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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 x

Filed by a Party other than the Registrant o

Check the appropriate box:

o                                     Preliminary Proxy Statement

o                                     Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

x                                   Definitive Proxy Statement

o                                     Definitive Additional Materials

o                                     Soliciting Material under §240.14a-12

NRG 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):

x                                   No fee required.

o                                     Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1)                                 Title of each class of securities to which transaction applies:

(2)                                 Aggregate number of securities to which transaction applies:

(3)                                 Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

(4)                                 Proposed maximum aggregate value of transaction:

(5)                                 Total fee paid:

o                                     Fee paid previously with preliminary materials.

o                                     Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

(1)                                 Amount Previously Paid:

(2)                                 Form, Schedule or Registration Statement No.:

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March 16, 2020

Fellow Stockholders:

We are pleased to invite you to attend NRG Energy, Inc.’s Annual Meeting of Stockholders, which will be held at 9 a.m., Central Time, on Thursday, April 30, 2020, at the JW Marriott Downtown, 806 Main Street, Houston, Texas 77002. Details regarding admission to the meeting and the business to be conducted are more fully described in the accompanying Notice of Annual Meeting of Stockholders and Proxy Statement.

Your vote is important. Whether or not you plan to attend the Annual Meeting, we hope you will vote as soon as possible. Information about voting methods is set forth in the accompanying Notice of Annual Meeting of Stockholders and Proxy Statement.

On behalf of everyone at NRG, I thank you for your ongoing interest and investment in NRG Energy, Inc. We are committed to acting in your best interests. If you have any questions with respect to voting, please call our proxy solicitor, MacKenzie Partners, Inc. at (800) 322-2885 (toll free).

Sincerely,

LAWRENCE S. COBEN
Chairman of the Board

THIS PROXY STATEMENT AND PROXY CARD ARE
BEING DISTRIBUTED ON OR ABOUT MARCH 16, 2020.

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NRG Energy, Inc.
804 Carnegie Center, Princeton, New Jersey 08540

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

When: Thursday, April 30, 2020, 9:00 a.m. Central Time

Where: JW Marriott Downtown, 806 Main Street, Houston, Texas 77002*

We are pleased to invite you to join our Board of Directors and senior leadership at the NRG Energy, Inc. 2020 Annual Meeting of Stockholders.

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2020 ANNUAL MEETING OF STOCKHOLDERS

PROXY STATEMENT

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This summary highlights information contained elsewhere in this Proxy Statement. This summary does not contain all of the information that you should consider, and you should read the entire Proxy Statement before voting. For more complete information regarding NRG Energy, Inc.’s 2019 performance, please review NRG Energy, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2019.

ROADMAP OF VOTING MATTERS

Stockholders are being asked to vote on the following matters at the 2020 Annual Meeting of Stockholders:

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CORPORATE GOVERNANCE HIGHLIGHTS

We are committed to maintaining the highest standards of corporate governance, which promote the long-term interests of our stockholders, strengthen Board and management accountability and help build public trust in the Company. The Governance of the Company section beginning on page 6 describes our corporate governance framework, which includes the following:

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SUMMARY OF DIRECTOR NOMINEES

QUESTIONS AND ANSWERS

Please see the Questions and Answers section beginning on page 67 for important information about the proxy materials, voting and the 2020 Annual Meeting of Stockholders. Additional questions may be directed to our proxy solicitor, MacKenzie Partners, Inc. at (800) 322-2885 or proxy@mackenziepartners.com.

LEARN MORE ABOUT OUR COMPANY

You can learn more about the Company, view our governance materials and much more by visiting our website, www.nrg.com.

Please also visit our 2020 Annual Meeting of Stockholders website at www.proxyvote.com to easily access the Company’s proxy materials or vote through the Internet.

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We are providing these proxy materials to you in connection with the solicitation of proxies by the Board of NRG Energy, Inc. for the 2020 Annual Meeting of Stockholders (Annual Meeting) and for any adjournment or postponement of the Annual Meeting. The Annual Meeting will be held on Thursday, April 30, 2020, at 9a.m. Central Time at the JW Marriott Downtown, 806 Main Street, Houston, Texas 77002*. In this Proxy Statement, “we,” “us,” “our,” “NRG” and the “Company” refer to NRG Energy, Inc.

You are receiving this Proxy Statement because you own shares of our common stock, par value $0.01 per share, that entitle you to vote at the Annual Meeting. By use of a proxy, you can vote whether or not you attend the Annual Meeting. This Proxy Statement describes the matters on which we would like you to vote and provides information on those matters.

Each of the Notice of Annual Meeting, this Proxy Statement and our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 (Annual Report on Form 10-K) is available at www.proxyvote.com. If you would like to receive, without charge, a paper copy of our Annual Report on Form 10-K, including the financial statements and the financial statement schedules, please send your request to Investor Relations, 804 Carnegie Center, Princeton, New Jersey 08540.

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About NRG

NRG Energy, Inc. is an integrated power company built on dynamic retail brands with diverse generation assets. NRG brings the power of energy to customers by producing and selling electricity and related products and services in major competitive power markets in the U.S. and Canada in a manner that delivers value to all of NRG’s stakeholders. NRG is a customer-driven business focused on perfecting the integrated model by balancing retail load with generation supply within its deregulated markets. The Company sells energy, services, and innovative, sustainable products and services directly to retail customers under the brand names NRG, Reliant, Green Mountain Energy, Stream, and XOOM Energy, as well as other brand names owned by NRG, supported by approximately 23,000 MW of generation as of December 31, 2019. NRG was incorporated as a Delaware corporation on May 29, 1992.

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NRG’s strategy is to maximize stockholder value through the safe production and sale of reliable power to its customers in the markets it serves, while positioning the Company to provide innovative solutions to the end-use energy customer. This strategy is intended to enable the Company to optimize its integrated model to generate stable and predictable cash flow, significantly strengthen earnings and cost competitiveness, and lower risk and volatility.

To effectuate the Company’s strategy, NRG is focused on: (i) serving the energy needs of end-use residential, commercial and industrial customers in competitive markets through multiple brands and channels with a variety of retail energy products and services differentiated by innovative features, premium service, sustainability, and loyalty/affinity programs; (ii) offering innovative and renewable energy solutions for customers; (iii) excellence in operating performance of its existing assets; (iv) optimal hedging of NRG’s net retail and generation positions; and (v) engaging in disciplined and transparent capital allocation.

Sustainability is an integral piece of NRG’s strategy and ties directly to business success, reduced risks and brand value. On September 24, 2019, NRG announced the acceleration of its science-based GHG emissions reduction goals to align with prevailing climate science, limiting warming to a 1.5 degree Celsius scenario. Under its new GHG emissions reduction timeline, NRG is targeting to achieve a 50% reduction by 2025 and net-zero emissions by 2050, from a 2014 baseline.

CORPORATE GOVERNANCE GUIDELINES AND CHARTERS

The Board has adopted Corporate Governance Guidelines (Guidelines) that, along with the Amended and Restated Certificate of Incorporation, as amended, the Fourth Amended and Restated Bylaws (Bylaws) and the charters of the committees of the Board (Committees), provide the framework for the governance of the Company. The Board’s Governance and Nominating Committee is responsible for periodically reviewing the Guidelines and recommending any proposed changes to the Board for approval. The Guidelines are available on the Governance section of the Company’s investor relations website at http://investors.nrg.com, along with the charters of all of the Committees and the Company’s Code of Conduct. The Guidelines, the charters of all of the Committees and the Code of Conduct are also available in print to any stockholder upon request. Stockholders who desire to receive such items in print may request them from the Company’s Corporate Secretary by writing to NRG Energy, Inc., 804 Carnegie Center, Princeton, New Jersey 08540.

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GOVERNANCE PRACTICES

The Board and Company are committed to maintaining the highest standards of corporate governance practices and principles. The Board has taken a proactive approach in applying leading governance practices to its structure. These measures have been recommended by the Board, approved by the stockholders and quickly instituted including the majority voting standard for the election of directors approved at the 2009 Annual Meeting of Stockholders, the declassification of our Board approved at the 2012 Annual Meeting of Stockholders and the adoption of proxy access, discussed further below, following the 2016 Annual Meeting of Stockholders. Furthermore, as described in the Guidelines, the Board follows a series of governance practices that it believes foster effective Board oversight and accountability to you, our stockholders. These practices include:

·                  Executive and director stock ownership guidelines to align interests with our stockholders;

·                  Ongoing succession planning for the CEO and other senior management;

·                  Annual performance evaluations of the Board and each of its standing Committees, as well as periodic peer review for individual directors;

·                  Director orientation and continuing education program, including Company site visits and information sessions with Company management;

·                  Access to and engagement of outside advisors and consultants to assist the Board and the Committees in the performance of their duties, as appropriate; and

·                  Active engagement with our stockholders regarding governance practices and other matters.

PROXY ACCESS

In response to engagement with our stockholders, our Bylaws provide for proxy access. Under the proxy access provisions in our Bylaws, a stockholder (or group of up to 20 stockholders) continuously owning at least 3% of our outstanding common stock for a period of at least three years prior to the date of the nomination may nominate and include in our proxy materials for the following annual meeting director nominees constituting up to 20% of the Board. To do so, the stockholder must submit the information required by Article II, Section 15 of our Bylaws to the Company’s Corporate Secretary as described further under “Director Nominees for Inclusion in the Proxy Materials for the 2021 Annual Meeting of Stockholders (Proxy Access).”

RISK OVERSIGHT

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The Board performs its risk oversight function in several ways. The Board monitors, reviews and reacts to strategic and corporate risks through reports by management, including the Enterprise Risk Management team, which is further described below, and through the Committees of the Board. Several Committees of the Board have responsibilities for addressing risk, however, the Board primarily conducts this oversight function through the Finance and Risk Management Committee. The Finance and Risk Management Committee is responsible for company-wide enterprise risk management. The Company’s Financial Risk Management Committee, a committee comprised of senior management and key personnel in and around the finance, commercial operations and risk functions, reports to the Board’s Finance and Risk Management Committee on a regular basis.

The table below summarizes the significant role the various Board Committees play in carrying out the risk oversight function.

The Chairs of each of the Committees regularly report to the Board on all matters reviewed by their respective Committees, thereby providing the Board with the opportunity to identify and discuss any risk-related issues or request additional information from management or the Committees that may assist the Board in its risk oversight role. To this end, risk-related issues presented to the Committees are routinely presented to the full Board to ensure proper oversight.

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BOARD STRUCTURE AND LEADERSHIP

Directors stand for election annually. Each director will hold office until his or her successor has been elected and qualified or until the director’s earlier death, resignation or removal.

As of the 2019 Annual Meeting of Stockholders, there were ten members of the Board. During the 2019 fiscal year, the Board continued to evaluate the composition of the Board. In its efforts to evolve the Board, the Governance and Nominating Committee engaged a search firm during 2019.  The search firm brought forth a number of candidates which were assessed by the Governance and Nominating Committee and interviewed by the Committee and other members of the Board.  Upon such review, the Committee recommended the appointment of Mr. Carrillo and Ms. Pruner. As a result, the Board increased its size to 12 members and appointed Mr. Carrillo and Ms. Pruner to the Board in October 2019. As of December 31, 2019, Mr. Hantke retired from the Board. In addition, Mr. Dallas advised the Board that he will not be standing for re-election at the Annual Meeting.  Because Mr. Dallas will not be standing for re-election at the Annual Meeting, the Board’s size will be decreased to 10 members as of the Annual Meeting.

The Guidelines provide that non-executive directors meet in executive session regularly following Board meetings. The Company’s Non-Executive Chairman, Mr. Coben, presides at these sessions. Also, pursuant to the Company’s Bylaws, Mr. Coben has been designated as an “alternate member” of all Committees to replace any absent or disqualified members of a Committee.

Directors are encouraged to attend the annual meetings of stockholders. All of the then incumbent directors attended the 2019 Annual Meeting of Stockholders. During the 2019 fiscal year, all directors except Mr. Carrillo, attended more than 75% of the total number of Board meetings and meetings of the Committees on which he or she served. As discussed above, Mr. Carrillo was appointed to the Board in October 2019 and had commitments confirmed prior to his appointment that caused him to miss three of the five meetings that occurred following his appointment.

Our CEO, Mr. Gutierrez, and Chairman, Mr. Coben, work closely together in complementary roles. Mr. Gutierrez focuses on the day-to-day operations of the Company and establishes the Company’s strategic plan. Mr. Coben leads the Board’s responsibilities for reviewing, approving and monitoring fundamental financial and business strategies and major corporate actions, assessing major risks facing the Company and management, and overseeing succession planning, most notably at the CEO level, and he presides over the Board and its Committees as they perform their broad and varied oversight functions. The Board believes that these complementary roles provide the appropriate governance structure for the Company at this time.

Since December 2003, NRG’s governance structure has been led by a separate CEO and Chairman of the Board. Irrespective of the Company’s current practice, the Board believes that an effective board leadership structure is highly dependent on the experience, skills and personal interaction between persons in leadership roles. As stated in the Guidelines, the Board believes that it is in the best interest of the Company for the Board to make a determination regarding separation of the roles of Chairman and CEO based upon the present circumstances.

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DIRECTOR INDEPENDENCE

Under the Guidelines and the New York Stock Exchange (NYSE) listing standards, a majority of the Board must be composed of independent directors. The Board determines the independence of our directors by applying the independence principles and standards established by the NYSE. These standards provide that a director is independent only if the Board affirmatively determines that such director does not have a direct or indirect material relationship with the Company, which may include commercial, industrial, consulting, legal, accounting, charitable, familial and other business, professional and personal relationships.

The Board conducts a review of the independence of the Company’s directors on an annual basis. In its most recent review, the Board considered, among other things:

·                  Any employment relationships between the Company and its directors (other than Mauricio Gutierrez) or their immediate family members;

·                  Any affiliations of the Company’s directors or their immediate family members with the Company’s independent registered public accounting firm, compensation consultants, legal counsel and other consultants and advisors;

·                  Any transactions that would require disclosure as a related person transaction or that qualify for review under our related person transactions policy;

·                  Any transactions made in the ordinary course of business with a company in which a director serves on the board or as a member of the executive management team; and

·                  Any transactions involving payments made by the Company to educational institutions.

In addition, because the Company provides retail electricity services through certain of its subsidiaries, the Board also considered instances where certain of our directors either received electricity services from the Company or serve as directors of businesses that received electricity services from the Company.

The Board has determined that all of the Company’s directors are independent under the Guidelines and the NYSE listing standards, with the exception of Mauricio Gutierrez, our President and Chief Executive Officer.

Each of the Audit, Compensation, and Governance and Nominating Committees is made up solely of independent directors. In accordance with the Guidelines and NYSE listing standards, all members of the Audit and Compensation Committees meet additional independence standards applicable to audit and compensation committee members, respectively.

BOARD EVALUATION

The Board conducts its annual performance evaluation using an open-ended question and answer format in a survey generated by the Corporate Secretary on the Board’s web portal. All directors are required to assess the actions taken by the Board during the past year and suggest changes or improvements for each Committee and the Board. The questions give each director an anonymous opportunity to provide candid observations and affirmative feedback to their peers and management. The Governance and Nominating Committee oversees the evaluation process.

Responses from all directors are combined to create an anonymous summary. The summary is used to promote open dialogue during the executive sessions of the February Board and Committee meetings. One-on-one director meetings are also conducted by the Chair of the Governance and Nominating Committee to discuss the results.

The Board believes this process evokes meaningful feedback. The process highlights the Board’s commitment to continuous self-improvement by identifying those issues that sometimes require honest and difficult conversations and supports the Board’s nomination and refreshment practices.

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DIRECTOR NOMINEE SELECTION PROCESS

The Governance and Nominating Committee is responsible for identifying individuals who the Committee believes are qualified to be Board members in accordance with criteria set forth in the Guidelines as well as the assessment, on an ongoing basis, of the members of the Board for purposes of continued service to the Board and Company. The Committee provides its recommendations to the Board for approval based on considerations of certain criteria. The Governance and Nominating Committee considers criteria that includes an individual’s business experience and skills, independence, judgment, integrity, and ability to commit sufficient time and attention to the activities of the Board. The Committee does not assign specific weights to particular criteria and no particular criterion is necessarily applicable to all Board members. The Committee also considers the Company’s strategy and the particular skills, experiences and other qualifications that should be represented on the Board as a whole in light of the Company’s strategic direction. In addition to the factors listed above, the Governance and Nominating Committee considers an understanding of and experience in the retail and wholesale competitive energy market, customer expertise, finance, and operations; executive leadership; age; and gender and ethnic diversity. The Committee also assesses whether a nominee’s background, experience, personal characteristics, or skills will advance the Board’s goal of creating and sustaining a Board that can support and oversee management’s execution of the Company’s strategic priorities. The Board takes into account all of these factors when evaluating the Committees recommendations.

Listed below are summaries of specific qualifications that the Governance and Nominating Committee and the Board believe should be represented on the Board among other qualifications that a Director may bring.

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The Governance and Nominating Committee’s process for identifying and evaluating director nominees includes consultation with all directors, solicitation of proposed nominees from all directors, the engagement of one or more professional search firms, if deemed appropriate, interviews with prospective nominees by the Committee (and other directors, if deemed appropriate) and recommendations regarding qualified candidates to the full Board.

As noted above, the Board is continually evaluating the need for board refreshment and has been focused on identifying individuals whose skills and experiences will enable them to make meaningful contributions to the Company in light of the Company’s evolving strategy and direction. The Board also aims to strike a balance between the knowledge and understanding of the business that comes from longer-term service on the Board with the ideas and perspectives that can come from adding new members.

Our director nominees have a balance of tenure, age and diversity, which provides our Board with a complementary mix of experience and perspective. In addition, nine of our ten director nominees are independent.

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BOARD SKILLS AND EXPERIENCE

Our directors represent a diverse mix of skills, experiences and viewpoints that are relevant to our Company and facilitate effective oversight. To illustrate the complementary nature each director’s skills and experience, the table below only identifies five primary skills and experiences that each director brings to the Board. It does not include all of the skills, experiences, qualifications, and diversity that each director offers, and the fact that a particular experience, skill, or qualification is not listed does not mean that a director does not possess that skills. We believe identifying five primary skills and experiences is a more meaningful presentation of the complementary contributions and value that each director brings to their service on the Board and to the Company’s stockholders. See “Proposal No. 1 Election of Directors” for the biographies of our director nominees and a description of the skills and viewpoints that each director brings to bear in his or her service to NRG’s Board and Committees.

BOARD DIVERSITY

The Board is committed to maintaining a diverse and inclusive Board. Of our ten director nominees, six (60%) are diverse, including three women. Our Corporate Governance Guidelines specify that the Governance and Nominating Committee must seek to maintain occupational and personal diversity of the Board. In its recruitment process, the Governance and Nominating Committee and the Board seek to reflect gender and racial/ethnic diversity in the pool of director candidates. Diversity also goes beyond race and gender and includes diversity of viewpoints and tenure. The differences in experience and expertise allow the Board to hear various perspectives from its members, leading to better outcomes and a robust decision making process.

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BOARD COMMITTEES

The Board has the following five standing Committees: Audit, Compensation, Governance and Nominating, Finance and Risk Management and Nuclear Oversight.

The membership and the functions of each Committee are described below. Each of the Committees has adopted a charter that describes each such Committee’s roles and responsibilities. The charters of all of the Committees are available on the Governance section of the Company’s investor relations website at http://investors.nrg.com.

The Audit Committee represents and provides assistance to the Board with respect to matters involving the accounting, auditing, financial reporting, internal controls, and legal compliance functions of the Company and its subsidiaries, including assisting the Board in its oversight of the integrity of the Company’s financial statements, the qualifications, independence, and performance of the Company’s independent auditors, the performance of the Company’s internal audit function, the Company’s compliance with legal and regulatory requirements, and effectiveness of the Company’s legal and regulatory compliance functions. Among other things, the Audit Committee:

·                  appoints, retains, oversees, evaluates, and compensates the independent auditors;

·                  reviews the annual audited and quarterly consolidated financial statements;

·                  reviews major issues regarding accounting principles and financial statement presentations;

·                  reviews earnings press releases and earnings guidance provided to analysts and rating agencies;

·                  reviews with the independent auditors the scope of the annual audit, and approves all audit and permitted non-audit services provided by the independent auditors;

·                  considers the adequacy and effectiveness of the Company’s internal control and reporting system;

·                  with the advice and assistance of the Finance and Risk Management Committee, reviews in a general manner the processes by which the Company assesses and manages risk, provided, however, the Audit Committee is not required to duplicate the work of the Finance and Risk Management Committee;

·                  reviews periodically the Company’s tax policies and any pending audits or assessments;

·                  reports regularly to the Board regarding its activities and prepares and publishes required annual Audit Committee reports;

·                  establishes procedures for the receipt, retention, and treatment of complaints and concerns regarding accounting, internal accounting controls, or auditing matters;

·                  oversees the internal audit and corporate compliance functions; and

·                  annually evaluates the performance of the Audit Committee and the adequacy of its charter.

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The Compensation Committee oversees the Company’s overall compensation structure, policies, and programs. Among other things, the Compensation Committee:

·                  reviews and recommends to the Board annual and long-term goals and objectives relevant to the compensation of the President and CEO, evaluates the performance of the President and CEO in light of those goals and objectives, and either as a committee with the Chairman of the Board or together with the other independent directors, determines and approves the President and CEO’s compensation;

·                  reports to the Board its review of annual and long-term goals and objectives relevant to the compensation of the Chief Financial Officer (CFO), the Executive Vice Presidents and any other officer designated by the Board, the evaluation of those officers’ performance in light of those goals and objectives, the determination and approval of compensation levels based on such evaluations and the review and approval of employment arrangements, severance arrangements and benefits plans;

·                  reviews and recommends to the Board the compensation, incentive compensation and equity-based plans that are subject to Board approval;

·                  reviews and approves stock incentive awards for executive officers other than the President and CEO;

·                  makes recommendations regarding, and monitors compliance by officers and directors with, the Company’s stock ownership guidelines;

·                  reviews and recommends to the Board the compensation of directors for service on the Board and its committees;

·                  oversees the evaluation of management and annually reviews the Company’s senior management succession plans;

·                  reviews and approves employment agreements and severance arrangements, benefit plans not otherwise subject to Board approval, and corporate goals and objectives for officers other than the President and CEO;

·                  reviews and discusses with management the Compensation Discussion and Analysis (CD&A) to be included in the Company’s proxy statement or annual report on Form 10-K, and based on such review and discussions, recommends to the Board that the CD&A be included in the Company’s proxy statement or annual report on Form 10-K, as applicable;

·                  evaluates any conflicts of interest and the independence of any outside advisors engaged by the Compensation Committee;

·                  reviews and oversees the Company’s overall compensation strategy, structure, policies, programs, risk profile and any stockholder advisory votes on the Company’s compensation practices and assesses whether the compensation structure establishes appropriate incentives for management and employees;

·                  annually evaluates the performance of the Compensation Committee and the adequacy of its charter; and

·                  performs such other responsibilities as may be delegated to it by the Board from time to time that are consistent with its purpose.

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The Compensation Committee may delegate to one or more subcommittees such power and authority as the Compensation Committee deems appropriate. No subcommittee shall consist of fewer than two members, and the Compensation Committee may not delegate to a subcommittee any power or authority that is required by any law, regulation or listing standard to be exercised by the Compensation Committee as a whole.

The Compensation Committee has the authority to retain at the expense of the Company such outside counsel, experts, and other advisors as it determines appropriate to assist it in the full performance of its functions, including sole authority to retain and terminate any compensation consultant used to assist the Compensation Committee in the evaluation of directors, or, if applicable, CEO or senior executive compensation, and to approve the consultant’s fees and other retention terms.

Pay Governance, the Compensation Committee’s independent compensation consultant for fiscal year 2019, assisted with executive pay decisions and worked with the Compensation Committee to formulate the design of the executive compensation program for 2019. For 2019, Pay Governance billed the Company approximately $92,230 for compensation consultation services.

The Governance and Nominating Committee recommends director candidates to the Board for election at the Annual Meeting of Stockholders, periodically reviews the Guidelines and recommends changes to the Board, and provides guidance to the Board with respect to governance related matters. Among other things, the Governance and Nominating Committee:

·                  identifies and reviews the qualifications of potential nominees to the Board consistent with criteria approved by the Board, and assesses the contributions and independence of incumbent directors in determining whether to recommend them for re-election;

·                  establishes and reviews procedures for the consideration of Board candidates recommended by the Company’s stockholders;

·                  makes recommendations to the Board concerning the structure, composition, and functioning of the Board and its committees;

·                  reviews and assesses the channels through which the Board receives information, and the quality and timeliness of information received;

·                  reviews and recommends to the Board retirement and other tenure policies for directors;

·                  reviews and approves Company policies applicable to the Board, the directors and officers subject to Section 16 of the Securities Exchange Act of 1934, as amended (Exchange Act);

·                  reviews and reports to the Board regarding potential conflicts of interests of directors;

·                  recommends to the Board director candidates for the annual meeting of stockholders, and candidates to be elected by the Board as necessary to fill vacancies and newly created directorships;

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·                  oversees the Company’s strategies and efforts to manage its environmental, economic and social impacts, including, but not limited to, the Company’s environmental, climate change and sustainability policies and programs;

·                  oversees the evaluation of the Board, each of its committees and management;

·                  monitors directorships in other public companies held by directors and senior officers of the Company;

·                  annually evaluates the performance of the Governance and Nominating Committee and the appropriateness of its charter;

·                  reviews the Company’s political contribution policy and the Company’s memberships in trade associations or other business associations that engage in lobbying activities or make independent expenditures relating to political campaigns or initiatives;

·                  reviews the Company’s charitable giving policy;

·                  oversees the orientation process for new directors and programs for the continuing education of existing directors; and

·                  performs such other responsibilities as may be delegated to it by the Board from time to time that are consistent with its purpose.

The Finance and Risk Management Committee assists the Board in fulfilling its responsibilities with respect to the oversight of trading, power marketing and risk management issues at the Company, and reviews and approves certain financial transactions. Among other things, the Finance and Risk Management Committee:

·                  reviews, reports and makes recommendations to the Board on management recommendations or proposals regarding the Company’s and its subsidiaries’ (a) capital structure, (b) liquidity, (c) need for credit or debt or equity financing, (d) amounts, timing and sources of capital market transactions, and (e) financial hedging and derivative activities;

·                  reviews and approves, or authorizes officers to approve, the pricing and other terms and conditions of transactions relating to debt or equity financings, financial hedging and derivatives activities, and other similar financial activities, in each case which have been reviewed and approved by the Board;

·                  reviews and approves, or authorizes officers to approve, repurchases, early redemption or other similar actions with respect to the Company’s securities;

·                  reviews and approves, or authorizes officers to approve, the pricing and other terms and conditions of financing transactions related to mergers, acquisitions, tender offers, and reorganizations which have been reviewed and approved by the Board;

·                  reviews and approves, or authorizes officers to approve, the pricing and other terms and conditions of securities offerings which have been reviewed and approved by the Board;

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·                  approves determinations of the fair market value of assets and investments of the Company for purposes of the Company’s note indentures, senior secured credit agreement or other similar financing documents where fair market value is required to be determined by the Board or by a Committee of the Board;

·                  reviews with management, on a periodic basis, contributions to employee benefit retirement plans of the Company, investment performance, funding, asset allocation policies and other similar performance measures of the employee benefit retirement plans of the Company;

·                  oversees the Company’s policies and procedures established by management to assess, monitor, manage and control the Company’s material risk exposures, including operational, business, financial and commodity market (including marketing and trading of fuel, transportation, energy and related products and services, and hedging of generation portfolio obligations), strategic, credit, liquidity and reputational risks;

·                  oversees matters related to the security of and risks related to information technology systems and procedures, including the Company’s cyber-security program and cyber-related risks;

·                  advises and assists the Audit Committee in its review of the processes by which management and the Committee assess the Company’s exposure to risk;

·                  approves as appropriate, the Company’s power marketing and trading transactions, limits, policies, practices and procedures, and counter-party credit limit and policies, and approves exceptions to policies, as necessary;

·                  annually evaluates the performance of the Finance and Risk Management Committee and the appropriateness of its charter;

·                  reviews and approves transactions exceeding the CEO’s individual authority limits under the Company’s risk management policies; and

·                  performs such other responsibilities as may be delegated to it by the Board from time to time that are consistent with its purpose.

The Nuclear Oversight Committee consists of all of the members of the Board, all of whom are citizens of the United States and meet the requirements of applicable law to serve on the Committee, a majority of which are independent as defined under the listing standards of the NYSE and as affirmatively determined by the Board.

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SUSTAINABILITY AT NRG

At NRG, sustainability is a philosophy that underpins and facilitates value creation across our business and for all of our stakeholders. It is an integral piece of our corporate strategy and ties directly to business success, reduced risks and reputational value. To help embed corporate responsibility into the culture and fabric of the organization and create a sustainable energy future, we prioritize our work into five key pillars: (i) business, (ii) customers, (iii) workplace,
(iv) operations, and (v) suppliers.

Each pillar comprises business activities that create value for NRG and its stakeholders and, collectively, are buttressed by a robust governance structure. We are committed to positively affecting our communities and reducing the environmental footprint of our fleet while ensuring long-term competitiveness and success for the Company. These efforts include providing sustainable energy solutions to businesses and residential customers, retrofitting existing plants with environmental controls, executing coal-to-gas conversions, evaluating carbon capture technologies and leading the industry on reporting and carbon reduction.

Most importantly, we maintain an unwavering commitment to safety and reliability.

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SUSTAINABLE BUSINESS

Since 2016, we have published an annual sustainability report, reporting using the Sustainability Accounting Standards Board (SASB) standards. Moreover, we were one of the first companies to publicly commit to supporting the Task Force on Climate-related Financial Disclosures (TCFD). We also report to CDP.

In 2018, the Governance and Nominating Committee assumed the responsibility of overseeing our sustainability initiatives, which include the strategies and efforts to manage the Company’s environmental, economic and social impacts, including climate change and sustainability policies and programs.

In 2019, NRG President and CEO, Mauricio Gutierrez, signed onto the Business Roundtable’s revised Statement on the Purpose of a Corporation, an effort to expand a corporation’s mandate beyond shareholder value to include value creation for all stakeholders, including employees, communities, the environment, our supply chain and customers. At NRG, we believe our comprehensive, 5-pillar approach to sustainability incorporates the spirit of this Statement of Purpose.

We engage with our stakeholders on environmental, social and governance (ESG) issues in a proactive, holistic and integrated manner. We strive to provide recent, credible and comparable data to ESG agencies while engaging institutional investors and investor advocacy organizations around ESG issues.

Our commitment to promoting transparency and reporting on our environmental, social and governance efforts is discussed in more detail in our annual sustainability report. To view the report and learn more about our corporate sustainability efforts, please visit www.nrg.com/sustainabilty.

SUSTAINABLE CUSTOMERS

Using our position as an integrated energy company, our expertise brings customers closer to achieving their sustainability goals through a range of retail renewable plans, tailored demand response programs, active energy management tools and energy efficiency consulting and products.

For example, our Renewable Select energy plan has delivered renewable energy to its customers through a simple contract with no on-site infrastructure. In 2019, NRG procured 1.6GW of solar PPAs, which support, among other things, the Renewable Select energy plan. Residential customers benefitted from solar- and wind- based retail plans and through the 100% renewable portfolio of our Green Mountain Energy brand.

In addition, in order to support customers in their energy management and grid stability in times of high demand, we provide energy load reduction through business demand response programs and the Degrees of Difference program, which empowers our customers to manage their usage through the Google/Nest partnership with the Reliant brand and a paperless online account management tool.

During 2019, we also helped our customers bring sustainability into their homes through Reliant Smart Home products and LED light bulbs and into their businesses through energy efficiency expertise from our Certified Energy Managers.

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SUSTAINABLE WORKPLACE

OUR EMPLOYEES

INCLUSION & DIVERSITY

At NRG, we seek to create an environment where our people are treated fairly and with respect and where each voice matters. In 2019, we committed that, beginning in 2020, and at least once every three years thereafter, we will conduct a gender and race pay equity study to ensure our employees are compensated for their contributions, not based on gender, race or other similar factors. We will also conduct unconscious bias training for all employees.

TALENT DEVELOPMENT

We deploy various talent development strategies and programs with the goal of ensuring a pipeline of leadership who can execute on the Company’s strategy and drive value for all stakeholders. The Board regularly engages with management on leadership development and succession planning, including providing feedback on development plans and bench strength for key senior leader positions. The Board also has a structured program that allows directors to interact directly with individuals deeper in the organization whom management, through a robust talent assessment program as well as mentoring relationships, has identified as high potential future leaders. We also have a performance management tool that emphasizes a continuous feedback loop, and we have a robust online training curriculum with topics including leadership, communication and productivity.

EMPLOYEE ENGAGEMENT

Continuously engaging in two-way dialogue with our employees is important to us. In 2019, we asked our employees about well-being, employee volunteer programs, and total rewards preferences. Following each survey, we quickly summarized the results and shared them with employees. The comments from our employees help provide direction on what we do well, what we should change, and what we could start doing. For example, in 2019, we heard that our employees want more education around both financial and emotional well-being, so we launched a campaign at the end of 2019 that will continue through 2020 to provide an increased number of educational seminars and tools to help our employees. These seminars and tools will include understanding stress, relaxation techniques, managing debt, and financial planning.

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TOTAL REWARDS

NRG seeks to provide the median target of compensation and benefits, benchmarked against direct peers, industry, and, where appropriate, general peers. To ensure incentives are properly aligned with business needs and can attract and retain qualified employees, the Compensation Committee actively reviews our total rewards programs, including benchmarking programs against peer groups, assessing the risks of programs and evaluating the design of the annual and long-term incentive programs. We offer full-time employees incentives designed to motivate and reward success. We continue to evaluate our offerings taking into consideration the needs of our employees to ensure they are competitive and best serve our employees. Every two years, we engage an independent third party to benchmark our compensation and benefits programs against our peers and report the results to the Board’s Compensation Committee.

COMMUNITY AND PHILANTHROPY

PositiveNRG, NRG Energy’s philanthropic giving program, creates a workplace that empowers employees by supporting communities, causes and organizations that they elect to champion. There are multiple touch-points the platform offers that allows for engagement with non-profit organizations and internal employee team building such as:

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SUSTAINABLE OPERATIONS

Our environmental performance metric counts environmental incidents such as reportable spills, permit deviations and receipt of Notices of Violation. Fewer incidents means a lower score. The chart shows the company’s EKPI score per year as a percentage of the baseline year of 2014.

We integrate environmental considerations into strategic and operational decisions. We have demonstrated our commitment by reducing our impact on the environment in several areas. Our annual SOx and NOx air emissions have declined significantly over the last five years. In addition, we published industry-leading GHG-reduction goals in 2014 and became the first power company to adopt a Science-Based Target. In 2019, NRG announced the acceleration of these GHG emissions reduction goals to align with new Intergovernmental Panel on Climate Change (IPCC) guidance, which calls for limiting global warming to a 1.5˚ Celsius increase. Under our GHG emissions reduction timeline, we are targeting a 50% reduction by 2025 and net-zero emissions by 2050 from a 2014 baseline.

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SUSTAINABLE SUPPLIERS

An analysis of carbon and water in our supply chain revealed that most of our environmental impacts occur with the fuel suppliers. This insight enables us to address the most significant areas of impact and the vendors that comprise the largest portion of our supply chain footprint. As a result, since 2017, NRG was a founding member of the Natural Gas Supply Collaborative (NGSC), a voluntary group of natural gas purchasers promoting transparency through voluntary reporting. Additionally, we are a member of CDP’s Supplier Engagement Program, which asks suppliers to voluntarily disclose environmental information for investment decisions. NRG was named a CDP Supplier Engagement Leader in 2017 and 2018.  In January 2019, we earned an A-; Leadership level, on the CDP Climate Change and Water questionnaires as well as Supply Chain Engagement.

NRG has a robust Supplier Code of Conduct as well as a Manufacturing Standards Policy. We require all contract manufacturers (including subcontractors) to adhere to our Social Responsibility Standards for Manufactures Policy, which requires compliance with applicable laws and regulations, industry best practices and the International Labour Organization Declaration on Fundamental Principles and Rights at Work. Third-party audits are conducted each year and NRG reports the results of such third-party manufacturing audits to the Board’s Audit Committee.

STOCKHOLDER ENGAGEMENT

Stockholder feedback is important to our Board’s decision-making process and has driven recent changes to our governance and compensation practices. In light of our Transformation Plan, in early 2018, we initiated a broad stockholder outreach program to discuss NRG’s long-term strategy and sustainability goals, as well as to review and seek feedback on our sustainability, governance, and compensation practices. We reached out to and had discussions with stockholders representing approximately 37% of our shares outstanding. During 2019, one or more members of management were involved in more than 50 in-person and telephonic meetings with investors representing more than 30% of shares outstanding. We regularly engage with stockholders concerning our Board, governance, ESG and executive compensation practices with the specific goal of seeking stockholder feedback. We greatly value the views of our stockholders and look forward to continuing the dialogue.

COMMUNICATION WITH DIRECTORS

Stockholders and other interested parties may communicate with the Board by writing to the Corporate Secretary, NRG Energy, Inc., 804 Carnegie Center, Princeton, New Jersey 08540. Communications intended for a specific director or directors should be addressed to their attention to the Corporate Secretary at the address provided above. Communications received from stockholders are forwarded directly to Board members as part of the materials mailed in advance of the next scheduled Board meeting following receipt of the communications. The Board has authorized the Corporate Secretary, in his or her discretion, to forward communications on a more expedited basis if circumstances warrant or to exclude a communication if it is illegal, unduly hostile or threatening, or similarly inappropriate. Advertisements, solicitations for periodical or other subscriptions, and other similar communications generally will not be forwarded to the directors.

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Proposal No. 1

Election of Directors

The Board is comprised of 11 members, all of whom will stand for election at the Annual Meeting, except for Terry G. Dallas who has notified the Board of his determination not to stand for re-election. Each director will hold office until his or her successor has been elected and qualified or until the director’s earlier death, resignation or removal. Each of the nominees for director named in this Proxy Statement have been recommended and nominated by the Governance and Nominating Committee.

The persons named as proxies on the proxy card intend to vote the proxies for the election of the nominees to the Board listed below. Each nominee listed below has consented to being named in this Proxy Statement and to serve as a director if elected. The biography for each director includes the specific experience, qualifications, attributes and skills that led the Board to conclude that the nominee should serve as a director. The Board believes that each of the director nominees has valuable individual skills and experiences that, taken together, provide the Company with the variety and depth of knowledge, judgment and vision necessary to provide effective oversight of the Company.

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DIRECTOR COMPENSATION

The total annual compensation received by our directors for their service as Board members and Chairs of the Committees of the Board, if applicable, is described in the chart below.

A non-employee director who is newly appointed to the Board, other than in connection with an annual meeting of stockholders, receives the Annual Equity Retainer and a pro rata portion of the Annual Cash Retainer upon appointment.

With respect to Chairperson and Committee Chair Retainers, fifty percent (50%) is received in the form of cash and fifty percent (50%) is received in the form of Deferred Stock Units (DSUs). Directors may however elect to receive the cash portion of their annual compensation as DSUs. Each DSU is equivalent in value to one share of NRG’s common stock and represents the right to receive one such share of common stock payable at the time elected by the director or immediately if no such election is made, or in the event the director does not make an election with respect to payment in a particular year, in accordance with his or her prior deferral election. In the event that a director’s service with the Company is terminated for any reason, other than cause, DSU awards are payable in accordance with such director’s deferral election. If a director’s service with the Company is terminated for cause, the award is forfeited. In connection with the grants of the DSUs, each non-employee director also receives dividend equivalent rights (DERs) which become exercisable proportionately with the DSUs to which they relate.  Similar to its competitive assessment on behalf of the named executive officer compensation, Pay Governance performed a review of director compensation. Results of the review were shared with the Compensation Committee who made a recommendation to the full Board for final approval. There were no changes to the director compensation program for 2019.

DIRECTOR COMPENSATION FISCAL YEAR ENDED DECEMBER 31, 2019

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The following table sets forth the aggregate number of stock awards (DSUs, restricted stock units (RSUs) and DERs) and option awards (non-qualified stock options (NQSOs)) held by each of the non-employee directors as of December 31, 2019.

DIRECTOR STOCK OWNERSHIP GUIDELINES

Directors are required to retain all stock received as compensation for the duration of their service on the Board, although they may sell shares as necessary to cover tax liability associated with the conversion of DSUs to common stock. Exceptions to these requirements may be made by the Board under special circumstances. No exceptions to such requirements were made for 2019.

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Proposal No. 2

Advisory Vote to Approve NRG’s Executive Compensation

Under Section 14A of the Exchange Act, the stockholders of the Company are entitled to vote at this year’s Annual Meeting to approve the compensation of the Company’s named executive officers, as disclosed in this Proxy Statement pursuant to Item 402 of Regulation S-K (Regulation S-K) of the rules and regulations under the Securities Act of 1933, as amended (Securities Act). Currently, this vote is conducted every year. The next vote will occur at the 2021 Annual Meeting of Stockholders.

As described more fully in the CD&A beginning on page 39, the Company’s executive compensation program is designed to attract, retain and reward top executive talent. The intent of the Company’s compensation program is to reward the achievement of the Company’s annual goals and objectives while supporting the Company’s long-term business strategy.

This proposal, commonly known as a “say on pay” proposal, gives stockholders the opportunity to express their views on the Company’s named executive officers’ compensation. This vote is not intended to address any specific item of compensation, but rather the overall compensation of the named executive officers as described in this Proxy Statement. Accordingly, the Board recommends that stockholders vote in favor of the following resolution:

“RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.”

The say on pay vote is advisory and therefore not binding on the Company, the Board or the Compensation Committee. However, the Board and the Compensation Committee value the opinions of the stockholders and to the extent there is a significant number of votes against the named executive officer compensation as disclosed in this Proxy Statement, stockholders’ concerns will be considered, and the Board and the Compensation Committee will evaluate actions necessary to address those concerns.

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Proposal No. 3

Ratification of Independent Registered Public Accounting Firm for the 2020 Fiscal Year

The Audit Committee is directly responsible for the appointment, compensation, retention and oversight of the independent registered public accounting firm retained to audit the Company’s consolidated financial statements. To execute this responsibility, the Audit Committee engages in a thorough annual evaluation of (i) the independent registered public accounting firm’s qualifications, performance and independence, (ii) whether the independent registered public accounting firm should be rotated, and (iii) the advisability and potential impact of selecting a different independent registered public accounting firm.

The Audit Committee appointed the firm of KPMG LLP, an independent registered public accounting firm, to audit the consolidated financial statements of the Company and its subsidiaries for the 2020 fiscal year at a meeting held in February. KPMG LLP has been retained as the Company’s independent registered public accounting firm continuously since May 2004. In accordance with SEC rules and KPMG LLP policies, audit partners are subject to rotation requirements to limit the number of consecutive years an individual partner may provide audit services to the Company. For lead and concurring review audit partners, the maximum number of consecutive years of service in that capacity is five years. The Audit Committee is involved in the selection of KPMG LLP’s lead audit partner.

The Audit Committee and the Board believe that the continued retention of KPMG LLP to serve as the Company’s independent registered public accounting firm for the 2020 fiscal year is in the best interests of the Company and its stockholders. If the stockholders do not ratify the appointment of KPMG LLP, the Audit Committee will reconsider its selection. Representatives of KPMG LLP are expected to attend the Annual Meeting where they will be available to respond to questions and, if they desire, to make a statement.

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Our executive officers are elected by the Board annually to hold office until their successors are elected and qualified. The required information by this section is incorporated by reference to the similarly named section of NRG’s Form 10-K for the fiscal year ended December 31, 2019.

STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth information concerning beneficial ownership of the Company’s common stock as of March 2, 2020, for: (a) each director and the nominees for director; (b) named executive officers (NEOs) who are current officers as of March 2, 2020; and (c) the directors and executive officers as a group. The percentage of beneficial ownership is based on 250,541,807 shares of common stock outstanding as of March 2, 2020. The percentage of beneficial ownership also includes any shares that such person has the right to acquire within 60 days of March 2, 2020. Unless otherwise indicated, each person has sole voting and dispositive power with respect to the shares set forth in the following table.

Except as noted below, the address of the beneficial owners is NRG Energy, Inc., 804 Carnegie Center, Princeton, New Jersey 08540.

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Stock Ownership of Principal Stockholders

The following table sets forth information for each person known to the Company to own more than five percent of the Company’s common stock, as of the date of their most recent Schedule 13D or Schedule 13G filing, as applicable, with the SEC. Percentage of beneficial ownership is based on 250,541,807 shares of common stock outstanding as of March 2, 2020. Unless otherwise indicated, each person has sole investment and voting power with respect to the shares set forth in the following table.

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REVIEW, APPROVAL OR RATIFICATION OF TRANSACTIONS WITH RELATED PERSONS

The Board has adopted written policies and procedures to address potential or actual conflicts of interest and the appearance that decisions are based on considerations other than the best interests of NRG that may arise in connection with transactions with certain persons or entities (Related Person Policy). The Related Person Policy operates in conjunction with our Code of Conduct and is applicable to all “Related Person Transactions,” which are all transactions, arrangements or relationships in which:

·                  the aggregate amount involved will or may be expected to exceed $50,000 in any calendar year;

·                  the Company is a participant; and

·                  any Related Person (as that term is defined below) has or will have a direct or indirect interest.

A “Related Person” is:

·                  any person who is, or at any time during the applicable period was, a director of the Company or a nominee for director or an executive officer;

·                  any person who is known to the Company to be the beneficial owner of more than 5% of the outstanding common stock;

·                  any immediate family member of any of the persons referenced in the preceding two bullets, which means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law of the director, nominee for director, executive officer or more than 5% beneficial owner of common stock, and any person (other than a tenant or employee) sharing the household of such director, nominee for director, executive officer or more than 5% beneficial owner of common stock; and

·                  any firm, corporation or other entity in which any of the foregoing persons is a partner or principal or in a similar position or in which such person has a 10% or greater beneficial ownership interest.

A Related Person Transaction is subject to review and approval or ratification by the Governance and Nominating Committee. If the aggregate amount involved is expected to be less than $500,000, the transaction may be approved or ratified by the Chair of the Governance and Nominating Committee. As part of its review of each Related Person Transaction, the Governance and Nominating Committee will take into account, among other factors it deems appropriate, whether the transaction is on terms no less favorable than the terms generally available to an unaffiliated third-party under the same or similar circumstances and the extent of the Related Person’s interest in the transaction. This Related Person Policy also provides that certain transactions, based on their nature and/or monetary amount, are deemed to be pre-approved or ratified by the Governance and Nominating Committee and do not require separate approval or ratification.

Transactions involving ongoing relationships with a Related Person will be reviewed and assessed at least annually by the Governance and Nominating Committee to ensure that such Related Person Transactions remain appropriate and in compliance with the Governance and Nominating Committee’s guidelines. The Governance and Nominating Committee’s activities with respect to the review and approval or ratification of all Related Person Transactions are reported periodically to the Board.

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COMPENSATION DISCUSSION AND ANALYSIS

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Executive Summary

The objectives of our executive compensation program are to align executive pay with stockholder value and to motivate executives to achieve our corporate goals. This CD&A describes the elements, implementation, and 2019 results of our executive compensation program.

At our 2019 Annual Meeting of Stockholders, we received 98% support for our say on pay proposal. As a result, we believe that our stockholders understand that our pay practices demonstrate our commitment to pay for performance and that our compensation plans are designed to recognize the performance of the Company. In 2019, we produced the following results in line with our business strategy:

·                  Delivered on our financial and operational objectives, including achieving top decile safety performance in our industry

·                  Executed on our previously announced Transformation Plan objectives realizing annual cost savings of $590 million, margin enhancements of $135 million, and $370 million of non-recurring working capital improvements

·                  Continued to perfect our customer-focused model by executing on our capital-light asset strategy with the execution of 1.6 gigawatts of solar power purchase agreements in ERCOT and expansion of our retail business through the acquisition of Stream Energy

·                  Adhered to our disciplined capital allocation strategy by:

o                Achieving investment grade credit metrics, thereby exceeding our target of reducing consolidated corporate debt to 2.75x net debt/adjusted EBITDA; and

o                Completing $1.44 billion of share repurchases.

Consistent with the objectives of our compensation program, the accomplishment of these corporate goals and the market performance of our common stock over the three-year performance period directly impacted our compensation decisions and pay outcomes for 2019 pursuant to our annual incentive plan (AIP) as described in more detail in the section of this CD&A entitled “Annual Incentive Compensation” and our long-term incentive plan (LTIP), as described in more detail in the section of this CD&A entitled “Long-Term Incentive Compensation.”

Our Adjusted EBITDA and Adjusted Free Cash Flow achievements fell just below target at approximately 96% and 95%, respectively, however, our Corporate Debt to Corporate EBITDA Ratio exceeded the maximum resulting in achievement of that metric at 200%. Based on the achievement of the Corporate Debt to Corporate EBITDA Ratio and weighting approved by our Compensation Committee, the Company achieved 124.5% of target on a combined basis and our NEOs received AIP awards commensurate with this performance.

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Our compensation program ties a significant portion of our NEOs’ overall compensation to the achievement of increases in TSR through our long-term compensation program.

Consistent with market practice, in 2017, we shifted performance-based equity from MSU awards to RPSU awards.  As such, NEOs received two-thirds of their equity awards in RPSUs in lieu of MSUs. The quantity of shares received by NEOs upon the vesting of an RPSU award is a function of the Company’s TSR performance ranked against the Performance Peer Group (as defined in “Elements of Compensation – Relative Performance Stock Units”). The Compensation Committee evaluated this comparator group for an appropriate mix of industry-specific and market-influenced constituents when determining awards.  In addition, RPSU awards granted in 2018, 2019 and 2020 were updated to limit the maximum award value that an NEO may receive to six times the fair market value of the target award, determined as of the date of grant.  As a result of the 222% increase in TSR over the three-year performance period ending January 3, 2020 (vesting January 3, 2020), RPSU awards vesting as of such date vested at 200% of target.

The Compensation Committee believes that the increases to the base salaries for our NEOs were consistent with the industry trend and important to maintain market competitiveness.  For 2019, our NEOs, other than Mr. Gutierrez, received increases to their base salaries ranging from 2.25% to 3.19%.  In addition, after a review of compensation benchmark data provided by Pay Governance as well as Mr. Gutierrez’s performance as CEO, Mr. Gutierrez received a base salary increase of 5.69%.

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KEY GOVERNANCE FEATURES OF OUR EXECUTIVE COMPENSATION PROGRAM

Over the past several years, we have modified our compensation programs and practices to incorporate several key governance features, adhering to the compensation best practices described in the table below.

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Executive Compensation Program

2019 NAMED EXECUTIVE OFFICERS

This CD&A describes our executive compensation program for our NEOs in 2019. For 2019, the NEOs were:

GOALS AND OBJECTIVES OF THE PROGRAM

Our Compensation Committee designs and implements an executive compensation program that:

·                                          closely aligns our executive compensation with stockholder value creation, avoiding plans that encourage executives to take excessive risk, while driving long-term value to stockholders;

·                                          supports the Company’s long-term business strategy, while rewarding our executive team for their individual accomplishments;

·                                          allows us to recruit and retain a top-tier executive team in a competitive industry and to motivate our executive team to achieve superior performance for a sustained period; and

·                                          provides a competitive compensation opportunity while adhering to market standards for compensation.

The Compensation Committee is responsible for the development and implementation of NRG’s executive compensation program. The intent of our executive compensation program is to reward the achievement of NRG’s annual goals and objectives and the creation of long-term stockholder value.

The Compensation Committee is committed to aligning executives’ compensation with performance. The Compensation Committee’s objectives are achieved through the use of both short-term and long-term incentives. The Company currently targets pay at the median of our Compensation Peer Group, as described below. In addition, through the AIP, the NEOs are rewarded for achieving annual corporate and individual goals. Our long-term incentive compensation program is designed to reward our NEOs for long-term TSR.

The Compensation Process

COMPENSATION CONSULTANT

Pursuant to its charter, the Compensation Committee is authorized to engage, at the expense of the Company, a compensation consultant to provide independent advice, support, and expertise to assist the Compensation Committee in overseeing and reviewing our overall executive compensation strategy, structure, policies and programs, and to assess whether our compensation structure establishes appropriate incentives for management and other key employees.

Pay Governance, the Compensation Committee’s independent compensation consultant since fiscal year 2015, assisted with executive and director pay assessments and worked with the Compensation Committee to review the design of the executive compensation program for 2019.

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Pay Governance reported directly to the Compensation Committee and provided no other remunerated services to the Company. Pay Governance does not provide services for any of our affiliates. In accordance with SEC rules and requirements, the Company has affirmatively determined that no conflicts of interest exist between the Company and Pay Governance (or any individuals working on the Company’s account on behalf of Pay Governance).

COMPENSATION PEER GROUP ANALYSIS

The Compensation Committee, with support from its advisors, identifies the best possible comparator group within relevant industries. The Compensation Committee performed a review of potential peer companies, considering factors such as industry, scope of operations, market value and relevance from a talent competition standpoint. In addition, a peer of peer analysis was conducted to confirm the appropriateness of potential peer companies and to assess companies that NRG’s peers use in their own peer groups. The Compensation Committee then considered the overall reasonableness of the list of potential peer companies as a whole.

The Compensation Committee aims to compare our executive compensation program to a consistent compensation peer group year-to-year.  Given the dynamic nature of our industry and the companies that comprise it, we annually examine the list for opportunities for improvement. While a number of potential new peer companies were considered, there were no changes to the peer group for 2019. The Compensation Peer Group for 2019 is identified below.

We use the median percentile of our Compensation Peer Group as a guidepost in establishing the targeted total direct compensation (base salary, annual cash incentive and equity) levels for our NEOs. We expect that, over time, targeted total direct compensation of our NEOs will continue to land near the median of our Compensation Peer Group, and actual pay in a given year will increase or decrease based on the achievement of defined performance-based compensation metrics.

While a portion of our compensation is fixed, a significant percentage is risk-based and payable and/or realizable only if certain performance objectives are met. The following charts illustrate the target percentage of annual fixed compensation, time-based compensation and performance-based compensation payable to our CEO, CFO and other NEOs on an average basis.

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Elements of Compensation

BASE SALARY

Base salary compensates NEOs for their level of experience and position responsibilities and for the continued expectation of superior performance. Recommendations on increases to base salary take into account, among other factors, the NEO’s individual performance, the general contributions of the NEO to overall corporate performance, and the level of responsibility of the NEO with respect to his or her specific position.

In 2019, the Compensation Committee approved modest increases to base salaries for NEOs, except the CEO, ranging from 2.25% to 3.19%. The Compensation Committee also evaluated the level of Mr. Gutierrez’s base salary and total compensation by comparing it to compensation benchmark data provided by Pay Governance. Following such evaluation, considering such competitive factors and performance, including that his base salary was not increased in 2018, the Compensation Committee approved a 5.69% increase to Mr. Gutierrez’s base salary for 2019.

For 2019, the base salary for each NEO was as follows:

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ANNUAL INCENTIVE COMPENSATION

OVERVIEW

Annual incentive compensation awards (AIP awards) are made under our AIP. AIP awards are short-term compensation designed to compensate NEOs for meeting annual individual and Company goals, both financial and non-financial. The annual incentive compensation opportunity is defined as a percentage of each NEO’s annual base salary. AIP awards are subject to certain requirements, including a threshold Adjusted Free Cash Flow performance metric (AIP Gate). For 2019, the AIP Gate was $983 million, a level the Compensation Committee believes was appropriate for a minimally acceptable level of financial performance. If the AIP Gate is not achieved, no AIP awards are paid, regardless of performance in any other metrics.

For 2019, the Compensation Committee set the following financial performance metric levels:

In addition, each NEO is evaluated on his or her achievement of individual performance criteria, which include measures that NRG values in the leadership of the business. Such measures include fostering safety; working collaboratively across the organization; expanding the retail operations and reshaping the generation portfolio; advancing NRG’s digital transformation; and delivering on operational and financial goals. Additional criteria may be chosen, as appropriate, and may change from time to time. The Compensation Committee assesses performance of each NEO relative to the performance criteria applicable to each NEO and adjusts the total AIP award for each NEO by a factor of plus or minus 20%, based on recommendations from the CEO for each NEO other than himself. The Compensation Committee retains sole discretion under the AIP to reduce the amount of, or eliminate any, AIP awards that are otherwise payable under the AIP.

AIP AWARD OPPORTUNITY

The target AIP award opportunities for the NEOs for 2019, expressed as a percentage of base salary, are set forth in the table below. Actual AIP payouts can range from fifty percent (50%) of the target percentage to two hundred percent (200%) of the target percentage, which reflects the threshold and maximum AIP award opportunities, respectively. No AIP award is provided if performance falls below the threshold levels established.

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2019 AIP AWARD PERFORMANCE CRITERIA

The AIP award performance criteria applicable to all NEOs are based upon our 2019 corporate business strategy and individual performance. The table below sets forth the 2019 AIP performance criteria and weighting applicable to all NEOs.

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2019 AIP PAYMENTS

As noted above, with respect to AIP awards for 2019, the AIP Gate was $983 million, the Adjusted Free Cash Flow target was $1,340 million, the Adjusted EBITDA target was $2,005 million, and the Corporate Debt to Corporate EBITDA Ratio target was 2.75x. For 2019, the AIP Gate was surpassed, the Adjusted Free Cash Flow achievement was approximately $1,287 million, the Adjusted EBITDA achievement was approximately $1,906 million, and the Corporate Debt to Corporate EBITDA Ratio achievement was above maximum at 2.44x.

The AIP awards paid to each of the NEOs for 2019 were:

LONG-TERM INCENTIVE COMPENSATION

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RANGE OF LTIP COMPENSATION

The aggregate value of equity awards granted to each NEO for fiscal year 2019 was reviewed relative to NEO compensation data from our Compensation Peer Group. Pay Governance provided compensation benchmark data for the Compensation Peer Group, as well as for broader industry practice, to the Compensation Committee. Our practice is to issue annual equity awards on the first trading day of the calendar year. For fiscal year 2019, the grant date was January 2, 2019. The closing price per share of the Company’s stock on the grant date was $38.11 per share.

RELATIVE PERFORMANCE STOCK UNITS

Each RPSU represents the potential to receive one share of common stock after the completion of three years of service from the date of grant based on the Company’s TSR performance ranked against the TSR performance of a strongly correlated comparator group (the Performance Peer Group). Relative measures are designed to minimize the impact of externalities, ensuring the program appropriately reflects management’s impact on the Company’s TSR by including peer companies and indices that are similarly impacted by market conditions.

The payout of shares of common stock at the end of the three-year performance period will be based on the Company’s TSR performance percentile rank, compared with the TSR performance of the Performance Peer Group. The following table illustrates the design of our RPSUs in 2019.  Additional details regarding RPSU awards are set forth following the Grants of Plan-Based Awards for Fiscal Year ended December 31, 2019 table.

RPSU awards granted since 2018 were updated to limit the maximum award value that an NEO may receive to six times (6x) the fair market value of the target award, determined as of the date of grant.

RESTRICTED STOCK UNITS

Each RSU represents the right to receive one share of common stock after the completion of the applicable vesting period. The RSU awards granted in 2019 vest ratably, meaning that one-third of the award vests each year on the anniversary of the grant date, over a three-year period. Occasionally, the Compensation Committee will use alternate RSU vesting periods, but only on an exception basis, such as for a new-hire with a specific skill set or to serve as an enhanced retention tool.

MARKET STOCK UNITS

In 2017, the Compensation Committee replaced market stock unit (MSU) awards with RPSU awards. As a result, the last outstanding MSU awards vested in January 2019.  Each MSU represented the potential to receive common stock after the completion of three years of service from the date of grant based on absolute NRG stock price change (plus dividends) versus a

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baseline. The number of shares of common stock paid as of the vesting date for each MSU award was equal to a TSR Multiplier times the target MSUs on the date of grant. The “TSR Multiplier” was the 20-trading day average closing price on the vesting date divided by the 20-trading day average closing price on the grant date, taking into account any dividends issued during the performance period, presumed reinvested as of the ex-dividend date. The TSR Multiplier thresholds and the valuation premium attributable to the awards were the features that tie the value of our MSU awards to NRG’s performance. Payout of stock for MSU awards were based on TSR performance over the three-year performance period.

DIVIDEND EQUIVALENT RIGHTS

In connection with each equity award, each NEO also receives DERs, which accrue with respect to the award to which they relate. Accrued DERs are paid at the same time that the shares of common stock underlying each award are delivered to the NEO. No DERs are paid if the underlying shares fail to vest.

CLAWBACKS

The Company has a “clawback” policy with regard to awards made under the AIP and LTIP in the case of a material financial restatement, including a restatement that was the result of employee misconduct, or in the case of fraud, embezzlement or other serious misconduct that was materially detrimental to the Company. The Compensation Committee retains discretion regarding the application of the clawback policy. The policy is in addition to other remedies that are available to the Company. If the Company is required to restate its earnings as a result of noncompliance with a financial reporting requirement due to misconduct, under the Sarbanes-Oxley Act of 2002 (SOX), the CEO and the CFO would also be subject to a clawback, as required by SOX.

BENEFITS

NEOs participate in the same retirement, life insurance, health and welfare plans as other salaried employees of the Company. A financial planning reimbursement benefit for NEOs was eliminated for 2019 as part of the Transformation Plan, except for Mr. Gutierrez who retained the benefit as a result of his employment agreement entered into in December 2015. Additionally, pursuant to the terms of his employment agreement, described in more detail in the section entitled “Employment Agreements” below, Mr. Gutierrez received additional benefits in the form of term life insurance with a death benefit of $7.75 million, and up to $10,000 for reimbursement of disability insurance premiums. We also provide certain security measures for Mr. Gutierrez to address safety concerns given his position as our President and CEO. In 2018, we paid for the initial procurement, installation and maintenance of personal residential security measures for Mr. Gutierrez.  This security program is intended to decrease security threats to Mr. Gutierrez, which is in the best interests of the Company and its stockholders.  As such, we believe the costs incurred in implementing these security measures were appropriate, reasonable and necessary, and we do not consider Mr. Gutierrez’s overall security program to be a perquisite for his benefit. However, the costs related to Mr. Gutierrez’s personal security incurred in 2018 are reported in the “All Other Compensation” column in the Summary Compensation Table below. We did not incur any cost related to Mr. Gutierrez’s security measures in 2019. We do not provide any gross-ups on perquisites for executive officers.

POTENTIAL SEVERANCE AND CHANGE-IN-CONTROL BENEFITS

We choose to pay severance and change-in-control benefits to assist with career transitions of our executives as well as to create an environment that provides for an adequate business transition and knowledge transfer during times of change.

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Change-in-control agreements are market practice among publicly-held companies. Most often, these agreements are utilized to encourage executives to remain with the company during periods of extreme job uncertainty and to evaluate a potential transaction in an impartial manner. In order to enable a smooth transition during an interim period, change-in-control agreements provide a defined level of security for the executive and the company, enabling a more seamless implementation of a particular acquisition or an asset sale or purchase, and subsequent integration.

Pursuant to his employment agreement, Mr. Gutierrez is entitled to severance payments and benefits in the event of termination of employment under certain circumstances, including following a change-in-control.

Pursuant to the Company’s Amended and Restated Executive Change-in-Control and General Severance Plan for Tier IA and Tier IIA Executives (CIC Plan), NEOs other than Mr. Gutierrez are entitled to a change-in-control benefit.

For a more detailed discussion, including the quantification of potential payments, please see the section entitled “Severance and Change-in-Control” following the executive compensation tables below.

Oversight of Risks Related to Compensation Policies

The Compensation Committee oversees risks related to our compensation policies and practices. The Company’s Enterprise Risk Management team assists the Compensation Committee with its oversight and analysis of these risks. To assist the Compensation Committee with determining whether the Company’s compensation policies and practices subject the Company to unnecessary risk or could potentially motivate employees to take excessive risk, the Company’s Enterprise Risk Management team conducts reviews of these policies and practices and reports to the Compensation Committee its findings as follows:

·                  base salaries are a sufficient component of total compensation to discourage excessive risk taking;

·                  earnings goals under the Company’s AIP are based upon its audited financial statements and the Company believes that the goals are attainable without the need to take inappropriate risks or make material changes to the Company’s business or strategy;

·                  NEOs who receive payment under the AIP and the Company’s LTIP may be required to reimburse the Company for all or a portion of the payment (commonly referred to as a clawback) if the Company has to prepare an accounting restatement because it is in material noncompliance with any financial reporting requirements or in the case of fraud, embezzlement or other serious misconduct, which discourages risk taking;

·                  the Company uses awards under the LTIP that are typically based upon total stockholder return over three-year periods, such as the RPSU awards and the previously issued MSU awards, which mitigates short-term risk taking;

·                  because incentive compensation has a large equity component, value is best realized through long-term appreciation of stockholder value, especially when coupled with the stock ownership guidelines, which expose the Company’s NEOs to loss of the value of the retained equity if stock appreciation is jeopardized; and

·                  the use of incentive compensation components that are paid or vest over an extended period mitigates against unnecessary or excessive risk taking.

Furthermore, the Enterprise Risk Management team continues to evaluate and review new or amended compensation policies or practices and reports its findings to the Compensation Committee, which are consistent with the principles identified above.

As a result of the review, management and the Compensation Committee have concluded that the Company’s compensation policies and practices are not reasonably likely to have a material adverse effect on the Company.

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Anti-Hedging and Anti-Pledging Policies

The Company prohibits executive officers, directors and employees from directly or indirectly engaging in any kind of hedging transaction that could reduce or limit their economic risk with respect to their holdings, ownership or interest in the Company’s securities, including prepaid variable forward contracts, equity swaps, collars, puts, calls and options. The Company also prohibits executive officers, directors and employees from directly or indirectly engaging in any transaction in which the Company’s securities are being pledged.

Other Matters

STOCK OWNERSHIP GUIDELINES

The Compensation Committee and the Board require each NEO to hold NRG stock with a value equal to a multiple of his or her base salary until his or her termination, as set forth in the table below. Personal holdings, vested awards and unvested, time-based RSUs count towards the ownership multiple. Unvested RPSUs and non-qualified stock options do not count towards the ownership multiple. Although the NEOs are not required to make purchases of our common stock to meet their target ownership multiple, NEOs are restricted from divesting any securities until such ownership multiples are attained, except in the event of a hardship or to make a required tax payment, and must maintain their ownership multiple after any such transactions. The current stock ownership for NEOs is shown below, based on the closing share price of $34.17 on March 2, 2020:

TAX AND ACCOUNTING CONSIDERATIONS

The Compensation Committee takes into account tax consequences to NEOs in designing the various elements of our compensation program, such as designing the terms of awards to defer immediate income recognition in accordance with Section 409A of the Code. The Compensation Committee remains informed of and takes into account the accounting implications of its compensation programs. However, the Compensation Committee approves programs based on their total alignment with our strategy and long-term goals.

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Compensation Tables

SUMMARY COMPENSATION TABLE FOR FISCAL YEAR ENDED DECEMBER 31, 2019