PROPOSAL 3 ELECTION OF DIRECTORS (IF CHARTER AMENDMENT TO
DECLASSIFY THE BOARD IS NOT APPROVED)
Director Nominees
If you sign your proxy card or voting instruction card with no further instructions, your shares will be voted in
accordance with the recommendations of the Board.
Each nominee listed below currently serves as a director of the Board. The names of the four nominees to serve on
the Board as Class I directors until the 2023 Annual Meeting or until their earlier removal are set forth below:
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Name
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Served
as
director since
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Gavin R. Baiera
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2016
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Scott B. Helm
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2017
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Curtis A. Morgan
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2016
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John R. Sult
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2018
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✔
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If the Charter Amendment is not approved, the Board of Directors recommends that stockholders vote FOR the election of these director nominees to the
Board.
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DIRECTOR NOMINATION PROCESS AND QUALIFICATION OVERVIEW OF DIRECTORS
Director Qualifications
In addition to each
directors individual qualifications, including his or her knowledge, skills and experience mentioned above, the Company believes that each of our directors possesses high ethical standards, acts with integrity, and exercises careful judgment.
Each is committed to employing his or her skills and abilities in the long-term interests of the Company and our stockholders. Collectively, our directors are knowledgeable and experienced in business, governmental, and civic endeavors, further
qualifying them for service as members of the Board.
Any director nominee is evaluated in accordance with the qualifications set forth in our Corporate Governance
Guidelines and the other characteristics that we value as part of our corporate culture. We require that directors possess the highest personal and professional ethics, integrity and values and be committed to representing the long-term interests of
our stockholders at large. They must also have an inquisitive and objective perspective, practical wisdom, mature judgment and sufficient personal resources such that any director compensation to be received from the Company would not be
sufficiently meaningful to impact their judgment in reviewing matters coming before the Board. Finally, they must be able to work compatibly with the other members of the Board and otherwise have the experience and skills necessary to enable them to
serve as productive Board members. Directors also must be willing to devote sufficient time to carrying out their fiduciary duties and other responsibilities effectively and should be committed to serve on the Board for an extended period of time.
For additional information, please read our Corporate Governance Guidelines.
In connection with the director nominations for the 2020 Annual Meeting, the
Nominating Committee also considered the director nominees: (1) knowledge of corporate governance issues, coupled with an appreciation of their practical application; (2) service as a director or executive of a publicly traded company and
other board experience; (3) experience in the energy and utility industry and understanding of the energy and commodity markets; (4) finance and accounting expertise, including audit, internal controls, risk management and cybersecurity
experience; (5) experience in and knowledge of commercial and market risk assessment and management; (6) knowledge in the areas of laws and regulations related to environmental, health, safety, regulatory and other key industry issues;
(7) strategic planning skills; and (8) experience in transactional and capital markets matters.
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PROPOSALS 2 & 3 ELECTION OF DIRECTORS
Each director nominee brings a strong and unique background and set of skills to the Board, giving the Board as a whole
competence and experience in a wide variety of areas, including energy, wholesale power generation and marketing, commodities, risk management, strategic planning, legal, corporate governance and board service, executive management, regulatory and
policy development, accounting and finance, and operations. For information concerning each directors various qualifications, attributes, skills and experience considered important by the Board in determining that such nominee should serve as
a director, as well as each nominees principal occupation, directorships and additional biographical information, please read the section entitled Director Expertise on page 4 and Director Nominee Biographies beginning
on page 13.
Director Selection Process
The Nominating Committee is responsible for identifying individuals qualified to become Board members and recommending to the Board the nominees for election as
directors of the Company. The Nominating Committees policy is to consider recommendations for such director nominees, including those submitted by current directors, members of management, or by stockholders, on the bases described below. In
this regard, stockholders may recommend director nominees by writing to the Nominating Committee c/o the Corporate Secretary of the Company, 6555 Sierra Drive, Irving, Texas 75039. Any such recommendations from stockholders received by the Corporate
Secretary of the Company will be promptly provided to the Nominating Committee. Recommendations to be considered by the Nominating Committee for the 2021 Annual Meeting should be submitted as described under Advance Notice Stockholder
Proposals or Nominations on page 11.
The Nominating Committee annually reviews the composition of the Board as a whole and recommends, if necessary, measures
to be taken so that the Board reflects the appropriate balance of knowledge, experience, skills, expertise and diversity required for the Board as a whole and contains at least the minimum number of independent directors required by applicable laws
and regulations.
Identification of Candidates and Diversity
The Nominating Committee identifies director nominees in various ways. In identifying and evaluating director nominees, the Nominating Committee may consult with
members of the Board, Company management, consultants, and other individuals likely to possess an understanding of the Companys business and knowledge of suitable candidates. In 2019, the Company engaged a search firm to identify and
coordinate the interviews of potential directors. In making its recommendations, the Nominating Committee assesses the requisite skills and qualifications of director nominees and the composition of the Board as a whole in the context of the
Boards criteria and needs. Such assessments will be consistent with the Boards criteria for membership, including: (i) not less than a majority of directors shall satisfy the NYSEs independence requirements; (ii) all
directors shall possess strong judgment, character, integrity, expertise, skills and knowledge useful to the oversight of the Companys business; business, governmental, civic or other relevant experience; and (iii) consideration will be
given to the extent to which the interplay of the director nominees qualifications and diversity of cultural background, gender, experience and viewpoints with those of other Board members will build a Board that is effective, in light of the
Companys business and structure. The Nominating Committee does not assign specific weights to particular criteria, and no particular criterion is necessarily applicable to all Board members. While the Company does not have a formal diversity
policy, the Nominating Committee will consider diversity criteria in the context of the perceived needs of the Board as a whole and seek to achieve a diversity of backgrounds and perspectives on the Board. The Board is asked to assess whether the
Board is appropriately diverse as part of the annual evaluation of the Board.
Ms. Acosta was appointed to the Board as a Class II director and will stand
for election at the 2021 Annual Meeting if the Charter Amendment is not passed. Ms. Crutchfield was appointed to the Board as a Class III director and will stand for election at the 2022 Annual Meeting if the Charter Amendment is not
passed. Mses. Acosta and Crutchfield were participants in the director search conducted by a third-party search firm.
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PROPOSALS 2 & 3 ELECTION OF DIRECTORS
Board Evaluation Process
The Board recognizes that a rigorous evaluation process is an essential component of strong corporate governance practices and promoting ongoing Board and Committee
effectiveness. Consistent with best practice, the Companys Corporate Governance Guidelines and each of the Committees Charters, the Nominating Committee oversees the annual evaluation of the performance of the Board and the Committees,
with the Chairman maintaining a substantial role in facilitating discussion among the Board and the Committees.
As part of the evaluation process, the Board and
each Committee reviews the following:
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Performance of the Board and each Committee, including areas where the Board and each Committee feels it functions
effectively and areas where the Board and each Committee believes it can improve;
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Overall composition of the Board and each Committee, including director tenure, board leadership structure, Committee
membership tenure, diversity, and individual skill sets;
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General board best practices, including oversight responsibilities and Committee duties;
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Culture to promote candid discussion within the Board and with senior management;
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Focus on risk management and strategic matters, including evaluation of transactions and emerging technologies, regulatory
and legal developments, and commercial and market factors; and
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Ability to ensure the Board serves the best interests of our stockholders and positions the Company for future success.
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Additionally, the Board reviews its meeting schedule, the quality and depth of information presented at each meeting, and the organization and
operation of the Board and the Committees. The Committees are evaluated on their effectiveness in fulfilling delegated responsibilities, the appropriateness of Committee materials, and the sufficiency of time to deliberate and for robust discussion.
The Board and Committee evaluation framework and process is conducted and reviewed annually.
As part of the two-part annual
evaluation process involving the full Board evaluation and Committee evaluations, the Board responds to a comprehensive written questionnaire designed to provide a holistic evaluation of the performance of the Board and each Committee in light of
the current needs of the Board and the Company. In 2019, 100% of directors participated in the Board and Committee evaluation process. To protect anonymity and the integrity of the evaluation process, an independent third party (the Companys
outside counsel) compiles responses to these evaluations into a report, which is initially provided to the Chairman. The Chairman is provided ample time to further discuss the results with the Companys outside counsel. The report, including
evaluation results and specific areas of focus for each Committee and the Board itself, is then presented to each Committee and the full Board in executive session to encourage candid discussion and feedback, and specific areas are discussed where
the Board would like to focus to enhance its effectiveness.
After receiving feedback from the Chairman on any action items resulting from the Board and Committee
discussions, the Corporate Secretary utilizes the results of the evaluations and discussions when developing workplans, formulating succession plans, and preparing board candidate evaluations for the upcoming year and thereafter.
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PROPOSALS 2 & 3 ELECTION OF DIRECTORS
CORPORATE GOVERNANCE PRACTICES
The Board proactively seeks to identify and implement leading governance practices. Furthermore, the Board follows a series of governance practices that it believes
foster effective Board oversight and accountability to you, our stockholders. These practices include:
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Managements proposal (Proposal 1) to declassify the Board and adopt annual elections for each of our directors;
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Effective beginning with the 2020 Annual Meeting, directors are elected by majority vote in uncontested elections (i.e.,
directors who receive more FOR votes than AGAINST votes are elected);
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Expanding the responsibility of the former Risk Committee in October 2019 to create the Sustainability and Risk Committee,
adding a Board source for advice and assistance to management in developing and implementing the Companys sustainability policies and practices;
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Our prohibition against directors and executive officers holding our securities in a margin account or pledging our
securities, absent Company approval (as further described under Insider Trading Policy on page 33 of this Proxy Statement);
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Our prohibition against directors and executive officers engaging in any hedging transaction with respect to our securities
held by them (as further described under Insider Trading Policy on page 33 of this Proxy Statement);
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Compensation of the Board and stock ownership guidelines for non-employee directors
and executive officers;
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Review by the Compensation Committee of performance-based compensation of our executives following a restatement that
impacts the achievement of performance targets relating to that compensation, including the ability to require reimbursement to the Company for all or a portion of the payment received;
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Ongoing succession planning for the CEO and other senior management;
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Annual performance evaluations of the Board and each of its standing Committees;
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Director orientation and continuing education program, including Company site visits and information sessions with Company
management;
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Access to and engagement of outside advisors and consultants to assist the Board and the Committees in the performance of
their duties, as appropriate; and
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Engagement with our stockholders regarding governance practices and other matters, including that, between July 2019 and
February 2020, our Chairman met with approximately 85% of the active portfolio managers at Vistras top twenty stockholders.
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CORPORATE GOVERNANCE DOCUMENTS
The Company maintains certain corporate governance documents on our website at www.vistraenergy.com. The
Companys Corporate Governance Guidelines and charters of the standing Committees of the Board, including the Audit Committee, the Nominating Committee, the Compensation Committee, and the Sustainability and Risk Committee, in each case as
currently in effect, can be accessed by selecting the tab labeled Corporate Governance on the home page of the Companys website.
The
Companys Code of Conduct that applies to the Companys employees, officers, including the CEO and Chief Financial Officer (CFO), and directors, is also available on the Companys website. In accordance with SEC
regulations, any amendments to the Code of Conduct will be posted on the Companys website.
The Board has adopted a written policy regarding transactions with
related parties, which is included in the Corporate Governance Guidelines available on the Companys website.
Printed copies of the corporate governance
documents that are posted on the Companys website are also available to any stockholder upon request to the Corporate Secretary of the Company, 6555 Sierra Drive, Irving, Texas 75039.
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PROPOSALS 2 & 3 ELECTION OF DIRECTORS
Board Committees
The Board has the following four standing Committees: Audit, Compensation, Nominating, and Sustainability and Risk (each, a Committee). The functions of
each Committee are described below, and membership as of February 2020 is described in the table above.
Audit Committee
Primary Responsibilities: Appoints, retains, oversees, evaluates and compensates the independent auditors; reviews the annual audited and quarterly consolidated
financial statements; reviews significant matters regarding accounting principles and financial statement presentations; oversees the performance of the Companys internal audit function; oversees the system, and annual audit, of internal
controls over financial reporting; oversees the system of internal controls over accounting, legal and regulatory compliance, and ethics (including reviewing the Companys Code of Conduct at least annually).
The Audit Committee is a separately designated standing audit committee as required by SEC regulations and NYSE rules.
For more information about the Audit Committee please see the Audit Committee report on page 73.
Nominating Committee
Primary Responsibilities: Reviews and
recommends director candidates to the Board for election at each annual meeting of stockholders, periodically reviews the Corporate Governance Guidelines and Committee charters and recommends changes to the Board, reviews and recommends Committee
composition and Chairs and recommends changes to the Board and provides guidance to the Board with respect to governance related matters.
The Nominating Committee
(i) identifies individuals qualified to become directors and recommends to the Board the nominees to stand for election as directors; (ii) oversees, and assumes a leadership role in, the governance of the Company including recommending
periodic updates to the Corporate Governance Guidelines for the Boards consideration; (iii) participates with the Chairman in the Boards annual evaluation of its performance and of the Committees; and (iv) recommends to the
Board the director nominees for each annual stockholder meeting and for each Committee.
Compensation Committee
Primary Responsibilities: Reviews and oversees the Companys overall compensation philosophy, and oversees the development and implementation of
compensation programs, policies and programs aligned with the Companys business strategy.
The Compensation Committee (i) reviews and approves corporate
goals and objectives relevant to the compensation of the CEO, evaluates the CEOs performance in light of those goals and objectives, and determines and recommends to the Board the CEOs compensation based on this evaluation;
(ii) oversees the evaluation of executive officers (and other senior officers and key employees) other than the CEO and reviews, determines and approves their compensation levels; (iii) oversees and makes recommendations to the Board with
respect to the adoption, amendment or termination of incentive compensation, equity-based and other executive compensation and benefits plans, policies and practices; (iv) reviews and discusses with the Board executive management succession
planning; (v) makes recommendations to the Board with respect to the compensation of the Companys outside directors; and (vi) produces the Compensation Committees report on executive compensation as required by the SEC to be
included in the Companys annual proxy statement.
Sustainability and Risk Committee
Primary Responsibilities: With respect to risk, assists the Board in fulfilling its responsibilities with respect to (i) the oversight of the enterprise
risk management process, including coordination, where necessary, with other Committees, (ii) the assessment of certain enterprise risks, and (iii) the review and assessment of market, commercial and risk management matters of the Company.
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PROPOSALS 2 & 3 ELECTION OF DIRECTORS
With respect to sustainability, the Committee: (i) reviews and discusses with management the Companys
strategies, policies, and practices to assist in addressing public sentiment and shaping policy to manage the Companys sustainability efforts; (ii) at least annually, reviews and discusses with management the Companys assessment of
greenhouse gas-related risks, including transition, regulatory, reputational, and/or market risks related to climate change, and managements process for the identification, evaluation, and mitigation of
transition risks related to climate change; (iii) oversees and monitors the Companys core vision and values and advises the Board and management on sustainability policies, including the Companys publicly stated targets and
aspirational goals for company-wide reductions of greenhouse gas emissions from its power generation operations; and (iv) provides oversight with respect to any sustainability reporting to the public or governmental agencies.
For further discussion of the Committees oversight duties related to risk, see the discussion of Board Risk Oversight on page 33.
COMMUNICATIONS WITH DIRECTORS
Stockholders and
other interested parties may communicate with the directors individually or as a group, including all non-management or independent directors and the Chairman of the Board, by writing to them c/o the Corporate
Secretary of the Company, 6555 Sierra Drive, Irving, Texas 75039. The Companys Corporate Secretary will review each communication received from stockholders and other interested parties and will forward the communication, as expeditiously
as reasonably practicable, to the addressees if the communication falls within the scope of matters generally considered by the Board. To the extent the subject matter of a communication relates to matters that have been delegated by the Board to a
Committee or to an executive officer of the Company, then the Companys Corporate Secretary may forward the communication to the executive officer of the Company or the chair of the Committee to which the matter has been delegated.
DIRECTOR INDEPENDENCE
We follow the
NYSEs requirements for determining director independence. These standards can be found on the NYSEs online manual at https://nyseguide.srorules.com/listed-company-manual. Based on the application of these standards and pursuant to
the requirements of the NYSE and the SEC, the Board has determined that:
(i)
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The following directors are independent: Mses. Ackermann, Acosta, and Crutchfield, and Messrs. Baiera, Barbas, Ferraioli,
Helm, Hunter, and Sult. Additionally, during their terms of service, Messrs. Madon, Strong and Zimmerman each qualified as an independent director.
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The Board has determined that Mses. Ackermann, Acosta, and Crutchfield, and Messrs. Barbas, Ferraioli, Helm, Hunter,
Sult, and Zimmerman qualify as Audit Committee Financial Experts as defined in Item 401(h) of Regulation S-K promulgated under the Securities Act.
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The Board has determined that each member of the Audit Committee (Messrs. Ferraioli, Hunter, Sult, and Zimmerman)
possesses the necessary level of financial literacy required to enable each of them to serve effectively as an Audit Committee member and satisfies the heightened independence requirements under NYSE and SEC requirements for Audit Committee members.
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The Board has determined that each member of the Compensation Committee (Ms. Acosta and Messrs. Baiera and Sult)
satisfies the heightened independence requirements under NYSE and SEC standards for Compensation Committee members.
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COMPLAINT AND REPORTING PROCEDURES FOR ACCOUNTING AND AUDITING MATTERS
Our Whistle Blower Policy provides for (1) the receipt, retention and treatment of complaints, reports and concerns regarding accounting, internal accounting
controls or auditing matters, and (2) the confidential, anonymous submission of complaints, reports and concerns by employees regarding questionable accounting or auditing matters, in each case relating to Vistra Energy. Complaints may be made
through a Compliance Helpline telephone number, operated by an
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independent third party. Complaints received are logged by our Chief Compliance Officer, investigated and reviewed by Internal Audit, and, if applicable, our Chief Compliance Officer, and
communicated to our Audit Committee. In accordance with applicable law, the Whistle Blower Policy and other procedures we use to address complaints prohibit us from taking adverse action against any person submitting a good faith complaint, report
or concern. A copy of our Whistle Blower Policy is available on the Companys website at www.vistraenergy.com/corporate-governance.
BUSINESS RELATIONSHIPS AND RELATED PERSON TRANSACTIONS POLICY
As set forth in the Corporate Governance Guidelines, the Board has adopted a written policy
relating to the approval of transactions with related parties. In general, for purposes of our policy, a related party transaction is a transaction to which we are a party, or a material amendment to any such transaction, and with respect to which a
related party is directly, or to our knowledge, indirectly, a party. As set forth in our policy, a related party is an executive officer, director or nominee for director of ours, a person known to us to be the beneficial owner of more
than 5% of our voting securities, an immediate family member of an executive officer, director, nominee for director or 5% stockholder, and any entity owned or controlled by any of the foregoing individuals or in which any such individual serves as
an executive officer or general partner or, together with any other such individuals, owns 10% or more of the equity interests of such an entity.
Our policy
requires that a related person transaction will only be permitted if: (i) the Audit Committee approves or ratifies the transaction in accordance with the policy (which requires that the transaction be on terms comparable to those that could be
obtained in arms length dealings with an unrelated third party), (ii) the disinterested members of the Board as a whole review and approve the transaction or (iii) the transaction involves compensation approved by the Compensation
Committee. In reviewing and approving any related party transaction or material amendments to any such transaction, the Audit Committee must satisfy itself that it has been fully informed as to the related partys relationship and interest and
as to the material facts of the transaction and must determine that the related party transaction is fair to us.
Since January 1, 2019, all related party
transactions have been approved or ratified by the Audit Committee or disinterested members of the Board in accordance with our policy. A copy of our related party transactions policy is included in our Corporate Governance Guidelines and is
available on the Companys website at www.vistraenergy.com/corporate-governance.
CHARITABLE CONTRIBUTIONS
During 2019, we did not make any contributions to any charitable organization in which an independent director served as an executive officer in 2019.
INSIDER TRADING POLICY
Under Vistra
Energys insider trading policy, members of the Board and all of Vistra Energys officers and employees, together with their respective related persons, shall not engage, directly or indirectly, in any derivative transactions involving any
securities of Vistra Energy, including pledges of Vistra Energy securities as collateral or short sales thereof. This policy includes, without limitation, hedging transactions, pledging Vistra Energy securities as collateral or engaging in short
sales of Vistra Energy securities. Any exceptions must be approved by Vistra Energys General Counsel on a case-by-case basis, and in no case will an exception be
granted in violation of applicable law or if such exception would introduce, in the sole estimation of Vistra Energys General Counsel, an unacceptable risk to Vistra Energy.
BOARD RISK OVERSIGHT
In the normal course of
business, the Company is exposed to a variety of risks. For a complete description of the risk factors associated with our business, see Part I, Item 1A Risk Factors of our 2019 Annual Report on Form
10-K, which is included in our Annual Report.
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PROPOSALS 2 & 3 ELECTION OF DIRECTORS
The Board has ultimate responsibility for protecting stockholder value. Among other things, the Board is ultimately
responsible for understanding the risks to which we are exposed, approving managements strategy to manage these risks, establishing policies and procedures that monitor and manage defined risks and measuring managements performance
against the strategy. The Committees, especially the Audit Committee and Sustainability and Risk Committee (originally constituted as the Risk Committee in July 2018 and expanded to Sustainability and Risk Committee in October 2019), play an
important role in support of the Boards oversight function. Risk oversight includes understanding the material risks to the business and what steps management is taking or should be taking to manage those risks, as well as understanding and
determining the appropriate risk appetite for the Company. To define the Companys risk appetite, the Board reviews and approves the annual business plan, budget and long-term plan, strategic initiatives, acquisitions and divestitures, capital
markets transactions, financings, capital allocation and capital structure.
The Board conducts its risk oversight function in several ways. The Board monitors,
reviews and responds to strategic, commercial, market, financial, sustainability and corporate risks facing the Company by receiving periodic reports from the management team, and through the Committees. While the Committees each have their
delegated responsibilities for identifying and addressing risks, the Board primarily conducts this oversight function through the Sustainability and Risk Committee, which oversees the enterprise risk management process and assesses certain
enterprise risks and market, commercial and risk management matters, and the Audit Committee, which oversees risks relating to accounting, internal audit and controls. On an annual basis, the Sustainability and Risk Committee provides, and the Board
reviews, a detailed enterprise risk report. Additionally, on a quarterly basis, the Sustainability and Risk Committee reviews an enterprise risk assessment and provides a report thereof to the Board. Further, the Board conducts periodic reviews of
risks on an ongoing and as-needed basis and receives updates from management during the year on any particular matters relating to risk management or risk controls that management believes need to be brought
to the attention of the Board.
The Board recognizes the importance of maintaining the trust and confidence of our customers and employees. To more effectively
prevent, detect and respond to information security threats, the Company has a dedicated Chief Information Officer whose team is responsible for leading enterprise-wide information security strategy, policy, standards, architecture and processes.
The Board receives reports on, among other things, the Companys cybersecurity risks and threats, the status of projects to strengthen the Companys information security systems, assessments of the Companys security program and the
emerging threat landscape. Additionally, the Board and Sustainability and Risk Committee monitor the ways in which the Company attempts to prudently minimize risks, to the extent reasonably practicable and consistent with the Companys
long-term strategies.
The table below summarizes the significant role the various Board Committees or similar bodies play in carrying out the risk oversight
function.
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COMMITTEE
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RISK OVERSIGHT FOCUS AREA
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Audit Committee
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Oversees and assesses financial risks, which includes reviewing and
discussing with management the Companys risk disclosures in the Companys annual reports to the Securities and Exchange Commission; reviewing and discussing the risk of fraud with management, the internal audit executive and the
independent auditor and reviewing the implementation of controls to mitigate fraud risks; considering the risk of managements ability to override the Companys internal controls; and overseeing significant tax risks and issues affecting
the Company.
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Compensation Committee
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Oversees risks related to our compensation policies and practices and
succession planning, with input from management and the Compensation Committees independent outside compensation consultant, Willis Towers Watson.
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Sustainability and
Risk Committee
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Oversees (i) greenhouse-gas related risks, including transition, regulatory, reputational, and/or market risks related to climate change, and managements process for the identification, evaluation, and mitigation
of transition risks related to climate change and (ii) certain enterprise risks and other risks related to commercial, credit, liquidity and market risks, including our trading of fuel, transportation, energy and related products and services
and regulatory compliance, and the Companys assessment and management of the risks associated with such activities.
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The Chairs of each of the Committees regularly report to the Board on matters reviewed by their respective Committees,
thereby providing the Board with the opportunity to identify and discuss any risk-related issues or request additional information from management or the Committees that may assist the Board in its risk oversight role. To this end, risk-related
issues presented to the Committees are routinely presented to the full Board to ensure proper oversight.
Additionally, the Company has established a Nuclear
Oversight Advisory Board (NOAB), which oversees and provides reports to the Board on an as-needed basis, but no less than annually, regarding various risks and strategic considerations related to
our ownership and operation, directly or indirectly, of interests in our Comanche Peak nuclear power plant. The NOAB is comprised of Dr. Richard Meserve, Chair, Bill Borchardt, Mr. Morgan and Mr. Burke. Dr. Meserve, who has
served as the Chair of the NOAB since 2012, is a former Chairman of the U.S. Nuclear Regulatory Commission (NRC). Mr. Borchardt, who has served as a member of the NOAB since 2014, previously held several leadership positions at the
NRC including, most recently, as the NRCs Executive Director of Operations from 2008 to 2013.
In addition to the above-described committee structure, the
Company has a Risk Management Policy, which is administered by the Chief Risk Officer, who oversees various risk management efforts and regularly reports to the Sustainability and Risk Committee regarding enterprise risk management and assessment
matters. As part of the Risk Management Policy, the Company maintains a Risk Management Committee whose role is to measure and monitor compliance with the Risk Management Policy, and its membership is comprised of various executives from key
management positions; namely, the CEO, CFO, Chief Compliance Officer, Chief Operating Officer, Chief Commercial Officer, Chief Risk Officer, President of Retail, Controller, Treasurer, and Vice President of Regulatory Compliance Trading and
Generation. The Risk Management Policy establishes guidelines necessary for the Company to effectively manage the market, credit, operative and regulatory risk of its commodities portfolios.
As outlined in our Risk Management Policy, the Board has established relevant delegation of authority thresholds, which together with our Code of Conduct and other
support relationships with members of the External Affairs, Internal Audit, Legal, Human Resources, Technology Services, and Compliance teams, are complementary and critical to the risk management process. In particular, and in addition to the
oversight role performed by the Risk Management Committee, the Board has delegated certain authority, subject to various term/tenor and dollar value thresholds, to the Companys Commitments Committee as further set forth in the Companys
Commitments Policy. The Commitments Policy establishes a framework for the Company to evaluate and approve all significant commitments and transactions made by the Company that have not otherwise been approved by the Board. The Commitments Committee
is comprised of the Companys CEO, CFO, Chief Operating Officer, Chief Administrative Officer, and General Counsel. The Board periodically reviews and revises the delegation of authority thresholds to appropriately balance business needs and
its oversight function.
Executive Compensation and Oversight of Risks Related to Compensation Policies
During 2019, the Compensation Committee consisted of three directors: Gavin R. Baiera, Paul M. Barbas, and Jeff D. Hunter (appointed in February 2019).
Beginning in February 2020, the Compensation Committee membership was comprised of Mr. Baiera (Chair), Arcilia Acosta, and John R. Sult. The primary responsibilities of the Compensation Committee are to:
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determine and oversee the compensation philosophy, objectives, and program of the Company and our subsidiaries, including
making recommendations to the Board with respect to the adoption, amendment or termination of compensation and benefits plans, arrangements, policies and practices;
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evaluate the performance of the Companys President and CEO, Curtis A. Morgan; James A. Burke, Executive Vice
President and Chief Operating Officer; David A. Campbell, Executive Vice President and CFO; Scott A. Hudson, President Vistra Retail; and Stephen J. Muscato, Executive Vice President and Chief Commercial Officer (collectively, the Named
Executive Officers); and
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recommend the executive compensation of the CEO to the full Board and approve executive compensation of the executive
officers (other than the CEO) based on those evaluations.
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As described above, the Compensation Committee is responsible for overseeing risks
related to our compensation policies, practices, and programs for all employees. To assist the Compensation Committee with determining whether
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PROPOSALS 2 & 3 ELECTION OF DIRECTORS
the Companys compensation policies and practices subject the Company to unnecessary risk or could potentially motivate employees to take excessive risk, the Compensation Committee
periodically evaluates, including seeking input from management and our independent compensation consultant, our compensation strategy to ensure:
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base salaries are market-based and a sufficient component of total compensation to discourage risk taking;
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earnings goals under the Companys EAIP are based upon its audited financial statements and the Company believes that
the goals are attainable without the need to take inappropriate risks or make material changes to the Companys business or strategy;
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Named Executive Officers who receive payment under the EAIP and the Companys 2016 Incentive Plan may be required to
reimburse the Company for all or a portion of the payment (commonly referred to as a clawback) if the Company has to prepare an accounting restatement because it is in material noncompliance with any financial reporting requirements;
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the Company uses awards under the 2016 Incentive Plan that are typically based upon factors that affect relative total
stockholder return over three-year periods, such as the relative Performance Share Unit (PSU) awards, which mitigates short-term risk taking;
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because incentive compensation has a large equity component, value is best realized through long-term appreciation of
stockholder value, especially when coupled with the executive stock ownership guidelines, which expose those officers subject to the guidelinesnamely the CEO, each Executive Vice President and the President Vistra Retailto loss of the
value of the retained equity if stock appreciation is jeopardized; and
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the use of incentive compensation components that are paid or vest over an extended period mitigates against unnecessary or
excessive risk taking.
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Board Leadership Structure
As set forth in our Corporate Governance Guidelines, the Board does not have a policy with respect to the separation of the offices of the Chairman and CEO. The Board
believes that this issue is part of the succession planning process and that it is in the best interests of the Company for the Board to make a determination regarding this issue any time it elects a new CEO and thereafter as deemed appropriate.
During 2019, the Company maintained separate CEO and Chairman roles. The Company has determined this to be the appropriate leadership structure at this time to
maintain independent Board leadership that can still benefit from the insight of our CEO. If a different determination is made in the future regarding the separation of the Chairman and CEO positions, such that the CEO is the Chairman, a Lead
Director shall be elected by the non-management directors of the Board to: (i) serve as a liaison between the Chairman and the independent directors, (ii) lead executive sessions of the Board,
(iii) have authority to call meetings of the independent directors, (iv) lead the Board in discussions concerning the CEOs employment and performance and CEO succession, (v) if requested by major stockholders, be available for
consultation and director communication, and (vi) perform such other duties and responsibilities as requested by the Board.
BENEFICIAL OWNERSHIP OF COMMON STOCK OF THE COMPANY
The following table sets forth information, as of March 1, 2020 (unless noted otherwise), regarding the beneficial ownership of our Common Stock by: (1) each
of our current directors and nominees for director; (2) each of our current named executive officers; (3) all of our directors and executive officers as a group; and (4) each person or entity we know that beneficially owns more than
5% of our outstanding shares of Common Stock.
Beneficial ownership for the purposes of this table is determined in accordance with the rules and regulations of the
SEC. Under such rules, beneficial ownership includes any shares as to which a person has sole or shared voting power or investment power and any shares that the stockholder has the right to dispose of or acquire within 60 days of March 1, 2020.
Common stock subject to options, regardless of whether such arrangement is currently in the money, that are currently exercisable within 60 days of March 1, 2020, are deemed to be outstanding and beneficially owned by the holder of the options,
and Common Stock issuable upon vesting of restricted stock units (RSUs) that are vested, or will vest within 60 days of March 1, 2020, is deemed to be outstanding and beneficially owned by the holder of such RSUs. The shares
underlying any outstanding options or RSUs, however, are not deemed outstanding for the purposes of computing the percentage ownership of any other stockholder.
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COMPENSATION DISCUSSION AND ANALYSIS
EXECUTIVE SUMMARY
The objectives of our executive compensation program are to align executives interests and those of our stockholders in accordance with the Companys
compensation philosophy. This Compensation Discussion and Analysis (CD&A) describes the elements, implementation, and 2019 results of our executive compensation program.
At our 2019 Annual Meeting of Stockholders, we received over 98% support for our
say-on-pay proposal. As a result, we believe that our stockholders recognize that our compensation philosophy reflects our commitment to pay for performance.
Additionally, we completed several activities to enhance our earnings, expand our geographical footprint, increase our retail marketing channels, reduce and lower the
cost of our debt, invest in our communities by enhancing our sustainability efforts, and create significant stockholder value as further described in the section entitled 2019 Business Highlights beginning on page 1 of this Proxy
Statement.
Compensation Philosophy
Vistra
Energy has a pay-for-performance compensation philosophy, which places an emphasis on
pay-at-risk; a significant portion of our executive officers compensation is comprised of variable compensation. Vistra Energys compensation
program is intended to attract and motivate top-talent executive officers as leaders and compensate executive officers appropriately for their contribution to the attainment of Vistra Energys financial,
operational and strategic objectives. In addition, Vistra Energy believes it is important to retain our top-tier talent and strongly align their interests with our stockholders by emphasizing incentive-based
compensation. To achieve the goals of our compensation philosophy, Vistra Energy believes that:
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the overall compensation program should emphasize variable compensation elements that have a direct link to overall
corporate performance and stockholder value;
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the overall compensation program should place an increased emphasis on pay-at-risk with increased levels of responsibility;
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the overall compensation program should attract, motivate, engage and retain
top-talent executive officers to serve in key roles; and
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an executive officers individual compensation level should be based upon an evaluation of the financial and
operational performance of that executive officers business unit or area of responsibility as well as the executive officers individual performance.
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2019 Named Executive Officers
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Name
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Title
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Curtis A. Morgan
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President and Chief Executive Officer (CEO)
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James A. Burke
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Executive Vice President and Chief Operating Officer
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David A. Campbell(1)
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Executive Vice President and Chief Financial Officer (CFO)
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Scott A. Hudson
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President of Vistra Retail
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Stephen J. Muscato
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Executive Vice President and Chief Commercial Officer
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J. William Holden(1)
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Former Executive Vice
President and Chief Financial Officer
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(1)
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Mr. Holden resigned from his position of Executive Vice President and Chief Financial Officer effective on
June 5, 2019, on which date Mr. Campbell assumed this position.
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These individuals are Vistra Energys Named Executive Officers for
2019while this Proxy Statement specifically discusses the compensation relating to Vistra Energys Named Executive Officers, the practices and programs described herein generally extend more broadly across Vistra Energys executive
leadership team.
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COMPENSATION DISCUSSION AND ANALYSIS
The Compensation Committee does not target any particular level of total compensation or individual component of
compensation against the peer group; rather, the Compensation Committee considers the range of total compensation provided by Vistra Energys peers, together with information from published surveys, in determining the appropriate mix and level
of total compensation for our executives.
Compensation of the CEO
In determining the compensation of the CEO, the Compensation Committee annually follows a thorough and detailed process. At the end of each year, the Compensation
Committee reviews an assessment of the CEO, prepared by the Chief Administrative Officer with input from the CEO, regarding the CEOs performance and the performance of Vistra Energys businesses. In addition, the Chair of the Compensation
Committee requests a formal written assessment of CEO performance from the remainder of the Board on CEO performance and meets (with and without the CEO) to evaluate and discuss his performance and the performance of Vistra Energys businesses.
While the Compensation Committee balances multiple factors in determining the CEOs compensation, including ensuring that a substantial portion of the
CEOs compensation is directly linked to his performance and the performance of Vistra Energys businesses, and that his compensation is competitive with compensation paid to similarly performing executive officers with similar
responsibilities in companies that Vistra Energy considers to be our peers.
Compensation of Other Named Executive Officers
In determining the compensation of each of Vistra Energys Named Executive Officers (other than the CEO), the Compensation Committee seeks the input of the CEO. At
the end of each year, the CEO reviews a self-assessment prepared by each Named Executive Officer and assesses the Named Executive Officers performance against business unit (or area of responsibility) and individual goals and objectives. The
CEO reviews these assessments with the Compensation Committee and makes recommendations for the compensation of the Named Executive Officers with that context, the Compensation Committee determines and approves the compensation for each Named
Executive Officer.
Role of the Compensation Consultant
To add
rigor in the review process and to inform the Compensation Committee of market trends, the Compensation Committees independent compensation consultant, Willis Towers Watson, analyzes Vistra Energys executive compensation structure and
plan designs and to assess whether the compensation program is competitive and supports the Compensation Committees goal to align the interests of executive officers with those of stockholders. Willis Towers Watson also provides the
Compensation Committee with market data and peer analysis, which the Compensation Committee references when determining compensation for executive officers. The Compensation Committee has authorized Willis Towers Watson to interact with Vistra
Energys management, as needed, on behalf of the Compensation Committee. Willis Towers Watson also provided other services to the Company during the fiscal year 2019 at the request of Company management.
The Compensation Committee has the sole authority to approve the independent compensation consultants fees and terms of the engagement. Thus, the Compensation
Committee annually reviews its relationship with, and assesses the independence of, Willis Towers Watson to ensure executive compensation consulting independence.
Base Salary
Vistra Energy believes that base salary should reflect the scope and complexity of an executive officers position
and the level of responsibility required to perform his or her job. It also believes that a competitive level of base salary is required to attract, motivate and retain qualified talent. Vistra Energy wants to ensure our cash compensation is
competitive and sufficient to incent executive officers to remain with Vistra Energy, recognizing our high-performance expectations across a broad set of operational, financial, customer service and community-oriented goals and objectives.
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2020 Proxy Statement
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COMPENSATION DISCUSSION AND ANALYSIS
The Compensation Committee regularly reviews base salaries and annually engages Willis Towers Watson to conduct
analyses to ensure the base salaries are market-competitive, while also serving as an effective retention tool. The Compensation Committee may also review an executive officers base salary from time to time during a year, including if the
executive officer is given a promotion or if his or her responsibilities are significantly modified.
In 2019, base salaries for each of Messrs. Morgan, Burke, and
Campbell were initially set by their respective employment agreements and base salaries for each of Messrs. Hudson and Muscato were determined based on market data, roles, and responsibilities. Subject to the employment agreements with Messrs.
Morgan, Burke, and Campbell, which are described under Employment Arrangements and Severance Benefits on page 51, the Compensation Committee may change the base salaries for all of the Named Executive Officers at any time based on
updated market data, updated roles and responsibilities and the CEOs recommendation. Board approval is required to change the base salary for Mr. Morgan.
In May 2018, the Compensation Committee and the Board approved salary increases for Messrs. Morgan, Burke, Muscato, and Hudson to recognize their enhanced roles and
responsibilities following the Dynegy merger. There were no changes to those base salaries during 2019. The 2019 base salary for each Named Executive Officer is reflected the table below.
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Name
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2019 Base
Salary
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Curtis A.
Morgan
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$
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1,130,000
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James A.
Burke
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$
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800,000
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David A.
Campbell
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$
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690,000
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Stephen J.
Muscato
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$
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550,000
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Scott A. Hudson
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$
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525,000
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Annual Incentive Plan
Summary
The EAIP provides an annual performance-based cash bonus for
the successful attainment of certain financial and operational performance targets that are established annually by the Compensation Committee. Under the terms of the EAIP, performance against these targets, which are set at challenging levels to
incentivize exceptional performance (while at the same time balancing the needs for safety and investment in Vistra Energys business), drives bonus funding.
Performance Framework
As a general matter, target-level performance
is based on Vistra Energys board-approved financial and operational plan (the Financial Plan) for each upcoming year. The Compensation Committee sets high expectations for Vistra Energys executive officers and therefore annually selects
a target performance level that constitutes above average performance for the business, which the Compensation Committee expects the business to achieve during the upcoming year. Threshold and superior levels are for performance levels that are
below or above Financial Plan-based expectations, respectively. Based on the level of attainment of these performance targets, an aggregate EAIP funding percentage amount for all participants is determined.
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COMPENSATION DISCUSSION AND ANALYSIS
Individual Performance Modifier
After approving actual performance against the applicable targets under the EAIP, and on a basis independent of such target performance calculations, the Compensation
Committee and the CEO review the performance of each of Vistra Energys executive officers on an individual and comparative basis. Based on this review, which includes an analysis of both objective and subjective criteria, as determined by the
Compensation Committee in its sole discretion, including the CEOs recommendations (with respect to all executive officers other than himself), the Compensation Committee approves an individual performance modifier for each executive officer.
Under the terms of the EAIP, the individual performance modifier can range from an outstanding rating (150%) to an unacceptable rating (0%). To calculate an
executive officers final annual cash incentive bonus, the executive officers corporate/business unit payout percentages are multiplied by the executive officers target incentive level, which is computed as a percentage of
annualized base salary, and then by the executive officers individual performance modifier, subject to the aggregate cap of 200% of such executive officers target bonus for executives under employment agreements.
Additionally, certain executives, including the Named Executive Officers, were subject to an executive limiter in which the EAIP is capped at 50% of each
executives target bonus if Vistras Energys Adjusted EBITDA did not meet the low end of Vistra Energys annual 2019 guidance. In the event that such Adjusted EBITDA targets were not met, the Board has complete discretion on any
final annual cash incentive bonus paid to such executives subject to the executive limiter. In 2019, because Vistra Energys Adjusted EBITDA exceeded the low end of guidance, no executive limiter was applicable.
Actual Awards
The following table provides a summary of the 2019
performance-based cash bonus for each Named Executive Officer under the EAIP, and the discussion below highlights the key factors used in determining the awards. The Compensation Committee and the Board (as applicable) have now certified financial
results for 2019 and approved the individual performance modifiers for all Named Executive Officers. All of the Named Executive Officers earned in excess of 100% of their respective target bonuses and were paid their approved bonuses in March 2020.
Mr. Morgan continued to successfully lead Vistra through transformation in 2019. Notably, the acquisition of two retail companies in Crius and Ambit, made the
company the largest retail provider in the country with over 5,000,000 customers. Vistra continued to achieve the synergy targets related to the Dynegy merger while adding synergies from the retail acquisitions. Additionally, Mr. Morgan
continued to lead Vistra Energy in its evolution with the closing of four coal plants in the MISO market. He further advanced the Companys carbon reduction efforts, including setting GHG emissions reduction targets for 2030 and 2050, and
becoming a founding member of the Climate Leadership Council to be an active participant in policy setting and stakeholder alignment. Throughout the year, Mr. Morgan continued to share Vistras vision of a strong balance sheet and
achieving its goals of low debt and strong free cash flow while also returning value to stockholders through a regular dividend, key financing activities that significantly reduced the annualized after-tax interest expense, and other financing
activities that expanded liquidity to support growth. Given these and other significant achievements, the Board approved an individual performance modifier that increased Mr. Morgans incentive award.
Mr. Burke played a key role in decisions around the generation fleet and the retail business in 2019. Notably, Mr. Burke led the Companys efforts to
acquire Ambit and Crius, while also driving synergies in the generation fleet and working to determine the path to fulfilling the MPS rule requirements in Illinois, resulting in the closing of the four coal plants in the MISO market. The company
experienced strong commercial availability across the fleet with a strong safety performance and outstanding outage management. The retail business had another strong year in 2019. In addition to the two acquisitions, the ERCOT business remained
strong with increased customer counts and maintained its position as the top-rated large retailer on the Public Utility Commission complaint scorecard, despite an extremely volatile summer driving heightened
customer activity across the ERCOT market. Given these and other significant achievements, the Compensation Committee approved an individual performance modifier that increased Mr. Burkes incentive award.
Mr. Campbell joined Vistra in June of 2019 as the Chief Financial Officer. He played a significant role in both the Crius integration and the Ambit merger that
closed in the third quarter of 2019. He also led activities to assess the companys business portfolio and develop the companys ten-year fundamental view, and his team oversaw the execution of the
companys capital allocation strategy, including a share repurchase program and approximately $8.3 billion in repricing/refinancing transactions that extended maturities and reduced the companys annual interest expenses. Mr. Campbell
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COMPENSATION DISCUSSION AND ANALYSIS
Compensation Risk Analysis
The Companys management team annually conducts an internal risk review and assessment process relative to general compensation plan risk factors (or the potential
for unintended consequences), which is reviewed by our independent compensation consultant, Willis Towers Watson. The assessment of our compensation policies and practices includes, among other things, a review of: (1) our overall compensation
pay structure; (2) the overall mix of compensation vehicles, including target and maximum compensation with respect to each plan; (3) the structure of the incentive plans; (4) other company pay plans; (5) the mix of cash and
equity payouts at various compensation levels; (6) the performance time horizons used by our plans; (7) the use of multiple financial and operational performance metrics that are readily monitored and reviewed; (8) the incorporation
of both operational and financial goals and individual performance modifiers; (9) the inclusion of maximum caps and other plan-based mitigants on the amount of our awards; (10) the risk of earnings manipulation posed by the incentive
structure, (11) the extent to which the Named Executive Officer pay program rewards short-term decisions at the risk of long-term performance (12) governance for oversight of program design and administration; and (13) multiple levels
of review and approval of awards (including approval of the Compensation Committee with respect to awards to executive officers and awards to other employees that exceed monetary thresholds). The Company also generally considered other compensation
policies (such as clawback and anti-hedging policies), other compensation plans relating to severance and change-in-control benefits, and compensation governance.
Following their assessment, our management team prepares a report, which is provided to the Compensation Committee for review. The Compensation Committee reviews the
report and provides it to the Sustainability and Risk Committee. For 2019, we concluded that there were no material issues regarding our executive pay programs, and that the design of the Companys incentive pay plans has, overall, a low-risk profile. Based on the foregoing, the Compensation Committee and the Companys management concluded that the risks arising from our overall compensation policies and practices are not reasonably likely
to have a material adverse effect on the Company.
Benefits and Perquisites
Benefits
Vistra Energys executive officers generally have the
opportunity to participate in certain of Vistra Energys broad-based employee compensation plans, including Vistra Energys Thrift (401(k)) Plan (the Thrift Plan), and health and welfare plans. Please refer to the footnotes to the Summary
Compensation Table below.
Perquisites
Vistra Energy provided
our executives with financial planning and tax services and executive physicals during 2019.
Employment Arrangements and Severance Benefits
Vistra Energy has entered into employment agreements with Messrs. Morgan, Burke, and Campbell. Additionally, Vistra Energy has entered into agreements with each of
Messrs. Hudson and Muscato containing certain change in control and severance provisions. Each of the agreements provides that certain payments and benefits will be paid upon the expiration of the agreement or an earlier termination of the Named
Executive Officers employment under various circumstances, including a termination without cause, a resignation for good reason and a qualifying termination of employment within a fixed period of time following a change in control of Vistra
Energy.
The change in control severance benefits for the Named Executive Officers are double trigger, benefits, requiring both (a) a change in
control of Vistra Energy and (b) a termination of employment before any applicable Named Executive Officer is entitled to receive any severance payment.
Vistra Energy believes that these provisions are important in order to attract, motivate and retain the caliber of executive officers that our business requires and
provide incentive for our executive officers to fully consider potential changes that are in Vistra Energys and our stockholders best interests, even if such changes could result in the executive officers termination of employment.
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COMPENSATION DISCUSSION AND ANALYSIS
Other Compensation Policies
Potential Impact of Restatements and Ability to Claw Back Compensation Awards
The Compensation Committee has a mechanism to address any restatements, if they occur, that may impact our key financial metrics and our financial performance. The
Compensation Committee will take action, as it determines to be appropriate, with respect to EAIP awards or other incentive or equity compensation awards to the extent such specified performance targets were not achieved in light of a restatement,
which could include seeking to recover amounts paid. We believe this mechanism allows for remedial action to be taken if executive compensation is awarded for achievement of financial performance that is later determined not to have been achieved
and further aligns the Named Executive Officers interests with those of our stockholders.
Accounting, Tax and Other Considerations
Accounting Considerations
Vistra Energy follows ASC
718 for our stock-based compensation awards, and the compensation that it pays to our executives is expensed in Vistra Energys financial statements as required by U.S. Generally Accepted Accounting Principles (GAAP).
As one of many factors, the Compensation Committee considers the financial statement impact in determining the amount of, and allocation among the elements of,
executive compensation.
Income Tax Considerations
Section 162(m) limits the tax deductibility of compensation paid by a public company to its CEO and certain other highly compensated executive officers to
$1 million. Prior to 2018, there was an exception to the limit on deductibility for performance-based compensation that met certain requirements. The Tax Cut and Jobs Act of 2017 (the TCJA), largely eliminated that exception
starting in 2018. As such, compensation paid to certain covered employees, including our Named Executive Officers in 2019 and thereafter is presumed to be subject to the Section 162(m) deductibility limits as amended by the TCJA, with the
exception of certain amounts payable pursuant to a written binding contract in effect as of November 2, 2017 that has not been materially modified thereafter (as permitted by the TCJA). Compensation granted in the past may not qualify as
performance-based compensation under certain circumstances. We have historically retained, and expect to continue to retain, flexibility to award compensation that is consistent with our corporate objectives even if it does not qualify
for a tax deduction.
Say-on-Pay Vote
In May 2019, Vistra Energys stockholders were asked to approve, on an advisory basis, Vistra Energys 2018 executive compensation programs. A substantial
majority (98.1%) of the votes cast on the say-on-pay proposal at that meeting were voted in favor of the proposal. The say-on-pay advisory vote serves as a tool to guide the Board and the Compensation Committee in ensuring alignment of Vistra Energys executive compensation programs with stockholder
interests. The Compensation Committee believes that these results reaffirm Vistra Energys stockholders support of Vistra Energys approach to executive compensation. The Compensation Committee will continue to use the say-on-pay vote as a guidepost for stockholder sentiment and believes it is critical to maintain and continually develop this program to promote ongoing
stockholder engagement, communication and transparency.
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COMPENSATION TABLES
Mr. Strong does not, and Mr. Madon did not, receive any stock-based compensation and, instead, the equivalent
cash value of such equity awards, together with applicable fees, were and are directly paid to entities affiliated with the employer of such director for firm use and not redirected to such individual directors.
Deferral of Board Annual Equity Awards
In November 2018, the Compensation
Committee approved the adoption of the Vistra Energy Equity Deferred Compensation Plan for Certain Directors (the Deferred Compensation Plan), effective January 1, 2019. Under the Deferred Compensation Plan, certain directors of
Vistra Energy may elect to defer settlement of the Common Stock to be received in respect of all or a portion of their vested equity awards (designated in 10% increments). The primary purpose of the Deferred Compensation Plan is to provide
flexibility for eligible directors to defer the receipt of Common Stock they are entitled to receive in consideration of their service as Directors, and to encourage their ownership of Common Stock.
Retirement Benefits from Vistra Energy
The
non-employee directors of the Board are not provided health, retirement or pension benefits.
2019
Director Compensation
The Compensation Committee reviews peer and market data, provided by Willis Towers Watson, on an annual basis, to ensure that non-employee director compensation is market-based. There were no changes to non-employee director compensation made in 2019.
Board Retainers
Except for each Committee Chair (whose cash
compensation is described below), each non-employee member of the Board receives an annual board retainer of $100,000 and an annual committee retainer (per Committee) of $10,000. The Chairman receives an
annual board retainer of $190,000. The Chair of the Audit Committee receives an annual board retainer of $100,000 and an annual committee retainer of $20,000. The Chairs of other Committees (besides the Audit Committee) receive an annual board
retainer of $100,000 and an annual committee retainer of $15,000.
Equity Awards
Except for the Chairman (whose equity compensation is described below), each non-employee member of the Board receives an annual
equity award in the amount of $150,000. The Chairman receives an annual equity award in the amount of $230,000. Certain members of the Board elected to be paid in cash in lieu of receiving their equity awards. Mr. Strongs director fees
are paid (and Mr. Madons director fees were paid) directly to an entity affiliated with his employer for firm use and are not redirected to him. All directors are reimbursed for reasonable expenses incurred in connection with their services as
directors.
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PROPOSAL 5 RATIFICATION OF APPOINTMENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTANT
The Audit
Committee has selected the firm of Deloitte to act as independent registered public accountant for the Company for fiscal year 2020 to audit the consolidated financial statements of the Company and the effectiveness of internal controls over
financial reporting and to make a report thereon to the stockholders. The Audit Committee and the Board believe that the continued retention of Deloitte as the Companys independent registered public accounting firm for the 2020 fiscal year is
in the best interests of the Company and its stockholders. If the stockholders do not ratify the appointment of Deloitte, the Audit Committee will reconsider its selection. Even if the stockholders ratify Deloittes appointment, the Audit
Committee may choose to select another auditor if it determines it to be in the best interests of the Company or its stockholders. Representatives of Deloitte are expected to be present at the 2020 Annual Meeting and will have the opportunity to
make a statement, if they desire to do so, and to respond to appropriate questions.
The persons named in the proxy will, unless otherwise instructed thereon, vote
your shares in favor of the following resolution, which will be submitted to the stockholders for ratification at the 2020 Annual Meeting:
RESOLVED, that the selection of the firm of Deloitte, independent registered public accountant, to audit the consolidated financial statements of the
Company and the effectiveness of internal controls over financial reporting for fiscal year 2020, to make a report thereon, and to perform other services, be, and hereby is, ratified.
The firm of Deloitte, independent registered public accountant, has been the independent registered public accountant for the Company since 2016, and also served as the
independent accountant for the Predecessor prior to the Predecessors emergence from bankruptcy in 2016.
The Audit Committee has adopted a policy relating to
the engagement of the Companys independent registered public accountant. The policy provides that in addition to the audit of the Companys financial statements and internal controls over financial reporting, related quarterly reviews and
other audit services, and providing services necessary to complete SEC filings, the Companys independent registered public accountant may be engaged to provide non-audit services as described herein.
Prior to engagement, all services to be rendered by the independent registered public accountant must be authorized by the Audit Committee in accordance with pre-approval procedures that are defined in the
policy. The pre-approval procedures require (i) the annual review and pre-approval by the Audit Committee of all anticipated audit and non-audit services; and (ii) the quarterly pre-approval by the Audit Committee of services, if any, not previously approved and the review of the status of
previously-approved services. The Audit Committee may also approve certain ongoing non-audit services not previously approved in the limited circumstances provided for in applicable SEC rules. All services
performed by the independent registered public accountant for the Company and our subsidiaries in 2019 were pre-approved by the Audit Committee.
The policy defines those non-audit services that the Companys independent registered public accountant may also be engaged
to provide as follows: (i) audit related services (e.g., due diligence, accounting consultations and audits related to mergers, acquisitions and divestitures; employee benefit plan audits; accounting and financial reporting standards
consultation; internal control reviews); (ii) tax related services (e.g., tax compliance; general tax consultation and planning; tax advice related to mergers, acquisitions, and divestitures); and (iii) other services (e.g.,
process improvement, review and assurance; litigation; general research; forensic and investigative services; training services). The policy prohibits the engagement of the Companys independent registered public accountant to provide:
(a) bookkeeping or other services related to the accounting records or financial statements of the Company; (b) financial information systems design and implementation services; (c) appraisal or valuation services, fairness opinions,
or contribution-in-kind reports; (d) actuarial services; (e) internal audit outsourcing services; (f) management or human resource functions;
(g) broker-dealer, investment advisor, or investment banking services; (h) legal and expert services unrelated to the audit; and (i) any other service that the PCAOB determines, by regulation, to be impermissible. In addition, the
policy prohibits the Companys independent registered public accountant from providing tax or financial planning advice to any officer of the Company.
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2020 Proxy Statement
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PROPOSAL 5 RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTANT
Ongoing compliance with the Audit Committees policy relating to the engagement of Deloitte is monitored on behalf
of the Audit Committee by the Companys CFO. Reports from Deloitte and the CFO describing the services provided by the firm and fees for such services are provided to the Audit Committee no less often than quarterly.
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✔
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The Board of Directors recommends that stockholders vote FOR ratification of the appointment of Deloitte as our independent registered public accountant for the fiscal year ending December 31,
2020.
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2020 Proxy Statement
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OTHER BUSINESS
Other than as stated herein, the Board does not intend to
bring any business before the 2020 Annual Meeting and it has not been informed of any matters that may be presented to the 2020 Annual Meeting by others. However, if any other matters properly come before the 2020 Annual Meeting, it is the intent of
the Board that the persons named in the proxy will vote pursuant to the proxy in accordance with their judgment in such matters.
This Proxy Statement and our
2019 Annual Report to stockholders are available on the Companys website at www.vistraenergy.com.
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By Order of the Board of Directors
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Stephanie Zapata Moore
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Executive Vice President,
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General Counsel, and Corporate Secretary
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Dated: March 30, 2020
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Whether or not you will be able to attend the meeting,
please vote your shares promptly.
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78
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2020 Proxy Statement
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APPENDIX A PROPOSED AMENDMENTS TO VISTRA ENERGY
CORP.S CERTIFICATE OF INCORPORATION TO DECLASSIFY THE BOARD OF DIRECTORS
Set forth below is the text of the Companys Certificate of Incorporation proposed to be amended by Proposal No. 1. Proposed additions are indicated by
double underlining, and proposed deletions are indicated by strike-outs.
Section 5.2 Classification.
Term; Removal.
(a) The Board of Directors
(other Other than those directors elected by the holders of any series of Preferred Stock provided for or fixed pursuant to the provisions of Article IV
hereof (including any Preferred Stock Designation) (the Preferred Stock Directors)) shall be divided into three classes, as nearly equal in number as possible, designated
Class I, Class II and Class III.
Class I directors shall initially serve until the first annual meeting of stockholders following the effectiveness of this Section 5.2;
Class II directors shall initially serve until the second annual meeting of stockholders following the effectiveness of this Section 5.2; and
Class III directors shall initially serve until the third annual meeting of stockholders following the effectiveness of this Section 5.2.
Commencing with the first, commencing with the 2020 annual meeting of stockholders following the effectiveness of this
Section 5.2, directors of each class the term of which shall then expire, directors shall be elected to hold office
for a three-year term and until the term expiring on the date of the next annual meeting of stockholders following their election and qualification
of until their respective successors in office. In case of any increase or decrease, from time to time, in the number of directors (other
than Preferred Stock Directors), the number of directors in each class shall be apportioned as nearly equal as possible shall have been duly elected and
qualified, or until their earlier death, resignation, disqualification or removal.
(b) Subject to the rights of the holders of any
outstanding series of Preferred Stock, and unless otherwise required by law, newly created directorships resulting from any increase in the authorized number of directors and any vacancies in the Board of Directors resulting from death, resignation,
retirement, disqualification, removal from office or other cause shall be filled solely by the affirmative vote of a majority of the remaining directors then in office and entitled to vote thereon, even though less than a quorum of the Board of
Directors, or by the sole remaining director. Any director so chosen shall hold office until the next election of the class for which such director shall have been chosen
annual meeting and until his or her successor shall have been duly elected and qualified, or until such directors earlier death, resignation, disqualification or removal. A
director may resign at any time upon notice to the Corporation as provided in the Corporations Bylaws. No decrease in the authorized number of directors shall shorten the term of any incumbent director.
(c) Except for such additional directors, if any, as are elected by the holders of any series of Preferred Stock as provided for or fixed pursuant to
the provisions of Article IV hereof (including any Preferred Stock Designation), any director, or the entire Board of Directors, may be removed from office at any time, but only for
with or without cause, and only by the affirmative vote of at least a majority of the voting power of the stock
outstanding and entitled to vote thereon.
(d) During any period when the holders of any series of Preferred Stock have the right to elect
additional directors as provided for or fixed pursuant to the provisions of Article IV hereof (including any Preferred Stock Designation), and upon commencement and for the duration of the period during which such right continues: (i) the then
otherwise total authorized number of directors of the Corporation shall automatically be increased by such number of directors that the holders of any series of Preferred Stock have a right to elect, and the holders of such Preferred Stock shall be
entitled to elect the additional directors so provided for or fixed pursuant to said provisions and (ii) each Preferred Stock Director shall serve until such Preferred Stock Directors successor shall have been duly elected and qualified,
or until such directors right to hold such office terminates pursuant to said provisions, whichever occurs earlier, subject to his or her earlier death, disqualification, resignation or removal. In case any vacancy shall occur among the
Preferred Stock Directors, a successor may be elected by the holders of Preferred Stock pursuant to said provisions. Except as otherwise provided for or fixed pursuant to the provisions of Article IV hereof (including any Preferred Stock
Designation), whenever the holders of any series of Preferred Stock having such right to elect additional directors are divested of such right pursuant to said provisions, the terms of office of all Preferred Stock Directors elected by the holders
of such Preferred Stock, or elected to fill any vacancies resulting from the death, resignation, disqualification or removal of such additional directors, shall forthwith terminate and the total authorized number of directors of the Corporation
shall be reduced accordingly.
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2020 Proxy Statement
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A-1
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AnnUAL MeeTing OF visTRA eneRgY cORP . Date: Wednesday, April 29, 2020
Annual Meeting of Vistra Energy Corp. Time: 9:00 A.M. (Central Daylight Time) to be held on Wednesday, April 29, 2020 Place: www.proxydocs.com/VST for Holders as of March 16, 2020 Please make your marks like this: Use dark black pencil or pen only
This proxy is being solicited on behalf of the Board of Directors Board of Directors Recommends a Vote FOR proposals 1, 4 and 5, and if the Charter Amendment in proposal 1 is approved, FOR the election of the Director nominees in VOTE BY: proposal
2, and if the Charter Amendment in proposal 1 is not approved, FOR the election inTeRneT TeLePHOne Call of the Director nominees in proposal 3. Directors Go To 866-829-5001 Recommend For Against Abstain 1: Approve an amendment to the Vistra Energy
www.proxypush.com/vsT • Use any touch-tone telephone. Corp. Certificate of Incorporation • Cast your vote online. OR For • Have your Proxy Card/V oting Instruction Form ready. (the “Charter”) to declassify the Board of
• View Meeting documents. • Follow the simple recorded instructions. Directors so that all Directors will be elected MAiL annually commencing with the 2020 Annual Meeting (the “Charter Amendment”) • Mark, sign and date
your Proxy Card/Voting Instruction Form. OR 2: If the Charter Amendment in proposal 1 is For Against Abstain Detach your Proxy Card/Voting Instruction Form. • approved, election of the following 10 Directors • Return your Proxy
Card/Voting Instruction Form in the For 01 Hilary E. Ackermann postage-paid envelope provided. For 02 Arcilia C. Acosta The undersigned hereby appoints Stephanie Zapata Moore, as the true and lawful attorney of the undersigned, with For 03 Gavin R.
Baiera full power of substitution and revocation, and authorizes her to vote all the shares of common stock of Vistra Energy For Corp. that the undersigned is entitled to vote at said meeting and any adjournment thereof upon the matters specified 04
Paul M. Barbas and upon such other matters as may be properly brought before the meeting or any adjournment thereof, conferring For 05 Lisa Crutchfield authority upon such true and lawful attorney to vote in her discretion on such other matters as
may properly come For 06 Brian K. Ferraioli before the meeting and revoking any proxy heretofore given. For 07 Scott B. Helm THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO For 08 Jeff D. Hunter DIRECTION IS GIVEN, SHARES
WILL BE VOTED FOR THE PROPOSALS 1, 4 AND 5, AND IF For 09 Curtis A. Morgan THE CHARTER AMENDMENT IN PROPOSAL 1 IS APPROVED, FOR THE ELECTION OF THE For DIRECTOR NOMINEES IN PROPOSAL 2, AND IF THE CHARTER AMENDMENT IN PROPOSAL 1 IS 10 John R. Sult
NOT APPROVED, FOR THE ELECTION OF THE DIRECTOR NOMINEES IN PROPOSAL 3. 3: I f the Charter Amendment in proposal 1 is not For Against Abstain approved, election of the following four Directors PROXY TABULATOR FOR For 01 Gavin R. Baiera For 02 Scott
B. Helm visTRA eneRgY cORP . For c/O MeDiAnT cOMMUnicATiOns 03 Curtis A. Morgan P.O. BOX 8016 For 04 John R. Sult cARY, nc 27512-9903 For Against Abstain 4: Approve, on an advisor y basis, named executive officer compensation. For For Against
Abstain 5: Ratify the selection of Deloitte & Touche LLP as our independent For registered public accounting firm for the year ending December 31, 2020. To attend the meeting and vote your shares in person, please mark this box. Authorized
Signatures - This section must be completed for your Instructions to be executed. Please Sign Here Please Date Above Please Sign Here Please Date Above Please sign exactly as your name(s) appears on your account. If held in joint tenancy, all
persons should sign. Trustees, administrators, etc., should include title and authority. Corporations should provide full name of corporation and title of authorized officer signing the proxy. Please separate carefully at the perforation and return
just this portion in the envelope provided.AnnUAL MeeTing OF visTRA eneRgY cORP . Date: Wednesday, April 29, 2020 Annual Meeting of Vistra Energy Corp. Time: 9:00 A.M. (Central Daylight Time) to be held on Wednesday, April 29, 2020 Place:
www.proxydocs.com/VST for Holders as of March 16, 2020 Please make your marks like this: Use dark black pencil or pen only This proxy is being solicited on behalf of the Board of Directors Board of Directors Recommends a Vote FOR proposals 1, 4 and
5, and if the Charter Amendment in proposal 1 is approved, FOR the election of the Director nominees in VOTE BY: proposal 2, and if the Charter Amendment in proposal 1 is not approved, FOR the election inTeRneT TeLePHOne Call of the Director
nominees in proposal 3. Directors Go To 866-829-5001 Recommend For Against Abstain 1: Approve an amendment to the Vistra Energy www.proxypush.com/vsT • Use any touch-tone telephone. Corp. Certificate of Incorporation • Cast your vote
online. OR For • Have your Proxy Card/V oting Instruction Form ready. (the “Charter”) to declassify the Board of • View Meeting documents. • Follow the simple recorded instructions. Directors so that all Directors will
be elected MAiL annually commencing with the 2020 Annual Meeting (the “Charter Amendment”) • Mark, sign and date your Proxy Card/Voting Instruction Form. OR 2: If the Charter Amendment in proposal 1 is For Against Abstain Detach
your Proxy Card/Voting Instruction Form. • approved, election of the following 10 Directors • Return your Proxy Card/Voting Instruction Form in the For 01 Hilary E. Ackermann postage-paid envelope provided. For 02 Arcilia C. Acosta The
undersigned hereby appoints Stephanie Zapata Moore, as the true and lawful attorney of the undersigned, with For 03 Gavin R. Baiera full power of substitution and revocation, and authorizes her to vote all the shares of common stock of Vistra Energy
For Corp. that the undersigned is entitled to vote at said meeting and any adjournment thereof upon the matters specified 04 Paul M. Barbas and upon such other matters as may be properly brought before the meeting or any adjournment thereof,
conferring For 05 Lisa Crutchfield authority upon such true and lawful attorney to vote in her discretion on such other matters as may properly come For 06 Brian K. Ferraioli before the meeting and revoking any proxy heretofore given. For 07 Scott
B. Helm THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO For 08 Jeff D. Hunter DIRECTION IS GIVEN, SHARES WILL BE VOTED FOR THE PROPOSALS 1, 4 AND 5, AND IF For 09 Curtis A. Morgan THE CHARTER AMENDMENT IN PROPOSAL 1 IS
APPROVED, FOR THE ELECTION OF THE For DIRECTOR NOMINEES IN PROPOSAL 2, AND IF THE CHARTER AMENDMENT IN PROPOSAL 1 IS 10 John R. Sult NOT APPROVED, FOR THE ELECTION OF THE DIRECTOR NOMINEES IN PROPOSAL 3. 3: I f the Charter Amendment in proposal 1 is
not For Against Abstain approved, election of the following four Directors PROXY TABULATOR FOR For 01 Gavin R. Baiera For 02 Scott B. Helm visTRA eneRgY cORP . For c/O MeDiAnT cOMMUnicATiOns 03 Curtis A. Morgan P.O. BOX 8016 For 04 John R. Sult
cARY, nc 27512-9903 For Against Abstain 4: Approve, on an advisor y basis, named executive officer compensation. For For Against Abstain 5: Ratify the selection of Deloitte & Touche LLP as our independent For registered public accounting firm
for the year ending December 31, 2020. To attend the meeting and vote your shares in person, please mark this box. Authorized Signatures - This section must be completed for your Instructions to be executed. Please Sign Here Please Date Above Please
Sign Here Please Date Above Please sign exactly as your name(s) appears on your account. If held in joint tenancy, all persons should sign. Trustees, administrators, etc., should include title and authority. Corporations should provide full name of
corporation and title of authorized officer signing the proxy. Please separate carefully at the perforation and return just this portion in the envelope provided.
Please separate carefully at the perforation and return just this portion in
the envelope provided. Revocable Proxy — vistra energy corp. Annual Meeting of stockholders April 29, 2020, 9:00 a.m. (central Daylight Time) This Proxy is solicited on Behalf of the Board of Directors The undersigned appoints Stephanie Zapata
Moore with full power of substitution, to act as proxy for the undersigned, and to vote all shares of common stock of Vistra Energy Corp. that the undersigned is entitled to vote at the annual meeting to stockholders on April 29, 2020 at 9:00 a.m.
and any and all adjournments thereof, as set forth below. This proxy is revocable and will be voted as directed. However, if no instruction are specified, the proxy will be voted FOR the proposals in 1, 4 and 5, and if the Charter Amendment in
proposal 1 is approved, FOR the election of the director nominees specified in proposal 2, and if the Charter Amendment in proposal 1 is not approved, then FOR the election of the director nominees in proposal 3. (cOnTinUeD AnD TO Be signeD On
ReveRse siDe)Please separate carefully at the perforation and return just this portion in the envelope provided. Revocable Proxy — vistra energy corp. Annual Meeting of stockholders April 29, 2020, 9:00 a.m. (central Daylight Time) This Proxy
is solicited on Behalf of the Board of Directors The undersigned appoints Stephanie Zapata Moore with full power of substitution, to act as proxy for the undersigned, and to vote all shares of common stock of Vistra Energy Corp. that the undersigned
is entitled to vote at the annual meeting to stockholders on April 29, 2020 at 9:00 a.m. and any and all adjournments thereof, as set forth below. This proxy is revocable and will be voted as directed. However, if no instruction are specified, the
proxy will be voted FOR the proposals in 1, 4 and 5, and if the Charter Amendment in proposal 1 is approved, FOR the election of the director nominees specified in proposal 2, and if the Charter Amendment in proposal 1 is not approved, then FOR the
election of the director nominees in proposal 3. (cOnTinUeD AnD TO Be signeD On ReveRse siDe)