incentive compensation
At the beginning of each fiscal year, the Board
reviews and sets key performance metrics for the AIP based on the Company’s business and strategic plan for the upcoming
year. Actual payments to executives are then based on the fiscal year results of the Company and the business unit, if applicable,
for which the executive performs services, as well as the executive’s individual performance. The Committee, in collaboration
with management, sets the targets for each metric described below, based on an analysis of prior years’ performance and an
intention to achieve growth in future years. Individual objectives are set for each NEO, with such objectives relating to the executive’s
functional area of responsibility and aligning with corporate strategy.
The following chart sets forth the 2018 AIP
targets as a percentage of base salary and the weightings of the various metrics for each NEO:
Corporate metric
The corporate metric used in determining the
AIP awards evaluates the Company’s financial success for the fiscal year. The metric used is basic net economic earnings
per share (“NEEPS”). Net economic earnings exclude from net income the after-tax impacts of fair
Spire Inc. | 2018 Proxy
Statement ![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/footer.jpg) |
31 |
value accounting and timing adjustments associated
with energy-related transactions, the impacts of acquisitions, divestiture and restructuring activities, and the largely non-cash
impacts of other non-recurring or unusual items, such as certain regulatory, legislative or GAAP standard-setting actions.
Management believes that excluding these
items provides a useful representation of the economic impact of actual settled transactions and overall results of ongoing
operations. These internal non-GAAP operating metrics should not be considered as an alternative to, or more meaningful than,
GAAP measures. More information regarding net economic earnings can be found in the 2018 10-K in the Non-GAAP Measures
section of our Management’s Discussion and Analysis of Financial Condition and Results of Operations. The table below
shows the level of performance for the corporate metric for fiscal year 2018.
Corporate
metric |
|
Threshold
performance |
|
Target
performance |
|
High
performance |
|
Actual
performance |
|
Resulting
corporate metric
payout percentage |
Basic net economic earnings per
share |
|
$3.37 |
|
$3.75 |
|
$3.77 |
|
$3.73 |
|
96.7% |
Business unit metric
The business unit metric relates to the portion
of the business over which an executive has the most control and influence. Mr. Lindsey, as president and chief executive
officer of Spire Missouri Inc. and chief executive officer of Spire Alabama Inc., Spire Gulf Inc., and Spire Mississippi Inc.,
was assigned the Gas Utility business unit. The other NEOs have not been assigned a business unit metric for AIP purposes.
The metric used to measure Gas Utility performance
is operating income. Business unit operating income for AIP purposes removes the impacts related to acquisition, divestiture and
restructuring activities and other non-recurring items. The table below shows the level of performance for the business unit metric
for fiscal year 2018.
Business
unit metric |
|
Threshold
performance |
|
Target
performance |
|
High
performance |
|
Actual
performance |
|
Resulting
business unit metric
payout percentage |
Gas Utility operating income |
|
$281.0 million |
|
$317.0 million |
|
$336.0 million |
|
$297.6 million |
|
90% |
Individual performance metric
Individual performance measures are generally
subjective and relate to the manner in which the executive accomplishes the individual objectives set for that executive during
the year. This allows for assessment of the executive’s leadership role in furthering the values and culture of the Company
as well as contributing to its long-term success.
Performance status is reviewed periodically
during the year, and the Committee reviews the final evaluation shortly after the end of the fiscal year but awaits the audit results
before approving the final payouts. Some discretionary adjustments may be applied, where appropriate, and there are instances where
objectives may be modified during the year, when warranted.
Fiscal year 2018 AIP results
After evaluating the performance of the Company
and the NEOs in fiscal year 2018, the Committee approved annual incentive awards. The awards for the NEOs reflected that the 2018
fiscal year was another successful and transformative year for the Company. Performance remains high across our leadership team,
as evidenced by their leadership in the Company’s continued execution of its strategy.
As a result of the performance on the metrics
described herein, the NEOs earned the following amounts under the AIP.
www.SpireEnergy.com |
Spire Inc. | 2018 Proxy
Statement ![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/footer.jpg) |
32 |
| |
|
Corporate | | |
Business unit | | |
|
Individual | | |
|
Total annual incentive plan payout | | |
Total annual incentive plan payout as % of target |
Suzanne Sitherwood | |
| $719,206 | | |
$ – | | |
| $138,794 | | |
| $858,000 | | |
| 98 | % |
Steven P. Rasche | |
| 180,152 | | |
– | | |
| 63,394 | | |
| 243,546 | | |
| 98 | |
Steven L. Lindsey | |
| 102,463 | | |
83,444 | | |
| 68,607 | | |
| 254,514 | | |
| 96 | |
Mark C. Darrell | |
| 140,336 | | |
– | | |
| 48,884 | | |
| 189,220 | | |
| 98 | |
Michael C. Geiselhart | |
| 145,050 | | |
– | | |
| 47,211 | | |
| 192,261 | | |
| 96 | |
Long-term incentive compensation
The Committee approves equity grants with approximately
75 percent of the value of long-term incentives being awarded in performance-contingent stock units (“PCSUs”) and approximately
25 percent of the value being awarded in time-based restricted shares (“TBRSs”).
Grants made in fiscal year 2018
On November 8, 2017, the Committee authorized
the grants of TBRSs (“2018 TBRSs”) and PCSUs (“2018 PCSUs”) to 25 officers, including all of the NEOs.
The grants were made on November 15, 2017. Both the 2018 TBRSs and the 2018 PCSUs are included in the “Grants of plan-based
awards” table in this proxy statement.
The 2018 TBRSs fully vest on the third anniversary
of the grant date if the recipient continues employment with the Company through that date. Quarterly dividends are paid on TBRSs
during the vesting period.
The 2018 PCSUs consist of stock units that become
eligible to vest after a three-year performance period is complete and the Company’s average NEEPS over the performance period
exceed the annualized declared dividend per share for the common stock as of the award date (“Dividend Related Earnings”).
If there are no Dividend Related Earnings, the units and related dividend equivalents are forfeited. If the Company meets the Dividend
Related Earnings metric, the actual number of units that vest is determined by the Committee based on the factors described below.
The factors that dictate the vesting levels
of the 2018 PCSUs are average NEEPS over fiscal years 2018-2020 and a Total Shareholder Return (“TSR”) metric that
compares the Company’s TSR performance to its peer group (described herein on page 34), with these metrics each weighted
at 50 percent.
![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsrx35x1.jpg)
Performance under the NEEPS metric is measured
by calculating the three-year average of the Company’s NEEPS. In the first year of the performance period, NEEPS was $3.73
on a non-diluted basis. NEEPS for fiscal years 2019 and 2020 will be added to the 2018 NEEPS amount for calculating the three-year
average NEEPS to determine if performance at any level has been achieved.
These metrics may be achieved at threshold,
target or high performance levels, as evaluated by the Committee. The threshold level produces vesting of 50 percent of the target
level of stock units for each metric. The high performance level produces vesting of 200 percent of the target level of stock
units for each metric.
Dividend equivalents on PCSUs will accrue throughout
the performance period and will only be paid to the participants in proportion to the number of shares actually earned at vesting.
No interest is paid on the accrued dividends.
The performance targets set for EIP grants are
considered to be confidential and competitive information, particularly to the extent the performance targets relate to projected
Company financial data and strategy, neither of which the Company publicly discloses. The Committee believes that targeted levels
of performance for the EIP grants are challenging and will not be achieved all of the time. High performance levels will be difficult
to achieve
Spire Inc. | 2018 Proxy
Statement ![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/footer.jpg) |
33 |
and will require exceptional performance. The
following chart shows the vesting levels for prior fiscal years as a percentage of target.
Fiscal
years |
Grants
vested at % of target |
2012-2014 |
113 |
% |
2013-2015 |
121 |
|
2014-2016 |
119 |
|
2015-2017 |
87 |
|
2016-2018 |
51 |
|
With regard to the Committee’s certification
of performance, the Committee, which is comprised solely of independent directors, reviews and discusses the calculations of the
metrics to verify compliance with the terms of the award agreement and determines the level of performance achieved and the number
of shares earned. The Committee then approves a resolution that reflects the Committee’s determinations. The PCSUs will vest
only upon the Committee’s certification as to performance.
Grants that vested in 2018
On November 18, 2015, the Committee authorized
the grant of TBRSs and PCSUs to 23 current officers, including all NEOs. The grants were made on December 1, 2015. These TBRSs
vested on December 1, 2018.
The PCSUs were granted for the performance period
of fiscal years 2016-2018. The vesting of those awards was based upon the three-year average NEEPS metric and the TSR metric based
on the peer group in place at the time of grant. TSR for the Company and peer group was calculated as follows:
![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsrx36x1.jpg)
Total share value at the end of the performance
period is calculated as the average share price for the last quarter of the performance period (July 1, 2018-September 30, 2018)
plus the value of reinvested dividends. Average share price immediately prior to the grant is calculated using the average share
price for the last quarter immediately prior to the grant (July 1, 2015-September 30, 2015).
In reviewing the Company’s performance
over the period and in accordance with the terms of the EIP, the Committee evaluated the NEEPS metric by averaging the NEEPS for
each of fiscal years 2016, 2017 and 2018. The metrics and actual performance for the 2018 PCSUs were as follows:
|
|
Weighting |
|
Threshold
performance |
|
Target
performance |
|
High
performance |
|
Actual
performance |
Total shareholder return
Payout percentage |
|
50% |
|
25th percentile
50% |
|
50th percentile
100% |
|
100th percentile
200% |
|
4th percentile
0% |
Three-year
average NEEPS
Payout percentage |
|
50% |
|
$3.30
50% |
|
$3.57
100% |
|
$3.91
200% |
|
$3.58
101% |
TSR performance for the three-year period was
low due to the consolidating nature of the natural gas industry. The Company’s peer group has reduced in size each year due
to acquisitions, which may cause results that do not fully reflect the financial success achieved by the Company and its shareholders.
On November 7, 2018, the Committee
certified these performance outcomes, resulting in a total of 20,138 PCSUs vesting (representing 51 percent of target) for
the NEOs. A total of 13,290 TBRSs also vested for the NEOs over the last year. The table below shows the number of PCSUs and
TBRSs that vested for each NEO.
Grants that vested December 1, 2018
|
|
PCSUs |
|
TBRSs |
|
Total |
Sitherwood |
|
9,540 |
|
6,290 |
|
15,830 |
Rasche |
|
3,061 |
|
2,020 |
|
5,081 |
Lindsey |
|
3,455 |
|
2,280 |
|
5,735 |
Darrell |
|
2,632 |
|
1,740 |
|
4,372 |
Geiselhart |
|
1,450 |
|
960 |
|
2,410 |
www.SpireEnergy.com |
Spire Inc. | 2018 Proxy
Statement ![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/footer.jpg) |
34 |
Executive compensation governance
Roles in executive compensation
The Committee implements and administers the
Company’s compensation philosophy and engages an independent compensation consultant to provide market reference perspective
and to serve as an advisor. The compensation consultant serves at the request of, and reports directly to, the Committee and does
not perform other significant services for the Company.
The Committee determined that the compensation
consultant is independent, and its work has not raised any conflicts of interest.
In fiscal year 2018, the Committee continued
its retention of Semler Brossy Consulting Group LLC (“Semler Brossy”) to serve as its consultant. Semler Brossy is
an independent firm, providing executive compensation consulting services to the Committee. Semler Brossy also provides consulting
services to the corporate governance committee regarding non-employee director compensation. Semler Brossy reports to the Committee
and attends all Committee meetings either in person or by telephone.
While the Committee receives advice on executive
compensation from its compensation consultant, the Committee and the Board retain all decision-making authority to ensure that
the decisions reflect the Company’s pay-for-performance philosophy.
The table below outlines the roles and responsibilities
of the various parties in determining and deciding executive compensation.
Party |
|
Roles
and responsibilities |
Compensation
committee |
|
• Reviews and approves a compensation philosophy/policy with respect to executive
officer compensation
• Reviews
and approves the evaluation process and compensation structure for the Company’s executive officers on
an annual basis
• Reviews
and recommends to the Board the corporate goals and objectives for the CEO’s performance and assists the
Board in evaluating the CEO’s performance in light of those goals and objectives and
then sets the CEO’s current compensation, including salary, and short-term and
long-term compensation on an annual basis
• Reviews
and approves the corporate goals and objectives for the executive officers’ performance, evaluates the
performance of the Company’s executive officers, and approves the annual compensation,
including salary, and short-term and long-term compensation for such executive officers
on an annual basis
• Administers
and makes recommendations to the Board regarding cash and equity-based incentive plans
• Reviews
compensation risk assessment of the Company’s compensation policies and practices
• Oversees
the development and review of executive succession plans and assists the Board in developing and
evaluating potential candidates for executive positions
|
Independent
compensation consultant |
|
• Advises
the Committee on performance metrics and linkage between pay and performance
• Keeps
the Committee informed of current industry and market trends
• Makes
recommendations to the Committee on companies to consider as a comparator peer group
• Presents
findings relative to the competitiveness of the Company’s executive compensation
• Provides
guidance and consultation on management’s risk assessment of the Company’s executive compensation
|
Independent
members of the Board |
|
• Approve
compensation of the CEO |
CEO |
|
• Evaluates
the performance of all Company executive officers
• Recommends
base salary adjustments for those officers
• Recommends
promotions, as appropriate
• Recommends
awards under the AIP based on each executive officer’s performance
• Recommends
equity grants under the EIP to the executive officers, based on each officer’s strategic role in
executing the corporate strategy to build long-term shareholder value
|
Other
members of management |
|
• Human
Resources – provides
analyses, compensation data and information to the Committee and the independent
compensation consultant to facilitate the Committee’s
review of compensation; develops and conducts risk assessment
of the Company’s executive compensation
• Chief
Financial Officer – provides reports on financial performance
relative to the metrics included in the incentive programs
as well as the financial impact of compensation decisions
• Internal
Audit – provides the results of its audit of performance relative
to the metrics
|
Spire Inc. | 2018 Proxy
Statement ![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/footer.jpg) |
35 |
Compensation committee actions in 2018
The Committee’s review of the Company’s
executive pay practices has continued to improve the integrity of our pay-for-performance philosophy, align the interests of our
executive officers and shareholders and strengthen our governance commitment. In 2018, the Committee:
• |
Reaffirmed the Company’s
pay philosophy and made minor updates to provide more clarity and make each principle more actionable; |
|
|
• |
Undertook a detailed review and analysis
of the Company’s long-term compensation performance metrics to ensure alignment with overall performance of the Company, including
reviewing the appropriateness of the industry peer group that will be used for determining the relative TSR component of the
PCSUs for the upcoming fiscal year; |
|
|
• |
Developed an annual incentive program for
specific commercial positions in our marketing and trading organization for the upcoming fiscal year; |
|
|
• |
Continued to utilize Willis Towers Watson
Energy Services Executive Compensation Survey as the primary market reference to assist the Committee in making its compensation
decisions; |
|
|
• |
Continued the practice of awarding EIP grants
to executives based on fixed value for each position, with validation of the grant levels from competitive market data; |
|
|
• |
Conducted an annual compensation risk assessment
to evaluate the extent to which the Company’s compensation policies and practices could exacerbate enterprise risks
or encourage excessive risk-taking behavior in a manner that would adversely impact the business; and |
|
|
• |
Reviewed and approved the use of executive
talent profiles in the succession planning process as well as individual development activities. |
Competitive market compensation analysis
Each year, the Committee evaluates certain comparative
data when determining executive compensation levels to help ensure that compensation opportunities being delivered to our executive
officers are competitive within the industry markets in which the Company competes for talent. Although the Committee reviews the
data to see how the Company’s executive compensation levels compare to the median range of the Company’s comparator
peer group, decisions are not guided solely by such data, as the Committee’s focus is to make compensation decisions uniquely
appropriate for the Company and the individual executive officer.
To assist the Committee
in its annual market review of executive officer compensation, the independent compensation consultant prepares an analysis of
the market competitiveness of compensation for each executive officer. The independent compensation consultant’s analysis
includes a combination of survey and peer company pay information to establish competitive market rates for base salary and annual
and long-term incentives for the executive officer positions. This allows the Committee to ensure our competitive market data is
robust, reliable and objective on an ongoing basis. In making compensation decisions, the Committee uses:
• |
The Willis
Towers Watson Energy Services Executive Compensation Survey (“WTW Survey”); and |
|
|
• |
Peer company data, described below in the section entitled “Use
of peer group,” which provides information regarding the pay levels and compensation programs at the companies competing
in our industry with whom we compete for executive talent. |
Of the sources listed above, the Committee places
more emphasis on the WTW Survey.
The WTW Survey is a proprietary third-party
survey, and the specific identity of respondents for any given position is not provided to the Company. Because of the large variance
in size among participating companies within the survey, the independent compensation consultant conducts analyses, including regression,
to adjust the compensation data for differences in revenue and size. These adjustments are necessary to allow for appropriate size
comparisons between our Company and the participating companies in the survey.
For each executive, the Committee determines
whether target total compensation is sufficient to retain and motivate the executive. If adjustments are needed to create greater
alignment with the Company’s compensation philosophy, or to reflect unique circumstances at the Company, the Committee evaluates
each component of compensation (base salary, short-term incentive and long-term incentive targets) to determine where such adjustments
may be required. In addition, the Committee considers other subjective factors in its compensation decisions, such as individual
performance, experience, future potential and expertise.
Use of peer group
Annually, the independent compensation consultant,
along with the Company’s finance leadership, reviews our peer group members and recommends a group composition that considers
industry-appropriateness, business size and changes necessitated due to acquisitions and divestitures. This peer group is used
as a secondary
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data point to assess executive compensation,
as well as to evaluate the relative TSR metric for vesting of PCSUs. The table below shows our peers for fiscal year 2018, as well
as a comparison of peer group members for fiscal years 2015-2017.
TSR has historically been determined by benchmarking
the Company’s performance against a specific set of gas utility peer companies. Over time, there has been a reduction in
the numbers of peers in the peer set due to the consolidating nature of the natural gas industry.
The peer group used to determine the TSR results
for the PCSUs that vested in 2018 has decreased as illustrated in the table below.
The text in orange below signifies companies
that have been added to or removed from the peer group each year. These changes to the peer group are taken into account by the
Committee at the time of vesting. For fiscal year 2019, the peer group will be the companies that participated in the 2018 WTW
Survey and have annual revenues of $1 billion to $6 billion, as well as any legacy peer group companies that did not participate
in the 2018 WTW Survey.
FY15 |
|
FY16 |
|
FY17 |
|
FY18 |
AGL
Resources Inc.
Atmos
Energy Corp.
Avista Corp.
Black Hills Corp.
Chesapeake Utilities Corp.
New Jersey Resources Corp.
Northwest
Natural Gas Co.
One
Gas, Inc.
Piedmont Natural Gas Co., Inc.
South Jersey Industries, Inc.
Southwest Gas Corp.
Vectren Corp.
WGL Holdings, Inc.
|
|
AGL
Resources Inc.
Atmos
Energy Corp.
Avista Corp.
Black Hills Corp.
Chesapeake Utilities Corp.
New Jersey Resources Corp.
NiSource Inc.
Northwest Natural Gas Co.
One
Gas, Inc.
Piedmont Natural Gas Co., Inc.
South Jersey Industries, Inc.
Southwest Gas Corp.
Vectren Corp.
WGL Holdings, Inc.
|
|
[acquired
7/16]
Alliant
Energy
Atmos Energy Corp.
Avista Corp.
Black Hills Corp.
[removed due to size]
New Jersey Resources Corp.
NiSource Inc.
Northwest Natural Gas Co.
Northwestern Corp.
One Gas, Inc.
[acquired 10/16]
South Jersey Industries, Inc.
Southwest Gas Corp.
Vectren Corp.
WGL Holdings, Inc.
|
|
Alliant
Energy
Atmos Energy Corp.
Avista Corp.*
Black Hills Corp.
New
Jersey Resources Corp.
NiSource Inc.
Northwest Natural Gas Co.
Northwestern Corp.
One Gas, Inc.
South
Jersey Industries, Inc.
Southwest Gas Corp.
Vectren Corp.*
WGL Holdings, Inc. [acquired 7/18]
|
13
peers
(9 peers as of 9/30/18) |
|
14
peers
(10 peers as of 9/30/18) |
|
13
peers
(12 peers as of 9/30/18) |
|
13
peers
(*pending acquisition) |
Termination and change in control
The Company believes it is important to provide
officers certain compensation in the event of a termination after a change in control, particularly since it does not enter into
employment agreements. In addition to the payments described below, the annual and long-term incentive benefits payable to the
NEOs upon termination with or without a change in control are described in the “Potential payments upon termination or change
in control” section later in this proxy statement.
Executive Severance Plan
Ms. Sitherwood and Mr. Lindsey participate
in the Company’s Executive Severance Plan. The Executive Severance Plan provides for a severance benefit if a participant’s
employment is terminated by the Company without cause or by the participant for good reason (such terms being defined in the plan).
No payment will be made on account of a participant’s death or disability.
The severance benefit is a lump
sum payment equal to the participant’s applicable percentage (200 percent for Ms. Sitherwood and 100 percent for
Mr. Lindsey) of the participant’s base salary, plus a cash payment equal to the estimated cost of continued
medical, dental and vision benefits for a period of 24 months for Ms. Sitherwood and 12 months for Mr. Lindsey.
In the event of a qualifying termination following
a change in control, the severance benefit will be a lump sum payment equal to the participant’s applicable percentage (300
percent for Ms. Sitherwood and 200 percent for Mr. Lindsey) of the participant’s base salary plus the participant’s
AIP target, plus a cash payment equal to the estimated cost of continued medical, dental and vision benefits for a period of 36
months for Ms. Sitherwood and 24 months for Mr. Lindsey.
The plan defines a change in control as (i)
one or more persons acquiring 30 percent or more of the Company’s outstanding shares; (ii) replacement of a majority of the
Board by individuals whose nominations were not approved by a majority of the Board; (iii) consummation of a reorganization, merger
or consolidation that results in
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the Company’s shareholders no longer owning
more than 50 percent of the voting power of the surviving entity’s outstanding securities; or (iv) a liquidation or dissolution
of the Company, or a sale of at least 80 percent of the Company’s assets.
A participant must sign a Confidentiality, Non-Disparagement,
Non-Competition and Non-Solicitation Agreement and must execute a release in order to receive a payment under the Executive Severance
Plan.
Management Continuity Protection Plan
The Management Continuity Protection Plan (“MCPP”)
was adopted in 1991 and was most recently restated in 2005. Effective January 1, 2015, no new participants will enter the MCPP.
Of the NEOs, Messrs. Darrell, Rasche and Geiselhart
were covered by the MCPP at fiscal year-end. The MCPP provides for the payment of benefits to officers in certain termination events
after a change in control, which is defined as occurring when a person acquires more than 50 percent of the voting power of securities
of the Company or if a person acquires between 30 percent and 50 percent of the voting power and the Board determines that a de
facto change in control has occurred.
The MCPP provides for a lump-sum payment in
an amount equal to the average W-2 compensation paid to a participant for the five-year period immediately preceding cessation
of employment, multiplied by 2.99 for an executive vice president or 2.00 for the other officers.
The MCPP does not provide benefit payments to
those participants who have reached normal retirement age of 65 and provides no benefits if the officer is terminated for cause.
The MCPP limits the amount of the benefit payable to an amount equal to the participant’s average monthly compensation for
the five-year period immediately preceding the cessation of employment multiplied by the number of months until the date the participant
would reach normal retirement age of 65.
If, after a change in control, a participant
in the MCPP is terminated other than for cause, resigns or retires within 54 months in the case of any executive vice president,
or within 42 months in the case of all other officers, then the participant is entitled to the lump sum amount described above.
However, the amount is reduced for each month the participant remains employed by the Company starting with the seventh month after
the change in control. The amount of the reduction is 1/48 per month for an executive vice president and 1/36 per month for all
other officers.
Other Company-provided benefits
The Company believes retirement, health and
welfare benefits serve an important role in the total compensation and benefits package offered to employees to assist in attracting
and retaining key talent. The Company provides both Company-paid and voluntary health and welfare programs. The programs are reviewed
periodically pursuant to the Company’s intent to be competitive within the industry in terms of total compensation.
Retirement plans
The Company offers its employees a defined contribution
401(k) plan that provides a Company match for all employees, including the NEOs. All of the NEOs participated in the Spire Employee
Savings Plan in 2018.
The NEOs participate in a qualified defined
benefit retirement plan sponsored by Spire Missouri Inc. for its employees. Spire Missouri Inc. also provides NEOs with non-qualified
supplemental retirement plan benefits. More details relative to these plans are included in the “Pension plan compensation”
section later in this proxy statement.
Life insurance
The Company provides a life insurance benefit
for Ms. Sitherwood in an amount equal to $500,000 while employed by the Company, and the Company provides a life insurance
benefit for Messrs. Rasche, Lindsey, Darrell and Geiselhart equal to 200 percent of base salary, subject to a maximum of $1,500,000
while employed by the Company. Following retirement, the Company provides a life insurance benefit equal to: 50 percent of the
employee’s active life insurance benefit, subject to a maximum of $250,000, if under age 70; or 25 percent of the employee’s
active life insurance benefit, subject to a maximum of $125,000, if age 70 or older. The costs for this coverage are included in
the “All other compensation” column of the “Summary compensation table”.
Deferred income plans
Since 1986, the Company has offered its directors,
officers and certain key employees the opportunity to defer income under deferred income plans. More details on the plans are provided
in the “Non-qualified deferred compensation” section later in this proxy statement.
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Perquisites
As a matter of business
philosophy, the Company provides limited perquisites or personal benefits to executive officers (including the CEO). These
limited perquisites include spousal travel to industry associations that encourage spousal attendance, executive financial
and tax planning, and executive wellness benefits. When an executive must relocate, perquisites may also include the payment
of relocation expenses as well as the associated tax obligations.
Tax implications of the Committee’s compensation
decisions
Section 162(m) of the Internal Revenue Code
(“Code”) generally limits tax deductibility of compensation paid by a public company to its chief executive officer
and certain other executive officers in any year to $1 million in the year compensation becomes taxable to the executive. Prior
to the Tax Cuts and Jobs Act, certain compensation was exempt from the deduction limit to the extent it met the requirements to
be considered “qualified performance-based compensation” as previously defined in Section 162(m). Certain arrangements
entered into prior to November 2, 2017 are considered ’‘grandfathered’’ and compensation paid under such
arrangements will continue to be deductible until the arrangements are materially modified.
The Committee has historically considered Section
162(m) in the design of incentive plans to preserve the corporate tax deductibility of compensation. However, in light of the changes
to Section 162(m), the Committee anticipates that a larger portion of future compensation paid to our NEOs will be subject to a
tax deduction disallowance under Section 162(m). The Committee recognizes that factors other than tax deductibility should be considered
in determining the forms and levels of executive compensation most appropriate and in the best interests of the Company and its
shareholders. Annually, the Committee reviews all compensation programs and payments, including the tax impact on the Company.
Accounting information
The Company accounts for equity
incentive grants under FASB ASC Topic 718. The fair value of stock-based awards is estimated using the closing price of the
Company’s common stock on the grant date or, for those with the total shareholder return modifier, using a Monte Carlo
simulation model that assesses probabilities of various outcomes of market conditions. Each year, an independent third party
runs the Monte Carlo simulation, which is subject to the audit procedures of the Company’s independent registered
public accounting firm. During fiscal year 2018, the Company did not make any modifications to equity grants that resulted in
a re-measurement of expense under the accounting rules.
Compensation committee report
The Committee has reviewed and
discussed with Company management the CD&A section included in this proxy statement. Based on this review and discussion,
the Committee recommended to the Board (and the Board has approved) that this CD&A be included in this proxy statement
and incorporated by reference in the 2018 10-K.
Compensation committee
Edward L. Glotzbach, Chair
Mark A. Borer
John P. Stupp Jr.
Mary Ann Van Lokeren
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Executive compensation tables
Summary compensation table
The table that follows presents information
about compensation for the Company’s NEOs for the last three completed fiscal years.
Salary
Salary includes amounts earned in each fiscal
year. In fiscal year 2018, the Committee approved adjustments to salaries of officers at its November 2017 meeting after the appointment
of officers. The amounts in this column also include any amounts of salary that the NEO may have deferred under the Spire Employee
Savings Plan and the deferred income plan. Salary deferred under the deferred income plan also appears in the “Executive
contributions in last FY” column of the “Non-qualified deferred compensation table” later in this proxy statement.
Bonus
The amounts in this column represent sign-on
or discretionary bonuses. No such bonuses were made in fiscal year 2018. Amounts under the Company’s AIP are reported in
the “Non-equity incentive plan compensation” column.
Stock awards
The amounts in this column represent the aggregate
grant date fair value calculated using the provisions of FASB ASC Topic 718 exclusive of the estimate of forfeitures. For those
shares subject to performance-based conditions, the value reflects the probable outcome as of the grant date.
Non-equity incentive plan compensation
This column includes incentive payments earned
by the NEOs under the AIP. Further details relative to the AIP can be found in the CD&A.
Change in pension value and non-qualified deferred
compensation earnings
This column includes the aggregate change in
the actuarial present value of the NEOs’ accumulated benefits under the Spire Missouri Employees’ Retirement Plan and
the supplemental retirement plans, as well as the above-market or preferential earnings in fiscal year 2018 on deferrals in the
deferred income plan.
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Summary compensation table
Name |
Year |
|
Salary |
|
Bonus |
|
Stock
awards |
(1) |
Non-equity
incentive plan
compensation |
|
Change in
pension value
and non-qualified
deferred
compensation
earnings |
(2) |
All other
compensation |
(3) |
Total |
Suzanne Sitherwood
President and Chief Executive Officer |
2018 |
|
$871,154 |
|
$ – |
|
$1,904,893 |
|
$858,000 |
|
$208,799 |
|
$173,993 |
|
$4,016,839 |
2017 |
|
846,635 |
|
– |
|
1,566,544 |
|
795,000 |
|
205,208 |
|
193,636 |
|
3,607,023 |
2016 |
|
820,673 |
|
– |
|
1,548,808 |
|
830,000 |
|
170,628 |
|
165,085 |
|
3,535,194 |
Steven P. Rasche
Executive Vice President, Chief Financial Officer |
2018 |
|
410,308 |
|
– |
|
504,689 |
|
243,546 |
|
81,299 |
|
70,736 |
|
1,310,578 |
2017 |
|
379,962 |
|
– |
|
455,833 |
|
238,423 |
|
77,276 |
|
75,877 |
|
1,227,371 |
2016 |
|
359,154 |
|
– |
|
496,991 |
|
246,975 |
|
69,355 |
|
57,789 |
|
1,230,264 |
Steven L. Lindsey
Executive Vice President, Chief Operating Officer of Distribution Operations |
2018 |
|
438,193 |
|
– |
|
617,715 |
|
254,514 |
|
59,867 |
|
83,113 |
|
1,453,402 |
2017 |
|
415,288 |
|
– |
|
551,173 |
|
256,751 |
|
61,107 |
|
94,168 |
|
1,378,487 |
2016 |
|
382,981 |
|
– |
|
560,960 |
|
262,379 |
|
61,399 |
|
91,035 |
|
1,358,754 |
Mark C. Darrell
Senior Vice President, General Counsel and Chief Compliance Officer |
2018 |
|
383,923 |
|
– |
|
433,038 |
|
189,220 |
|
78,152 |
|
65,598 |
|
1,149,931 |
2017 |
|
358,327 |
|
– |
|
389,095 |
|
189,933 |
|
122,452 |
|
79,709 |
|
1,139,516 |
2016 |
|
355,596 |
|
– |
|
427,477 |
|
203,459 |
|
145,091 |
|
72,212 |
|
1,203,835 |
Michael C. Geiselhart
Senior Vice President, Strategic Planning and Corporate Development |
2018 |
|
388,077 |
|
– |
|
411,550 |
|
192,261 |
|
137,109 |
|
40,987 |
|
1,169,984 |
2017 |
|
343,846 |
|
– |
|
285,436 |
|
178,582 |
|
94,610 |
|
36,267 |
|
938,741 |
(1) |
See the Stock-Based Compensation footnote of the consolidated financial statements in the 2018 10-K for discussions regarding the manner in which the fair value of these awards are calculated, including assumptions used. Further information regarding the 2018 awards is included in the “Grants of plan-based awards” table and “Outstanding equity awards at fiscal year-end table” elsewhere in this proxy statement. The maximum financial impact for the 2018 stock awards for the NEOs is as follows: |
|
Sitherwood |
$2,606,738 |
|
Rasche |
690,805 |
|
Lindsey |
845,277 |
|
Darrell |
592,566 |
|
Geiselhart |
563,258 |
The amounts for stock awards are presented excluding
any actual or estimated forfeitures.
(2) |
The amounts shown below in the “Above-market interest” column are also included in the amounts in the “Aggregate earnings in last FY” column of the “Non-qualified deferred compensation table” for the deferred income plans. |
|
|
Increase
in
pension value |
Above-market
interest |
Total |
|
Sitherwood |
$176,482 |
$32,317 |
$208,799 |
|
Rasche |
70,167 |
11,132 |
81,299 |
|
Lindsey |
58,965 |
902 |
59,867 |
|
Darrell |
67,174 |
10,978 |
78,152 |
|
Geiselhart |
113,485 |
23,624 |
137,109 |
(3) |
The table below provides details on the amounts included in this column for fiscal year 2018: |
|
|
401(k)
match |
|
Perquisites |
(a) |
Dividend
equivalents |
(b) |
Dividends |
(c) |
Other |
|
Total |
|
Sitherwood |
$13,750 |
|
$20,904 |
|
$96,949 |
|
$42,390 |
|
$ – |
|
$173,993 |
|
Rasche |
14,988 |
|
12,935 |
|
30,415 |
|
12,398 |
|
– |
|
70,736 |
|
Lindsey |
13,750 |
|
18,178 |
|
36,492 |
|
14,693 |
|
– |
|
83,113 |
|
Darrell |
12,689 |
|
14,512 |
|
27,754 |
|
10,643 |
|
– |
|
65,598 |
|
Geiselhart |
16,346 |
|
6,211 |
|
10,667 |
|
7,763 |
|
– |
|
40,987 |
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(a) |
Perquisites include life insurance premiums, spousal travel, executive financial planning and executive wellness benefits. |
(b) |
Dividend equivalents are paid on PCSUs at the time of vesting. Dividends are paid quarterly on TBRSs during the three-year vesting period. |
(c) |
This column includes corrected amounts for fiscal years 2016 and 2017 for quarterly dividends on TBRSs that were not reported in this column for those fiscal years. The dividends that were added to the “All other compensation” column for fiscal year 2017 are $46,450 for Ms. Sitherwood, $16,229 for Mr. Rasche, $17,350 for Mr. Lindsey, $13,106 for Mr. Darrell, and $6,567 for Mr. Geiselhart. The dividends that were added to the “All other compensation” column for fiscal year 2016 are $41,991 for Ms. Sitherwood, $14,588 for Mr. Rasche, $16,811 for Mr. Lindsey, $12,713 for Mr. Darrell, and $6,521 for Mr. Geiselhart. |
Grants of plan-based awards
The plans under which grants in the table below
were made are generally described in the CD&A in the “Annual incentive compensation” and “Long-term incentive
compensation” sections.
Under the AIP, performance metrics and potential
targets for awards are typically approved in November, with the determinations of earned award amounts made the following November,
based upon corporate, business unit, if applicable, and individual performance in the most recently completed fiscal year.
Equity awards are generally considered for grant
in November each year, with the grant date occurring approximately one week after the November Committee meeting. Under the EIP,
the Committee may grant performance-based awards, stock appreciation rights, stock options, restricted stock shares or restricted
stock units.
| |
| |
| |
Estimated
future payouts under
non-equity incentive plan awards(1) | |
Estimated
future payouts under
equity incentive plan awards(2) | |
All other | |
Grant date |
|
Name | |
Grant
date | |
Action
date | |
Threshold | |
Target | |
Maximum | |
Threshold | |
(In shares)
Target | |
Maximum | |
stock
awards | (3) |
fair value of
stock awards |
(4) |
Sitherwood | |
11/8/17 | |
11/8/17 | |
$437,500 | |
$875,000 | |
$1,312,500 | |
| |
| |
| |
| |
|
|
| |
11/15/17 | |
11/8/17 | |
| |
| |
| |
8,975 | |
17,950 | |
35,900 | |
| |
$1,437,257 |
|
| |
11/15/17 | |
11/8/17 | |
| |
| |
| |
| |
| |
| |
5,980 | |
467,636 |
|
Rasche | |
11/8/17 | |
11/8/17 | |
124,200 | |
248,400 | |
372,600 | |
| |
| |
| |
| |
|
|
| |
11/15/17 | |
11/8/17 | |
| |
| |
| |
2,380 | |
4,760 | |
9,520 | |
| |
381,133 |
|
| |
11/15/17 | |
11/8/17 | |
| |
| |
| |
| |
| |
| |
1,580 | |
123,556 |
|
Lindsey | |
11/8/17 | |
11/8/17 | |
132,450 | |
264,900 | |
397,350 | |
| |
| |
| |
| |
|
|
| |
11/15/17 | |
11/8/17 | |
| |
| |
| |
2,910 | |
5,820 | |
11,640 | |
| |
466,007 |
|
| |
11/15/17 | |
11/8/17 | |
| |
| |
| |
| |
| |
| |
1,940 | |
151,708 |
|
Darrell | |
11/8/17 | |
11/8/17 | |
96,750 | |
193,500 | |
290,250 | |
| |
| |
| |
| |
|
|
| |
11/15/17 | |
11/8/17 | |
| |
| |
| |
2,040 | |
4,080 | |
8,160 | |
| |
326,686 |
|
| |
11/15/17 | |
11/8/17 | |
| |
| |
| |
| |
| |
| |
1,360 | |
106,352 |
|
Geiselhart | |
11/8/17 | |
11/8/17 | |
100,000 | |
200,000 | |
300,000 | |
| |
| |
| |
| |
|
|
| |
11/15/17 | |
11/8/17 | |
| |
| |
| |
1,940 | |
3,880 | |
7,760 | |
| |
310,672 |
|
| |
11/15/17 | |
11/8/17 | |
| |
| |
| |
| |
| |
| |
1,290 | |
100,878 |
|
(1) |
These columns show the range of possible payouts for AIP in fiscal year 2018. The amounts paid in fiscal year 2019 but earned based upon performance in fiscal year 2018 are included in the “Non-equity incentive plan compensation” column in the “Summary compensation table” and are based on the metrics described in the CD&A. |
(2) |
These columns show the range of possible payouts for the PCSU awards granted in fiscal year 2018. |
(3) |
This column shows the number of shares of TBRS granted in fiscal year 2018 as to which the restrictions will lapse on November 15, 2020. Details of each grant are listed in the “Outstanding equity awards at fiscal year end table”. |
(4) |
This column provides the grant date fair value of PCSU and TBRS awards using the provisions of FASB ASC Topic 718, exclusive of the estimate of forfeitures. For those shares in the “Estimated future payouts under equity incentive plan awards” columns, the value reflects the probable outcome on the grant date and is the same as the amount included for such shares in the “Stock awards” column for 2018 in the “Summary compensation table”. |
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In November 2017, EIP awards were
made to Ms. Sitherwood and Messrs. Rasche, Lindsey, Darrell and Geiselhart. These awards included PCSUs that vest upon the
attainment of multi-year performance objectives. Under the terms of the awards, these units may vest if certain corporate
performance metrics for the 2018-2020 fiscal year performance period are met or exceeded. The performance metrics for the
units granted in fiscal year 2018 are the cumulative three-year average NEEPS over fiscal years 2018-2020 and relative TSR,
which are weighted at 50 percent each. If the performance criteria are not satisfied for the fiscal years 2018-2020
performance period, the awards will be forfeited. At the conclusion of the performance period, payouts can range from 0
percent to 200 percent of target for each metric. After vesting, executives are expected to retain 75 percent of vested
shares until their stock ownership requirements are met. In the event of a change in control, vesting may accelerate at the
target level on a pro rata basis if the awards have not already been forfeited and the successor does not assume the award or
provide a comparable award, provided that the assumed or replacement award must provide that the vesting will be accelerated
if the participant is terminated without cause within 24 months of the change in control. If a participant leaves the Company
due to death, disability or retirement, the participant’s award may vest on a pro rata basis if the performance metrics
are met. Dividend equivalents on PCSUs are accrued throughout the performance period and paid to the participant in
proportion to the amount of shares actually earned at vesting. No interest is paid on the accrued dividends. More details on
these awards are included in the “Long-term incentive compensation” section of the CD&A.
Outstanding equity awards at fiscal year end
table
Name | |
Stock award grant date | |
No. of shares or units of stock that have not vested | |
Market
value of shares or units of stock
that have not vested | (1) |
Stock award vesting date | |
Equity incentive plan awards: No. of unearned shares, units or other rights that have not vested | (2) |
Equity incentive plan awards: Market or payout value of unearned shares, units or other rights that have not vested |
Sitherwood | |
12/1/15 | |
6,290 | |
462,630 | |
12/1/18 | |
18,890 | |
1,389,360 |
| |
12/1/16 | |
6,570 | |
483,224 | |
12/1/19 | |
19,270 | |
1,450,406 |
| |
11/15/17 | |
5,980 | |
439,829 | |
11/15/20 | |
17,950 | |
1,320,223 |
Rasche | |
12/1/15 | |
2,020 | |
148,571 | |
12/1/18 | |
6,060 | |
445,713 |
| |
12/1/16 | |
1,910 | |
140,481 | |
12/1/19 | |
5,740 | |
422,177 |
| |
11/15/17 | |
1,580 | |
116,209 | |
11/15/20 | |
4,760 | |
350,098 |
Lindsey | |
12/1/15 | |
2,280 | |
167,694 | |
12/1/18 | |
6,840 | |
503,082 |
| |
12/1/16 | |
2,310 | |
169,901 | |
12/1/19 | |
6,940 | |
510,437 |
| |
11/15/17 | |
1,940 | |
142,687 | |
11/15/20 | |
4,760 | |
428,061 |
Darrell | |
12/1/15 | |
1,740 | |
127,977 | |
12/1/18 | |
5,210 | |
383,196 |
| |
12/1/16 | |
1,630 | |
119,887 | |
12/1/19 | |
4,900 | |
360,395 |
| |
11/15/17 | |
1,360 | |
100,028 | |
11/15/20 | |
4,080 | |
300,084 |
Geiselhart | |
12/1/15 | |
960 | |
70,608 | |
12/1/18 | |
2,870 | |
211,089 |
| |
12/1/16 | |
1,200 | |
88,260 | |
12/1/19 | |
3,590 | |
264,045 |
| |
11/15/17 | |
1,290 | |
94,880 | |
11/15/20 | |
3,880 | |
285,374 |
(1) |
The dollar amounts in this column reflect the value calculated at $73.55 per share, the closing price of the Company stock on September 30, 2018. |
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(2) |
Vesting dates, performance periods and levels of awards, assuming performance metrics are met, are provided below: |
Grant date | |
Performance period | |
Vesting date | |
Name | |
Threshold | |
Target | |
Maximum |
12/1/15 | |
10/1/15-9/30/18 | |
12/1/18 | |
Sitherwood | |
10,390 | |
18,890 | |
37,780 |
| |
| |
| |
Rasche | |
3,333 | |
6,060 | |
12,120 |
| |
| |
| |
Lindsey | |
3,762 | |
6,840 | |
13,680 |
| |
| |
| |
Darrell | |
2,866 | |
5,210 | |
10,420 |
| |
| |
| |
Geiselhart | |
1,579 | |
2,870 | |
5,740 |
12/1/16 | |
10/1/16-9/30/19 | |
12/1/19 | |
Sitherwood | |
9,860 | |
19,720 | |
39,440 |
| |
| |
| |
Rasche | |
2,870 | |
5,740 | |
11,480 |
| |
| |
| |
Lindsey | |
3,470 | |
6,940 | |
13,880 |
| |
| |
| |
Darrell | |
2,450 | |
4,900 | |
9,800 |
| |
| |
| |
Geiselhart | |
1,795 | |
3,590 | |
7,180 |
11/15/17 | |
10/1/17-9/30/17 | |
11/15/20 | |
Sitherwood | |
8,975 | |
17,950 | |
35,900 |
| |
| |
| |
Rasche | |
2,380 | |
4,760 | |
9,520 |
| |
| |
| |
Lindsey | |
2,910 | |
5,820 | |
11,640 |
| |
| |
| |
Darrell | |
2,040 | |
4,080 | |
8,160 |
| |
| |
| |
Geiselhart | |
1,940 | |
3,880 | |
7,760 |
Option exercises and stock vested in fiscal
2018 table
None of the NEOs had any stock options to exercise
in fiscal year 2018, so those columns do not appear in the table below. The value column reflects the shares acquired on vesting
multiplied by the closing price on the vesting date.
Name | |
No. of shares acquired on vesting | |
Value realized on vesting |
Sitherwood | |
25,691 | |
$2,100,239 |
Rasche | |
8,953 | |
731,908 |
Lindsey | |
9,857 | |
805,810 |
Darrell | |
7,575 | |
619,256 |
Geiselhart | |
989 | |
80,851 |
Pension plan compensation
The NEOs participate in the Spire Missouri Employees’
Retirement Plan, a tax-qualified defined benefit plan sponsored by Spire Missouri Inc.
Grandfathered pension benefit
Effective January 1, 2009, Spire Missouri Inc.
amended its plan to change the way benefits are calculated. Prior to that date, the Plan provided benefits based on a final pay
formula that used a participant’s years of credited service and average final compensation. The average final compensation
is the highest consecutive three-year average of the final 10 years of employment. Participants’ years of credited service
under the plan were frozen as of December 31, 2008; however, the average final pay was not frozen and will continue to be based
on the highest three-year average in the final 10 years of employment. Benefits under the plan formula in effect prior to January
1, 2009 are referred to as “grandfathered benefits.” With respect to annual incentive compensation paid on or after
January 1, 2013, average final compensation will exclude such incentive compensation for purposes of the grandfathered benefit.
Of the NEOs, only Mr. Darrell and Mr. Geiselhart have grandfathered benefits.
While normal retirement age under the plan is
age 65, participants may retire at age 60 with 10 or more years of service without reduction of the grandfathered benefit for early
retirement. Retirement at age 60 is assumed in calculating the grandfathered benefits for Mr. Darrell and Mr. Geiselhart.
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Cash balance benefit
On and after January 1, 2009, the plan uses
a cash balance formula that provides: (i) a cash balance credit between 4 and 10 percent of compensation (base salary and annual
incentive compensation) depending on the participant’s age, and (ii) interest credits using a rate equal to an average of
corporate bond rates published by the Internal Revenue Service. Benefits under the plan formula in effect on and after January
1, 2009 are referred to as “current benefits.” The cash balance credit and interest credit are applied as of December
31 of each year, on an average monthly basis, with interest compounded monthly. During fiscal year 2018, cash balance credits were
as follows:
Sitherwood | |
| 9 | % |
Rasche | |
| 9 | |
Lindsey | |
| 8 | |
Darrell | |
| 10 | |
Geiselhart | |
| 9 | |
The early retirement amount of the current benefits
will be the amount credited in the participant’s cash balance account in the case of a lump sum payment. If an annuity is
taken at early retirement, the benefit will be the actuarial equivalent of the lump sum amount.
Supplemental retirement benefits
The Code generally places a limit on the amount
of the annual pension that can be paid from a tax-qualified defined benefit plan as well as on the amount of annual earnings that
can be used to calculate a pension benefit. Since 1977, Spire Missouri Inc. has maintained a Supplemental Retirement Benefit Plan,
a non-qualified plan that covers benefits that accrued through December 31, 2004 and that pays eligible employees the difference
between the amount payable under the tax-qualified plan and the amount they would have received without the limits on the qualified
plan or without any deferred income plan contributions. Spire Missouri Inc. adopted the Supplemental Retirement Benefit Plan II
to comply with Code Section 409A, which covers grandfathered benefits accrued on and after January 1, 2005. It also adopted the
Cash Balance Supplemental Retirement Benefit Plan to provide similar supplemental benefits for those that accrue on and after January
1, 2009 under the current benefit formula.
Please note the following relating to the benefits
shown in the table below:
• |
the Supplemental Retirement Benefit Plans are unfunded and
subject to reduction or forfeiture in the event of the Company’s bankruptcy; |
|
|
• |
the years of credited service in the table are the same as
the executives’ years of actual service as of December 31, 2008, when years of service were frozen for all participants;
|
|
|
• |
the compensation used to determine current and grandfathered
benefits under the Plans include the amounts in the “Salary” column and the amount attributable to payments under
the AIP in the “Non-equity incentive plan compensation” column (for current benefits only after January 1, 2013)
in the “Summary compensation table”; and |
|
|
• |
executives at the Company are subject to mandatory retirement
at age 65 unless the Board of Directors asks them to continue working past that age. |
The pension benefits in the table below were
calculated using:
• |
the September 30, 2018 measurement date; |
|
|
• |
the same assumptions as described in Note 2, Pension Plans
and Other Post-retirement Benefits, of the consolidated financial statements in the 2018 10-K for the fiscal year ended September
30, 2018, except retirement at the greater of 60 or the executive’s actual age as noted above was used for the grandfathered
benefit and, as required, no income growth assumption nor any forfeiture assumption was used; |
|
|
• |
for the grandfathered benefit, the greater of: |
|
– |
years of service, multiplied by the sum of 1.7 percent of Social Security covered compensation (a 35-year average of Social Security maximum bases) plus 2.0 percent of the highest average normal compensation during a 36-month period in the 10 years prior to the measurement date in excess of Social Security covered compensation; and |
|
|
|
|
– |
the highest average normal compensation during a 36-month period in the 10 years prior to the measurement date, multiplied by (i) years of service, and (ii) the benefit factor of 2.1 percent, less the executive’s estimated Social Security benefit multiplied by 1.25 percent for each year of service up to a maximum of 40 years. |
• |
the assumption of a 90 percent probability that the participant elects a lump sum equivalent of the monthly annuity amount described above. |
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Pension benefits table
Name | |
Plan name | |
No.
of years credited service | (1) |
Present value of accumulated benefit | |
Payments during last year |
Sitherwood | |
Laclede Gas Company Employees’ Retirement Plan | |
– | |
$189,350 | |
$ – |
| |
Supplemental Retirement Benefit Plans | |
– | |
792,411 | |
– |
Rasche | |
Laclede Gas Company Employees’ Retirement Plan | |
– | |
239,021 | |
– |
| |
Supplemental Retirement Benefit Plans | |
– | |
179,197 | |
– |
Lindsey | |
Laclede Gas Company Employees’ Retirement Plan | |
– | |
143,165 | |
– |
| |
Supplemental Retirement Benefit Plans | |
– | |
176,717 | |
– |
Darrell | |
Laclede Gas Company Employees’ Retirement Plan | |
4.67 | |
684,949 | |
– |
| |
Supplement Retirement Benefit Plans | |
4.67 | |
416,010 | |
– |
Geiselhart | |
Laclede Gas Company Employees’ Retirement Plan | |
2.33 | |
451,405 | |
– |
| |
Supplemental Retirement Benefit Plans | |
2.33 | |
183,798 | |
– |
(1) |
As noted above, years of credited service were frozen as of December 31, 2008. |
Non-qualified deferred compensation
Executives are eligible to participate in the
deferred compensation plans offered by the Company.
Spire Deferred Income Plan
The Spire Inc. Deferred Income Plan covers participant
deferrals made on and after January 1, 2005 and is intended to comply with Code Section 409A.
Executive deferrals
Effective January 1, 2015, the Deferred Income
Plan allows participants, including the NEOs, to defer up to 50 percent of annual salary, and up to 90 percent of Annual Incentive
Plan compensation.
Prior to 2015, participants could defer up to
15 percent of annual salary.
Plan investments
Effective January 1, 2016, the Spire Deferred
Income Plan provides participant investment options that mirror returns in certain 401(k) plan investment funds and Company stock.
Participants may also elect an annual fixed interest rate based on Moody’s Corporate Bond Rate not to exceed 120 percent
of the Applicable Federal Rate.
Deferrals made
prior to 2016 earn investment income equal to the greater of:
• |
the Moody’s Corporate Bond Rate, plus an interest credit ranging from 1 to 3 percent depending
on the age of the participant at the start of the specific plan year, or |
• |
a guaranteed interest rate based on the age of the participant at the start of the specific plan
year. |
Plan benefits
The Spire Deferred Income Plan provides retirement
benefits payable in annual installments over a 15-year period based on the deferred account balance as of the date of retirement.
In the event of any other termination of employment
prior to age 55, the executive will receive the deferred account balance reduced by any additional interest credits payable in
a lump sum.
The Spire Deferred Income Plan provides:
• |
death and disability benefits payable in a lump sum |
|
|
• |
a lump sum payment if the participant is terminated within two years of a change in control |
For participant deferrals made after calendar
2015, the disability and change in control termination benefits are equal to the deferred account balance at the date of disability
or termination.
For participant deferrals made after calendar
year 2015, the death benefits are equal to the deferred account balance plus participant deferrals projected from the date of death
to the end of the plan year in which death occurred.
For participant deferrals made prior to calendar
year 2016, the disability deferred account balance is credited with investment income through the end of the plan year in which
disability occurs.
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The benefits payable for participant deferrals
prior to calendar year 2016 upon death, disability and change in control termination are equal to the greater of:
• |
the present value of the deferred account balance projected through age 65, or |
|
|
• |
the deferred account balance accumulated through the respective termination date. |
Laclede Gas Company Deferred Income Plan II
The Laclede Gas Company Deferred Income Plan
II (“Deferred Income Plan II”) covers participant deferrals prior to January 1, 2005.
The Deferred Income Plan II provides similar
benefits as the Spire Deferred Income Plan with the following exceptions:
• |
death and disability benefits are payable in 15 annual installments, and |
|
|
• |
retirement benefits are payable in 15 annual installments; benefits continue for the participant’s lifetime following retirement at age 65 or later (at least 15 annual installments). |
The amounts in the table below include contributions
by the executive and investment earnings under both deferred compensation plans.
Non-qualified deferred compensation table
Name | |
| |
Executive
contributions in
last FY | (1) |
Company contributions in last FY | |
Aggregate
earnings in
last FY | (2) |
Aggregate withdrawals/ distributions | |
Aggregate balance at last FYE |
Sitherwood | |
Deferred Income Plan | |
$329,135 | |
$ – | |
$117,943 | |
$ – | |
$1,700,493 |
Rasche | |
Deferred Income Plan | |
205,404 | |
– | |
44,388 | |
– | |
785,438 |
Lindsey | |
Deferred Income Plan | |
24,958 | |
– | |
4,142 | |
– | |
78,837 |
Darrell | |
Deferred Income Plans | |
67,615 | |
– | |
21,576 | |
– | |
357,716 |
Geiselhart | |
Deferred Income Plan | |
174,829 | |
– | |
88,100 | |
– | |
998,412 |
(1) |
The amounts in this column are also included in the “Salary” column of the “Summary compensation table”. |
(2) |
The amounts attributable to above-market interest on non-qualified deferred compensation in the “Change in pension value” and “Non-qualified deferred compensation earnings” column in the “Summary compensation table” and identified in footnote 2 to that table are also included in this column. |
Potential payments upon termination or change
in control
This section describes the potential payments
and benefits to which the NEOs would have been entitled upon termination of employment, including termination of employment following
a change in control, as if such termination had occurred on the last trading day of our fiscal year (September 30, 2018) using
the New York Stock Exchange closing price of $73.55 per share of the Company’s stock on that date. The discussion does not
include payments and benefits to the extent they are generally provided on a non-discriminatory basis to salaried employees upon
termination of employment. The following table sets forth the potential payments to the NEOs upon the termination of their employment
with the Company, including a termination of employment following a change in control. The table does not include retirement plan
benefits payable to the executives shown in the “Pension benefits table”.
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| |
Cash severance | (1) |
Annual
incentive plan payment | (2) |
Equity grants | (3) |
Deferred
income plan | (4) |
Health
benefits | (5) |
Reduction
due to 280G | (6) |
Total payment |
Suzanne Sitherwood | |
| |
| |
| |
| |
| |
| |
|
Voluntary termination | |
$ — | |
$875,000 | |
$2,741,475 | |
$1,701,983 | |
$ — | |
$ — | |
$5,318,458 |
Retirement | |
— | |
875,000 | |
2,741,475 | |
1,701,983 | |
— | |
— | |
5,318,458 |
Disability | |
— | |
875,000 | |
3,595,881 | |
1,765,874 | |
— | |
— | |
6,236,755 |
Death | |
— | |
875,000 | |
3,595,881 | |
1,789,227 | |
— | |
— | |
6,260,108 |
Involuntary termination | |
1,750,000 | |
875,000 | |
2,741,475 | |
1,701,983 | |
29,538 | |
— | |
7,097,995 |
Change-in-control | |
5,250,000 | |
875,000 | |
4,127,158 | |
1,758,938 | |
44,306 | |
— | |
12,055,402 |
Steven P. Rasche | |
| |
| |
| |
| |
| |
| |
|
Voluntary termination | |
— | |
248,400 | |
830,545 | |
785,965 | |
— | |
— | |
1,864,910 |
Retirement | |
— | |
248,400 | |
830,545 | |
785,965 | |
— | |
— | |
1,864,910 |
Disability | |
— | |
248,400 | |
1,088,991 | |
799,163 | |
— | |
— | |
2,136,554 |
Death | |
— | |
248,400 | |
1,088,991 | |
813,228 | |
— | |
— | |
2,150,619 |
Involuntary termination | |
— | |
248,400 | |
830,545 | |
785,965 | |
— | |
— | |
1,864,910 |
Change-in-control | |
2,421,360 | |
248,400 | |
1,235,806 | |
794,120 | |
— | |
(653,719) | |
4,045,967 |
Steven L. Lindsey | |
| |
| |
| |
| |
| |
| |
|
Voluntary termination | |
— | |
264,000 | |
— | |
78,158 | |
— | |
— | |
343,058 |
Retirement | |
— | |
264,000 | |
— | |
78,158 | |
— | |
— | |
343,058 |
Disability | |
— | |
264,000 | |
1,207,814 | |
81,159 | |
— | |
— | |
1,553,873 |
Death | |
— | |
264,000 | |
1,207,814 | |
83,744 | |
— | |
— | |
1,556,458 |
Involuntary termination | |
441,500 | |
264,000 | |
— | |
78,158 | |
20,395 | |
— | |
804,953 |
Change-in-control | |
1,412,800 | |
264,000 | |
1,449,104 | |
80,687 | |
40,790 | |
— | |
3,248,281 |
Mark C. Darrell | |
| |
| |
| |
| |
| |
| |
|
Voluntary termination | |
— | |
193,500 | |
712,130 | |
357,805 | |
— | |
— | |
1,263,435 |
Retirement | |
— | |
193,500 | |
712,130 | |
357,805 | |
— | |
— | |
1,263,435 |
Disability | |
— | |
193,500 | |
934,047 | |
380,239 | |
— | |
— | |
1,507,786 |
Death | |
— | |
193,500 | |
934,047 | |
393,274 | |
— | |
— | |
1,520,821 |
Involuntary termination | |
— | |
193,500 | |
712,130 | |
357,805 | |
— | |
— | |
1,263,435 |
Change-in-control | |
2,020,016 | |
193,500 | |
1,060,022 | |
375,413 | |
— | |
— | |
3,648,951 |
Michael C. Geiselhart | |
| |
| |
| |
| |
| |
| |
|
Voluntary termination | |
— | |
200,000 | |
469,065 | |
996,182 | |
— | |
— | |
1,665,247 |
Retirement | |
— | |
200,000 | |
469,065 | |
996,182 | |
— | |
— | |
1,665,247 |
Disability | |
— | |
200,000 | |
616,042 | |
1,054,205 | |
— | |
— | |
1,870,247 |
Death | |
— | |
200,000 | |
616,042 | |
1,061,630 | |
— | |
— | |
1,877,672 |
Involuntary termination | |
— | |
200,000 | |
469,065 | |
996,182 | |
— | |
— | |
1,665,247 |
Change-in-control | |
1,093,208 | |
200,000 | |
722,813 | |
1,043,169 | |
— | |
— | |
3,059,180 |
(1) |
Ms. Sitherwood and Mr. Lindsey are participants in the Executive Severance Plan, which provides for a cash payment in the event of an involuntary termination, whether by the Company without cause, or by the executive for good reason, the amount of which is increased if such involuntary termination occurs within 24 months after a change in control. In the event of involuntary termination, Ms. Sitherwood’s cash payment would be based on a multiple of two times annual base salary. Mr. Lindsey’s cash payment would be based on a multiple of one times annual base salary. In the event of involuntary termination within two years following a change in control, Ms. Sitherwood’s cash payment would be based on a multiple of three times annual base salary plus target AIP. Mr. Lindsey’s cash payment would be based on a multiple of two times annual base salary plus target AIP. |
|
Messrs. Rasche, Darrell and Geiselhart are covered by the Management Continuity Protection Plan (MCPP). The potential payments to these officers are limited to termination within 54 months for Mr. Rasche and 42 months for Mr. Darrell and Mr. Geiselhart after a change in control. This cash payment for Mr. Rasche is equal to 2.99 times average annual W-2 compensation, and this cash payment for Mr. Darrell and Mr. Geiselhart is equal to 2.0 times average annual W-2 compensation. |
(2) |
Upon a change in control, any awards under the AIP are deemed earned at a prorated target based on the number of completed days in the fiscal year prior to the change in control. This payment takes place whether or not a termination occurs. The AIP’s definition of change in control mirrors the definition in the Executive Severance Plan. |
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|
If a participant’s employment ceases due to termination without cause or by death, disability or retirement, the participant is eligible to earn a prorated award based upon Company performance and the participant’s achievement of individual metrics. |
(3) |
Participants, including the NEOs, have outstanding PCSUs and TBRSs under the EIP. The EIP uses the same definition of change in control that is used in the AIP and the Executive Severance Plan. |
|
Performance-Contingent Stock Units. These awards generally provide for vesting of stock units on the third anniversary of the grant date that falls after the end of the performance period, to the extent that the Committee determines and certifies that the performance criteria have been met or exceeded. A participant forfeits all non-vested awards upon the participant’s termination of employment for cause. |
|
If during the performance period a participant dies or leaves the Company due to retirement or disability, the participant remains eligible to earn a prorated award based on the number of full months as a participant during the performance period, as the Committee may determine, if the performance contingency is satisfied. |
|
In the event of a change in control, any outstanding awards shall be deemed earned and vested at a prorated target, based on the number of months completed in the performance period at the time of the change in control, if the award is not assumed or replaced with a comparable award by the successor or surviving entity. If the successor or surviving entity does not assume or replace the award, the award will trigger a benefit at a prorated target based on the number of full months as a participant if the participant is involuntarily terminated without cause within two years of the change in control. Dividend equivalents on PCSUs are accrued throughout the performance period and paid to the participant in proportion to the amount of shares actually earned at vesting, up to the amount of dividends that would have been paid on the target number of shares. In the event of a change in control, accrued dividend equivalents would be paid on the same prorated basis as mentioned above. The same amounts would be payable in the event of a participant’s death, retirement or termination of employment due to disability if the target level of performance is achieved. As Mr. Lindsey is not retirement-eligible, there is no accelerated vesting of any PCSUs. As a result of being retirement-eligible at the time of any termination, PCSU grants would vest on a pro-rata basis for the following individuals, at a value of: |
|
Sitherwood | |
$2,565,260* |
|
Rasche | |
776,197* |
|
Darrell | |
665,505* |
|
Geiselhart | |
439,993* |
|
*These amounts are included in the “Equity grants” column. |
|
Time-Based Restricted Stock. These shares generally provide for vesting on the third anniversary of the grant date. A participant forfeits all non-vested shares upon the participant’s termination of employment for any reason prior to vesting, other than as a result of a change in control or mandatory retirement requirements. None of the NEOs were subject to mandatory retirement requirements during fiscal year 2018. |
|
If a participant’s employment is terminated by the Company without cause within two years following a change in control, the shares become vested on the earlier of the vesting date or the date of the change in control. If a participant’s employment is terminated due to mandatory retirement requirements, the shares become vested based on the number of full months from the award date to the participant’s retirement. |
(4) |
Under the terms of the deferred income plans, if a participant’s employment is terminated within two years of a change in control, the participant will receive a lump sum payment equal to the greater of (i) the present value of the account balance projected through age 65 using a guaranteed minimum rate of return, or (ii) the actual account balance accumulated through the termination date. However, for deferrals made on and after January 1, 2015, the lump sum payment would be equal to the participant’s account balance plus the present value of employer contributions and earnings credits that would have been made or earned on such account balance through age 65. |
|
Upon retirement, the participant will receive the participant’s account balance in 15 installments unless the participant elected a lump sum for deferrals made on and after January 1, 2005. |
|
In the event of death or disability, a participant or the participant’s beneficiary will receive the participant’s account balance plus the projected earnings that would have been payable if the participant had retired at age 65. |
|
Upon any other termination of employment, the participant will receive all deferred amounts plus interest accrued at the Moody’s rate applicable to each plan year. |
|
The amounts reflected in this table are the amounts that each executive would receive if the executive terminated on September 30, 2018. The account balance as of the end of fiscal year 2018 is reflected in the “Non-qualified deferred compensation table” above. |
(5) |
The Executive Severance Plan provides that the Company will provide a cash payment equal to a certain number of months of continued medical, dental and vision coverage. In the event of involuntary termination, absent a change in control, Ms. Sitherwood would receive a cash payment equal to 24 months of continued medical, dental and vision benefits, and Mr. Lindsey would receive a cash payment equal to 12 months of continued medical, dental and vision benefits. In the event of involuntary termination within two years following a change in control, Ms. Sitherwood would receive a cash payment equal to 36 months of continued medical, dental and vision benefits, and Mr. Lindsey would receive a cash payment equal to 24 months of continued medical, dental and vision benefits. The table reflects these cash payments under the “Health benefits” column. The MCPP, which governs the severance arrangements for Messrs. Rasche, Darrell and Geiselhart, does not provide for Company-paid health benefits or any cash equivalent upon termination. |
(6) |
Code Section 280G provides guidelines that govern payments triggered by a change in control, known as “parachute payments.” If such payments exceed 2.99 times the annual average compensation for certain individuals, the payments may trigger adverse tax consequences and excise taxes. The Company does not provide any gross-up payments for such adverse tax consequences or excise taxes under any of the arrangements. |
|
The Executive Severance Plan provides for a “best of net” calculation whereby the reduction in the severance calculation is determined to be the better of a reduction of the calculated amount to the amount permissible under Code Section 280G or the cost to the executive of paying the 20 percent excise tax on the calculated severance payment. Based on the exemption under Code Section 280G for severance pay that is tied to a non-competition agreement, we believe that Ms. Sitherwood’s severance payment and other change in control benefits would not exceed the limits under Code Section 280G. We also believe that Mr. Lindsey’s severance payment and other change in control benefits would not exceed the limits under Code Section 280G. |
|
The MCPP provides for the reduction of the calculated severance value to the amount permissible under Code Section 280G. This amount represents the amount the severance payment to Mr. Rasche would be reduced. No reduction is required for Mr. Darrell or Mr. Geiselhart. |
Spire Inc. | 2018 Proxy
Statement ![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/footer.jpg) |
49 |
CEO pay ratio
Under Section 953(b) of the Dodd-Frank Wall
Street Reform and Consumer Protection Act and Item 402(u) of Regulation S-K, we are required to provide the ratio of the annual
total compensation of Ms. Sitherwood, president and chief executive officer, to the annual total compensation of the median
employee of the Company.
For fiscal year 2018, the median annual total
compensation of all employees of the Company and its subsidiaries (other than the president and chief executive officer) was $89,539.
Ms. Sitherwood’s total annual compensation for fiscal year 2018 was $4,016,839. Based on this information, the ratio
of the compensation of the chief executive officer to the median annual total compensation of all other employees was estimated
to be 45 to 1.
To identify the median employee, and to determine
the total annual compensation of such employee, we used the following methodology. We identified our median employee as of the
end of the fiscal year, September 30, 2018, using our entire workforce of 3,366 employees, and base pay, plus annual and long-term
incentive compensation, for the period of October 1, 2017 through September 30, 2018. With respect to the annual total compensation
of Ms. Sitherwood, we used the amount reported in the “Total” column of the “Summary compensation table”.
SEC rules for identifying the median employee
and calculating the pay ratio allow companies to apply various methodologies and various assumptions and, as a result, the pay
ratio reported by the Company may not be comparable to the pay ratio reported by other companies.
www.SpireEnergy.com |
Spire Inc. | 2018 Proxy
Statement ![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/footer.jpg) |
50 |
Proposal 3: Ratification of appointment
of independent registered public accountant
The Board of Directors,
upon recommendation of its audit committee, recommends that you ratify the appointment of Deloitte independent registered public
accountant, to audit the books, records and accounts of Spire Inc. and its subsidiaries for the fiscal year ending September 30,
2019. A representative of Deloitte will be present at the annual meeting, will have an opportunity to make a statement if he or
she desires to do so, and will be available to respond to appropriate questions.
![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/check1.jpg) |
Your Board of Directors recommends a vote “FOR” ratification
of the appointment of Deloitte & Touche LLP as independent registered public accountant. |
Audit committee report
The audit committee of the Board of Directors
is composed of five directors who are independent as required by and in compliance with the applicable listing standards of the
New York Stock Exchange and the rules of the SEC. The names of the committee members as of the date of this proxy statement appear
at the end of this report. The committee operates under a written charter.
The primary function of the audit committee
is oversight. Management is responsible for the preparation, presentation and integrity of the Company’s financial statements.
Management is also responsible for maintaining appropriate accounting and financial reporting practices and policies; for establishing
internal controls and procedures designed to provide reasonable assurance that the Company is in compliance with accounting standards
and applicable laws and regulations; and for assessing the effectiveness of the Company’s internal control over financial
reporting.
Deloitte, the Company’s independent registered
public accounting firm, is responsible for planning and performing an independent audit of the financial statements in accordance
with the standards of the PCAOB and to issue reports expressing an opinion, based on its audit (i) as to the conformity of the
audited financial statements with generally accepted accounting principles and (ii) on the effectiveness of the Company’s
internal control over financial reporting. The committee is responsible for the appointment, compensation and oversight of Deloitte.
In fulfilling its oversight responsibilities,
the committee reviewed and discussed the audited financial statements in the 2018 10-K with management and Deloitte, which included
a discussion of the critical accounting policies and practices used by the Company. The committee also discussed with Deloitte
the matters required to be discussed under the applicable PCAOB standards.
Deloitte has provided the committee with the
written disclosures and letter required by the applicable requirements of the PCAOB regarding the independent registered public
accounting firm’s communications with the audit committee concerning independence, and the committee has discussed with Deloitte
its independence.
Based on the reviews and discussions referred
to above, the committee recommended to the Board of Directors that the audited financial statements referred to above be included
in the 2018 10-K.
Audit committee
Maria V. Fogarty, Chair
Edward L. Glotzbach
Rob L. Jones
Brenda D. Newberry
John P. Stupp Jr.
Spire Inc. | 2018 Proxy Statement ![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/footer.jpg) |
51 |
Fees of independent registered public accountant
The following table displays the aggregate fees
for professional audit services for the audit of the financial statements for the fiscal years ended September 30, 2018 and 2017,
and fees incurred for other services during those periods by the Company’s independent registered public accounting firm,
Deloitte.
|
2018 |
2017 |
Audit fees |
$ 2,200,000 |
$ 2,200,000 |
Audit-related
fees(1) |
147,800 |
142,000 |
Tax fees(2) |
29,256 |
31,484 |
All other fees(3) |
1,895 |
1,895 |
Total |
$ 2,378,951 |
$ 2,375,379 |
(1) |
Audit-related fees consisted
of comfort letters, consents for registration statements, work paper reviews and audit consulting. |
(2) |
Tax fees consisted primarily
of assistance with tax planning, compliance and reporting. |
(3) |
All other fees consisted
of an annual subscription for the accounting technical library. |
The total fees for fiscal year 2018 were slightly
higher than 2017. The increase in the audit-related fees is the result of increased fees related to the adoption of the new revenue
standard and PCAOB standard. This increase was partially offset by lower fees for comfort letters and consents. The audit committee
pre-approved all of the fees for fiscal years 2018 and 2017. The Policy Regarding the Approval of Independent Registered Public
Accountant Provision of Audit and Non-Audit Services is described earlier in this proxy statement.
www.SpireEnergy.com |
Spire Inc. | 2018 Proxy
Statement ![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/footer.jpg) |
52 |
Other matters
About the annual shareholders meeting
This proxy statement is furnished to solicit
proxies by the Board of Directors of Spire for use at the annual meeting of its shareholders to be held on January 31, 2019, and
at any adjournment or postponement of the meeting. The meeting will be held at the Company’s principal offices at 700 Market
Street, St. Louis, MO 63101 at 10:00 a.m. Central Standard Time. This proxy statement is first being made available to shareholders
with the annual report for its fiscal year 2018 on or about December 14, 2018.
Questions and answers about the annual meeting
Who is soliciting my vote?
The Board of Directors of the Company is soliciting
your vote for the Company’s annual meeting of shareholders.
When will the meeting take place?
The annual meeting will be held on Thursday,
January 31, 2019 at 10:00 a.m. Central Standard Time at the Company’s principal offices at 700 Market Street, St. Louis,
MO 63101.
Who is entitled to vote at the annual meeting?
If you owned Company stock at the close of business
on November 30, 2018, you may attend and vote at the annual meeting.
Why did I receive a notice in the mail regarding
the internet availability of proxy materials instead of a paper copy of proxy materials?
Under the “Notice and Access” rules
of the Securities and Exchange Commission (“SEC”), we are permitted to furnish proxy materials, including this proxy
statement and our Annual Report on Form 10-K, to our shareholders, by providing a Notice of Internet Availability of Proxy Materials.
Most shareholders will not receive printed copies unless they request them. The Notice instructs you as to how you may access proxy
materials on the internet and how you may submit your proxy via the internet. If you would like to receive a paper or electronic
copy of our proxy materials, you should follow the instructions for requesting such materials in the Notice. Any request to receive
proxy materials by mail or electronically will remain in effect until you revoke it.
If more than one shareholder lives in my household
and I have elected to receive printed copies of the proxy materials, how can I obtain an extra copy of the proxy materials?
For those shareholders that have elected to
receive printed copies of our proxy materials, under the rules of the SEC, we are permitted to deliver a single copy of the Notice
or this proxy statement and our Annual Report on Form 10-K to multiple shareholders that share the same address, unless we have
received contrary instructions from any such shareholder. This practice, known as “householding,” is designed to reduce
our printing and postage costs. Upon written or oral request, we will mail a separate copy of this proxy statement and our Annual
Report on Form 10-K to any shareholder at a shared address to which a single copy of each document was delivered. You may call,
toll free, 866-540-7095, or write to Broadridge, Householding Department, 51 Mercedes Way, Edgewood, NY 11717 to request a separate
copy.
Spire Inc. | 2018 Proxy Statement ![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/footer.jpg) |
53 |
Can I vote my shares by filling out and returning
the notice?
No, the Notice identifies the items to be voted
on at the annual meeting; you cannot vote by marking the Notice and returning it. The Notice provides instructions on how to: (i)
vote by internet, (ii) vote by telephone and (iii) request and return a paper proxy card or voting instruction card.
Why didn’t I receive a notice in the mail
regarding the internet availability of proxy materials?
If you previously elected to access proxy materials
over the internet, you will not receive a Notice in the mail. You should have received an email with links to the proxy materials
and online proxy voting. Also, if you previously requested paper copies of the proxy materials or if applicable regulations required
delivery of the proxy materials, you will not receive the Notice.
If you received a paper copy of the proxy materials
or the Notice by mail, you can eliminate paper mailings in the future by electing to receive an email that will provide internet
links to these documents. Opting to receive future proxy materials online will save us the cost of producing and mailing documents
and help us conserve natural resources. Enrollment for electronic delivery is effective until canceled.
Who is a shareholder of record?
You are a shareholder of record if your shares
are registered directly in your name with our transfer agent, Computershare. You will receive a Notice or these proxy materials
by delivery directly to you. You are entitled to vote your shares by internet, telephone, in person at the meeting, or, if you
have requested printed proxy materials, by completing and returning the enclosed proxy card.
Who is a beneficial owner?
You are a beneficial owner if you hold your
stock in a stock brokerage account, or through a bank or other nominee. Your shares are held in “street name” and the
Notice or these proxy materials are being sent to you by your broker, bank or nominee, who is considered the shareholder of record.
As a beneficial owner, you have the right to direct your broker, bank or nominee on how to vote. You may attend the annual meeting,
but you will need to bring a letter or statement from that firm that shows you were a beneficial owner of Company shares on November 30,
2018. You may not vote these shares in person at the annual meeting unless you request, complete and deliver a legal proxy from
your broker, bank or nominee. If you requested printed proxy materials, your broker, bank or nominee provided a voting instruction
card for you to use in directing the broker, bank or nominee on how to vote your shares.
How many shares must be present to hold the
annual meeting?
A majority of our issued and outstanding shares
entitled to vote at the annual meeting as of the record date must be present in person or represented by proxy to have a quorum.
As of November 30, 2018, there were 50,706,614 shares outstanding. Both abstentions and broker non-votes are counted as present
for purposes of determining quorum.
How many votes are required for each item of
business?
Election of directors
The election of directors requires the affirmative
vote FOR each nominee of a majority of those shares entitled to vote and present at the meeting in person or represented by proxy.
Withheld votes and abstentions will have the effect of votes against the nominee, while broker non-votes will not be considered
represented and will have no effect on the outcome.
Advisory approval of the compensation of our
named executive officers
This proposal, which is non-binding, requires
the affirmative vote of a majority of the shares entitled to vote and present in person or represented by proxy at the meeting
to be approved. Abstentions will have the effect of a vote against the proposal, while broker non-votes will not be counted as
votes cast and will have no effect on the outcome.
Ratification of appointment of independent registered
public accountant
This proposal requires an affirmative vote FOR
of a majority of those shares entitled to vote and present at the meeting in person or represented by proxy to be approved. Abstentions
will have the effect of a vote against the proposal.
www.SpireEnergy.com |
Spire Inc. | 2018 Proxy
Statement ![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/footer.jpg) |
54 |
Voting matters
How do I vote?
You may vote on the internet, by telephone,
by mail, or by attending the annual meeting and voting by ballot. The internet and telephone voting procedures are designed to
authenticate that you are a shareholder by use of a control number. The procedures allow you to confirm that your instructions
have been properly recorded. If you vote by telephone or internet, you do not need to mail back your proxy card or voting instruction
card.
By internet
If you have internet access, you may submit
your proxy by following the instructions provided in the Notice, or, if you requested printed proxy materials, by following the
instructions provided with your proxy materials and on your proxy card or voting instruction card. On the internet voting site,
you can confirm that your instructions have been properly recorded. If you vote on the internet, you can also request electronic
delivery of future proxy materials.
By telephone
You can vote by telephone by following the instructions
provided in the Notice, or, if you requested printed proxy materials, by following the instructions provided with your proxy materials
and on your proxy card or voting instruction card.
By mail
If you elected to receive printed proxy materials
by mail, you may choose to vote by mail by marking your proxy card or voting instruction card, dating and signing it, and returning
it in the postage-paid envelope provided. Please allow sufficient time for mailing if you decide to vote by mail.
At the annual meeting
The method or timing of your vote will not limit
your right to vote at the annual meeting if you attend the annual meeting and vote in person. However, if your shares are held
in the name of a bank, broker or the nominee, you must obtain a legal proxy, executed in your favor, from the holder of record
to be able to vote at the annual meeting. You should allow yourself enough time prior to the annual meeting to obtain this proxy
from the holder of record.
The shares voted electronically, by telephone
or represented by proxy cards received, properly marked, dated, signed and not revoked, will be voted at the annual meeting.
If you hold your shares through a broker,
please note that your broker will not be permitted to vote on your behalf for the first two proposals unless you provide instructions
as to how to vote your shares. Voting your shares is important to ensure that you are represented at the meeting. If you have any
questions about the voting process, please contact the broker where you hold your shares.
Can I vote my shares that are held in the Company’s
dividend reinvestment and stock purchase plan or any of the Company’s 401(k) plans?
If you participate in the Company’s dividend
reinvestment and stock purchase plan or in the Company Stock Fund of the Spire Employee Savings Plan, you are entitled to vote
those shares. If you do not give voting instructions for shares owned by you through this plan, none of your shares held in the
plan will be voted. To allow sufficient time for voting by the administrator and trustee of the plan, your voting instructions
must be received by January 29, 2019.
How can I revoke or change my vote?
You may revoke your proxy at any time before
it is voted at the meeting by:
• |
Sending timely written notice of revocation to the corporate secretary; |
• |
Submitting another timely proxy by telephone, internet or proxy card; or |
• |
Attending the annual meeting and voting in person. If your shares are held in the name of a bank, broker or other holder of record, you must obtain a proxy executed in your favor from the holder of record to be able to vote at the meeting. |
How many votes do I have?
You are entitled to one vote for each share
that you owned on November 30, 2018.
Spire Inc. | 2018 Proxy
Statement ![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/footer.jpg) |
55 |
What happens if I don’t give specific
voting instructions?
Shareholders of record
If you are a shareholder of record and you either
indicate that you want to vote as recommended by the Board of Directors or you return a signed proxy card but do not indicate how
you want to vote, then your shares will be voted in accordance with the recommendations of the Board of Directors on all matters
presented in this proxy statement and as the proxy holders may determine in their discretion regarding any other matters properly
presented for a vote at the meeting. If you indicate a choice for any matter to be acted upon, the shares will be voted in accordance
with your instructions.
Beneficial owners
If you hold shares in street name and do not
provide instructions, your shares may constitute “broker non-votes” on certain proposals. Generally, broker non-votes
occur on a non-routine proposal where a broker is not permitted to vote on that proposal without instructions from the beneficial
owner and instructions are not given. Broker non-votes are considered present at the annual meeting, but not as voting on a matter.
Thus, broker non-votes are counted as present for purposes of determining whether there is a quorum, but are not counted for purposes
of determining whether a matter has been approved. Broker non-votes will not affect the outcome of the votes on the first two proposals.
If you do not provide instructions to your broker, under the rules of the New York Stock Exchange, your broker will not be authorized
to vote the shares it holds for you with respect to the first two proposals. Your broker has the discretion, however, to vote the
shares it holds for you on the ratification of the independent registered public accountant.
Who counts the votes?
We hired Broadridge Investor Communications
as an independent tabulator of votes to ensure confidentiality of the voting process. However, if you write comments on your proxy
card, the comments will be shared with us. We also have hired IVS Associates, Inc. to serve as independent inspector of elections.
Requirements for submission of proxy proposals,
nomination of directors and other business
Under the rules of the SEC, shareholder proposals
intended to be included in the proxy statement for the annual meeting of shareholders in January 2020 must be received by the corporate
secretary of Spire Inc. at its principal office at the address set forth on page 19 of this proxy statement by August 13, 2019.
Also, the procedures to be used by
shareholders to recommend nominees to the corporate governance committee are outlined on page 19 of this proxy statement. If
a shareholder seeks to nominate a person or make a shareholder proposal from the floor of the annual meeting in January 2020,
notice must be received by the corporate secretary at the Company’s principal business offices no later than November
1, 2019 and not before October 1, 2019 (not less than 90 days nor more than 120 days, respectively, prior to January 30,
2020). Also, such proposal must be, under law, an appropriate subject for shareholder action to be brought before the
meeting.
The chairman of the Board may refuse to allow
the transaction of any business or to acknowledge the nomination of any person not made in compliance with the procedures set forth
in the Company’s bylaws.
Proxy solicitation
We will pay the expense of soliciting proxies.
Proxies may be solicited on our behalf by officers or employees in person or by email, telephone, fax or special letter. We have
hired Morrow Sodali LLC, 470 West Avenue, Stamford, CT 06902, to assist us in the solicitation of proxies for a fee of $7,500,
plus reimbursement of out-of-pocket expenses for those services.
www.SpireEnergy.com |
Spire Inc. | 2018 Proxy
Statement ![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/footer.jpg) |
56 |
Helpful resources
Board of Directors |
|
Spire Board |
https://www.spireenergy.com/officers-directors |
Board committee charters |
|
Audit committee |
http://investors.spireenergy.com/governance/governance-documents |
Compensation committee |
http://investors.spireenergy.com/governance/governance-documents |
Corporate governance committee |
http://investors.spireenergy.com/governance/governance-documents |
Financial reporting |
|
Annual Report |
http://investors.spireenergy.com/filings-and-reports/annual-reports |
Governance documents |
|
Code of Business Conduct |
http://investors.spireenergy.com/governance/governance-documents |
Corporate Governance Guidelines |
http://investors.spireenergy.com/governance/governance-documents |
Weblinks are provided for convenience only,
and the content on the referenced websites does not constitute a part of this proxy statement.
Contact information
Investor Relations
Scott
W. Dudley Jr.
Managing Director, Investor Relations
Spire Inc.
700 Market Street, 6th Floor
St. Louis, MO 63101
314-342-0878
Scott.Dudley@SpireEnergy.com
Board of Directors
Chairman of the Board
c/o Spire Inc.
700 Market Street
St. Louis, MO 63101
Attn: Corporate Secretary
Corporate Secretary
Ellen L. Theroff
Vice President, Corporate Secretary
Spire Inc.
700 Market Street, 6th Floor
St. Louis, MO 63101
314-342-0530
Ellen.Theroff@SpireEnergy.com
Transfer Agent
Computershare Trust Company N.A.
P.O. Box 505000
Louisville, KY 40233-5000
800-884-4225
![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsrx60x1.jpg)
Spire Inc.
700 Market Street
St. Louis, MO 63101
SpireEnergy.com
![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsrproxy1.jpg)
![](http://www.sec.gov/Archives/edgar/data/1126956/000130817918000284/lsrproxy2.jpg)
This regulatory filing also includes additional resources:
lsr2018_def14a.pdf
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