Item 1.01
Entry into a Material Definitive Agreement.
On February 13, 2017, NRG Energy, Inc. (the “Company”) entered into a letter agreement (the “Elliott Cooperation Agreement”) with Elliott Associates, L.P., Elliott International, L.P. and Elliott International Capital Advisors Inc. (collectively, “Elliott”), and a letter agreement (the “Bluescape Cooperation Agreement,” and together with the Elliott Cooperation Agreement, the “Cooperation Agreements”) with Bluescape Energy Partners LLC and BEP Special Situations 2 LLC (collectively, “Bluescape”).
Under the terms of the Cooperation Agreements, the Company agreed to appoint C. John Wilder, Jr. and Barry T. Smitherman (each of Mr. Wilder and Mr. Smitherman, or his replacement selected in accordance with the Cooperation Agreements, a “New Director”) to the Company’s board of directors (the “Board”). Immediately prior to the execution of the Cooperation Agreements, Howard E. Cosgrove resigned as chairman of the Board and as a director and Edward R. Muller resigned as vice chairman of the Board and as a director, and immediately following such resignations the Board effected the appointment of the New Directors. The Board elected Lawrence S. Coben, a current Board member, as the new chairman of the Board.
The Company has agreed to nominate the New Directors for election as directors of the Company at the 2017 Annual Meeting, subject to the terms of the Cooperation Agreements.
The Board also agreed to form an
ad hoc
committee of the Board (the “New Committee”) that will conduct a review of, and make recommendations to the Board with respect to, the Company’s (a) operational and cost excellence initiatives, (b) potential portfolio and/or asset de-consolidations, dispositions, and optimization, (c) capital structure and allocation, and (d) broader strategic initiatives. The New Committee will be chaired by Mr. Wilder. The other members of the New Committee are Mr. Smitherman, Mauricio Gutierrez, the chief executive officer of the Company, Anne C. Schaumburg and Paul W. Hobby. Subject to the terms of the Cooperation Agreements, the Company has agreed to publicly disclose any recommendations of the New Committee that have been adopted by the Board promptly upon completion of the New Committee’s review but no later than August 15, 2017. Under the terms of the Cooperation Agreements, the Company has agreed to appoint Mr. Wilder to the Finance and Risk Management Committee of the Board, and appoint at least one New Director to any new committee that may be formed following the execution and delivery of the Cooperation Agreements.
Pursuant to the Cooperation Agreements, and subject to certain conditions, each of Elliott and Bluescape has agreed to certain standstill and voting provisions. Under the terms of the Cooperation Agreements, each of Elliott and Bluescape agreed to vote, or cause to be voted, all shares of the Company’s common stock owned by Elliott or Bluescape, as the case may be, or its controlled or controlling affiliates, in favor of the election of the directors nominated by the Board at the 2017 Meeting and at any subsequent annual meeting of Company stockholders during the applicable standstill period and, subject to certain exceptions relating to extraordinary transactions, in accordance with the Board’s recommendation on any proposals. In addition, under the terms of the Elliott Cooperation Agreement, Elliott agreed to customary standstill restrictions that, subject to earlier termination under certain circumstances, expire upon the earlier of (x) December 31, 2017, and (y) thirty (30) days prior to the first day of the time period established pursuant to the Company’s by-laws for stockholders to deliver notice to the Company of director nominations to be brought before the 2018 Annual Meeting (the “Expiration Date”). Under the terms of the Bluescape Cooperation Agreement, Bluescape agreed to customary standstill restrictions that, subject to earlier termination or automatic extension under certain circumstances, expire upon the earlier of (x) December 31, 2018, and (y) thirty (30) days prior to the first day of the time period established pursuant to the Company’s by-laws for stockholders to deliver notice to the Company of director nominations to be brought before the 2019 Annual Meeting.
The foregoing description of the terms and conditions of the Cooperation Agreements does not purport to be complete and is qualified in its entirety by reference to the full text of the Cooperation Agreements, copies of which are attached to this Current Report as Exhibits 10.1 and 10.2 and incorporated herein by reference.