Item 2. Properties
Information regarding the registrant’s properties is included in Part I. Item 1. - Business under the sections titled “Utility - Property and Other Generation Resources” and “Entergy Wholesale Commodities - Property” in this report.
Item 3.
Item 3. Legal Proceedings
Details of the registrant’s material environmental regulation and proceedings and other regulatory proceedings and litigation that are pending or those terminated in the fourth quarter of 2012 are discussed in Part I. Item 1. - Business under the sections titled “Retail Rate Regulation”, “Environmental Regulation”, and “Litigation” and "Impairment of Long-Lived Assets" in Note 1 to the financial statements in this report.
Item 4.
Item 4. Mine Safety Disclosures
Not applicable.
EXECUTIVE OFFICERS OF ENTERGY CORPORATION
Executive Officers
(a)
In addition, this officer is an executive officer and/or director of various other wholly owned subsidiaries of Entergy Corporation and its operating companies.
Each officer of Entergy Corporation is elected yearly by the Board of Directors. Each officer's age and title is provided as of December 31, 2013.
PART II
Item 5.
Item 5. Market for Registrants’ Common Equity and Related Stockholder Matters
Entergy Corporation
The shares of Entergy Corporation’s common stock are listed on the New York Stock and Chicago Stock Exchanges under the ticker symbol ETR.
The high and low prices of Entergy Corporation’s common stock for each quarterly period in 2013 and 2012 were as follows:
Consecutive quarterly cash dividends on common stock were paid to stockholders of Entergy Corporation in 2013 and 2012. Quarterly dividends of $0.83 per share were paid in 2013 and 2012.
As of January 31, 2014, there were 32,163 stockholders of record of Entergy Corporation.
Unregistered Sales of Equity Securities and Use of Proceeds
Issuer Purchases of Equity Securities (1)
In accordance with Entergy’s stock-based compensation plans, Entergy periodically grants stock options to key employees, which may be exercised to obtain shares of Entergy’s common stock. According to the plans, these shares can be newly issued shares, treasury stock, or shares purchased on the open market. Entergy’s management has been authorized by the Board to repurchase on the open market shares up to an amount sufficient to fund the exercise of grants under the plans. The amount of share repurchases under these programs may vary as a result of material changes in business results or capital spending or new investment opportunities. In addition, in the first quarter 2013, Entergy withheld 62,841 shares of its common stock at $64.45 per share to pay taxes due upon vesting of restricted stock granted as part of its long-term incentive program.
(1)
See Note 12 to the financial statements for additional discussion of the stock-based compensation plans.
(2)
Maximum amount of shares that may yet be repurchased does not include an estimate of the amount of shares that may be purchased to fund the exercise of grants under the stock-based compensation plans.
Entergy Corporation, Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy
There is no market for the common stock of Entergy Corporation’s wholly owned subsidiaries. Cash dividends on common stock paid by the Registrant Subsidiaries during 2013 and 2012, were as follows:
Information with respect to restrictions that limit the ability of the Registrant Subsidiaries to pay dividends is presented in Note 7 to the financial statements.
Item 6.
Item 6. Selected Financial Data
Refer to “SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON OF ENTERGY CORPORATION AND SUBSIDIARIES, ENTERGY ARKANSAS, INC. AND SUBSIDIARIES, ENTERGY GULF STATES LOUISIANA, L.L.C., ENTERGY LOUISIANA, LLC, ENTERGY MISSISSIPPI, INC., ENTERGY NEW ORLEANS, INC., ENTERGY TEXAS,
INC. AND SUBSIDIARIES, and SYSTEM ENERGY RESOURCES, INC.” which follow each company’s financial statements in this report, for information with respect to selected financial data and certain operating statistics.
Item 7.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Refer to “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS OF ENTERGY CORPORATION AND SUBSIDIARIES, ENTERGY ARKANSAS, INC. AND SUBSIDIARIES, ENTERGY GULF STATES, LOUISIANA, L.L.C., ENTERGY LOUISIANA, LLC, ENTERGY MISSISSIPPI, INC., ENTERGY NEW ORLEANS, INC., ENTERGY TEXAS, INC. AND SUBSIDIARIES, and SYSTEM ENERGY RESOURCES, INC.”
Item 7A.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Refer to “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS OF ENTERGY CORPORATION AND SUBSIDIARIES - Market and Credit Risk Sensitive Instruments.”
Item 8.
Item 8. Financial Statements and Supplementary Data
Refer to “TABLE OF CONTENTS - Entergy Corporation, Entergy Arkansas, Inc., Entergy Gulf States Louisiana, L.L.C., Entergy Louisiana, LLC, Entergy Mississippi, Inc., Entergy New Orleans, Inc., Entergy Texas, Inc., and System Energy Resources, Inc.”
Item 9.
Item 9. Changes In and Disagreements With Accountants On Accounting and Financial Disclosure
No event that would be described in response to this item has occurred with respect to Entergy Corporation, Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, or System Energy.
Item 9A.
Item 9A. Controls and Procedures
Disclosure Controls and Procedures
As of December 31, 2013, evaluations were performed under the supervision and with the participation of Entergy Corporation, Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy (individually “Registrant” and collectively the “Registrants”) management, including their respective Principal Executive Officers (PEO) and Principal Financial Officers (PFO). The evaluations assessed the effectiveness of the Registrants’ disclosure controls and procedures. Based on the evaluations, each PEO and PFO has concluded that, as to the Registrant or Registrants for which they serve as PEO or PFO, the Registrant’s or Registrants’ disclosure controls and procedures are effective to ensure that information required to be disclosed by each Registrant in reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms; and that the Registrant’s or Registrants’ disclosure controls and procedures are also effective in reasonably assuring that such information is accumulated and communicated to the Registrant’s or Registrants’ management, including their respective PEOs and PFOs, as appropriate to allow timely decisions regarding required disclosure.
Internal Control over Financial Reporting
(Entergy Corporation, Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)
The managements of Entergy Corporation, Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy (individually “Registrant” and collectively the “Registrants”) are responsible for establishing and maintaining adequate internal control over financial reporting for the Registrants. Each Registrant’s internal control system is designed to provide reasonable
assurance regarding the preparation and fair presentation of each Registrant’s financial statements presented in accordance with generally accepted accounting principles.
All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
Each Registrant’s management assessed the effectiveness of each Registrant’s internal control over financial reporting as of December 31, 2013. In making this assessment, each management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control - Integrated Framework. The original 1992 COSO Framework was utilized for management's assessment.
Based on each management’s assessment and the criteria set forth by the original 1992 COSO Framework, each Registrant’s management believes that each Registrant maintained effective internal control over financial reporting as of December 31, 2013.
The Registrants’ registered public accounting firm has issued an attestation report on each Registrant’s internal control over financial reporting.
Changes in Internal Controls over Financial Reporting
Under the supervision and with the participation of each Registrant’s management, including its respective PEO and PFO, each Registrant evaluated changes in internal control over financial reporting that occurred during the quarter ended December 31, 2013 and found no change that has materially affected, or is reasonably likely to materially affect, internal control over financial reporting.
Attestation Report of Registered Public Accounting Firm
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of
Entergy Corporation and Subsidiaries
New Orleans, Louisiana
We have audited the internal control over financial reporting of Entergy Corporation and Subsidiaries (the “Corporation”) as of December 31, 2013, based on criteria established in Internal Control -Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Corporation’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Corporation’s internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, the Corporation maintained, in all material respects, effective internal control over financial reporting as of December 31, 2013, based on the criteria established in Internal Control -Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements as of and for the year ended December 31, 2013 of the Corporation and our report dated February 27, 2014 expressed an unqualified opinion on those consolidated financial statements.
/s/ DELOITTE & TOUCHE LLP
New Orleans, Louisiana
February 27, 2014
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of
Entergy Arkansas, Inc. and Subsidiaries
Little Rock, Arkansas
We have audited the internal control over financial reporting of Entergy Arkansas, Inc. and Subsidiaries (the “Company”) as of December 31, 2013, based on criteria established in Internal Control - Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2013, based on the criteria established in Internal Control - Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements as of and for the year ended December 31, 2013 of the Company and our report dated February 27, 2014 expressed an unqualified opinion on those consolidated financial statements.
/s/ DELOITTE & TOUCHE LLP
New Orleans, Louisiana
February 27, 2014
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Members of
Entergy Gulf States Louisiana, L.L.C.
Baton Rouge, Louisiana
We have audited the internal control over financial reporting of Entergy Gulf States Louisiana, L.L.C. (the “Company”) as of December 31, 2013, based on criteria established in Internal Control - Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2013, based on the criteria established in Internal Control - Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the financial statements as of and for the year ended December 31, 2013 of the Company and our report dated February 27, 2014 expressed an unqualified opinion on those financial statements.
/s/ DELOITTE & TOUCHE LLP
New Orleans, Louisiana
February 27, 2014
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Members of
Entergy Louisiana, LLC and Subsidiaries
Baton Rouge, Louisiana
We have audited the internal control over financial reporting of Entergy Louisiana, LLC and Subsidiaries (the “Company”) as of December 31, 2013, based on criteria established in Internal Control - Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2013, based on the criteria established in Internal Control - Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements as of and for the year ended December 31, 2013 of the Company and our report dated February 27, 2014 expressed an unqualified opinion on those consolidated financial statements.
/s/ DELOITTE & TOUCHE LLP
New Orleans, Louisiana
February 27, 2014
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of
Entergy Mississippi, Inc.
Jackson, Mississippi
We have audited the internal control over financial reporting of Entergy Mississippi, Inc. (the “Company”) as of December 31, 2013, based on criteria established in Internal Control - Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2013, based on the criteria established in Internal Control - Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the financial statements as of and for the year ended December 31, 2013 of the Company and our report dated February 27, 2014 expressed an unqualified opinion on those financial statements.
/s/ DELOITTE & TOUCHE LLP
New Orleans, Louisiana
February 27, 2014
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of
Entergy New Orleans, Inc.
New Orleans, Louisiana
We have audited the internal control over financial reporting of Entergy New Orleans, Inc. (the “Company”) as of December 31, 2013, based on criteria established in Internal Control-Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2013, based on the criteria established in Internal Control-Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the financial statements as of and for the year ended December 31, 2013 of the Company and our report dated February 27, 2014 expressed an unqualified opinion on those financial statements.
/s/ DELOITTE & TOUCHE LLP
New Orleans, Louisiana
February 27, 2014
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholder of
Entergy Texas, Inc. and Subsidiaries
Beaumont, Texas
We have audited the internal control over financial reporting of Entergy Texas, Inc. and Subsidiaries (the “Company”) as of December 31, 2013, based on criteria established in Internal Control - Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2013, based on the criteria established in Internal Control - Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements as of and for the year ended December 31, 2013 of the Company and our report dated February 27, 2014 expressed an unqualified opinion on those consolidated financial statements.
/s/ DELOITTE & TOUCHE LLP
New Orleans, Louisiana
February 27, 2014
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholder of
System Energy Resources, Inc.
Jackson, Mississippi
We have audited the internal control over financial reporting of System Energy Resources, Inc. (the “Company”) as of December 31, 2013, based on criteria established in Internal Control - Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2013, based on the criteria established in Internal Control - Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the financial statements as of and for the year ended December 31, 2013 of the Company and our report dated February 27, 2014 expressed an unqualified opinion on those financial statements.
/s/ DELOITTE & TOUCHE LLP
New Orleans, Louisiana
February 27, 2014
PART III
Item 10.
Item 10. Directors and Executive Officers of the Registrants (Entergy Corporation, Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy Texas)
Information required by this item concerning directors of Entergy Corporation is set forth under the heading “Item 1 - Election of Directors” contained in the Proxy Statement of Entergy Corporation, to be filed in connection with its Annual Meeting of Stockholders to be held May 2, 2014, and is incorporated herein by reference.
All officers and directors listed below held the specified positions with their respective companies as of the date of filing this report, unless otherwise noted.
Each director and officer of the applicable Entergy company is elected yearly to serve by the unanimous consent of the sole stockholder with the exception of the directors and officers of Entergy Gulf States Louisiana, L.L.C. and Entergy Louisiana, LLC, who are elected yearly to serve by the unanimous consent of the sole common membership owners, EGS Holdings, Inc. and Entergy Louisiana Holdings, respectively. Entergy Corporation’s directors are elected annually at the annual meeting of shareholders. Entergy Corporation’s officers are elected at the annual organizational meeting of the Board of Directors.
Corporate Governance Guidelines and Committee Charters
Each of the Audit, Corporate Governance, and Personnel Committees of Entergy Corporation’s Board of Directors operates under a written charter. In addition, the full Board has adopted Corporate Governance Guidelines. Each charter and the guidelines are available through Entergy’s website (www.entergy.com) or upon written request.
Audit Committee of the Entergy Corporation Board
The following directors are members of the Audit Committee of Entergy Corporation’s Board of Directors:
Steven V. Wilkinson (Chairman)
Maureen S. Bateman
Stuart L. Levenick
Blanche L. Lincoln
All Audit Committee members are independent. In addition to the general independence requirements, all Audit Committee members must meet the heightened independence standards imposed by the SEC and NYSE. All Audit Committee members possess the level of financial literacy and accounting or related financial management expertise required by the NYSE rules. Steven V. Wilkinson qualifies as an “audit committee financial expert,” as that term is defined in the SEC rules.
Code of Ethics
The Board of Directors has adopted a Code of Business Conduct and Ethics for Members of the Board of Directors. The code is available through Entergy’s website (www.entergy.com) or upon written request. The Board has also adopted a Code of Business Conduct and Ethics for Employees that includes Special Provision Relating to Principal Executive Officer and Senior Financial Officers. The Code of Business Conduct and Ethics for Employees is to be read in conjunction with Entergy’s omnibus code of integrity under which Entergy operates called the Code of Entegrity as well as system policies. All employees are required to abide by the Codes. Non-bargaining employees are required to acknowledge annually that they understand and abide by the Code of Entegrity. The Code of Business Conduct and Ethics for Employees and the Code of Entegrity are available through Entergy’s website (www.entergy.com) or upon written request.
Source of Nominations to the Board of Directors; Nominating Procedure
The Corporate Governance Committee does not have any single method for identifying director candidates but will consider candidates suggested by a wide range of sources including director candidates recommended by Entergy Corporation's shareholders. Shareholders wishing to recommend a candidate to the Corporate Governance Committee should do so by submitting the recommendation in writing to Entergy Corporation's Secretary at 639 Loyola Avenue, P.O. Box 61000, New Orleans, LA 70161, and it will be forwarded to the Corporate Governance Committee members for their consideration. Any recommendation should include:
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the number of shares of Entergy Corporation held by the shareholder;
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the name and address of the candidate;
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a brief biographical description of the candidate, including his or her occupation for at least the last five years, and a statement of the qualifications of the candidate, taking into account the qualification requirements set forth above; and
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the candidate's signed consent to serve as a director if elected and to be named in the Proxy Statement.
Once the Corporate Governance Committee receives the recommendation, it may request additional information from the candidate about the candidate's independence, qualifications, and other information that would assist the Corporate Governance Committee in evaluating the candidate, as well as certain information that must be disclosed about the candidate in the Proxy Statement, if nominated. The Corporate Governance Committee will apply the same standards in considering director candidates recommended by shareholders as it applies to other candidates.
Section 16(a) Beneficial Ownership Reporting Compliance
Information called for by this item concerning the directors and officers of Entergy Corporation is set forth in the Proxy Statement of Entergy Corporation to be filed in connection with its Annual Meeting of Stockholders to be held on May 2, 2014, under the heading “Section 16(a) Beneficial Ownership Reporting Compliance”, which information is incorporated herein by reference.
Item 11.
Item 11. Executive Compensation
ENTERGY CORPORATION
Information concerning the directors and officers of Entergy Corporation is set forth in the Proxy Statement under the headings "Compensation Discussion and Analysis," "Executive Compensation Tables," "Nominees for the Board of Directors," and "Non-Employee Director Compensation," all of which information is incorporated herein by reference.
ENTERGY ARKANSAS, ENTERGY GULF STATES LOUISIANA, ENTERGY LOUISIANA, ENTERGY MISSISSIPPI, ENTERGY NEW ORLEANS, AND ENTERGY TEXAS
COMPENSATION DISCUSSION AND ANALYSIS
In this section, the compensation earned by the following Named Executive Officers in 2013 is discussed. Each officer’s title is provided as of December 31, 2013.
Mr. Denault, Mr. Forbes, Mr. Marsh, Mr. Mohl and Mr. West serve as executive officers of Entergy Corporation. No additional compensation was paid in 2013 to Mr. Denault, Mr. Marsh, Mr. Mohl or Mr. West for their service as Named Executive Officers of Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans and Entergy Texas (the "Subsidiaries").
1 Mr. Mohl is included in the Executive Compensation section of this Form 10-K because he served as President, Entergy Gulf States Louisiana and Entergy Louisiana for a portion of 2013.
CD&A Highlights
Pay for Performance Philosophy
Entergy Corporation's executive compensation programs are based on a philosophy of pay-for-performance that is embodied in the design of the annual and long-term incentive plans. In keeping with this philosophy, approximately 80% of the annual target compensation of Entergy Corporation’s Chief Executive Officer (excluding non-qualified supplemental retirement income) is “at risk,” with the substantial majority of this “at risk” compensation consisting of awards under the Executive Annual Incentive Plan (or Annual Incentive Plan) and the Long-Term Performance Unit Program, and the balance consisting of stock option and restricted stock awards.
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The Annual Incentive Plan incentivizes and rewards the achievement of operational financial metrics that are deemed by the Personnel Committee to be consistent with the overall goals and strategic direction that the Board has set for Entergy Corporation.
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The equity-based long-term incentive programs, including the Long-Term Performance Unit Program, further align the interests of the executives and Entergy Corporation’s shareholders by directly tying the value of the equity awards granted to executives under these programs to the performance of Entergy Corporation’s stock price and total shareholder return.
2013 Incentive Pay Outcomes
Pay outcomes for the Named Executive Officers during 2013 demonstrated the application of this pay- for-performance philosophy.
Annual Incentive Plan Awards
Awards under the Annual Incentive Plan are tied to operational financial performance through the Entergy Achievement Multiplier, which is the performance metric used to determine the funding of awards under the plan. For 2013, the Entergy Achievement Multiplier was determined based in equal part on the success in achieving earnings per share and operating cash flow goals. These goals were set at the beginning of the year based on Entergy Corporation’s financial plan and the Board’s overall goals for Entergy Corporation and were consistent with its published earnings guidance.
For 2013, the Personnel Committee, based on the recommendation of the Finance Committee, determined that management exceeded its earnings per share goal of $5.00 per share by $0.36 per share and met its operating cash flow goal of $3.25 billion, in each case based on operational earnings and operating cash flow, which excluded from as-reported results special items relating to Entergy Corporation’s decision to close the Vermont Yankee Nuclear Power Station and a related settlement reached with the State of Vermont in 2013, the implementation of the human capital management strategic initiative, and Entergy Corporation’s proposed spin-merge transaction with ITC Holdings Corp. (the “ITC Transaction”). The Personnel Committee evaluated each of these adjustments to as-reported results and concluded that they were appropriate in light of management’s performance with respect to these matters and the Committee’s view that, in general, management’s performance for purposes of determining Annual Incentive Plan awards should be measured against operational financial results, since operational results form the basis for Entergy Corporation’s financial plan and guidance to investors and are the primary basis on which its financial performance is evaluated by investors.
Based on this performance and the recommendation of the Finance Committee, the Personnel Committee certified an Entergy Achievement Multiplier of 136% for 2013, consistent with the strong financial results achieved by Entergy Corporation despite the significant challenges posed in 2013, including continued low wholesale power prices and financial and regulatory challenges and uncertainty related to Entergy Corporation’s wholesale nuclear plants. In reaching this decision, the Committee also took into account management's performance in relation to a number of strategic initiatives and decisions undertaken in 2013, including the successful integration of the transmission systems owned by Entergy Corporation’s utility operating companies into MISO, the decision to close the Vermont
Yankee Nuclear Power Station and related settlement agreement with the State of Vermont, the development and implementation of the human capital management initiative, and management’s unsuccessful effort to complete the ITC Transaction. This resulted in payouts to the executive officers, including Entergy Corporation’s Chief Executive Officer, under the Annual Incentive Plan at 136% of target, which the Personnel Committee considered to be appropriate in light of Entergy Corporation’s financial performance for the year and management’s performance on the matters discussed above.
Long-Term Performance Unit Program Payouts
Under the Long-Term Performance Unit Program, a substantial portion of targeted executive officer pay is tied directly to Entergy’s relative total shareholder return. Under this program, performance is measured over a three-year period by assessing Entergy Corporation’s total shareholder return in relation to the total shareholder return of the companies included in the Philadelphia Utility Index, with payouts based solely on relative performance. Performance is measured based on relative total shareholder return because it encourages the executives to deliver superior shareholder value in relation to Entergy Corporation’s peers and rewards not just stock price appreciation, but also the ability to deliver significant dividends to shareholders.
Although Entergy Corporation’s total shareholder return improved in 2013 both on an absolute basis and in relation to its peers, Entergy Corporation’s total shareholder return for the 2011 through 2013 performance period was in the bottom quartile of the Philadelphia Utility Index, which resulted in a zero payout for the performance units granted in 2011 for all of the Named Executive Officers. This compares with a grant date target opportunity of $1,111,023 for Entergy Corporation’s Chief Executive Officer and grant date payout opportunities ranging from $243,224 to $544,393 for the other Named Executive Officers for this performance period.
Establishing Executive Compensation
Pay for Performance Philosophy
Entergy Corporation’s executive compensation programs are based on a philosophy of pay-for-performance that is embodied in the design of the annual and long-term incentive plans. The annual incentive plan incentivizes and rewards the achievement of operational financial metrics that are deemed by the Personnel Committee to be consistent with the overall goals and strategic direction that the Board has set. The long-term incentive programs further align the interests of executives and Entergy Corporation’s shareholders by directly tying the value of the equity awards granted to executives under these programs to the performance of Entergy Corporation’s stock price and total shareholder return. Entergy Corporation believes the executive pay programs described in this section and in the accompanying tables have played a material role in the ability to drive strong financial and operational results and to attract and retain a highly experienced and successful management team.
The Starting Point
To develop a competitive compensation program, the Personnel Committee annually reviews compensation data from two sources:
Survey Data
The Committee uses published and private compensation survey data to develop marketplace compensation levels for the executive officers. The data, which is compiled by the Committee’s independent compensation consultant, compares the current compensation opportunities provided to each of the executive officers against the compensation opportunities provided to executives holding similar positions at companies with corporate revenues similar to Entergy Corporation’s. For non-industry specific positions such as a chief financial officer, the Committee reviews general industry data for total cash compensation (base salary and annual incentive). For management positions that are industry-specific such as Group President, Utility Operations, the Committee reviews data from utility companies for total cash compensation. However, for long-term incentives, all positions are reviewed relative to utility market data. The survey
data reviewed by the Committee covers hundreds of companies across a broad range of industries and over 60 investor-owned utility companies in the utility sector. In evaluating compensation levels against the survey data, the Committee considers only the aggregated survey data. The identities of the companies participating in compensation survey data are not disclosed to, or considered by, the Committee in its decision-making process and, thus, are not considered material by the Committee.
The Committee uses this survey data to develop compensation opportunities that are designed to deliver total target compensation at approximately the 50th percentile of the surveyed companies. The survey data are the primary data used for purposes of determining target compensation. As a result, Mr. Denault, Entergy Corporation’s Chief Executive Officer, is compensated at a higher level than Entergy Corporation’s other Named Executive Officers, reflecting market practices that compensate chief executive officers at greater potential compensation levels with more “pay at risk” than other named executive officers, due to the greater responsibilities and accountability required of a Chief Executive Officer. In most cases, the Committee considers its objectives to have been met if Entergy Corporation’s Chief Executive Officer and the eight (8) other executive officers (including all of the Named Executive Officers) who constitute what is referred to as the Office of the Chief Executive each have a target compensation opportunity that falls within the range of 85% - 115% of the 50th percentile of the survey data. Promoted officers or officers who are new to their roles may be transitioned into the targeted market range over time. Actual compensation received by an individual officer may be above or below the targeted range based on an individual officer’s skills, performance, experience and responsibilities, corporate performance and internal pay equity. For 2013, the total target compensation of each of the Named Executive Officers fell within the targeted range except for three officers whose total target compensation fell below the targeted range and another officer whose total targeted compensation was set above the targeted range, based on the Committee’s assessment of his skills, performance, experience and responsibilities and internal pay equity.
Proxy Analysis
Although the survey data described above is the primary data used in determining compensation, the Committee reviews data derived from the proxy statements of companies included in the Philadelphia Utility Index as an additional point of comparison. The proxy data are used to compare the compensation levels of the Named Executive Officers with the compensation levels of the corresponding top five highest paid executive officers of the companies included in the Philadelphia Utility Index, as reported in their proxy statements, based on pay rank and without regard to roles and responsibilities except with respect to the Chief Executive Officer and Chief Financial Officer, for whom comparable roles are used. The Personnel Committee uses this analysis to evaluate the overall reasonableness of Entergy Corporation's compensation programs. The following companies were included in the Philadelphia Utility Index at the time the proxy data was compiled:

AES Corporation

El Paso International

Ameren Corporation

Exelon Corporation

American Electric Power Co. Inc.

FirstEnergy Corporation

CenterPoint Energy Inc.

NextEra Energy

Consolidated Edison Inc.

Northeast Utilities

Covanta Holding Corporation

PGE Corporation

Dominion Resources Inc.

Public Service Enterprise Group, Inc.

DTE Energy Company

Southern Company

Duke Energy Corporation

Xcel Energy

Edison International
Executive Compensation Elements
The following table lists the elements of target direct compensation for the 2013 executive compensation program. The program uses a mix of fixed and variable compensation elements and provides alignment with both
short- and long-term business goals through annual and long-term incentives. Incentives are designed to drive overall corporate performance, specific business unit strategies, and individual performance using performance and operational measures the Committee believes correlate to shareholder value and align with Entergy Corporation’s strategic vision and operating priorities. The Committee establishes the performance measures and ranges of performance for the variable compensation elements. An individual's award is based primarily on corporate performance, market-based compensation levels, and individual performance.
Element
Key Characteristics
Why This Element Is Paid
How This Amount Is Determined
Base Salary
Fixed compensation component payable in cash. Reviewed annually and adjusted when appropriate.
Provides a base level of competitive cash compensation for executive talent.
Experience, job scope, market data, individual performance, and internal pay equity.
Annual Incentive Awards
Variable compensation component payable in cash based on performance against goals established annually.
Motivate and reward executives for performance on key financial and operational measures during the year.
Target opportunity based on job scope, market data, and internal equity. Actual awards based on performance tied to two measures:
Earnings Per Share
Operating Cash Flow
Stock Options
Non-qualified stock options that expire in ten years and become exercisable over three years - 33 1/3% on each anniversary of the grant date.
Coupled with restricted stock awards, align the interests of executives with Entergy Corporation's long-term shareholder value, provide competitive compensation, retain executive talent, and increase the executive officers’ ownership in Entergy Corporation common stock.
Job scope, market data, internal equity, individual performance, and Entergy Corporation’s performance.
Restricted Stock Awards
Restricted stock awards vest over three-year years - 33 1/3% on each anniversary of the grant date, have voting rights and accrue dividends during the vesting period.
Coupled with stock options, align the interests of executives with Entergy Corporation's long-term shareholder value, provide competitive compensation, retain executive talent, and increase the executive officers’ ownership in Entergy Corporation common stock.
Job scope, market data, individual performance, and Entergy Corporation’s performance.
Long-Term Performance Unit Program
Each performance unit equals the value of one share of Entergy Corporation common stock at the end of a three-year performance period. Each unit also earns the equivalent of the dividends paid during the performance period. Beginning with the 2012-2014 performance period, performance units granted under the Long-Term Performance Unit Program will be settled in shares of Entergy Corporation common stock rather than in cash.
Focuses the executive officers on building shareholder value and increase the executive officers’ ownership in Entergy Corporation common stock.
Entergy Corporation’s total shareholder return relative to the total shareholder return of the companies in the Philadelphia Utility Index.
Short-Term Compensation
The Personnel Committee determines the base salaries for all of the Named Executive Officers who are members of the Office of the Chief Executive based on competitive compensation data, performance considerations, and advice provided by the Committee’s independent compensation consultant. For the other Named Executive Officers, their salaries are established by their supervisors using the same criteria. The Committee also uses internal pay equity; however, the Committee has not established any predetermined formula against which the base salary of one Named Executive Officer is measured against another officer or employee.
In 2013, all of the Named Executive Officers received merit increases in their base salaries in the range of 2.0 to 5.8 percent, except for Messrs. Denault, Marsh, Forbes, May and Mohl. These increases in base salary were made in light of current economic conditions and the projected growth in executive salaries in 2013 based on general industry surveys obtained from human resources consulting firms, as well as, an internal pay equity comparison. The salary increases shown for Messrs. Denault, Forbes, Marsh, May and Mohl from 2012 to 2013 were determined in conjunction with their promotion to new positions assumed in 2013. The Committee determined the compensation levels for each of these officers using competitive compensation data provided by its independent compensation consultant. The Committee also considered their previous compensation levels and the compensation paid to their predecessors. In determining the 2013 base salaries, the Committee sought to position the compensation for each officer, other than Mr. Mohl and Mr. May, at below market levels with the intent of transitioning them to market-competitive levels over time. Mr. Mohl’s salary was established, in consultation with the independent compensation consultant, to reflect his unique responsibilities and accountability as President of the wholesale commodities business.
The following table sets forth the 2012 and 2013 base salaries for the Named Executive Officers. Changes in base salaries were effective either upon the date of the officers’ promotion or in April of the years shown, for those who received merit increases.
Annual Incentive Plan
Performance-based incentives are included in the Named Executive Officers’ compensation packages because Entergy Corporation believes performance-based incentives encourage the Named Executive Officers to pursue objectives consistent with the overall goals and strategic direction that the Board has set for Entergy Corporation. Annual incentive plans are commonly used by companies in a variety of industry sectors to compensate their executive officers for achieving financial and operational goals.
Under the Annual Incentive Plan, a performance metric known as the Entergy Achievement Multiplier is used to determine the percentage of target annual plan opportunities that will be paid each year to each Named Executive Officer, subject to adjustment based on individual performance.
Each year the Personnel Committee reviews the performance measures used to determine the Entergy Achievement Multiplier. In December 2012, the Personnel Committee decided to retain for 2013 the performance measures used for determining the 2012 Entergy Achievement Multiplier. These measures were consolidated earnings per share and operating cash flow, with each measure weighted equally. The Committee selected these performance measures because:
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earnings per share and operating cash flow have both a correlative and causal relationship with shareholder value over the long-term;
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earnings per share and operating cash flow targets are aligned with externally-communicated goals; and
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earnings per share and operating cash flow results are readily available in earning releases and SEC filings.
In addition, these measures are used by a number of other companies, including the companies in the Philadelphia Utility Index, as components of their incentive programs.
The Committee sets minimum, target and maximum achievement levels under the Annual Incentive Plan. There is no payout for performance at or below the minimum achievement level, the payout for performance at target is 100% of the target payout, and the payout for performance at or above the maximum achievement level is 200% of target. Payouts for performance between minimum and target achievement levels and between target and maximum levels are calculated using straight-line interpolation. In general, the Committee seeks to establish target achievement levels such that the relative difficulty of achieving the target level is consistent from year to year.
In January 2013, the Committee determined the Annual Incentive Plan targets to be used for purposes of determining annual bonuses for 2013. The Committee’s determination of the target levels was made after a full review by Entergy Corporation’s Board of Directors of management’s 2013 financial plan for Entergy Corporation and upon the recommendation of the Finance Committee. In setting the target levels, the Committee confirmed that the established targets aligned with Entergy Corporation’s anticipated 2013 financial performance as reflected in the financial plan and Entergy Corporation’s published earnings guidance. In keeping with its past practice, the Committee also determined that for purposes of measuring performance against such targets, the Committee would exclude the effect on as-reported results of activities associated with Entergy Corporation’s planned ITC Transaction, since that was a known special item that would be excluded in determining operational results, and the effect of any major storms that may occur during the year. The Committee therefore established the following targets for purposes of measuring management performance, in each case excluding the effect of activities associated with the ITC Transaction.
In 2013 in connection with their promotions, the Personnel Committee increased the 2013 target awards for incentives to be paid for 2013 under the Annual Incentive Plan for Messrs. Denault, Forbes, Marsh, May, and Mohl as follows: Mr. Denault’s increased from 70% to 120% of his base salary, Mr. Marsh’s increased from 40% to 70%, Mr. Mohl’s and Mr. Forbes’ increased from 60% to 70% of their base salaries and Mr. May’s increased from 40% to 60% of his base salary. The target awards established for these officers were comparable to the target awards historically set for these positions and levels of responsibility.
In December 2012, the target awards for incentives to be paid for 2013 under the Annual Incentive Plan for the other Named Executive Officers were set as follows: Haley Fisackerly (40%); Hugh T. McDonald (50%); Alyson M. Mount, (60%); Sallie T. Rainer (40%); Charles L. Rice, Jr. (40%); and Roderick K. West (70%).
The target awards for the Named Executive Officers (other than Entergy Corporation named executive officers) were set by their respective supervisors (subject to ultimate approval of Entergy’s Corporation's Chief Executive
Officer) who allocated a potential incentive pool established by the Personnel Committee among various of their direct and indirect reports.
Target awards are set based on an executive officer’s position and executive management level within the Entergy organization. Executive management levels at Entergy range from Level 1 through Level 4. At December 31, 2013, Mr. Denault held a Level 1 position, Messrs. Forbes, Marsh, Mohl and West held positions in Level 2, Ms. Mount and Mr. May held Level 3 positions, and the remaining Named Executive Officers held positions in Level 4. Accordingly, their respective incentive targets differ one from another based on the external market data developed by the Committee’s independent compensation consultant and the other factors noted above.
In January 2014, the Finance and Personnel Committees reviewed Entergy Corporation’s financial results against the performance objectives reflected in the table above. Based on the Finance Committee’s recommendation, the Personnel Committee determined that for 2013, management exceeded its earnings per share goal of $5.00 per share by $0.36 per share and met its operating cash flow goal of $3.25 billion, in each case based on operational earnings and operating cash flow, which excluded from as-reported results special items recorded for (i) an impairment and other expenses associated with the planned closure of the Vermont Yankee Nuclear Power Station and the related settlement agreement reached with the State of Vermont in 2013, (ii) expenses for the implementation of the human capital management strategic initiative in 2013, and (iii) costs associated with Entergy Corporation’s proposed spin-merge transaction with the ITC Transaction, offset by a related tax benefit. The adjustment to as-reported results for costs associated with the ITC Transaction had been identified as a special item at the time the goals were set, but the other special items had arisen during the year. The Committee evaluated each of these adjustments to as-reported results and concluded that they were appropriate in light of the Committee’s view that, in general, management’s performance for purposes of determining Annual Incentive Plan awards should be measured against operational financial results, since operational results form the basis for Entergy Corporation’s financial plan and guidance to investors and are the primary basis on which Entergy Corporation’s financial performance is evaluated by investors.
Based on this performance, and the recommendation of the Finance Committee, the Personnel Committee certified an Entergy Achievement Multiplier of 136% for 2013, consistent with the strong financial results achieved by Entergy Corporation, despite the significant challenges posed in 2013, including continued low wholesale power prices and regulatory challenges and uncertainty related to Entergy Corporation’s wholesale nuclear plants. In reaching this decision, the Committee also took into account management's performance in relation to a number of strategic initiatives and decisions undertaken in 2013, including the successful integration of the transmission systems owned by Entergy Corporation’s utility operating companies into MISO, the decision to close the Vermont Yankee Nuclear Power Station and related settlement agreement with the State of Vermont, the development and implementation of the human capital management initiative, and management’s unsuccessful effort to complete the ITC Transaction. This compares with an Entergy Achievement Multiplier of 104% and a payout to members of the Office of Chief Executive of 95% of target for 2012, when Entergy Corporation exceeded its earnings per share target by a smaller margin and fell short of its operating cash flow goal and the Personnel Committee reduced the awards paid to reflect management’s failure to meet the Committee’s expectations with respect to employee safety.
After the Entergy Achievement Multiplier was established to determine overall funding for the Annual Incentive Plan, Entergy Corporation’s Chief Executive Officer allocated incentive award funding to the business units based on their business unit results (referred to as the “line of business multiplier”). Individual awards were determined based on the line of business multiplier as well as individual officer performance.
The following table shows the Annual Incentive Plan payments as a percentage of base salary for 2013, as well as the incentive awards paid to each Named Executive Officer for 2013.
Nuclear Retention Plan
Mr. Forbes participates in the Entergy Nuclear Retention Plan, a special retention plan for officers and other leaders with special expertise in the nuclear industry. The Committee authorized this plan to attract and retain key management and employee talent in the nuclear power field, a field that requires unique technical and other expertise that is in great demand in the utility industry. The plan provides for bonuses to be paid annually over a three-year employment period with the bonus opportunity dependent on the participant’s management level and continued employment. Each annual payment is equal to an amount ranging from 15% to 30% of the employee’s base salary as of their date of enrollment in the Plan. In the case of Mr. Forbes, the annual cash bonus was fixed at 30% of his base salary as of January 1, 2011 for the 2011 through 2013 plan cycle. Under the plan, Mr. Forbes therefore received, in January 2013, a cash bonus equal to 30% of his January 1, 2011 base salary of $358,750. Mr. Forbes received his final payout for the 2011 through 2013 plan cycle in January 2014.
Mr. Forbes’ participation in the plan was renewed in January 2014 for a three-year period beginning on January 1, 2014, in recognition of the value Entergy Corporation places on Mr. Forbes as a member of Entergy Corporation’s senior management team and his extensive experience in the nuclear industry, and to keep his pay competitive. In accordance with the terms and conditions of the Nuclear Retention Plan, in January 2015, 2016 and 2017, Mr. Forbes will receive a cash bonus equal to 30% of his base salary as of January 1, 2014. The three year period covered and percentage of base salary paid to Mr. Forbes under the plan are consistent with the terms of participation of other senior executive officers who participate in this plan.
Long-Term Incentive Compensation
The goal for the long-term incentive compensation is to focus the executive officers on building shareholder value and to increase the executive officers’ ownership of Entergy Corporation common stock. In the long-term incentive compensation programs, Entergy Corporation uses a mix of performance units, restricted stock and stock options. Performance units reward the Named Executive Officers on the basis of total shareholder return, which is a measure of stock price appreciation and dividend payments, in relation to the companies in the Philadelphia Utility Index. Restricted stock ties the executive officers’ long-term financial interest to the long-term financial interests of Entergy Corporation’s shareholders. Stock options provide a direct incentive to increase the price of Entergy Corporation’s common stock. In general, Entergy Corporation seeks to allocate the total value of long-term incentive compensation 60% to performance units and 40% to a combination of stock options and restricted stock, equally divided in value,
all based on their grant date fair values. Allocations for individual Named Executive Officers may vary from this target as a result of individual performance, promotions and internal pay equity.
All of the performance units, shares of restricted stock and stock options granted to the Named Executive Officers in 2013 were awarded under the 2011 Equity Ownership Plan. All equity awards granted under the equity ownership plans require both a change in control and an involuntary job loss or substantial diminution of duties (a “double trigger”) for the acceleration of these awards upon a change in control.
Performance Unit Program
Performance unit awards are issued to the Named Executive Officers under the Long-Term Performance Unit Program. Each performance unit represents the value of one share of Entergy Corporation common stock at the end of the three-year performance period, plus dividends accrued during the performance period. The Personnel Committee sets payout opportunities for the program at the outset of each performance period, and the program is structured to reward Named Executive Officers only if performance goals set by the Personnel Committee are met. The Personnel Committee has no discretion to make awards if minimum performance goals are not achieved.
Beginning with the 2012-2014 performance period, upon vesting, the performance units granted under the Long-Term Performance Unit Program will be settled in shares of Entergy Corporation common stock rather than cash. Accrued dividends on any shares earned during the performance period will also be will be paid in shares of Entergy Corporation common stock at the end of the performance period if earned. All shares paid out under the Long-Term Performance Unit Program will be required to be retained by the officers until applicable executive stock ownership requirements are met. The form of payment was modified from a cash-settled award to a stock-settled award to align the method of payment with market practice and to encourage the executives to own shares of Entergy Corporation common stock.
The Long-Term Performance Unit Program specifies a minimum, target and maximum achievement level. Performance is measured by assessing Entergy’s total shareholder return relative to the total shareholder return of the companies in the Philadelphia Utility Index. The Personnel Committee identified the Philadelphia Utility Index as the industry peer group for total shareholder return performance because the companies included in this index, in the aggregate, approximate Entergy Corporation in terms of business and scale. The Personnel Committee chose relative total shareholder return as a measure of performance because it reflects Entergy Corporation’s creation of shareholder value relative to other electric utilities over the performance period. It also takes into account dividends paid by the companies in this index and normalizes certain events that affect the industry as a whole. Minimum, target and maximum performance levels are determined by reference to the percentile ranking of Entergy’s total shareholder return against the total shareholder return of the companies in the Philadelphia Utility Index. At any given time, a participant in the Long-Term Performance Unit Program may be participating in up to three performance periods. Currently, participants are participating in the 2012-2014, the 2013-2015 and the 2014-2016 performance periods.
2013-2015 Performance Unit Program Grants. Subject to achievement of performance levels, the Personnel Committee established the following target performance unit payout opportunities for the 2013-2015 performance period:
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37,156 performance units for Mr. Denault;
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7,472 performance units for Mr. Forbes and Mr. Mohl;
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7,442 performance units for Mr. Marsh;
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7,600 performance units for Mr. West;
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2,969 performance units for Mr. May;
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3,000 performance units for Ms. Mount;
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1.900 performance units for Mr. Fisackerly, Mr. McDonald, Ms. Rainer and Mr. Rice.
The range of potential payouts under the program is shown below. Each Named Executive Officer received a larger number of performance units than were granted to officers at their respective levels in 2012 to reflect the lower stock
price at the time of the award as compared to 2012 and an increase in targeted long-term value required to result in awards approximating the 50th percentile of the corporate market data. The target awards for Messrs. Denault, Forbes, Marsh, May, and Mohl include target awards established in January 2013, plus, pursuant to the terms of the program, prorated awards received in connection with their promotions in 2013.
There is no payout for performance below the 25th percentile. Payouts between minimum and target and target and maximum are calculated using straight-line interpolation.
Payout for the 2011-2013 Performance Period. For the 2011-2013 performance period, the approved target performance unit payout opportunities were:
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12,041 performance units for Mr. Denault;
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2,636 performance units for Mr. Marsh;
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3,539 performance units for Mr. Forbes and Mr. Mohl;
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5,900 performance units for Mr. West;
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1,597 performance units for Mr. May;
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1,319 performance units for Ms. Mount;
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1,200 performance units for Mr. Fisackerly and Mr. McDonald;
•
633 performance units for Ms. Rainer; and
•
1,200 performance units for Mr. Rice.
The target awards for Messrs. Denault, Forbes, Marsh, May, and Mohl include target awards established in January 2011 plus, pursuant to the terms of the program, pro-rated awards received in connection with their promotions in 2013.
In January 2014, the Committee assessed Entergy Corporation’s total shareholder return for the 2011-2013 performance period in order to determine the actual number of performance units to be paid to Long Term Performance Unit Program participants for the 2011-2013 performance period. The Committee compared Entergy Corporation’s total shareholder return against the total shareholder return of the companies that comprise the Philadelphia Utility Index. Based on this comparison, as recommended by the Finance Committee, the Personnel Committee concluded that Entergy Corporation’s performance for the 2011-2013 performance period ranked in the bottom quartile, resulting in a zero payout for the 2011-2013 performance period.
Stock Options and Restricted Stock
Stock options and restricted stock are granted as part of the long-term incentive awards to the executive officers.
As previously discussed, the Personnel Committee considers several factors in determining the number of stock options and shares of restricted stock it will grant to the Named Executive Officers, including individual performance, prevailing market practice, targeted long-term valued created by the use of stock options and restricted stock, and the potential dilutive effect of stock option and restricted stock grants. The Committee’s assessment of individual performance of each Named Executive Officer is the most important factor in determining the number of
shares of restricted stock and stock options awarded except with respect to Entergy Corporation’s Chief Executive Officer, for whom comparative market data is the most important factor. The Committee, in consultation with Entergy Corporation’s Chief Executive Officer, reviews each other Named Executive Officer’s performance, role and responsibilities, strengths and developmental opportunities. Stock option and restricted stock awards for Entergy Corporation’s Chief Executive Officer are determined solely by the Personnel Committee on the basis of the same considerations. For all equity awards, the Committee also considers Entergy Corporation’s significant achievements of the prior year.
The following table sets forth the number of stock options and shares of restricted stock granted to each Named Executive Officer in 2013. The exercise price for each option was $64.60, which was the closing price of Entergy’s common stock on the date of grant.
Stock Options. Under the equity plans, all stock options must have an exercise price equal to the fair market value of Entergy Corporation’s common stock on the date of grant. The equity ownership plans prohibit the repricing of “underwater” stock options without shareholder approval.
A formal policy has not been adopted regarding the granting of options at times when Entergy Corporation is in possession of material non-public information. However, Entergy Corporation generally grants options to Named Executive Officers only during the month of January in connection with annual executive compensation decisions.
Restricted Stock. Upon vesting, shares of Entergy Corporation common stock will be distributed along with the dividends that have accrued on the vested shares. Entergy Corporation believes the use of restricted stock enhances retention, mitigates the burn rate and, in conjunction with stock ownership requirements, assists in building executive ownership of Entergy Corporation common stock.
For additional information regarding stock options and shares of restricted stock awarded in 2013 to each of the Named Executive Officers, see the 2013 Grants of Plan-Based Awards table.
Restricted Units
Restricted units granted under the 2011 Equity Ownership Plan represent phantom shares of Entergy Corporation common stock (i.e., non-stock interests that have an economic value equivalent to a share of Entergy Corporation’s common stock). Restricted units are occasionally granted for retention purposes, to offset forfeited compensation from a previous employer or for other limited purposes. If all conditions of the grant are satisfied, restrictions on the restricted units lift at the end of the restricted period, and a cash equivalent value of the restricted units is paid. The settlement price is equal to the number of restricted units multiplied by the closing price of Entergy Corporation common stock on the date restrictions lift. Restricted units are not entitled to dividends or voting rights. Restricted units are generally
time-based awards for which restrictions lift, subject to continued employment, generally over a two- to five-year period.
In January 2013, the Committee granted Mr. Forbes 8,000 restricted units and in May 2013, the Committee granted Mr. West 21,000 restricted units. The Committee granted the restricted units to Mr. Forbes to encourage the retention of his leadership in light of the numerous strategic challenges facing Entergy Corporation’s nuclear fleet. Mr. West’s award was made in recognition of Mr. West’s senior leadership role with Entergy Corporation and to ensure a successful transition in light of the leadership changes made in 2013. In determining the size of the grant, the Committee consulted its independent consultant to confirm that the grant was consistent with market practices. The Committee also noted, based on the advice of its independent consultant, that such grants are a commonly used technique for retention purposes.
Mr. Forbes’ restricted units will vest in one installment on January 2, 2016 and Mr. West’s restricted units will vest in one installment on May 1, 2018. On the respective vesting dates, Entergy Corporation will pay to Mr. Forbes and Mr. West, subject to payment of withholding taxes, a cash amount equal to the closing price of a share of Entergy Corporation common stock on that date multiplied by the number of units subject to their awards. Upon a termination of employment without cause or upon termination of employment by Mr. Forbes or Mr. West with good reason within 24 months following a change in control, Mr. Forbes’ and Mr. West’s restricted units may vest on an earlier date.
Benefits, Perquisites, Agreements and Post-Termination Plans
Pension Plan, Pension Equalization Plan and System Executive Retirement Plan
Retirement Plans
The Named Executive Officers participate in an Entergy Corporation-sponsored tax qualified final average pay defined benefit pension plan that covers a broad group of employees. In addition, each Named Executive Officer participates in the Pension Equalization Plan, a non-qualified restoration plan, and the System Executive Retirement Plan, a non-qualified supplemental retirement plan. Both plans are sponsored by Entergy Corporation. Under the terms of the Pension Equalization Plan and System Executive Retirement Plan, an employee participating in both plans is eligible to receive only the greater of the two benefits computed in accordance with the terms of, and conditions of each plan.
The Committee believes that these plans have been an important part of the executive compensation programs because they have assisted in the recruitment of top talent in the competitive market, as these types of supplemental plans have typically been found historically in companies of similar size to Entergy Corporation and in its industry. These plans serve a critically important role in the retention of senior executives, as benefits from these plans generally increase for each year that these executives remain employed by us. The plans thereby have encouraged the most senior executives to remain employed by us and continue their work on behalf of Entergy Corporation’s shareholders. See the 2013 Pension Benefits Table for additional information regarding the operation of the plans described under this caption.
Savings Plan
The Named Executive Officers are eligible to participate in an Entergy Corporation-sponsored Savings Plan that covers a broad group of employees. The Savings Plan is a tax-qualified retirement savings plan, wherein total combined before-tax and after-tax contributions may not exceed 30% of a participant’s base salary up to certain contribution limits defined by law. In addition, under the Savings Plan, the participant’s employer matches an amount equal to seventy cents for each dollar contributed by participating employees, including the Named Executive Officers, with respect to the first six percent of their eligible earnings under the plan for that pay period. For employees hired or rehired on or after July 1, 2014 who are not eligible to participate in the final average pay defined benefit pension, but instead will participate in a new cash balance defined benefit pension plan, the Entergy System employer matching contribution will be one dollar for each dollar contributed by the employee with respect to the first six percent of the
eligible earnings for each pay period. The Savings Plan is maintained for employees, including the Named Executive Officers to encourage employees to save some percentage of their cash compensation for their eventual retirement. The Savings Plan permits employees to make such savings in a manner that is relatively tax efficient. Entergy Corporation believes this type of savings plan is also a critical element in attracting and retaining talent in a competitive market.
Retirement Plan Changes
During 2013, after reviewing comparative market data, the Personnel Committee approved certain changes to Entergy Corporation’s retirement plans and policies to better align them with emerging market practice. As a result of these changes, employees who are hired or rehired on or after July 1, 2014 will no longer be eligible to participate in Entergy Corporation’s tax qualified final average pay defined benefit pension plan and instead will participate in a new cash balance pension plan and will receive an enhanced employer matching contribution under Entergy Corporation’s Savings Plan, as described above. In addition, in January 2014, the Committee authorized management to (i) amend the Supplemental Executive Retirement Plan to provide that as of July 1, 2014, the plan will be closed to new participants, including employees hired or promoted to an officer-level position on or after July 1, 2014, (ii) amend the Pension Equalization Plan to provide that participants in the new cash balance pension plan will not be eligible to participate in such plan and instead may be eligible to participate in a new cash balance restoration plan, and (iii) amend the Pension Equalization Plan and, as necessary, all other non-qualified plans sponsored by Entergy Corporation to provide that supplemental credited service will no longer be granted under any such plans to new executive officers.
Executive Deferred Compensation Plan
The Named Executive Officers are eligible to defer up to 100% of their Annual Incentive Plan awards into either or both Entergy Corporation-sponsored Executive Deferred Compensation Plan and the equity plan. In addition, they are eligible to defer up to 100% of their base salary into the Executive Deferred Compensation Plan. Entergy Corporation believes that providing this benefit is important as a retention and recruitment tool because many, if not all, of the companies with which Entergy Corporation competes for executive talent provide a similar arrangement to their senior executive officers. See the 2013 Non-qualified Deferred Compensation discussion for additional information regarding the operation of the Executive Deferred Compensation Plan.
Health & Welfare Benefits
The Named Executive Officers are eligible to participate in various health and welfare benefits available to a broad group of employees. These benefits include medical, dental and vision coverage, life and accidental death and dismemberment insurance, business travel accident insurance, and long-term disability insurance. Eligibility, coverage levels, potential employee contributions, and other plan design features are the same for the Named Executive Officers as for the broad employee population.
Executive Disability Plan
All of the executive officers, including the Named Executive Officers, are eligible to participate in the Executive Disability Plan of Entergy Corporation and Subsidiaries. Individuals who elect to participate in this plan and become disabled under the terms of the plan are eligible for 65% of the difference between their base salary and $276,923 (i.e. the base salary that produces the maximum $15,000 monthly disability payment under Entergy Corporation’s general long-term disability plan).
Perquisites
Named Executive Officers are provided with a limited number of perquisites and other personal benefits as part of providing a competitive executive compensation program and for employee retention. The Personnel Committee reviews all perquisites, including the personal use of corporate aircraft, on an annual basis. In 2013, the Named Executive Officers were offered: corporate aircraft usage, relocation assistance, annual physical exams, and event tickets. Certain
of the Named Executive Officers, who are not members of the Office of the Chief Executive, were provided in 2013 with club dues and tax gross up payments on some perquisites. For security and business convenience reasons, Entergy Corporation’s Chief Executive Officer is permitted to use its corporate aircraft at the expense of Entergy Corporation for personal use. The other Named Executive Officers may use corporate aircraft for personal travel subject to the approval of Entergy Corporation’s Chief Executive Officer. From time to time, tickets to cultural and sporting events are made available to employees, including the Named Executive Officers, for business purposes. If not utilized for business purposes, the tickets are made available to employees, including the Named Executive Officers, for personal use. Relocation benefits provided to the executive officers, including tax gross-up payments on this benefit, are similar in nature and amount to those provided to all eligible employees. For additional information regarding perquisites, see the “All Other Compensation” column in the Summary Compensation Table.
Retention Agreements and other Compensation Arrangements
The Committee believes that retention and transitional compensation arrangements are an important part of overall compensation. The Committee believes that these arrangements help to secure the continued employment and dedication of the Named Executive Officers, notwithstanding any concern that they might have at the time of a change in control regarding their own continued employment. In addition, the Committee believes that these arrangements are important as recruitment and retention devices, as all or nearly all of the companies with which Entergy Corporation competes for executive talent have similar arrangements in place for their senior employees.
To achieve these objectives, Entergy Corporation has established a System Executive Continuity Plan under which each of the Named Executive Officers is entitled to receive “change in control” payments and benefits if such officer’s employment is involuntarily terminated in connection with a change in control. Severance payments under the System Executive Continuity Plan are based on a multiple of the sum of an executive officer’s annual base salary plus his or her average Annual Incentive Plan award at target for the two fiscal years immediately preceding the fiscal year in which the termination of employment occurs. Under no circumstances can this multiple exceed 2.99 times the sum of (a) the executive officer’s annual base salary as in effect at any time within one year prior to the commencement of a change in control period or if higher, immediately prior to a circumstance constituting good reason plus (b) his or her annual incentive, calculated using the average annual target opportunity derived under the Annual Incentive Plan for the two calendar years immediately preceding the calendar year in which the officer’s termination occurs, or if higher the annual incentive award actually received under the Annual Incentive Plan for the fiscal year immediately preceding the fiscal year in which the termination of employment occurs. Entergy Corporation has strived to ensure that the benefits and payment levels under the System Executive Continuity Plan are consistent with market practices. The executive officers will not receive any tax gross-up payments on any severance benefits received under this plan.
In certain cases, the Committee may approve the execution of a retention agreement with an individual executive officer. These decisions are made on a case by case basis to reflect specific retention needs or other factors, including market practice. If a retention agreement is entered into with an individual officer, the Committee considers the economic value associated with that agreement in making overall compensation decisions for that officer. Entergy Corporation has voluntarily adopted a policy that any severance arrangements providing benefits in excess of 2.99 times an officer’s annual base salary and annual incentive award must be approved by Entergy Corporation’s shareholders.
During 2013, Entergy Corporation had retention agreements with Mr. Denault and Mr. Mohl. In general, Mr. Denault’s retention agreement provides for severance payments and other benefits in the event of termination of employment other than for cause or on account of death or disability in lieu of those provided under Entergy Corporation’s System Executive Continuity Plan. As with any severance benefits paid under the System Executive Continuity Plan, Mr. Denault will not receive tax gross-up payments on any severance benefits he may receive under his agreement. Mr. Denault’s retention agreement was entered into when he was Entergy Corporation’s Chief Financial Officer and was designed to reflect the competition for chief financial officer talent in the marketplace at that time and the Committee’s assessment of the critical role this position plays in executing Entergy Corporation’s long-term financial and other strategic objectives. Based on the market data provided by its former independent compensation consultant, the Committee believes the benefits and payment levels under Mr. Denault’s retention agreement are consistent with market practices.
Entergy Corporation entered into an agreement with Mr. Mohl when he became President, Entergy Wholesale Commodities that provides for severance payments if his employment is terminated upon the occurrence of certain events related to the Entergy Wholesale Commodities business (an “EWC Event”) and subsequent to such event, he does not continue employment with the wholesale commodities business and is not offered a comparable position with an Entergy System company. Upon termination, Mr. Mohl would receive a payment equal to two times his base salary plus his target annual incentive bonus for the year of termination or if termination occurs in 2014, his 2013 target annual bonus if it is higher than the 2014 target annual bonus. If such termination occurs prior to September 18, 2014, he will be eligible to receive, in addition to the severance payment described above, a payment equal to $2,200,000 plus a payment equal to the benefits he would have been eligible for under the System Executive Retirement Plan as if he were retirement eligible, reduced by any benefits payable under any of Entergy Corporation’s qualified or non-qualified plans provided he executes a release agreement in favor of Entergy Corporation. If the EWC Event is considered a change in control under Entergy Corporation’s System Continuity Plan, he will only receive the benefits he is eligible for under that plan. This agreement was entered into in light of the unique challenges facing the Entergy Wholesale Commodities business at the time Mr. Mohl assumed his position. In determining the type and size of the amount of payment under this agreement, Entergy Corporation consulted with the independent compensation consultant to confirm that the economic value of this arrangement was consistent with market practice.
For additional information regarding the System Executive Continuity Plan and Mr. Denault’s and Mr. Mohl’s retention agreements described above, see “2013 Potential Payments Upon Termination or Change."
Other Compensation Policies and Practices
Entergy Corporation strives to ensure that its compensation philosophy and practices are in line with the best practices of companies in its industry as well as Fortune 500 companies. Some of these practices include the following:
Clawback Provisions
Entergy Corporation has adopted the Entergy Corporation Policy Regarding Recoupment of Certain Compensation. This policy covers individuals subject to Section 16 of the Exchange Act. Under the policy, the Committee will require reimbursement of incentives paid to these executive officers where:
•
(i) the payment was predicated upon the achievement of certain financial results with respect to the applicable performance period that were subsequently the subject of a material restatement other than a restatement due to changes in accounting policy; or (ii) a material miscalculation of a performance award occurs, whether or not the financial statements were restated and, in either such case, a lower payment would have been made to the executive officer based upon the restated financial results or correct calculation; or
•
in the Board of Directors’ view, the executive officer engaged in fraud that caused or partially caused the need for a restatement or caused a material miscalculation of a performance award whether or not the financial statements were restated.
The amount the Committee requires to be reimbursed is equal to the excess of the gross incentive payment made over the gross payment that would have been made if the original payment had been determined based on the restated financial results or correct calculation. Further, following a material restatement of Entergy Corporation’s financial statements, Entergy Corporation will seek to recover any compensation received by Entergy Corporation’s Chief Executive Officer and Chief Financial Officer that is required to be reimbursed under Section 304 of the Sarbanes-Oxley Act of 2002.
Stock Ownership Guidelines and Share Retention Requirements
For many years, Entergy Corporation has had stock ownership guidelines for executives, including the Named Executive Officers. These guidelines are designed to align the executives’ long-term financial interests with those of shareholders. Annually, the Personnel Committee monitors the executive officers’ compliance with these guidelines.
To more closely align the stock ownership guidelines with market practice, effective January 1, 2014, Entergy Corporation adjusted the stock ownership guidelines to increase the salary multiple for Entergy Corporation’s Chief Executive Officer to six times his base salary and reduced the base salary multiple for the other executive officers.
The new ownership guidelines are as follows:
Further, to ensure compliance with the guidelines, until an executive officer satisfies the stock ownership guidelines, the officer must retain:
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all net after-tax shares paid out under the Long-Term Performance Unit Program, which will pay out entirely in Entergy Corporation stock commencing with the 2012-2014 performance period;
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all net after-tax shares of Entergy Corporation’s restricted stock received upon vesting; and
•
at least 75% of the after-tax net shares received upon the exercise of Entergy Corporation stock options, except for stock options granted before January 1, 2014, as to which the executive officer must retain at least 75% of the after-tax net shares until the earlier of achievement of the stock ownership guidelines or five years from the date of exercise.
Trading Controls and Anti-Pledging and Anti-Hedging Policies
Executive officers, including the Named Executive Officers, are required to receive the permission of Entergy Corporation’s General Counsel prior to entering into any transaction involving company securities, including gifts, other than the exercise of employee stock options. Trading is generally permitted only during open trading windows occurring immediately following the release of earnings. Employees, who are subject to trading restrictions, including the Named Executive Officers, may enter into trading plans under Rule 10b5-1 of the Exchange Act, but these trading plans may be entered into only during an open trading window and must be approved by Entergy Corporation. The Named Executive Officer bears full responsibility if he or she violates this policy by permitting shares to be bought or sold without pre-approval or when trading is restricted.
Entergy Corporation also prohibits directors and executive officers, including the Named Executive Officers, from pledging any Entergy Corporation securities or entering into margin accounts involving Entergy Corporation securities. Entergy Corporation prohibits these transactions because of the potential that sales of Entergy Corporation securities could occur outside trading periods and without the required approval of the General Counsel.
Entergy Corporation also has adopted an anti-hedging policy that prohibits officers, directors and employees from entering into hedging or monetization transactions involving Entergy Corporation’s common stock. Prohibited transactions include, without limitation, zero-cost collars, forward sale contracts, purchase or sale of options, puts, calls, straddles or equity swaps or other derivatives that are directly linked to Entergy Corporation’s stock or transactions involving “short-sales” of Entergy Corporation’s stock. The Board adopted this policy to require officers, directors and employees to continue to own Entergy Corporation stock with the full risks and rewards of ownership, thereby ensuring continued alignment of their objectives with those of Entergy Corporation’s other shareholders.
Compensation Consultant Independence Policy
To maintain the independence of the Personnel Committee’s compensation consultant, the Board has adopted a policy that any consultant (including its affiliates) retained by the Board of Directors or any Committee of the Board of Directors to provide advice or recommendations on the amount or form of executive and director compensation
should not be retained by Entergy Corporation or any of its affiliates to provide other services in an aggregate amount that exceeds $120,000 in any year. In 2013, the Personnel Committee’s independent compensation consultant, Pay Governance LLC, did not provide any services to Entergy Corporation other than its services to the Personnel Committee. Annually, the Committee reviews the relationship with its compensation consultant including services provided, quality of those services, and fees associated with services in its evaluation of the executive compensation consultant’s independence.
Roles and Responsibilities
Role of Personnel Committee
The Personnel Committee has overall responsibility for approving the compensation program for the Named Executive Officers and makes all final compensation decisions regarding the Named Executive Officers. The Committee works with executive management to ensure that the compensation policies and practices are consistent with Entergy Corporation’s values and support the successful recruitment, development, and retention of executive talent so business objectives can be achieved and optimize Entergy Corporation’s long-term financial returns. The Committee evaluates executive pay each year to ensure that the compensation policies and practices are consistent with Entergy Corporation’s philosophy. The Personnel Committee is responsible for, among its other duties, the following actions related to the Named Executive Officers:
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developing and implementing compensation policies and programs for hiring, evaluating, and setting compensation for the executive officers, including any employment agreement with an executive officer;
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evaluating the performance of Entergy Corporation’s Chairman and Chief Executive Officer; and
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reporting, at least annually, to the Board on succession planning, including succession planning for Entergy Corporation’s Chief Executive Officer.
Role of Chief Executive Officer
The Personnel Committee solicits recommendations from Entergy Corporation’s Chief Executive Officer, with respect to compensation decisions for the other Named Executive Officers. Compensation decisions made by the Personnel Committee in early 2013 were based on the recommendations of Mr. Leonard, Entergy Corporation’s former Chief Executive Officer.
At the Committee’s request, Entergy Corporation’s Chief Executive Officer provides the Personnel Committee with an assessment of the performance of each of the other Named Executive Officers and recommends compensation levels to be awarded to each of them. In addition, the Committee may request that Entergy Corporation’s Chief Executive Officer provide management feedback and recommendations on changes in the design of compensation programs, such as special retention plans or changes in the structure of bonus programs Mr. Denault does not play any role with respect to any matter affecting his own compensation, nor does he have any role determining or recommending the amount, or form of, director compensation. The Personnel Committee also relies on the recommendations of the senior human resources executives with respect to compensation decisions, policies and practices.
Mr. Denault may attend meetings of the Personnel Committee only at the invitation of the chair of the Personnel Committee and cannot call a meeting of the Committee. However, he is not in attendance at the portion of any meeting when the Committee approves the compensation to be paid to the Named Executive Officers. Since he is not a member of the Committee, he has no vote on matters submitted to the Committee. During 2013, Mr. Denault attended 6 meetings of the Personnel Committee.
Role of the Compensation Consultant
The Personnel Committee has the sole authority from the Board of Directors for the appointment, compensation, and oversight of its outside compensation consultant. In 2013, Entergy Corporation’s Personnel Committee retained
Pay Governance LLC as its independent compensation consultant to assist it in, among other things, evaluating different compensation programs and developing market data to assess the compensation programs.
During 2013, Pay Governance assisted the Committee with its responsibilities related to Entergy Corporation’s compensation programs for its executives. Specifically, the Committee directed Pay Governance to: (i) regularly attend meetings of the Committee; (ii) conduct studies of competitive compensation practices; (iii) identify market surveys and proxy peer groups; (iv) review base salary, annual incentives, and long-term incentive compensation opportunities relative to competitive practices; and (v) develop conclusions and recommendations related to the executive compensation plan for consideration by the Committee. A senior consultant from Pay Governance attended all Personnel Committee meetings to which he was invited in 2013. Pay Governance did not provide any other services to Entergy Corporation in 2013.
Tax and Accounting Considerations
Section 162(m) of the Code limits the tax deductibility by a publicly held corporation of compensation in excess of $1 million paid to Entergy Corporation’s Chief Executive Officer or any of its other Named Executive Officers who may be a Section 162(m) covered employee, unless that compensation is “performance-based compensation” within the meaning of Section 162(m). The Personnel Committee considers deductibility under Section 162(m) as it structures the compensation packages that are provided to its Named Executive Officers. Likewise, the Personnel Committee considers financial accounting consequences as it structures the compensation packages that are provided to the Named Executive Officers. However, the Personnel Committee and the Board believe that it is in Entergy Corporation’s best interest that the Personnel Committee retains the flexibility and discretion to make compensation awards, whether or not deductible. This flexibility is necessary to foster achievement of performance goals established by the Personnel Committee, as well as other corporate goals that the Committee deems important to Entergy Corporation’s success, such as encouraging employee retention and rewarding achievement of key Entergy Corporation’s goals.
PERSONNEL COMMITTEE REPORT
The Personnel Committee Report included in the Entergy Corporation Proxy Statement is incorporated by reference, but will not be deemed to be “filed” in this Annual Report on Form 10-K. None of the Subsidiaries has a compensation committee or other board committee performing equivalent functions. The board of directors of each of the Subsidiaries is comprised of individuals who are officers or employees of Entergy Corporation or one of the Subsidiaries. These boards do not make determinations regarding the compensation paid to executive officers of the Subsidiaries.
EXECUTIVE COMPENSATION TABLES
2013 Summary Compensation Table
The following table summarizes the total compensation paid or earned by each of the Named Executive Officers for the fiscal years ended December 31, 2013, 2012, and 2011. For information on the principal positions held by each of the Named Executive Officers, see Item 10, “Directors and Executive Officers of the Registrants.” The compensation set forth in the table represents the aggregate compensation paid by all Entergy System companies. None of the Entergy System companies has entered into any employment agreements with any of the Named Executive Officers (other than the retention agreements described in “Potential Payments upon Termination or Change in Control”). For additional information regarding the material terms of the awards reported in the following tables, including a general description of the formula or criteria to be applied in determining the amounts payable, see “Compensation Discussion and Analysis.”
(1)
The amounts in column (c) represent the actual base salary paid to the Named Executive Officer. The 2013 changes in base salaries noted in the Compensation Discussion and Analysis for Messrs. Denault, Forbes, Marsh, May, and Mohl were effective upon their promotions and for the other Named Executive Officers in April 2013.
(2)
The amounts in column (d) in 2013 and 2012 for Mr. Fisackerly, Mr. McDonald, Ms. Rainer, and Mr. Rice, in 2012 for Mr. Mohl, and in 2013 for Mr. May represent a cash bonus paid in recognition of their work supporting the move to MISO. The amount for Mr. Forbes represents the cash bonus paid to him pursuant to the Nuclear Retention Plan. See "Nuclear Retention Plan" in Compensation Discussion and Analysis.
(3)
The amounts in column (e) represent the aggregate grant date fair value of restricted stock, restricted units, and performance units granted under the 2011 Equity Ownership Plan calculated in accordance with FASB ASC Topic 718, without taking into account estimated forfeitures. The grant date fair value of the restricted stock and the restricted units is based on the closing price of Entergy Corporation common stock on the date of grant. The grant date fair value of performance units is based on the probable outcome of the applicable performance conditions, measured using a Monte Carlo simulation valuation model. The simulation model applies a risk-free interest rate and an expected volatility assumption. The risk-free rate is assumed to equal the yield on a three-year treasury bond on the grant date. Volatility is based on historical volatility for the 36-month period preceding the grant date. If the highest achievement level is attained, the maximum amounts that will be received with respect to the performance units granted in 2013 are as follows: Mr. Denault, $7,378,205; Mr. Fisackerly, $245,480; Mr. Forbes, $1,348,185; Mr. Marsh, $1,470,889; Mr. May, $509,644; Mr. McDonald, $245,480; Mr. Mohl, $1,348,716; Ms. Mount, $387,600; Ms. Rainer, $245,480; Mr. Rice, $245,480; and Mr. West, $981,920.
(4)
The amounts in column (f) represent the aggregate grant date fair value of stock options granted under the 2011 Equity Ownership Plan calculated in accordance with FASB ASC Topic 718. For a discussion of the relevant assumptions used in valuing these awards, see Note 12 to the financial statements.
(5)
The amounts in column (g) represent cash payments made under the Annual Incentive Plan.
(6)
The amounts in column (h) include the annual actuarial increase in the present value of the Named Executive Officers’ benefits under all pension plans established by Entergy Corporation using interest rate and mortality rate assumptions consistent with those used in Entergy Corporation’s financial statements and include amounts which the Named Executive Officers may not currently be entitled to receive because such amounts are not vested (see “2013 Pension Benefits”). None of the increase is attributable to above-market or preferential earnings on non-qualified deferred compensation (see “2013 Non-qualified Deferred Compensation”). For 2013, the aggregate change in the actuarial present value of Messrs. Fisackerly's, May's, and McDonald's pension benefits was a decrease of $103,400, $80,100, and $116,500, respectively.
(7)
The amounts in column (i) for 2013 include (a) matching contributions by Entergy Corporation under the Savings Plan to each of the Named Executive Officers; (b) dividends paid on restricted stock when vested; (c) life insurance premiums; (d) tax gross up payments on club dues and relocation expenses; and (e) perquisites and other compensation. The amounts are listed in the following table:
Perquisites and Other Compensation
The amounts set forth in column (i) include perquisites and other personal benefits that Entergy Corporation provides to the Named Executive Officers as part of providing a competitive executive compensation program and for employee retention. In 2013, the Named Executive Officers were offered: corporate aircraft usage, relocation assistance, annual physical exams and event tickets. Certain of the Named Executive Officers, who are not members of the Office of the Chief Executive, were provided with club dues and tax gross up payments on some perquisites. The following perquisites and other compensation were provided by Entergy Corporation in 2013:
For security and business reasons, Entergy Corporation permits its Chief Executive Officer to use its corporate aircraft for personal use at the expense of Entergy Corporation. The other Named Executive Officers may use the corporate aircraft for personal travel subject to the approval of Entergy Corporation’s Chief Executive Officer. The amounts included in column (i) for the personal use of corporate aircraft, reflect the incremental cost to Entergy Corporation for use of the corporate aircraft, determined on the basis of the variable operational costs of each flight, including fuel, maintenance, flight crew travel expense, catering, communications, and fees, including flight planning, ground handling, and landing permits.
Tickets to cultural and sporting events are purchased for business purposes, and if not utilized for business purposes, the tickets are made available to the employees, including the Named Executive Officers, for personal use.
Entergy Corporation also provides relocation benefits to a broad base of employees which include assistance with moving expenses, purchase and sale of homes, and transportation of household goods. In connection with their promotion, and in accordance with Entergy Corporation's relocation policies, Entergy Corporation paid $186,915 and $145,279 in relocation expenses for Mr. Marsh and Mr. Mohl, respectively, in 2013. The relocation assistance amounts reported above represent the amounts paid to our relocation service provider or the executive officer. None of the other perquisites referenced above exceeded $25,000 for any of the other Named Executive Officers.
2013 Grants of Plan-Based Awards
The following table summarizes award grants during 2013 to the Named Executive Officers.
(1)
The amounts in columns (c), (d), and (e) represent minimum, target, and maximum payment levels under the Annual Incentive Plan. The actual amounts awarded are reported in column (g) of the Summary Compensation Table.
(2)
Except as otherwise noted in footnote 6, the amounts in columns (f), (g), and (h) represent the minimum, target, and maximum payment levels under the Long-Term Performance Unit Program. Performance under the program is measured by Entergy Corporation’s total shareholder return relative to the total shareholder returns of the companies included in the Philadelphia Utility Index. If Entergy Corporation’s total shareholder return is not at least 25% of that for the Philadelphia
Utility Index, there is no payout. Subject to achievement of performance targets, each unit will be converted into one share of Entergy Corporation’s common stock on the last day of the performance period (December 31, 2015.) Accrued dividends on the shares earned will also be paid in Entergy Corporation common stock.
(3)
Except as otherwise noted in footnotes 7 and 8, the amounts in column (i) represent shares of restricted stock granted under the 2011 Equity Ownership Plan. Shares of restricted stock vest over a three-year period, have voting rights and accrue dividends during the vesting period.
(4)
The amounts in column (j) represent options to purchase shares of Entergy Corporation’s common stock. The options vest one-third on each of the first through third anniversaries of the grant date and have a ten-year term from the date of grant. The options were granted under the 2011 Equity Ownership Plan.
(5)
The amounts in column (l) are valued based on the aggregate grant date fair value of the award calculated in accordance with FASB ASC Topic 718 and, in the case of the performance units, are based on the probable outcome of the applicable performance conditions. See Notes 3 and 4 to the Summary Compensation Table for a discussion of the relevant assumptions used in calculating the grant date fair value.
(6)
With their promotions, Messrs. Denault, Forbes, Marsh, May and Mohl received pro-rated performance unit awards under the 2011 - 2013 Long-Term Performance Unit Program and 2012 - 2014 Long-Term Performance Unit Program. For the 2011 - 2013 Long-Term Performance Program, subject to achievement of performance targets, each unit will be converted into the cash equivalent of one share of Entergy Corporation’s common stock on the last day of the performance period (December 31, 2013). For the 2012 - 2014 Long-Term Performance Program, subject to achievement of performance targets, each unit will be converted into one share of Entergy Corporation's common stock on the last day of the performance period (December 31, 2014).
(7)
In January 2013, Mr. Forbes was awarded 8,000 restricted units under the 2011 Equity Ownership Plan. The restricted units will vest on January 2, 2016.
(8)
In May 2013, Mr. West was awarded 21,000 restricted units under the 2011 Equity Ownership Plan. The restricted units will vest on May 1, 2018.
2013 Outstanding Equity Awards at Fiscal Year-End
The following table summarizes, for each Named Executive Officer, unexercised options, restricted stock that has not vested, and equity incentive plan awards outstanding as of the end of 2013.
(1)
Consists of options that vested or will vest as follows: 1/3 of the options granted vest on each of 1/31/2014, 1/31/2015 and 1/31/2016.
(2)
Consists of options that vested or will vest as follows: 1/2 of the remaining unexercisable options vest on each of 1/26/2014 and 1/26/2015.
(3)
The remaining unexercisable options vested on 1/27/2014.
(4)
Consists of performance units that will vest on December 31, 2015 based on Entergy Corporation’s total shareholder return performance over the 2013-2015 performance period, as described under “Executive Compensation Elements - Long-Term Incentive Compensation - Performance Unit Program” in Compensation Discussion and Analysis.
(5)
Consists of performance units that will vest on December 31, 2014 based on Entergy Corporation’s total shareholder return performance over the 2012 - 2014 performance period.
(6)
Consists of shares of restricted stock that vested or will vest as follows: 1/3 of the shares of restricted stock granted vest on each of 1/31/2014, 1/31/2015 and 1/31/2016.
(7)
Consists of shares of restricted stock that vested or will vest as follows: 1/2 of the shares of restricted stock granted vest on each of 1/26/2014 and 1/26/2015.
(8)
Consists of shares of restricted stock that vested on 1/27/2014.
(9)
Consists of restricted units granted under the 2011 Equity Ownership Plan which will vest on January 2, 2016.
(10)
Consists of restricted units granted under the 2011 Equity Ownership Plan which will vest on May 1, 2018.
2013 Option Exercises and Stock Vested
The following table provides information concerning each exercise of stock options and each vesting of stock during 2013 for the Named Executive Officers.
(1)
Includes the January 25, 2013 cash settlement of 8,000 restricted units granted under the 2007 Equity Ownership Plan.
(2)
Includes the June 30, 2013 cash settlement of 1,668 restricted units granted under the 2007 Equity Ownership Plan.
(3)
Includes the April 30, 2013 cash settlement of 15,000 restricted units granted under the 2007 Equity Ownership Plan.
2013 Pension Benefits
The following table shows the present value as of December 31, 2013, of accumulated benefits payable to each of the Named Executive Officers, including the number of years of service credited to each Named Executive Officer, under the retirement plans sponsored by Entergy Corporation, determined using interest rate and mortality rate assumptions set forth in Note 11 to the financial statements. Information regarding these retirement plans is included in Compensation Discussion & Analysis under the heading, “Benefits, Perquisites, Agreements, and Post-Retirement Plans - Pension Plan, Pension Equalization Plan, and System Executive Retirement Plan.” In addition, this section includes information regarding early retirement options under the plans.
(1)
During 2006, Mr. Denault entered into an agreement granting an additional 15 years of service under the non-qualified System Executive Retirement Plan if he continues to work for an Entergy System company employer until age 55. The additional 15 years of service increases the present value of his benefit by $1,595,600.
(2)
Service under the non-qualified System Executive Retirement Plan is granted from date of hire. Qualified plan benefit service is granted from the later of date of hire or plan participation date.
Qualified Retirement Benefits
The qualified retirement plan is a funded, tax-qualified, noncontributory defined benefit pension plan that provides benefits to most of the non-bargaining unit employees of Entergy System Companies. All Named Executive Officers are participants in this plan. Benefits under the tax-qualified pension plan are calculated as an annuity payable at age 65 and generally equal to 1.5% of a participant's Final Average Monthly Earnings (FAME) multiplied by years of service (not to exceed 40). “Eligible Earnings” for purposes of calculating FAME generally includes the employee’s base salary and eligible annual incentive award and excludes all other bonuses. FAME is calculated using the employee's average monthly Earnings for the 60 consecutive months in which the employee's earnings were highest during the 120 month period immediately preceding the employee's retirement and includes up to 5 annual bonuses paid during the 60 month period. Benefits under the tax-qualified plan are payable monthly after attainment of at least age 55 and after separation from an Entergy System company. The amount of annual earnings that may be considered in calculating benefits under the tax-qualified pension plan is limited by federal law. Participants are 100% vested in their benefit upon completing 5 years of vesting service or upon attainment of age 65 while an active employee participant in the plan. Contributions to the pension plan are made entirely by Entergy Corporation and are paid into a trust fund from which the benefits of participants will be paid.
Normal retirement under the plan is age 65. Employees who terminate employment prior to age 55 may receive a reduced deferred vested retirement benefit commencing as early as age 55 that is based on the normal retirement benefit (reduced by 7% per year for the first 5 years commencement precedes age 65, and reduced by 6% for each additional year commencement precedes age 65). Employees who are at least age 55 with 10 years of vesting service upon termination of employment are entitled to a subsidized early retirement benefit beginning as early as age 55. The subsidized early retirement benefit is equal to the normal retirement benefit reduced by 2% per year for each year that early retirement precedes age 65.
Mr. Forbes and Mr. McDonald are eligible for subsidized early retirement benefits.
Non-qualified Retirement Benefits
The Named Executive Officers are eligible to participate in certain non-qualified retirement benefit plans that provide retirement income, including the Pension Equalization Plan and the System Executive Retirement Plan. Each of these plans is an unfunded non-qualified defined benefit pension plan that provides benefits to key management employees. In these plans, as described below, an executive is typically enrolled in one or more plans but only paid the amount due under the plan that provides the highest benefit. In general, upon disability, participants in the Pension Equalization Plan and the System Executive Retirement Plan remain eligible for continued service credits until the earlier of recovery or retirement eligibility. Generally, spouses of participants who die before commencement of benefits may be eligible for a portion of the participant’s accrued benefit.
All of the Named Executive Officers participate in both the Pension Equalization Plan and the System Executive Retirement Plan.
The Pension Equalization Plan
The Pension Equalization Plan is a non-qualified unfunded restoration retirement plan that provides for the payment to participants from Entergy’s general assets a single lump sum cash distribution upon separation from service generally equal to the actuarial present value of the difference between the amount that would have been payable as an annuity under the tax-qualified pension plan, but for Internal Revenue Code limitations on pension benefits and earnings that may be considered in calculating tax-qualified pension benefits, and the amount actually payable as an annuity under the tax-qualified pension plan. The Pension Equalization Plan also takes into account as “Eligible Earnings” any incentive awards paid under the Annual Incentive Plan and includes supplemental credited service granted to a Participant in calculating his or her benefit. Participants receive their Pension Equalization Plan benefit in the form of a single sum cash distribution. The benefits under this plan are offset by benefits payable from the qualified retirement plan and may be offset by prior employer benefits. The Pension Equalization Plan benefit attributable to supplemental credited service is not vested until age 65. Effective July 1, 2014, new participants in the Pension Equalization Plan will not be provided with supplemental credited service. Subject to the prior written consent of the Entergy System Company employer (which consent is deemed given if the participant’s employment is terminated within twenty-four months following a change in control by the employer without “Cause” or by the participant for “Good Reason” as defined in the plan), an employee who terminates employment prior to age 65 may be vested in his or her benefit, with payment of the lump sum benefit generally at separation from service unless delayed six months under Internal Revenue Code Section 409A. Benefits payable prior to age 65 are subject to the same reductions as qualified plan benefits.
The System Executive Retirement Plan
The System Executive Retirement Plan is a non-qualified supplemental retirement plan that provides for a single sum payment at age 65. Like the Pension Equalization Plan, the System Executive Retirement Plan is designed to provide for the payment to participants from Entergy’s general assets of a single-sum cash distribution upon separation from service. The single-sum benefit is generally equal to the actuarial present value of a specified percentage of the participant’s “Final Average Monthly Compensation” (which is generally 1/36th of the sum of the participant's annual rate of base salary and Annual Incentive Plan award for the 3 highest years during the last 10 years preceding termination of employment), after first being reduced by the value of the participant’s tax-qualified Pension Plan benefit and typically any prior employer pension benefit available to the participant.
While the System Executive Retirement Plan has a replacement ratio schedule from one year of service to the maximum of 30 years of service, the table below offers a sample ratio at 20 and 30 years of service.
The System Executive Retirement Plan benefit is not vested until age 65. Subject to the prior written consent of the Entergy System company employer, an employee who terminates his or her employment prior to age 65 may be vested in the System Executive Retirement Plan benefit, with payment of the lump sum benefit generally at separation from service unless delayed six months under Code Section 409A. Benefits payable prior to age 65 are subject to the same reductions as qualified plan benefits. Further, in the event of a change in control, participants whose employment is terminated without “Cause” or by the employee for “Good Reason,” as defined in the Plan are also eligible for a subsidized lump sum benefit payment, even if they do not currently meet the age or service requirements for early retirement under that plan or have company permission to separate from employment. Such lump sum benefit is payable generally at separation from service unless delayed 6 months under Code Section 409A.
2013 Non-qualified Deferred Compensation
The Executive Deferred Compensation Plan, the 2007 Equity Ownership Plan and the 2011 Equity Ownership Plan allow for the deferral of compensation for the Named Executive Officers. Entergy Corporation does not “match” amounts that are deferred by employees pursuant to the Executive Deferred Compensation Plan or the equity plans. With the exception of allowing for the deferral of federal and state taxes, Entergy Corporation provides no additional benefit to the Named Executive Officer for deferring any of the compensation received under these plans. Any increase in value of the deferred amounts results solely from the increase in value of the deemed investment options selected by the Named Executive Officer (phantom stock of Entergy Corporation or mutual funds available under the Savings Plan). As of December 31, 2013, none of the Named Executive Officers had deferred compensation balances under the equity ownership plans or the Executive Deferred Compensation Plan.
As of December 31, 2013, Mr. Forbes and Mr. May had deferred account balances under a frozen Defined Contribution Restoration Plan. These amounts are deemed invested, as chosen by the participant, in certain T. Rowe Price investment funds that are also available to participants under the Savings Plan. The Defined Contribution Restoration Plan, until it was frozen in 2005, credited eligible employees’ deferral accounts with employer contributions to the extent contributions under the qualified savings plan in which the employee participated were subject to limitations imposed by the Internal Revenue Code.
All deferrals are credited to the applicable Entergy System company employer’s non-funded liability account. Depending on the plan under which the deferral is made, the Named Executive Officers may elect investment in either phantom Entergy Corporation common stock or one or more of several investment options available under the Savings Plan. Within limitations of the program, participating Named Executive Officers may move funds from one deemed investment option to another. The participating Named Executive Officers do not have the ability to withdraw funds from the deemed investment accounts except within the terms provided in their deferral elections. Within the limitations prescribed by law as well as the plan, participating Named Executive Officers with deferrals under the Executive Deferred Compensation Plan and/or the equity plans have the option to make a successive deferral of these funds. Assuming a Named Executive Officer does not elect a successive deferral, the Entergy System company employer of the participant is obligated to pay the amount credited to the participant’s account at the earlier of deferral receipt date or separation from service. These payments are paid out of the general assets of the employer and are payable in a lump sum.
Defined Contribution Restoration Plan
(1)
Amounts in this column are not included in the Summary Compensation Table.
2013 Potential Payments upon Termination or Change in Control
Entergy Corporation has plans and other arrangements that provide compensation to a Named Executive Officer if his or her employment is terminated under specified conditions, including following a change in control of Entergy Corporation. In addition, Entergy Corporation has entered into individual retention agreements with Mr. Denault and Mr. Mohl.
The tables below reflect the amount of compensation each of the Named Executive Officers would have received if his or her employment with an Entergy System company had been terminated under various scenarios as of December 31, 2013. For purposes of these tables, the assumed stock price was $63.27, the closing market price on that date.
Leo P. Denault
Chairman and Chief Executive Officer
The following table shows certain payments and benefits, excluding vested or earned awards and benefits, which the Chairman and Chief Executive Officer would have been entitled to receive as a result of a termination of his employment under various scenarios as of December 31, 2013:
(1)
In addition to the payments and benefits in the table, Mr. Denault also would have been entitled to receive his vested pension benefits. If Mr. Denault’s employment were terminated under certain conditions relating to a change in control, he would also be eligible for early retirement benefits. For a description of these benefits, see “2013 Pension Benefits.” In addition, Mr. Denault is subject to the following provisions:
Retention Agreement. Mr. Denault’s retention agreement provides that, unless his employment is terminated for cause, he will be granted an additional 15 years of service under the System Executive Retirement Plan if he continues to work for an Entergy System company employer until age 55. Because Mr. Denault had not reached age 55 as of December 31, 2013, he is only entitled to this supplemental credited service and System Executive Retirement Plan supplemental benefits in the event of his death or disability.
System Executive Retirement Plan. If Mr. Denault’s employment were terminated for cause, he would forfeit his benefit under the System Executive Retirement Plan. In the event of a termination related to a change in control, pursuant to the terms of the System Executive Retirement Plan, Mr. Denault would be eligible for subsidized retirement (but not the additional 15 years of service) upon his separation of service even if he does not then meet the age or service requirements for early retirement under the System Executive Retirement Plan or have company permission to separate from employment.
(2)
In the event of a termination (not due to death or disability) by Mr. Denault for good reason or by Entergy Corporation not for cause (regardless of whether there is a change in control), Mr. Denault would be entitled to receive, pursuant to his
retention agreement, a lump sum severance payment equal to the product of 2.99 times the sum of (a) his annual base salary as in effect at any time within one year prior to the effective date of the retention agreement or, if higher, immediately prior to a circumstance constituting good reason plus (b) the greater of (i) his actual annual incentive award under the Annual Incentive Plan for the calendar year immediately preceding the calendar year in which Mr. Denault’s termination date occurs or (ii) Mr. Denault’s Annual Incentive Plan target award for the calendar year in which the effective date of the retention agreement occurred. For purposes of this table, we have calculated the award using a base salary of $1,085,000 and target award of 70%.
(3)
In the event of a termination due to death or disability, by Mr. Denault for good reason, or by Entergy Corporation not for cause (in all cases, regardless of whether there is a change in control), Mr. Denault would have forfeited his performance units for all open performance periods and would have been entitled to receive a single-lump sum severance payment pursuant to his retention agreement that would not be based on any outstanding performance periods. The payment would be calculated using the average annual number of performance units he would have been entitled to receive under the Performance Unit Program with respect to the two most recent performance periods preceding the calendar year in which his termination occurs, assuming all performance goals were achieved at target. For purposes of the table, the value of Mr. Denault’s severance payment was calculated by taking an average of the target performance units from the 2009-2011 Performance Unit Program (22,500 units) and the 2010-2012 Performance Unit Program (22,300 units). This average number of units (22,400 units) multiplied by the closing price of Entergy stock on December 31, 2013 ($63.27) would equal a severance payment of $1,417,248 for the forfeited performance units.
(4)
In the event of his death, disability, termination by Mr. Denault for good reason or by Entergy Corporation not for cause (regardless of whether there is a change in control), all of Mr. Denault’s unvested stock options would immediately vest. In addition, he would be entitled to exercise any unexercised options during a ten-year term extending from the grant date of the options. For purposes of this table, we assumed that Mr. Denault exercised his options immediately upon vesting and received proceeds equal to the difference between the closing price of common stock on December 31, 2013, and the exercise price of each option share. As of December 31, 2013, the closing stock price for Mr. Denault’s unvested options fell below the exercise prices and accordingly are considered “underwater” and are excluded from the table.
(5)
In the event of his death, disability, termination by Mr. Denault for good reason or by Entergy Corporation not for cause (regardless of whether there is a change in control), all of Mr. Denault’s unvested restricted stock would immediately vest.
(6)
Pursuant to his retention agreement, in the event of a termination by Mr. Denault for good reason or by Entergy Corporation not for cause, Mr. Denault would be eligible to receive company-subsidized COBRA benefits for 18 months.
(7)
Pursuant to the System Executive Continuity Plan, in the event of a termination related to a change in control, Mr. Denault would be eligible to receive company-subsidized medical and dental benefits for 18 months.
(8)
As of December 31, 2013, Mr. Denault is not eligible for retirement.
(9)
In December of 2010, Mr. Denault voluntarily agreed to amend his retention agreement to eliminate excise tax gross-up payments.
Under the terms of Mr. Denault’s retention agreement, Entergy Corporation may terminate his employment for cause upon Mr. Denault’s:
•
continuing failure to substantially perform his duties (other than because of physical or mental illness or after he has given notice of termination for good reason) that remains uncured for 30 days after receiving a written notice from the Personnel Committee;
•
willfully engaging in conduct that is demonstrably and materially injurious to Entergy;
•
conviction of or entrance of a plea of guilty or nolo contendere to a felony or other crime that has or may have a material adverse effect on his ability to carry out his duties or upon Entergy’s reputation;
•
material violation of any agreement that he has entered into with Entergy; or
•
unauthorized disclosure of Entergy’s confidential information.
Mr. Denault may terminate his employment for good reason upon:
•
the substantial reduction in the nature or status of his duties or responsibilities;
•
a reduction of 5% or more in his base salary as in effect on the date of the retention agreement;
•
the relocation of his principal place of employment to a location other than the corporate headquarters;
•
the failure to continue to allow him to participate in programs or plans providing opportunities for equity awards, stock options, restricted stock, stock appreciation rights, incentive compensation, bonus and other plans on a basis not materially less favorable than enjoyed at the time of the retention agreement (other than changes similarly affecting all senior executives);
•
the failure to continue to allow him to participate in programs or plans with opportunities for benefits not materially less favorable than those enjoyed by him under any of the pension, savings, life insurance, medical, health and accident, disability or vacation plans at the time of the retention agreement (other than changes similarly affecting all senior executives); or
•
any purported termination of his employment not taken in accordance with his retention agreement.
Mr. Denault may terminate his employment for good reason in the event of a change in control upon:
•
the substantial reduction or alteration in the nature or status of his duties or responsibilities;
•
a reduction in his annual base salary;
•
the relocation of his principal place of employment to a location more than 20 miles from his current place of employment;
•
the failure to pay any portion of his compensation within seven days of its due date;
•
the failure to continue in effect any compensation plan in which he participates and which is material to his total compensation, unless other equitable arrangements are made;
•
the failure to continue to provide benefits substantially similar to those that he currently enjoys under any of the pension, savings, life insurance, medical, health and accident or disability plans, or Entergy taking of any other action which materially reduces any of those benefits or deprives him of any material fringe benefits that he currently enjoys;
•
the failure to provide him with the number of paid vacation days to which he is entitled in accordance with the normal vacation policy; or
•
any purported termination of his employment not taken in accordance with his retention agreement.
Haley R. Fisackerly
President & CEO, Entergy Mississippi
The following table shows certain payments and benefits, excluding vested or earned awards and benefits, which the President and CEO, Entergy Mississippi would have been entitled to receive as a result of a termination of his employment under various scenarios as of December 31, 2013:
(1)
In addition to the payments and benefits in the table, if Mr. Fisackerly's employment were terminated under certain conditions relating to a change in control, Mr. Fisackerly also would have been entitled to receive his vested pension benefits and would have been eligible for early retirement benefits. For a description of the pension benefits, see "2013 Pension Benefits." If Mr. Fisackerly's employment were terminated for cause, he would forfeit his benefit under the System Executive Retirement Plan.
(2)
In the event of a qualifying termination related to a change in control, Mr. Fisackerly would be entitled to receive pursuant to the System Executive Continuity Plan, a lump sum severance payment equal to the product of one time the sum of (a) his annual base salary as in effect at any time within one year prior to the commencement of a change in control period or, if higher, immediately prior to a circumstance constituting good reason plus (b) his annual incentive, calculated using the average annual target opportunity derived under the Annual Incentive Plan for the two calendar years immediately preceding the calendar year in which the participant’s termination occurs. For purposes of this table, a 40% target opportunity and a base salary of $296,174 was assumed.
(3)
In the event of a qualifying termination related to a change in control, Mr. Fisackerly would have forfeited his performance units for the 2012-2014 and 2013-2015 performance periods and would have been entitled to receive, pursuant to the 2011 Equity Ownership Plan, a single-sum severance payment that would not be based on any outstanding performance periods. For both the 2012-2014 performance period and the 2013-2015 performance period, the payment would have been calculated using the average annual number of performance units he would have been entitled to receive under each Performance Unit Program with respect to the two most recent performance periods preceding the calendar year in which his termination occurs, assuming all performance goals were achieved at target. For purposes of the table, the value of Mr. Fisackerly’s severance payment was calculated by taking an average of the target performance units from the 2009-2011 Performance Unit Program (900 units) and the 2010-2012 Performance Unit Program (1,000 units). This average number of units (950 units) multiplied by the closing price of Entergy stock on December 31, 2013 ($63.27) would equal a severance payment of $60,107 for the forfeited performance units.
In the event of Mr. Fisackerly’s death or disability not related to a change in control, Mr. Fisackerly would not have forfeited his performance units for all open performance periods, but rather such performance unit awards would have been pro-rated based on his number of months of participation in each open Performance Unit Program performance cycle. The amount of the award is based on actual performance achieved, with a stock price set as of the end of the performance period, and payable in the form of a lump sum after the completion of the performance period. For purposes of the table, the value of Mr. Fisackerly’s awards were calculated as follows:
2012 - 2014 Plan - 1,000 (24/36 *1,500) performance units at target, assuming a stock price of $63.27
2013 - 2015 Plan - 633 (12/36 * 1,900) performance units at target, assuming a stock price of $63.27
(4)
In the event of his death, disability or qualifying termination related to a change in control, all of Mr. Fisackerly’s unvested stock options would immediately vest. In addition, he would be entitled to exercise his stock options for the remainder of the ten-year extending from the grant date of the options. For purposes of this table, it is assumed that Mr. Fisackerly exercised his options immediately upon vesting and received proceeds equal to the difference between the closing price of common stock on December 31, 2013, and the applicable exercise price of each option share. As of December 31, 2013, the closing stock price of Mr. Fisackerly’s unvested options fell below the exercise prices and accordingly are considered “underwater” and are excluded from the table.
(5)
In the event of his death or disability, Mr. Fisackerly would immediately vest in a pro-rated portion of the unvested restricted stock that was otherwise scheduled to become vested on the immediately following twelve (12)-month grant date anniversary date (as well as dividends declared on the pro-rated portion of such restricted stock). The pro-rated vested portion would be determined based on the number of days between the most recent preceding twelve (12)-month grant date anniversary date and the date of his death or disability. In the event of his qualifying termination related to a change in control, Mr. Fisackerly would immediately vest in all unvested restricted stock.
(6)
Pursuant to the System Executive Continuity Plan, in the event of a termination related to a change in control, Mr. Fisackerly would be eligible to receive company-subsidized COBRA benefits for 12 months.
(7)
As of December 31, 2013, compensation and benefits available to Mr. Fisackerly under this scenario are substantially the same as available with a voluntary resignation.
(8)
In December 2010, the System Executive Continuity Plan was amended to eliminate excise tax gross-up payments.
Jeffrey S. Forbes
Executive Vice President, Nuclear Operations and Chief Nuclear Officer
The following table shows certain payments and benefits, excluding vested or earned awards and benefits, which the Executive Vice President, Nuclear Operations and Chief Nuclear Officer would have been entitled to receive as a result of a termination of his employment under various scenarios as of December 31, 2013:
(1)
In addition to the payments and benefits in the table, Mr. Forbes would have been eligible to retire and entitled to receive his vested pension benefits. For a description of the pension benefits available see "2013 Pension Benefits." In the event of a termination related to a change in control, pursuant to the terms of the System Executive Retirement Plan, Mr. Forbes would be eligible for subsidized early retirement even if he does not have company permission to separate from employment. If Mr. Forbes' employment were terminated for cause, he would not receive a benefit under the System Executive Retirement Plan.
(2)
In the event of a qualifying termination related to a change in control, Mr. Forbes would be entitled to receive pursuant to the System Executive Continuity Plan a lump sum severance payment equal to the product of 2.99 times the sum of (a) his annual base salary as in effect at any time within one year prior to the commencement of a change in control period or, if higher, immediately prior to a circumstance constituting good reason plus (b) his annual incentive, calculated using the average annual target opportunity derived under the Annual Incentive Plan for the two calendar years immediately preceding the calendar year in which the participant’s termination occurs. For purposes of this table, a 60% target opportunity and a base salary of $550,000 was assumed.
(3)
In the event of a qualifying termination related to a change in control, Mr. Forbes would have forfeited his performance units for the 2012-2014 and 2013-2015 performance periods and would have been entitled to receive, pursuant to the 2011 Equity Ownership Plan, a single-sum severance payment that would not be based on any outstanding performance periods. For both the 2012-2014 performance period and the 2013-2015 performance period, the payment would have been calculated using the average annual number of performance units he would have been entitled to receive under each Performance Unit Program with respect to the two most recent performance periods preceding the calendar year in which his termination occurs, assuming all performance goals were achieved at target. For purposes of the table, the value of Mr. Forbes’ severance payment was calculated by taking an average of the target performance units from the 2009-2011 Performance Unit Program (4,800 units) and the 2010-2012 Performance Unit Program (5,300 units). This average number of units (5,050 units) multiplied by the closing price of Entergy stock on December 31, 2013 ($63.27) would equal a severance payment of $319,514 for the forfeited performance units.
In the event of Mr. Forbes’ retirement, death or disability not related to a change in control, Mr. Forbes would not have forfeited his performance units for all open performance periods, but rather such performance unit awards would have been pro-rated based on his number of months of participation in each open Performance Unit Program performance
cycle. The amount of the award is based on actual performance achieved, with a stock price set as of the end of the performance period, and payable in the form of a lump sum after the completion of the performance period. For purposes of the table, the value of Mr. Forbes' awards were calculated as follows:
2012 - 2014 Plan - 2,878 (24/36*4,317) performance units at target, assuming a stock price of $63.27
2013 -2015 Plan - 2,491 (12/36*7,472) performance units at target, assuming a stock price of $63.27
(4)
In the event of his death, disability or qualifying termination related to a change in control, all of Mr. Forbes’s unvested stock options would immediately vest. In addition, he would be entitled to exercise his stock options for the remainder of the ten-year extending from the grant date of the options. For purposes of this table, it is assumed that Mr. Forbes exercised his options immediately upon vesting and received proceeds equal to the difference between the closing price of common stock on December 31, 2013, and the applicable exercise price of each option share. As of December 31, 2013, the closing stock price of Mr. Forbes’s unvested options fell below the exercise prices and accordingly are considered “underwater” and are excluded from the table.
(5)
In the event of his death or disability, Mr. Forbes would immediately vest in a pro-rated portion of the unvested restricted stock that was otherwise scheduled to become vested on the immediately following twelve (12)-month grant date anniversary date (as well as dividends declared on the pro-rated portion of such restricted stock). The pro-rated vested portion would be determined based on the number of days between the most recent preceding twelve (12)-month grant date anniversary date and the date of his death or disability. In the event of his qualifying termination related to a change in control, Mr. Forbes would immediately vest in all unvested restricted stock.
(6)
As Entergy Corporation's Chief Nuclear Officer, Mr. Forbes participates in the Nuclear Retention Program which does not allow for accelerated or prorated payout upon termination of any kind.
(7)
Mr. Forbes’ 8,000 restricted units vest 100% in 2016. Pursuant to his restricted unit agreement, any unvested restricted units will vest immediately in the event of a termination for a reason other than cause, total disability or death. The units will vest upon termination within 24 months of a change in control without cause or by Mr. Forbes with good reason. If Mr. Forbes voluntarily resigned or was terminated for cause, he would forfeit these units.
(8)
Upon retirement, Mr. Forbes would be eligible for retiree medical and dental benefits, the same as all other retirees. Pursuant to the System Executive Continuity Plan, in the event of a termination related to a change in control, Mr. Forbes would not be eligible to receive company-subsidized COBRA benefits.
(9)
As of December 31, 2013, Mr. Forbes is retirement eligible and would retire rather than voluntarily resign. Given that scenario, the compensation and benefits available to Mr. Forbes under retirement are substantially the same as available with a voluntary resignation.
(10)
In December 2010, the System Executive Continuity Plan was amended to eliminate excise tax gross-up payments.
Andrew S. Marsh
Executive Vice President and Chief Financial Officer
The following table shows certain payments and benefits, excluding vested or earned awards and benefits, which the Executive Vice President and Chief Financial Officer would have been entitled to receive as a result of a termination of his employment under various scenarios as of December 31, 2013:
(1)
In addition to the payments and benefits in the table, if Mr. Marsh's employment were terminated under certain conditions relating to a change in control, Mr. Marsh also would have been entitled to receive his vested pension benefits and would have been eligible for early retirement benefits. For a description of the pension benefits, see "2013 Pension Benefits." If Mr. Marsh's employment were terminated for cause, he would forfeit his benefit under the System Executive Retirement Plan.
(2)
In the event of a qualifying termination related to a change in control, Mr. Marsh would be entitled to receive pursuant to the System Executive Continuity Plan a lump sum severance payment equal to the product of 2.99 times the sum of (a) his annual base salary as in effect at any time within one year prior to the commencement of a of a change in control period or, if higher, immediately prior to a circumstance constituting good reason plus (b) his annual incentive, calculated using the average annual target opportunity derived under the Annual Incentive Plan for the two calendar years immediately preceding the calendar year in which the participant’s termination occurs. For purposes of this table, a 40% target opportunity and a base salary of $500,000 was assumed.
(3)
In the event of a qualifying termination related to a change in control, Mr. Marsh would have forfeited his performance units for the 2012-2014 and 2013-2015 performance periods and would have been entitled to receive, pursuant to the 2011 Equity Ownership Plans, a single-sum severance payment that would not be based on any outstanding performance periods. For both the 2012-2014 performance period and the 2013-2015 performance period, the payment would have been calculated using the average annual number of performance units he would have been entitled to receive under each Performance Unit Program with respect to the two most recent performance periods preceding the calendar year in which his termination occurs, assuming all performance goals were achieved at target. For purposes of the table, the value of Mr. Marsh’s severance payment was calculated by taking an average of the target performance units from the 2009-2011 Performance Unit Program (4,800 units) and the 2010-2012 Performance Unit Program (5,300 units). This average number of units (5,050 units) multiplied by the closing price of Entergy stock on December 31, 2013 ($63.27) would equal a severance payment of $319,514 for the forfeited performance units.
In the event of Mr. Marsh’s death or disability not related to a change in control, Mr. Marsh would not have forfeited his performance units for all open performance periods, but rather such performance unit awards would have been pro-rated based on his number of months of participation in each open Performance Unit Program performance cycle. The amount of the award is based on actual performance achieved, with a stock price set as of the end of the performance period, and payable in the form of a lump sum after the completion of the performance period. For purposes of the table, the value of Mr. Marsh's awards were calculated as follows:
2012 - 2014 Plan - 2,661 (24/36*3,992) performance units at target, assuming a stock price of $63.27
2013 - 2015 Plan - 2,481 (12/36*7,442)) performance units at target, assuming a stock price of $63.27
(4)
In the event of his death, disability or qualifying termination related to a change in control, all of Mr. Marsh’s unvested stock options would immediately vest. In addition, he would be entitled to exercise his stock options for the remainder of the ten-year extending from the grant date of the options. For purposes of this table, it is assumed that Mr. Marsh exercised his options immediately upon vesting and received proceeds equal to the difference between the closing price of common stock on December 31, 2013, and the applicable exercise price of each option share. As of December 31, 2013, the closing stock price of Mr. Marsh’s unvested options fell below the exercise prices and accordingly are considered “underwater” and are excluded from the table.
(5)
In the event of his death or disability, Mr. Marsh would immediately vest in a pro-rated portion of the unvested restricted stock that was otherwise scheduled to become vested on the immediately following twelve (12)-month grant date anniversary date (as well as dividends declared on the pro-rated portion of such restricted stock). The pro-rated vested portion would be determined based on the number of days between the most recent preceding twelve (12)-month grant date anniversary date and the date of his death or disability. In the event of his qualifying termination related to a change in control, Mr. Marsh would immediately vest in all unvested restricted stock.
(6)
Pursuant to the System Executive Continuity Plan, in the event of a termination related to a change in control, Mr. Marsh would be eligible to receive company-subsidized COBRA benefits for 18 months.
(7)
As of December 31, 2013, compensation and benefits available to Mr. Marsh under this scenario are substantially the same as available with a voluntary resignation.
(8)
In December 2010, the System Executive Continuity Plan was amended to eliminate excise tax gross-up payments.
Phillip R. May, Jr.
President & CEO, Entergy Gulf States Louisiana and Entergy Louisiana
The following table shows certain payments and benefits, excluding vested or earned awards and benefits, which the President & CEO, Entergy Gulf States Louisiana and Entergy Louisiana would have been entitled to receive as a result of a termination of his employment under various scenarios as of December 31, 2013:
(1)
In addition to the payments and benefits in the table, if Mr. May's employment were terminated under certain conditions relating to a change in control, Mr. May also would have been entitled to receive his vested pension benefits and would have been eligible for early retirement benefits. For a description of the pension benefits, see "2013 Pension Benefits." If Mr. May's employment were terminated for cause, he would forfeit his benefit under the System Executive Retirement Plan.
(2)
In the event of a qualifying termination related to a change in control, Mr. May would be entitled to receive pursuant to the System Executive Continuity Plan a lump sum severance payment equal to the product of two times the sum of (a) his annual base salary as in effect at any time within one year prior to the commencement of a change in control period or, if higher, immediately prior to a circumstance constituting good reason plus (b) his annual incentive, calculated using the average annual target opportunity derived under the Annual Incentive Plan for the two calendar years immediately preceding the calendar year in which the participant’s termination occurs. For purposes of this table, a 40% target opportunity and a base salary of $330,000 was assumed.
(3)
In the event of a qualifying termination related to a change in control, Mr. May would have forfeited his performance units for the 2012-2014 and 2013-2015 performance periods and would have been entitled to receive, pursuant to the 2011 Equity Ownership Plan, a single-sum severance payment that would not be based on any outstanding performance periods. For both the 2012-2014 performance period and the 2013-2015 performance period, the payment would have been calculated using the average annual number of performance units he would have been entitled to receive under each Performance Unit Program with respect to the two most recent performance periods preceding the calendar year in which his termination occurs, assuming all performance goals were achieved at target. For purposes of the table, the value of Mr. May’s severance payment was calculated by taking an average of the target performance units from the 2009-2011 Performance Unit Program (2,000 units) and the 2010-2012 Performance Unit Program (2,200 units). This average number of units (2,100 units) multiplied by the closing price of Entergy stock on December 31, 2013 ($63.27) would equal a severance payment of $132,867 for the forfeited performance units.
In the event of Mr. May’s death or disability not related to a change in control, Mr. May would not have forfeited his performance units for all open performance periods, but rather such performance unit awards would have been pro-rated based on his number of months of participation in each open Performance Unit Program performance cycle. The amount of the award is based on actual performance achieved, with a stock price set as of the end of the performance period, and payable in the form of a lump sum after the completion of the performance period. For purposes of the table, the value of Mr. May's awards were calculated as follows:
2012 - 2014 Plan - 1,383 (24/36*2,075) performance units at target, assuming a stock price of $63.27
2013 - 2015 Plan - 990 (12/36*2,969) performance units at target, assuming a stock price of $63.27
(4)
In the event of his death, disability or qualifying termination related to a change in control, all of Mr. May's unvested stock options would immediately vest. In addition, he would be entitled to exercise his stock options for the remainder of the ten-year extending from the grant date of the options. For purposes of this table, it is assumed that Mr. May exercised his options immediately upon vesting and received proceeds equal to the difference between the closing price of common stock on December 31, 2013, and the applicable exercise price of each option share. As of December 31, 2013, the closing stock price of Mr. May’s unvested options fell below the exercise prices and accordingly are considered “underwater” and are excluded from the table.
(5)
In the event of his death or disability, Mr. May would immediately vest in a pro-rated portion of the unvested restricted stock that was otherwise scheduled to become vested on the immediately following twelve (12)-month grant date anniversary date (as well as dividends declared on the pro-rated portion of such restricted stock). The pro-rated vested portion would be determined based on the number of days between the most recent preceding twelve (12)-month grant date anniversary date and the date of his death or disability. In the event of his qualifying termination related to a change in control, Mr. May would immediately vest in all unvested restricted stock.
(6)
Pursuant to the System Executive Continuity Plan, in the event of a termination related to a change in control, Mr. May would be eligible to receive company-subsidized COBRA benefits for 18 months.
(7)
As of December 31, 2013, compensation and benefits available to Mr. May under this scenario are substantially the same as available with a voluntary resignation.
(8)
In December 2010, the System Executive Continuity Plan was amended to eliminate excise tax gross-up payments.
Hugh T. McDonald
President & CEO, Entergy Arkansas
The following table shows certain payments and benefits, excluding vested or earned awards and benefits, which the President & CEO, Entergy Arkansas would have been entitled to receive as a result of a termination of his employment under various scenarios as of December 31, 2013:
(1)
In addition to the payments and benefits in the table, if Mr. McDonald would have been eligible to retire and entitled to receive his vested pension benefits. For a description of the pension benefits available see "2013 Pension Benefits." In the event of a termination related to a change in control, pursuant to the terms of the System Executive Retirement Plan, Mr. McDonald would be eligible for subsidized early retirement even if he does not have company permission to separate from employment. If Mr. McDonald’s employment were terminated for cause, he would not receive a benefit under the System Executive Retirement Plan.
(2)
In the event of a qualifying termination related to a change in control, Mr. McDonald would be entitled to receive pursuant to the System Executive Continuity Plan, a lump sum severance payment equal to the product of one time the sum of (a) his annual base salary as in effect at any time within one year prior to the commencement of a change in control period or, if higher, immediately prior to a circumstance constituting good reason plus (b) his annual incentive, calculated using the average annual target opportunity derived under the Annual Incentive Plan for the two calendar years immediately preceding the calendar year in which the participant’s termination occurs. For purposes of this table, a 50% target opportunity and a base salary of $345,220 was assumed.
(3)
In the event of a qualifying termination related to a change in control, Mr. McDonald would have forfeited his performance units for the 2012-2014 and 2013-2015 performance periods and would have been entitled to receive, pursuant to the 2011 Equity Ownership Plan, a single-sum severance payment that would not be based on any outstanding performance periods. For both the 2012-2014 performance period and the 2013-2015 performance period, the payment would have been calculated using the average annual number of performance units he would have been entitled to receive under each Performance Unit Program with respect to the two most recent performance periods preceding the calendar year in which his termination occurs, assuming all performance goals were achieved at target. For purposes of the table, the value of Mr. McDonald’s severance payment was calculated by taking an average of the target performance units from the 2009-2011 Performance Unit Program (900 units) and the 2010-2012 Performance Unit Program (1,000 units). This average number of units (950 units) multiplied by the closing price of Entergy stock on December 31, 2013 ($63.27) would equal a severance payment of $ $60,107 for the forfeited performance units.
In the event of Mr. McDonald’s retirement, death, or disability not related to a change in control, Mr. McDonald would not have forfeited his performance units for all open performance periods, but rather such performance unit awards would have been pro-rated based on his number of months of participation in each open Performance Unit Program performance cycle. The amount of the award is based on actual performance achieved, with a stock price set as of the end of the
performance period, and payable in the form of a lumpsum after the completion of the performance period. For purposes of the table, the value of Mr. McDonald’s awards were calculated as follows:
2012 - 2014 Plan - 1,000 (24/36 * 1,500) performance units at target, assuming a stock price of $63.27
2013 - 2015 Plan - 633 (12/36 * 1,900) performance units at target, assuming a stock price of $63.27
(4)
In the event of his retirement, death, disability or qualifying termination related to a change in control, all of Mr. McDonald's unvested stock options would immediately vest. In addition, he would be entitled to exercise his stock options for the remainder of the ten-year extending from the grant date of the options. For purposes of this table, it is assumed that Mr. McDonald exercised his options immediately upon vesting and received proceeds equal to the difference between the closing price of common stock on December 31, 2013, and the applicable exercise price of each option share. As of December 31, 2013, the closing stock price of Mr. McDonald’s unvested options fell below the exercise prices and accordingly are considered “underwater” and are excluded from the table.
(5)
In the event of his death or disability, Mr. McDonald would immediately vest in a pro-rated portion of the unvested restricted stock that was otherwise scheduled to become vested on the immediately following twelve (12)-month grant date anniversary date (as well as dividends declared on the pro-rated portion of such restricted stock). The pro-rated vested portion would be determined based on the number of days between the most recent preceding twelve (12)-month grant date anniversary date and the date of his death or disability. In the event of his qualifying termination related to a change in control, Mr. McDonald would immediately vest in all unvested restricted stock.
(6)
Upon retirement, Mr. McDonald would be eligible for retiree medical and dental benefits, the same as all other retirees. Pursuant to the System Executive Continuity Plan, in the event of a termination related to a change in control, Mr. McDonald would not be eligible to receive company-subsidized COBRA benefits.
(7)
As of December 31, 2013, Mr. McDonald is retirement eligible and would rather retire than voluntary resign. Given that scenario, the compensation and benefits available to Mr. McDonald under retirement are substantially the same as available with a voluntary resignation.
(8)
In December 2010, the System Executive Continuity Plan was amended to eliminate excise tax gross-up payments.
William M. Mohl
President, Entergy Wholesale Commodities
Former President & CEO, Entergy Gulf States Louisiana and Entergy Louisiana
The following table shows certain payments and benefits, excluding vested or earned awards and benefits, which the President, Entergy Wholesale Commodities would have been entitled to receive as a result of a termination of his employment under various scenarios as of December 31, 2013:
(1)
In addition to the payments and benefits in the table, if Mr. Mohl's employment were terminated under certain conditions relating to a change in control, Mr. Mohl also would have been entitled to receive his vested pension benefits and would have been eligible for early retirement benefits. For a description of the pension benefits, see "2013 Pension Benefits." If Mr. Mohl's employment were terminated for cause, he would forfeit his benefit under the System Executive Retirement Plan.
(2)
In the event of a qualifying termination related to a change in control, Mr. Mohl would be entitled to receive pursuant to the System Executive Continuity Plan a lump sum severance payment equal to the product of 2.99 times the sum of (a) his annual base salary as is effect at any time within one year prior to the commencement of a of a change in control period or, if higher, immediately prior to a circumstance constituting good reason plus (b) his annual incentive, calculated using the average annual target opportunity derived under the Annual Incentive Plan for the two calendar years immediately preceding the calendar year in which the participant’s termination occurs. For purposes of this table, a 60% target opportunity and a base salary of $560,000 was assumed.
(3)
In the event of a qualifying termination related to a change in control, Mr. Mohl would have forfeited his performance units for the 2012-2014 and 2013-2015 performance periods and would have been entitled to receive, pursuant to the 2011 Equity Ownership Plan, a single-sum severance payment that would not be based on any outstanding performance periods. For both the 2012-2014 performance period and the 2013-2015 performance period, the payment would have been calculated using the average annual number of performance units he would have been entitled to receive under each Performance Unit Program with respect to the two most recent performance periods preceding the calendar year in which his termination occurs, assuming all performance goals were achieved at target. For purposes of the table, the value of Mr. Mohl’s severance payment was calculated by taking an average of the target performance units from the 2009-2011 Performance Unit Program (4,800 units) and the 2010-2012 Performance Unit Program (5,300 units). This average number of units (5,050 units) multiplied by the closing price of Entergy stock on December 31, 2013 ($63.27) would equal a severance payment of $319,514 for the forfeited performance units.
In the event of Mr. Mohl’s death or disability not related to a change in control, Mr. Mohl would not have forfeited his performance units for all open performance periods, but rather such performance unit awards would have been pro-rated based on his number of months of participation in each open Performance Unit Program performance cycle. The amount of the award is based on actual performance achieved, with a stock price set as of the end of the performance period, and
payable in the form of a lump sum after the completion of the performance period. For purposes of the table, the value of Mr. Mohl's awards were calculated as follows:
2012 - 2014 Plan - 2,878 (24/36*4,317) performance units at target, assuming a stock price of $63.27
2013 - 2015 Plan - 2,491 (12/36*7,472) performance units at target, assuming a stock price of $63.27
(4)
In the event of his death, disability or qualifying termination related to a change in control, all of Mr. Mohl’s unvested stock options would immediately vest. In addition, he would be entitled to exercise his stock options for the remainder of the ten-year extending from the grant date of the options. For purposes of this table, it is assumed that Mr. Mohl exercised his options immediately upon vesting and received proceeds equal to the difference between the closing price of common stock on December 31, 2013, and the applicable exercise price of each option share. As of December 31, 2013, the closing stock prices of Mr. Mohl’s unvested options fell below the exercise prices and accordingly are considered “underwater” and are excluded from the table.
(5)
In the event of his death or disability, Mr. Mohl would immediately vest in a pro-rated portion of the unvested restricted stock that was otherwise scheduled to become vested on the immediately following twelve (12)-month grant date anniversary date (as well as dividends declared on the pro-rated portion of such restricted stock). The pro-rated vested portion would be determined based on the number of days between the most recent preceding twelve (12)-month grant date anniversary date and the date of his death or disability. In the event of his qualifying termination related to a change in control, Mr. Mohl would immediately vest in all unvested restricted stock.
(6)
Pursuant to the provisions of Mr. Mohl’s retention agreement, if Mr. Mohl is terminated without cause prior to September 18, 2014, the date Mr. Mohl becomes retirement eligible, Mr. Mohl would receive a severance payment of $7,538,650, upon satisfaction of certain terms and conditions. This amount includes, in addition to a severance payment calculated on the basis of his base salary and target annual bonus, a payment of $2,200,000 plus the benefits he would be eligible for under the System Executive Retirement Plan as if he were retirement eligible reduced by any benefits payable under any of Entergy Corporation’s qualified or non-qualified retirement plans. See “Executive Compensation - Compensation Discussion And Analysis -Retention Agreements and Other Compensation Arrangements.”
(7)
Pursuant to the System Executive Continuity Plan, in the event of a termination related to a change in control, Mr. Mohl would be eligible to receive company-subsidized COBRA benefits for 18 months.
(8)
As of December 31, 2013, compensation and benefits available to Mr. Mohl under this scenario are substantially the same as available with a voluntary resignation.
(9)
In December 2010, the System Executive Continuity Plan was amended to eliminate excise tax gross-up payments.
Alyson M. Mount
Senior Vice President, Chief Accounting Officer
The following table shows certain payments and benefits, excluding vested or earned awards and benefits, which the Senior Vice President, Chief Accounting Officer would have been entitled to receive as a result of a termination of her employment under various scenarios as of December 31, 2013:
(1)
In addition to the payments and benefits in the table, if Ms. Mount's employment were terminated under certain conditions relating to a change in control, Ms. Mount also would have been entitled to receive her vested pension benefits and would have been eligible for early retirement benefits. For a description of the pension benefits, see "2013 Pension Benefits." If Ms. Mount's employment were terminated for cause, she would forfeit her benefit under the System Executive Retirement Plan.
(2)
In the event of a qualifying termination related to a change in control, Ms. Mount would be entitled to receive pursuant to the System Executive Continuity Plan a lump sum severance payment equal to the product of 2.00 times the sum of (a) her annual base salary as in effect at any time within one year prior to the commencement of a change in control period or, if higher, immediately prior to a circumstance constituting good reason plus (b) her annual incentive, calculated using the average annual target opportunity under the Annual Incentive Plan for the two calendar years immediately preceding the calendar year in which the participant’s termination occurs. For purposes of this table, a 48% target opportunity and a base salary of $286,700 was assumed.
(3)
In the event of a qualifying termination related to a change in control, Ms. Mount would have forfeited her performance units for the 2012-2014 and 2013-2015 performance periods and would have been entitled to receive, pursuant to the 2011 Equity Ownership Plan, a single-sum severance payment that would not be based on any outstanding performance periods. For both the 2012-2014 performance period and the 2013-2015 performance period, the payment would have been calculated using the average annual number of performance units she would have been entitled to receive under each Performance Unit Program with respect to the two most recent performance periods preceding the calendar year in which her termination occurs, assuming all performance goals were achieved at target. For purposes of the table, the value of Ms. Mount’s severance payment was calculated by taking an average of the target performance units from the 2009-2011 Performance Unit Program (2,000 units) and the 2010-2012 Performance Unit Program (2,200 units). This average number of units (2,100 units) multiplied by the closing price of Entergy stock on December 31, 2013 ($63.27) would equal a severance payment of $132,867 for the forfeited performance units.
In the event of Ms. Mount’s death or disability not related to a change in control, Ms. Mount would not have forfeited her performance units for all open performance periods, but rather such performance unit awards would have been pro-rated based on her number of months of participation in each open Performance Unit Program performance cycle. The amount of the award is based on actual performance achieved, with a stock price set as of the end of the performance period, and payable in the form of a lump sum after the completion of the performance period. For purposes of the table, the value of Ms. Mount's awards were calculated as follows:
2012 - 2014 Plan - 1,378 (24/36*2,067) performance units at target, assuming a stock price of $63.27
2013 - 2015 Plan - 1,000 (12/36*3,000) performance units at target, assuming a stock price of $63.27
(4)
In the event of her death, disability or qualifying termination related to a change in control, all of Ms. Mount's unvested stock options would immediately vest. In addition, she would be entitled to exercise her stock options for the remainder of the ten-year extending from the grant date of the options. For purposes of this table, it is assumed that Ms. Mount exercised her options immediately upon vesting and received proceeds equal to the difference between the closing price of common stock on December 31, 2013, and the applicable exercise price of each option share. As of December 31, 2013, the closing stock price of Ms. Mount’s unvested options fell below the exercise prices and accordingly are considered “underwater” and are excluded from the table.
(5)
In the event of her death or disability, Ms. Mount would immediately vest in a pro-rated portion of the unvested restricted stock that was otherwise scheduled to become vested on the immediately following twelve (12)-month grant date anniversary date (as well as dividends declared on the pro-rated portion of such restricted stock). The pro-rated vested portion would be determined based on the number of days between the most recent preceding twelve (12)-month grant date anniversary date and the date of her death or disability. In the event of her qualifying termination related to a change in control, Ms. Mount would immediately vest in all unvested restricted stock.
(6)
Pursuant to the System Executive Continuity Plan, in the event of a termination related to a change in control, Ms. Mount would be eligible to receive company-subsidized COBRA benefits for 18 months.
(7)
As of December 31, 2013, compensation and benefits available to Ms. Mount under this scenario are substantially the same as available with a voluntary resignation.
(8)
In December 2010, the System Executive Continuity Plan was amended to eliminate excise tax gross-up payments.
Sallie T. Rainer
President & CEO, Entergy Texas
The following table shows certain payments and benefits, excluding vested or earned awards and benefits, which the President & CEO, Entergy Texas would have been entitled to receive as a result of a termination of her employment under various scenarios as of December 31, 2013:
(1)
In addition to the payments and benefits in the table, if Ms. Rainer's employment were terminated under certain conditions relating to a change in control, Ms. Rainer also would have been entitled to receive her vested pension benefits and would have been eligible for early retirement benefits. For a description of the pension benefits, see "2013 Pension Benefits." If Ms. Rainer's employment were terminated for cause, she would forfeit her benefit under the System Executive Retirement Plan.
(2)
In the event of a qualifying termination related to a change in control, Ms. Rainer would be entitled to receive pursuant to the System Executive Continuity Plan a lump sum severance payment equal to the product of 1.00 times the sum of (a) her annual base salary as in effect at any time within one year prior to the commencement of a change in control period or, if higher, immediately prior to a circumstance constituting good reason plus (b) her annual incentive, calculated using the average annual target opportunity under the Annual Incentive Plan for the two calendar years immediately preceding the calendar year in which the participant’s termination occurs. For purposes of this table, a 40% target opportunity and a base salary of $291,000 was assumed.
(3)
In the event of a qualifying termination related to a change in control, Ms. Rainer would have forfeited her performance units for the 2012-2014 and 2013-2015 performance periods and would have been entitled to receive, pursuant to the 2011 Equity Ownership Plan, a single-sum severance payment that would not be based on any outstanding performance periods. For both the 2012-2014 performance period and the 2013-2015 performance period, the payment would have been calculated using the average annual number of performance units she would have been entitled to receive under each Performance Unit Program with respect to the two most recent performance periods preceding the calendar year in which her termination occurs, assuming all performance goals were achieved at target. For purposes of the table, the value of Ms. Rainer’s severance payment was calculated by taking an average of the target performance units from the 2009-2011 Performance Unit Program (900 units) and the 2010-2012 Performance Unit Program (1,000 units). This average number of units (950 units) multiplied by the closing price of Entergy stock on December 31, 2013 ($63.27) would equal a severance payment of $60,107 for the forfeited performance units.
In the event of Ms. Rainer’s death or disability not related to a change in control, Ms. Rainer would not have forfeited his performance units for all open performance periods, but rather such performance unit awards would have been pro-rated based on her number of months of participation in each open Performance Unit Program performance cycle. The amount of the award is based on actual performance achieved, with a stock price set as of the end of the performance period, and payable in the form of a lump sum after the completion of the performance period. For purposes of the table, the value of Ms. Rainer's awards were calculated as follows:
2012 - 2014 Plan - 861 (24/36 * 1,292) performance units at target, assuming a stock price of $63.27
2013 - 2015 Plan - 633 (12/36 * 1,900) performance units at target, assuming a stock price of $63.27
(4)
In the event of her death, disability or qualifying termination related to a change in control, all of Ms. Rainer's unvested stock would immediately vest. In addition, she would be entitled to exercise any unexercised options during a ten-year term extending from the grant date of the options. For purposes of this table, we assumed that Ms. Rainer exercised her options immediately upon vesting and received proceeds equal to the difference between the closing price of common stock on December 31, 2013, and the exercise price of each option share. As of December 31, 2013, the closing stock price of Ms. Rainer’s unvested options fell below the exercise prices and accordingly are considered “underwater” and are excluded from the table.
(5)
In the event of her death or disability, Ms. Rainer would immediately vest in a pro-rated portion of the unvested restricted stock that was otherwise scheduled to become vested on the immediately following twelve (12)-month grant date anniversary date (as well as dividends declared on the pro-rated portion of such restricted stock). The pro-rated vested portion would be determined based on the number of days between the most recent preceding twelve (12)-month grant date anniversary date and the date of her death or disability. In the event of her qualifying termination related to a change in control, Ms. Rainer would immediately vest in all unvested restricted stock.
(6)
Pursuant to the System Executive Continuity Plan, in the event of a termination related to a change in control, Ms. Rainer would be eligible to receive company-subsidized COBRA benefits for 12 months.
(7)
As of December 31, 2013, compensation and benefits available to Ms. Rainer under this scenario are substantially the same as available with a voluntary resignation.
(8)
In December 2010, the System Executive Continuity Plan was amended to eliminate excise tax gross-up payments.
Charles L. Rice, Jr.
President & CEO, Entergy New Orleans
The following table shows certain payments and benefits, excluding vested or earned awards and benefits, which the President and CEO, Entergy New Orleans would have been entitled to receive as a result of a termination of his employment under various scenarios as of December 31, 2013:
(1)
In addition to the payments and benefits in the table, if Mr. Rice's employment were terminated under certain conditions relating to a change in control, Mr. Rice also would have been entitled to receive his vested pension benefits and would have been eligible for early retirement benefits. For a description of the pension benefits, see "2013 Pension Benefits." If Mr. Rice's employment were terminated for cause, he would forfeit his benefit under the System Executive Retirement Plan.
(2)
In the event of a qualifying termination related to a change in control, Mr. Rice would be entitled to receive pursuant to the System Executive Continuity Plan, a lump sum severance payment equal to the product of one time the sum of (a) his annual base salary as in effect at any time within one year prior to the commencement of a change in control period or, if higher, immediately prior to a circumstance constituting good reason plus (b) his annual incentive, calculated using the average annual target opportunity derived under the Annual Incentive Plan for the two calendar years immediately preceding the calendar year in which the participant’s termination occurs. For purposes of this table, a 40% target opportunity and a base salary of $257,144 was assumed.
(3)
In the event of a qualifying termination related to a change in control, Mr. Rice would have forfeited his performance units for the 2012-2014 and 2013-2015 performance periods and would have been entitled to receive, pursuant to the 2011 Equity Ownership Plan, a single-sum severance payment that would not be based on any outstanding performance periods. For both the 2012-2014 performance period and the 2013-2015 performance period, the payment would have been calculated using the average annual number of performance units he would have been entitled to receive under each Performance Unit Program with respect to the two most recent performance periods preceding the calendar year in which his termination occurs, assuming all performance goals were achieved at target. For purposes of the table, the value of Mr. Rice’s severance payment was calculated by taking an average of the target performance units from the 2009-2011 Performance Unit Program (900 units) and the 2010-2012 Performance Unit Program (1,000 units). This average number of units (950 units) multiplied by the closing price of Entergy stock on December 31, 2013 ($63.27) would equal a severance payment of $60,107 for the forfeited performance units.
In the event of Mr. Rice’s death or disability not related to a change in control, Mr. Rice would not have forfeited his performance units for all open performance periods, but rather such performance unit awards would have been pro-rated based on his number of months of participation in each open Performance Unit Program performance cycle. The amount of the award is based on actual performance achieved, with a stock price set as of the end of the performance period, and payable in the form of a lump sum after the completion of the performance period. For purposes of the table, the value of Mr. Rice’s awards were calculated as follows:
2012 - 2014 Plan - 1,000 (24/36 * 1,500) performance units at target, assuming a stock price of $63.27
2013 - 2015 Plan - 633 (12/36 * 1,900) performance units at target, assuming a stock price of $63.27
(4)
In the event of his death, disability or qualifying termination related to a change in control, all of Mr. Rice's unvested stock options would immediately vest. In addition, he would be entitled to exercise his stock options for the remainder of the ten-year extending from the grant date of the options. For purposes of this table, it is assumed that Mr. Rice exercised his options immediately upon vesting and received proceeds equal to the difference between the closing price of common stock on December 31, 2013, and the applicable exercise price of each option share. As of December 31, 2013, the closing stock price of Mr. Rice’s unvested options fell below the exercise prices and accordingly are considered “underwater” and are excluded from the table.
(5)
In the event of his death or disability, Mr. Rice would immediately vest in a pro-rated portion of the unvested restricted stock that was otherwise scheduled to become vested on the immediately following twelve (12)-month grant date anniversary date (as well as dividends declared on the pro-rated portion of such restricted stock). The pro-rated vested portion would be determined based on the number of days between the most recent preceding twelve (12)-month grant date anniversary date and the date of his death or disability. In the event of his qualifying termination related to a change in control, Mr. Rice would immediately vest in all unvested restricted stock.
(6)
Pursuant to the System Executive Continuity Plan, in the event of a termination related to a change in control, Mr. Rice would be eligible to receive company-subsidized COBRA benefits for 12 months.
(7)
As of December 31, 2013, compensation and benefits available to Mr. Rice under this scenario are substantially the same as available with a voluntary resignation.
(8)
In December 2010, the System Executive Continuity Plan was amended to eliminate excise tax gross-up payments.
Roderick K. West
Executive Vice President & Chief Administrative Officer
The following table shows certain payments and benefits, excluding vested or earned awards and benefits, which the Executive Vice President & Chief Administrative Officer would have been entitled to receive as a result of a termination of her employment under various scenarios as of December 31, 2013:
(1)
In addition to the payments and benefits in the table, if Mr. West’s employment were terminated under certain conditions relating to a change in control, Mr. West also would have been entitled to receive his vested pension benefits and would have been eligible for early retirement benefits. For a description of the pension benefits, see “2013 Pension Benefits.” If Mr. West’s employment were terminated for cause, he would forfeit his benefit under the System Executive Retirement Plan.
(2)
In the event of a qualifying termination related to a change in control, Mr. West would be entitled to receive pursuant to the System Executive Continuity Plan a lump sum severance payment equal to the product of 2.99 times the sum of (a) his annual base salary as in effect at any time within one year prior to the commencement of a change in control period or, if higher, immediately prior to a circumstance constituting good reason plus (b) his annual incentive, calculated using the average annual target opportunity under the Annual Incentive Plan for the two calendar years immediately preceding the calendar year in which the participant’s termination occurs. For purposes of this table, a 70% target opportunity and a base salary of $612,726 was assumed.
(3)
In the event of a qualifying termination related to a change in control, Mr. West would have forfeited his performance units for the 2012-2014 and 2013-2015 performance periods and would have been entitled to receive, pursuant to the 2011 Equity Ownership Plan, a single-sum severance payment that would not be based on any outstanding performance periods. For both the 2012-2014 performance period and the 2013-2015 performance period, the payment would have been calculated using the average annual number of performance units he would have been entitled to receive under the Performance Unit Program with respect to the two most recent performance periods preceding the calendar year in which his termination occurs, assuming all performance goals were achieved at target. For purposes of the table, the value of Mr. West’s severance payment was calculated by taking an average of the target performance units from the 2009-2011 Performance Unit Program (4,800 units) and the 2010-2012 Performance Unit Program (5,300 units). This average number of units (5,050 units) multiplied by the closing price of Entergy stock on December 31, 2013 ($63.27) would equal a severance payment of $319,514 for the forfeited performance units.
In the event of Mr. West’s death or disability not related to a change in control, Mr. West would not have forfeited his performance units for all open performance periods, but rather such performance unit awards would have been pro-rated based on his number of months of participation in each open Performance Unit Program performance cycle. The amount of the award is based on actual performance achieved, with a stock price set as of the end of the performance period, and
payable in the form of a lump sum after the completion of the performance period. For purposes of the table, the value of Mr. West’s awards were calculated as follows:
2012 - 2014 Plan - 3,600 (5,400 * 24/36) performance units at target, assuming a stock price of $63.27
2013 - 2015 Plan - 2,533 (7,600 *12/36) performance units at target, assuming a stock price of $63.27
(4)
In the event of his death, disability or qualifying termination related to a change in control, all of Mr. West’s unvested stock options would immediately vest. In addition, he would be entitled to exercise any unexercised options during a ten-year term extending from the grant date of the options. For purposes of this table, we assumed that Mr. West exercised his options immediately upon vesting and received proceeds equal to the difference between the closing price of common stock on December 31, 2013, and the exercise price of each option share. As of December 31, 2013, the closing stock price of Mr. West’s unvested options fell below the exercise prices and accordingly are considered “underwater” and are excluded from the table.
(5)
In the event of his death or disability, Mr. West would immediately vest in a pro-rated portion of the unvested restricted stock that was otherwise scheduled to become vested on the immediately following twelve (12)-month grant date anniversary date (as well as dividends declared on the pro-rated portion of such restricted stock). The pro-rated vested portion would be determined based on the number of days between the most recent preceding twelve (12)-month grant date anniversary date and the date of his death or disability. In the event of his qualifying termination related to a change in control, Mr. West would immediately vest in all unvested restricted stock.
(6)
Mr. West’s 21,000 restricted units vest 100% in 2018. Pursuant to his restricted unit agreement, any unvested restricted units will vest immediately in the event of a termination for a reason other than cause, total disability or death. The units will vest upon termination within 24 months of a change in control without cause or by Mr. West with good reason. If Mr. West voluntarily resigned or was terminated for cause, he would forfeit these units.
(7)
Pursuant to the System Executive Continuity Plan, in the event of a termination related to a change in control, Mr. West would be eligible to receive company-subsidized COBRA benefits for 18 months.
(8)
As of December 31, 2013, compensation and benefits available to Mr. West under this scenario are substantially the same as available with a voluntary resignation.
(9)
In December 2010, the System Executive Continuity Plan was amended to eliminate excise tax gross-up payments.
In the following sections, additional information is provided regarding certain of the scenarios described in the tables above:
Termination Related to a Change in Control
Under the System Executive Continuity Plan, the Named Executive Officers will be entitled to the benefits described in the tables above in the event of a termination related to a change in control if their employment is terminated other than for cause or if they terminate their employment for good reason, in each case within a period ending 24 months following the effective date of a change in control.
A change in control includes the following events:
•
The purchase of 30% or more of either the common stock or the combined voting power of the voting securities of Entergy Corporation;
•
the merger or consolidation of Entergy Corporation (unless Entergy Corporation's board members constitute at least a majority of the board members of the surviving entity);
•
the liquidation, dissolution or sale of all or substantially all of Entergy Corporation's assets; or
•
a change in the composition of Entergy Corporation's board such that, during any two-year period, the individuals serving at the beginning of the period no longer constitute a majority of Entergy Corporation's board at the end of the period.
Entergy Corporation may terminate a Named Executive Officer's employment for cause under the System Executive Continuity Plan if he or she:
•
willfully and continuously fails to substantially perform his or her duties after receiving a 30-day written demand for performance from the Board;
•
engages in conduct that is injurious to Entergy Corporation or any of its subsidiaries;
•
is convicted or pleads guilty or nolo contendere to a felony or other crime that materially and adversely affects his or her ability to perform his or her duties or Entergy Corporation's reputation;
•
materially violates any agreement with Entergy Corporation or any of its subsidiaries; or
•
discloses any of Entergy Corporation's confidential information without authorization.
A Named Executive Officer may terminate employment with Entergy Corporation for good reason under the System Executive Continuity Plan if, without his or her consent:
•
the nature or status of his or her duties and responsibilities is substantially altered or reduced compared to the period prior to the change in control;
•
his or her salary is reduced by 5% or more;
•
he or she is required to be based outside of the continental United States at somewhere other than the primary work location prior to the change in control;
•
any of his or her compensation plans are discontinued without an equitable replacement;
•
his or her benefits or number of vacation days are substantially reduced; or
•
his or her employment is purported to be terminated other than in accordance with the System Executive Continuity Plan.
In addition to participation in the System Executive Continuity Plan, upon the completion of a transaction resulting in a change in control of Entergy Corporation, benefits already accrued under the System Executive Retirement Plan, Pension Equalization Plan, and Supplemental Retirement Plan, if any, will become fully vested if the executive is involuntarily terminated without "Cause" or terminates employment for "Good Reason." Any awards granted under the equity ownership plans will become fully vested upon a change in control and the executive is involuntarily terminated without cause or terminates employment for good reason. In 2010, Entergy Corporation eliminated tax gross up payments for any severance benefits paid under the System Executive Continuity Plan.
Under certain circumstances, the payments and benefits received by a Named Executive Officer pursuant to the System Executive Continuity Plan may be forfeited and, in certain cases, subject to repayment. Benefits are no longer payable under the System Executive Continuity Plan, and unvested performance units under the Performance Unit Program are subject to forfeiture, if the executive:
•
accepts employment with Entergy Corporation or any of its subsidiaries;
•
elects to receive the benefits of another severance or separation program;
•
removes, copies or fails to return any property belonging to Entergy Corporation or any of its subsidiaries;
•
discloses non-public data or information concerning Entergy Corporation or any of its subsidiaries; or
•
violates their non-competition provision, which generally runs for two years but extends to three years if permissible under applicable law.
Furthermore, if the executive discloses non-public data or information concerning Entergy Corporation or any of its subsidiaries or violates their non-competition provision, he or she will be required to repay any benefits previously received under the System Executive Continuity Plan.
Termination for Cause
If a Named Executive Officer's employment is terminated for "cause" (as defined in the System Executive Continuity Plans and described above under "Termination Related to a Change in Control"), he or she is generally entitled to the same compensation and separation benefits described below under "Voluntary Resignation" except that all options may no longer be exercisable.
Voluntary Resignation
If a Named Executive Officer voluntarily resigns from an Entergy System company employer, he or she is entitled to all accrued benefits and compensation as of the separation date, including qualified pension benefits (if any) and other post-employment benefits on terms consistent with those generally available to other salaried employees. In the case of voluntary resignation, the officer would forfeit all unvested stock options, shares of restricted stock and restricted units as well as any perquisites to which he or she is entitled as an officer. In addition, the officer would forfeit, except as described below, his or her right to receive incentive payments under any outstanding performance periods under the Long Term Performance Unit Program or the Annual Incentive Plan. If the officer resigns after the completion of an Annual Incentive Plan or Performance Unit Program performance period, he could receive a payout under the Performance Unit Program based on the outcome of the performance cycle and could, at entergy Corporation's discretion, receive an annual incentive payment under the Annual Incentive Plan. Any vested stock options held by the officer as of the separation date will expire the earlier of ten years from date of grant or 90 days from the last day of active employment.
Retirement
Under Entergy Corporation's retirement plans, a Named Executive Officer's eligibility for retirement benefits is based on a combination of age and years of service. Normal retirement is defined as age 65. Early retirement is defined under the qualified retirement plan as minimum age 55 with 10 years of service and in the case of the System Executive Retirement Plan and the supplemental credited service under the Pension Equalization Plan, the consent of Entergy System company employer.
Upon a Named Executive Officer’s retirement, he or she is generally entitled to all accrued benefits and compensation as of the separation date, including qualified pension benefits and other post-employment benefits consistent with those generally available to salaried employees. The annual incentive payment under the Annual Incentive Plan is pro-rated based on the actual number of days employed during the performance year in which the retirement date occurs. Similarly, payments under the Performance Unit Program for those retiring with a minimum 12 months of participation are pro-rated based on the actual full months of participation, in each outstanding performance cycle, in which the retirement date occurs. In each case, payments are delivered at the conclusion of each annual or performance cycle, consistent with the timing of payments to active participants in the Annual Incentive Plan and the Performance Unit Program, respectively. Unvested stock options issued under our equity ownership plans vest on the retirement date and expire ten years from the grant date of the options. Any restricted units held (other than those issued under the Performance Unit Program) by the executive upon his or her retirement are forfeited, and perquisites are not available following the separation date.
Disability
If a Named Executive Officer's employment is terminated due to disability, he or she generally is entitled to the same compensation and separation benefits described above under "Retirement," except that restricted units may be subject to specific disability benefits (as noted, where applicable, in the tables above).
Death
If a Named Executive Officer dies while actively employed by an Entergy System company employer, he or she generally is entitled to the same compensation and separation benefits described above under "Retirement," including:
•
all unvested stock options will vest immediately;
•
vested stock options will expire ten years from the grant date; and
•
restricted units may be subject to specific death benefits depending on the restricted unit agreement (as noted, where applicable, in the tables above).
Compensation of Directors
For information regarding compensation of the directors of Entergy Corporation, see the Proxy Statement under the heading “Director Compensation”, which information is incorporated herein by reference. The Boards of Directors of Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy Texas are comprised solely of employee directors who receive no compensation for service as directors.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Entergy Corporation owns 100% of the outstanding common stock of registrants Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans and Entergy Texas. The information with respect to persons known by Entergy Corporation to be beneficial owners of more than 5% of Entergy Corporation’s outstanding common stock is included under the heading “Stockholders Who Own at Least Five Percent” in the Proxy Statement, which information is incorporated herein by reference. The registrants know of no contractual arrangements that may, at a subsequent date, result in a change in control of any of the registrants.
The following table sets forth the beneficial ownership of Common Stock of Entergy Corporation and stock-based units as of January 31, 2014 for all directors and Named Executive Officers. Unless otherwise noted, each person had sole voting and investment power over the number of shares of Common Stock and stock-based units of Entergy Corporation set forth across from his or her name.
*
Director of the respective Company
**
Named Executive Officer of the respective Company
***
Director and Named Executive Officer of the respective Company
(1)
The number of shares of Entergy Corporation common stock owned by each individual and by all directors and executive officers as a group does not exceed one percent of the outstanding Entergy Corporation common stock.
(2)
Represents the balances of phantom units each executive holds under the defined contribution restoration plan and the deferral provisions of the Equity Ownership Plan. These units will be paid out in either Entergy Corporation Common Stock or cash equivalent to the value of one share of Entergy Corporation common stock per unit on the date of payout, including accrued dividends. The deferral period is determined by the individual and is at least two years from the award of the bonus. For directors of Entergy Corporation the phantom units are issued under the Service Recognition Program for Outside Directors. All non-employee directors are credited with units for each year of service on the Board. In addition, Messrs. Edwards and Hintz have deferred receipt
of some of their quarterly stock grants. The deferred shares will be settled in cash in an amount equal to the market value of Entergy Corporation common stock at the end of the deferral period.
Equity Compensation Plan Information
The following table summarizes the equity compensation plan information as of December 31, 2013. Information is included for equity compensation plans approved by the stockholders and equity compensation plans not approved by the stockholders.
(1)
Includes the Equity Ownership Plan, which was approved by the shareholders on May 15, 1998, the 2007 Equity Ownership Plan and the 2011 Equity Ownership Plan. The 2007 Equity Ownership Plan was approved by Entergy Corporation shareholders on May 12, 2006, and 7,000,000 shares of Entergy Corporation common stock can be issued, with no more than 2,000,000 shares available for non-option grants. The 2011 Equity Ownership Plan was approved by Entergy Corporation shareholders on May 6, 2011, and 5,500,000 shares of Entergy Corporation common stock can be issued from the 2011 Equity Ownership Plan, with no more than 2,000,000 shares available for incentive stock option grants. The Equity Ownership Plan, the 2007 Equity Ownership Plan and the 2011 Equity Ownership Plan (the “Plans”) are administered by the Personnel Committee of the Board of Directors (other than with respect to awards granted to non-employee directors, which awards are administered by the entire Board of Directors). Eligibility under the Plans is limited to the non-employee directors and to the officers and employees of an Entergy System employer and any corporation 80% or more of whose stock (based on voting power) or value is owned, directly or indirectly, by Entergy Corporation. The Plans provide for the issuance of stock options, restricted shares, equity awards (units whose value is related to the value of shares of the Common Stock but do not represent actual shares of Common Stock), performance awards (performance shares or units valued by reference to shares of Common Stock or performance units valued by reference to financial measures or property other than Common Stock) and other stock-based awards.
(2)
Entergy has a Board-approved stock-based compensation plan. However, effective May 9, 2003, the Board has directed that no further awards be issued under that plan. As of December 31, 2013, all options outstanding under the plan were either exercised or expired.
Item 13.
Item 13. Certain Relationships and Related Transactions and Director Independence
For information regarding certain relationships, related transactions and director independence of Entergy Corporation, see the Proxy Statement under the headings “Corporate Governance - Director Independence” and “Transactions with Related Persons,” which information is incorporated herein by reference.
Since December 31, 2011, none of the Subsidiaries or any of their affiliates has participated in any transaction involving an amount in excess of $120,000 in which any director or executive officer of any of the Subsidiaries, any nominee for director, or any immediate family member of the foregoing had a material interest as contemplated by Item 404(a) of Regulation S-K (“Related Party Transactions”).
Entergy Corporation’s Board of Directors has adopted written policies and procedures for the review, approval or ratification of Related Party Transactions. Under these policies and procedures, the Corporate Governance Committee, or a
subcommittee of the Board of Directors of Entergy Corporation composed of independent directors, reviews the transaction and either approves or rejects the transaction after taking into account the following factors:
•
Whether the proposed transaction is on terms at least as favorable to Entergy Corporation or the subsidiary as those achievable with an unaffiliated third party;
•
Size of transaction and amount of consideration;
•
Nature of the interest;
•
Whether the transaction involves a conflict of interest;
•
Whether the transaction involves services available from unaffiliated third parties; and
•
Any other factors that the Corporate Governance Committee or subcommittee deems relevant.
The policy does not apply to (a) compensation and Related Party Transactions involving a director or an executive officer solely resulting from that person’s service as a director or employment with the Company so long as the compensation is approved by Entergy’s Board of Directors, (b) transactions involving the rendering of services as a public utility at rates or charges fixed in conformity with law or governmental authority or (c) any other categories of transactions currently or in the future excluded from the reporting requirements of Item 404(a) of Regulation SK.
None of the Subsidiaries are listed issuers. As previously noted, the Boards of Directors of the Subsidiaries are composed solely of employee directors. None of the Boards of Directors of any of the Subsidiaries has any committees.
Item 14.
Item 14. Principal Accountant Fees and Services (Entergy Corporation, Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)
Aggregate fees billed to Entergy Corporation (consolidated), Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy for the years ended December 31, 2013 and 2012 by Deloitte & Touche LLP were as follows:
(a)
Includes fees for employee benefit plan audits, consultation on financial accounting and reporting, and other attestation services.
(b)
Includes fees for tax advisory services.
(c)
100% of fees paid in 2013 and 2012 were pre-approved by the Entergy Corporation Audit Committee.
Entergy Audit Committee Guidelines for Pre-approval of Independent Auditor Services
The Audit Committee has adopted the following guidelines regarding the engagement of Entergy’s independent auditor to perform services for Entergy:
1.
The independent auditor will provide the Audit Committee, for approval, an annual engagement letter outlining the scope of services proposed to be performed during the fiscal year, including audit services and other permissible non-audit services (e.g. audit-related services, tax services, and all other services).
2.
For other permissible services not included in the engagement letter, Entergy management will submit a description of the proposed service, including a budget estimate, to the Audit Committee for pre-approval. Management and the independent auditor must agree that the requested service is consistent with the SEC’s rules on auditor independence prior to submission to the Audit Committee. The Audit Committee, at its discretion, will pre-approve permissible services and has established the following additional guidelines for permissible non-audit services provided by the independent auditor:
•
Aggregate non-audit service fees are targeted at fifty percent or less of the approved audit service fee.
•
All other services should only be provided by the independent auditor if it is the only qualified provider of that service or if the Audit Committee specifically requests the service.
3.
The Audit Committee will be informed quarterly as to the status of pre-approved services actually provided by the independent auditor.
4.
To ensure prompt handling of unexpected matters, the Audit Committee delegates to the Audit Committee Chair or its designee the authority to approve permissible services and fees. The Audit Committee Chair or designee will report action taken to the Audit Committee at the next scheduled Audit Committee meeting.
5.
The Vice President and General Auditor will be responsible for tracking all independent auditor fees and will report quarterly to the Audit Committee.
PART IV
Item 15.
Item 15. Exhibits and Financial Statement Schedules
(a)1.
Financial Statements and Independent Auditors’ Reports for Entergy, Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy are listed in the Table of Contents.
(a)2.
Financial Statement Schedules
Report of Independent Registered Public Accounting Firm (see page 531)
Financial Statement Schedules are listed in the Index to Financial Statement Schedules (see page S-1)
(a)3.
Exhibits
Exhibits for Entergy, Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy are listed in the Exhibit Index (see page E-1). Each management contract or compensatory plan or arrangement required to be filed as an exhibit hereto is identified as such by footnote in the Exhibit Index.
ENTERGY CORPORATION
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. The signature of each of the undersigned shall be deemed to relate only to matters having reference to the above-named company and any subsidiaries thereof.
Signature
Title
Date
/s/ Alyson M. Mount
Alyson M. Mount
Senior Vice President and
Chief Accounting Officer
(Principal Accounting Officer)
February 27, 2014
Leo P. Denault (Chairman of the Board, Chief Executive Officer and Director; Principal Executive Officer); Andrew S. Marsh (Executive Vice President and Chief Financial Officer; Principal Financial Officer); Maureen S. Bateman, Kirkland H. Donald, Gary W. Edwards, Alexis M. Herman, Donald C. Hintz, Stuart L. Levenick, Blanche L. Lincoln, Stewart C. Myers, W. J. Tauzin, and Steven V. Wilkinson (Directors).
ENTERGY ARKANSAS, INC.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. The signature of each of the undersigned shall be deemed to relate only to matters having reference to the above-named company and any subsidiaries thereof.
Signature
Title
Date
/s/ Alyson M. Mount
Alyson M. Mount
Senior Vice President and
Chief Accounting Officer
(Principal Accounting Officer and
acting Principal Financial Officer)
February 27, 2014
Hugh T. McDonald (Chairman of the Board, President, Chief Executive Officer, and Director; Principal Executive Officer); Theodore H. Bunting, Jr., Andrew S. Marsh, and Mark T. Savoff (Directors).
ENTERGY GULF STATES LOUISIANA, L.L.C.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof.
ENTERGY GULF STATES LOUISIANA, L.L.C.
By /s/ Alyson M. Mount
Alyson M. Mount
Senior Vice President and Chief Accounting Officer
Date: February 27, 2014
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. The signature of each of the undersigned shall be deemed to relate only to matters having reference to the above-named company and any subsidiaries thereof.
Signature
Title
Date
/s/ Alyson M. Mount
Alyson M. Mount
Senior Vice President and
Chief Accounting Officer
(Principal Accounting Officer and
acting Principal Financial Officer)
February 27, 2014
Phillip R. May, Jr. (Chairman of the Board, President, Chief Executive Officer, and Director; Principal Executive Officer); Theodore H. Bunting, Jr., Andrew S. Marsh, and Mark T. Savoff (Directors).
ENTERGY LOUISIANA, LLC
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. The signature of each of the undersigned shall be deemed to relate only to matters having reference to the above-named company and any subsidiaries thereof.
Signature
Title
Date
/s/ Alyson M. Mount
Alyson M. Mount
Senior Vice President and
Chief Accounting Officer
(Principal Accounting Officer and
acting Principal Financial Officer)
February 27, 2014
Phillip R. May, Jr. (Chairman of the Board, President, Chief Executive Officer, and Director; Principal Executive Officer); Theodore H. Bunting, Jr., Andrew S. Marsh, and Mark T. Savoff (Directors).
ENTERGY MISSISSIPPI, INC.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. The signature of each of the undersigned shall be deemed to relate only to matters having reference to the above-named company and any subsidiaries thereof.
Signature
Title
Date
/s/ Alyson M. Mount
Alyson M. Mount
Senior Vice President and
Chief Accounting Officer
(Principal Accounting Officer and
acting Principal Financial Officer)
February 27, 2014
Haley R. Fisackerly (Chairman of the Board, President, Chief Executive Officer, and Director; Principal Executive Officer); Theodore H. Bunting, Jr., Andrew S. Marsh, and Mark T. Savoff (Directors).
ENTERGY NEW ORLEANS, INC.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. The signature of each of the undersigned shall be deemed to relate only to matters having reference to the above-named company and any subsidiaries thereof.
Signature
Title
Date
/s/ Alyson M. Mount
Alyson M. Mount
Senior Vice President and
Chief Accounting Officer
(Principal Accounting Officer and
acting Principal Financial Officer)
February 27, 2014
Charles L. Rice, Jr. (Chairman of the Board, President, Chief Executive Officer, and Director; Principal Executive Officer); Theodore H. Bunting, Jr., Andrew S. Marsh, and Mark T. Savoff (Directors).
ENTERGY TEXAS, INC.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. The signature of each of the undersigned shall be deemed to relate only to matters having reference to the above-named company and any subsidiaries thereof.
Signature
Title
Date
/s/ Alyson M. Mount
Alyson M. Mount
Senior Vice President and
Chief Accounting Officer
(Principal Accounting Officer and
acting Principal Financial Officer)
February 27, 2014
Sallie T. Rainer (Chair of the Board, President, Chief Executive Officer, and Director; Principal Executive Officer); Theodore H. Bunting, Jr., Andrew S. Marsh, and Mark T. Savoff (Directors).
SYSTEM ENERGY RESOURCES, INC.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof.
SYSTEM ENERGY RESOURCES, INC.
By /s/ Alyson M. Mount
Alyson M. Mount
Senior Vice President and Chief Accounting Officer
Date: February 27, 2014
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. The signature of each of the undersigned shall be deemed to relate only to matters having reference to the above-named company and any subsidiaries thereof.
Signature
Title
Date
/s/ Alyson M. Mount
Alyson M. Mount
Senior Vice President and
Chief Accounting Officer
(Principal Accounting Officer)
February 27, 2014
Jeffrey S. Forbes (Chairman of the Board, President, Chief Executive Officer, and Director; Principal Executive Officer); Wanda C. Curry (Vice President, Chief Financial Officer - Nuclear Operations; Principal Financial Officer); Andrew S. Marsh and Steven C. McNeal (Directors).
EXHIBIT 23(a)
CONSENTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration Statement No. 333-190911 on Form S-3, Post -Effective Amendments Nos. 3 and 5A on Form S-8 to Registration Statement No. 33-54298 on Form S-4, and in Registration Statements Nos. 333-55692, 333-68950, 333-75097, 333-90914, 333-98179, 333-140183, 333-142055, 333-168664, 333-174148, and 333-183090 on Form S-8 of our reports dated February 27, 2014, relating to the consolidated financial statements and financial statement schedule of Entergy Corporation and Subsidiaries, and the effectiveness of Entergy Corporation and Subsidiaries’ internal control over financial reporting, appearing in this Annual Report on Form 10-K of Entergy Corporation for the year ended December 31, 2013.
We consent to the incorporation by reference in Registration Statement No. 333-190911-02 on Form S-3 of our reports dated February 27, 2014, relating to the consolidated financial statements and financial statement schedule of Entergy Arkansas, Inc. and Subsidiaries, and the effectiveness of Entergy Arkansas, Inc. and Subsidiaries’ internal control over financial reporting, appearing in this Annual Report on Form 10-K of Entergy Arkansas, Inc. for the year ended December 31, 2013.
We consent to the incorporation by reference in Registration Statement No. 333-190911-01 on Form S-3 of our reports dated February 27, 2014, relating to the financial statements and financial statement schedule of Entergy Gulf States Louisiana, L.L.C., and the effectiveness of Entergy Gulf States Louisiana, L.L.C.’s internal control over financial reporting, appearing in this Annual Report on Form 10-K of Entergy Gulf States Louisiana, L.L.C. for the year ended December 31, 2013.
We consent to the incorporation by reference in Registration Statement No. 333-190911-07 on Form S-3 of our reports dated February 27, 2014, relating to the consolidated financial statements and financial statement schedule of Entergy Louisiana, LLC and Subsidiaries, and the effectiveness of Entergy Louisiana, LLC and Subsidiaries’ internal control over financial reporting, appearing in this Annual Report on Form 10-K of Entergy Louisiana, LLC for the year ended December 31, 2013.
We consent to the incorporation by reference in Registration Statement No. 333-190911-06 on Form S-3 of our reports dated February 27, 2014, relating to the financial statements and financial statement schedule of Entergy Mississippi, Inc., and the effectiveness of Entergy Mississippi, Inc.’s internal control over financial reporting, appearing in this Annual Report on Form 10-K of Entergy Mississippi, Inc. for the year ended December 31, 2013.
We consent to the incorporation by reference in Registration Statement No. 333-190911-05 on Form S-3 of our reports dated February 27, 2014, relating to the financial statements and financial statement schedule of Entergy New Orleans, Inc., and the effectiveness of Entergy New Orleans, Inc.’s internal control over financial reporting, appearing in this Annual Report on Form 10-K of Entergy New Orleans, Inc. for the year ended December 31, 2013.
We consent to the incorporation by reference in Registration Statement No. 333-190911-04 on Form S-3 of our reports dated February 27, 2014, relating to the consolidated financial statements and financial statement schedule of Entergy Texas, Inc. and Subsidiaries, and the effectiveness of Entergy Texas, Inc. and Subsidiaries’ internal control over financial reporting, appearing in this Annual Report on Form 10-K of Entergy Texas, Inc. for the year ended December 31, 2013.
We consent to the incorporation by reference in Registration Statement No. 333-190911-03 on Form S-3 of our reports dated February 27, 2014, relating to the financial statements of System Energy Resources, Inc., and the effectiveness of System Energy Resources, Inc.’s internal control over financial reporting, appearing in this Annual Report on Form 10-K of System Energy Resources, Inc. for the year ended December 31, 2013.
/s/ DELOITTE & TOUCHE LLP
New Orleans, Louisiana
February 27, 2014
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of
Entergy Corporation and Subsidiaries
Entergy Arkansas, Inc. and Subsidiaries
Entergy Mississippi, Inc.
Entergy New Orleans, Inc.
Entergy Texas, Inc. and Subsidiaries
To the Board of Directors and Members of
Entergy Gulf States Louisiana, L.L.C.
Entergy Louisiana, LLC and Subsidiaries
We have audited the consolidated financial statements of Entergy Corporation and Subsidiaries, Entergy Arkansas, Inc. and Subsidiaries, Entergy Louisiana, LLC and Subsidiaries, and Entergy Texas, Inc. and Subsidiaries, and we have also audited the financial statements of Entergy Gulf States Louisiana, L.L.C., Entergy Mississippi, Inc., and Entergy New Orleans, Inc. (collectively the “Companies”) as of December 31, 2013 and 2012, and for each of the three years in the period ended December 31, 2013, and the respective Companies’ internal control over financial reporting as of December 31, 2013, and have issued our reports thereon dated February 27, 2014; such financial statements and reports are included elsewhere in this Form 10-K. Our audits also included the financial statement schedules of the respective Companies listed in Item 15. These financial statement schedules are the responsibility of the respective Companies’ managements. Our responsibility is to express an opinion based on our audits. In our opinion, such financial statement schedules, when considered in relation to the basic financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.
/s/ DELOITTE & TOUCHE LLP
New Orleans, Louisiana
February 27, 2014
INDEX TO FINANCIAL STATEMENT SCHEDULES
Schedules other than those listed above are omitted because they are not required, not applicable, or the required information is shown in the financial statements or notes thereto.
Columns have been omitted from schedules filed because the information is not applicable.
S-1
S-2
S-3
S-4
S-5
S-6
S-7
S-8
EXHIBIT INDEX
The following exhibits indicated by an asterisk preceding the exhibit number are filed herewith. The balance of the exhibits have heretofore been filed with the SEC as the exhibits and in the file numbers indicated and are incorporated herein by reference. The exhibits marked with a (+) are management contracts or compensatory plans or arrangements required to be filed herewith and required to be identified as such by Item 15 of Form 10-K.
Some of the agreements included or incorporated by reference as exhibits to this Form 10-K contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties were made solely for the benefit of the other parties to the applicable agreement and (i) were not intended to be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate; (ii) may have been qualified in such agreement by disclosures that were made to the other party in connection with the negotiation of the applicable agreement; (iii) may apply contract standards of “materiality” that are different from the standard of “materiality” under the applicable securities laws; and (iv) were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement.
Entergy acknowledges that, notwithstanding the inclusion of the foregoing cautionary statements, it is responsible for considering whether additional specific disclosures of material information regarding material contractual provisions are required to make the statements in this Form 10-K not misleading.
(2) Plan of Acquisition, Reorganization, Arrangement, Liquidation or Succession
Entergy Gulf States Louisiana
(3) Articles of Incorporation and By-laws
Entergy Corporation
System Energy
Entergy Arkansas
E-1
Entergy Gulf States Louisiana
Entergy Louisiana
Entergy Mississippi
Entergy New Orleans
Entergy Texas
E-2
(4)Instruments Defining Rights of Security Holders, Including Indentures
Entergy Corporation
E-3
System Energy
E-4
Entergy Arkansas
E-5
Entergy Gulf States Louisiana
E-6
Entergy Louisiana
E-7
Entergy Mississippi
Entergy New Orleans
E-8
Entergy Texas
(10) Material Contracts
Entergy Corporation
E-9
E-10
E-11
E-12
E-13
E-14
E-15
System Energy
E-16
E-17
E-18
Entergy Arkansas
E-19
E-20
E-21
E-22
Entergy Gulf States Louisiana
E-23
E-24
E-25
Entergy Louisiana
E-26
Entergy Mississippi
E-27
E-28
Entergy New Orleans
E-29
E-30
Entergy Texas
E-31
E-32
(12) Statement Re Computation of Ratios
*(a)
Entergy Arkansas’s Computation of Ratios of Earnings to Fixed Charges and of Earnings to Fixed Charges and Preferred Dividends, as defined.
*(b)
Entergy Gulf States Louisiana’s Computation of Ratios of Earnings to Fixed Charges and of Earnings to Fixed Charges and Preferred Distributions, as defined.
*(c)
Entergy Louisiana’s Computation of Ratios of Earnings to Fixed Charges and of Earnings to Fixed Charges and Preferred Distributions, as defined.
*(d)
Entergy Mississippi’s Computation of Ratios of Earnings to Fixed Charges and of Earnings to Fixed Charges and Preferred Dividends, as defined.
*(e)
Entergy New Orleans’s Computation of Ratios of Earnings to Fixed Charges and of Earnings to Fixed Charges and Preferred Dividends, as defined.
*(f)
Entergy Texas’s Computation of Ratios of Earnings to Fixed Charges, as defined.
*(g)
System Energy’s Computation of Ratios of Earnings to Fixed Charges, as defined.
*(21) Subsidiaries of the Registrants
(23) Consents of Experts and Counsel
*(a)
The consent of Deloitte & Touche LLP is contained herein at page 530.
*(24) Powers of Attorney
E-33
(31) Rule 13a-14(a)/15d-14(a) Certifications
E-34
(32) Section 1350 Certifications
E-35
(101) XBRL Documents
Entergy Corporation
*INS -
XBRL Instance Document.
*SCH -
XBRL Taxonomy Extension Schema Document.
*CAL -
XBRL Taxonomy Extension Calculation Linkbase Document.
*DEF -
XBRL Taxonomy Extension Definition Linkbase Document.
*LAB -
XBRL Taxonomy Extension Label Linkbase Document.
*PRE -
XBRL Taxonomy Extension Presentation Linkbase Document.
_________________
*
Filed herewith.
+
Management contracts or compensatory plans or arrangements.
E-36