COMPENSATION COMMITTEE REPORT
The Compensation, Governance and Nominating Committee, or CGNC, has reviewed the following Compensation Discussion and Analysis (CD&A) and discussed it with
management.
Based on its review and discussions with management, the CGNC recommended to the Board that the CD&A be incorporated by reference into the
companys Annual Report on Form 10-K for the year ended December 31, 2015 and included in this Proxy Statement.
Compensation, Governance and Nominating Committee
Craig A. Rogerson, Chair
John W. Conway
Raja Rajamannar
Natica von Althann
COMPENSATION DISCUSSION AND ANALYSIS (CD&A)
TABLE OF CONTENTS
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24 PPL CORPORATION 2016 Proxy Statement
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NAMED EXECUTIVE OFFICERS
In 2015, our named executive officers, or NEOs, were:
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Named Executive Officer
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Title
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W. H. Spence
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Chairman, President and Chief Executive Officer (CEO)
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V. Sorgi
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Senior Vice President and Chief Financial Officer (CFO)
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R. J. Grey
(1)
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Executive Vice President and Chief Legal Officer (CLO)
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P. A. Farr
(2)
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Former President of PPL Energy Supply, LLC (Energy Supply)
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V. A. Staffieri
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Chairman of the Board, Chief Executive Officer and President of LG&E and KU Energy LLC (LKE)
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R. A. Symons
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Chief Executive of Western Power Distribution (WPD)
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(1)
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Mr. Grey served as Executive Vice President, General Counsel and Secretary through May 31, 2015. He served as our Executive Vice President and Chief Legal Officer from June 1, 2015 until his retirement on
January 31, 2016.
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(2)
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Following the spinoff of PPLs competitive supply business, referenced in this CD&A as Energy Supply, effective June 1, 2015, Mr. Farr ceased being an executive officer of PPL and became the Chief
Executive Officer of Talen Energy Corporation, an independent, publicly traded company. Actual compensation for Mr. Farr represents what he earned through May 31, 2015.
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The 2015 compensation of these NEOs is explained in the following sections and in the Summary Compensation Table that follows this CD&A.
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PPL CORPORATION 2016 Proxy Statement 25
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EXECUTIVE COMPENSATION
2015 PERFORMANCE
ACHIEVEMENTS AND PAY ALIGNMENT
An Overview of 2015 Performance
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PPL delivered strong operational and financial results for shareowners in 2015, while laying a firm foundation for the companys
long-term growth and success.
PPLs 6.3% total shareowner return was among the highest
overall in its sector. In a challenging year for utilities, PPLs stock significantly outperformed both the Philadelphia Stock Exchange Utility Index, or UTY, and the S&P 500 Utilities Index, or S&P 500 EU, with PPL stock up 1.2%, while
these indices were down 9.8% and 9.1%, respectively.
The company extended its proven track record
of delivering on financial commitments, growing per-share earnings from ongoing operations by 9% and exceeding the midpoint of its forecast earnings range for the sixth consecutive year. See Annex A for a description of adjusted 2014 earnings from
ongoing operations. In addition, the company increased its dividend for the 13th time in 14 years and maintained investment-grade credit ratings from both Moodys Investors Service and Standard & Poors Ratings Services.
In June, the company successfully completed the spinoff of its Energy Supply segment, one of the
largest transactions in PPL history. The transaction completed PPLs strategic transformation into a high performing, purely regulated utility business. It created value for shareowners, gave investors clear choices and eliminated PPLs
exposure to the risk associated with todays challenging competitive energy markets.
At the
same time, the executive team led a significant corporate restructuring and adopted
a leaner management structure to achieve long-term cost savings.
Across the businesses in 2015, PPL successfully completed $3.5 billion in infrastructure improvements, investments that demonstrate our focus toward the future. These
investments are driving robust rate base growth and sustainable earnings growth, and they are improving reliability and safety for the companys 10 million customers in the U.S. and U.K. In delivering these improvements, the company
demonstrated its proven ability to execute large capital projects efficiently and effectively.
In
Pennsylvania and Kentucky, PPL secured favorable results for rate requests, receiving commission approvals for increases that will provide an additional $256 million in annual revenue at our U.S. operations. In the U.K., we transitioned successfully
to a new regulatory framework that sets customer charges and incentive opportunities for our U.K. utilities over an eight-year period, which began April 1, 2015, providing more regulatory and revenue certainty. Our four Western Power Distribution
(WPD) subsidiaries were the only U.K. distribution networks to receive fast-track regulatory approval for their business plans for this eight-year period. The fast-track incentive is worth approximately $43 million annually for WPD assuming a
$1.60/£ foreign currency exchange rate.
Other notable achievements in 2015 include the
following:
In Pennsylvania
Energized the Susquehanna-Roseland
transmission line, a critical regional grid project that has improved reliability in the PJM Interconnection. This approximately $650 million project included 100 miles of new 500 kV transmission line and is the companys largest
transmission project in over three decades.
Made significant progress on the $335 million Northeast-Pocono transmission project including 70
miles of new transmission lines, three new substations and additional improvements. This project is expected to be completed this May, a year earlier than originally anticipated.
Secured Pennsylvania Public Utility
Commission approval for a $471 million project to replace 1.4 million customer meters with new, more advanced metering technology.
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26 PPL CORPORATION 2016 Proxy Statement
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In Kentucky
Began commercial operation of a new 642-megawatt natural gas, combined-cycle generating unit, a
$527 million project.
Completed the planned retirement of 800 megawatts of coal-fired generation.
Started construction on a new
$30 million, 10-megawatt solar facility, the states first utility-scale solar installation.
In the U.K.
Concluded the last five-year regulatory review cycle in March 2015 as the top-performing U.K.
utility over the period, earning $478 million in incentive revenues for outperforming WPDs incentive targets.
Achieved new records in 2015 for reducing customer interruptions and the time customers are without
service, positioning WPD to earn near maximum incentive rewards for these metrics and achieving at or near maximum reward levels for customer satisfaction.
These outstanding financial, operational and strategic results demonstrate our focus to increase value for shareowners in both the short- and long-term, a focus supported
by our executive compensation program and pay-for-performance culture.
Based on the
close alignment of PPLs executive compensation with performance, these performance achievements resulted in:
Annual cash incentive awards ranging from 116.5% to 158.4% of target;
Performance-Contingent
Restricted Stock Unit awards for the 20132015 performance period being granted at a value of 141.6% of target; and
Performance Unit awards for the 2013-2015 performance period vesting at 142.86% of target.
Looking forward, the company is solidly positioned to continue to deliver strong earnings growth, a
competitive dividend and long-term shareowner value.
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* Earnings are from ongoing operations
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The CGNC believes that a well-designed executive compensation program rewards annual financial and operational results while ensuring a
focus on long-term shareowner value. In reviewing the results of the past several years, which have included both major expansion of the regulated utility businesses and a spinoff of the competitive energy supply business, transforming PPL into a
fully regulated company, the CGNC concluded that the companys executive compensation program for 2015 contained the appropriate elements to support the companys strategy and focus on creating long-term shareowner value.
Read more
in 2015 Named Executive Officer Compensation beginning on page 33.
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PPL CORPORATION 2016 Proxy Statement 27
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EXECUTIVE COMPENSATION
Aligning
Employees and Compensation Strategies with Our Corporate Strategic Framework
PPLs corporate strategic framework provides the basis for
determining annual and longer-term performance goals and objectives under our executive compensation programs.
The performance goals that PPL has established reinforce the core features of our operational mission: reliability and safety. We
believe success occurs through achieving operational excellence, as well as workforce readiness and engagement. If we are effective in these areas, our underlying performance should increase shareowner value that out-paces our sector, and our
performance toward these goals is measured specifically to reward our executives for these accomplishments through our compensation program.
Although PPL operations
are now fully regulated, the company continues to operate in multiple regulatory environments that can and do vary significantly by region. To align our NEOs actions with the companys overall goals, NEO performance objectives are focused
on enterprise-wide metrics that measure the financial performance of PPL, as well as financial metrics for its largest segments, providing direct alignment to our goal of increasing shareowner value.
How We Align PPLs Compensation Programs with Performance
Performance-based compensation for the NEOs is primarily based on three core metrics: earnings per share from ongoing operations, or EPS, earnings from ongoing operations
before interest and taxes, or EBIT, and relative total shareowner return, or TSR. These metrics align with our commitment to shareowners to deliver earnings growth and shareowner value creation.
The balance of measures is given careful consideration, with a view to our short-term and longer-term strategic goals, while focusing on areas most within an
individuals control.
Earnings are central to our business strategy and a primary focus of the investment community. Consequently, EPS and EBIT performance
measures are central to the compensation program for our NEOs.
At the NEO level, the emphasis is placed on EPS growth. In our experience, EPS is the primary measure
by which our shareowners and market analysts assess PPLs performance, and accountability for strong EPS performance primarily falls on PPLs executive officers. Management actions with respect to financing and tax strategy, capital
investment and our revenue models drive EPS.
We balance the use of EPS with an EBIT measure. EBIT provides a more general means by which to assess and reward
operational profitability with less emphasis on financing and tax strategies; thus, EBIT is more representative of the financial performance of the core operations of the business segments and the business as a whole. The CGNC believes that both
measures in combination provide a balanced assessment of PPLs financial performance.
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28 PPL CORPORATION 2016 Proxy Statement
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To supplement the internal assessment of
performance provided by the EPS and EBIT measurements, relative TSR is used for certain equity-based awards, further aligning executives interests with those of shareowners. This approach provides an objective assessment of how the market is
responding to our current and potential operational performance in comparison to our peers, directly correlated to market performance.
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EPS
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EBIT
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TSR
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How We
Define It
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Earnings per share from ongoing operations
See Annex A for a
reconciliation of financial measures presented in accordance with GAAP to non-GAAP measures used for compensation
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Earnings from ongoing operations before interest and taxes
See Annex A for a
reconciliation of financial measures presented in accordance with GAAP to non-GAAP measures used for compensation
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Total shareowner return, which is a combination of share price
appreciation and reinvested dividends
Assessed relative to the UTY
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Where We
Use It
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Annual Cash Incentive
Performance-Contingent
Restricted Stock Units
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Annual Cash Incentive
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Performance Units
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Further information about the targets that apply to specific awards is set out in this CD&A.
A substantial portion of NEO compensation is delivered in the form of equity, and our senior executives are subject to significant Equity Ownership Guidelines. These
practices further reinforce our commitment to create shareowner value by directly linking NEO compensation to share price appreciation and sustainable long-term growth.
2015 Pay and Performance
The PPL compensation framework places a heavy emphasis on at-risk performance-based pay through the use of annual and long-term performance-based compensation elements.
In 2015, 85% of the CEOs target compensation opportunity was at-risk performance-based pay. For the CFO, this percentage was 73%, and the average for the other NEOs was 71%.
The following graphs illustrate the 2015 elements of compensation divided among base salary, annual cash incentive targeted opportunity and the total long-term incentive
targeted opportunity.
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Elements of Compensation as a Percentage of Targeted Total Direct Compensation 2015
(1)
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(1)
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Based on target award levels as a percentage of targeted total direct compensation for performance during 2015. Values of performance-contingent restricted stock unit and performance unit awards shown in the Summary
Compensation Table in this proxy statement reflect equity awards granted in 2015. Performance-contingent restricted stock unit awards granted in January 2015 were awarded based on performance for 2012-2014. Because the performance-contingent
restricted stock units granted in 2016 are based on performance for 2013-2015, the CD&A includes such awards as part of the CGNCs analysis.
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(2)
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Includes the positions of the CLO, the former President of PPL Energy Supply, the President of LKE and the Chief Executive of WPD.
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PPL CORPORATION 2016 Proxy Statement 29
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EXECUTIVE COMPENSATION
OVERVIEW OF
PPLS EXECUTIVE COMPENSATION FRAMEWORK
Our compensation program reflects PPLs ongoing commitment to pay-for-performance, with executive
compensation aligned to shareowner interests and linked to short- and long-term company performance. As illustrated in the previous section, at least 70% of our NEOs compensation is at-risk and directly linked to the financial performance of
PPL.
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Process for Setting Executive
Compensation
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As part of its duties, there are a number of activities the CGNC undertakes each year in reviewing the operation and effectiveness of the PPL
compensation program.
Below in this CD&A, we provide additional
information on two critical aspects of this process: the way in which the CGNC uses market data to inform decisions on executive officer compensation, and the process by which targets are set under the incentive plans.
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The Use of Market Data
The CGNC uses market compensation data as one of several criteria when reviewing individual NEO compensation levels. The primary source of competitive data is the
Towers Watson 2014 U.S. Energy Services Industry Executive Compensation Database
. The CGNC believes this is the most appropriate market reference because it reflects the broad energy industry and the primary source for executive talent, can
be adjusted to reflect our size, and the large sample size results in more consistent reliable information. The CGNC also uses, as market references, competitive data from the
Towers Watson 2014 U.S. General Industry Executive Compensation
Database
and information on pay practices from a select group of industry comparators, which includes public utilities with revenues one-third to three times that of PPL. For Mr. Symons, the CGNC considers U.K.-based compensation data
compiled by FIT Remuneration Consultants, including utility companies within the Financial Times Stock Exchange in London, England.
These analyses produce a market
median reference point (the 50
th
percentile) referred to as PPL Competitive Data. Although the survey participants can vary slightly from year to year, the large nature of the samples
minimizes the risk this change could distort general market trends. For 2015 compensation decisions, the CGNC considered this data to determine the PPL Competitive Data reference point for compensation of our NEOs. Frederic W. Cook & Co.,
Inc., or Cook, the CGNCs independent compensation consultant, provides the compensation data to the CGNC.
Establishing Performance Targets
Each year, the CGNC reviews and sets the performance targets that apply to incentive awards. This process is particularly important in seeking to ensure alignment between
pay and performance over short- and long-term periods.
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30 PPL CORPORATION 2016 Proxy Statement
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In setting the PPL Corporation EPS and EBIT
targets, the CGNC reviews comprehensive data and systematically assesses PPLs targets by considering:
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PPLs historical performance.
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Historical performance within the industry.
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PPLs earnings forecasts for the coming year.
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Analysts earnings forecasts for the coming year.
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These data are used with a view to setting goals that are
appropriately challenging and competitive within the industry. The targets for the 2015 awards were reviewed during the first quarter of 2015 and are summarized beginning on page 33.
Elements of NEO Compensation
The compensation program is composed of three key elements base salary, an annual cash incentive and long-term equity incentives which make up total direct
compensation.
There were no substantial changes to the elements of compensation or how they were used in 2015, as compared to 2014, other than the changes to the
weightings of corporate and business segment measures with respect to annual cash incentive awards for Messrs. Staffieri and Symons, as described below under Annual Cash Incentive.
Regarding Mr. Grey, the CGNC authorized the company to enter into a retention agreement with him on May 6, 2015. The purpose of this agreement was to secure his
continued employment and engagement as CLO until January 31, 2016 through the critical spinoff of the Energy Supply segment and related transition. In his role, Mr. Grey was central in advising PPL on the successful completion of the
spinoff, transitioning to a new General Counsel post-spinoff, and managing matters involving the evolving legal operations for the company pre- and post-spinoff. For more information regarding Mr. Greys agreement, see Retention
Agreements beginning on page 63.
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Compensation
Element
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Purpose
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Features
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Performance Measures
and Time Horizon
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Base Salary
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To reward sustained performance, experience, value in the market and to PPL, and individual skills, knowledge and behaviors
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Reviewed annually with any change
effective in January
CGNC
applies judgment in setting salary to reflect performance, experience and responsibility
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Review of individual performance and
market position
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Annual Cash
Incentive
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To motivate and reward corporate performance over the short term
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Paid in cash
Combination of corporate and
segment performance for business segment presidents
Up to two times target for top performance
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100% financial
Measures include PPL EPS, PPL
EBIT, business segment net income and EBIT, and earnings before interest, taxes, depreciation and amortization, or EBITDA
One year
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PPL CORPORATION 2016 Proxy Statement 31
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EXECUTIVE COMPENSATION
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Compensation
Element
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Purpose
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Features
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Performance Measures
and Time Horizon
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Long-term Equity Incentives
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Performance-
Contingent Restricted Stock
Units
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To align shareowner and executive interests while rewarding longer-term performance and encouraging retention
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Grant
value determined based on EPS performance over prior three years
Payable in shares of PPL common stock
Dividends accrue quarterly, but are
not paid unless and until underlying award vests
Restricted for three years from date of grant
Represents 40% of the total
long-term equity incentive opportunity
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100% EPS
Based on performance over the
three years preceding grant
Restricted for three additional years following grant
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Performance
Units
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To align shareowner and executive interests and to drive sustainable growth over the long-term
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Vests at 0% to 200% of target, subject to
certification of performance at the end of the three-year performance period
Payable in shares of PPL common stock
Dividends accrue quarterly, but are
not paid unless and until underlying award vests
Represents 60% of the total long-term equity incentive opportunity
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100% relative TSR, using the UTY
Three-year performance
period
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In addition, the NEOs receive modest perquisites, such as financial planning, tax preparation services and matching contributions under
our deferred compensation plans.
Read more
in the Other Elements of Compensation section on page 40.
2015 Say-on-Pay Advisory Vote on Executive Compensation
The CGNC considered the results of the last shareowner advisory
vote on executive compensation when reviewing potential changes to PPLs executive compensation program. PPL received a favorable shareowner vote of over 96% in support of the compensation of our NEOs in response to our say-on-pay proposal at
the companys 2015 annual meeting. We have a long-standing practice of engaging with our shareowners on various matters of interest to them. In 2015, we enhanced our efforts by conducting a focused outreach to shareowners representing
approximately 38% of our outstanding shares to seek their views on our compensation program, as well as our corporate governance practices. The CGNC decided to maintain the core design of our compensation program for 2016, but it is continuing to
assess the feedback received from shareowners to ensure our compensation structure is aligned with our corporate strategy and best pay practices.
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32 PPL CORPORATION 2016 Proxy Statement
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2015 NAMED EXECUTIVE OFFICER COMPENSATION
Base Salary
Each year, the CGNC reviews base salary in the context of responsibilities, experience, value in the market and to PPL, sustained individual performance and internal
parity to determine whether an executives base salary will be increased. In reaching a decision, the CGNC reviews market compensation data and whether each executives position is competitive.
In January 2015, the CGNC approved increases ranging from 0% to 11.1%, with an average increase for the NEOs of 3.6%, as follows:
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Named Executive Officer
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2014 Year-End Salary
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2015 Salary
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% Change
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W. H. Spence
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$1,127,500
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$1,127,500
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0.0%
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V. Sorgi
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$450,000
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$500,000
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11.1%
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R. J. Grey
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$565,000
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$580,000
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2.7%
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P. A. Farr
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$737,100
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$773,955
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5.0%
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V. A. Staffieri
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$811,220
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$811,220
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0.0%
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R. A. Symons
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£535,000
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£551,050
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3.0%
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With respect to individual base
salary decisions, the following points are noted:
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Although the CGNC considered Mr. Spences individual performance as very strong, he did not receive a salary increase because his base salary at that time was fully market competitive.
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Mr. Sorgi assumed the role of CFO in June 2014, at which time he received an increase to his salary. In light of his demonstrated performance in the CFO role, his salary was increased in 2015 to bring his base
salary to a more competitive level.
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Messrs. Greys and Symons base salary changes reflected their respective performance and merit increase.
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Mr. Farrs increase was approved in anticipation of his new CEO role with Talen Energy Corporation.
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Mr. Staffieris base salary was not increased because his base salary at that time was fully market competitive.
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2015 Annual Cash Incentive Awards
The Annual Cash Incentive awards, which are made under the shareowner-approved Short-term Incentive Plan, measure and reward performance against the companys
financial goals for the year. The measures used to assess managements success in executing the companys strategy and initiatives are primarily EPS (or net income at a segment level) and EBIT. These align with our goals of increasing
shareowner value and were set and communicated to the NEOs in January 2015.
For 2015, the CGNC approved a number of changes to the relative weights of performance
measures under the Annual Cash Incentive program for the segment presidents. These changes were intended to better align the potential outcome within their area of direct control. In particular:
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Mr. Staffieris targets were rebalanced to 40% PPL Corporation and 60% LKE financial measures, from 60% PPL Corporation and 40% LKE.
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Mr. Symons targets were also rebalanced and changed to 40% PPL Corporation and 60% WPD financial measures, from 25% PPL Corporation and 75% financial and operational WPD targets.
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PPL CORPORATION 2016 Proxy Statement 33
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EXECUTIVE COMPENSATION
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In anticipation of the spinoff of the Energy Supply segment, incentives for Mr. Farr were based solely on the performance of Energy Supply. The 2015 performance measures focused on earnings (as measured by EBITDA)
and free cash flow, both identified as key measures of short-term performance for the Energy Supply segment in the lead-up to the spinoff. Reflecting the shorter performance period, Mr. Farrs maximum opportunity was capped at 125% of
target, while the other NEOs could earn up to 200% of target for exceeding the maximum levels of goals. Mr. Farrs 2014 targets had been composed of 42% PPL EPS, 18% PPL EBIT, 28% Energy Supply Net Income and 12% Energy Supply EBIT.
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In summary, the performance measures for 2015 were as follows:
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Measure
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CEO, CFO,
CLO
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Segment Presidents of WPD and LKE
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President of
Energy Supply
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Relative Weight
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Relative Weight
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Overall Weight
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Relative Weight
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PPL EPS
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70%
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40%
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70%
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40% * 70% =
28%
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PPL EBIT
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30%
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30%
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40% * 30% =
12%
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Business Segment Net
Income
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60%
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70%
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60% * 70% =
42%
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LKE EBIT
WPD EBITDA
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30%
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60% * 30% =
18%
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Energy Supply EBITDA
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70%
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Energy Supply Free Cash Flow
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30%
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34 PPL CORPORATION 2016 Proxy Statement
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PPL Corporate Financial Performance
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EPS (70% of corporate element)
EPS from ongoing operations in 2015 was $2.21, which is
between the target and maximum payout levels of $2.15
and $2.37, respectively. The threshold target was
$2.05,
below which no amount would be awarded.
Therefore, the percent of target earned in relation
to
PPLs EPS was
127.3%
of target.
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EBIT (30% of corporate element)
EBIT in 2015 was $2,889.92 million, which is slightly
below the target payout level of $2,906 million.
Therefore, the percent of target earned in relation
to
PPLs EBIT was
91.4%
of target. If EPS had been
below $2.05, no payout for EBIT would have been
awarded.
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As a result, the combined incentive earned for corporate financial performance was
116.5% of target
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Business Segment Financial Performance
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LG&E and KU
Energy (LKE) V. A. Staffieri
Net Income (70% of segment element)
Target ongoing net income for
the year was $353.4 million.
LKE ongoing net income for the year was $376 million, which is between the target and maximum
payout levels.
The percent
of target earned for the LKE ongoing net income target was
173.1% of target
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WPD R. A.
Symons
Net Income (70% of segment element)
Target ongoing net income for
the year was £589.6 million.
WPD ongoing net income for the year was £646 million, which exceeded the maximum payout
level.
The percent of
target earned for the WPD ongoing net income measure was
200% of target
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EBIT (30% of segment element)
Target EBIT for the year was
$754.2 million.
LKE EBIT
for the year was $784 million, which is between the target and maximum payout levels.
The percent of target earned for the LKE EBIT target was
157.9% of
target
.
|
|
EBITDA (30% of segment element)
Target EBITDA for the year was
£994 million.
WPD
EBITDA for the year was £1,033 million, which is between the target and maximum payout levels.
The percent of target earned for the WPD EBITDA target was
154.7% of
target
.
|
As a result, the combined incentive earned for LKE
financial performance was
168.5% of target
.
|
|
As a result, the combined percent of target earned for
WPD financial performance was
186.4% of target
.
|
|
PPL CORPORATION 2016 Proxy Statement 35
|
EXECUTIVE COMPENSATION
|
|
|
|
Energy Supply Financial Performance
|
|
In light of the spinoff of the Energy Supply segment, 2015 performance was measured through May 31, 2015, the last full day before the effective date of the
spinoff.
EBITDA for the partial
year was $308 million against a prorated target of $240 million, which exceeded the maximum payout level of $299 million. Due to the cap previously set by the CGNC, the incentive earned for the Energy Supply EBITDA measure was
125% of target
.
Free Cash Flow for the partial year was $134 million against a prorated target of $86 million, which
exceeded the maximum payout level of $121 million. Due to the cap previously set by the CGNC, the incentive earned for the Energy Supply Free Cash Flow target was
125% of target
.
As a result, the payout earned was deemed to be
125% of
target
.
|
Individual Annual Cash Incentive Awards for 2015 Performance
The following annual incentive awards were approved by the CGNC for 2015 performance:
|
|
|
|
|
|
|
|
|
|
|
|
Named Executive
Officer
|
|
Weight × Goal Results
|
|
2015 Earned Award
|
|
Corporate
|
|
Segment
|
|
Energy Supply
|
|
|
|
|
|
|
W. H. Spence
|
|
100% × 116.5%
|
|
|
|
|
|
116.5%
|
|
|
|
|
|
V. Sorgi
|
|
100% × 116.5%
|
|
|
|
|
|
116.5%
|
|
|
|
|
|
R. J. Grey
|
|
100% × 116.5%
|
|
|
|
|
|
116.5%
|
|
|
|
|
|
P. A. Farr
|
|
|
|
|
|
100% × 125.0%
|
|
125.0%
|
|
|
|
|
|
V. A. Staffieri
|
|
40% × 116.5%
|
|
60% × 168.5%
|
|
|
|
147.7%
|
|
|
|
|
|
R. A. Symons
|
|
40% × 116.5%
|
|
60% × 186.4%
|
|
|
|
158.4%
|
This resulted in the following
annual cash incentive awards approved for the NEOs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Named Executive
Officer
|
|
2015 Base
Salary
|
|
Target Opportunity
(% of Base Salary)
|
|
2015 Earned
Award
|
|
2015 Annual Cash
Incentive Award
|
|
|
|
|
|
|
|
|
|
|
|
W. H. Spence
|
|
$1,127,500
|
|
|
|
140%
|
|
|
|
|
|
116.5%
|
|
|
|
|
|
$1,838,953
|
|
|
|
|
|
|
|
|
|
|
|
|
|
V. Sorgi
|
|
$500,000
|
|
|
|
70%
|
|
|
|
|
|
116.5%
|
|
|
|
|
|
$407,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. J. Grey
|
|
$580,000
|
|
|
|
75%
|
|
|
|
|
|
116.5%
|
|
|
|
|
|
$506,775
|
|
|
|
|
|
|
|
|
|
|
|
|
|
P. A. Farr
(1)
|
|
$773,955
|
|
|
|
80%
|
|
|
|
|
|
125.0%
|
|
|
|
|
|
$322,481
|
|
|
|
|
|
|
|
|
|
|
|
|
|
V. A. Staffieri
|
|
$811,220
|
|
|
|
75%
|
|
|
|
|
|
147.7%
|
|
|
|
|
|
$898,629
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. A. Symons
|
|
£551,050
|
|
|
|
55%
|
|
|
|
|
|
158.4%
|
|
|
|
|
|
£480,075
|
|
|
(1)
|
Mr. Farrs annual cash incentive award was prorated to reflect the five months through May 31, 2015, before the completion of the spinoff of the Energy Supply segment.
|
|
36 PPL CORPORATION 2016 Proxy Statement
|
2015 Long-term Equity Incentive Awards
The purpose of the long-term incentive program is to align our executives interests with those of shareowners by providing long-term equity incentives that are
earned based on company performance. This goal is achieved through two distinct equity awards Performance-Contingent Restricted Stock Units and Performance Units that tie compensation to the share price of PPL, based on EPS and TSR
performance measures over different three-year periods.
|
|
|
|
|
|
|
|
|
Named Executive
Officer
|
|
Target Award (% of Base Salary)
|
|
Total Long-term
Incentive
|
|
40% Performance-
Contingent Restricted
Stock Units
(Based on EPS)
|
|
60% Performance Units
(Based on TSR)
|
|
|
|
|
W. H. Spence
|
|
450%
|
|
180%
|
|
270%
|
|
|
|
|
V. Sorgi
|
|
200%
|
|
80%
|
|
120%
|
|
|
|
|
R. J. Grey
|
|
165%
|
|
66%
|
|
99%
|
|
|
|
|
P. A. Farr
|
|
270%
|
|
108%
|
|
162%
|
|
|
|
|
V. A. Staffieri
|
|
175%
|
|
70%
|
|
105%
|
|
|
|
|
R. A. Symons
|
|
70%
|
|
28%
|
|
42%
|
It has been the CGNCs
long-time practice to make these annual grants at its regularly scheduled January meeting.
While off-cycle awards may be made from time-to-time, for example, at the
appointment of a new executive officer, no such awards were made in 2015 to the NEOs.
2015 Performance-Contingent Restricted Stock
Unit Awards
The 2015 Performance-Contingent Restricted Stock Units were assigned a target value, with actual awards made to reflect PPLs EPS performance
over the three calendar years ended December 31, 2015. Awards were calculated based on year-end 2015 salary and awarded in January 2016 for the 20132015 performance period. Restrictions lapse on the third anniversary of the grant date,
subject to continued employment through that date.
|
PPL CORPORATION 2016 Proxy Statement 37
|
EXECUTIVE COMPENSATION
EPS performance targets are consistent with those established in each of the performance years for
the Annual Cash Incentive and provide an additional focus on delivering sustained long-term EPS performance. The goals and corresponding level of achievement for 2015 awards were as follows:
|
|
|
|
|
|
|
|
|
|
|
EPS Goals and Corresponding Level of Achievement for Last Three
Years
(1)
|
Performance Year
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Annual EPS
Results
|
|
Achievement
(% of Target)
|
|
|
|
|
|
|
2013
|
|
$2.02
|
|
$2.25 - $2.30
|
|
$2.53
|
|
$2.45
|
|
163.6%
|
|
|
|
|
|
|
2014
|
|
$2.00
|
|
$2.15 -$2.28
|
|
$2.78
|
|
$2.45
|
|
134.0%
|
|
|
|
|
|
|
2015
|
|
$2.05
|
|
$2.15
|
|
$2.37
|
|
$2.21
|
|
127.3%
|
(1)
|
Performance targets were set for 2015 in anticipation of the spinoff of the Energy Supply segment and excluded earnings from that business. For purposes of comparison, the 2014 EPS annual result was similarly adjusted
as publicly reported in PPLs 2014 earnings release, as $2.03 per share instead of $2.45. Based on that comparison, the 2015 EPS target represented growth of 5.9% from the 2014 EPS result, as adjusted for the spinoff. See Annex A for a
description of adjusted earnings from ongoing operations for 2014.
|
The average EPS goal attainment for the three-year performance period was 141.6% of
target. Therefore, the following Performance-Contingent Restricted Stock awards were approved and made to the NEOs by the CGNC in January 2016 as part of their total compensation package for 2015. These awards will be reflected in the Summary
Compensation Table and Grants of Plan-based Awards table for 2016.
|
|
|
|
|
|
|
|
|
Performance-Contingent Restricted Stock Unit Awards Granted for the Performance Period 2013-2015
|
Named
Executive
Officer
|
|
2015 Base Salary
|
|
Target Award
(% of Salary)
|
|
Award Value
|
|
Units Granted
(1)
|
|
|
|
|
|
W. H. Spence
|
|
$1,127,500
|
|
180%
|
|
$2,873,772
|
|
86,482
|
|
|
|
|
|
V. Sorgi
|
|
$500,000
|
|
80%
|
|
$566,400
|
|
17,045
|
|
|
|
|
|
R. J. Grey
|
|
$580,000
|
|
66%
|
|
$542,045
|
|
16,312
|
|
|
|
|
|
P. A. Farr
(2)
|
|
$773,955
|
|
108%
|
|
$493,164
|
|
14,841
|
|
|
|
|
|
V. A. Staffieri
|
|
$811,220
|
|
70%
|
|
$804,081
|
|
24,198
|
|
|
|
|
|
R. A. Symons
|
|
£551,050
|
|
28%
|
|
£218,480
|
|
9,294
|
(1)
|
Number of units granted is the award value divided by the closing price of PPL common stock on January 21, 2016, the date the CGNC approved the grants, which was $33.23, and equivalent to £23.51 using an
exchange rate of £0.7075 for Mr. Symons award. The number of units is rounded up to the nearest whole unit.
|
(2)
|
Mr. Farrs award was prorated to reflect his five months of service through May 31, 2015, before completion of the Energy Supply spinoff. As contemplated in the agreements governing the spinoff entered into in
June 2014, the CGNC approved the acceleration of vesting of Mr. Farrs units as of the completion of the spinoff, consistent with the acceleration of all employees units as provided for in the transaction agreements.
|
2015 Performance Unit Awards
The Performance Unit
awards complement the Performance-Contingent Restricted Stock Unit awards by rewarding executives for relative shareowner value creation over the three years starting in the year they are granted. Performance Unit awards made in January 2015 were
calculated based on year-end 2014 salary.
|
38 PPL CORPORATION 2016 Proxy Statement
|
Target award values are established at the start
of the year, and the actual number of shares that an NEO receives is contingent on PPLs TSR performance relative to the companies in the UTY, as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TSR combines the impact of share price movement and reinvested dividends during the three-year performance period from January 1, 2015 to
December 31, 2017.
The CGNC determined that the constituents of the UTY are an appropriate
TSR industry group for PPL. The UTY is a market capitalization-weighted index of 20 geographically diverse, North American utility companies that are considered to be our peers by analysts and investors.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At the end of the performance period, awards can range from 0% to 200% of target depending on relative performance. Awards are forfeited
if PPL ranks below the 25
th
percentile at the end of the three-year period. The CGNC has no discretion to provide for payment other than as reflected in the actual attainment of the stated
performance goals.
The following Performance Unit awards were granted by the CGNC in January 2015, subject to the 2015-2017 performance period.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Unit Awards Granted in 2015
|
Named Executive
Officer
|
|
|
|
2014 Base Salary
|
|
|
|
|
|
Target Award
(% of Salary)
|
|
|
|
|
|
Award Value
|
|
|
|
|
|
|
Number of
Performance Units
Granted
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
W. H. Spence
|
|
|
|
$1,127,500
|
|
|
|
|
|
270%
|
|
|
|
|
|
|
$3,044,250
|
|
|
|
|
|
|
85,280
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
V. Sorgi
|
|
|
|
$450,000
|
|
|
|
|
|
120%
|
|
|
|
|
|
|
$540,000
|
|
|
|
|
|
|
15,130
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. J. Grey
|
|
|
|
$565,000
|
|
|
|
|
|
99%
|
|
|
|
|
|
|
$559,350
|
|
|
|
|
|
|
15,670
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
P. A. Farr
(2)
|
|
|
|
$737,100
|
|
|
|
|
|
162%
|
|
|
|
|
|
|
$1,194,102
|
|
|
|
|
|
|
33,450
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
V. A. Staffieri
|
|
|
|
$811,220
|
|
|
|
|
|
105%
|
|
|
|
|
|
|
$851,781
|
|
|
|
|
|
|
23,860
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. A. Symons
|
|
|
|
£535,000
|
|
|
|
|
|
42%
|
|
|
|
|
|
|
£224,700
|
|
|
|
|
|
|
9,460
|
|
|
(1)
|
Number of units granted is the award value divided by the closing price of PPL common stock on January 22, 2015, the date the CGNC approved the grants, which was $35.70, and equivalent to £23.77 using an
exchange rate of £0.6658 for Mr. Symons award. The number of units is rounded up to the nearest 10 units.
|
(2)
|
At the time of Mr. Farrs award, the spinoff of the Energy Supply segment had not yet occurred. On completion of the spinoff, all of Mr. Farrs 2015 Performance Units were forfeited in accordance with the
related grant agreement.
|
Following the CGNCs assessment and certification of performance in early 2018, the Performance Unit awards and dividend
equivalents will vest, if applicable.
Vesting of 20132015 Performance Units
Performance Unit awards were made to the NEOs in 2013, subject to a three-year performance period. The actual number of units that could vest at the
end of the performance period was contingent on PPLs TSR from January 1, 2013 to December 31, 2015 relative to companies in the UTY.
Over this
three-year period, PPL ranked at the 65
th
percentile. As a result, the 20132015 Performance Units were earned at
142.86% of target
.
|
PPL CORPORATION 2016 Proxy Statement 39
|
EXECUTIVE COMPENSATION
Other Elements of
Compensation
In addition to the three core elements of compensation (base salary, an annual cash incentive and long-term equity incentives in the form
of Performance-Contingent Restricted Stock Units and Performance Units), the company also provides other forms of indirect compensation, which are summarized below.
Perquisites
PPL provides limited executive
perquisites to its NEOs. Where provided, these are consistent with market practice and serve a direct business interest.
Financial planning services, including tax
preparation and support, and a one-time payment for estate document preparation, are provided to the NEOs other than Mr. Symons. These services are provided in recognition of time constraints on executives and their more complex compensation
program that requires professional financial and tax planning. We believe that good financial planning by experts reduces the amount of time and attention that executive officers must spend on such issues. Such planning also helps ensure the
objectives of our compensation programs are met and not hindered by unexpected tax or other consequences.
Additionally, each NEO, other than Mr. Symons, is also
eligible for an executive physical every two years, up to a cost of $5,000. The CGNC believes the benefit is beneficial to both the employee and the company through potential reduced costs and increased productivity.
Mr. Symons arrangements reflect U.K. market practice. Although he does not receive the perquisites described above, in accordance with the WPD Executive Car
Allowance Policy, Mr. Symons receives a monthly cash allowance of £862.98 and reimbursement for fuel.
The incremental cost to PPL of all perquisites
received by our NEOs for the year is summarized in Note 7 to the Summary Compensation Table on page 47.
|
40 PPL CORPORATION 2016 Proxy Statement
|
Indirect
Compensation
The company provides executive benefits such as nonqualified deferred compensation opportunities and supplemental executive retirement plan
benefits. We have historically viewed our retirement benefits as a means of providing financial security to all our salaried employees after they have spent a substantial portion of their careers with the company. Officers of the company, including
the NEOs, participate in certain benefit programs offered to all PPL employees, or all LKE employees in the case of Mr. Staffieri, or all WPD employees in the case of Mr. Symons. In addition, officers are eligible for the executive benefit
plans discussed below.
|
|
|
|
|
Retirement Plan
|
|
Description
|
|
NEO Participants
|
|
|
|
PPL Retirement
Plan
|
|
Tax-qualified defined benefit pension
plan
Closed to new
salaried employees after December 31, 2011
|
|
Messrs. Spence, Sorgi and Grey
Mr. Farr participated in this plan prior to June 1, 2015
|
|
|
|
PPL Supplemental Executive
Retirement Plan
(PPL SERP)
|
|
Nonqualified defined benefit pension plan to provide for retirement benefits
above amounts available under the PPL Retirement Plan
Closed to new officers after December 31, 2011
|
|
Messrs. Spence, Sorgi, Grey and Farr
(1)
|
|
|
|
Supplemental Compensation
Pension Plan
|
|
Nonqualified defined benefit plan
that applies to certain employees hired before January 1, 2012, who are not vested in the PPL SERP
|
|
Mr. Sorgi
|
|
|
|
PPL Subsidiary Retirement Plan
|
|
Tax-qualified defined benefit pension plan
Closed to new salaried
employees after December 31, 2011
This plan was transferred to Talen Energy Corporation, effective June 1, 2015, the closing of the
spinoff of the Energy Supply segment
|
|
Mr. Farr
|
|
|
|
LG&E and KU Retirement Plan
(LG&E
Retirement
Plan)
|
|
Tax-qualified defined benefit pension
plan
Closed to new
participants after December 31, 2005
|
|
Mr. Staffieri
|
|
|
|
LG&E and KU Supplemental Executive Retirement Plan (LG&E SERP)
|
|
Nonqualified defined benefit pension plan
Closed to new participants
effective January 1, 2012
|
|
Mr. Staffieri
|
|
|
|
Electricity Supply Pension Scheme (ESPS)
|
|
U.K. tax-approved defined benefit
pension scheme
|
|
Mr. Symons
|
(1)
|
In connection with the June 1, 2015 spinoff of PPLs Energy Supply segment, the CGNC approved the acceleration of Mr. Farrs vesting in the PPL SERP, consistent with other participants who were part
of the spinoff; no additional benefits accrued to Mr. Farr after that time.
|
Additional details about these plans are provided under
Executive Compensation Tables Pension Benefits in 2015 beginning on page 53.
|
PPL CORPORATION 2016 Proxy Statement 41
|
EXECUTIVE COMPENSATION
The primary capital accumulation opportunities for NEOs other than Messrs. Staffieri and Symons
are: (1) stock gains under the companys long-term incentive program (as described above) and the employee stock ownership plan; and (2) voluntary savings opportunities that, for 2015, included (a) savings through the tax-qualified employee
savings plan, which is a 401(k) plan (our PPL Deferred Savings Plan), and (b) the PPL Executive Deferred Compensation Plan, which is a nonqualified deferred compensation arrangement.
|
|
|
|
|
Savings
Plans
|
|
Description
|
|
NEO Participants
|
|
|
|
PPL Deferred
Savings Plan
|
|
Tax-qualified defined contribution plan
PPL provides matching contributions
of up to 3% of the participants pay subject to contribution limits imposed by the Internal Revenue Service, or IRS
Pay defined as salary plus annual cash incentive award
Participants vest in PPLs
matching contributions after one year of service
Participants may request distribution of their account at any time following termination of
employment
|
|
Messrs. Spence, Sorgi and Grey
Mr. Farr participated in this plan prior to June 1, 2015
|
|
|
|
PPL Executive
Deferred
Compensation
Plan
|
|
Non-qualified deferred
compensation plan
Participants
may defer some or all of their cash compensation in excess of the estimated minimum legally required annual payroll tax withholding
Matching contributions are made under this plan on behalf of participating officers to make up for
matching contributions that could not be made on behalf of such officers under the PPL Deferred Savings Plan because of statutory limits on qualified plan benefits
There is no vesting requirement for the company matching contributions
|
|
Messrs. Spence, Sorgi and Grey
Mr. Farr participated in this plan prior to June 1, 2015
|
|
|
|
|
|
The company also has a PPL Employee Stock Ownership Plan, or ESOP. Although it is a tax-qualified, employee stock ownership plan in which
Messrs. Spence, Sorgi and Grey participate, no contributions have been made to the ESOP since 2012. Mr. Farr participated in the ESOP prior to June 1, 2015.
Neither Mr. Staffieri nor Mr. Symons participates in the ESOP, the PPL Deferred Savings Plan or the PPL Executive Deferred Compensation Plan. Mr. Staffieri does, however,
participate in the LG&E and KU Savings Plan and in the LG&E and KU Nonqualified Savings Plan, which allow participants to defer a maximum of 75% of base salary and annual cash incentive awards, as further described under Executive
Compensation Tables Nonqualified Deferred Compensation in 2015 beginning on page 58.
|
42 PPL CORPORATION 2016 Proxy Statement
|
GOVERNANCE POLICIES UNDERPINNING OUR COMPENSATION FRAMEWORK
At PPL, the CGNC has adopted strong corporate governance practices that are intended to drive results and support accountability to shareowners, as well as align
interests of executive officers with those of shareowners.
|
|
|
What We Do
|
|
What We Dont Do
|
|
|
ü
Conduct annual pay risk assessment
|
|
û
No hedging or pledging of PPL stock by officers and directors
|
|
|
ü
Retain independent compensation consultant
|
|
û
No dividend equivalents paid on unvested equity awards granted to executive officers
|
|
|
ü
Adopted proxy access
|
|
û
No tax gross-ups for NEO perquisites or in new change-in-control severance agreements
|
|
|
ü
Require significant equity ownership
|
|
û
No single trigger change-in-control severance agreements
|
|
|
ü
Adopted clawback policy
|
|
û
No new participants in the PPL SERP or LG&E SERP
|
Additional information on
PPLs Equity Ownership Guidelines, Hedging and Pledging and Clawback Policies can be found below.
Equity Ownership Guidelines
An important part of PPLs compensation philosophy is ensuring a strong linkage between executives and shareowners. The Equity Ownership Guidelines enable the
company to align executives with this philosophy. The guidelines provide that NEOs should maintain the following levels of ownership in PPL stock:
|
|
|
Executive Officer Level
|
|
Equity Guideline
(Multiple of Salary)
|
Chairman, President and CEO
|
|
5x
|
Executive Vice Presidents
|
|
3x
|
Senior Vice Presidents
|
|
2x
|
Presidents of business segments
(1)
|
|
2x
|
|
|
|
|
(1)
|
Includes Messrs. Staffieri and Symons, and included Mr. Farr until the June 1, 2015 spinoff of the Energy Supply segment.
|
NEOs must attain the minimum ownership requirement that applies to their level by the end of their fifth anniversary year at that level. If an NEO fails to achieve the
required level within the specified time frame, the following additional requirements apply until the Guideline is exceeded.
|
|
The NEO must not sell any shares of PPL stock.
|
|
|
The NEO will be required to retain any vesting equity awards, net of required tax withholding.
|
|
|
The CGNC retains the right, at its discretion, to deliver annual cash incentive awards in the form of restricted stock unit grants.
|
All NEOs were in compliance with the Equity Ownership Guidelines as of December 31, 2015, and Mr. Farr was in compliance as of June 1, 2015, the date he
left the company.
|
PPL CORPORATION 2016 Proxy Statement 43
|
EXECUTIVE COMPENSATION
Hedging and Pledging Prohibitions
In accordance with best governance practices, the company has an established policy that prohibits its officers and directors from the following
actions:
|
|
Pledging shares of company stock as collateral for any loans.
|
|
|
Engaging in any form of hedging transaction.
|
|
|
Trading in derivatives of PPL common stock.
|
Clawback Policy
In January 2013, the CGNC adopted a policy regarding the recoupment of executive compensation, commonly referred to as a clawback. Subject
to the discretion and approval of the Board, this policy enables the company to seek recoupment of incentive-based compensation awarded to any current executive officer of the company in situations where the Board has determined that:
|
|
the company is required to prepare an accounting restatement due to the material noncompliance by the company with any financial reporting requirement under the securities laws, and
|
|
|
a lower award would have been made to the executive officer based upon the restated financial results.
|
The Board has full
and final authority to make all determinations under this policy, including, without limitation, whether the policy applies and, if so, the amount of cash bonus or other incentive-based compensation, if any, to be repaid by any executive officer. In
each such instance, as determined by the Board, the company will, to the extent permitted by applicable law, seek to recover incentive-based compensation received by such individual in excess of the amount that would have been received under the
accounting restatement. Any recoupment under this policy is to be in addition to any other remedies that may be available to the company, including such remedies contained in the companys equity grant agreements, employment letters, if any,
and applicable law.
ADDITIONAL INFORMATION
Special Compensation
In addition to the annual direct and indirect compensation described above, the company provides special compensation under specific situations.
Employment Agreements
. We generally do not enter into traditional employment agreements with executive officers. Other than a Service
Agreement entered into with Mr. Symons in the U.K. as described at page 49 under Employment Agreement, there are no specific agreements pertaining to length of employment that would commit the company to pay an executive for a
specific period. Generally, our executive officers are employees-at-will whose employment is conditioned on performance and subject to termination by the company at any time.
Retention Agreements
. The company entered into a retention agreement with Mr. Grey on May 6, 2015, pursuant to which he retired
from PPL on January 31, 2016. PPL previously entered into a retention agreement with Mr. Farr, under which he was granted shares of restricted PPL common stock. For specific details on retention agreements that were in place for NEOs
during 2015, see Retention Agreements beginning on page 63.
Change-in-Control Protections
. The company believes certain
executive officers who are terminated without cause or who resign for good reason (as defined in Change-in-Control Arrangements on page 60) in connection with a change in control of PPL Corporation should be provided
separation benefits. These benefits are intended to ensure that executives focus on serving the company and shareowner interests without the distraction of possible job and income loss. All of our NEOs have agreements with the company providing for
separation benefits in the event of a change in control.
The major components of the companys change-in-control protections are:
|
|
Accelerated Vesting of Specific Outstanding Equity Awards
. As of the close of a transaction that results in a change
in control of PPL Corporation, all outstanding equity awards granted under the former ICP as part of the companys compensation program (excluding restricted stock and restricted stock units issued pursuant to
|
|
44 PPL CORPORATION 2016 Proxy Statement
|
|
retention agreements) become available to executives. As a result, restrictions on all outstanding restricted stock units lapse, a pro rata portion of performance units become payable and all unexercisable stock options become
exercisable. No awards have been made under this plan since 2012, when a new equity plan, the SIP, was implemented.
|
Equity awards granted under the SIP
become vested upon a change in control, only if the executive is terminated following or in connection with the change in control (a double trigger).
Stock options granted prior to 2007 are exercisable for 36 months following a qualifying termination of employment in connection with a change in control; options granted
in 2007 and thereafter under the ICP are, after a change in control, exercisable for the remaining term of the stock option.
The company believes that its
change-in-control benefits are consistent with the practices of companies with whom PPL competes for talent and assist in retaining executives and recruiting new executives to the company.
Additional details on current arrangements and agreements are discussed further below under Termination Benefits, beginning on page 64, and
Change-in-Control Arrangements, beginning on page 60.
Severance Benefits.
To continue to retain and protect our executives, the company adopted an
Executive Severance Plan in 2012 that provides severance benefits for officers, including the NEOs other than Mr. Symons, terminated for reasons other than cause.
The key features of the plan include (1) two years of base pay; (2) an allowance for benefit continuation; and (3) outplacement or career services support.
Severance benefits payable under this program are conditioned on the executive officer agreeing to release the company from any liability arising from the employment relationship.
The company has agreements with all of the NEOs that provide benefits to the executives upon specified terminations of employment in connection with a change in control
of PPL Corporation. The benefits provided under these agreements replace any other severance benefits provided to these officers by PPL Corporation, including the Executive Severance Plan or any prior severance agreement.
Additional details on current arrangements and agreements for NEOs are discussed further below under Termination Benefits at page 64.
Tax Deductibility of Compensation
Section 162(m) of the Internal Revenue Code generally provides that publicly held corporations may not deduct in any taxable year specified compensation in excess of
$1 million paid to the CEO and the next three most highly compensated executive officers (excluding the CFO). Performance-based compensation in excess of $1 million is deductible if specified criteria are met, including shareowner approval of
applicable plans. In this regard, the PPL Corporation Short-term Incentive Plan is designed to enable PPL to make cash awards to officers that are deductible under Section 162(m). Similarly, the PPL SIP is structured to enable grants of
equity-based incentive awards to be deductible under Section 162(m).
The CGNC generally seeks ways to limit the impact of Section 162(m). However, the CGNC
believes that the tax deduction limitation should not compromise our ability to establish and implement incentive programs that support the compensation objectives discussed above. Accordingly, achieving these objectives and maintaining required
flexibility in this regard may result in payments of compensation or grants of awards that are not deductible for federal income tax purposes.
|
PPL CORPORATION 2016 Proxy Statement 45
|
EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION TABLES
The following table summarizes all compensation for our chief executive officer, our chief financial officer, our former president of PPLs Energy Supply business
and our next three most highly compensated executives, known as named executive officers, or NEOs, for service to PPL and its subsidiaries. Mr. Spence also served as a director but received no separate compensation for board service.
SUMMARY COMPENSATION TABLE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and Principal Position
(1)
|
|
Year
|
|
Salary
(2)
|
|
Bonus
|
|
Stock
Awards
(3)
|
|
Option
Awards
(4)
|
|
Non-Equity
Incentive
Plan
Compensation
(5)
|
|
Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings
(6)
|
|
All Other
Compensation
(7)
|
|
Total
|
William H. Spence
Chairman, President and
Chief Executive Officer
|
|
|
|
2015
|
|
|
|
$
|
1,127,500
|
|
|
|
|
|
|
|
|
$
|
6,237,307
|
|
|
|
$
|
727,355
|
|
|
|
|
$1,838,953
|
|
|
|
|
$2,994,822
|
|
|
|
|
$ 54,075
|
|
|
|
$
|
12,980,012
|
|
|
|
|
2014
|
|
|
|
|
1,126,760
|
|
|
|
|
|
|
|
|
|
6,292,601
|
|
|
|
|
|
|
|
|
|
2,134,132
|
|
|
|
|
3,808,318
|
|
|
|
|
27,445
|
|
|
|
|
13,389,256
|
|
|
|
|
2013
|
|
|
|
|
1,098,846
|
|
|
|
|
|
|
|
|
|
4,768,559
|
|
|
|
|
1,526,000
|
|
|
|
|
2,519,440
|
|
|
|
|
2,144,007
|
|
|
|
|
52,868
|
|
|
|
|
12,109,720
|
|
Vincent Sorgi
Senior Vice President and
Chief Financial Officer
|
|
|
|
2015
|
|
|
|
|
498,462
|
|
|
|
|
|
|
|
|
|
994,921
|
|
|
|
|
70,635
|
|
|
|
|
407,750
|
|
|
|
|
153,159
|
|
|
|
|
32,318
|
|
|
|
|
2,157,245
|
|
|
|
|
2014
|
|
|
|
|
398,404
|
|
|
|
|
|
|
|
|
|
613,624
|
|
|
|
|
|
|
|
|
|
344,924
|
|
|
|
|
318,067
|
|
|
|
|
27,602
|
|
|
|
|
1,702,621
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert J. Grey
Executive Vice President
and Chief Legal Officer
|
|
|
|
2015
|
|
|
|
|
579,539
|
|
|
|
|
|
|
|
|
|
1,146,332
|
|
|
|
|
235,660
|
|
|
|
|
506,775
|
|
|
|
|
|
|
|
|
|
56,927
|
|
|
|
|
2,525,233
|
|
|
|
|
2014
|
|
|
|
|
563,253
|
|
|
|
|
|
|
|
|
|
1,056,292
|
|
|
|
|
|
|
|
|
|
572,910
|
|
|
|
|
591,769
|
|
|
|
|
33,185
|
|
|
|
|
2,817,409
|
|
|
|
|
2013
|
|
|
|
|
499,292
|
|
|
|
|
|
|
|
|
|
837,779
|
|
|
|
|
251,463
|
|
|
|
|
531,806
|
|
|
|
|
|
|
|
|
|
30,729
|
|
|
|
|
2,151,069
|
|
Paul A. Farr
Former President
PPL Energy Supply, LLC
|
|
|
|
2015
|
|
|
|
|
341,192
|
|
|
|
|
|
|
|
|
|
2,446,781
|
|
|
|
|
494,821
|
|
|
|
|
322,481
|
|
|
|
|
203,878
|
|
|
|
|
36,538
|
|
|
|
|
3,845,692
|
|
|
|
|
2014
|
|
|
|
|
736,155
|
|
|
|
|
|
|
|
|
|
2,418,196
|
|
|
|
|
|
|
|
|
|
883,025
|
|
|
|
|
1,122,169
|
|
|
|
|
56,599
|
|
|
|
|
5,216,144
|
|
|
|
|
2013
|
|
|
|
|
701,377
|
|
|
|
|
|
|
|
|
|
1,796,407
|
|
|
|
|
593,156
|
|
|
|
|
861,354
|
|
|
|
|
28,870
|
|
|
|
|
40,582
|
|
|
|
|
4,021,746
|
|
Victor A. Staffieri
Chairman of the Board, Chief
Executive Officer and President
LG&E and KU Energy LLC
|
|
|
|
2015
|
|
|
|
|
811,220
|
|
|
|
|
|
|
|
|
|
1,745,339
|
|
|
|
|
39,745
|
|
|
|
|
898,629
|
|
|
|
|
60,305
|
|
|
|
|
76,630
|
|
|
|
|
3,631,868
|
|
|
|
|
2014
|
|
|
|
|
811,220
|
|
|
|
|
|
|
|
|
|
1,843,401
|
|
|
|
|
|
|
|
|
|
751,393
|
|
|
|
|
3,173,983
|
|
|
|
|
88,862
|
|
|
|
|
6,668,859
|
|
|
|
|
2013
|
|
|
|
|
811,220
|
|
|
|
$
|
20,000
|
|
|
|
|
1,597,735
|
|
|
|
|
479,774
|
|
|
|
|
923,574
|
|
|
|
|
|
|
|
|
|
134,265
|
|
|
|
|
3,966,568
|
|
Robert A.
Symons
Chief Executive WPD
|
|
|
|
2015
|
|
|
|
|
836,038
|
|
|
|
|
|
|
|
|
|
691,919
|
|
|
|
|
6,569
|
|
|
|
|
690,156
|
|
|
|
|
369,842
|
|
|
|
|
20,288
|
|
|
|
|
2,614,812
|
|
|
|
|
2014
|
|
|
|
|
872,710
|
|
|
|
|
|
|
|
|
|
775,944
|
|
|
|
|
|
|
|
|
|
609,305
|
|
|
|
|
1,520,212
|
|
|
|
|
27,115
|
|
|
|
|
3,805,286
|
|
(1)
|
Effective June 1, 2015, concurrent with the spinoff of PPLs Energy Supply segment, Mr. Farr resigned from PPL.
|
|
Mr. Symons is based in the United Kingdom and is compensated in Pounds Sterling. We converted his 2015 cash compensation, changes in pension value and personal benefits to U.S. dollars at an exchange rate of $1.5283,
which is the average monthly translation rate for 2015, except with respect to the Non-Equity Incentive Plan Compensation amount, which was converted to U.S. dollars at an exchange rate of $1.4376, which is the translation rate for February 2,
2016, the date the cash incentive award was paid to Mr. Symons.
|
(2)
|
Salary includes cash compensation deferred to the PPL Executive Deferred Compensation Plan or, for Mr. Staffieri, to the LG&E and KU Nonqualified Savings Plan. The following NEOs deferred salary in 2015 in the
amounts indicated: Mr. Spence ($33,825); Mr. Sorgi ($14,953); Mr. Grey ($17,386); Mr. Farr ($119,417); and Mr. Staffieri ($44,929). These amounts are included in the Nonqualified Deferred Compensation in 2015
table on page 59 as executive contributions for the last fiscal year.
|
(3)
|
This column represents the aggregate grant date fair value of restricted stock units and performance units as calculated under ASC Topic 718, without taking into account estimated forfeitures. The grant date fair values
of restricted stock units are calculated using the closing price of PPL common stock on the NYSE on the date of grant. The grant date fair values of the performance units reflected in this column are the target payouts based on the probable outcome
of the performance condition, determined as of the grant date, and are disclosed in the Grants of Plan-Based Awards During 2015 table on page 48. The maximum potential values as of the grant date of the performance units granted in 2015
assuming the highest level of performance are as follows: Mr. Spence$6,430,355; Mr. Sorgi$1,140,852; Mr. Grey$1,181,592; Mr. Farr$2,522,287; Mr. Staffieri$1,799,139; and
Mr. Symons$713,331. For additional information on the assumptions made in the valuation of performance units, refer to Note 10 to the PPL financial statements in the Annual Report on Form 10-K for the fiscal year ended
December 31, 2015, as filed with the SEC. Further information regarding the 2015 awards is included in the Grants of Plan-Based Awards During 2015 and Outstanding Equity Awards at Fiscal Year-End 2015 tables elsewhere in
this proxy statement.
|
(4)
|
For 2015, amounts represent the incremental fair value under ASC Topic 718 of adjustments to prior year grants made to the
NEOs under the anti-dilution provisions of PPLs equity-based compensation plans as a result of the spinoff of PPLs Energy Supply segment. No stock options were awarded in 2015. For additional information on the assumptions made in
the
|
|
46 PPL CORPORATION 2016 Proxy Statement
|
|
valuation of adjustments to outstanding stock options, refer to Note 10 to the PPL financial statements in the Annual Report on Form 10-K for the fiscal year ended December 31, 2015, as filed with the
SEC. A description of the adjustments made in connection with the spinoff is included in the introduction to the Outstanding Equity Awards at Fiscal Year-End 2015 at page 50.
|
(5)
|
For 2015, amounts represent cash awards made in January 2016 for performance under the companys annual cash incentive award program for 2015, which were made under PPLs Short-term Incentive Plan for all
NEOs. These amounts include amounts the NEOs have elected to defer to the PPL Executive Deferred Compensation Plan or, for Mr. Staffieri, to the LG&E and KU Nonqualified Savings Plan. The following NEOs deferred cash awards in the amounts
indicated: Mr. Spence ($55,169); Mr. Sorgi ($122,325); and Mr. Staffieri ($53,918). These amounts will be included in the Nonqualified Deferred Compensation in 2016 table as executive contributions in next years
proxy statement.
|
(6)
|
This column represents the sum of the changes in the actuarial present value of accumulated benefit in the PPL Retirement Plan and PPL Supplemental Executive Retirement Plan during 2015 for Messrs. Spence, Sorgi,
Grey and Farr, the PPL Subsidiary Retirement Plan for Mr. Farr (as of May 31, 2015), the LG&E and KU Retirement Plan and the LG&E and KU Supplemental Executive Retirement Plan for Mr. Staffieri and the Electricity Supply Pension
Scheme in the United Kingdom for Mr. Symons. See the Pension Benefits in 2015 table beginning on page 56 for additional information. No amounts are shown for 2015 under this column for Mr. Grey as his change in pension
value during 2015 was a negative amount. Mr. Greys net decrease in pension value for 2015 was ($146,175), composed of a decrease in the value of his accumulated benefit under the PPL SERP of ($203,751), offset by an increase in the value
of his accumulated benefit under PPL Retirement Plan of $57,576. No above-market or preferential earnings under the PPL Executive Deferred Compensation Plan are reportable for 2015. As to Mr. Staffieri, no above-market or preferential earnings
under the LG&E and KU Nonqualified Savings Plan and LG&E Energy Corp. Nonqualified Savings Plan are reportable for 2015. See the Nonqualified Deferred Compensation in 2015 table on page 59 for additional information.
Mr. Symons does not participate in a deferred compensation plan in the United Kingdom.
|
(7)
|
The table below reflects the components of this column for 2015, which include the companys matching contribution for each individuals 401(k) plan contributions under respective savings plans, the
companys matching contribution for each individuals contributions under nonqualified deferred compensation plans, or NQDC, and the perquisites of financial planning and tax preparation services, company car, and other personal benefits
as noted.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
|
|
401(k)
Match
|
|
|
|
NQDC
Employer
Contributions
|
|
Financial
Planning
and Tax
Preparation
|
|
Company
Car
(a)
|
|
Other
|
|
|
|
Total
|
W. H. Spence
|
|
|
|
$7,950
|
|
|
|
$30,000
|
|
$11,000
|
|
|
|
|
|
|
|
|
|
$5,125
|
|
(b)
|
|
|
|
|
|
|
|
$54,075
|
|
|
V. Sorgi
|
|
|
|
7,950
|
|
|
|
13,313
|
|
11,000
|
|
|
|
|
|
|
|
|
|
55
|
|
(c)
|
|
|
|
|
|
|
|
32,318
|
|
|
R. J. Grey
|
|
|
|
7,950
|
|
|
|
16,346
|
|
9,000
|
|
|
|
|
|
|
|
|
|
23,631
|
|
(d)
|
|
|
|
|
|
|
|
56,927
|
|
|
P. A. Farr
|
|
|
|
7,950
|
|
|
|
28,588
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36,538
|
|
|
V. A. Staffieri
|
|
|
|
11,130
|
|
|
|
54,500
|
|
11,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
76,630
|
|
|
R. A. Symons
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$17,993
|
|
|
|
|
|
2,295
|
|
(e)
|
|
|
|
|
|
|
|
20,288
|
|
|
|
(a)
|
Car benefits provided to Mr. Symons, including monthly car allowance and reimbursement for fuel. Benefit is capped at £20,000 per year.
|
|
(b)
|
Includes $5,000 paid for executive physical and $125 value of a hospitality gift.
|
|
(c)
|
Value of a hospitality gift.
|
|
(d)
|
Includes $23,576 reimbursed to Mr. Grey for legal fees as set forth in his Retention Agreement described beginning on page 63 and $55 value of a hospitality gift.
|
|
(e)
|
Includes $2,240 for cost of private medical insurance plan in the United Kingdom for Mr. Symons, his wife and daughter and $55 value of a hospitality gift.
|
|
PPL CORPORATION 2016 Proxy Statement 47
|
EXECUTIVE COMPENSATION
GRANTS OF PLAN-BASED AWARDS
DURING 2015
The following table provides information about equity and non-equity incentive plan awards granted to the NEOs in 2015.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grant
Date
|
|
Estimated Future Payouts
under Non-Equity Incentive
Plan Awards
(1)
|
|
Estimated Future Payouts
under Equity Incentive
Plan Awards
(2)
|
|
All Other
Stock
Awards:
Number of
Shares of
Stock or
Units
(3)
|
|
Grant
Date
Fair
Value of
Stock
and
Option
Awards
(4)
|
Name
|
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
|
W. H. Spence
|
|
1/22/2015
|
|
$789,250
|
|
$1,578,500
|
|
$3,157,000
|
|
|
|
|
|
|
|
|
|
|
|
|
1/22/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
91,028
|
|
$3,022,130
|
|
|
1/22/2015
|
|
|
|
|
|
|
|
22,926
|
|
91,705
|
|
183,410
|
|
|
|
3,215,177
|
|
|
6/1/2015
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
727,355
|
V. Sorgi
|
|
1/22/2015
|
|
175,000
|
|
350,000
|
|
700,000
|
|
|
|
|
|
|
|
|
|
|
|
|
1/22/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,786
|
|
424,495
|
|
|
1/22/2015
|
|
|
|
|
|
|
|
4,068
|
|
16,270
|
|
32,540
|
|
|
|
570,426
|
|
|
6/1/2015
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
70,635
|
R. J. Grey
|
|
1/22/2015
|
|
217,500
|
|
435,000
|
|
870,000
|
|
|
|
|
|
|
|
|
|
|
|
|
1/22/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,733
|
|
555,536
|
|
|
1/22/2015
|
|
|
|
|
|
|
|
4,213
|
|
16,851
|
|
33,702
|
|
|
|
590,796
|
|
|
6/1/2015
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
235,660
|
P. A. Farr
|
|
1/22/2015
|
|
129,003
|
|
258,006
|
|
516,011
|
|
|
|
|
|
|
|
|
|
|
|
|
1/22/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,712
|
|
1,185,638
|
|
|
1/22/2015
|
|
|
|
|
|
|
|
8,993
|
|
35,971
|
|
71,942
|
|
|
|
1,261,143
|
|
|
6/1/2015
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
494,821
|
V. A. Staffieri
|
|
1/22/2015
|
|
304,207
|
|
608,415
|
|
1,216,830
|
|
|
|
|
|
|
|
|
|
|
|
|
1/22/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,475
|
|
845,770
|
|
|
1/22/2015
|
|
|
|
|
|
|
|
6,415
|
|
25,658
|
|
51,316
|
|
|
|
899,569
|
|
|
6/1/2015
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39,745
|
R. A. Symons
|
|
1/22/2015
|
|
231,547
|
|
463,194
|
|
926,387
|
|
|
|
|
|
|
|
|
|
|
|
|
1/22/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,098
|
|
335,254
|
|
|
1/22/2015
|
|
|
|
|
|
|
|
2,543
|
|
10,173
|
|
20,346
|
|
|
|
356,665
|
|
|
6/1/2015
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,323
|
(1)
|
These columns show the potential payout range under the 2015 annual cash incentive award program. For additional information, see CD&A 2015 Named Executive Officer Compensation 2015
Annual Cash Incentive Awards beginning on page 33. The cash incentive payout range is from 50% to 200% of target. If the actual performance falls below the 50% payout level, the payout is zero. Mr. Symons is based in the United
Kingdom and is compensated in Pounds Sterling. We converted his annual cash incentive award ranges to U.S. dollars at an exchange rate of $1.5283, which is the average monthly translation rate for 2015.
|
(2)
|
These columns show the potential payout range for the performance units granted in 2015 to the NEOs under PPLs SIP. For additional information, see CD&A 2015 Named Executive Officer
Compensation 2015 Long-term Equity Incentive Awards 2015 Performance Unit Awards beginning on page 38. The payout range for performance unit awards granted in 2015 is from 25% to 200% of target. The performance period
is 2015-2017. At the end of the performance period, PPL TSR for the three-year period is compared to the total return of the companies in the Philadelphia Stock Exchange Utility Index, or UTY. Shares of PPL common stock reflecting the applicable
number of performance units, as well as reinvested cash or stock dividend equivalents, will vest and be paid according to the applicable level of achievement of the performance goal. If actual performance falls below the 25% payout level, the payout
is zero.
|
(3)
|
This column shows the number of performance-contingent restricted stock units granted in 2015 to the NEOs under PPLs
SIP based on EPS performance during 2012-2014. For additional information, see CD&A 2015 Named Executive Officer Compensation 2015 Long-term Equity Incentive Awards 2015 Performance-Contingent Restricted
Stock Unit Awards beginning on page 37. In general, restrictions on the awards will lapse on January 22, 2018, three years from the date of
|
|
48 PPL CORPORATION 2016 Proxy Statement
|
|
grant. Each restricted stock unit entitles the executive to receive additional restricted stock units equal in value to the amount of quarterly dividends paid on PPL common stock. These additional restricted stock units
are payable in shares of PPL common stock at the end of the restriction period, subject to the same conditions as the underlying restricted stock units.
|
(4)
|
This column shows the grant date fair value, as calculated under ASC Topic 718, of the performance units and restricted stock units granted to the NEOs, without taking into account estimated forfeitures. For restricted
stock units granted on January 22, 2015, grant date fair value is calculated using the closing price of PPL common stock on the NYSE on the grant date of $35.70. For performance units, grant date fair value is calculated using a
Monte Carlo pricing model value of $35.06 for the awards granted on January 22, 2015. Also includes adjustments made to restricted stock units and performance units as described in the introduction to the Outstanding Equity Awards at
Fiscal Year-End 2015 table on page 50. For additional information on the valuation assumptions for performance units, see Note 10 to the PPL financial statements in the Annual Report on Form 10-K for the fiscal year ended
December 31, 2015, as filed with the SEC.
|
(5)
|
Reflects adjustments made to prior year grants under the anti-dilution provisions of PPLs stock-based compensation plans as a result of the June 2015 spinoff of PPLs Energy Supply segment. No new stock
options were granted in 2015. For a description of the adjustments made to outstanding stock option and other equity awards, see the introduction to the Outstanding Equity Awards at Fiscal Year-End 2015 table on page 50.
|
Employment Agreement
Mr. Symons is a party to an amended and restated Service Agreement, dated March 16, 2015, with Western Power Distribution (South West) plc, or WPD (South West).
He serves as the Chief Executive of the Western Power Distribution group of companies, four of which are British regional electricity distribution utility companies. The Service Agreement provides that Mr. Symons is entitled to an annual base
salary equal to £535,000, subject to annual review. His salary for 2015 was £535,000 for the first three months of 2015 and increased to £551,050 on April 1, 2015. Furthermore, Mr. Symons is eligible to participate, at
WPD (South West)s discretion, in any bonus or incentive plans for senior executives and/or directors that WPD (South West) may operate, from time to time. Currently, Mr. Symons participates in the Directors Results Related Bonus
Scheme. The terms of the Service Agreement further provide that Mr. Symons, his wife and dependent children are entitled to participate in a private medical insurance plan, at WPD (South West)s expense. Mr. Symons is also entitled to
car usership and private fuel benefits in accordance with WPD (South West)s executive car program. His car usership benefits are capped at an annual amount equal to £20,000. WPD (South West) has also committed, while Mr. Symons is
employed with the company, to provide life insurance for him in the amount of £4.79 million. The amount of insurance is adjusted annually in connection with The Retail Price Index in the United Kingdom. This benefit terminates once
Mr. Symons leaves WPD (South West). The term of the Service Agreement is to continue until after six months notice to terminate provided by either WPD (South West) or Mr. Symons, or until Mr. Symons is otherwise terminated as
provided in the agreement.
In the event that Mr. Symons employment is terminated during the two-year period following a change in control of WPD (South
West) (as defined in the Service Agreement) pursuant to a relevant event (as described below), Mr. Symons is entitled to (1) a lump-sum payment equal to two times his taxable pay received from WPD (South West) during the
12-month period immediately preceding the change in control, payable within seven days of the termination of his employment and (2) amounts owed to him under the pension plan in which he participated up until April of 2006. See Potential
Payments upon Termination or Change in Control of PPL Corporation Change-in-Control Arrangements beginning on page 60 for additional change-in-control benefits available to Mr. Symons.
For purposes of the Service Agreement, relevant event is defined to mean (1) a termination of Mr. Symons employment by WPD (South West) other
than because of his gross misconduct or his material breach of contract or (2) a termination of Mr. Symons employment by him pursuant to one of a number of circumstances including: (a) a material alteration in his position or
responsibilities; (b) a reduction in his base salary; (c) the relocation of Mr. Symons place of work more than 50 miles away; or (d) a cutback or exclusion from a compensation plan, pension plan or welfare plan.
Mr. Symons Service Agreement contains restrictive covenants, including an indefinite covenant not to disclose confidential information and, during
Mr. Symons employment and for the 12-month period following the termination of his employment, a covenant not to solicit employees and directors of WPD (South West) or its subsidiaries.
|
PPL CORPORATION 2016 Proxy Statement 49
|
EXECUTIVE COMPENSATION
OUTSTANDING EQUITY AWARDS AT
FISCAL YEAR-END 2015
The following table provides information on all unexercised stock option awards, as well as all unvested restricted stock unit awards
and unearned and unvested performance units, for each NEO as of December 31, 2015. Each stock option grant, as well as each grant of performance units that is unearned and unvested, is shown separately for each NEO, and the restricted stock
units that have not vested are shown in the aggregate. The vesting schedule for each grant is shown following this table, based on the grant date of the stock option, phantom stock option, restricted stock unit award, or performance unit award grant
date. The market value of the stock awards is based on the closing price of PPL common stock on the NYSE as of December 31, 2015, the last trading day of 2015, which was $34.13. For additional information about stock awards, see
CD&A 2015 Named Executive Officer Compensation 2015 Long-term Equity Incentive Awards beginning on page 37.
In
connection with PPLs June 1, 2015 spinoff of its Energy Supply segment to form the publicly traded Talen Energy Corporation, PPL adjusted outstanding (but previously unsettled) stock option, restricted stock unit and performance unit
awards in accordance with the recapitalization adjustment provisions of the relevant stock plans, as authorized by the CGNC, to reflect that the holders of such awards did not receive a distribution of Talen Energy Corporation common stock with
respect to the PPL shares underlying their outstanding awards. Outstanding restricted stock units and performance units were increased by multiplying the number of PPL units outstanding before the spinoff by an adjustment ratio of 1.07534, which was
calculated based on the value of the foregone Talen Energy Corporation distribution shares utilizing the three-day average closing prices for Talen Energy Corporation and PPL shares of common stock over the three trading days immediately following
the spinoff date. The number of outstanding PPL stock options was increased by multiplying the number of stock options outstanding before the spinoff by an adjustment ratio of 1.10996, and the per share exercise prices of such stock options were
adjusted by dividing the pre-spinoff exercise prices by that same option adjustment ratio. The option adjustment ratio was calculated by comparing the average closing trading price of PPL shares of common stock during the five trading days
immediately preceding the spinoff date to the average closing trading price of PPL shares of common stock during the five trading days immediately following the spinoff date. The methodology used for adjusting the outstanding stock options was
intended to comply with applicable tax law requirements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
Name
|
|
Grant
Date
(1)
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
(2)
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
(2)
|
|
Option
Exercise
Price
($)
|
|
Option
Expiration
Date
|
|
Number of
Shares or
Units of
Stock That
Have
Not
Vested
(3)
(#)
|
|
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
($)
|
|
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights
That
Have
Not
Vested
(4)
(#)
|
|
Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units
or
Other
Rights
That
Have Not
Vested
($)
|
W. H. Spence
|
|
1/25/07
|
|
126,224
|
|
|
|
31.65
|
|
1/24/2017
|
|
|
|
|
|
|
|
|
|
|
1/24/08
|
|
77,419
|
|
|
|
42.84
|
|
1/23/2018
|
|
|
|
|
|
|
|
|
|
|
1/27/11
|
|
63,445
|
|
|
|
23.20
|
|
1/26/2021
|
|
|
|
|
|
|
|
|
|
|
7/22/11
|
|
10,334
|
|
|
|
25.24
|
|
7/21/2021
|
|
|
|
|
|
|
|
|
|
|
1/26/12
|
|
430,041
|
|
|
|
25.41
|
|
1/25/2022
|
|
|
|
|
|
|
|
|
|
|
1/24/13
|
|
517,978
|
|
258,990
|
|
26.59
|
|
1/23/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
317,140
|
|
10,823,988
|
|
|
|
|
|
|
1/23/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
229,020
|
|
7,816,453
|
|
|
1/22/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
189,952
|
|
6,483,062
|
V. Sorgi
|
|
3/29/10
|
|
13,696
|
|
|
|
25.13
|
|
3/28/2020
|
|
|
|
|
|
|
|
|
|
|
1/27/11
|
|
26,561
|
|
|
|
23.20
|
|
1/26/2021
|
|
|
|
|
|
|
|
|
|
|
1/26/12
|
|
29,624
|
|
|
|
25.41
|
|
1/25/2022
|
|
|
|
|
|
|
|
|
|
|
1/24/13
|
|
36,768
|
|
18,385
|
|
26.59
|
|
1/23/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,112
|
|
1,027,723
|
|
|
|
|
|
|
1/23/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,602
|
|
873,796
|
|
|
1/22/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,701
|
|
1,150,215
|
|
50 PPL CORPORATION 2016 Proxy Statement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
Name
|
|
Grant
Date
(1)
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
(2)
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
(2)
|
|
Option
Exercise
Price
($)
|
|
Option
Expiration
Date
|
|
Number of
Shares or
Units of
Stock That
Have
Not
Vested
(3)
(#)
|
|
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
($)
|
|
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights
That
Have
Not
Vested
(4)
(#)
|
|
Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units
or
Other
Rights
That
Have Not
Vested
($)
|
R. J. Grey
|
|
1/25/07
|
|
62,512
|
|
|
|
31.65
|
|
1/24/2017
|
|
|
|
|
|
|
|
|
|
|
1/24/08
|
|
33,498
|
|
|
|
42.84
|
|
1/23/2018
|
|
|
|
|
|
|
|
|
|
|
1/22/09
|
|
50,192
|
|
|
|
28.77
|
|
1/21/2019
|
|
|
|
|
|
|
|
|
|
|
1/21/10
|
|
46,052
|
|
|
|
28.09
|
|
1/20/2020
|
|
|
|
|
|
|
|
|
|
|
1/27/11
|
|
76,820
|
|
|
|
23.20
|
|
1/26/2021
|
|
|
|
|
|
|
|
|
|
|
1/26/12
|
|
76,598
|
|
|
|
25.41
|
|
1/25/2022
|
|
|
|
|
|
|
|
|
|
|
1/24/13
|
|
85,354
|
|
42,679
|
|
26.59
|
|
1/23/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
56,688
|
|
1,934,761
|
|
|
|
|
|
|
1/23/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38,189
|
|
1,303,391
|
|
|
1/22/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34,903
|
|
1,191,239
|
P. A. Farr
|
|
1/25/07
|
|
22,512
|
|
|
|
31.65
|
|
1/24/2017
|
|
|
|
|
|
|
|
|
|
|
1/24/08
|
|
51,091
|
|
|
|
42.84
|
|
1/23/2018
|
|
|
|
|
|
|
|
|
|
|
1/22/09
|
|
81,015
|
|
|
|
28.77
|
|
1/20/2019
|
|
|
|
|
|
|
|
|
V. A. Staffieri
|
|
1/24/13
|
|
|
|
81,427
|
|
26.59
|
|
1/23/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
98,929
|
|
3,376,477
|
|
|
|
|
|
|
1/23/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
65,680
|
|
2,241,658
|
|
|
1/22/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
53,146
|
|
1,813,873
|
R. A. Symons
|
|
2/15/07
|
|
28,880
|
|
|
|
33.50
|
|
2/15/2017
|
|
|
|
|
|
|
|
|
|
|
2/15/08
|
|
24,208
|
|
|
|
42.88
|
|
2/15/2018
|
|
|
|
|
|
|
|
|
|
|
2/15/13
|
|
|
|
30,804
|
|
27.51
|
|
2/15/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,796
|
|
1,289,977
|
|
|
|
|
|
|
1/23/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,655
|
|
943,865
|
|
|
1/22/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,073
|
|
719,221
|
(1)
|
For a better understanding of this table, we have included an additional column showing the grant date of the outstanding stock options and the unearned and unvested performance units.
|
(2)
|
Under the terms of PPLs ICP and SIP, stock options for the NEOs, except for Mr. Symons, vest, or become exercisable, in three equal annual installments over a three-year period beginning on the first
anniversary of the grant date. As contemplated in the agreements governing the spinoff entered into in June 2014, the CGNC waived the service-based vesting requirement for Mr. Farrs outstanding stock options as of the completion of the
spinoff, consistent with the waiver of the service-based vesting for all employees stock options as provided for in the transaction agreements. The vesting dates of unvested stock option awards for the following NEOs are:
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Grant Date
|
|
Vesting Date
1/24/16
|
W. H. Spence
|
|
1/24/13
|
|
258,990
|
V. Sorgi
|
|
1/24/13
|
|
18,385
|
R. J. Grey
|
|
1/24/13
|
|
42,679
|
V. A. Staffieri
|
|
1/24/13
|
|
81,427
|
|
PPL CORPORATION 2016 Proxy Statement 51
|
EXECUTIVE COMPENSATION
Prior to 2014, Mr. Symons received phantom stock option awards pursuant to
WPDs Long-term Incentive Plan. Phantom stock options are the right to receive the appreciation in the value of PPL common stock over a fixed price for a specified period of time and are sometimes referred to as stock appreciation rights, or
SARs. The exercise price of the phantom stock options, which have a 10-year term, is equivalent to the closing price of PPLs common stock on the NYSE the day before the grant. The options vest, or become exercisable, in three equal annual
installments over a three-year period beginning on the first anniversary of the grant date. The vesting date of unvested phantom stock option awards for Mr. Symons is as follows:
|
|
|
|
|
Name
|
|
Grant Date
|
|
Vesting Date
2/15/16
|
R. A. Symons
|
|
2/15/13
|
|
30,804
|
(3)
|
All restricted stock units for the NEOs under PPLs ICP and the SIP vest on the third anniversary of the grant date. As contemplated in the agreements governing the spinoff entered into in June 2014, the CGNC
waived the service-based vesting requirement for Mr. Farrs outstanding restricted stock and restricted stock unit awards as of the completion of the spinoff, consistent with the waiver of service-based vesting requirements for all
employees restricted stock or restricted stock units as provided for in the transaction agreements. The dates that restrictions lapse for each restricted stock unit award granted to the NEOs other than Mr. Farr are:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grant
Date
|
|
Vesting Dates
|
Name
|
|
|
1/24/16
|
|
1/23/17
|
|
1/22/18
|
W. H. Spence
|
|
|
|
1/24/13
|
|
|
|
|
110,810
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/23/14
|
|
|
|
|
|
|
|
|
|
112,056
|
|
|
|
|
|
|
|
|
|
|
1/22/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
94,274
|
|
V. Sorgi
|
|
|
|
1/24/13
|
|
|
|
|
8,787
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/23/14
|
|
|
|
|
|
|
|
|
|
8,083
|
|
|
|
|
|
|
|
|
|
|
1/22/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,242
|
|
R. J. Grey
|
|
|
|
1/24/13
|
|
|
|
|
20,403
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/23/14
|
|
|
|
|
|
|
|
|
|
18,955
|
|
|
|
|
|
|
|
|
|
|
1/22/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,330
|
|
V. A. Staffieri
|
|
|
|
1/24/13
|
|
|
|
|
38,914
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/23/14
|
|
|
|
|
|
|
|
|
|
33,631
|
|
|
|
|
|
|
|
|
|
|
1/22/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,384
|
|
R. A. Symons
|
|
|
|
1/24/13
|
|
|
|
|
13,184
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/23/14
|
|
|
|
|
|
|
|
|
|
14,153
|
|
|
|
|
|
|
|
|
|
|
1/22/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,459
|
|
(4)
|
The number of performance units granted in 2014 disclosed in the table for each NEO represents the maximum payout amount for 2014 awards. The maximum amount is used because PPLs total relative shareowner return
was at the maximum payout level of the awards as compared to its industry peers for the time period of 2014 through 2015, the first two years of the three-year performance period for the 2014 awards. The number of performance units granted in 2015
disclosed in the table for each NEO represents the maximum payout amount for 2015 awards. The maximum amount is used because PPLs total relative shareowner return was above the maximum payout level of the awards as compared to its industry
peers for 2015, the first year of the three-year performance period for the 2015 awards. The number of shares shown in the table for each NEO also includes dividend equivalents reflected as additional performance units.
|
|
These performance units are payable in shares of PPL common stock following the performance period. While the performance period ends on December 31, 2016 for the 2014 awards and December 31, 2017 for the 2015
awards, the number of performance units earned is not determined until the CGNC certifies that the level of performance goals have been achieved. The number of performance units earned at the time of certification may be more or less than the number
of awards reflected in this table, depending on whether or not the performance goals have been achieved and the level of achievement. See CD&A 2015 Named Executive Officer Compensation 2015 Long-term Equity Incentive
Awards 2015 Performance Unit Awards beginning on page 38 for a discussion of the performance goals related to TSR and the attainment levels for each award.
|
|
52 PPL CORPORATION 2016 Proxy Statement
|
OPTION EXERCISES AND STOCK VESTED IN 2015
The following table provides information for each of the NEOs with respect to (1) stock option and phantom stock option award exercises during 2015, including the
number of shares acquired or treated as acquired upon exercise and the value realized, and (2) the number of shares acquired during 2015 upon the vesting of stock awards in the form of restricted stock units and the deemed vesting of stock
awards in the form of performance units and the value realized, each before payment of any applicable withholding tax and broker commissions.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
Name
|
|
Number of
Shares
Acquired on Exercise
(1)
|
|
|
Value Realized
on Exercise
(2)
|
|
|
Number of Shares
Acquired
on Vesting
|
|
|
Value Realized
on Vesting
(3)
|
|
W. H. Spence
|
|
|
|
|
|
|
|
|
|
|
166,221
|
|
|
|
$ 5,619,314
|
|
V. Sorgi
|
|
|
|
|
|
|
|
|
|
|
15,416
|
|
|
|
518,989
|
|
R. J. Grey
|
|
|
|
|
|
|
|
|
|
|
37,853
|
|
|
|
1,273,419
|
|
P. A. Farr
(4)
|
|
|
773,412
|
|
|
|
$5,579,345
|
|
|
|
328,619
|
|
|
|
11,339,752
|
|
V. A. Staffieri
|
|
|
131,763
|
|
|
|
772,129
|
|
|
|
73,479
|
|
|
|
2,471,358
|
|
R. A. Symons
|
|
|
44,227
|
|
|
|
231,673
|
|
|
|
27,305
|
|
|
|
918,775
|
|
(1)
|
For Mr. Symons, the phantom stock option awards reflected in the table were settled in cash in accordance with their terms.
|
(2)
|
Amounts reflect the difference between the exercise price of the stock option or phantom stock option award and the closing price on the NYSE of PPL common stock underlying the stock option or phantom stock option award
at the time of exercise.
|
(3)
|
Amounts reflect the closing price on the NYSE of the shares of PPL common stock underlying the restricted stock units on the day the restrictions lapsed and the closing price on December 31, 2015 on the NYSE of the
shares of PPL common stock underlying the performance units granted in 2013 that are deemed to have been earned as of December 31, 2015, the last day of the three-year performance period.
|
(4)
|
As a result of the spinoff of PPLs Energy Supply segment, the service-based vesting requirement for Mr. Farrs outstanding restricted stock units and performance units was waived. However, distribution
will occur under the original vesting provisions of the awards. As of December 31, 2015, Mr. Farrs outstanding restricted stock units totaled 117,253 (39,482, 42,011 and 25,760 to be distributed in 2016, 2017 and 2018, respectively)
on which he will continue to earn divided equivalents. As of December 31, 2015, Mr. Farrs outstanding performance units granted in 2014 totaled 87,705, the maximum payout amount for 2014 awards because PPLs total relative
shareowner return was at the maximum payout level as compared to its industry peers for the time period of 2014 through 2015, the first two years of the three-year performance period for the 2014 awards. Mr. Farr will continue to earn dividend
equivalents on these outstanding awards through December 31, 2016, the completion of the performance period. The actual number of shares to be distributed, including accrued dividend equivalents, will depend on the actual attainment of the
performance goals, if any, at the end of the performance period.
|
PENSION BENEFITS
IN 2015
The following table sets forth information on the pension benefits for the NEOs under each of the following pension plans:
|
|
PPL Retirement Plan.
The PPL Retirement Plan is a funded and tax-qualified defined benefit retirement plan that covers
approximately 2,477 active employees as of December 31, 2015. The PPL Retirement Plan was closed to new salaried employees after December 31, 2011. As applicable to Messrs. Spence, Sorgi and Grey, and to Mr. Farr until May 31,
2015, the plan provides benefits based primarily on a formula that takes into account the executives earnings for each fiscal year. Benefits under the PPL Retirement Plan for eligible employees are determined as the greater of the following
two formulas:
|
|
|
|
The first is a career average pay formula of 2.25% of annual earnings for each year of credited service under the plan.
|
|
|
|
The second is a final average pay formula as follows:
|
1.3% of final average earnings up
to the Average Social Security Wage Base
|
PPL CORPORATION 2016 Proxy Statement 53
|
EXECUTIVE COMPENSATION
plus
1.7% of final average earnings in excess of the Average Social Security Wage Base
multiplied by
the sum of years of credited
service (up to a maximum of 40 years).
Under the final average pay formula, final average earnings equal the average of the highest
60 months of pay during the last 120 months of credited service. The Average Social Security Wage Base is the average of the taxable Social Security Wage Base for the 35 consecutive years preceding an employees retirement date
or, for employees retiring at the end of 2015, $72,636. The executives annual earnings taken into account under each formula include base salary and cash incentive awards, but may not exceed an IRS-prescribed limit applicable to tax-qualified
plans ($265,000 for 2015).
The benefit an employee earns is payable starting at retirement on a monthly basis for life or in a lump sum. Benefits are
computed on the basis of the life annuity form of pension, with a normal retirement age of 65. Benefits are reduced for retirement prior to age 60 for employees with 20 years of credited service and reduced prior to age 65 for other
employees. Employees vest in the PPL Retirement Plan after five years of credited service. In addition, the plan provides for joint and survivor annuity choices and does not require employee contributions.
Benefits under the PPL Retirement Plan are subject to the limitations imposed under Section 415 of the Internal Revenue Code. The Section 415
limit for 2015 was $210,000 per year for a single life annuity payable at an
IRS-prescribed
retirement age. Benefits in excess of these federal limits are payable from company funds under the Supplemental
Compensation Pension Plan described below unless the employee is eligible for benefits under the PPL Supplemental Executive Retirement Plan described below.
|
|
Supplemental Compensation Pension Plan.
The PPL Supplemental Compensation Pension Plan is a nonqualified plan that covers
approximately 71 active employees hired prior to January 1, 2012 who are vested in the PPL Retirement Plan and, in the case of Mr. Sorgi, is not vested in the PPL SERP, at the time of termination or retirement. The benefit formula is the
same as the PPL Retirement Plan, but it reflects compensation in excess of the IRS-prescribed limit of $265,000 for 2015. The plan benefit is calculated using all PPL affiliated company service, not just service credited under the PPL Retirement
Plan. Upon retirement, this plan will only pay out the excess benefit above and beyond the PPL Retirement Plan. At such time as Mr. Sorgi vests in the PPL SERP, he will no longer be eligible for this plan.
|
|
|
PPL Supplemental Executive Retirement Plan.
The PPL SERP covers approximately seven active officers as of December 31,
2015, including Messrs. Spence, Sorgi and Grey, and Mr. Farr until May 31, 2015, to provide for retirement benefits above amounts available under the PPL Retirement Plan described above. The PPL SERP is unfunded and is not qualified for tax
purposes. Accrued benefits under the PPL SERP are subject to claims of the companys creditors in the event of bankruptcy. The PPL SERP was closed to new officers after December 31, 2011.
|
The PPL SERP formula is 2.0% of final average earnings for the first 20 years of credited service plus 1.5% of final average earnings for the next
10 years. Final average earnings is the average of the highest 60 months of earnings during the last 120 months of credited service. Earnings include base salary and annual cash incentive awards.
Benefits are computed on the basis of the life annuity form of pension, with a normal retirement age of 65. Generally, no benefit is payable under the PPL
SERP if the executive officer has less than 10 years of service unless specifically authorized, such as upon a qualifying termination in connection with a change in control. Benefits under the PPL SERP are paid, in accordance with a
participants advance election, as a single sum or as an annuity, including choices of a joint and survivor or years-certain annuity. At age 60, or at age 50 with 10 years of service, accrued benefits are vested and may not be
reduced by an amendment to the PPL SERP or termination by the company. After the completion of 10 years of service, participants are eligible for death benefit protection.
The company does not have a policy for granting additional years of service but has done so under the PPL SERP in individual situations. A grant of
additional years of service to any executive officer must be approved by the CGNC. The CGNC previously granted to Mr. Spence an additional year of service for each year of employment under the PPL SERP as a retention mechanism. Mr. Grey
was credited with service under the PPL
|
54 PPL CORPORATION 2016 Proxy Statement
|
SERP commencing as of
age 30, based on plan provisions in effect prior to January 1, 1998. The total PPL SERP benefit cannot increase beyond 30 years of service for any participant. The table below reflects the additional service amounts based on service
as of December 31, 2015. In connection with the June 1, 2015 spinoff of PPLs Energy Supply segment, the CGNC approved the acceleration of Mr. Farrs vesting in the PPL SERP, consistent with other PPL SERP participants who
were part of the spinoff. No additional benefits under the PPL SERP accrued to Mr. Farr after that time. Please refer to the table footnotes for additional information related to credited service under the PPL SERP.
|
|
PPL Subsidiary Retirement Plan.
The PPL Subsidiary Retirement Plan, in which Mr. Farr became a participant before he
became an officer of the company, is a defined benefit plan that covered approximately 306 active employees as of May 31, 2015, and utilizes a hypothetical account balance to determine a monthly retirement annuity when an individual retires
(known as a cash balance plan). The PPL Subsidiary Retirement Plan was closed to new salaried employees after December 31, 2011. Age 65 is the normal retirement age, but an individual may receive a reduced benefit as early as
age 50 if the participant has at least five years of service. This plan was transferred to Talen Energy Corporation, effective June 1, 2015, the closing of the spinoff of the Energy Supply segment, and is no longer a plan of the company.
|
The benefit formula for yearly increases to the hypothetical account balance is an increasing scale, based on
age plus years of service. A participant whose age plus years of service is 32 or lower receives the minimum yearly credit of 5% of compensation plus 1.5% of compensation that is in excess of 50% of the Social Security Wage Base for that year.
Compensation generally means base salary. The amount credited increases as age plus years of service increases, up to a maximum credit, at age plus years of service of 75 or above, of 14% of compensation plus 6% of compensation that is
in excess of 50% of the Social Security Wage Base.
A participant has a vested right to a benefit under this plan after three years of service.
Benefits are paid as a monthly annuity amount for life, or as a joint and survivor annuity. The amount of the annuity is determined by converting the hypothetical account balance, plus an assumed rate of interest, into a monthly annuity for life or
joint lives at the participants date of commencement of payment.
|
|
LG&E and KU Retirement Plan
.
The LG&E and KU Retirement Plan, or LG&E Retirement Plan, is a
funded and tax-qualified defined benefit retirement plan that covers approximately 1,601 active employees as of December 31, 2015 and that was closed to new participants on December 31, 2005. As applicable to Mr. Staffieri, the
LG&E Retirement Plan provides benefits based on a formula that takes into account the executives average monthly earnings and years of service. Benefits for eligible employees are determined as the greater of the following two formulas:
|
|
|
|
The first formula is 1.58% of average monthly earnings plus 0.40% of average monthly earnings in excess of covered compensation multiplied by years of credited service (up to a maximum of 30 years).
|
|
|
|
The second formula is 1.68% of average monthly earnings multiplied by years of credited service (up to a maximum of 30 years).
|
Under the LG&E Retirement Plan, the average monthly earnings is the average of the highest five consecutive monthly earnings prior to
termination of employment. Monthly earnings is defined as total compensation as indicated on Form W-2 including deferrals to a 401(k) plan, but excluding any earnings from the exercise of stock options, limited to the IRS-prescribed
limit applicable to tax-qualified plans ($265,000 for 2015), divided by 12.
Covered compensation is 1/12
th
of the average of the Social Security Wage Base for the 35-year period ending with the year of a participants social security retirement age. The Social Security Wage Base for future years is
assumed to be equal to the Social Security Wage Base of the current year.
The benefit an employee earns is payable starting at retirement on a
monthly basis for life. Benefits are calculated on the basis of the life annuity form of pension with a normal retirement age of 65. Early retirement occurs at the earlier of age 55 or 30 years of service. Prior to January 1, 2015,
there was no early retirement reduction after attainment of age 62. Prior to age 62, benefits were reduced. Effective January 1, 2015, there is no early retirement reduction after attainment of age 60. As a result, prior to age 60,
benefits are reduced. Employees vest in the LG&E Retirement Plan after five years of service.
Benefits under the LG&E Retirement Plan are
subject to the limitations imposed under Section 415 of the Internal Revenue Code. The Section 415 limit for 2015 is $210,000 per year for a single life annuity payable at an
IRS-prescribed
retirement age.
|
PPL CORPORATION 2016 Proxy Statement 55
|
EXECUTIVE COMPENSATION
|
|
LG&E and KU Supplemental Executive Retirement Plan.
Mr. Staffieri is a participant in the LG&E and KU
Supplemental Executive Retirement Plan, or LG&E SERP. The LG&E SERP is unfunded and is not qualified for tax purposes. It was closed to new participants effective January 1, 2012. Accrued benefits under the LG&E SERP are subject to
claims of the companys creditors in the event of bankruptcy.
|
The LG&E SERP formula is equal to
64% of the average monthly compensation less
|
|
|
100% of the monthly qualified LG&E Retirement Plan benefit payable at age 65;
|
|
|
|
100% of the primary Social Security Benefit payable at age 65;
|
|
|
|
100% of any matching contribution or the employer contribution for those participants for whom the defined contribution plan is the primary retirement vehicle; and
|
|
|
|
100% of any other employer-provided benefit payable at age 65 as a life annuity from any qualified defined benefit plan or defined contribution plan (if such qualified defined contribution plan was the
employers primary vehicle for retirement) sponsored by previous employers.
|
The net benefit is multiplied by a fraction, not to
exceed one, the numerator of which is years of service at date of termination and the denominator is 15.
Average monthly compensation is
the average compensation for the highest 36 consecutive months preceding termination of employment. Compensation is defined as base salary plus short-term incentive pay prior to any deferrals under any qualified or nonqualified deferred
compensation plan.
Normal retirement is age 65. Early retirement for a participant who has been credited with at least five years of service and
whose age is at least age 50 is the later of separation of service or age 55. There is no early retirement reduction after attainment of age 62.
|
|
Electricity Supply Pension Scheme.
Mr. Symons was an active participant in the Electricity Supply Pension Scheme, or
ESPS, in the United Kingdom until April 6, 2006, at which time he ceased to accrue any benefits under the ESPS. The ESPS is a United Kingdom tax-approved defined benefit pension scheme. It provides at retirement an annual pension of 1/80
th
of final salary for each year of service, a lump sum of three times a members annual pension, which is payable at retirement, and dependents benefits payable on the members death.
In addition to the standard benefit accrual rate of 1/80
th
, Mr. Symons received an enhancement to his pension of 1/30
th
accrual rate for
the period April 1, 2000 to April 5, 2006. He began receiving distributions from the ESPS on March 20, 2012, and the distributions received during 2015 are included in the following table.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Plan Name
|
|
Number of Years
Credited
Service
(1)
|
|
Present Value
of
Accumulated
Benefit
(2)(3)
|
|
Payments
During Last
Fiscal Year
|
|
|
W. H. Spence
|
|
PPL Retirement Plan
|
|
|
|
9.5
|
|
|
|
$
|
552,368
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PPL SERP
|
|
|
|
19.0
|
(4)
|
|
|
|
15,754,028
|
|
|
|
|
|
|
|
|
V. Sorgi
|
|
PPL Retirement Plan
|
|
|
|
9.7
|
|
|
|
|
354,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Compensation Pension Plan
|
|
|
|
9.7
|
|
|
|
|
357,242
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PPL SERP
|
|
|
|
9.7
|
|
|
|
|
499,293
|
|
|
|
|
|
|
|
|
R. J. Grey
|
|
PPL Retirement Plan
|
|
|
|
20.8
|
|
|
|
|
1,267,214
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PPL SERP
|
|
|
|
30.0
|
(5)
|
|
|
|
6,497,765
|
|
|
|
|
|
|
|
|
P. A.
Farr
(6)
|
|
PPL SERP
|
|
|
|
17.0
|
|
|
|
|
4,356,119
|
|
|
|
|
|
|
|
|
V. A. Staffieri
|
|
LG&E Retirement Plan
|
|
|
|
23.8
|
|
|
|
|
1,627,646
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LG&E SERP
|
|
|
|
23.8
|
|
|
|
|
13,650,846
|
|
|
|
|
|
|
|
|
R. A. Symons
|
|
Electricity Supply Pension Scheme
|
|
|
|
34.0
|
|
|
|
|
15,926,177
|
(7)
|
|
|
|
608,878
|
(7)
|
|
|
(1)
|
See PPL Supplemental Executive Retirement Plan above for a description of the years of service that have been granted under the PPL SERP to Messrs. Spence and Grey.
|
|
56 PPL CORPORATION 2016 Proxy Statement
|
(2)
|
The assumptions used in estimating the present values of each NEOs accumulated pension benefit are:
|
|
|
|
|
|
|
|
|
|
Plan
|
|
Assumed
Retirement
Date
(a)
|
|
Discount
Rate
|
|
Post-retirement Mortality
Assumption
|
PPL Retirement Plan
|
|
60
|
|
4.60%
|
|
RP-2014 gender specific healthy annuitant tables with white collar adjustment (removing MP-2014 improvement projections from 2006-2014) and applying Scale BB
2-Dimensional mortality improvements from 2006 on a generational basis (for LG&E and KU Retirement Plan and the LG&E and KU SERP, the base rates are increased by 2%)
|
Supplemental Compensation Pension
Plan
|
|
60
|
|
4.60%
|
|
LG&E Retirement Plan
|
|
60
|
|
4.58%
|
|
LG&E SERP
|
|
62
|
|
4.63%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PPL SERP
|
|
60
|
|
4.63%
|
|
RP-2014 gender specific healthy annuitant tables with no collar adjustment (removing MP-2014 improvement projections from 2006-2014) and applying Scale BB
2-Dimensional
mortality improvements from 2006 on a generational basis.
|
Electricity Supply Pension Scheme
|
|
60
|
|
3.68%
|
|
Based upon United Kingdom standard tables S1PMA and S1PFA appropriate for the members year of birth with a 95% scaling factor and future improvements subject to the standard table
projected forward from 2002 in line with the 20011CMI core projections with a long-term improvement rate of 1.0% per annum.
|
|
(a)
|
For the PPL Retirement Plan, PPL Supplemental Compensation Pension Plan and PPL SERP, this column reflects the age at which retirement may occur without any reduction
in benefits. For the PPL Retirement Plan and the PPL Supplemental Compensation Pension Plan, an employee may retire without any reduction in benefits at age 60 provided that the employee has at least 20 years of service. Effective
January 1, 2015, for the LG&E Retirement Plan, the age at which retirement may occur without any reductions in benefits is age 60. Prior to that date, it was age 62. For the LG&E SERP, the age at which retirement may occur without any
reduction in benefits is age 62. For the WPD Electricity Supply Pension Scheme, the age at which retirement may occur without any reduction in benefits is age 60.
|
(3)
|
The present values in the column reflect theoretical figures prescribed by the SEC for disclosure and comparison purposes. The table below reflects the actual benefits payable under the PPL SERP and the LG&E SERP
upon the listed events assuming termination of employment occurred as of December 31, 2015.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SERP Payments upon Termination
as of December 31, 2015
(a)
|
Named Executive Officer
|
|
Retirement
|
|
Death
|
|
Disability
|
W. H. Spence
(b)
|
|
|
|
$16,168,495
|
|
|
|
|
$7,982,774
|
|
|
|
|
$16,168,495
|
|
V. Sorgi
(b)
|
|
|
|
|
|
|
|
|
114,734
|
|
|
|
|
|
|
R. J. Grey
|
|
|
|
6,549,481
|
|
|
|
|
3,187,144
|
|
|
|
|
6,549,481
|
|
P. A. Farr
(b)
|
|
|
|
|
|
|
|
|
1,452,423
|
|
|
|
|
|
|
V. A.
Staffieri
(c)
|
|
|
|
14,068,810
|
|
|
|
|
7,698,998
|
|
|
|
|
10,914,219
|
|
|
(a)
|
Messrs. Spence, Sorgi, Grey and Farr have elected to receive benefits payable under the PPL SERP as a lump-sum payment, subject to applicable law. For Mr. Staffieri, the LG&E SERP does not provide for a
lump-sum payment, but a lump-sum amount is shown here for comparison purposes. See note (c) below for Mr. Staffieris monthly LG&E SERP benefits. The amounts shown in this table represent the values that would have become
payable based on a December 31, 2015 termination of employment. Actual payment would be made following December 31, 2015 subject to plan rules and in compliance with Section 409A of the Internal Revenue Code.
|
|
(b)
|
Messrs. Spence, Sorgi and Farr are not eligible to retire under the PPL SERP. Messrs. Spence and Farr, however,
are vested under the PPL SERP, while Mr. Sorgi is not. If Mr. Spence had left the company on December 31, 2015, voluntarily or as a result of a disability or death, he, or his spouse, would have been vested in a deferred benefit under
the PPL Retirement Plan and the PPL SERP. If Mr. Sorgi had left the company voluntarily on December 31, 2015, he would have been eligible for benefits under the PPL Retirement Plan and the PPL Supplemental
|
|
PPL CORPORATION 2016 Proxy Statement 57
|
EXECUTIVE COMPENSATION
|
Compensation Pension Plan, but not under the PPL SERP. Mr. Farr left the company on June 1, 2015 in connection with the spinoff of the Energy Supply segment and was vested in a deferred benefit under the PPL
Retirement Plan and the PPL SERP, as well as the PPL Subsidiary Retirement Plan. See Note 6 below for information for that plan. Additionally, if Mr. Sorgi had died on December 31, 2015, his spouse would have been eligible for a PPL SERP
benefit in addition to a benefit from the PPL Retirement Plan.
|
|
(c)
|
If Mr. Staffieri had retired on December 31, 2015, and commenced his LG&E SERP benefit on January 1, 2016, the monthly LG&E SERP benefit payable as a life annuity would have been $80,066. If he
had died on December 31, 2015, the monthly LG&E SERP benefit payable to his spouse for her lifetime on January 1, 2016 would have been $42,288. If Mr. Staffieri had become disabled on December 31, 2015, the monthly LG&E
SERP disability benefit payable at age 65 as a life annuity (assuming continued accrual) would have been $82,418.
|
(4)
|
Includes 9.5 additional years of service provided to Mr. Spence. The years of credited service in excess of actual years of service provided to the company resulted in an increase to the present value of
accumulated benefits for Mr. Spence as of December 31, 2015 under the PPL SERP of $8,140,141.
|
(5)
|
Includes 9.2 additional years of service provided to Mr. Grey. The years of credited service in excess of actual years of service provided to the company resulted in an increase to the present value of accumulated
benefits for Mr. Grey as of December 31, 2015 under the PPL SERP of $1,954,909.
|
(6)
|
Mr. Farr also participated in the PPL Subsidiary Retirement Plan during 2015, which was transferred to Talen Energy Corporation, effective June 1, 2015, the closing of the spinoff of the Energy Supply segment. This
plan is no longer a plan of the company. As of June 1, 2015, the day the plan was transferred, Mr. Farr had 4.8 years of credited service in the plan, and the present value of accumulated benefit in the plan was $58,879. No payments from
this plan were made to Mr. Farr from January 1, 2015 through May 31, 2015.
|
(7)
|
Mr. Symons is based in the United Kingdom and receives his pension benefits in Pounds Sterling. His present value of accumulated benefit as of December 31,
2015 is converted from Pounds Sterling to U.S. dollars at an exchange rate of $1.4834, the translation rate for December 31, 2015, and his pension distributions are converted to U.S. dollars at an exchange rate of $1.5283, which is the average
monthly translation rate for 2015.
|
NONQUALIFIED DEFERRED COMPENSATION IN 2015
The PPL Executive Deferred Compensation Plan allows participants to defer all or a portion of their cash compensation in excess of the required minimum
payroll taxes. In addition, the company made matching contributions to this plan during 2015 of up to 3% of an executives cash compensation (base salary plus annual cash incentive award) to match executive contributions that would have been
made to PPLs tax-qualified 401(k) deferred savings plan, also known as the PPL Deferred Savings Plan, except for IRS-imposed limitations on those contributions. The PPL Executive Deferred Compensation Plan is unfunded and is not qualified for
tax purposes. All benefits under this plan are subject to the claims of the companys creditors in the event of bankruptcy. A hypothetical account is established for each participant who elects to defer, and the participant selects one or more
deemed investment choices that generally mirror those that are available to employees under the PPL Deferred Savings Plan at Fidelity Investments. These investment accounts include large, mid and small cap index and investment funds, international
equity index funds, target date funds, bond funds and a stable value fund, with returns that ranged from -6.69% to 7.94% during 2015. Earnings and losses on each account are determined based on the performance of the investment funds selected by the
participant. The company maintains each account as a bookkeeping entry. During 2015, Messrs. Spence, Sorgi, Grey and Farr notionally invested in one or more of those funds.
In general, the NEOs who participate in this plan cannot withdraw any amounts from their deferred accounts until they either leave or retire from the company. The
companys Corporate Leadership Council, which currently consists of the chief executive officer, chief financial officer and general counsel, has the discretion to make a hardship distribution if there is an unforeseeable emergency
that causes a severe financial hardship to the participant.
Participants may elect distribution in one or more annual installments for a period of up to
15 years, provided the participant complies with the election and timing rules of Section 409A of the Internal Revenue Code.
Mr. Staffieri is a
participant in the LG&E and KU Nonqualified Savings Plan. The plan allows participants to defer up to a maximum of 75% of base salary and annual cash incentive awards. In addition, the participant receives a matching contribution equal to 70% of
the first 6% deferred if that participant is not eligible for matching contributions in the LG&E and KU Savings Plan (a tax-qualified 401(k) plan) at the time the deferred compensation would have otherwise been paid to the participant. The
LG&E and KU Nonqualified Savings Plan is unfunded and is not qualified for tax purposes. All benefits under the LG&E and KU Nonqualified Savings Plan are subject to the claims of creditors in the event of bankruptcy. A hypothetical account
is established for each participant who elects to defer. The amount in the
|
58 PPL CORPORATION 2016 Proxy Statement
|
participants hypothetical account is
credited with interest at an annual rate equal to the Prime Interest Rate as reported in
The Wall Street Journal
. The Prime Interest Rate will be reset quarterly based on the last day of the preceding calendar quarter or
March 31, June 30, September 30, and December 31. The interest is calculated by applying the Prime Interest Rate to the balance in the hypothetical account. Mr. Staffieris rate of return for 2015 was 3.25%.
In general, distributions under the LG&E and KU Nonqualified Savings Plan are made as specified by the NEO at the time of completion of the deferral agreement. A
hardship distribution may be approved by the Employee Benefits Plan Board, however, if there is an unforeseeable emergency, as defined by Section 409A of the Internal Revenue Code, which causes a severe financial hardship to the
participant.
Participants may elect a lump-sum payment or annual installment payments for a period of not less than two years and not more than 10 years,
provided the participant complies with the election and timing rules of Section 409A of the Internal Revenue Code.
Mr. Staffieri also has a hypothetical
account in the LG&E Energy Corp. Nonqualified Savings Plan. This is a grandfathered deferred compensation plan that was closed to new contributions on January 1, 2005. The plan is unfunded and is not qualified for tax purposes. The plan is
subject to claims of creditors in the event of bankruptcy. The hypothetical account is credited with interest in the same manner as the LG&E and KU Nonqualified Savings Plan. Mr. Staffieris rate of return for 2015 was 3.25%
Mr. Symons does not participate in a deferred compensation plan in the United Kingdom.
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Name of Plan
|
|
Executive
Contributions
in Last FY
(1)
|
|
Registrant
Contributions
in Last FY
(2)
|
|
Aggregate
Earnings
in Last FY
(3)
|
|
Aggregate
Withdrawals/
Distributions
|
|
Aggregate
Balance
at Last FYE
(4)
|
W. H. Spence
|
|
PPL Executive Deferred Compensation Plan
|
|
$ 97,849
|
|
$30,000
|
|
$ 29,552
|
|
|
|
$ 811,816
|
V. Sorgi
|
|
PPL Executive Deferred Compensation Plan
|
|
152,923
|
|
13,313
|
|
8,582
|
|
|
|
256,114
|
R. J. Grey
|
|
PPL Executive Deferred Compensation Plan
|
|
17,386
|
|
16,346
|
|
(32,104)
|
|
|
|
911,736
|
P. A. Farr
|
|
PPL Executive Deferred Compensation Plan
|
|
560,930
|
|
28,588
|
|
63,344
|
|
|
|
4,259,784
|
V. A. Staffieri
|
|
LG&E and KU
Nonqualified Savings Plan
|
|
90,013
|
|
54,500
|
|
27,953
|
|
|
|
923,970
|
|
|
LG&E Energy Corp. Nonqualified Savings Plan
|
|
|
|
|
|
34,889
|
|
|
|
1,092,503
|
(1)
|
The following NEOs deferred salary in 2015 in the amounts indicated: Spence$33,825; Sorgi$14,953; Grey$17,386; Farr$119,417; and Staffieri$44,929, which is included in the
Salary column of the Summary Compensation Table for 2015. In addition, the following NEOs deferred a portion of their cash incentive awards for 2014 performance paid in 2015, which were included in the Non-Equity Incentive Plan
Compensation column of the Summary Compensation Table for 2014: Spence$64,024; Sorgi$137,970; Farr$441,513; and Staffieri$45,084.
|
(2)
|
Amounts in this column are company matching contributions during 2015 and are included in the Summary Compensation Table for 2015 under the heading All Other Compensation.
|
(3)
|
Aggregate earnings for 2015 are not reflected in the Summary Compensation Table because such earnings are not deemed to be above-market or preferential earnings.
|
(4)
|
Represents the total balance of each NEOs account as of December 31, 2015. Of the totals in this column, the following amounts were reported as compensation to the NEO in the Summary Compensation Table for
previous years:
|
|
|
|
|
|
|
|
Named Executive Officer
|
|
Executive
Contributions
|
|
Registrant
Contributions
|
|
Total
|
W. H. Spence
|
|
$ 236,203
|
|
$188,873
|
|
$ 425,076
|
V. Sorgi
|
|
11,952
|
|
9,052
|
|
21,004
|
P. A. Farr
|
|
2,334,679
|
|
169,446
|
|
2,504,125
|
R. J. Grey
|
|
219,380
|
|
83,713
|
|
303,093
|
V. A. Staffieri
|
|
378,038
|
|
234,002
|
|
612,040
|
|
PPL CORPORATION 2016 Proxy Statement 59
|
EXECUTIVE COMPENSATION
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE
IN CONTROL OF PPL CORPORATION
Change-in-Control Arrangements
The company has entered into change-in-control severance agreements with each of its currently employed NEOs that provide benefits to these officers upon qualifying
terminations of employment in connection with a change in control of the company (a so-called double trigger).
The change-in-control agreement with
respect to Mr. Spence is of the older form of agreement. Messrs. Sorgis and Staffieris agreements follow the new form of agreement and are described separately below. Mr. Symons agreement, while substantially
similar, differs as described below. The change-in-control agreement for Mr. Spence defines Change in Control as the occurrence of any of the following five specific events:
|
|
a change in the majority of the members of our Board of Directors occurs through contested elections;
|
|
|
an investor or group acquires 20% or more of the companys common stock;
|
|
|
a merger occurs that results in less than 60% control of the company or the surviving entity by the current shareowners;
|
|
|
shareowner approval of the liquidation or dissolution of the company; or
|
|
|
the Board of Directors declares that a change in control is anticipated to occur or has occurred.
|
A voluntary termination
of employment by Mr. Spence would only result in the payment of benefits if there was good reason for leaving. Good reason includes a number of circumstances where the NEO has a substantial adverse change in the
employment relationship or the duties assigned. For example, a reduction in salary, a relocation of the place of work of more than 30 miles, or a cutback or exclusion from a compensation plan, pension plan or welfare plan would constitute
good reason. The benefits provided under these agreements replace any other severance benefits that the company or any prior severance or change-in-control agreement would provide to these NEOs.
There is no benefit payable before or after a change in control if Mr. Spence is discharged for cause. Cause generally means willful conduct
that can be shown to cause material injury to the company or the willful refusal to perform duties after written demand by the Board of Directors.
Mr. Spences change-in-control agreement continues in effect until December 31, 2016, and the agreement is automatically extended for additional one-year
periods. If a change in control occurs during the agreements term, the agreement will expire no earlier than 36 months after the month in which the change in control occurs. The agreement specifies that Mr. Spence will be entitled to
the severance benefits described below if, in connection with a change in control, his employment is terminated for any reason other than death, disability, retirement or cause, or he terminates employment for good reason.
These benefits include:
|
|
a lump-sum payment equal to three times the sum of (1) Mr. Spences base salary in effect immediately prior to the date of termination or, if higher, immediately prior to the first occurrence of an event or
circumstance constituting good reason and (2) the highest annual cash incentive award in respect of the last three fiscal years ending immediately prior to the fiscal year in which the change in control occurs or, if higher, the
fiscal year immediately prior to the fiscal year in which an event or circumstance constituting good reason first occurs;
|
|
|
a lump-sum payment having an actuarial present value equal to the additional pension benefits Mr. Spence would have received had he continued to be employed by the company for an additional 36 months;
|
|
|
the continuation of welfare benefits for Mr. Spence and his dependents for the 36-month period following separation (reduced to the extent he receives comparable benefits from another employer);
|
|
|
unpaid incentive compensation that has been allocated or awarded for a previous performance period;
|
|
60 PPL CORPORATION 2016 Proxy Statement
|
|
|
vesting of all contingent incentive compensation awards for all then uncompleted periods, calculated on a prorated basis of months of completed service, assuming performance achievement at 100% of the target level;
|
|
|
vesting of all performance units outstanding calculated on a prorated basis of months of completed service, assuming achievement at 100% of target, plus an amount payable in cash to provide payment for the maximum
payout (200% of target);
|
|
|
outplacement services for up to three years;
|
|
|
a gross-up payment for any excise tax imposed under the golden parachute provisions of the Internal Revenue Code; and
|
|
|
post-retirement health care and life insurance benefits for which Mr. Spence would have become eligible within the 36-month period following the change in control.
|
The CGNC approved a new form of change-in-control agreement to be used for those officers entering into such agreements after December 31, 2011, including for
Messrs. Sorgi and Staffieri. The new form differs from the prior form in the following areas:
|
|
provides that the term may not expire during the period in which a change in control (a potential change in control) may occur, and expires no earlier than 24 months after a change in control actually
occurs;
|
|
|
eliminates excise tax gross-ups;
|
|
|
eliminates accrual of additional pension service and benefit credits;
|
|
|
eliminates payment upon a potential change in control unless a qualifying termination of employment actually occurs and is in connection with the potential change in control;
|
|
|
shortens the notice period from 15 months to six months advance notice to terminate an agreement;
|
|
|
eliminates welfare benefit continuation (other than retiree welfare benefits, as described below); the company would pay a lump-sum payment equivalent to the cost of COBRA coverage that would be incurred for the
24-month
period following termination of employment; and
|
|
|
limits outplacement services to $50,000.
|
Messrs. Sorgis and Staffieris change-in-control agreements
continue in effect until December 31, 2016, and are generally automatically extended for additional one-year periods. Their agreements provide that they will be entitled to the severance benefits described below if, in connection with a change
in control, the company terminates their employment for any reason other than death, disability, retirement or cause, or the executive terminates employment for good reason.
Pursuant to Messrs. Sorgis and Staffieris agreements, a change in control is defined to include the following events:
|
|
a change in a majority of the members of our Board of Directors occurs during a 12-month period through contested elections;
|
|
|
an investor group acquires 30% or more of the companys common stock;
|
|
|
a merger occurs that results in less than 70% control of the company or the surviving entity by the current shareowners; or
|
|
|
the sale or other disposition of substantially all the companys assets.
|
Messrs. Sorgis and
Staffieris change-in-control agreement benefits include:
|
|
a lump-sum payment equal to three times the sum of (1) their respective base salary in effect immediately prior to the date of termination or, if higher, immediately prior to the first occurrence of an event or
circumstance constituting good reason and (2) the average annual bonus in respect of the last three fiscal years ending immediately prior to the fiscal year in which the change in control occurs or, if higher, the fiscal year
immediately prior to the fiscal year in which an event or circumstance constituting good reason first occurs;
|
|
PPL CORPORATION 2016 Proxy Statement 61
|
EXECUTIVE COMPENSATION
|
|
a lump-sum payment equal to the aggregate amount of COBRA premiums otherwise payable for the 24-month period following termination (assuming COBRA would have been available for the 24 months at the rate in effect at
date of termination);
|
|
|
unpaid incentive compensation that has been allocated or awarded for a previous performance period;
|
|
|
vesting of all contingent cash-based incentive compensation awards for all then uncompleted periods, calculated on a prorated basis of months of completed service, assuming achievement at the actual level of performance
as of the date of change in control;
|
|
|
outplacement services until December 31 of the second calendar year after termination but limited to fees of $50,000; and
|
|
|
post-retirement health care and life insurance benefits if eligibility would have occurred within the 24-month period following termination, or if more favorable to Messrs. Sorgi or Staffieri, within 24 months of
the date on which the event or circumstance constituting good reason first occurs.
|
Mr. Symons change-in-control agreement is
substantially similar to the change-in-control agreement for Mr. Spence, but differs from his agreement in the following respects:
|
|
The definition of Change in Control in Mr. Symons agreement also includes the occurrence of any of the following two specific events:
|
|
|
|
all or substantially all of the assets of subsidiaries of PPL Global, LLC that are located in the United Kingdom are sold or all or substantially all of the United Kingdom assets of the subsidiaries of PPL Global, LLC
are transferred to the ownership of one or more business entities that have less than 50% of their ownership interests attributable to PPL Global, LLC and its subsidiaries after such transfer and PPL Global, LLC does not exercise active operational
control of such entity or entities; or
|
|
|
|
either (1) WPD (South West) comes under the control of any person or persons acting in concert not having control of WPD (South West) as of May 11, 2006, or (2) the person or persons having the right to
control, directly or indirectly, a majority of the votes which may ordinarily be cast at general meetings of WPD (South West) or the right to control the composition of the Board of Directors of WPD (South West), cease to have those rights, provided
that, in either case, PPL Corporation does not maintain an equity or voting interest of at least 50%;
|
|
|
In the event of a qualifying termination of employment, Mr. Symons would generally be entitled to a lump-sum payment equal to two times the sum of his annual base salary and his highest annual cash incentive award
in respect of the last three fiscal years;
|
|
|
Mr. Symons agreement provides for a lump-sum payment having an actuarial present value equal to the additional pension benefits he would have received had he continued to be employed by the company for an
additional 24 months;
|
|
|
Mr. Symons agreement does not provide for continuation of welfare benefits for Mr. Symons and his dependents following separation;
|
|
|
Mr. Symons agreement does not provide for payment or vesting of any incentive compensation awards (including performance units) for uncompleted periods;
|
|
|
Mr. Symons agreement provides for outplacement services of up to two years, whereas the other executives would be entitled to receive outplacement services of up to three years;
|
|
|
Mr. Symons agreement does not provide for excise tax gross-ups; and
|
|
|
Mr. Symons agreement does not provide for any post-retirement health care and life insurance benefits.
|
In
addition to the benefits that the change-in-control agreements provide, the following events would occur in the event of a change in control under the companys compensation arrangements:
|
|
the restriction period applicable to any outstanding restricted stock unit awards lapses for those awards granted under the SIP;
|
|
62 PPL CORPORATION 2016 Proxy Statement
|
|
|
the performance period applicable to any outstanding performance unit awards will be deemed to conclude prior to the change in control, and a pro rata portion of all unvested units will become immediately vested as
though there had been achievement of goals satisfying the target award (although the change-in-control agreements with respect to Mr. Spence would increase this amount based on assumed achievement at the maximum level);
|
|
|
the restriction period on any outstanding stock options lapses on qualifying termination of employment under the SIP;
|
|
|
upon a qualifying termination, all participants in the PPL SERP and LG&E SERP immediately vest in their accrued benefit, even if not yet vested due to age and service; and
|
|
|
upon a qualifying termination, the PPL SERP benefit improves by a pro rata portion of the additional years of service granted to the officer, if any, that otherwise would not be earned until a specified period of years
had elapsed or the officer had reached a specified age.
|
See the table beginning on page 67 for the estimated value of benefits to be paid if
Messrs. Spence, Sorgi, Staffieri or Symons were terminated on December 31, 2015, after a change in control of PPL for qualifying reasons. Because no change of control event was associated with Messrs. Farrs and Greys departure from
the company, no amounts associated with a change in control are included in the table for them.
The value of the PPL SERP enhancements for Messrs. Spence and Sorgi
is included under the Termination Following a Change in Control column of the table provided below beginning on page 67.
PPL has trust arrangements
in place to facilitate the funding of benefits under the PPL SERP, the Executive Deferred Compensation Plan, change-in-control agreements and the DDCP if a change in control were to occur. Currently, the trusts are not funded. The trusts provide for
the company to fund the trusts at the time a potential change in control occurs. The funds are refundable to the company if the change in control does not actually take place.
A potential change in control is triggered when:
|
|
the company enters into an agreement that would result in a change in control;
|
|
|
the company or any investor announces an intention to enter into a change in control;
|
|
|
the Board of Directors declares that a potential change in control has occurred; or
|
|
|
an investor obtains 5% or more of the companys common stock and intends to control or influence management (requiring a Schedule 13D to be filed by the investor with the SEC).
|
Within 60 days of the end of each year after the change in control occurs, PPL is required to irrevocably deposit additional cash or property into the trusts in an
amount sufficient to pay participants or beneficiaries the benefits that are payable under terms of the plans that are being funded by the trusts as of the close of each year. Any income on the trust assets would be taxed to PPL and not to the
beneficiaries of the trusts, and such assets would be subject to the claims of general creditors in the event of PPLs insolvency or bankruptcy.
Retention Agreements
On May 6, 2015, in connection with the planned retirement of Mr. Grey,
PPL entered into a Retention Agreement with Mr. Grey. The Retention Agreement provided for Mr. Greys retirement from PPL on January 31, 2016, except that if PPL would have entered into an agreement prior to January 31,
2016, the consummation of which would constitute a Change in Control of PPL, Mr. Grey would have instead retired upon the consummation of the Change in Control.
The Retention Agreement provided that, during the retention period, Mr. Greys compensation would continue to be set by the CGNC, consistent with past practice
and the compensation arrangements of other senior executives of PPL, except that the service-based vesting requirements of any long-term incentive awards granted during the retention period would not require Mr. Grey to remain employed by PPL
after the retention period and Mr. Greys salary and bonus targets would not be reduced from the level in effect on the effective date of the Retention Agreement other than any reduction that is consistent with a general reduction by PPL
of the salary or bonus targets of its senior executive officers. In addition, during the retention period, Mr. Grey remained eligible to receive all benefits and perquisites consistent with those generally provided by PPL to senior executives.
The Retention Agreement also provided for PPL
|
PPL CORPORATION 2016 Proxy Statement 63
|
EXECUTIVE COMPENSATION
to pay the reasonable and documented attorneys fees incurred in connection with entering into
the Retention Agreement, in an amount not to exceed $25,000.
Following the expiration of the retention period, Mr. Grey became entitled to receive a lump sum
payment equal to $830,000 in addition to amounts otherwise payable pursuant to PPLs Executive Severance Plan. The Retention Agreement also provided for specified additional or different payments and benefits that would have applied if
Mr. Greys employment had terminated due to death, disability or a termination without cause, or, if a change in control had occurred, in each case, prior to January 31, 2016.
PPL previously entered into a retention agreement with Mr. Farr that granted him 40,000 shares of restricted PPL common stock. As contemplated in the agreements
governing the spinoff entered into in June 2014, the CGNC approved the acceleration of vesting of Mr. Farrs restricted stock award as of the completion of the spinoff.
Termination Benefits
The NEOs are entitled to various benefits in the event of a termination of employment, but the value of those benefits and their components vary depending upon the
circumstances. A qualifying termination in connection with a change in control of PPL Corporation triggers contractual benefits under the change in control and equity award agreements described above. A retirement results in benefits and
payments in cash or stock that are set forth in various executive plans referred to above. A termination resulting from death or disability also has a number of benefit consequences under various benefit plans.
The table set forth below provides the companys estimates of the probable value of benefits that would have been payable to the NEOs assuming a termination of
employment as of December 31, 2015, for reasons of retirement, voluntary termination, death, disability, involuntary termination not for cause, change of control or qualifying termination in connection with a change in control. As for
Mr. Grey, who retired on January 31, 2016, and Mr. Farr, whose employment terminated on June 1, 2015, concurrent with the spinoff of PPLs Energy Supply business, information is provided for what each officer received upon
departure from PPL. In addition, as permitted by SEC disclosure rules, the table does not reflect any amount provided to an NEO that is generally available to all salaried employees. Also, the table does not repeat information disclosed in the
Pension Benefits in 2015 table, the Nonqualified Deferred Compensation in 2015 table or the Outstanding Equity Awards at Fiscal Year-End 2015 table, except to the extent that vesting or payment may be accelerated.
If an NEO did not yet qualify for full retirement benefits or other benefits requiring longer service, that additional benefit is not reflected below. If an NEO had the ability to elect retirement and thereby avoid forfeiture or decreased benefits,
the table assumes that retirement was elected and is noted as such in the footnotes to the table.
In the event that an executive is terminated for cause
by the company, no additional benefits are due under the applicable plans and agreements.
Severance
. See CD&A
Additional Information Special Compensation Severance Benefits for a discussion of the companys practice as to severance benefits. The NEOs, other than Mr. Symons, are subject to the PPL Executive Severance
Plan. The plan provides for severance benefits for executives in the event of a termination of employment that is not for cause. Cause is defined as misconduct materially injurious to the company, insubordination, fraud or breach of
confidentiality against the company or egregious violation of company policy. Pursuant to this plan, each of the NEOs, other than Mr. Symons, is eligible for two years of base salary, a lump sum amount for 24 months of health plan
continuation (COBRA) and outplacement services for the lesser of two years or $50,000 in fees. Benefits are conditioned on a release of liability from the NEO. Mr. Farr was not eligible for severance payments when he left the company in
connection with the spinoff.
As discussed above in Change-in-Control Arrangements, there is a structured approach to separation benefits for involuntary
and select good reason terminations of employment in connection with a change in control of PPL Corporation. PPL has entered into agreements with each of the NEOs that provide benefits to the officers upon qualifying terminations of
employment in connection with a change in control. The benefits provided under these agreements replace any other severance benefits provided to the NEOs by PPL, including any benefit under the PPL Executive Severance Plan or any prior severance or
change-in-control agreement.
The table below includes the severance payments, the value of continued welfare benefits and outplacement benefits as Other
separation benefits, and the value of gross-up payments for required Federal excise taxes on excess parachute payments as Tax gross-up amount payable for Mr. Spence. The value of any additional pension benefits
|
64 PPL CORPORATION 2016 Proxy Statement
|
provided under the change-in-control agreements
is discussed above in Change-in-Control Arrangements and is included as SERP in the table below.
PPL SERP, PPL
Executive Deferred Compensation Plan and Savings Plans.
See Pension Benefits in 2015 above for a discussion of the PPL SERP and Change-in-Control Arrangements for a discussion of enhanced benefits that are triggered if
Mr. Spence is terminated in connection with a change in control of PPL. The table below only includes as SERP in the table the enhancements to pension plan benefits disclosed in the Pension Benefits in 2015 table
available as a result of the particular circumstances of termination of employment.
Account balances under the PPL Executive Deferred Compensation Plan, the LG&E
and KU Nonqualified Savings Plan and the LG&E Energy Corp. Nonqualified Savings Plan become payable as of termination of employment for any reason, or as of the time previously elected. Current balances are included in the Nonqualified
Deferred Compensation in 2015 table on page 59 above and are not included in the table below.
Annual Cash Incentive
Awards
.
It is PPLs practice to pay a pro rata portion of the accrued but unpaid annual cash incentive award to executives who retire or who are eligible to retire and (1) die while employed or (2) terminate
employment due to a disability during the performance year. Payments occur at the regularly scheduled time as paid to other executive officers. Only Mr. Sorgi is currently ineligible to retire.
In the event any of the NEOs were to die or terminate employment due to a disability, the CGNC has the authority to consider an award. If Mr. Sorgi was to leave
voluntarily, he would not be entitled to an annual cash incentive award.
In the event of a qualifying termination in connection with a change in control of PPL
Corporation, annual cash incentive awards that have been determined, but not yet paid, are payable under the terms of the change-in-control agreements entered into with the NEOs. Also in the case of a change in control, if a termination under these
change-in-control agreements occurs during the performance year, accrued incentive cash awards are payable on a prorated basis for the period worked during the year using the assumption that performance goals were attained at target.
Long-term Incentive Awards
.
Restrictions on restricted stock units generally lapse upon retirement, death or termination of
employment due to disability under the ICPKE and the SIP, or in the event of a change in control under the ICPKE. Under the SIP, if there is a change in control, restrictions lapse if there is a termination not for cause or for
good reason. Restricted stock units are forfeited under both plans in the event of voluntary and involuntary termination if the executive is not retirement eligible.
For performance units granted prior to 2014, the units are eligible for pro rata vesting at the end of the performance period if the NEO has retired, died or terminated
employment due to a disability during the performance period under the SIP. Effective with performance units granted in 2014, if the NEO is eligible to retire, and retires after the first year of the performance period, the NEO is eligible for the
award, if any, without proration at the end of the performance period. In the event of a change in control, the performance period ends and there is pro rata vesting as if the target shareowner return was achieved. See Change-in-Control
Arrangements above for a discussion of enhanced benefits that are triggered if Mr. Spence is terminated in connection with a change in control of the company. Performance units are forfeited in the event of voluntary termination if the
executive is not eligible to retire.
In all events where performance units are not forfeited, we have included the prorated value based on the assumption of
performance achievement at target, except where the NEO is retirement-eligible and the first year of the performance period year has passed, then the full value is assumed without proration.
Stock options that are not yet exercisable become exercisable upon retirement under the SIP. In the event of death or termination of employment due to disability, stock
options not yet exercisable continue to become exercisable in accordance with the vesting schedule (in one-third increments on each anniversary of the grant) under SIP. In the event of a change in control, all options granted under the SIP
require a qualifying termination of the executive officer before any stock options would become exercisable after a change in control occurs. Stock options not yet exercisable are forfeited in the following events:
|
|
Voluntary termination or involuntary termination not for cause, if the executive is not eligible to retire; or
|
|
|
Involuntary termination for cause even if the executive is eligible to retire.
|
|
PPL CORPORATION 2016 Proxy Statement 65
|
EXECUTIVE COMPENSATION
The term of all previously granted PPL stock options is 10 years. Upon the below stated events
of termination, the executive may exercise options as follows:
|
|
In the event of retirement, (1) for options granted under the SIP, the executive has the earlier of five years from retirement or the remaining term to exercise the options, and (2) for options granted under
the ICP, the executive has the remaining term to exercise the options.
|
|
|
In the event of termination of employment as a result of death or disability, the term for options granted under the ICP is reduced to 36 months, and under the SIP is reduced to three years and 60 days, unless the
remaining term is shorter.
|
|
|
In the event of a change in control, the term for options granted under the ICP is reduced to 36 months. In the event of a qualifying termination of employment in connection with a change in control under the SIP,
the term for options granted is reduced to three years and 60 days for all outstanding options. For options granted in 2010 or after under the ICP, and for all options granted under the SIP, the exercise periods in the event of a change in control
are extended to the full term.
|
|
|
In the event of voluntary termination of employment for reasons other than noted above, NEOs have a maximum of 60 days to exercise options granted under the ICP and the SIP that are exercisable but that have not yet
been exercised before they are forfeited.
|
|
|
In the event of a termination for cause, the NEOs must exercise all outstanding exercisable options prior to termination or risk immediate forfeiture of all options, whether exercisable or not.
|
Phantom stock options awarded to Mr. Symons that are not yet exercisable become exercisable upon death, or upon a change in control of PPL if
(1) PPLs stock ceases to be traded, (2) PPL no longer has any ownership in WPD or (3) the WPD Phantom Stock Options plan is terminated and not replaced with a plan of equivalent value. In the event of termination of employment
due to disability or retirement, phantom stock options not yet exercisable continue to become exercisable in accordance with the vesting schedule (in one-third increments on each anniversary of the grant). Phantom stock options not yet exercisable
are forfeited in the following events:
|
|
Voluntary termination or involuntary termination not for cause, if Mr. Symons is not eligible to retire; or
|
|
|
Involuntary termination for cause even if Mr. Symons is eligible to retire.
|
The term of all previously
granted phantom stock options to Mr. Symons is 10 years. Upon the below stated events of termination, he may exercise the phantom stock options as follows:
|
|
In the event of termination of employment as a result of death, the term for the phantom stock options is reduced to three years from the date of termination.
|
|
|
In the event of termination of employment as a result of disability, or upon retirement, the term for the phantom stock options is reduced to five years from the date of termination or retirement.
|
|
|
In the event of voluntary resignation or involuntary termination other than for cause other than noted above, Mr. Symons has a maximum of 90 days to exercise his phantom stock options that are exercisable but that
have not yet been exercised before they are forfeited.
|
|
|
In the event of a termination for cause, Mr. Symons must exercise all outstanding exercisable phantom stock options prior to termination or risk immediate forfeiture of all phantom stock options,
whether exercisable or not.
|
Effective June 1, 2015, concurrent with the spinoff of PPLs Energy Supply segment, Mr. Farr resigned from
PPL. As contemplated in the agreements governing the spinoff entered into in June 2014, the CGNC approved the acceleration of vesting of Mr. Farrs restricted stock, restricted stock units and stock options as of the completion of the
spinoff, consistent with the acceleration of all employees restricted stock, restricted stock units and stock options as provided for in the transaction agreements. On completion of the spinoff, all of Mr. Farrs 2015 performance
units were forfeited in accordance with the related grant agreement.
Assumptions for the table below:
|
|
For NEOs eligible to retire (Messrs. Spence, Staffieri and Symons), we have assumed the executive retires in the case of voluntary or involuntary termination.
|
|
|
For Messrs. Spence, Sorgi, Staffieri and Symons, we have assumed the termination event occurred as of December 31, 2015.
|
|
66 PPL CORPORATION 2016 Proxy Statement
|
|
|
For Mr. Grey, we used January 31, 2016, his actual date of retirement from the company.
|
|
|
For Mr. Farr, we used June 1, 2015, the date of his resignation from the company.
|
The disclosure in the table
for Messrs. Grey and Farr is limited to the termination event that actually occurred.
The following table includes the value (based on the closing price of PPL
common stock on the NYSE of $34.13 on December 31, 2015) of options that are not yet exercisable and in-the-money, assuming the options were exercised as of December 31, 2015 for each termination event. Footnote 7 following the
table identifies such options as of December 31, 2015 that may be exercised in the future. For the table below, options already exercisable as of the termination event are excluded.
|
|
|
|
|
|
|
|
|
|
|
|
|
Named Executive Officer
|
|
Retirement or
Voluntary
Termination
|
|
Death
|
|
Disability
|
|
Involuntary
Termination
Not for Cause
|
|
Change in
Control
|
|
Termination
Following a
Change in
Control
|
W. H. Spence
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance payable in cash
(1)
|
|
|
|
|
|
|
|
$ 2,255,000
|
|
|
|
$11,252,217
|
Other separation benefits
(2)
|
|
|
|
|
|
|
|
81,879
|
|
|
|
112,959
|
Tax gross-up amount payable
(3)
|
|
|
|
|
|
|
|
|
|
|
|
8,718,731
|
SERP
(4)
|
|
|
|
|
|
|
|
|
|
|
|
450,000
|
Performance-contingent restricted
stock units
(5)
|
|
$10,823,995
|
|
$10,823,995
|
|
$10,823,995
|
|
10,823,995
|
|
|
|
10,823,995
|
Performance units
(6)
|
|
9,698,551
|
|
9,698,551
|
|
9,698,551
|
|
9,698,551
|
|
$9,698,551
|
|
19,397,103
|
Stock options
(7)
|
|
1,952,785
|
|
|
|
|
|
1,952,785
|
|
|
|
1,952,785
|
V.
Sorgi
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance payable in cash
(1)
|
|
|
|
|
|
|
|
1,000,000
|
|
|
|
2,138,634
|
Other separation benefits
(2)
|
|
|
|
|
|
|
|
86,635
|
|
|
|
86,270
|
Tax gross-up amount payable
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
SERP
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance-contingent restricted
stock units
(5)
|
|
|
|
1,027,732
|
|
1,027,732
|
|
(8)
|
|
|
|
1,027,732
|
Performance units
(6)
|
|
|
|
663,747
|
|
663,747
|
|
(8)
|
|
663,747
|
|
663,747
|
Stock options
(7)
|
|
|
|
|
|
|
|
(8)
|
|
|
|
138,623
|
R. J.
Grey
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance payable in cash
(1)
|
|
|
|
|
|
|
|
2,015,000
|
|
|
|
|
Other separation benefits
(2)
|
|
|
|
|
|
|
|
76,249
|
|
|
|
|
Tax gross-up amount payable
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
SERP
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance-contingent restricted
stock units
(5)
|
|
|
|
|
|
|
|
1,858,806
|
|
|
|
|
Performance units
(6)
|
|
|
|
|
|
|
|
1,901,504
|
|
|
|
|
Stock options
(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
P. A.
Farr
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance payable in cash
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
Other separation benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax gross-up amount payable
|
|
|
|
|
|
|
|
|
|
|
|
|
SERP
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance-contingent restricted stock units, restricted stock
(5)
|
|
5,208,036
|
|
|
|
|
|
|
|
|
|
|
Performance units
(6)
|
|
2,300,587
|
|
|
|
|
|
|
|
|
|
|
Stock
options
(7)
|
|
741,893
|
|
|
|
|
|
|
|
|
|
|
|
PPL CORPORATION 2016 Proxy Statement 67
|
EXECUTIVE COMPENSATION
|
|
|
|
|
|
|
|
|
|
|
|
|
Named Executive Officer
|
|
Retirement or
Voluntary
Termination
|
|
Death
|
|
Disability
|
|
Involuntary
Termination
Not for Cause
|
|
Change in
Control
|
|
Termination
Following a
Change in
Control
|
V. A.
Staffieri
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance payable in cash
(1)
|
|
|
|
|
|
|
|
$1,622,440
|
|
|
|
$4,877,627
|
Other separation benefits
(2)
|
|
|
|
|
|
|
|
96,078
|
|
|
|
95,619
|
Tax gross-up amount payable
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
SERP
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance-contingent restricted
stock units
(5)
|
|
$3,376,444
|
|
$3,376,444
|
|
$3,376,444
|
|
3,376,444
|
|
|
|
3,376,444
|
Performance units
(6)
|
|
2,829,070
|
|
2,829,070
|
|
2,829,070
|
|
2,829,070
|
|
$2,829,070
|
|
2,829,070
|
Stock options
(7)
|
|
613,960
|
|
|
|
|
|
613,960
|
|
|
|
613,960
|
R. A.
Symons
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance payable in cash
(1)
|
|
|
|
|
|
|
|
|
|
|
|
3,007,297
|
Other separation benefits
(2)
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
Tax gross-up amount payable
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance-contingent restricted
stock units
(5)
|
|
1,289,964
|
|
1,289,964
|
|
1,289,964
|
|
1,289,964
|
|
449,970
|
|
1,289,964
|
Performance units
(6)
|
|
1,139,737
|
|
1,139,737
|
|
1,139,737
|
|
1,139,737
|
|
1,139,737
|
|
1,139,737
|
Phantom stock
options
(7)
|
|
|
|
203,922
|
|
|
|
|
|
203,922
|
|
203,922
|
(1)
|
For purposes of this table, we have assumed the NEOs, other than Messrs. Grey and Farr, are eligible for benefits under their respective change-in-control agreements.
|
|
In accordance with PPLs Executive Severance Plan, the NEOs included in the table, other than Messrs. Farr and Symons, are eligible for a payment of severance benefits in the event of an involuntary termination not
for cause, if they are not eligible to receive severance payments under another plan or any agreement. Each of the NEOs, other than Messrs. Farr and Symons, is eligible to receive a cash severance payment equal to two years base salary
and additional benefits described in Note 2 below.
|
|
In the event of termination of employment in connection with a change in control of PPL Corporation, each NEO is eligible for severance benefits if termination occurs within 36 months of a change in control
(a) due to termination by the company for reasons other than cause or (b) by the executive on the basis of good reason as that term is defined in the agreement. For purposes of the table, a qualifying termination of
employment in connection with a change of control is assumed, except for Messrs. Farr and Grey.
|
|
Amounts shown as Severance payable in cash under the Termination Following a Change in Control column for Mr. Spence is three times the sum of his annual salary as of the termination date
plus the highest annual cash incentive payment made in the last three years as provided under his agreement. For Messrs. Sorgi and Staffieri, the amounts are three times the sum of their annual salary and the average of their annual cash bonuses
earned in the last three fiscal years ending immediately prior to the fiscal year in which the termination date occurs. For Mr. Symons, the amount is generally a lump-sum payment equal to two times the sum of his annual base salary and his
highest annual cash incentive award in respect of the last three fiscal years. All compensation for Mr. Symons has been converted from Pounds Sterling to U.S. Dollars at an exchange rate of $1.4834, which is the translation rate for
December 31, 2015.
|
(2)
|
Under the PPL Executive Severance Plan, each NEO, other than Messrs. Farr and Symons, is eligible for specified benefits if terminated due to a qualifying termination as defined in the plan. In addition to the lump
sum severance payment described in Note 1 above, these officers are eligible to receive a lump sum payment equivalent to 24 months of COBRA premiums and outplacement assistance not to exceed $50,000 in fees.
|
|
Under the terms of the change-in-control agreements of each of Messrs. Spence, Sorgi and Staffieri included in the table, the executive is eligible for continued medical and dental benefits, life insurance premiums,
disability coverage and outplacement services (limited to $50,000 in the case of Messrs. Sorgi and Staffieri). The amounts shown as Other separation benefits are the estimated present values of each of these benefits in the
respective column. Mr. Symons is eligible for outplacement services.
|
(3)
|
In the event excise taxes become payable under Section 280G and Section 4999 of the Internal Revenue Code as a
result of any excess parachute payments, as that phrase is defined by the IRS, the change-in-control agreement for Mr. Spence
|
|
68 PPL CORPORATION 2016 Proxy Statement
|
|
provides that the company will pay the excise tax as well as gross-up the executive for the impact of the excise tax payment. (The tax payment and gross-up do not extend to normal income taxes due on any separation
payments.) The amounts shown as Tax gross-up amount payable include the companys estimate of the excise tax and gross-up payments that would be made under the terms of Mr. Spences change-in-control agreement if he had
been terminated on December 31, 2015. In connection with a change in control on that date, Messrs. Sorgis, Staffieris and Symons change-in-control agreements do not provide for excise tax payments or gross-ups.
|
|
Mr. Symons is a United Kingdom-based individual and citizen, with no portion of his pay applicable to work performed in the United States. Mr. Symons is therefore not subject to excise taxes under Sections 280G and
4999 of the Internal Revenue Code.
|
(4)
|
Amounts shown as SERP under the Termination Following a Change in Control column include the values of the incremental benefits payable under the terms of the change-in-control agreements.
Mr. Spence was eligible for a severance payment equal to the value of the PPL SERP benefit that would be determined by adding an additional three years of service. Neither Mr. Sorgi nor Mr. Staffieri is eligible for enhanced SERP
benefits upon termination for any reason, and Mr. Symons does not participate in any SERP.
|
(5)
|
Total outstanding performance-contingent restricted stock units are included in the Outstanding Equity Awards at Fiscal Year-End 2015 table above. The amounts included in this table reflect the value of the
restricted stock and performance-contingent restricted stock units that would become immediately vested as a result of each event as of December 31, 2015, except for Mr. Farr, whose restricted stock and restricted stock units vested as of
the spinoff of the Energy Supply segment, and for Mr. Grey, whose restricted stock units vested as of January 31, 2016. The table set forth below this note shows the number of units accelerated and payable as well as the number forfeited upon the
occurrence of each termination event. The shares of PPL common stock underlying Mr. Farrs restricted stock units will be distributed upon the events described below. The gross value in the above table would be reduced by the amount of
taxes required to be withheld, and the net shares would be distributed. For purposes of the table below, the total number of shares is provided without regard for the tax impact.
|
Restricted Stock and Restricted Stock Units
(#)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Named Executive Officer
|
|
Retirement or
Voluntary
Termination
|
|
|
Death
|
|
|
Disability
|
|
|
Involuntary
Termination
Not for Cause
|
|
|
Change in
Control
|
|
|
Termination
Following a
Change in
Control
|
|
W. H. Spence
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated
|
|
|
317,140
|
|
|
|
317,140
|
|
|
|
317,140
|
|
|
|
317,140
|
|
|
|
|
|
|
|
317,140
|
|
Forfeited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
V. Sorgi
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated
|
|
|
|
|
|
|
30,112
|
|
|
|
30,112
|
|
|
|
|
|
|
|
|
|
|
|
30,112
|
|
Forfeited
|
|
|
30,112
|
|
|
|
|
|
|
|
|
|
|
|
30,112
|
|
|
|
|
|
|
|
|
|
R. J. Grey
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
53,004
|
|
|
|
|
|
|
|
|
|
Forfeited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
P. A. Farr
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated
|
|
|
149,785
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forfeited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
V. A. Staffieri
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated
|
|
|
98,929
|
|
|
|
98,929
|
|
|
|
98,929
|
|
|
|
|
|
|
|
|
|
|
|
98,929
|
|
Forfeited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. A. Symons
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated
|
|
|
37,796
|
|
|
|
37,796
|
|
|
|
37,796
|
|
|
|
37,796
|
|
|
|
13,184
|
|
|
|
37,796
|
|
Forfeited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PPL CORPORATION 2016 Proxy Statement 69
|
EXECUTIVE COMPENSATION
(6)
|
The table includes the value of the performance units that would become payable as a result of each event as of December 31, 2015 (June 1, 2015 for Mr. Farr and January 31, 2016 for Mr. Grey)
assuming target performance was achieved, except as next noted. In the case of Mr. Spences Termination Following a Change in Control, this value is composed of units that become payable upon a change in control of PPL
Corporation plus an amount payable in cash under the change-in-control agreements to provide payment for the maximum payout value. The table set forth below this note presents the number of units accelerated and payable as of the event, or the
number of units that become payable after the performance period is completed, as well as the number forfeited. The gross value in the table would be reduced by the amount of taxes required to be withheld, and the net shares would be distributed.
For purposes of the following table, the total number of shares is provided without regard to the tax impact.
|
Performance Units
(#)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Named Executive Officer
|
|
Retirement or
Voluntary
Termination
|
|
|
Death
|
|
|
Disability
|
|
|
Involuntary
Termination
Not for Cause
|
|
|
Change in
Control
|
|
|
Termination
Following a
Change in
Control
|
|
W. H. Spence
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
284,165
|
|
|
|
284,165
|
|
Forfeited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available after performance period completed
|
|
|
284,165
|
|
|
|
284,165
|
|
|
|
284,165
|
|
|
|
284,165
|
|
|
|
|
|
|
|
|
|
V. Sorgi
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,448
|
|
|
|
19,448
|
|
Forfeited
|
|
|
34,948
|
|
|
|
15,500
|
|
|
|
15,500
|
|
|
|
34,948
|
|
|
|
15,500
|
|
|
|
15,500
|
|
Available after performance period completed
|
|
|
|
|
|
|
19,448
|
|
|
|
19,448
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. J. Grey
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forfeited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available after performance period completed
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
54,236
|
|
|
|
|
|
|
|
|
|
P. A. Farr
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forfeited
|
|
|
36,368
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available after performance period completed
|
|
|
66,166
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
V. A. Staffieri
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
82,891
|
|
|
|
82,891
|
|
Forfeited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available after performance period completed
|
|
|
82,891
|
|
|
|
82,891
|
|
|
|
82,891
|
|
|
|
82,891
|
|
|
|
|
|
|
|
|
|
R. A. Symons
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,394
|
|
|
|
33,394
|
|
Forfeited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available after performance
period completed
|
|
|
33,394
|
|
|
|
33,394
|
|
|
|
33,394
|
|
|
|
33,394
|
|
|
|
|
|
|
|
|
|
|
70 PPL CORPORATION 2016 Proxy Statement
|
(7)
|
Outstanding stock options are included in the Outstanding Equity Awards at Fiscal Year-End 2015 table. The table above includes the value of the options not yet exercisable that would become exercisable as a
result of each event as of December 31, 2015 (June 1, 2015 for Mr. Farr and January 31, 2016 for Mr. Grey). In the event of voluntary termination and involuntary termination for reasons other than cause, Mr. Sorgi would forfeit his
unvested stock options because he has not reached retirement age. Therefore, the value displayed under the retirement or voluntary termination column is representative for retirement conditions only. Options already exercisable as of
December 31, 2015 are excluded from this table. The table below details the number of options that accelerate and become exercisable as of the termination event and the number forfeited. For illustrative purposes, it is assumed that all options
not yet exercisable that become exercisable as of the event are exercised as of December 31, 2015, and valued based on the difference between a closing price of PPL common stock of $34.13 on that date and the option exercise price. In the event
of death or disability for NEOs other than Mr. Symons, unexercisable options become exercisable under the normal vesting schedule. For Mr. Symons, his phantom stock options become exercisable upon death and change in control. The gross
value in the table would be reduced by the amount of taxes required to be withheld, and the net shares would be distributed. For the purposes of the following table, the total number of shares is provided without regard to the tax impact.
|
Stock Options Not Yet Exercisable
(#)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Named Executive Officer
|
|
Retirement or
Voluntary
Termination
|
|
|
Death
|
|
|
Disability
|
|
Involuntary
Termination
Not for Cause
|
|
|
Change in
Control
|
|
|
Termination
Following a
Change in
Control
|
|
W. H. Spence
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated
|
|
|
258,990
|
|
|
|
|
|
|
|
|
|
258,990
|
|
|
|
|
|
|
|
258,990
|
|
Forfeited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
V. Sorgi
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,385
|
|
Forfeited
|
|
|
18,385
|
|
|
|
|
|
|
|
|
|
18,385
|
|
|
|
18,385
|
|
|
|
|
|
R. J. Grey
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forfeited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
P. A. Farr
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated
|
|
|
90,696
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forfeited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
V. A. Staffieri
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated
|
|
|
81,427
|
|
|
|
|
|
|
|
|
|
81,427
|
|
|
|
|
|
|
|
81,427
|
|
Forfeited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. A. Symons (Phantom Stock Options)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated
|
|
|
|
|
|
|
30,804
|
|
|
|
|
|
|
|
|
|
30,804
|
|
|
|
30,804
|
|
Forfeited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(8)
|
In the event of involuntary termination for reasons other than for cause, Mr. Sorgi would forfeit all outstanding restricted stock units, performance units and stock options because he is not eligible to retire.
Any exceptions to the automatic forfeitures would require the approval of the CGNC.
|
|
PPL CORPORATION 2016 Proxy Statement 71
|
|
|
|
PROPOSAL 5:
|
|
RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
|
|
|
|
What are you voting on?
|
|
The Board of Directors has determined that it would be desirable to request an expression of opinion from the shareowners on the appointment of Deloitte & Touche LLP, or Deloitte, as the companys independent
registered public accounting firm for the fiscal year ending December 31, 2016.
|
Pursuant to the policy of the Audit Committee to solicit competitive proposals for audit services from independent accounting firms at
least once every ten years, the Audit Committee conducted a competitive selection process during 2015 to determine the companys independent registered public accounting firm for the audits of the consolidated financial statements as of and for
the fiscal year ending December 31, 2016 of PPL and its subsidiary registrants. The Audit Committee invited several international public accounting firms to participate in this process, including Ernst & Young LLP, or EY. As
a result of this process, on July 28, 2015, the Audit Committee approved the appointment of Deloitte as the companys independent registered public accounting firm for the fiscal year ending December 31, 2016. This action effectively
dismissed EY as the companys independent registered public accounting firm and became effective upon EYs completion of its procedures on the financial statements of PPL and its subsidiaries as of and for the fiscal year ended
December 31, 2015 and the filing of the related
Form 10-K,
except with respect to audit and audit-related services pertaining to the fiscal year ended December 31, 2015, as required by PPL.
The audit reports of EY on the consolidated financial statements of PPL and its subsidiaries as of and for the fiscal years ended December 31, 2013 and 2014 did not
contain any adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope or accounting principles. During PPLs two most recent fiscal years ended December 31, 2014 and the subsequent interim
period through July 28, 2015, the date of Deloittes appointment, there were no disagreements between PPL and EY on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which, if
not resolved to the satisfaction of EY would have caused EY to make reference to the subject matter of the disagreement in connection with its report and there were no reportable events (as defined by Item 304(a)(1)(v) of Regulation S-K). PPL
requested that EY furnish it with a letter addressed to the SEC stating whether or not it agrees with the above statements. A copy of such letter, dated July 30, 2015, was filed as Exhibit 16.1 to PPLs Form 8-K filed on July 30,
2015.
During PPLs two most recent fiscal years ended December 31, 2014 and the subsequent interim periods through July 28, 2015, the date of the
appointment, neither PPL nor anyone on its behalf consulted with Deloitte regarding (i) either the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be
rendered on the consolidated financial statements of PPL or any of its subsidiary registrants, and no written report or oral advice was provided by Deloitte to PPL and its subsidiary registrants that Deloitte concluded was an important factor
considered by PPL and its subsidiary registrants in reaching a decision as to the accounting, auditing, or financial reporting issue; or (ii) any matter that was the subject of either a disagreement as defined in Item 304(a)(1)(iv) of the
SECs Regulation S-K and the related instructions or a reportable event as described in Item 304(a)(1)(v) of the SECs Regulation S-K.
Representatives
of each of Deloitte and EY are expected to be present at the Annual Meeting, will have the opportunity to make a statement if they desire to do so and are expected to be available to respond to appropriate questions.
The Board of Directors has determined that it would be desirable to request an expression of opinion from the shareowners on the appointment of Deloitte. If the
shareowners do not ratify the selection of Deloitte, the selection of the principal independent auditor will be reconsidered by the Audit Committee.
Vote Required for Ratification.
The affirmative vote of a majority of the votes cast, in person or by proxy, by all
shareowners voting as a single class, is required to ratify the appointment of Deloitte as the companys independent registered public accounting firm.
Your Board of Directors recommends
that you vote FOR Proposal 5
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PPL CORPORATION 2016 Proxy Statement 77
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PROPOSAL NO. 5: RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
Fees to Independent
Auditor for 2015 and 2014
For the fiscal years ended December 31, 2015 and 2014, EY served as our principal independent registered public
accounting firm, or principal independent auditor. The following table presents fees for professional services rendered by EY for the audit of our companys annual financial statements, including expenses, for the fiscal years ended
December 31, 2015 and 2014, and also includes fees for other services rendered.
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2015
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2014
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(In thousands)
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Audit fees
(a)
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$7,720
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$8,252
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Audit-related fees
(b)
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206
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1,132
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Tax fees
(c)
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578
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651
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All other
fees
(d)
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22
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10
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(a)
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Includes estimated fees for audit of annual financial statements and review of financial statements included in our companys Quarterly Reports on Form 10-Q and for services in connection with statutory and
regulatory filings or engagements, including comfort letters and consents for financings and filings made with the SEC.
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(b)
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Includes review of internal controls and performance of specific agreed-upon procedures and due diligence and consultation services in connection with the spinoff of the companys competitive generation business to
combine with the generation assets of Riverstone Holdings LLC to form Talen Energy Corporation.
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(c)
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Includes fees for tax advice in connection with the spinoff of the companys competitive generation business to combine with the generation assets of Riverstone Holdings LLC to form Talen Energy Corporation.
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(d)
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Represents fees for Deloitte review of EY work papers and for access to an EY online accounting research tool.
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Approval of Fees.
The Audit Committee has procedures for pre-approving audit and non-audit services to be provided by the independent auditor. These
procedures are designed to ensure the continued independence of the independent auditor. More specifically, the use of the independent auditor to perform either audit or non-audit services is prohibited unless specifically approved in advance by the
Audit Committee of PPL. As a result of this approval process, the Audit Committee of PPL has pre-approved specific categories of services and authorization levels. All services outside of the specified categories and all amounts exceeding the
authorization levels are approved by the Chair of the Audit Committee of PPL, who serves as the Committee designee to review and approve audit and non-audit services during the year. A listing of the approved audit and non-audit services is reviewed
with the full Audit Committee of PPL no later than its next meeting.
The Audit Committee of PPL approved 100% of the 2015 and 2014 services provided by EY.
* * * * * *
Report of the Audit Committee
The Audit Committee assists the Board of Directors in fulfilling its oversight responsibilities with respect to, among other items, the integrity of the companys
financial statements. Company management is responsible for the preparation and integrity of the companys financial statements, the financial reporting process and the associated system of internal controls over financial reporting and
assessing the effectiveness of such controls. For 2015, Ernst & Young LLP was the companys principal independent registered public accounting firm, or independent auditor, and was responsible for auditing the
companys annual financial statements, expressing an opinion as to whether the financial statements present fairly, in all material respects, the companys financial position and results of operations in conformity with U.S. generally
accepted accounting principles, and expressing an opinion as to the effectiveness of internal control over financial reporting in accordance with the Standards of the Public Company Accounting Oversight Board (PCAOB). The Audit Committees
responsibility is to monitor and review these processes. Among other duties, the Audit Committee has reviewed and discussed the audited financial statements, significant accounting policies, and other disclosures with management and the independent
auditor. The Audit Committee has also reviewed and discussed highlights of quarterly earnings calls and earnings press releases.
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78 PPL CORPORATION 2016 Proxy Statement
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PROPOSAL NO. 5: RATIFICATION OF THE APPOINTMENT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
In its capacity as a Committee of the Board of
Directors, the Audit Committee is directly responsible for the appointment, compensation, retention and oversight of the work of the independent auditor. The independent auditor reports directly to the Audit Committee, and the Audit Committee is
responsible for pre-approving all audit and permitted non-audit services to be provided by the independent auditor. In determining whether to reappoint the independent auditor, the Audit Committee takes into consideration various factors,
including: the historical and recent performance of the independent auditor on the audit; its professional qualifications; the quality of ongoing discussions with the independent auditor; external data, including recent PCAOB reports on the
independent auditor and its peer firms; the results of an internal survey of the independent auditors service and quality; and the appropriateness of fees. The Audit Committee also has a policy to periodically solicit competitive proposals for
audit services from independent public accounting firms.
The Audit Committee has discussed with the independent auditor the matters required to be discussed by
applicable Auditing Standards, as periodically adopted or amended, and the rules of the Securities and Exchange Commission (SEC) including the appropriateness and application of accounting principles. The Audit Committee has received the written
disclosures and the letter from the companys independent auditor required by applicable requirements of the PCAOB regarding the independent auditors communications with the Audit Committee concerning independence and has had discussions
with Ernst & Young LLP about its independence. The Audit Committee also considered whether the provision of non-audit services by Ernst & Young LLP is compatible with maintaining the independence of such independent auditor.
In the performance of its responsibilities, the Audit Committee met periodically with the internal auditor and the independent auditor, with and without management
present, to discuss the results of their examinations, their evaluations of the companys internal controls, and the overall quality of the companys financial reporting. The Audit Committee also met periodically with various members of
management to discuss compliance activities. With respect to risk management, the Audit Committee regularly reviews information with regard to inherent risks to the company, the identification, assessment, management and monitoring of those risks,
and risk management practices and activities of the company. While the Audit Committee has responsibility for overseeing the companys process for identifying, assessing and managing business risks, each of the other Board Committees also
considers risks within its areas of responsibility. For example, the Compensation, Governance and Nominating Committee reviews various risks, including risks related to compensation matters as well as legal and regulatory compliance risks as they
relate to corporate governance.
The Audit Committee has reviewed and discussed, together with management and the independent auditor, managements assessment of
internal controls relating to the adequacy and effectiveness of financial reporting. The Audit Committee has also reviewed the process utilized in connection with the certifications of the companys principal executive officer and principal
financial officer under the Sarbanes-Oxley Act of 2002 and related SEC rules for the companys annual and quarterly filings with the SEC. In addition, the Audit Committee has established a process and procedures for the receipt, retention and
treatment of complaints regarding accounting or auditing matters.
Based on the reviews and discussions referred to above, the Audit Committee recommended to the
Board of Directors, and the Board approved, that the audited financial statements and managements assessment of the effectiveness of the companys internal control over financial reporting be included in the companys Annual Report
on Form 10-K for the year ended December 31, 2015.
The Audit Committee has a Charter that specifies its responsibilities. The committee Charter, which has been
approved by the Board of Directors, is available on the companys website (
www.pplweb.com/audit-committee
). Also, the Audit Committees procedures and practices comply with the requirements of the SEC and the NYSE applicable to
corporate audit committees.
The Audit Committee
Steven G. Elliott, Chair
Rodney C. Adkins
Raja Rajamannar
Craig A. Rogerson
Keith H. Williamson
Armando Zagalo de Lima
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PPL CORPORATION 2016 Proxy Statement 79
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What are you voting on?
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We have been notified that two shareowners intend to present proposals for consideration at the Annual Meeting. The shareowner proposals and
supporting statements appear below, under Proposals 6 and 7, and we present the proposals as they were submitted to us. We recommend that you vote
against
the two shareowner proposals. Our responses are included immediately after
each proposal.
Vote Required for
Approval.
The affirmative vote of a majority of the votes cast, in person or by proxy, by all shareowners voting as a single class, is required to approve each shareowner proposal.
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The first shareowner proposal is submitted by William Steiner, 112 Abbottsford Gate, Piermont, NY 10968, who has advised the company
that his proxy, John Chevedden or his designee, plans to introduce the following resolution at the Annual Meeting. We have been notified that Mr. Steiner is the beneficial owner of no less than 100 shares of the companys common stock.
PROPOSAL 6: INDEPENDENT BOARD CHAIRMAN
Shareholders request our Board of Directors to adopt as policy, and amend our governing documents as necessary, to require the Chair of the Board of Directors, whenever
possible, to be an independent member of the Board. The Board would have the discretion to phase in this policy for the next CEO transition, implemented so it does not violate any existing agreement. If the Board determines that a Chair who was
independent when selected is no longer independent, the Board shall select a new Chair who satisfies the requirements of the policy within a reasonable amount of time. Compliance with this policy is waived if no independent director is available and
willing to serve as Chair. This proposal requests that all the necessary steps be taken to accomplish the above.
According to Institutional Shareholder Services 53%
of the Standard & Poors 1,500 firms separate these 2 positions 2015 Board Practices, April 12, 2015. This proposal topic won 50%-plus support at 5 major U.S. companies in 2013 including 73%-support at Netflix.
It is the responsibility of the Board of Directors to protect shareholders long-term interests by providing independent oversight of management. By setting
agendas, priorities and procedures, the Chairman is critical in shaping the work of the Board.
A board of directors is less likely to provide rigorous independent
oversight of management if the Chairman is also the CEO, as is the case with our Company. Having a board chairman who is independent of management is a practice that will promote greater management accountability to shareholders and lead to a more
objective evaluation of management.
According to the Millstein Center for Corporate Governance and Performance (Yale School of Management), The independent
chair curbs conflicts of interest, promotes oversight of risk, manages the relationship between the board and CEO, serves as a conduit for regular communication with shareowners, and is a logical next step in the development of an independent
board.
An NACD Blue Ribbon Commission on Directors Professionalism recommended that an independent director should be charged with organizing the
boards evaluation of the CEO and provide ongoing feedback; chairing executive sessions of the board; setting the agenda and leading the board in anticipating and responding to crises. A blue-ribbon report from The Conference Board also
supported this position.
A number of institutional investors said that a strong, objective board leader can best provide the necessary oversight of management. Thus,
the California Public Employees Retirement Systems Global Principles of Accountable Corporate Governance recommends that a companys board should be chaired by an independent director, as does the Council of Institutional Investors.
An independent director serving as chairman can help ensure the functioning of an effective board. Please vote to enhance shareholder value:
Independent Board Chairman Proposal 6
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80 PPL CORPORATION 2016 Proxy Statement
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PPLS STATEMENT IN RESPONSE
The Board of Directors has considered this proposal and concluded that its adoption would not be in the best interests of our shareowners.
The Board is in the best position to evaluate and determine the ideal Board leadership structure for the company at any
given time, and the proposals generic and inflexible approach to corporate governance is not in the best interests of the company and its shareowners.
The Board has in-depth knowledge of PPLs
businesses and operations, strategic vision and goals and culture and is acutely aware of the opportunities and challenges facing the company and the capabilities of senior management. As such, the Board is uniquely positioned to determine the most
effective Board leadership structure for PPL at any given time. Accordingly, rather than adopting a one-size-fits-all approach to corporate governance, the Board believes that the interests of the company and its shareowners are best
served when the Board has the ability to choose a leadership structure that can be tailored to the needs of the company.
At the present time, the Board
believes that the most effective leadership structure for PPL is for our CEO to also serve as Chairman of the Board. This combined role enables PPL to speak with a unified voice in communicating with shareowners, customers, regulators, analysts,
employees and other constituencies, creates clear lines of authority and accountability and provides the necessary leadership to execute PPLs strategy. Moreover, the Board believes that our current leadership structure is optimal, given
Mr. Spences deep knowledge of PPLs complex business and industry and his ability to formulate and implement strategic initiatives. Mr. Spence is intimately involved in the day-to-day operations of the company and is thus in the
best position to identify major issues, risks, and developments affecting our company and evaluate the most critical issues for consideration by the Boards independent directors.
While the Board is satisfied that combining the roles of Chairman and CEO has served our shareowners well over time, it is important to note that, under PPLs
current structure, the Board retains the flexibility to separate the Chairman and CEO roles if and when the Board believes that a separation will improve the companys performance or better serve our shareowners. In contrast, the proposed
policy would constrain the Boards decision-making and would not serve shareowners well over time.
The Board
has served shareowners very well in its thoughtful determination of whether to combine the roles of Chairman and CEO.
Our exemplary performance and our record of good corporate governance demonstrate the
effectiveness of our current leadership structure and the soundness of the decisions made by the Board in this regard. Since Mr. Spences appointment as Chairman in April 2012, PPL has completed a strategic transformation into a
high-performing, purely regulated utility business after successfully completing the spinoff of our competitive generation business in the U.S. In 2015, PPLs 6.3% total shareowner return was among the highest overall in its sector,
outperforming the Philadelphia Stock Exchange Utility Index. Given the length of Mr. Spences tenure as PPLs Chairman and CEO and our performance during that period, the Board believes that shareowners will not benefit from
separating the roles of Chairman and CEO and that separating the two roles at this time could undermine the clarity of PPLs strategic focus.
The Boards independent presiding (or lead) director provides an effective balance for our management.
The Board recognizes the need to have
effective, independent Board oversight of management. To that end, whenever the Chairman is also the CEO or is a director who does not otherwise qualify as an independent director, PPLs
Guidelines for Corporate Governance
specifically provide that the independent directors designate an independent director to serve as the presiding director to chair the executive sessions of the Board and serve as the lead director. Pursuant to our
Guidelines for
Corporate Governance
, the duties of the independent lead director include, among other responsibilities: presiding at all meetings of the Board at which the Chairman and CEO is not present; serving as an adviser to the Chairman and CEO, as well
as a non-exclusive liaison between the independent directors and the Chairman and CEO; periodically reviewing or suggesting meeting agendas and schedules for the Board and at least annually soliciting suggestions from the Board on meeting topics;
calling meetings of the independent directors, as needed; and responding to shareowner and other stakeholder questions that are directed to the presiding or lead director, as well as to the independent directors as a group.
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PPL CORPORATION 2016 Proxy Statement 81
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SHAREOWNER PROPOSALS
The Board believes that the responsibilities delegated to the presiding or lead director are
substantially similar to many of the functions typically fulfilled by a board chairman. From the perspective of the Board, the lead director position balances the need for effective and independent oversight of management with the need for strong,
unified leadership.
Other aspects of PPLs governance practices also enable effective independent oversight
of management.
In addition to the above, the Board has taken the following steps to further ensure that the Board provides effective and independent oversight of management.
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With the exception of Mr. Spence, all of our directors are independent under the applicable listing standards of the New York Stock Exchange and have been determined by the full Board of Directors to have no
relationship with the company that would compromise each respective directors status as an independent director.
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All members of the Boards operating committees are independent, allowing for independent oversight of such important matters as the companys business plan, the integrity of PPLs financial statements,
legal compliance, risk management, executive compensation, the nomination of directors and the evaluation of Board members.
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Pursuant to our
Guidelines for Corporate Governance
, the independent directors meet at least annually in executive session to evaluate the CEOs performance, to discuss the CEOs compensation and to
address any other matters they deem appropriate.
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The independent directors also convene in executive sessions without any management or employee directors present at each regularly scheduled Board meeting and as needed to review any matters they deem appropriate.
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The board members also have direct and unlimited access to the companys management a right they are encouraged to exercise and are authorized to retain independent outside financial, legal,
compensation or other advisers at any time.
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As with other governance matters, we will continue to consider, as appropriate, our companys
leadership structure and how the leadership structure can enhance the effectiveness of our corporate governance practices. Given our companys strong independent director presence, the role of the independent presiding director and other
corporate governance considerations, as well as the clear advantages to maintaining a flexible, tailored approach to determining PPLs Board leadership structure, we believe that mandating that the Chairman be an independent director would not
be in the best interests of PPL and its shareowners.
Your Board of Directors recommends
that you vote AGAINST Proposal 6
The second shareowner proposal is submitted by the Comptroller of the State of New York as the trustee of
the New York State Common Retirement Fund and the administrative head of the New York State and Local Retirement System. The New York State Common Retirement Fund beneficially owned 1,651,740 shares of the companys common stock as of
December 3, 2015, the date of the proposal. The request was submitted on behalf of Thomas P. DiNapoli, State Comptroller, State of New York, Division of Corporation Governance, 59 Maiden
Lane-30
th
Floor, New York, New York 10038. The following proposal and supporting statement were submitted by the New York State Common Retirement Fund.
PROPOSAL 7: REPORT ON DISTRIBUTED RESOURCES DEPLOYMENT
Whereas:
In May 2014, Barclays downgraded bonds for the entire U.S. electric
utility sector due to risk of rapidly improving solar power and energy storage technologies.
A 2014 report by UBS found that solar systems and batteries will be
disruptive technologies for utilities due to steeply declining costs.
In a recent analysis, Deutsche Bank predicts solar photovoltaic (PV) power costs will reach
parity with average electricity prices (grid parity) in 36 U.S. states as soon as 2017, assuming todays 30% solar investment tax credit (lTC) is reduced to 10% in 2017 as current legislation stipulates.
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82 PPL CORPORATION 2016 Proxy Statement
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The U.S. EPA recently released its final Clean
Power Plan that requires states to achieve 32% GHG reductions on average nationwide (from 2005 levels), listing renewable energy as a key pillar of the plan.
94% of
electric power industry representatives surveyed by PricewaterhouseCoopers predict that the power utility business model will be either completely transformed or significantly changed between today and 2030.
A November 2014 Moodys report indicated that a proactive regulatory response to distributed generation is credit positive as it gives utilities improved rate
designs and helps in the long-term planning for their infrastructure.
Navigant Research indicated that: Utilities that proactively engage with their
customers to accommodate distributed generation and even participate in the market themselves limit their risk and stand to benefit the most.
Electric power companies already capitalizing on providing distributed solar generation and energy efficiency services to customers include NRG Energy and Green Mountain
Power.
The UNs Intergovernmental Panel on Climate Change (IPCC), estimates that a 50% reduction in greenhouse gas emissions globally is needed by 2050 (from
1990 levels) to stabilize global temperatures, entailing a U.S. target reduction of 80%.
Resolved:
With board oversight, assess how PPL Corporation is
adapting (or could adapt) its business model to enable increased deployment of distributed low-carbon electricity generation resources as a means to reduce societal greenhouse gas emissions and protect shareholder value, and report to shareholders
(at reasonable cost and omitting proprietary information) by September 1st, 2016.
Supporting Statement
:
We recommend the assessment
include analysis of revenue models for significant adoption of customer-sited solar and other applicable distributed generation resources (to be determined by management) using equipment owned by PPL Corporation or by partnering with third-party
installers who either lease or sell the equipment to customers.
PPLS STATEMENT IN RESPONSE
Your Board of Directors has considered this proposal and concluded that its adoption would not be in the best interest of our shareowners.
Management recognizes its responsibility for environmental stewardship and, together with Board oversight, continually considers strategies and initiatives that improve
the efficiency and effectiveness of our delivery services, reduce our environmental footprint and increase shareowner value. The companys long-term business planning includes the development of distributed generation and investments in
technologies that will facilitate further deployment of distributed low-carbon generation resources.
We provide detailed information regarding our commitment to
environmental stewardship and corporate responsibility in our corporate stakeholder report, which is posted on the companys website at https://pplstakeholderreport.com/. The companys actions and plans related to distributed low-carbon
generation are included in that report. Additionally, PPL is currently taking steps to create a more robust stakeholder report that will use the Global Reporting Initiatives Sustainability Reporting Standards to disclose information specific
to the electric sector.
The following are some examples of initiatives PPL has taken that demonstrate our environmental stewardship through the advancement of
distributed low-carbon generation and related efforts:
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Western Power Distribution (WPD) participates in the U.K. Low Carbon Networks Fund, recently renamed the Network Innovation Allowance and Competitions, which has launched projects that test innovative methods to enable
the widespread adoption by customers of low-carbon technologies such as solar panels, heat pumps and electric vehicles. Specific projects include:
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Expanding the options available for generation customers to connect a wide range of renewable energy projects to the electricity network, including connecting low-carbon generation directly to urban electricity
networks.
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Using feedback from energy storage, demand response and other trial projects to plan network upgrades that enhance the flexibility of WPDs distribution network.
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PPL CORPORATION 2016 Proxy Statement 83
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SHAREOWNER PROPOSALS
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Using batteries as storage devices for excess energy from solar panels. WPD, in partnership with a solar company, is currently developing one of the first industrial-scale battery storage facilities linked to a solar
park and the electricity network.
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Louisville Gas and Electric Company (LG&E) and Kentucky Utilities Company (KU) are approaching low-carbon, distributed generation options on several fronts:
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Most recently, the utilities are exploring offering individual solar generation facilities to commercial and industrial customers. The company would own and operate the distributed solar facilities, with a capability
designed to meet each individual customers unique needs.
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LG&E and KU are developing Kentuckys first utility-scale solar array, which will be capable of producing up to 10 megawatts. Construction began in October 2015, and the facility is expected to be commercially
available in June of this year.
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The utilities are seeking regulatory permission to own and operate public electric vehicle charging stations throughout Kentucky to help advance the electric vehicle market in Kentucky.
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LG&E and KU are partnering with the Electric Power Research Institute for a three-year project to learn more about battery storage. A one megawatt battery will be installed near the LG&E and KUs Brown
Solar facility and is expected to begin operation in October. The research project is designed to evaluate battery integration, test potential applications for utility scale batteries and understand operations and maintenance.
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In Pennsylvania, PPL Electric Utilities Corporation (PPL Electric) is making investments to expand customer access to renewable and distributed resources:
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PPL Electric has made significant investments in smart grid technology that can help the company better integrate distributed generation facilities, such as wind, solar and other renewable sources.
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Pennsylvania law prohibits regulated utility ownership of generation resources; however, PPL Electric participates in a statewide alternative energy portfolio standard. From June 2015 to May 2016, alternative power
sources will comprise 13.7 percent of the power it buys for customers, including 5.5 percent from solar, wind and hydropower energy sources.
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As to the
request to provide analysis of revenue models for significant adoption of customer-sited solar and other applicable distributed generation resources, the company believes that such modeling would show a wide range of possible revenue outcomes given
the emerging state of the distributed generation market, as well as the dynamic and complex nature of evolving state and federal regulations. Given its speculative nature, such an analysis would not be instructive to our shareowners and other
stakeholders or provide a valid assessment of the true risks or opportunities for PPL. Furthermore, to model what third-party installers may or may not do to lease or sell equipment in our specific markets would be difficult, if not impossible.
In light of our existing stakeholder report, our continued assessment of viable distributed low-carbon generation resources and our ongoing related distribution network
improvements, the Board believes that preparation of the report requested by the proponent is neither the most effective use of your companys resources nor in the best interest of our shareowners.
Your Board of Directors recommends
that you vote AGAINST Proposal 7
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84 PPL CORPORATION 2016 Proxy Statement
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On what matters am I voting?
There are seven proposals scheduled to be voted on at the meeting:
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the election of nine directors, as listed in this proxy statement, for a term of one year;
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an advisory vote to approve compensation of named executive officer, or NEOs;
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the approval of the 2016 Short-term Incentive Plan, an annual cash incentive compensation plan compliant with Internal Revenue Code Section 162(m);
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an amendment of the companys articles of incorporation to increase the number of authorized shares of common stock;
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the ratification of the appointment of Deloitte & Touche LLP as the companys independent registered public accounting firm for the year ending December 31, 2016; and
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the consideration of two shareowner proposals, if properly presented at the meeting.
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Why am
I receiving these proxy materials?
Our Board of Directors has made these materials available to you on the Internet or has delivered
printed versions of these materials to you by mail in connection with the Board of Directors solicitation of proxies for use at our Annual Meeting of Shareowners. As a shareowner, you are invited to attend the Annual Meeting and are requested
to vote on the items of business described in this Proxy Statement.
What is included in these materials?
These proxy materials include:
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this Proxy Statement for the Annual Meeting; and
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our Annual Report for the fiscal year ended December 31, 2015.
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If you received printed versions of
these materials by mail, these materials also include the proxy card or voting instruction form for the Annual Meeting.
Why did I
receive a notice in the mail regarding the Internet availability of proxy materials instead of a full set of printed proxy materials?
In accordance with SEC rules, instead of mailing a printed copy of our proxy materials to all of our shareowners, we have elected to furnish such
materials to selected shareowners by providing access to these documents over the Internet. Accordingly, commencing on April 12, 2016, we sent a Notice of Internet Availability of Proxy Materials (the Notice) to most of our shareowners.
These shareowners have the ability to access the proxy materials on a website referred to in the Notice and to download printable versions of the proxy materials or to request to receive a printed set of the proxy materials. Instructions on how to
access the proxy materials over the Internet or to request a printed copy of the materials from us may be found in the Notice. We encourage you to take advantage of the availability of the proxy materials on the Internet in order to help reduce the
environmental impact and cost of the Annual Meeting.
How can I get electronic access to the proxy materials?
The Notice provides you with instructions regarding how to:
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view our proxy materials for the Annual Meeting on the Internet;
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vote your shares after you have viewed our proxy materials; and
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request a printed copy of the proxy materials.
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Copies of the proxy materials are available for viewing at
www.pplweb.com/PPLCorpProxy.
If you received printed versions of these materials by mail, these materials also include the proxy card or
voting instruction form for the Annual Meeting.
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PPL CORPORATION 2016 Proxy Statement 85
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GENERAL INFORMATION
Who can vote?
Holders of PPL Corporation common stock as of the close of business on the record date, February 29, 2016, may vote at the Annual Meeting, either in
person or by proxy. Each share of PPL Corporation common stock is entitled to one vote on each matter properly brought before the Annual Meeting.
What is the difference between holding shares as a shareowner of record and as a beneficial owner?
If your
shares are registered directly in your name with PPL Corporations transfer agent, Wells Fargo Bank, N.A., you are considered, with respect to those shares, the shareowner of record. The Notice or printed copies of the proxy
materials have been sent directly to you by PPL Corporation.
If your shares are held in a stock brokerage account or by a bank or other holder
of record, you are considered the beneficial owner of shares held in street name, and the shareholder of record of your shares is your broker, bank or other holder of record. The Notice or printed copies of the
proxy materials have been forwarded to you by your broker, bank or other holder of record. As the beneficial owner, you have the right to direct your broker, bank or other holder of record to vote your shares. The company urges you to instruct your
broker, bank or other holder of record on how to vote your shares. Please understand that, if you are a beneficial owner, the company does not know that you are a shareowner or how many shares you own.
If I am a shareowner of record, how do I vote?
If you are a
shareowner of record
, you can vote via the Internet, by telephone, by mail or in person at the Annual Meeting.
If you received a Notice, you may vote by proxy at
www.proxypush.com/ppl
by following the instructions found in the Notice. If you received or requested printed copies of the proxy materials by mail, you may vote via the Internet by following the instructions on your proxy card.
If you received or requested printed copies of the proxy
materials by mail, you may vote by proxy by calling the toll-free telephone number found on your proxy card. Please have your proxy card and the last four digits of your Social Security Number or Tax Identification Number available when you call.
The telephone and Internet voting facilities for shareowners of record will be available 24 hours a day and will close at 11:59 p.m.,
Central Time, on May 24, 2016.
If you received or requested printed copies of the proxy
materials by mail, you may vote by proxy by completing, signing and dating the proxy card and returning it in the postage-paid envelope we have provided. If you return your signed proxy card but do not indicate your voting preferences, the persons
named in the proxy card will vote the shares represented by that proxy as recommended by the Board of Directors.
If the postage-paid envelope is
missing, please mail your completed proxy card to PPL Corporation, c/o Shareowner Services, P.O. Box 64873, St. Paul, MN 55164-0873. We must receive your mailed proxy card no later than 11:59 p.m., Central Time, on May 24,
2016 in order for your vote to be counted.
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In person at the Annual Meeting
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You may come to the Annual Meeting
and cast your vote there, either by proxy or by ballot. For those shareowners who received a Notice, please bring the Notice, which will serve as your admission ticket. For those shareowners who received printed copies of the proxy materials, please
bring your admission ticket with you to the Annual Meeting.
If you vote via the Internet or by telephone, or mail to us your properly completed and
signed proxy card, your shares of PPL Corporation common stock will be voted according to the choices that you specify. If you sign and mail your proxy card without marking any choices, your proxy will be voted:
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FOR the election of all nominees listed for director;
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FOR the advisory vote to approve compensation of NEOs;
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86 PPL CORPORATION 2016 Proxy Statement
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FOR the approval of the 2016 Short-term Incentive Plan;
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FOR the amendment of the companys articles of incorporation to increase the number of authorized shares of common stock;
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FOR the ratification of the appointment of Deloitte & Touche LLP as the companys independent registered public accounting firm for the year ending December 31, 2016; and
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AGAINST the two shareowner proposals.
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We do not expect any other matters to be brought before the Annual
Meeting. By giving your proxy, however, you appoint the persons named as proxies as your representatives at the meeting. If an issue comes up for vote at the Annual Meeting that is not included in the proxy material, the proxy holders will vote your
shares in accordance with their best judgment.
If I am a beneficial owner of shares held in street name, how do I vote?
As the beneficial owner of shares held in street name, you have the right to direct your broker, bank or other holder of record how to
vote your shares, and it is required to vote your shares in accordance with your instructions. If you do not give instructions to your brokerage firm or bank, it will nevertheless be entitled to vote your shares with respect to routine
items, but it will not be permitted to vote your shares with respect to non-routine items. In the case of a non-routine item, your shares will be considered broker non-votes on that proposal.
We recommend that you follow the voting instructions in the materials you receive from your broker, bank or other holder of record to vote via the
Internet, by telephone or by mail. You may vote shares held in street name at the Annual Meeting only if you obtain a signed proxy from the record holder (broker or other nominee) giving you the right to vote the shares. Please see the attendance
requirements discussed under Who can attend the Annual Meeting?
As a participant in the PPL Corporation Employee Stock
Ownership Plan, or ESOP, how do I vote shares held in my plan account?
If you are a participant in our ESOP, you have the right to
provide voting directions to the plan trustee, Fidelity Investments, by submitting your ballot card for those shares of our common stock that are held by the plan and allocated to your account. ESOP participant ballots are treated confidentially.
Full and fractional shares credited to your account under the plan as of February 29, 2016 will be voted by the trustee in accordance with your instructions. Participants may not vote in person at the Annual Meeting. Similar to the process for
shareowners of PPL Corporation common stock who receive printed proxy materials, you may vote by mail, telephone or on the Internet. To allow sufficient time for voting by the trustee of the plan, your ballot must be returned by 11:59 p.m.,
Central Time, on May 22, 2016, if you vote by mail, by telephone or on the Internet. Please follow the ballot instructions specific to the participants in the ESOP.
If you do not return your ballot, or return it unsigned, or do not vote by phone or on the Internet, the plan provides that the trustee will vote your
shares in the same percentage as shares held by participants for which the trustee has received timely voting instructions. The plan trustee will follow participants voting directions and the plan procedure for voting in the absence of voting
directions, unless it determines that to do so would be contrary to the Employee Retirement Income Security Act of 1974.
May I change
or revoke my vote?
Any shareowner giving a proxy has the right to revoke it at any time before it is voted by:
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giving notice in writing to our Corporate Secretary, which must be received no later than the close of business on May 24, 2016;
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completing, signing, dating and returning a new proxy card or voting instruction form with a later date;
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providing a later-dated vote using the telephone or Internet voting procedures; or
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attending the Annual Meeting and voting in person.
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PPL CORPORATION 2016 Proxy Statement 87
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GENERAL INFORMATION
Will my shares be voted if I do not provide my proxy?
It depends on whether you hold your shares in your own name or as the beneficial owner in the name of a broker, bank or other holder
of record. If you hold your shares directly in your own name, they will not be voted unless you provide a proxy or vote in person at the Annual Meeting. Brokerage firms, banks or other holders of record generally have the authority to vote
customers unvoted shares on certain routine matters. For example, if your shares are held in the name of a brokerage firm, bank or other holder of record, such firm can vote your shares for the ratification of the appointment of
Deloitte & Touche LLP, as this matter is considered routine under the applicable rules. The company urges you to instruct your broker, bank or other holder of record on how to vote your shares.
Who can attend the Annual Meeting?
If you are a shareowner of record and you received a Notice, the Notice will serve as your admission ticket. If you are a shareowner of record who
received or requested printed copies of the proxy materials by mail, your admission ticket is enclosed with your proxy materials. If you hold shares through the ESOP, your admission ticket is the letter enclosed with your ballot card. You will need
to bring your Notice or admission ticket, along with picture identification, to the meeting. If you own shares as a beneficial owner (in street name), please bring to the meeting proof of your PPL common stock ownership, such as your most recent
brokerage statement, or an ownership confirmation letter from your broker, or your Notice or PPL voting instruction form sent to you by your broker, along with picture identification. PPL will use your brokerage document to verify your ownership of
PPL common stock and admit you to the meeting.
What constitutes a quorum?
In order to conduct the Annual Meeting, a majority of the outstanding shares entitled to vote must be present, in person or by proxy, in order to
constitute a quorum. As of the record date, there were 675,775,274 shares of common stock outstanding, and each share of common stock is entitled to one vote. No shares of preferred stock of the company were outstanding. If you submit a properly
executed proxy card or vote by telephone or on the Internet, you will be considered part of the quorum. Abstentions and broker non-votes will be counted as shares present and entitled to vote at the meeting for purposes of determining a
quorum, so long as the broker, bank or other holder of record casts a vote on behalf of a shareowner on any issue other than a procedural motion. A broker non-vote occurs when a broker, bank or other holder of record who holds shares for
another person has not received voting instructions from the beneficial owner of the shares and, under NYSE listing standards, does not have discretionary authority to vote on a proposal.
What vote is needed for these proposals to be adopted?
Each matter to be submitted to shareowners, including the election of directors, requires the affirmative vote of a majority of the votes cast, in person
or by proxy, by the shareowners at the meeting. For purposes of determining the number of votes cast with respect to a particular matter, only those cast for or against are included. Abstentions and broker non-votes are
counted only for purposes of determining whether a quorum is present at the meeting.
Under our articles of incorporation and our
Guidelines for
Corporate Governance
, directors must be elected by a majority of the votes cast in uncontested elections, such as the election of directors at the Annual Meeting. This means that the number of votes cast for a director nominee must
exceed the number of votes cast against that nominee. Abstentions and broker non-votes are not counted as votes for or against a director nominee. Any nominee who is an incumbent director and does not receive a
majority of votes cast for his or her election would be required to tender his or her resignation promptly following the failure to receive the required vote. Within 90 days following the final tabulation of the shareowner vote, the
Compensation, Governance and Nominating Committee would then be required to make a recommendation to the Board as to whether the Board should accept the resignation, and the Board would be required to decide whether to accept the resignation. The
Board must then promptly disclose its decision-making process. In a contested election, the required vote would be a plurality of votes cast. Full details of this policy are set forth in our
Guidelines for Corporate Governance
, which can be
found in the Corporate Governance section of our website (
www.pplweb.com/Guidelines
).
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88 PPL CORPORATION 2016 Proxy Statement
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Proposal 1 (election of
directors), Proposal 2 (advisory vote to approve executive compensation), Proposal 3 (vote to approve annual cash incentive compensation plan) and Proposals 6 and 7 (shareowner proposals) are non-routine matters under NYSE rules,
and brokerage firms, banks or other holders of record are prohibited from voting on each of these proposals without receiving instructions from the beneficial owners of the shares. Abstentions and broker
non-votes
will not be considered as votes cast and will have no effect on the outcome of the vote.
Proposal 4
(amendment of the companys articles of incorporation to increase the number of authorized shares of common stock) and Proposal 5 (ratification of auditor), are each considered to be a routine matter under NYSE rules, and
brokers, banks or other holders of record may vote in their discretion on behalf of clients who have not furnished voting instructions. Abstentions will not be treated as votes cast and will have no effect on the outcome of the vote on these
proposals.
Who conducts the proxy solicitation and how much will it cost?
PPL Corporation will pay the cost of soliciting proxies on behalf of the Board of Directors. In addition to the solicitation by mail, a number of regular
employees may solicit proxies in person, over the Internet, by telephone or by facsimile. We have retained Innisfree M&A Incorporated to assist in the solicitation of proxies for the Annual Meeting, and we expect that the remuneration to
Innisfree for its services will not exceed $15,000, plus reimbursement for out-of-pocket expenses. Brokers, banks and other holders of record who hold shares for the benefit of others will be asked to send proxy material to the beneficial owners of
the shares, and we will reimburse them for their expenses.
Who can assist me if I have questions about the annual meeting or need help
voting my shares?
Your vote is important!
If you need any help voting your shares or have questions about the Annual Meeting,
please call the firm assisting us with the solicitation of proxies:
INNISFREE M&A INCORPORATED
Shareowners may call toll-free at 877-825-8730
Banks and brokers may call collect at 212-750-5833
How does the company keep voter information confidential?
To preserve voter confidentiality, we voluntarily
limit access to shareowner voting records to certain designated employees of PPL Services Corporation. These employees sign a confidentiality agreement that prohibits them from disclosing the manner in which a shareowner has voted to any employee of
a PPL affiliate or to any other person (except to the Judges of Election or the person in whose name the shares are registered), unless otherwise required by law.
What is householding, and how does it affect me?
We have adopted a procedure approved by the SEC called
householding. Under this procedure, shareowners of record who have the same address and last name and receive hard copies of the Annual Meeting materials will receive only one copy of this Notice of Annual Meeting and Proxy Statement and
the 2015 Annual Report, unless we are notified that one or more of these shareowners wishes to continue receiving individual copies. If you and other PPL shareowners living in your household do not have the same last name, you may also request to
receive only one copy of future proxy statements and financial reports.
Householding conserves natural resources and reduces our distribution costs.
Shareowners who participate in householding will continue to receive separate proxy cards. Also, householding will not in any way affect dividend check mailings.
If you are eligible for householding, but you and other shareowners of record with whom you share an address currently receive multiple copies of this
Notice of Annual Meeting and Proxy Statement and any accompanying documents, or if you hold PPL stock in more than one account, and in either case you wish to receive only a single copy of each document for your household, please contact Wells Fargo
Shareowner Services in writing: ATTN: Householding/PPL Corporation, P.O. Box 64854, St. Paul, MN 55164-0854.
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PPL CORPORATION 2016 Proxy Statement 89
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GENERAL INFORMATION
Alternatively, if you participate in householding and wish to receive a separate
copy of this Notice of Annual Meeting and Proxy Statement and any accompanying documents or prefer to discontinue your participation in householding, please contact Wells Fargo as indicated above and a separate copy will be sent to you promptly.
If you are a beneficial owner, you can request information about householding from your bank, broker or other holder of record.
When are the 2017 shareowner proposals due?
To be included in the proxy materials for the 2017 Annual Meeting, any proposal intended to be presented at that Annual Meeting by a shareowner must be
received by the Secretary of the company in writing no later than December 13, 2016:
Corporate Secretarys Office
PPL Corporation
Two
North Ninth Street
Allentown, Pennsylvania 18101
To be properly brought before the Annual Meeting, any other proposal must be received no later than 75 days in advance of the date of the 2017 Annual
Meeting.
Acronyms used in this proxy statement
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CD&A
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Compensation Discussion and Analysis
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LKE
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LG&E and KU Energy LLC
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CGNC
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Compensation, Governance and Nominating Committee
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NEO
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Named executive officer
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DDCP
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Directors Deferred Compensation Plan
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NYSE
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New York Stock Exchange
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EPS*
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Earnings per share from ongoing operations
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PPL
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PPL Corporation
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EBIT*
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Earnings from ongoing operations before interest and taxes
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SEC
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Securities and Exchange Commission
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EBITDA
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Earnings from ongoing operations before interest, taxes, depreciation and amortization
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SERP
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Supplemental Executive Retirement Plan
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ESOP
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Employee Stock Ownership Plan
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SIP
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2012 Stock Incentive Plan
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GAAP
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Generally accepted accounting principles
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TSR
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Total Shareowner Return
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ICP
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Incentive Compensation Plan
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UTY
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Philadelphia Stock Exchange Utility Index
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ICPKE
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Incentive Compensation Plan for Key Employees
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WPD
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Western Power Distribution
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IRS
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Internal Revenue Service
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*
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See Annex A for a reconciliation of corporate financial measures presented in accordance with GAAP to non-GAAP measures used for compensation.
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90 PPL CORPORATION 2016 Proxy Statement
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ANNEX A
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RECONCILIATION OF FINANCIAL MEASURES
(UNAUDITED)
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Reconciliation of Net Income to Earnings from Ongoing Operations
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(Millions of Dollars)
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(Per ShareDiluted)
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2015
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2014
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2015
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2014(a)
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Net Income
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$ 682
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$1,737
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$ 1.01
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$ 2.61
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Less: Special Items (expense) benefit:*
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Foreign currency-related economic hedges
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55
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127
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0.08
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0.19
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Spinoff of the Supply segment
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(943
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)
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232
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(1.39
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)
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0.35
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Change in U.K. tax rate
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78
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0.11
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Change in WPD line loss accrual
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(52
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)
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(0.08
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)
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Settlement of certain income tax positions
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18
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0.03
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Certain valuations allowances
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(12
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)
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(0.02
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)
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Other (net)
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(3
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)
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(2
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)
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(0.01
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)
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(0.01
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)
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Total Special Items
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(807
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305
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(1.20
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)
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0.45
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Earnings from Ongoing Operations
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$1,489
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$1,432
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$ 2.21
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$ 2.16
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Dissynergies-spinoff of Supply segment
expense (benefit):(b)
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Indirect operation and maintenance
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47
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0.07
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Interest expense
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29
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0.05
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Depreciation
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7
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0.01
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Total Dissynergies-Spinoff of Supply Segment
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83
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0.13
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Earnings from Ongoing Operations (Adjusted)
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$1,349
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$ 2.03
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*
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See Combined Managements Discussion and Analysis of Financial Condition and Results of Operations in PPLs Annual Report on Form 10-K for the fiscal year ended December 31, 2015 for additional information
on special items.
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(a)
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The If-Converted Method has been applied to PPLs 2011 Equity Units, resulting in $9 million of interest charges (after-tax) being added back to earnings and approximately 11 million shares of
PPL Common Stock being treated as outstanding. Both adjustments are only for purposes of calculating diluted earnings per share.
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(b)
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Represents 2014 costs allocated to the Supply segment that remained with PPL after the spinoff of the Supply segment. Earnings from ongoing operations (adjusted) for 2014 also reflects the impact of
spinoff dissynergies that would remain with PPL after completion of the transaction, if left unmitigated.
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Earnings from ongoing
operations, should not be considered as an alternative to reported earnings, or net income, which is an indicator of operating performance determined in accordance with U.S. generally accepted accounting principles (GAAP). PPL believes that
earnings from ongoing operations, although a non-GAAP financial measure, is also useful and meaningful to investors because it provides managements view of PPLs earnings excluding the Supply segment, as the spinoff was
completed June 1, 2015. Other companies may use different measures to present financial performance.
Earnings from ongoing operations is adjusted for the impact of special items as described below, which includes the Supply segments earnings now reflected in
discontinued operations. Also included in special items is the loss on spinoff resulting from the fair value of the Supply segment being less than PPLs recorded value as of June 1, 2015, the date of the spinoff. Earnings from ongoing
operations for 2014 was adjusted to reflect the impact of spinoff dissynergies that would remain with PPL after the completion of the transaction, if left unmitigated.
Earnings from ongoing operations is adjusted for the impact of special items. Special items include:
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Unrealized gains or losses on foreign currency-related economic hedges.
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Supply segment discontinued operations.
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Gains and losses on sales of assets not in the ordinary course of business.
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Workforce reduction and other restructuring effects.
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Acquisition and divestiture-related adjustments.
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Other charges or credits that are, in managements view, not reflective of the companys ongoing operations.
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PPL CORPORATION
2016 SHORT-TERM INCENTIVE
PLAN
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ANNEX B
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Section 1. Purpose.
The purpose of the 2016 Short-term Incentive Plan (the Plan) is to advance the interests of PPL Corporation (PPL), and its
shareholders by providing incentives in the form of periodic bonus awards (Awards) to certain senior executive employees of PPL and its affiliates, thereby motivating such executives to attain corporate performance goals articulated
under the Plan.
Section 2. Administration.
(a) The Plan shall be administered by two or more outside directors, as defined under Section 162(m) of the Internal Revenue
Code of 1986, as amended (the Code), and the regulations thereunder, who have been designated by PPLs Board of Directors to act as the committee (the Committee).
(b) The Committee shall have the exclusive authority to select the senior executives to be granted Awards under the Plan, to determine the
size and terms of the Award (subject to the limitations imposed on Awards in Section 4 below), to modify the terms of any Award that has been granted (except for any modification that would increase the amount of the Award payable to an
executive), to determine the time when Awards will be made and the performance period to which they relate, to establish performance objectives in respect of such performance periods, and to certify that such performance objectives were attained;
provided, however, that any such action shall be consistent with the applicable provisions of Section 162(m) of the Code. The Committee is authorized to interpret that Plan, to establish, amend and rescind any rules and regulations relating to
the Plan, and to make any other determinations that it deems necessary or desirable for the administration of the Plan. The Committee may correct any defect or supply any omission or reconcile any inconsistency in the Plan in the manner and to the
extent the Committee deems necessary or desirable. Any decision of the Committee in the interpretation and administration of the Plan, as described herein, shall be final, conclusive and binding on all parties concerned.
Section 3. Participation.
Awards may be
granted to senior executives of PPL and its affiliates who are covered employees, as defined in Section 162(m) of the Code, or who the Committee anticipates may become covered employees. An Executive to whom an Award is granted
shall be a Participant.
Section 4. Awards under the Plan.
(a) Participants Award shall be determined based on the attainment of written performance goals approved by the Committee for a
performance period which is established by the Committee (i) while the outcome for that performance period is substantially uncertain and (ii) no more than 90 days after the commencement of that performance period or, if less, the number
of days which is equal to 25 percent of that performance period. The performance goals, which must be objective, shall be based upon one or more of the following criteria: (1) earnings before or after taxes (including earnings before interest,
taxes, depreciation and amortization or other corporate earnings measures); (2) net income, operating income or other income measures; (3) earnings per share; (4) book value per share; (5) total shareholder return;
(6) expense management, including operations and maintenance expenses; (7) return on investment before or after the cost of capital; (8) improvements in capital structure; (9) profitability of an identifiable business unit or
product; (10) maintenance or improvement of profit margins, gross margins or operating margins; (11) stock price; (12) market share; (13) revenues or sales; (14) costs, including cost reduction measures); (15) cash flow
(or free cash flow); (16) working capital; (17) capital expenditures; (18) changes in net assets (whether or not multiplied by a constant percentage intended to represent the cost of capital); (19) return measures (including, but
not limited to, return on assets, capital, equity, shareholders equity, investments or sales); (20) economic value added; (21) credit rating; (22) improvement in workforce diversity, inclusion or culture; (23) employee
retention; (24) business expansion or consolidation (acquisitions and divestitures); (25) strategic plan development and implementation; (26) independent industry ratings or assessments; (27) environmental, health and safety;
(28) reliability; (29) customer satisfaction; and (30) productivity. The foregoing criteria may relate to PPL, one or
more of its affiliates or one or more of its
divisions or units, or any combination of the foregoing, on a consolidated or nonconsolidated basis, and may be applied on an absolute basis and/or be relative to one or more peer group companies or other indices, or any combination thereof, all as
the Committee determines. In addition, to the degree consistent with Section 162(m) of the Code, the performance goals may be calculated without regard to accounting changes or items of an unusual nature or infrequency of occurrence or
non-recurring items. Performance goals need not be based upon an increase or positive result under a business criterion and could include, for example, the maintenance of the status quo or the limitation of economic losses (measured, in each case,
by reference to a specific business measure). The maximum amount of an Award to any Participant with respect to a fiscal year of PPL (or other designated performance period) shall be $5 million.
(b) The Committee shall determine whether the performance goals have been met with respect to any affected Participant and, if they have, so
certify and ascertain the amount of the applicable Award. No Awards will be paid for that performance period until such certification is made by the Committee. The amount of the Award actually paid to any affected Participant may be less than the
amount determined by the applicable performance goal formula, at the discretion of the Committee. The amount of the Award determined by the Committee for a performance period shall be paid to the Participant at such time as determined by the
Committee in its sole discretion during the calendar year that follows the end of the applicable performance period; provided, however that a Participant may, if and to the extent permitted by the Committee and consistent with the requirements of
Section 409A of the Code, elect to defer payment of an Award.
(c) The provisions of this Section 4 shall be administered and
interpreted in accordance with Section 162(m) of the Code in a manner intended to achieve deductibility by PPL or its affiliates of the payment of Awards.
Section 5. Amendment and Termination of the Plan.
(a) The Committee may at any time, or from time to time, suspend or terminate the Plan in whole or in part or amend it in such respects as
the Committee may deem appropriate. No Awards may be granted under the Plan after the date of the Companys first shareholders meeting that occurs during 2021, but Awards granted prior to such date shall continue to be payable hereunder.
(b) No amendment, suspension or termination of the Plan shall, without the Participants consent, impair any of the rights or
obligations under any Award theretofore granted to a Participant under the Plan.
Section 6. Miscellaneous Provisions.
(a) Determinations made by the Committee under the Plan need not be uniform and may be made selectively among eligible individuals under the
Plan, whether or not such eligible individuals are similarly situated. Neither the Plan nor any action taken hereunder shall be construed as giving any right to be retained as an employee of PPL or an affiliate.
(b) Participants rights and interest under the Plan may not be assigned or transferred, hypothecated or encumbered in whole or in part
either directly or by operation of law or otherwise (except in the event of a Participants death or disability) including, but not by way of limitation, execution, levy, garnishment, attachment, pledge, bankruptcy or in any other manner;
provided, however, that, subject to applicable law, any amounts payable to any Participant hereunder are subject to reduction to satisfy any liabilities owed to PPL or any of its affiliates by the Participant. Any attempted assignment or transfer,
hypothecation or encumbrance shall be void and of no effect.
(c) PPL and its affiliates shall have the right to deduct from any payment
made under the Plan any federal, state, local or foreign income or other taxes required by law to be withheld with respect to such payment.
(d) Each person who is or at any time serves as a member of the Committee or PPLs Board of Directors shall be indemnified and held
harmless by PPL against and from: (i) any loss, cost, liability or expense that may be imposed upon or reasonably incurred by such person in connection with or resulting from any claim, action, suit or proceeding to which such person may be a
party or in which such person may be involved by reason of any action or failure to act under the Plan; and (ii) any and all amounts paid by such person in satisfaction of judgment in any such action, suit or proceeding relating to the Plan.
Each person covered by this indemnification shall give PPL an
ANNEX B
opportunity, at its own expense, to handle and defend the same before such person undertakes to handle and defend it on such persons own behalf. The foregoing right
of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the bylaws of PPL, as a matter of law, or otherwise, or any power that PPL may have to indemnify such person or hold such
person harmless.
(e) Each member of the Committee and PPLs Board of Directors shall be fully justified in relying or acting in
good faith upon any report made by the independent public accountants of, or counsel for, PPL and upon any other information furnished in connection with the Plan. In no event shall any person who is or shall have been a member of the Committee or
PPLs Board of Directors be liable for any determination made or other action taken or any failure to act in reliance upon any such report or information or for any action taken, including without limitation the furnishing of information, or
failure to act, if in good faith.
(f) All matters relating to the Plan or to Awards granted hereunder shall be governed by the laws of
the Commonwealth of Pennsylvania without regard to its conflict of laws principles.
(g) The Plan shall be effective as of
January 1, 2016. However, if the Plan is not approved, prior to the payment of any Awards, by the affirmative vote of holders of a majority of the votes cast, in person or represented by proxy, the Plan and all Awards thereunder shall
terminate.
DIRECTIONS TO PPL CORPORATION
ANNUAL MEETING OF SHAREOWNERS
9:00 A.M. WEDNESDAY, MAY 25, 2016
PPL
CENTER
701 Hamilton Street, Allentown, Pennsylvania 18101
PARKING GARAGE
706 West Linden Street,
Allentown, Pennsylvania 18101
Directions to Parking Garage:
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From the east
or west:
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Exit US 22 at PA 145 S / MacArthur Road / 7
th
Street. MacArthur Road becomes 7
th
Street.
Turn right on Linden Street and make an immediate left into the parking
garage.
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From the north or south:
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Take Pennsylvania Turnpike Northeast Extension and exit at the Lehigh Valley
Interchange to US 22 East.
Exit US 22 at PA 145 S / MacArthur Road / 7
th
Street. MacArthur Road becomes 7
th
Street.
Turn right on Linden Street and make an immediate left into the parking garage.
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Your parking ticket will be validated when you check in at the meeting,
so please take your ticket with you into the meeting.
SHAREOWNER INQUIRIES:
Wells Fargo Bank, N.A.
Shareowner Services
1110 Centre Pointe Curve, Suite 101
Mendota Heights,
MN 55120
Toll Free: 1-800-345-3085
Outside U.S.:
651-450-4064
shareowneronline.com
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Online Account Access:
Registered shareowners can activate their account for online access by visiting
shareowneronline.com
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FOR QUESTIONS ABOUT PPL CORPORATION OR ITS SUBSIDIARIES:
PPL Treasury Department
Two North Ninth Street
Allentown, PA 18101
Via e-mail: invserv@pplweb.com
PPL Corporate Offices: 610-774-5151
PPL Corporation, PPL
Electric Utilities Corporation, LG&E and KU Energy LLC, Louisville Gas and Electric Company and Kentucky Utilities Company file a joint Form 10-K Report with the Securities and Exchange Commission. The Form 10-K Report for 2015 is
available without charge by writing to the PPL Treasury Department at the address printed above, by calling 1-800-345-3085, or by accessing it through the Investors page of PPLs Internet website identified below.
Whether you plan to attend the Annual Meeting or not, you may vote over the Internet, by telephone or by returning
your proxy. To ensure proper representation of your shares at the Annual Meeting, please follow the instructions at the website address in the Notice or follow the instructions that you will be given after dialing the toll-free number on your proxy.
If you receive printed copies of the proxy materials, you may also mark, date, sign and mail the accompanying proxy as soon as possible. An envelope, which requires no postage if mailed in the United States, is included for your convenience if you
receive printed copies of the proxy materials.
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Shareowner Services
P.O. Box 64945
St. Paul, MN 55164-0945
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Address Change? Mark box, sign, and indicate changes below:
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TO VOTE BY INTERNET OR
TELEPHONE, SEE REVERSE SIDE
OF THIS PROXY CARD.
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The Board of Directors Recommends a Vote FOR
Items 1, 2, 3, 4 and 5.
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1.
Election of directors:
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FOR
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AGAINST
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ABSTAIN
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FOR
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AGAINST
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ABSTAIN
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01
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Rodney C. Adkins
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06
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William H. Spence
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02
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John W. Conway
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07
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Natica von Althann
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03
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Steven G. Elliott
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08
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Keith H. Williamson
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Please fold here Do not separate
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Raja Rajamannar
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Armando Zagalo de Lima
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05
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Craig A. Rogerson
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2.
Advisory vote to approve compensation of named executive officers
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For
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Abstain
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3.
Approve 2016 Short-term Incentive Plan
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Abstain
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4.
Amendment of Companys Articles of Incorporation to increase the number of authorized
shares of common stock
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Abstain
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5.
Ratification of the appointment of Independent Registered Public
Accounting Firm
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Abstain
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The Board of Directors Recommends a Vote AGAINST
Items 6 and 7.
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6.
Shareowner Proposal Adopt policy to require independent chairman of the
board
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Abstain
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7.
Shareowner Proposal Assess and report on distributed resources deployment
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Abstain
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THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, WILL BE VOTED AS THE BOARD RECOMMENDS.
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Date
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Signature(s) in Box
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Please sign exactly as your name(s) appears on Proxy. If held in joint tenancy, all persons should sign. Trustees, administrators, etc., should include title and authority. Corporations should provide full name of corporation and
title of authorized officer signing the Proxy.
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PPL CORPORATION
ANNUAL MEETING OF SHAREOWNERS
WEDNESDAY,
MAY 25, 2016
9:00 A.M. EASTERN TIME
PPL CENTER
701 HAMILTON STREET
ALLENTOWN, PENNSYLVANIA 18101
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PPL Corporation
Two North Ninth Street
Allentown, PA 18101
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proxy
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This proxy is solicited by the Board of Directors for use at the Annual Meeting on May 25, 2016.
William H. Spence and Joanne H. Raphael, and each of them, are hereby appointed proxies, with the power of substitution, to vote the shares of the undersigned, as
directed on the reverse side of this proxy, at the Annual Meeting of Shareowners of PPL Corporation to be held on May 25, 2016, and any adjournments or postponements thereof, and in their discretion to vote and act upon any other matters as may
properly come before said meeting and any adjournments or postponements thereof.
The shares of stock you hold in your account or in a dividend reinvestment account
will be voted as you specify on the reverse side.
If no choice is specified, the proxy will be voted FOR Items 1, 2, 3, 4 and 5, and
AGAINST Items 6 and 7.
By signing the proxy, you revoke all prior proxies and appoint William H. Spence and Joanne H. Raphael, and each of them,
with full power of substitution, to vote your shares on the matters shown on the reverse side and any other matters which may properly come before the Annual Meeting and all adjournments or postponements thereof.
Vote by Internet, Telephone or Mail
24
Hours a Day, 7 Days a Week
Your Telephone or Internet vote authorizes the named proxies to vote your shares
in the same manner as if you marked, signed and returned your proxy card.
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INTERNET
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PHONE
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MAIL
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www.proxypush.com/ppl
Use the Internet to vote your proxy
24 hours a
day, 7 days a week, until
11:59 p.m. (CT) on May 24, 2016.
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1-866-883-3382
Use any touch-tone telephone to
vote your proxy 24
hours a day,
7 days a week, until 11:59 p.m.
(CT)
on May 24, 2016.
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Mark, sign and date your proxy card and return it in the
postage-paid envelope weve provided or return it to PPL Corporation, c/o Shareowner Services, P.O. Box 64873, St. Paul, MN 55164-0873. We must receive your mailed proxy card no later than 11:59 p.m. (CT) on May 24, 2016 in order
for your vote to be counted.
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If you vote your proxy by Internet or by Telephone, you do NOT need to mail back your Proxy Card.
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Shareowner Services
P.O. Box 64945
St. Paul, MN 55164-0945
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Address Change? Mark box, sign, and indicate changes below:
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TO VOTE BY INTERNET OR
TELEPHONE, SEE REVERSE SIDE
OF THIS BALLOT CARD.
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The Board of Directors Recommends a Vote FOR
Items 1, 2, 3, 4 and 5.
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1.
Election of directors:
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FOR
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AGAINST
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ABSTAIN
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FOR
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AGAINST
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ABSTAIN
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01
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Rodney C. Adkins
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¨
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¨
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06
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William H. Spence
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02
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John W. Conway
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¨
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07
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Natica von Althann
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03
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Steven G. Elliott
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08
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Keith H. Williamson
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Please fold here Do not separate
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04
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Raja Rajamannar
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¨
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¨
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¨
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09
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Armando Zagalo de Lima
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05
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Craig A. Rogerson
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2.
Advisory vote to approve compensation of named executive officers
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For
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¨
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Against
|
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¨
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Abstain
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3.
Approve 2016 Short-term Incentive Plan
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¨
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For
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¨
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Against
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¨
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Abstain
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4.
Amendment of Companys Articles of Incorporation to increase the number of authorized
shares of common stock
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¨
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For
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¨
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Against
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¨
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Abstain
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5.
Ratification of the appointment of Independent Registered Public Accounting
Firm
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For
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¨
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Against
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Abstain
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The Board of Directors Recommends a Vote AGAINST
Items 6 and 7.
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6.
Shareowner Proposal Adopt policy to require independent chairman of the
board
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For
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Against
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Abstain
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7.
Shareowner Proposal Assess and report on distributed resources deployment
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For
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Against
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Abstain
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Date
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Signature(s) in Box
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Please sign exactly as your name(s) appears on Ballot. If held in joint tenancy, all persons should sign. Trustees, administrators, etc., should include title and authority. Corporations should provide full name of corporation
and title of authorized officer signing the Ballot.
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PPL CORPORATION
ANNUAL MEETING OF SHAREOWNERS
WEDNESDAY,
MAY 25, 2016
9:00 A.M. EASTERN TIME
PPL CENTER
701 HAMILTON STREET
ALLENTOWN, PENNSYLVANIA 18101
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PPL Corporation
Employee Stock Ownership Plan (ESOP)
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Confidential Ballot
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This is a ballot for voting your shares of PPL Corporation Common Stock held in the ESOP. Please complete the ballot card and return in
the envelope provided or vote by telephone or the Internet. Fidelity Investments, as Trustee of the ESOP, will vote shares held in your ESOP Account as directed on the ballot at the Annual Meeting of Shareowners of PPL Corporation to be held on May
25, 2016.
If you do not return your ballot card, or return it unsigned, or do not vote by telephone or Internet, the ESOP provides that the Trustee will vote your
shares in the same percentage as shares held by participants for which the Trustee has received timely voting instructions.
Please review the information carefully
and indicate how you wish your shares to be voted at the Annual Meeting. Mark, sign, date and use the return envelope for mailing your ballot (if you do not vote by telephone or Internet) to Fidelity Investments agent for tabulation. Timely
receipt of your instructions on a signed ballot card or by telephone or Internet is extremely important.
This ballot, if sent by mail, must be received by 11:59
p.m. (CT) on May 22, 2016 in order for your vote to be counted. If you wish to vote by telephone or on the Internet, please follow the instructions below.
Vote by Internet, Telephone or Mail
24
Hours a Day, 7 Days a Week
Your Telephone or Internet vote authorizes the ESOP Trustee to vote your shares
in the same manner as if you marked, signed and returned your ballot card.
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INTERNET
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PHONE
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MAIL
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www.proxypush.com/pplesop
Use the Internet to vote your ballot
24 hours a day, 7
days a week, until
11:59 p.m. (CT) on May 22, 2016.
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1-866-883-3382
Use any touch-tone telephone to
vote your ballot 24
hours a day,
7 days a week, until 11:59 p.m.
(CT)
on May 22, 2016.
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Mark, sign and date your ballot card and return it in the
postage-paid envelope weve provided or return it to PPL Corporation, c/o Shareowner Services, P.O. Box 64873, St. Paul, MN 55164-0873. We must receive your mailed ballot card no later than 11:59 p.m. (CT) on May 22, 2016 in order for your vote
to be counted.
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If you vote your ballot by Internet or by Telephone, you do NOT need to mail back your Ballot Card.