Xcel Energy (XEL) DEF 14ADefinitive proxy

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.    )

Filed by the Registrant   ☒                             Filed by a Party other than the Registrant   ☐

Check the appropriate box:

XCEL ENERGY INC.

(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

April 8, 2020

Dear Fellow Shareholders:

What a difference a month makes. As we were preparing for our Annual Shareholders’ Meeting this year, I was excited to share with you our outstanding 2019 results. However, in the face of a global pandemic, our immediate focus has shifted. I want to thank the entire Xcel Energy team for their work to keep our customers and employees safe. And a special thank you to our mission critical employees who are working hard to ensure our customers have the electricity and natural gas service they depend on every day.

Due to concerns about the coronavirus (COVID-19), this year’s annual meeting will be completely virtual and held via live webcast over the internet.  This approach is consistent with actions we have taken to protect the health and safety of our employees and the public during this challenging time while continuing to provide vital electric and gas service.

Our enclosed materials will showcase the outstanding accomplishments of 2019 at Xcel Energy and the continuation of our record of operational and financial excellence. Our 2019 highlights include:

• Meeting or exceeding our annual ongoing earnings guidance for the 15th consecutive year

• Increasing our dividend for the 16th consecutive year

• Exceeding total shareholder return for our industry peer group on a one-, three-, five- and 10-year basis

• Making progress toward our industry-leading vision of producing 100% carbon-free electricity by 2050 and reducing carbon emissions 80% (from a 2005 baseline) by 2030  

As part of the clean energy transition, we have exciting opportunities to invest in our system and our communities. Xcel Energy’s future is indeed bright, and we have strong plans in place for:

• The continued transition from fossil-fuels to clean, low-cost renewable energy

• Enhancing the customer experience through a variety of programs, from electric vehicle subscriptions to new ways for customers to choose    their fuel sources and manage their energy

• Keeping customer bills low, all while delivering outstanding service and value

Logistics for this meeting will be different than in years past. You may attend the online meeting, submit questions, and vote your shares electronically during the meeting via the internet by visiting www.virtualshareholdermeeting.com/XEL2020.  Please review the information in the proxy statement for instructions on how to access and participate in the virtual meeting.

As always, we encourage you to vote your shares prior to the annual meeting. Details for how and when to vote and other important information are included in the proxy statement.

Thank you for your confidence in us.

Sincerely,

Ben Fowke

Chairman and Chief Executive Officer

April 8, 2020

Dear Fellow Shareholders:

On behalf of the Board of Directors, I join Ben in inviting you to Xcel Energy’s 2020 Annual Shareholders’ Meeting. Your Board is committed to effective governance that delivers both strong results for you and great value for customers.

We are proud to have delivered those results consistently over time. Our sound governance practices combine the benefits of strong, independent oversight with broad expertise and strong management that — working together — allow us to successfully execute innovative strategies in a complex and changing industry. Our practices ensure effective Board operations, encourage independent thought and judgment, and execute appropriate levels of Board oversight to produce these consistent and strong results. We continue this oversight as the Company navigates the challenges of the coronavirus with the goal of supporting our employees, customers and communities.

We are committed not only to delivering outstanding results, but also to representing your interests. These and other practices are detailed in the proxy statement, which I encourage you to review as you cast your vote.

As part of the evolution of our Board, we appointed two new independent directors during the past year: Netha Johnson, President, Bromide Specialties, Abermarle Corporation, and George Kehl, retired Office Managing Partner at KPMG LLP. Netha and George join our existing directors, who bring a variety of diversity, skills, qualifications and experiences, and represent an effective mix of deep Company knowledge and fresh perspectives.

I would like to thank Richard Davis, for his many contributions and years of dedicated service to Xcel Energy. Richard, who has served on the Board since 2006, will be leaving our Board when his term ends at the annual meeting.  

As your Lead Independent Director, I am focused on the important obligations that our Board owes to you, our shareholders. My responsibilities include reviewing and approving the agendas for our Board meetings to ensure they cover key areas of Company focus, working with the Chairman to provide the directors information needed to effectively govern, developing and executing succession plans for both the Board and management to ensure strong independent oversight over the long term, and acting as a regular communications channel between our independent directors and our chief executive officer.   

2019 was another great year for Xcel Energy. It is my privilege to serve as Xcel Energy’s Lead Independent Director, and I look forward to continuing my service to the Company. Know that your Board remains focused on delivering value to you, today and long into the future.

Thank you for investing in Xcel Energy.

Sincerely,

Chris Policinski

Lead Independent Director

Table of Contents

Forward-Looking Statements

The statements contained in this proxy statement about our future performance, including, without limitation, future financial and operational results, strategies, visions, prospects, consequences and all other statements that are not purely historical, are forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. Although we believe that our expectations are based on information currently available and on reasonable assumptions, we can give no assurance they will be achieved. There are a number of risks and uncertainties that could cause actual results to differ materially from any forward-looking statements made herein. A discussion of some of these risks and uncertainties is contained in our Annual Report on Form 10-K and subsequent reports on Form 8-K filed with the Securities and Exchange Commission (“SEC”), and available on our website: www.xcelenergy.com. These reports address in further detail our business, industry issues and other factors that could cause actual results to differ materially from those indicated in this proxy statement. In addition, any forward-looking statements included herein represent our estimates only as of the date hereof and should not be relied upon as representing our estimates as of any subsequent date. While we may elect to update forward-looking statements from time to time, we specifically disclaim any obligation to do so, even if our internal estimates change, unless otherwise required by applicable securities laws.

Annual Meeting Agenda

Proposals

How to Attend the Virtual Meeting

Due to coronavirus (COVID-19) developments and the related recommendations and protocols issued by public health authorities and federal, state, and local governments, we have determined our annual meeting of shareholders will be a completely virtual annual meeting; therefore there will be no physical meeting location. To attend the virtual meeting, visit www.virtualshareholdermeeting.com/XEL2020. If you wish to vote your shares during the virtual meeting, you will need the control number included on your proxy card or your Notice of Internet Availability of Proxy Materials. We recommend that you log in at least fifteen minutes before the meeting to ensure that you are logged in when the meeting starts.

Please refer to the Questions and Answers Section under “How do I attend and vote at the Annual Meeting?” on page 66 of this proxy statement for important information about attending and voting at the annual meeting.

Notice of Internet Availability of Proxy Materials or this proxy statement and proxy card are being distributed on or about April 8, 2020. Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to be held on May 22, 2020: Our 2020 proxy statement and Annual Report are available free of charge at www.proxyvote.com.

You are receiving these proxy materials in connection with the solicitation by the Board of Directors (“Board”) of Xcel Energy Inc. (referred to in this proxy statement as “Xcel Energy,” the “Company,” “we,” “us,” and “our”) of proxies to be voted at Xcel Energy’s 2020 Annual Meeting of Shareholders. Please vote on the proposals described in this proxy statement.

Thank you for investing in Xcel Energy.

2020 PROXY STATEMENT  |   XCEL ENERGY  |   1

2  |   THE FUTURE IN SIGHT  |   XCEL ENERGY

2020 PROXY STATEMENT  |   XCEL ENERGY  |   3

4  |   THE FUTURE IN SIGHT  |   XCEL ENERGY

2020 PROXY STATEMENT  |   XCEL ENERGY  |   5

6  |   THE FUTURE IN SIGHT  |   XCEL ENERGY

Corporate Governance

Serving shareholders well is a key priority for your Board. We believe that the most effective oversight comes from:

Xcel Energy has the practices, the Board, and the management team to deliver consistent and strong results for shareholders.

We regularly monitor issues and trends in corporate governance and employ practices that best serve shareholders. Current practices include:

Highlights of our practices are summarized on the following table, followed by additional explanation of key features.

2020 PROXY STATEMENT  |   XCEL ENERGY  |   7

Leadership Structure and Roles

Our Board consists of a combined Chairman and CEO position, complemented with a Lead Independent Director chosen from our independent directors. This structure, along with other corporate governance practices discussed below, provides sound and independent oversight of the Company. The Board believes that this structure is best suited for the Company at this time and serves shareholders well. We annually review this structure to confirm it is most effective for our business.

The combined Chairman and CEO role brings to the Board important experience and expertise, both of the Company and our rapidly changing industry. The skills and experience of the CEO are well suited for the role of Chairman, putting the Board in the best position to assess key industry drivers, identify important changes in the energy and consumer landscape, and develop effective strategies. In light of the opportunities and challenges facing the Company and our industry, the Board believes that shareholders are best served by having a combined role of Chairman and CEO.

Mr. Fowke currently serves in this role, providing the benefit of his extensive experience in the regulated energy industry to both the Company and the Board. His thorough understanding of the opportunities and challenges facing the industry is valuable at both the Board and management levels. For example, under his leadership, S&P Global Energy Awards honored Xcel Energy with the Award of Excellence in the Power category for our carbon-free vision. The S&P Global Energy Awards recognizes companies in the energy space all over the world for industry achievements. Xcel Energy was also recognized by Ethisphere, a global leader in defining and advancing the standards of ethical business practices, as one of the World’s Most Ethical Companies in 2020. For its proactive transition to clean energy and commitment to reducing carbon emissions, Xcel Energy was honored as an Organizational Leader by the national Climate Leadership Awards.

The Lead Independent Director likewise plays a critical role in our governance structure, working with both the independent directors and management to ensure the Company is well positioned with sound strategy, solid risk management and effective governance. The Lead Independent Director role is well defined, with responsibilities consistent with best practice. Mr. Policinski serves in this role, having been elected to serve a one-year term in May 2019, his fourth consecutive year in this role.

8  |   THE FUTURE IN SIGHT  |   XCEL ENERGY

The final piece of this governance structure is the independent directors. The Board currently includes fourteen independent directors. Our directors are strong individuals, comfortable with their roles representing shareholders, and maintaining objectivity in the Board’s deliberations. They conduct business via a sound committee structure that governs risk management and mitigation as assigned by the Board and reports back to the Board through an efficient and effective process.

The Board believes that this structure ensures that directors receive the information, industry insights and direction needed to form successful strategies while maintaining the independence necessary to ensure effective governance and oversight. Our business is rather unique in that it is price-regulated, operates under a complex set of federal, state and local regulations, and is undergoing significant transformation. Working with the Lead Independent Director, the Chairman can lead the development of strategy, providing information and insight on the Company’s opportunities, challenges and performance.

Risk Oversight

A key accountability of the Board is the oversight of material risk, and our Board employs a strong process for doing so. As outlined below, management and each Board committee have responsibilities for overseeing the identification and mitigation of key risks and reporting their assessments, activities, and initiatives to the full Board.

Management identifies and analyzes risks to determine materiality and other attributes such as timing, probability and controllability. Management broadly considers our business, the utility industry, business and policy trends, the domestic and global economies, and the environment to determine enterprise risks and actions to mitigate them, and employs a robust program to identify, assess, manage, and mitigate compliance risks.

2020 PROXY STATEMENT  |   XCEL ENERGY  |   9

The Board approaches risk oversight and mitigation as an integral and continuous part of its governance of the Company. First, the Board as a whole regularly reviews management’s key risk assessment and analyzes areas of existing and future risks and opportunities. Next, the Board assigns oversight of certain critical risks to each of its four standing committees to ensure these risks are well understood and provides focused oversight by the committee with the most applicable expertise. New risks identified during the risk assessment process are considered and assigned as appropriate, typically during the annual Board and committee evaluation process, with committee charters and annual work plans updated accordingly. Committees regularly report on their oversight activities, and certain risk topics may be brought to the full Board for consideration where deemed appropriate to ensure broad Board understanding of the nature of the risk. Finally, the Board conducts an annual strategy session where the Company’s future plans and initiatives are reviewed and confirmed in light of the current and projected landscape.

The Audit Committee is responsible for reviewing the adequacy of risk oversight and affirming that appropriate oversight occurs. Current risk assignments are as follows:

This tiered and structured approach provides a comprehensive risk-management framework that ensures shareholder interests are protected. For example, given its emergence as a threat, the Board employs comprehensive oversight of the risks associated with cybersecurity and the physical security of our assets, with the topic addressed twice at the Board level, as well as at the ONES and Audit Committees throughout the year. While the ONES Committee has primary committee responsibility for this topic due to the operational issues involved, the Board has determined that the topic is of sufficient importance to warrant this comprehensive oversight approach. Likewise, given the importance of employee and public safety in our industry, the Board implemented regular safety briefings and heard presentations addressing our refreshed approach to safety. Augmenting such oversight efforts, the Board conducts annual drills to practice its response in a possible emergency situation to ensure it is well prepared and positioned to perform in a possible crisis.

The Board also employs a process of ensuring compliance practices are sound, a particularly important topic given our highly regulated business. Management performs a regular compliance risk assessment as a companion to the enterprise risk assessment, providing a focused overview of the unique areas of compliance risk the Company faces. The Audit Committee is apprised of compliance risks via regular briefings and written updates to ensure these risks are appropriately managed and mitigated.

Board Committees

Structures

As noted, the Board employs a committee structure to assist in conducting its work and regularly refreshes that work in light of risk assessments. By assigning responsibilities to committees with particular expertise and focus, the Board can ensure it fulfills its duties in an efficient and effective manner.

Committees are made up exclusively of independent directors, with members of the Audit Committee and GCN meeting additional independence criteria. Each operates under a written charter that clearly defines its responsibilities, which is regularly reviewed and approved at both the committee and Board levels. Committees have the authority to engage outside experts, advisors, and counsel to assist in their duties, as needed. In addition, each committee undertakes a regular evaluation process and members participate in training on relevant topics to ensure the committee functions well and directors are well educated on issues. Additional information regarding these governance practices is provided in the Practices section below.

10  |   THE FUTURE IN SIGHT  |   XCEL ENERGY

For topics having broad implications for Xcel Energy, the full Board may hear or act on any issue, and committees may provide updates to the full Board for its information and consideration. Likewise, a committee may delegate all or a portion of its responsibilities to a subcommittee, as appropriate. This flexibility can be employed as appropriate to ensure risks are effectively overseen and managed.

2020 PROXY STATEMENT  |   XCEL ENERGY  |   11

Practices

Coordinating Officer

Each committee is supported by a senior member of management who works directly with the committee chair in setting agendas, providing supporting materials, ensuring charter requirements are fulfilled, and communicating with committee members. This function provides another avenue for directors to have meaningful exchange with members of management to gain a deeper understanding of the issues impacting the business and the effectiveness and impact of strategic initiatives and risk mitigation efforts. The effectiveness of the coordinating officer role is regularly evaluated as part of the annual evaluation process.

Evaluations

The Board and committees conduct an annual assessment to evaluate the effectiveness of their processes, identify issues or topics for further exploration and provide feedback on the quality and timeliness of information from management, among other things. The assessment includes a survey of the directors, individual interviews with the Lead Independent Director, discussion in both regular and executive sessions, and feedback to management. Input and feedback from the assessments are incorporated into Board practices such as inviting more third-party speakers at Board and committee meetings to provide additional perspective to the Directors. The Board believes this assessment is an important component of the governance process and is helpful in driving continued improvement in the overall effectiveness of Board and committee oversight.

Training

Committees are regularly apprised of new and emerging requirements and trends facing the industry. Each committee conducts training on topics relevant to its responsibilities, and committees regularly seek input to prioritize training topics. In addition, the ONES Committee participates in site visits to gain understanding of our operations, including tours of our nuclear plants, and the full Board has toured certain facilities to gain even deeper understanding of various aspects of our business. Directors are also encouraged to participate in outside training on topics related to corporate governance and industry issues. In addition, under our Guidelines on Corporate Governance, each new director is expected to participate in a detailed orientation process and each sitting director is expected to participate in periodic continuing education.

We publish continuing education opportunities periodically for director consideration and facilitate participation. During 2019, members of the Board attended outside trainings on topics such as emerging trends in audit issues and education on industry issues, and many directors have attended training from the Institute of Nuclear Power Operations, which addresses issues specific to oversight of nuclear operations.

12  |   THE FUTURE IN SIGHT  |   XCEL ENERGY

ESG Oversight

Corporate responsibility is embedded throughout our organization and integrated into our governance processes. With strong leadership from our Board and executive management team, along with engaged leaders and business units across the Company, we are able to effectively manage risks and opportunities and drive strong performance across a spectrum of corporate responsibility issues. Through our strategic planning process, the Board and executive leadership team identified three strategic priorities, lead the clean energy transition, keep bills low, and enhance the customer experience, that represent the keys to our continued success in achieving our vision to be the preferred and trusted provider of the energy our customers need. Strong alignment exists between our strategic priorities and our corporate responsibility.

Our most recent Corporate Responsibility Report, published in May 2019, marks the fourteenth year we have published the report. Our report covers a variety of ESG issues and is built on 24 issues that we have identified as important to our stakeholders and Company. The GCN oversees activities and reporting of our ESG matters. A copy of our most recent Corporate Responsibility Report is available on our website at www.xcelenergy.com.

Director Succession Planning

The Board employs robust practices to ensure strong continuity of skills and leadership over time through sound succession planning. The GCN regularly develops and the Board regularly reviews succession plans for the CEO and other top leaders, as well as plans to develop and/or acquire talent in key positions of management. Likewise, the GCN regularly reviews and identifies timing of changes in Board make-up given director tenure and age requirements and needed skills for appointment of new directors to the Board. The GCN also considers and develops paths both for Board leadership positions, such as committee chairs and independent lead director and ensuring diversity of experience, gender, and race. The Board has been successful in self-identifying, recruiting, and recommending diverse candidates who complement current director skills and attributes, and bringing on new directors with unique skills that are important to our business. It plans to continue to develop and execute plans to ensure sound governance, strong leadership, and business continuity through effective succession planning. In performing its responsibilities for identifying, recruiting, and recommending candidates to the Board, the GCN is committed to including qualified candidates who reflect diverse backgrounds, including gender and race. If the Board is unable to self-identify, recruit, and recommend candidates to the Board, the GCN is likewise committed to including in each third-party search qualified candidates who reflect such diverse backgrounds.

Human Capital Management

Xcel Energy’s success depends on our ability to actively implement programs to attract, hire, develop, and retain skilled employees. We emphasize a policy of inclusion – including investments in diversity and inclusion programs to create a diverse, inclusive, and safe working environment. We believe this leads to higher employee satisfaction, engagement, opportunity, productivity, and retention for our 11,000 employees who demonstrate our values – connected, safe, committed, and trustworthy. Our human capital management and succession planning practices are an integral part of who we are, how we operate, and how we see our future. The GCN is responsible for CEO and executive officer succession planning, annually reviewing the Company’s workforce strategy, and overseeing the process for management development. In 2020, Xcel Energy’s practices were recognized by the Human Rights Campaign by being named a top corporation on the Equality Index for four consecutive years.

Political Contributions, Lobbying, and Government Communications Disclosure  

We believe interaction with legislative and policy-making environments is important to our business and is a part of responsible corporate citizenship. Xcel Energy works with federal, state, and local officials on political activities important to our Company, employees, customers, and shareholders. We may provide financial support to political candidates, committees, and other political organizations by making corporate contributions when it is legally permissible to do so. Political activity by the Company is done to promote the interests of the Company and we seek to have interactions that are clear, transparent, and in full compliance with all laws, regulations, and Company policies.

The Board plays an important role in providing oversight of our public policy engagement and political participation with respect to significant policy issues that could impact the reputation of the electric and gas utility industry and Xcel Energy. The GCN annually reviews the Company’s policy, lobbying expenditures, contributions, and key lobbying activities. Our policy and our corporate contributions to a candidate campaign, ballot measure, and entities organized under Section 527 of the Internal Revenue Code are disclosed on our website at www.xcelenergy.com.  

2020 PROXY STATEMENT  |   XCEL ENERGY  |   13

Strategy Session

The Board annually conducts a strategy session to consider new and emerging industry trends, consult with outside experts, and assess current strategies and key initiatives to ensure the Company is well positioned for the future. This session offers the opportunity for a fluid exchange of information and ideas, helping to refine the current approach, identify new opportunities and risks, and establish key objectives to be monitored throughout the year as the strategies are executed. Agendas for future Board meetings are set in consideration of these objectives.

Code of Conduct Refresh

In 2019, the Company undertook an effort to refresh our Code of Conduct to align with our values, which plays an important role in our organizational culture by outlining the Company’s requirements and expectations. With the Code of Conduct refresh, employees were given both clear guidance on what is expected and better tools to help them make compliant and ethical business decisions. The Board adopted the refreshed Code of Conduct, completed training, and acknowledged their obligation to follow the Code of Conduct.

Key Performance Indicators and Scorecard Development

The GCN reviews and approves KPIs and the corporate scorecard annually to ensure our goals are appropriately aligned with corporate priorities. The annual refinement of KPIs establishes the long-term oversight of operational goals that promote the best interests of our shareholders, customers, and employees.

Shareholder Engagement and Investor Outreach

Our Company believes that regular, transparent communication with our shareholders and other stakeholders is essential to Xcel Energy’s long-term success. We have continued our practice of engaging with shareholders throughout the year on a range of topics. Presentations at financial conferences, meetings with analysts and investment firms, regular outreach on governance topics, and responding to inquiries are examples of the activities we employ to engage our shareholders. During 2019, our governance outreach to our largest shareholders represented more than 50 percent of outstanding shares, we participated in 23 sell-side/industry conferences or non-deal road shows, and we held over 210 individual and group meetings with approximately 430 institutional investors, representing nearly 65 percent of shares held by active managers. We voluntarily disclosed our performance and metrics in the ESG Report based on the Edison Electric Institute and American Gas Association Templates and published our Corporate Responsibility Report. Both are available on our website at www.xcelenergy.com.  The Board receives regular updates on such efforts. We also engaged in discussions with investors with specific ESG interests to respond to inquiries, and share information on our performance and plans. Finally, the Board also offers channels for shareholders to contact it with any inquiry or issue, and responds as appropriate.

Communications with the Board

The Board welcomes your input. You may communicate with the Board in two ways: first, you may send correspondence to the Company’s principal offices in care of the Corporate Secretary, Xcel Energy Inc., 414 Nicollet Mall, Minneapolis, Minnesota 55401. Second, you may contact the directors directly via email at BoardofDirectors@xcelenergy.com. These emails are sent automatically to an independent director designated to receive such communications. The email is simultaneously sent to the Corporate Secretary’s office, who may act as agent for the independent directors and coordinate the response. If the receiving director requests the Company to respond on behalf of the directors, a copy of the Company-prepared response is provided to the receiving director. If the receiving director does not request a response, the agent acting for the receiving director will provide a summary of the actions taken. The Board reserves the option to review and change this policy due to the nature and volume of the correspondence.

Determining Executive Officer and Director Compensation

The GCN has broad authority to develop and implement compensation policies and programs for executive officers and directors. The GCN may retain independent, external compensation consultants to assist in this effort and may change consultants at any time during the year if it determines that a change would be in the best interests of the Company and its shareholders.

To assist in setting 2019 compensation, the GCN retained Meridian Compensation Partners, LLC (“Meridian”) as its independent, executive compensation consultant. Meridian is an independent consulting firm delivering advisory services to compensation committees and does not perform any assignments for the Company other than providing executive and director compensation services for the GCN.

Several internal controls exist to ensure the independent judgment of Meridian:

The GCN assessed Meridian’s independence pursuant to Nasdaq and SEC rules and concluded that no conflict of interest exists that prevents it from independently advising the GCN. In its oversight of our 2019 executive compensation program, the GCN worked with Meridian and the CEO and the Senior Vice President, Chief Human Resources Officer. The GCN received additional support from the Senior Vice President, Corporate Secretary and Executive Services and the Executive Vice President, General Counsel. In 2019, the CEO and other officers provided recommendations with respect to:

Additional information regarding the determination of executive compensation is included in the Compensation Discussion and Analysis (“CD&A”) beginning on page 32.

14  |   THE FUTURE IN SIGHT  |   XCEL ENERGY

Board Planning and Composition

We believe that the most effective oversight comes from a Board of Directors that represents a diverse range of experience and perspectives that provide the collective skills, qualifications, and attributes necessary to provide sound governance. We also believe it is important for the Board to work well as a whole, with members bringing their experience to the table and dialoguing freely with each other and with management to create an environment that results in well-functioning oversight. The GCN regularly reviews with the Board the experience and attributes desired for effective governance in our changing industry and evaluates the current Board make-up in light of these criteria.

Director Experience and Attributes

The Board has identified key skills, expertise, and attributes that are important for effective governance of Xcel Energy. Each director brings to us a wealth of experience that combines to varying degrees many or all of these skills, but some have more in-depth experience in a particular area than others. Consistent with the goal of ensuring a comprehensive mix of skills and expertise are represented at the Board table, below we capture how our directors contribute to both the general skills mix (organized by key attribute), as well as the specialized expertise relevant to that attribute. In making this assessment, we considered the experience each director has from work, education, board service on other public companies, and engagement in community, civic, and business organizations.

2020 PROXY STATEMENT  |   XCEL ENERGY  |   15

16  |   THE FUTURE IN SIGHT  |   XCEL ENERGY

2020 PROXY STATEMENT  |   XCEL ENERGY  |   17

Demographic Background

Our directors represent a diverse range of experience and backgrounds. Over the last several years, the GCN has focused on recruiting and recommending diverse candidates to complement current director demographics.  

18  |   THE FUTURE IN SIGHT  |   XCEL ENERGY

Director Tenure

The Board believes that diversity in tenure creates a good mix of perspectives with longer-tenured directors bringing a deep understanding of the Company while new members bring a fresh perspective and expertise helpful to keeping abreast of a changing industry. The GCN considers emerging business needs and desired skills when evaluating potential candidates. Over the past five years, the Board has added six new directors. As of the date of this proxy statement, the Board consists of 15 directors, whose tenure is shown below.

It is critical for the Company and shareholders to have a well-rounded, diverse Board that functions well as a whole. In evaluating director nominees, the GCN considers experience in the areas identified above and expects director nominees to have proven leadership skills, sound judgment, integrity and a commitment to the success of the Company. In addition, for incumbent directors, the GCN considers attendance, past performance on the Board and contributions to the Board and applicable committees.

Additional Board Information

New Director Nominees

The Board determined to expand the size of the Board by two additional directors and currently has a total of 15 members. The GCN reviewed the skills and expertise of the Board and determined the Board would benefit from two additional members, with Mr. Johnson having expertise in leading operations and growing businesses through innovation and Mr. Kehl having extensive experience advising audit committees of Fortune 500 companies in financial reporting and controls, compliance and regulatory matters, and strategic transactions. The GCN sought recommendations of the directors and one of our non-employee directors identified Mr. Kehl as a potential candidate. Mr. Johnson was identified to the Board through a third-party search firm. After reviewing Mr. Johnson’s and Mr. Kehl’s individual qualifications and interviewing each, the GCN recommended them for election to the Board, effective March 1, 2020.

We believe our slate of director nominees provides a well-rounded and well-qualified Board that collectively provides effective oversight and governance of the Company.

Director Independence

Each of our director nominees other than Mr. Fowke is independent. The Board has satisfied, and expects to continue to satisfy, its objective to have no more than two directors who are not independent serving on the Board at any time.

The Board determines director independence under the standards established by Nasdaq, which we have adopted with a four-year look back. In addition, a director who is an employee or representative of a significant supplier of any Xcel Energy business unit or legal entity will not be “independent” unless the relationship was entered into with the supplier as a result of competitive purchasing practices. When evaluating director independence, the Board has determined that the receipt of regulated electric and gas service from the Company does not constitute a material relationship. The Board reviews ordinary course of business transactions in which directors have an interest as part of the Board’s annual independence review.

Director Attendance

During 2019 the Board met six times, and the independent directors met in executive session without management present on all six occasions. The average attendance for all directors at Board and committee meetings was approximately 98 percent, with nine of our directors attending 100 percent of Board and applicable committee meetings. Each director also attended a half-day strategy session and related executive session. We do not have a formal policy, but encourage our directors to attend the annual meeting of shareholders. All but one of the then-serving directors attended the 2019 annual meeting.

2020 PROXY STATEMENT  |   XCEL ENERGY  |   19

Governing Documents

The following materials relating to our corporate governance can be found on our website at www.xcelenergy.com, under “Company — Investor Relations — Governance Documents” and are also available free of charge to shareholders who request them.

 Shareholders may request our governing documents by writing our offices at: Corporate Secretary, Xcel Energy Inc., 414 Nicollet Mall, Minneapolis, Minnesota 55401. We publish any amendments to the Code of Conduct and waivers of the Code of Conduct for our executive officers or directors on our website.

Shareholder Recommendation of Directors

Any shareholder may recommend potential nominees to the GCN for consideration for membership on the Board. Recommendations can be made by sending a written statement of the qualifications of the recommended individual to the Corporate Secretary, Xcel Energy Inc., 414 Nicollet Mall, Minneapolis, Minnesota 55401. Such recommendations should be received by October 1, 2020 to be considered for the 2021 annual meeting. The GCN will evaluate candidates recommended by shareholders on the same basis as it evaluates other candidates.

Proxy Access

In February 2016, we amended our bylaws to permit any shareholder (or group of no more than 20 shareholders) owning three percent or more of our common stock continuously for at least three years to nominate up to an aggregated limit of two candidates or 20 percent of our Board (whichever is greater) for inclusion in our proxy statement. Notice of such nominees for the 2021 annual meeting must be received no earlier than November 9, 2020 and no later than close of business on December 9, 2020. Notice should be addressed to the Corporate Secretary, Xcel Energy Inc., 414 Nicollet Mall, Minneapolis, Minnesota 55401. Requirements for such nominations and nominees are detailed in our bylaws, which are available on our website at www.xcelenergy.com, under “Company —Investor Relations — Governance Documents”.

20  |   THE FUTURE IN SIGHT  |   XCEL ENERGY

Proposal No. 1

Election of Directors

Serving shareholders well is a key priority for your Board. We believe a well-qualified and diverse mix of directors best positions the Board to effectively govern and achieve strong results. Demonstrated leadership, judgment, and expertise, combined with diversity, integrity, and experience, are some of the important characteristics for Board members. Such characteristics are evaluated when considering director candidates.

Fourteen nominees have been recommended by the GCN and nominated by the Board. We believe this slate of directors brings not only the right expertise and experience to the Board, but also the right attributes to ensure constructive and free exchange of ideas and opinions with each other and with management.

Of the fourteen director nominees, twelve were elected by shareholders at the 2019 annual meeting. The Board elected to expand to fifteen members to bring on the expertise and experience of Mr. Netha N. Johnson and Mr. George J. Kehl, whose backgrounds are detailed below. The Board has set the size of the Board at fourteen when Mr. Davis’ term ends at the annual meeting. Xcel Energy thanks Mr. Davis for his significant contributions and service to the Company since 2006.

Each nominee has agreed to be named in this proxy statement and to serve if elected. Should any nominee become unable to serve for any reason, the persons named as proxies reserve full discretion to vote “FOR” any other persons who may be recommended by the GCN and nominated by the Board, or the Board may reduce the number of nominees. If elected at the 2020 annual meeting, the nominees will hold office until the 2021 annual meeting and until their successors have been elected and qualified.

Vote Required

Each director shall be elected by majority vote, meaning a nominee must receive more votes “FOR” election than the votes cast “AGAINST.” Any director who does not receive a majority of the votes cast “FOR” election must offer his or her resignation for consideration by the Board under the process outlined on page 64. Proxies solicited by the Board will be voted “FOR” each of the nominees, unless a different vote is specified.

2020 PROXY STATEMENT  |   XCEL ENERGY  |   21

Nominees

22  |   THE FUTURE IN SIGHT  |   XCEL ENERGY

2020 PROXY STATEMENT  |   XCEL ENERGY  |   23

24  |   THE FUTURE IN SIGHT  |   XCEL ENERGY

2020 PROXY STATEMENT  |   XCEL ENERGY  |   25

26  |   THE FUTURE IN SIGHT  |   XCEL ENERGY

2020 PROXY STATEMENT  |   XCEL ENERGY  |   27

28  |   THE FUTURE IN SIGHT  |   XCEL ENERGY

Beneficial Ownership of Certain Shareholders

Share Ownership of Directors and Officers

The table below provides the beneficial ownership of our common stock as of March 25, 2020 for: (a) each director; (b) the executive officers named in the Summary Compensation Table; and (c) the directors and current executive officers as a group. Unless otherwise indicated, each person has sole investment and voting power (or shares such powers with his or her spouse) of the shares noted. None of the listed individual directors, officers, or director nominees beneficially owned more than one percent of our common stock. The directors and executive officers as a group beneficially owned less than one percent of our common stock on March 25, 2020. None of the shares owned by our directors or executives are subject to any type of pledge.

2020 PROXY STATEMENT  |   XCEL ENERGY  |   29

Largest Owners of Xcel Energy’s Shares

The table below provides information as to each person or entity known to us to be the beneficial owner of more than five percent of our common stock:

30  |   THE FUTURE IN SIGHT  |   XCEL ENERGY

Proposal No. 2

Advisory Vote on Executive Compensation

Recommendation and Background

Our Board recognizes that performance-based executive compensation is an important element in driving long-term shareholder value. We are seeking shareholders’ views on the compensation of named executive officers identified in the Executive Compensation Tables section of this proxy statement through an advisory vote on the following resolution:

“RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed in the Company’s 2020 proxy statement, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.”

The Company’s goal for its executive compensation program is to align executive leadership’s interests with those of our shareholders, customers, and employees. The Board believes our executive compensation program satisfies this goal and is strongly aligned with the long-term interests of our shareholders.

Shareholders are urged to read the CD&A and other information included in the Executive Compensation Tables section of this proxy statement. The GCN and the Board believe that the information provided in these sections demonstrate that our executive compensation program aligns our executives’ compensation with our short-term and long-term performance and provides the compensation and incentives needed to attract, motivate, and retain key executives who are crucial to our long-term success.

As an advisory vote, this proposal is not binding upon the Company. However, the GCN, which is responsible for designing and administering our executive compensation program, values the opinions expressed by shareholders in their vote on this proposal and will continue to consider the outcome of the vote when making future compensation decisions for named executive officers.

Vote Required

The Board will consider shareholders to have approved our executive compensation if the shares voted “FOR” the proposal exceed the shares voted “AGAINST.” Abstentions and broker non-votes will have no effect on this matter. Proxies solicited by the Board will be voted “FOR” the approval of our executive compensation, unless a different vote is specified.

2020 PROXY STATEMENT  |   XCEL ENERGY  |   31

Compensation Discussion and Analysis

In this section, we describe the material components of our executive compensation program for 2019 for named executive officers (“NEOs”) who appear in the Summary Compensation Table and other compensation tables contained in this proxy statement.

Highlights

2019 Performance

We are executing our strategy for long-term customer and shareholder value. Our successful track record positions us well as we continue to provide cleaner generation and the options customers want.

2019 Compensation

No significant changes were made to our executive compensation program for 2019, which continues to be primarily variable compensation based on performance outcomes. We continue to monitor evolving best practices to ensure our talent needs for attraction, motivation, and retention are met, and we continue to assess certain features of our programs compared to market practices.

Our 2019 incentive compensation outcomes are:

As part of our thoughtful succession planning, we made several leadership changes that were effective in March 2020.  As part of these changes, Bob Frenzel became our President and Chief Operating Officer, Brian Van Abel became our Executive Vice President and Chief Financial Officer, and Tim O’Connor became our Executive Vice President and Chief Generation Officer.

Compensation Philosophy

Our executive compensation programs are designed to align the interests of our executives with the interests of our shareholders, customers, and employees. Our compensation philosophy is based on the following principles:

This philosophy, which includes significant emphasis on pay for performance, is applied consistently across all executives. Individual compensation may be differentiated based on scope of responsibilities, experience, and contributions to Company results.

32  |   THE FUTURE IN SIGHT  |   XCEL ENERGY

Executive Compensation Practices

Our compensation practices for NEOs are outlined below. These practices reflect our compensation philosophy and help ensure sound corporate governance practices.

Impact of Say-on-Pay Vote

Each year, Xcel Energy provides shareholders with a non-binding say-on-pay vote on its executive compensation programs.

The GCN evaluated results of the say-on-pay vote, and in light of the broad shareholder support of our executive compensation programs, the GCN decided to maintain the core design of our compensation programs. The GCN will continue to consider the outcome of future say-on-pay votes, in addition to various other factors, when making future compensation decisions.

96% of the votes cast at our 2019 annual meeting were in favor of our executive compensation programs and policies

2020 PROXY STATEMENT  |   XCEL ENERGY  |   33

Establishing Compensation

Market Analysis

At the GCN’s request, Meridian, its independent compensation consultant, presented its annual market assessment comparing our executive compensation programs and compensation against our peer group for:

To provide a broad perspective of the competitive market, Meridian analyzed data for various market pay levels, including the 25^th, 50^th, and 75^th percentiles. We consider compensation (base salary, target annual incentive, target long-term incentive, and target total compensation) to be market competitive if it is within a competitive range of the median or 50^th percentile of the peer group.

For 2019, the GCN made pay decisions based on this annual market assessment of compensation and specific factors about each NEO, including experience, internal equity, Company results, scope and responsibility, retention, and the NEO’s role in succession planning.

The GCN exercises its independent judgment to approve the compensation level for the CEO. For all other executive officers, the GCN considers the CEO’s recommendation for setting compensation levels. The GCN approved compensation for the CEO and all other executive officers that is aligned with the Company’s overall compensation philosophy described above.

Peer Group

Our peer group of publicly traded energy services companies is generally consistent from year to year (subject to changes resulting from mergers and acquisitions or other significant corporate events) and was developed by Meridian and approved by the GCN to approximate the competitive market in which we compete for talent. Peer group companies were selected primarily based on the following criteria:

⁽¹⁾ SCANA Corporation was removed from the peer group effective January 1, 2019, PG&E Corporation was removed from the peer group effective January 1, 2020, and Evergy, Inc. was added to the peer group effective January 1, 2020.

In December 2018, at the time 2019 compensation was assessed:

Executive Compensation Elements

The following table provides information regarding the elements of total direct compensation for our NEOs in 2019:

34  |   THE FUTURE IN SIGHT  |   XCEL ENERGY

Perquisites offered by the Company are limited in nature and scope. In addition, we provide the following retirement and post-employment programs:

Mix of Total Compensation

We balance the mix of compensation to our NEOs by delivering a blend of short-term and long-term incentives that are consistent with prevailing market practice and our compensation philosophy. This approach has effectively resulted in 87 percent of total direct compensation for the CEO and 74 percent of total direct compensation for other NEOs to be in the form of variable compensation, with the remainder representing fixed compensation. The GCN and the Board believe this design encourages a balance of short-range and long-range strategic thinking, which is important given the long-term nature of utility operations and the capital investment necessary for such operations.

The following charts illustrate the mix of total direct compensation for the CEO and other NEOs at target performance.

Overview of Target Total Compensation

For 2019, the GCN set each NEO’s base salary, target annual incentive and target long-term incentive awards, which are shown in the table below.

These compensation levels align and the mix of pay is competitive with the market for the utility industry.

2020 PROXY STATEMENT  |   XCEL ENERGY  |   35

Base Salary

Base salary provides a fixed element of regular income. The amount of base salary set by the GCN is competitive in the utility industry. A key consideration is the median base salary rates at peer companies, although the GCN has flexibility to review other relevant factors as outlined in our compensation philosophy. The base salaries for the NEOs were, in aggregate, just above the median of base salaries of our peer companies.

Annual Incentive

Our annual incentive plan (“AIP”) is intended to reward our NEOs for the achievement of short-term performance goals. In February 2019, our management recommended AIP goals to the GCN based on an evaluation of prior corporate performance and available objective metrics and benchmarks. These goals were selected as they are aligned with our corporate operational priorities. In addition, they discourage short-term thinking or behavior that could threaten the value of the Company or the investment of its shareholders.

The GCN determined each NEO’s 2019 AIP payout in accordance with the following:

The table below discloses the GCN approved corporate operational goals and actual results for the AIP in 2019:

Our Employee Safety KPI performance was decreased to threshold level, despite an actual above target result in our DART performance, due to two employee fatalities in 2019. Safety is one of our core values and we take these tragic losses seriously. We have implemented a newly revitalized safety program that focuses on safety culture and the prevention of the most serious injuries.

Annual incentive awards are, in part, based on ongoing EPS, as documented in Exhibit A, which can be adjusted for certain identified financial impacts. For 2019, no adjustments were made to ongoing EPS.

When ongoing EPS is below a certain threshold, awards will not be paid. If ongoing EPS is in the lower end of earnings guidance, or $2.55 to $2.60 per share in 2019, then operational results can be modified by a funding multiplier of 50 percent to 100 percent. If ongoing EPS is at $2.61 per share or greater, then the operational results can be modified by a funding multiplier from a range of 100 percent to 150 percent, not to exceed a 150 percent of target payout. For 2019, the GCN considered overall operational performance as well as ongoing earnings results when determining the funding multiplier, resulting in an award level of 121.6 percent of target.  

Superior financial performance is recognized and rewarded as a pre-defined percentage of each NEO’s target annual incentive award. For 2019, an additional 40 percent of target annual incentive awards were paid based on the achieved EPS result of $2.64 per share for 2019. When combined, the awards were paid at 161.6 percent of target.

36  |   THE FUTURE IN SIGHT  |   XCEL ENERGY

Long-Term Incentives

Long-term incentive (“LTI”) awards are intended to reward NEOs for the achievement of long-term performance goals and shareholder value creation, and to retain critical talent. For 2019, our long-term incentive program had two components, which balanced these objectives:

Grant of 2019-2021 LTI Awards

Long-term incentive compensation is approximately 71 percent of the CEO’s target total direct compensation and 54 percent of the average of the other NEOs’ target total direct compensation and is primarily performance-based. Prior to vesting, long-term incentive awards may not be sold, encumbered or otherwise transferred by the participant. Stock earned under long-term incentive compensation is subject to our Stock Ownership Policy (see page 39).

The following section describes the performance-based long-term incentive grants for the three-year period ending December 31, 2021.

For performance between percentiles, the number of performance shares earned is determined by straight line interpolation.

2020 PROXY STATEMENT  |   XCEL ENERGY  |   37

Restricted Stock Units Subject to Service-Based Vesting

In 2019, each NEO was granted RSUs that vest upon the third anniversary of the grant date, provided that the NEO remains continuously employed until such anniversary, subject to certain limited exceptions. RSUs serve as an important continuity and retention tool. Each RSU represents one share of our common stock.

Dividend equivalents are credited on each RSU during the vesting period to the same extent that dividends are paid on shares of our common stock. The credited dividend equivalents are paid only if the associated RSU vests based on the satisfaction of the service requirement. Awards will vest on a pro rata basis for NEOs who are at least 55 years of age and have 10 years of service in the event that any such NEO leaves the Company for any reason, other than with cause, during the term of the grant.

For 2019, the CEO was awarded 32,144 RSUs and the other NEOs were awarded from 4,355 to 6,470 RSUs.

The Performance Share and RSU grants are included in the Grants of Plan-Based Awards Table on page 45.

Settlement of 2017-2019 LTI Awards

For 2017, the long-term incentive program had two components — Performance Shares and RSUs. The following section describes the results of these award grants for the three-year period ending December 31, 2019.

Restricted Stock Units Subject to Service-Based Vesting

In 2017, we granted each NEO RSUs that vested upon the third anniversary of the grant, provided such NEO remained continuously employed for the three-year period.

The CEO earned 34,989 RSUs and the other NEOs earned awards ranging from 4,533 to 6,864 RSUs, all of which included dividend equivalents credited over the three-year cycle.

The Performance Shares and RSUs awards that were earned are included in the Option Exercises and Stock Vested Table on page 47.

38  |   THE FUTURE IN SIGHT  |   XCEL ENERGY

Retirement and Deferred Compensation Benefits

In 2019, the Company provided retirement benefits to executive officers under the Xcel Energy qualified and nonqualified pension plans. The role of the pension plans in executive compensation is the same as it is for other employees: to provide income during retirement and aid in the retention of qualified employees. The qualified pension plan benefits are based on earnings up to the Internal Revenue Service’s established limits and the benefit may be payable in a manner that results in individual income tax advantages. The nonqualified pension plan restores the benefit that would have been payable through the qualified pension plan if not for the limits imposed by Internal Revenue Code sections 401(a)(17) and 415(b).

The Company maintains a SERP, which was closed to new participants in 2008. Benefits continue to accrue for Mr. Fowke, who remains the sole participant in the SERP. The SERP provides a benefit to the participant, which is offset by the qualified and nonqualified pension plan benefits. Covered compensation for the purposes of calculating SERP benefits includes base salary and annual incentive awards. Long-Term incentive payments are not included in covered compensation. The SERP benefit is valued as a 20-year annuity but is payable as a lump sum after the participant’s termination of employment. Unreduced benefits are payable at age 62; benefits are payable as early as age 55, reduced 5 percent for each year that the benefit commencement date precedes age 62.

Each executive officer is eligible to participate in Xcel Energy’s 401(k) Savings Plan and also Deferred Compensation Plan. The 401(k) Savings Plan allows executive officers, like other eligible employees, to defer a portion of their base salary up to certain IRS limits. The Deferred Compensation Plan also allows executive officers to defer all or a portion of their annual incentive award and all or a portion of their performance-based long-term incentive awards. For 2019, the Company matched 50 percent of base salary deferrals (up to 8 percent deferred), netting to a maximum 4 percent as the eligible matching contributions. One of the purposes of the Deferred Compensation Plan is to allow for a full employer matching contribution that cannot be contributed under the Company’s qualified retirement plans due to the Internal Revenue Service Code limitations.

Additional Compensation Program Features and Policies

Severance Policy

The Company provides severance benefits to NEOs in accordance with the Xcel Energy Senior Executive Severance and Change in Control Policy (as amended, the “Severance Policy”). The Board or the GCN may name additional participants. The GCN believes the Severance Policy provides a competitive severance benefit that retains key talent during a critical and potentially protracted period of uncertainty in the event the Company undergoes a change in control and the executive is not retained following the completion of such event. Outside of change in control situations, the Severance Policy also encourages executive officers to focus on the interests of Xcel Energy and its shareholders without undue concern that the officer will be terminated without compensation and benefits.

The benefits payable under the Severance Policy are discussed in more detail under Potential Payments upon Termination or Change in Control beginning on page 51.

Employment Contracts

Neither our CEO nor any of our other executive officers have employment contracts.

Stock Ownership Requirements

Our Stock Ownership Policy is an important feature of our compensation philosophy that helps to ensure alignment of executive interests with those of our shareholders. The share ownership guideline for each executive is based on the executive’s position. Executives are expected to achieve the applicable ownership requirement within five years of the date they assume their current executive position by holding shares paid from incentives or by other methods.

If an executive is not in compliance with the ownership requirement within the required time period, the executive must elect to receive payment of any incentive awards in stock and must retain 100 percent of the net shares (after-tax) delivered to him or her until the ownership requirement is met.

As of March 25, 2020, all current NEOs have achieved, or are on track to achieve, the stated share ownership requirement by the date specified for achievement. All shares of common stock that the executive owns, as well as amounts deferred into the Xcel Energy stock fund in the 401(k) Savings Plan and Deferred Compensation Plan, count toward compliance with the ownership guidelines. The table below shows the value of shares of common stock and common stock equivalents that each NEO must hold by the required dates expressed as a multiple of base salary.