Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of
Certain Officers.
On June 30, 2020, David J. Lesar, a current member of the Board of Directors
(the "Board") of CenterPoint Energy, Inc. (the "Company"), was appointed by the
Board as permanent President and Chief Executive Officer of the Company,
effective July 1, 2020. Mr. Lesar will continue to serve as a member of the
Board. John W. Somerhalder II, another member of the Board, had been serving as
Interim President and Chief Executive Officer of the Company since February 19,
2020 until a permanent President and Chief Executive Officer of the Company was
identified and appointed. On June 30, 2020, Mr. Somerhalder provided notice of
his intent to resign from his interim executive officer and director positions
with the Company and its affiliates and has ceased service in such capacity
effective June 30, 2020.He also departed from the Company as a director,
effective as of the same date. His resignation as an interim executive officer
and as a director was not the result of any disagreement he had with the Company
on any matter relating to the Company's operations, policies and practices,
including any matters concerning the Company's controls or any financial or
accounting-related matters or disclosures.
David J. Lesar, age 67, joined the Company as a member of the Board on May 6,
2020. He served as interim CEO of Health Care Service Corporation, the largest
privately-held health insurer in the United States, from July 2019 through June
1, 2020, having joined that company's board of directors in 2018. He was the
Chairman of the Board and CEO of Halliburton Company from 2000 to 2017 and
Executive Chairman of the Board from June 2017 until December 2018. Mr. Lesar
joined Halliburton in 1993 and served in a variety of other roles, including
executive vice president of Finance and Administration for Halliburton Energy
Services, a Halliburton business unit, CFO of Halliburton from 1995 through May
1997, President and Chief Operating Officer from June 1997 through August 2000
and continued as President until August 2014. He has also served on the board of
directors of several companies, most recently Agrium, Inc. as well as Lyondell
Chemical Company, Southern Company, Cordant Technologies, and Mirant Corp. A
Certified Public Accountant, Mr. Lesar was previously a partner at Arthur
Andersen. He received both his B.S. and MBA from the University of Wisconsin.
In connection with his appointment, pursuant to an offer letter dated July 1,
2020, Mr. Lesar will receive a base salary of $1,350,000 per year. He will also
receive a sign-on equity award consisting of restricted stock units valued at
$1,000,000, which will vest ratably upon his continued employment on the first,
second and third anniversaries of the grant date. In connection with
facilitating Mr. Lesar's relocation to the Company's headquarters in Houston,
Texas where Mr. Lesar does not currently have a residence, Mr. Lesar will
receive benefits in connection with the purchase of his residence in Dallas,
Texas by the Company for an agreed upon $1,217,000 and other relocation
assistance subject to the Company's relocation policy. Mr. Lesar will be
eligible to participate in the Company's compensation and benefits plans and
programs for similarly situated executives, including the Company's change in
control plan and incentive plans. The incentive plans include the Company's
Short-Term Incentive Plan ("STI") and the Long-Term Incentive Plan ("LTI"). His
initial target STI award level will be 125% of base salary (prorated for the
period of time during the fiscal year in which he serves as President and Chief
Executive Officer, relative to the entire year) and his target LTI award level
will be 520% of base salary, which he was granted effective July 1, 2020.
On June 30, 2020, at the recommendation of the Board's Governance Committee, the
Board also appointed Earl M. Cummings to the Board effective July 1, 2020, with
an initial term to expire on the date of the Company's annual meeting of
shareholders in 2021 and until his successor is elected and qualified. Mr.
Cummings is expected to stand for election as director at the Company's annual
meeting of shareholders in 2021.
Since 2012, Mr. Cummings has served as Managing Partner of MCM Houston
Properties, LLC, a real estate fund that invests in single family residential
properties in Houston, Texas. In his role as Managing Partner, he is responsible
for overall capital raising, investment, acquisition, and business strategies of
the fund and its assets. Mr. Cummings also serves as Chief Executive Officer of
The BTS Team, which began as an information technology and staffing firm
providing solutions and services across various regions and evolved into a
company that also invested financial resources in various industries to create
value for shareholders and other stakeholders, and he previously served as its
Chief Information Officer and Chairman of its board. He also served as Chief
Executive Officer of BestAssets, Inc., a private company providing real estate
portfolio management and related services. Active across communities and in
non-profit board service, Mr. Cummings has served on the boards of the
University of Houston Board of Visitors, C-STEM Robotics (where he was founding
Chairman of the Executive Board for C-STEM), Yellowstone Academy and has also
served on the advisory boards for KIPP Academy and Texas Southern University
School of Business. Mr. Cummings holds a BBA of Management Information Systems
from the University of Houston and an MBA from Pepperdine University.
There are no arrangements or understandings between Mr. Cummings and any other
person pursuant to which he was selected as a director, and the Company is not
aware of any transaction in which he has an interest requiring disclosure
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under Item 404(a) of Regulation S-K. Committee appointments for Mr. Cummings
will be determined at a later date. Mr. Cummings will be compensated for his
service on the Board under the Company's standard arrangements for non-employee
directors described in its proxy statement for the 2020 annual meeting of
stockholders (which arrangements may be updated from time to time) and received
an initial stock award approved by the Board under the CenterPoint Energy, Inc.
Stock Plan for Outside Directors, as amended, valued at $125,000, which
represents a prorated amount of the annual stock award valued at $150,000
received by each of the Company's non-employee directors serving on the Board as
of early May 2020, which awards were previously disclosed on Current Reports on
Form 8-K and/or related Section 16 filings.
As previously disclosed in connection with Mr. Somerhalder's appointment as
Interim President and Chief Executive Officer of the Company, the Company agreed
to provide certain compensation to Mr. Somerhalder, including, in the discretion
of the Compensation Committee of the Board (the "Compensation Committee"), an
annual cash bonus amount of up to $1,000,000 (pro-rated for actual time served)
in respect of the period during which Mr. Somerhalder serves as Interim
President and Chief Executive Officer of the Company. Pursuant to these terms
and effective as of the date of Mr. Somerhalder's resignation, the Compensation
Committee approved the payment of a cash bonus of $364,384 to Mr. Somerhalder.
A copy of the press release announcing the above is attached as Exhibit 99.1 to
this Current Report on Form 8-K and incorporated herein by reference.
On July 1, 2020, the Compensation Committee approved new forms of award
agreements under the LTI for performance awards and restricted stock unit awards
granted to Mr. Lesar, as well as a new form of award agreement for restricted
stock units (retention, service-based vesting) to be used for Mr. Lesar's
sign-on grant and for grants to such other employees as the Compensation
Committee may determine in the future. Among other things, the newly approved
forms of award agreements for Mr. Lesar's performance awards and restricted
stock unit awards provide that Mr. Lesar will be a "retirement eligible"
participant, and therefore eligible for pro-rata vesting upon retirement,
subject to achievement of the relevant performance metrics in the case of
performance awards, after three years of service. Also under these award
agreements, the award will fully vest, subject, in the case of performance
awards, to the achievement of the relevant performance metrics, if Mr. Lesar
satisfies the requirements for enhanced retirement, which are set forth in the
agreements. The newly approved form of award agreement for restricted stock
units for retention, service-based vesting amended the applicable vesting
schedule to provide flexibility for multi-year vesting arrangements.
The description of the offer letter and forms of award agreements, as amended,
is qualified in its entirety by reference to the full text of the offer letter
and the forms of performance award agreement for the chief executive officer,
restricted stock unit award agreement for the chief executive officer and
restricted stock unit award agreement (retention, service-based vesting), as
applicable, which are included as Exhibits 10.1, 10.2, 10.3 and 10.4,
respectively, hereto and incorporated by reference herein.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
10.1 Offer Letter dated July 1, 2020
Form of Performance Award Agreement for the Chief Executive
10.2 Officer
Form of Restricted Stock Unit Award Agreement for the Chief
10.3 Executive Officer
Form of Restricted Stock Unit Award Agreement (Retention,
10.4 Service-Based Vesting)
99.1 Press Release issued by the Company on June 30, 2020
104 Cover Page Interactive Data File - the cover page XBRL tags are
embedded within the Inline XBRL document
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