NOTICE OF ANNUAL MEETING

OF STOCKHOLDERS

 

 

Quanta Services, Inc.

2800 Post Oak Boulevard, Suite 2600

Houston, TX 77056 | (713) 629-7600

TO BE HELD MAY 27, 2022

To our Stockholders:

The annual meeting of stockholders of Quanta Services, Inc. (“Quanta”) will be held in the Williams Tower, 2nd Floor Conference Center, Auditorium No. 1, located at 2800 Post Oak Boulevard, Houston, Texas 77056, on May 27, 2022, at 8:30 a.m. local time. At the meeting, you will be asked to consider and act upon the following matters, which are more fully described in the accompanying Proxy Statement:

 

1.

Election of nine directors nominated by Quanta’s Board of Directors;

 

2.

Approval, by non-binding advisory vote, of Quanta’s executive compensation;

 

3.

Ratification of the appointment of PricewaterhouseCoopers LLP as Quanta’s independent registered public accounting firm for fiscal year 2022;

 

4.

Approval of an amendment to the Quanta Services, Inc. 2019 Omnibus Equity Incentive Plan to, among other changes, increase the number of shares of Quanta common stock that may be issued thereunder by 2,173,000 shares; and

 

5.

Action upon any other matters that are properly brought before the meeting, or any adjournments or postponements of the meeting, by or at the direction of the Board of Directors.

Our stockholders of record at the close of business on April 1, 2022, are entitled to notice of, and to vote at, the annual meeting and any adjournments or postponements of the meeting.

By Order of the Board of Directors,

 

Carolyn M. Campbell

Corporate Secretary

Houston, Texas

April 14, 2022

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 27, 2022:

The Notice, Proxy Statement and 2021 Annual Report to Stockholders are available at www.proxydocs.com/PWR.

 

PROXY STATEMENT SUMMARY		Quanta Services, Inc. 2800 Post Oak Boulevard, Suite 2600 Houston, TX 77056 | (713) 629-7600

This summary highlights selected information about the items to be voted on at the 2022 annual meeting of stockholders (the “Annual Meeting”) of Quanta Services, Inc. (together with its subsidiaries, “Quanta” or the “Company”). This summary does not contain all of the information that you should consider in deciding how to vote. You should read the entire Proxy Statement carefully before voting.

 

2022 Annual Meeting of Stockholders
		Where Williams Tower, 2nd Floor Conference Center, Auditorium No. 1, located at 2800 Post Oak Boulevard, Houston, Texas 77056
		When May 27, 2022, at 8:30 a.m. local time
		Record Date Our stockholders of record at the close of business on April 1, 2022, are entitled to notice of, and to vote at, the Annual Meeting and any adjournments or postponements of the meeting.

Annual Meeting Agenda and Voting Recommendations   Stockholders are being asked to vote on four agenda matters:
Proposal		Board Recommendation
Proposal 1
Election of nine directors nominated by Quanta’s Board of Directors		FOR Each Director Nominee
Proposal 2
Approval, by non-binding advisory vote, of Quanta’s executive compensation		FOR
Proposal 3
Ratification of the appointment of PricewaterhouseCoopers LLP as Quanta’s independent registered public accounting firm for fiscal year 2022		FOR
Proposal 4
Approval of an amendment to the Quanta Services, Inc. 2019 Omnibus Equity Incentive Plan to, among other changes, increase the number of shares of Quanta common stock that may be issued thereunder by 2,173,000 shares		FOR

Voting Your Shares

Your vote is important. Even if you plan to attend the Annual Meeting in person, the Board of Directors of Quanta (the “Board”) recommends that you cast your vote as soon as possible. Stockholders of record may vote by any of the below methods.

 

 

         i

 

PROXY STATEMENT SUMMARY

 

Proposal 1: Election of Directors

 

The Board of Directors unanimously recommends a vote FOR the election of each of the director nominees. u    See page 2 for further information

Director Nominees

The following table provides summary information about each director nominee. Each director nominee is elected annually by a majority of votes cast.

 

				Committees
Name, Age, and Principal Position / Experience		Director Since		AC		CC		GNC		IC
Earl C. (Duke) Austin, Jr. (52) President and Chief Executive Officer of Quanta		2016
Doyle N. Beneby (62) Independent President and Chief Executive Officer of Midland Cogeneration Venture		2016				∎				∎
Vincent D. Foster (65) Independent Executive Chairman and Former Chief Executive Officer of Main Street Capital Corporation		1998		∎ F						∎
Bernard Fried (65) Independent Principal of BF Consulting and Former Chief Executive Officer of Plastikon Industries, Inc.		2004		∎ F		∎
Worthing F. Jackman (57) Independent President and Chief Executive Officer of Waste Connections, Inc.		2005		∎ F		∎
Holli C. Ladhani (51) Independent Former President and Chief Executive Officer of Select Energy Services, Inc.		2021						∎		∎
David M. McClanahan (72) Independent Chairman of the Board of Quanta and Former President and Chief Executive Officer of CenterPoint Energy, Inc.		2016
Margaret B. Shannon (72) Independent Former Vice President and General Counsel of BJ Services Company		2012						∎		∎
Martha B. Wyrsch (64) Independent Former Executive Vice President and General Counsel of Sempra Energy		2019				∎		∎

 

		Committees AC - Audit Committee GNC - Governance and Nominating Committee         CC - Compensation Committee IC - Investment Committee		F  Financial Expert

 

     ii

 

PROXY STATEMENT SUMMARY

 

Snapshot of 2022 Director Nominees

 

 

Board Qualifications, Skills and Experience

The Board regularly reviews the desired qualifications, skills and experiences that it believes are appropriate to oversee Quanta’s business and long-term strategy. Attributes brought by director nominees include:

 

          

Corporate Governance Highlights

We are committed to strong governance standards, as evidenced by the key best practices below.

✓ Annual election of directors

✓ Five new directors added since 2016

✓ Majority voting standard for election of directors in uncontested elections

✓ Director resignation policy

✓ Holders of Quanta common stock vote as a single class on all matters

✓ Independent Chairman of the Board

✓ Annual stockholder engagement

✓ Robust stock ownership requirements for directors and officers

✓ Meaningful annual limit on non-employee director compensation

✓ Code of Conduct that applies to all directors, officers and employees

✓ Robust oversight process of business strategy, risk management and corporate sustainability and responsibility matters

 

         iii

 

PROXY STATEMENT SUMMARY

 

Proposal 2: Advisory Vote to Approve Executive Compensation

 

The Board of Directors unanimously recommends a vote FOR the advisory resolution approving Quanta’s executive compensation. u    See page 24 for further information

Compensation Overview

Despite continuing to operate through unprecedented health conditions and a challenging economic environment as a result of the novel coronavirus disease that began in 2019 (“COVID-19”), Quanta continued to execute and perform at a high level and achieved strong financial results during 2021. While certain of Quanta’s operations were impacted by the pandemic and broader challenges in the energy market, the Company achieved many record financial results based on continued collaboration with customers, including record annual revenues, net income attributable to common stock and earnings per share.

During 2021, the Company also accomplished key strategic objectives related to base business operations growth, workforce development and customer expansion. Notably, Quanta completed its largest acquisition to date by acquiring Blattner Holding Company (“Blattner”), a premier utility-scale renewable energy infrastructure solutions provider, which significantly expanded Quanta’s service offerings with respect to the renewable energy market and ability to collaborate with customers on their energy-transition projects and long-term plans. The Company believes its performance and accomplishments are indicative of the resiliency and sustainability of its business model. Additionally, as a result of the Company’s ability to perform notwithstanding the difficult circumstances, the Compensation Committee, as supported by the Company’s Chief Executive Officer (“CEO”), did not make any adjustments in 2021 directly related to the COVID-19 pandemic.

Quanta’s strong performance during 2021 resulted in a payout under the 2021 annual incentive plan at approximately 165.9% of target and the completion of an exceptional 2019-2021 performance cycle that resulted in performance exceeding the maximum performance goals set under the 2019 long-term incentive plan. Additionally, the performance targets and metrics utilized in the Company’s 2021 long-term incentive plan, which apply to the 2021-2023 performance cycle, continue to represent improvement over prior performance and/or targets and support Quanta’s strategic initiatives with respect to return on invested capital, efficient and sustainable usage of property and equipment and employee safety.

2021 Target Compensation Mix

Quanta’s named executive officer (“NEO”) compensation is primarily comprised of base salary, short-term cash incentives and long-term equity incentives. Target award levels generally reflect competitive market levels and practices, with upside opportunity for performance above target levels, and performance measures are chosen to align the interests of executives with stockholders.

 

 

     iv

 

PROXY STATEMENT SUMMARY

 

2021 Long-Term Incentive Plan Equity Mix

A significant portion of equity-based incentive awards (70% with respect to the CEO and 60% with respect to other NEOs) are tied to measurable Company performance over a 3-year performance period.

 

Elements of Executive Compensation

 

		Element and Form of Compensation		Performance / Payment Criteria		Purpose
		Base Salary Cash		Individual performance and experience in the role are factors		To provide fixed compensation necessary to attract and retain key executives, and offset the cyclicality in our business that may impact variable pay
		Short-Term Incentive Cash		Tied to the achievement of performance targets related to (i) AIP Adjusted EBITDA (as defined below); (ii) AIP Adjusted EBITDA margin (as defined below); and (iii) safety performance		To incentivize and reward achievement of annual financial and operational performance targets, which focus on profitable growth and safe execution
		Long-Term Incentive Performance Stock Units (“PSUs”)		Cliff-vest at the end of a 3-year performance period   Tied to the achievement of return on invested capital, relative total stockholder return, capital efficiency and certain sustainability-based metrics (i.e., fleet idle time and composite driver safety)		To incentivize achievement of our long-term financial performance targets that focus on strategic initiatives   To align management and stockholder interests and to attract and promote retention of key executives   To incentivize sustainable performance through reduced environmental impact and enhanced employee safety
		Restricted Stock Units (“RSUs”)		Vest over three years in equal annual installments		To align management and stockholder interests and attract and promote retention of key executives
		Other Compensation Retirement Benefits and Perquisites		Not applicable		To maintain the health and safety of executives   To provide a competitive compensation package and, in certain cases, optimize key executives’ time

 

         v

 

PROXY STATEMENT SUMMARY

 

Compensation Governance

We are committed to strong governance standards that ensure our executive compensation programs are closely aligned with the interests of our stockholders and other stakeholders, as evidenced by the policies and practices described below.

 

 

Proposal 3: Ratification of the Appointment of Independent Registered Public Accounting Firm

 

The Board of Directors unanimously recommends a vote FOR ratification of the appointment of PricewaterhouseCoopers LLP as Quanta’s independent registered public accounting firm for fiscal year 2022. u    See page 66 for further information

 

     vi

 

PROXY STATEMENT SUMMARY

 

Proposal 4: Approval of Amendment to Omnibus Equity Incentive Plan

 

The Board of Directors unanimously recommends a vote FOR approval of the amendment to the Quanta Services, Inc. 2019 Omnibus Equity Incentive Plan (the “2019 Omnibus Plan”). u    See page 69 for further information

Summary of Amendment

Stockholders are being asked to approve an amendment to the 2019 Omnibus Plan. The 2019 Omnibus Plan was approved by the Board on March 21, 2019 and by Quanta’s stockholders on May 23, 2019. On March 30, 2022, the Board approved Amendment No. 1 to the 2019 Omnibus Plan, subject to stockholder approval, which increases the number of shares of Quanta common stock that may be issued thereunder by 2,173,000 shares and clarifies that dividends and dividend equivalents granted in tandem with any award under the 2019 Omnibus Plan will not be paid unless and until such award vests and the restrictions on such award lapse (the “Amendment”).

Quanta’s Grant Practices and Use of Equity-Based Compensation

 

•

Motivation and Alignment of Interests. Quanta utilizes equity-based compensation to attract, retain and incentivize key personnel and believes that such equity-based compensation has been integral to Quanta’s success in the past and will be important for continued strong performance.

 

•

Broad-Based Grant Practices. Quanta grants equity-based compensation to management and key operations personnel at the majority of our operating companies and has awarded equity-based incentive compensation to approximately 2,500 individuals on an annual average basis over the last three fiscal years. Approximately 79% of the equity-based compensation awards under the 2019 Omnibus Plan have been granted to employees that are not executive officers or directors of Quanta. We believe these broad-based grants help align incentives throughout the organization, which is key given our decentralized structure.

 

•

Strategic Grant Practices. Quanta has historically utilized strategic acquisitions as a key component of our strategic plan, including to broaden our customer base, expand its geographic area of operations, grow our portfolio of services and increase opportunities across the organization. Granting equity-based compensation awards to key personnel of an acquired business helps foster retention and an ownership culture and align incentives throughout Quanta’s decentralized structure. Since May 2019, when the 2019 Omnibus Plan was adopted, Quanta has granted equity-based compensation awards covering approximately 1.3 million shares to key employees of acquired businesses in connection with the closing of strategic acquisitions.

 

•

Stock Repurchases Offset Dilution. Quanta repurchased approximately 7.8 million shares of Quanta common stock from 2019 through 2021, which has provided a significant return of capital to investors and offset the dilutive effect of shares underlying equity-based compensation awards granted during 2019, 2020 and 2021.

 

•

Reasonable Share Request. Quanta believes that the increase to the number of shares of Quanta common stock available for issuance under the 2019 Omnibus Plan, together with the remaining shares currently available for issuance under the 2019 Omnibus Plan, would be sufficient for equity compensation awards over approximately the next three years, and that such a request is reasonable and consistent with general market practices.

 

•

Impact of Insufficient Shares. If stockholders do not approve the Amendment, we expect that we will have an insufficient number of shares available to make equity-based compensation a meaningful part of our employees’ overall compensation in the future, requiring us to consider providing additional cash awards or remuneration in order to maintain competitive levels of compensation. We believe that outcome could negatively impact our ability to align employee compensation with the interests of our stockholders.

 

         vii

 

PROXY STATEMENT SUMMARY

 

2019 Omnibus Plan Best Practices

The 2019 Omnibus Plan includes features designed to protect stockholder interests and reflect our compensation and governance principles, as described below.

 

•

One-Year Minimum Vesting Requirement. Subject to certain limited exceptions, the 2019 Omnibus Plan requires future equity awards to have minimum vesting periods of not less than one year from the date an award is granted.

 

•

No Payment of Dividends on Unvested Awards. As further clarified by the Amendment, payment of dividends and dividend equivalents on shares underlying unvested awards is expressly prohibited until awards vest or restrictions lapse, such that declared dividends and dividend equivalents are subject to forfeiture until such vesting and/or lapsing.

 

•

Director Compensation Limit. Awards under the 2019 Omnibus Plan and all other compensation payable to each non-employee director is subject to an aggregate limit of $500,000 per year, provided that a newly elected director may receive up to $750,000 for his or her initial calendar year of service on the Board and a director serving as Chairman of the Board or Lead Director may receive up to $750,000 per calendar year.

 

•

No Liberal Share Recycling. Shares tendered or withheld to cover taxes or pay the exercise of an award are not again available for grant under the 2019 Omnibus Plan.

 

•

Clawback Policy. Incentive compensation is subject to recoupment as required by law or pursuant to the Company’s clawback policy (as described in further detail in Compensation Discussion & Analysis – Clawback Policy), or if the Board determines that a participant has violated applicable restrictive covenants.

 

•

No Discounted Options or Stock Appreciation Rights. Options and stock appreciation rights must have an exercise price or base price at or above the fair market value per share of Quanta common stock on the date of grant.

 

•

Prohibition on Repricing. Repricing of stock options and stock appreciation rights without the approval of our stockholders is expressly prohibited.

 

•

No Liberal Change in Control Definition. The 2019 Omnibus Plan does not include a “liberal” change in control definition (i.e., mergers require actual consummation).

 

•

No Excise Tax Gross-Ups. A default “best-net” parachute payment provision states that either parachute payments will be reduced to avoid excise taxes or a participant will receive the full benefit and pay the related excise taxes, whichever results in the better after-tax result for the participant.

 

•

Transfer Restrictions. The 2019 Omnibus Plan includes robust transfer restrictions, including that no award may be transferred to a third-party financial institution for value.

 

•

Fixed Term and Fixed Share Authorization. The 2019 Omnibus Plan has a term of ten years and does not have an “evergreen” feature (i.e., the amount of shares authorized is fixed and can only be increased with stockholder approval).

 

      viii

 

TABLE OF

CONTENTS

Board Recommendation ✓ X

 

 

         1

 

QUANTA BOARD OF DIRECTORS

Proposal 1: Election of Directors

 

The Board of Directors unanimously recommends a vote FOR the election of each of the director nominees.

The Board currently consists of ten directors, whose current terms of office all expire at the Annual Meeting. Pat Wood, currently a member of our Board, has not been nominated for re-election at the Annual Meeting. Having considered the size, structure and composition of the Board, and based on the recommendation of the Governance and Nominating Committee, the Board approved a decrease in the number of directors constituting the Board by one, effective as of May 27, 2022, so that the Board shall thereafter consist of nine directors until otherwise determined in accordance with Quanta’s bylaws.

The Board proposes that the following nine nominees be elected for a new term of one year or until their successors are duly elected and qualified or until their earlier death, resignation or removal. Each of the nominees has consented to serve if elected. If a nominee becomes unwilling or unavailable to serve as a director, the Board may designate a substitute nominee or reduce the number of directors that constitute the Board. In that case, the persons named as proxies will vote for the substitute nominee designated by the Board. Proxies cannot be voted for a greater number of persons than the number of nominees named below.

The Board unanimously recommends a vote FOR the election of Ms. Ladhani, Ms. Shannon, Ms. Wyrsch and Messrs. Austin, Beneby, Foster, Fried, Jackman and McClanahan.

Director Nominees

The following provides biographical information about each director nominee, including a description of the experience, qualifications and skills that have led the Board to determine that each nominee should serve on the Board.

EARL C. (DUKE) AUSTIN, JR.

 

Director Since: 2016 Age: 52 Key Skills and Attributes •  Industry Experience •  Risk Oversight and Management •  Operations / Strategic Planning •  Senior Leadership •  Environmental / Social / Governance   Positions with Quanta •  President •  Chief Executive Officer		Experience   Mr. Austin has been a member of the Board and served as Quanta’s President and Chief Executive Officer since March 2016. He previously served as Quanta’s Chief Operating Officer from January 2013 until January 2022 and as President of the Electric Power Division and Oil and Gas Division from May 2011 to December 2012 and had responsibility for oversight of power and pipeline operations since January 2011. He served as President of the Oil and Gas Division from October 2009 to May 2011 and as President of North Houston Pole Line, L.P., an electric and natural gas specialty contractor and subsidiary of Quanta, from 2001 until September 2009. He currently serves as chairman of the Texas State University System Board of Regents and as a director of the Southwest Line Chapter of the National Electrical Contractors Association. Mr. Austin holds a Bachelor of Arts degree in Business Management.   Qualifications   The Board believes Mr. Austin’s qualifications to serve on the Board include his significant contributions to Quanta in strategy and operational and safety leadership, including through his service as our Chief Executive Officer and his prior service as our Chief Operating Officer, as well as his extensive technical expertise and knowledge of the industries Quanta serves. Mr. Austin also brings extensive knowledge of all aspects of the Company’s operations as a result of his service as our Chief Executive Officer.

 

     2

 

QUANTA BOARD OF DIRECTORS

 

DOYLE N. BENEBY
Director Since: 2016 Age: 62 Key Skills and Attributes •  Industry Experience •  Risk Oversight and Management •  Operations / Strategic Planning •  Senior Leadership •  Government / Regulatory •  Environmental / Social / Governance Other Public Company Board Service •  Korn Ferry (2015 to current) •  Capital Power Corp. (2012 to current)		Experience   Mr. Beneby has been a member of the Board since March 2016. Mr. Beneby has served as President and Chief Executive Officer of Midland Cogeneration Venture, a natural gas-fired combined electrical and energy generating plant located in the United States, since November 2018. He previously served as the Chief Executive Officer of New Generation Power International from October 2015 until May 2016 and as President and Chief Executive Officer of CPS Energy from August 2010 until September 2015. Mr. Beneby has served as a director of Korn Ferry since September 2015 and as a director of Capital Power Corp. since May 2012. Mr. Beneby holds a Bachelor of Science degree in Engineering and a Master of Business Administration degree.   Qualifications   The Board believes Mr. Beneby’s qualifications to serve on the Board include his extensive executive-level experience at a municipal electric and gas utility and his service as a chief executive officer and director of other public companies, as well as his operational, safety and financial expertise and knowledge of the industries Quanta serves.   Committee Memberships   •  Compensation (Chairman) •  Investment
VINCENT D. FOSTER
Director Since: 1998 Age: 65 Key Skills and Attributes •  Industry Experience •  Risk Oversight and Management •  Operations / Strategic Planning •  Senior Leadership •  Finance / Accounting / Capital Allocation •  Legal / Compliance Other Public Company Board Service •  Main Street Capital Corporation (2007 to current) •  Team Industrial Services, Inc. (2005 – 2017)		Experience   Mr. Foster has been a member of the Board since 1998. He has served as Executive Chairman of the Board of Main Street Capital Corporation, a specialty investment company, since March 2007 and as Senior Managing Director of Main Street Capital Partners, LLC (and its predecessor firms), a private investment firm, since 1997. He also served as Chief Executive Officer of Main Street Capital Corporation from March 2007 until November 2018. Mr. Foster previously served as a director of Team Industrial Services, Inc. from 2005 until July 2017, U.S. Concrete, Inc. from 1999 to 2010, Carriage Services, Inc. from 1999 to 2011 and HMS Income Fund, Inc. from June 2012 to March 2013. He has also served on the Eli Broad College of Business Advisory Board for Michigan State University since 2020. Mr. Foster holds a Juris Doctor degree and is a Certified Public Accountant.   Qualifications   The Board believes Mr. Foster’s qualifications to serve on the Board include his significant contributions and service to Quanta since its inception, his experience as chief executive officer of a public corporation, his many years of service on boards of other public companies and his extensive tax, accounting, merger and acquisitions, financial, legal and corporate governance expertise.   Committee Memberships   •  Audit •  Investment (Chairman)

 

         3

 

QUANTA BOARD OF DIRECTORS

 

BERNARD FRIED
Director Since: 2004 Age: 65 Key Skills and Attributes •  Industry Experience •  Risk Oversight and Management •  Operations / Strategic Planning •  Senior Leadership •  Finance / Accounting / Capital Allocation		Experience   Mr. Fried has been a member of the Board since March 2004. He has served as Principal of BF Consulting, a provider of management consulting services, since September 2011, and previously served as Chief Executive Officer and as a director of Plastikon Industries, Inc., a plastics manufacturing company, from April 2016 to September 2017. Mr. Fried also previously served as the Executive Chairman of OpTerra Energy Group, an energy conservation measures services provider, from June 2012 to February 2016, and as the Executive Chairman of Energy Solutions International, a software provider to the pipeline industry, from March 2011 to May 2015. Mr. Fried also served as Chief Executive Officer and President of Siterra Corporation, a software services provider, from May 2005 to March 2011, as Chief Executive Officer and President of Citadon, Inc., a software services provider, from 2001 until November 2003, and as Chief Financial Officer and Managing Director of Bechtel Enterprises, Inc. from 1997 until 2000. Mr. Fried holds a Bachelor of Engineering degree and a Master of Business Administration degree.   Qualifications   The Board believes Mr. Fried’s qualifications to serve on the Board include his executive management experience, including at companies within Quanta’s industries, his prior service on company boards, and his extensive executive-level experience in operations, risk oversight, information technology systems, human resources, finance and international business.   Committee Memberships   •  Audit •  Compensation
WORTHING F. JACKMAN
Director Since: 2005 Age: 57 Key Skills and Attributes •  Industry Experience •  Risk Oversight and Management •  Operations / Strategic Planning •  Senior Leadership •  Finance / Accounting / Capital Allocation •  Environmental / Social / Governance Other Public Company Board Service •  Waste Connections, Inc. (2019 to current)		Experience   Mr. Jackman has been a member of the Board since May 2005. He has served as Chief Executive Officer and a director of Waste Connections, Inc., an integrated solid waste services company, since July 2019 and as President of Waste Connections, Inc. since July 2018. He previously served as its Executive Vice President and Chief Financial Officer from September 2004 until July 2018 and as Vice President – Finance and Investor Relations from April 2003 until August 2004. From 1991 until April 2003, Mr. Jackman held various positions with Deutsche Bank Securities, Inc., an investment banking firm, most recently serving as Managing Director, Global Industrial and Environmental Services Group. Mr. Jackman holds a Bachelor of Science degree in Business Administration – Finance and a Master of Business Administration degree.   Qualifications   The Board believes Mr. Jackman’s qualifications to serve on the Board include his corporate experience, including as chief executive officer and chief financial officer of a public corporation, as well as his investment banking experience and extensive financial and accounting expertise.   Committee Memberships   •  Audit (Chairman) •  Compensation

 

     4

 

QUANTA BOARD OF DIRECTORS

 

HOLLI C. LADHANI
Director Since: 2021 Age: 51 Key Skills and Attributes •  Industry Experience •  Risk Oversight and Management •  Operations / Strategic Planning •  Senior Leadership •  Finance / Accounting / Capital Allocation •  Environmental / Social / Governance Other Public Company Board Service •  Marathon Oil Company (2021 to current) •  Noble Energy, Inc. (2017 – 2020) •  Atlantic Power Corporation (2010 – 2018) •  Rosetta Resources (2013 – 2015)		Experience   Ms. Ladhani has been a member of the Board since July 2021. She previously served as President, Chief Executive Officer and a director of Select Energy Services, Inc., a publicly traded provider of water management and chemical solutions to the energy industry, from November 2017 until January 2021. Prior to its merger with Select Energy, Ms. Ladhani served as Chairman, President and Chief Executive Officer of Rockwater Energy Solutions, Inc., a provider of chemical solutions to the energy industry, from 2015 until November 2017, as well as in various other positions with Rockwater from its formation in 2011 until 2015, including Executive Vice President – Chemical Technologies and Chief Financial Officer. Prior to that, she served as Executive Vice President and Chief Financial Officer of Dynegy Inc., then a publicly traded independent power producer, from 2005 until 2011, and in various other positions with Dynegy from 2000 to 2005, including Chief Accounting Officer and Treasurer. She also held positions of increasing responsibility at PricewaterhouseCoopers, LLP from 1992 to 2000, including Senior Manager. Ms. Ladhani has served as a director of Marathon Oil Corporation, a publicly traded independent exploration and production company, since March 2021 and as a director of Priority Power Management, LLC, a full-service energy solutions provider, since April 2021, and she also currently serves on the Board of Trustees at Rice University. She previously served as a director of Noble Energy, Inc., a publicly traded independent exploration and production company, from 2017 through the sale of Noble in October 2020, as a director of Atlantic Power Corporation, a publicly traded independent power producer, from 2010 until 2018 and as a director of Rosetta Resources Inc., a publicly traded independent exploration and production company, from 2013 until 2015. Ms. Ladhani holds a Bachelor of Arts degree in Business Administration and a Master of Business Administration degree.   Qualifications   The Board believes Ms. Ladhani’s qualifications to serve on the Board include her extensive experience, including as Chief Executive Officer and Chief Financial Officer of companies within the energy industry, as well as her financial and accounting expertise and her years of service on boards of other public and private companies.   Committee Memberships   •  Governance and Nominating •  Investment

 

         5

 

QUANTA BOARD OF DIRECTORS

 

DAVID M. MCCLANAHAN
Director Since: 2016 Age: 72 Chairman of the Board Key Skills and Attributes •  Industry Experience •  Risk Oversight and Management •  Operations / Strategic Planning •  Senior Leadership •  Finance / Accounting / Capital Allocation •  Government / Regulatory Other Public Company Board Service •  CenterPoint Energy, Inc. (2002 – 2013)		Experience   Mr. McClanahan has been a member of the Board since March 2016 and Chairman of the Board since May 2017. He previously served as President and Chief Executive Officer of CenterPoint Energy, Inc. from October 2002 until December 2013 and as Special Advisor to the Chief Executive Officer of CenterPoint Energy, Inc. from January 2014 until July 2014. From 1999 until 2002, Mr. McClanahan served as President and Chief Operating Officer of all regulated operations for Reliant Energy, Inc. He also previously served as a director of CenterPoint Energy, Inc. from 2002 until 2013. Mr. McClanahan holds a Bachelor of Arts degree in Mathematics and a Master of Business Administration degree and is a Certified Public Accountant.   Qualifications   The Board believes Mr. McClanahan’s qualifications to serve on the Board include his extensive experience, including as a chief executive officer of a public company in the electric power and natural gas industries and his prior service on the board of a public company, as well as his technical expertise and knowledge of the industries Quanta serves and his financial, accounting and regulatory expertise.
MARGARET B. SHANNON
Director Since: 2012 Age: 72 Key Skills and Attributes •  Industry Experience •  Risk Oversight and Management •  Senior Leadership •  Government / Regulatory •  Legal / Compliance •  Environmental / Social / Governance Other Public Company Board Service •  Matador Resources Company (2011 – 2016)		Experience   Ms. Shannon has been a member of the Board since December 2012. She served as Vice President and General Counsel of BJ Services Company, an international oilfield services company, from 1994 to 2010, when it was acquired by Baker Hughes Incorporated. Prior to 1994, she was a partner with the law firm of Andrews Kurth LLP. Ms. Shannon served on the board of directors of Matador Resources Company, an exploration and production company, from June 2011 to December 2016. In addition, she has been active in several not-for-profit organizations in Houston. Ms. Shannon holds a Bachelor of Arts degree and a Juris Doctor degree.   Qualifications   The Board believes Ms. Shannon’s qualifications to serve on the Board include her extensive experience in the energy industry, as well as in corporate governance, and her years of service on boards of other public and private companies.   Committee Memberships   •  Governance and Nominating •  Investment

 

     6

 

QUANTA BOARD OF DIRECTORS

 

MARTHA B. WYRSCH
Director Since: 2019 Age: 64 Key Skills and Attributes •  Industry Experience •  Risk Oversight and Management •  Operations / Strategic Planning •  Senior Leadership •  Finance / Accounting / Capital Allocation •  Government / Regulatory •  Legal / Compliance •  Environmental / Social / Governance Other Public Company Board Service •  National Grid plc (2021 to current) •  First American Financial Corporation (2018 to current) •  Spectris plc (2012 to 2021) •  Noble Energy, Inc. (2019 to 2020)		Experience   Ms. Wyrsch has been a member of the Board since October 2019. She previously served as Executive Vice President and General Counsel of Sempra Energy, an energy infrastructure and services company with operations in the United States and internationally, from September 2013 until March 2019, where she oversaw legal and compliance matters. She also previously served as President – North America of Vestas American Wind Technology, a wind turbine services company, from 2009 until 2012, where she had direct responsibility for North American sales, construction, services and maintenance. From 2007 until 2008 she served as President and Chief Executive Officer of Spectra Energy Transmission, a natural gas transmission and storage business in the United States and Canada, and from 1999 through 2007, she served in various roles of increasing responsibility with Duke Energy Corporation, including as President and Chief Executive Officer, Gas Transmission from 2005 until 2007. Ms. Wyrsch has served as a director of First American Financial Corporation, a publicly traded financial services company, since 2018 and as a director of National Grid plc, a publicly traded electricity and gas utility company, since September 2021. She also previously served as a director of Spectris plc, a provider of specialty instrumentation and controls that is listed on the London Stock Exchange, from 2012 until 2021 and as a director of Noble Energy, Inc., a publicly traded independent oil and natural gas exploration and production company, from December 2019 through the sale of Noble in October 2020. Ms. Wyrsch holds a Bachelor of Arts degree and a Juris Doctor degree.   Qualifications   The Board believes Ms. Wyrsch’s qualifications to serve on the Board include her experience as an executive officer of large, publicly traded utility and energy companies and her experience serving as a public company director, as well as her technical expertise and knowledge of the industries Quanta serves and her legal expertise and experience with respect to corporate governance.   Committee Memberships   •  Compensation •  Governance and Nominating

 

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QUANTA BOARD OF DIRECTORS

 

Mix of Skills, Experience, and Other Attributes of Director Nominees

Our director nominees have an effective mix of backgrounds, knowledge, and skills. The table below provides a summary of certain collective competencies and attributes of the director nominees. The lack of an indicator for a particular item does not mean that the director nominee does not possess that skill or experience, and we look to each director to be knowledgeable in all of these areas. Rather, the indicator represents that the item is a core competency that the director nominee brings to the Board. Our director nominees also have a wide range of additional skills and experience not mentioned, which are further described in their biographies above.

 

Industry Experience Understanding of, and experience in, the industries or markets we serve as a result of serving as a director or executive officer of a company that operates in such industries or markets

∎

∎

∎

∎

∎

∎

∎

∎

∎

Risk Oversight and Management Experience as a chief executive officer, president or other executive officer of a public or private company or leadership of a regulatory agency, with responsibility for, among other things, talent development and management of human capital

∎

∎

∎

∎

∎

∎

∎

∎

∎

Operations / Strategic Planning Experience in an executive officer role responsible for the oversight of operations and the development of a business strategy for a public or private company

∎

∎

∎

∎

∎

∎

∎

∎

Senior Leadership Business and strategic management experience from service in a significant leadership position, such as a chief executive officer, chief financial officer or other senior leadership role.

∎

∎

∎

∎

∎

∎

∎

∎

∎

Finance / Accounting / Capital Allocation Experience as a chief financial officer of, or service in a similar financial oversight function for, a public or private company or meets the definition of financial expert within the meaning of U.S. Securities and Exchange Commission (“SEC”) regulations

∎

∎

∎

∎

∎

∎

Government / Regulatory Service in, or experience interacting with, governmental or regulatory entities

∎

∎

∎

∎

Legal / Compliance Experience overseeing the legal department of a public company or practicing law or holds a legal degree

∎

∎

∎

Environmental / Social / Governance Experience with governance principles or corporate responsibility and sustainability initiatives

∎

∎

∎

∎

∎

∎

Other Public Company Board Experience Current or prior service on the board of directors of a public company

∎

∎

∎

∎

∎

∎

∎

Diversity Represents diversity of race, ethnicity and/or gender

∎

∎

∎

∎

Independence Independent within the meaning of SEC regulations, New York Stock Exchange (“NYSE”) corporate governance listing standards and our Corporate Governance Guidelines

∎

∎

∎

∎

∎

∎

∎

∎

Age (in years)

52

62

65

65

57

51

72

72

64

62

Tenure (in years)

6

6

24

18

17

1

6

10

3

10.1

 

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CORPORATE

GOVERNANCE

We are committed to having sound corporate governance practices that maximize stockholder value in a manner consistent with legal requirements and the highest standards of integrity. In that regard, the Board has adopted guidelines that provide a framework for the governance of Quanta, and we continually review these guidelines and regularly monitor developments in the area of corporate governance. Our Corporate Governance Guidelines are posted in the Investor Relations / Governance section of our website at www.quantaservices.com.

Board Leadership Structure

The Board believes that the leadership structure of Quanta’s Board should include either an independent non-executive Chairman of the Board or a Lead Director who satisfies Quanta’s standards for independence. The Board reviews its leadership structure from time to time to assess whether it continues to serve the best interests of Quanta and its stockholders.

Chairman of the Board

Quanta’s Corporate Governance Guidelines provide that the Board will appoint a Chairman of the Board, who may but need not be an employee of Quanta. The Chairman of the Board generally presides over all regular sessions of the Board and Quanta’s annual meetings of stockholders. With input from the CEO (if the Chairman is an independent director), or in consultation with the Lead Director (if the Chairman is not an independent director), the Chairman sets the agenda for Board meetings, subject to the right of each Board member to suggest the inclusion of items on any agenda. The Chairman of the Board may vote at any meeting of the Board on any matter called to a vote, subject to the legal, fiduciary and governance requirements applicable to all members of the Board. If the Chairman of the Board is an independent director, the duties and responsibilities of the Chairman of the Board generally include the following:

 

•

working with the Chief Executive Officer to ensure directors receive timely, accurate and complete information to enable sound decision making, effective monitoring and advice;

 

•

encouraging active engagement of all directors;

 

•

directing discussions toward a consensus view and summarizing discussions for a complete understanding of what has been agreed;

 

•

encouraging the Board’s involvement in strategic planning and monitoring the Chief Executive Officer’s implementation;

 

•

coordinating, monitoring and maintaining a record of all meetings of independent directors and discussing Board executive session results with the Chief Executive Officer;

 

•

promoting effective relationships and open communication between the independent directors and the management team;

 

•

coordinating, together with the Compensation Committee, the formal evaluation of the Chief Executive Officer on an annual basis;

 

•

coordinating, together with the Governance and Nominating Committee, the succession plans for the Chief Executive Officer;

 

•

identifying matters specifically reserved for the decision of the Board and ensuring that the Board sets appropriate levels of authority for management;

 

•

coordinating, together with the Governance and Nominating Committee, a process for the annual evaluation of the Board, its members and its committees; and

 

•

reviewing management’s investor relations strategy and participating, where appropriate, in its implementation.

Additional duties and responsibilities of the Chairman of the Board may be established from time to time by the Board and the Governance and Nominating Committee of the Board.

In May 2021, the Board re-appointed David McClanahan, an independent director, as non-executive Chairman of the Board to serve as such until his successor is duly elected and qualified at the next annual meeting of the Board or until his earlier resignation or removal. Mr. McClanahan has served as Quanta’s non-executive Chairman of the Board since his initial appointment in May 2017. The Board may modify this structure in the future to ensure that the Board leadership structure for Quanta remains effective and advances the best interests of our stockholders.

 

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CORPORATE GOVERNANCE

 

Lead Director

In the event the Chairman of the Board is not an independent director, our Corporate Governance Guidelines provide that a Lead Director will be elected exclusively by the independent directors. The Lead Director must be an independent director and will assist the Chairman of the Board and the remainder of the Board in assuring effective corporate governance in managing the affairs of the Board. The Lead Director is responsible for ensuring that the quality, quantity and timeliness of the flow of information between management and the Board enables the Board to fulfill its functions and fiduciary duties in an efficient and effective manner. In addition, the Lead Director will coordinate the activities of the other independent directors, preside over the Board when the Chairman of the Board is not present, consult with the Chairman of the Board as to agenda items for Board and committee meetings, and perform such other duties and responsibilities as the Board deems appropriate.

The Board’s Role in Strategy

The Board recognizes the importance of ensuring that the Company’s overall business strategy is designed to create long-term, sustainable value for stockholders and benefit all of Quanta’s stakeholders. While the formulation and implementation of Quanta’s strategy is primarily the responsibility of management, the Board plays an active oversight role, carried out primarily through regular reviews and discussions with management, including both broad-based presentations and more in-depth analyses and discussions of specific areas of focus and evolving business, industry, societal, operating and economic conditions. Directors have full and free access to Quanta’s management and Company information, and, as necessary and appropriate, directors may consult with independent legal, financial, accounting and other advisors.

Periodically, the Board undertakes a robust qualitative and quantitative review of management’s five-year strategic plan, which includes both financial and operational performance goals and the strategic initiatives designed to support those goals. In connection with management’s current five-year strategic plan, the Board and management discuss, among other things, key strategic initiatives, including those set forth below.

 

•

The Company’s commitment to its workforce, including with respect to safety, training, and operational excellence of its craft skilled labor and the attraction, development and retention of exceptional employees in a diverse and inclusive environment.

 

•

The continued growth of the Company’s base business operations and continuing to differentiate the solutions the Company provides to its customers.

 

•

The Company’s expectations and strategies with respect to margin performance and, if necessary, improvement in each operating segment.

 

•

The Company’s growth opportunities with existing and potential customers and in existing and adjacent markets where craft skilled labor is critical to providing cost-certain solutions.

 

•

The Company’s capital allocation initiatives and considerations, including expected investment and acquisition activity, as well as planned strategic operating initiatives for each operating segment.

 

•

The Company’s commitment to maintaining its entrepreneurial culture through its decentralized management structure while also ensuring appropriate corporate oversight.

The Board also annually reexamines the strategic plan, reviewing management’s progress on its strategic initiatives and revised financial projections based on, among other things, prior period financial results and recent acquisition activity. The Board and management discuss and consider market trends and opportunities, the Company’s competitive positioning, recent regulatory and legal changes, and emerging technologies and challenges in the industries Quanta serves. Furthermore, on an ongoing basis, the Board evaluates specific business decisions in light of the strategic plan, including proposed acquisitions or investments and capital allocation decisions. The Board’s oversight of risk management (as described below) also enhances the directors’ understanding of the risks associated with the Company’s strategy and the Board’s ability to provide guidance to and oversight of management in executing the strategic plan.

The Board’s Role in Risk Oversight

The Board oversees an enterprise-wide approach to risk management, designed to support the achievement of long-term organizational objectives and enhance stockholder value. The annual enterprise risk management assessment, managed by Quanta’s Chief Executive Officer, General Counsel, Chief Financial Officer and Chief Compliance Officer, provides visibility to the Board about the identification, assessment, monitoring and management of critical risks and management’s risk mitigation strategies.

 

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CORPORATE GOVERNANCE

 

In this process, risk is assessed throughout the business, including operational, industry, financial and reputational risks, legal and regulatory risks and data and systems security risks. A component of the Board’s oversight function is not only understanding the risks the Company faces and what steps management is taking to manage those risks, but also understanding what level of risk is appropriate for Quanta. The involvement of the full Board in setting Quanta’s business strategy, both short-term and long-term, is a key part of its understanding of Quanta’s risks and how those risks may evolve in response to changes in strategy or business environment, and what constitutes an appropriate level of risk for Quanta.

As set forth below, the Board and the committees of the Board have oversight responsibility for risk management in certain areas.

 

•

Board. The full Board, in addition to its ultimate oversight responsibility for the risk management process, focuses on the development and review of the Company’s CEO succession plan and succession planning and talent development for other key management positions. The Board also reviews and evaluates certain key strategic risks, such as, among other things, customer business model developments, technological changes, structural or organizational risk, certain uninsurable risks, and risks pertaining to capital allocation decisions. Additionally, as part its focus on key strategic risks, the Board considers the significant opportunities and challenges arising from the physical risks associated with changes in climate, as well as technological advances, market developments and additional regulatory and compliance costs that arise in response to climate change. The full Board also focuses on oversight of the Company’s human capital management, which is a key strategic risk of the Company. Specifically, the Board conducts an annual review of management’s enterprise-wide talent development initiatives that are designed to maintain a workforce that meets the Company’s future needs and a quarterly review (with additional updates as necessary) of Company safety performance and key employee safety matters.

 

•

Audit Committee. The Audit Committee focuses on risks relating to the Company’s financial reporting and accounting policies and the Company’s independent registered public accounting firm, internal controls and internal audit function, as well as the Company’s compliance with legal and regulatory requirements. The Audit Committee also concentrates on risks related to information technology security programs, including cybersecurity, and senior management reports periodically to the committee and/or the Board on significant information security matters.

 

•

Compensation Committee. The Compensation Committee focuses on risks relating to Quanta’s compensation policies and programs to determine whether they encourage excessive risk-taking and whether they are aligned with Quanta’s risk management profile. The Compensation Committee also evaluates compensation policies and practices and strives to create incentives that are designed to mitigate such risks.

 

•

Investment Committee. The Investment Committee focuses on risks associated with prospective acquisitions, dispositions, investments and certain significant capital expenditures.

 

•

Governance and Nominating Committee. The Governance and Nominating Committee focuses on risks relating to Quanta’s corporate governance, Board membership and structure and management succession planning, as well as corporate responsibility and sustainability matters, including environmental issues, social issues and practices and policies relating to the support of business, charitable, educational and industry/trade organizations and with respect to political activity. The Governance and Nominating Committee also periodically reviews Quanta’s risk management process, reporting its findings to the Board.

For additional information regarding the risks facing the Company, review the risk factors included in Item 1A. of Part I of Quanta’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021. The risks described therein are not the only risks facing the Company, and additional risks and uncertainties not currently known, or that may currently be deemed to be immaterial based on the information known to the Company, may materially adversely affect the Company’s business, financial condition or results of operations in future periods.

Board Independence

The Board has determined that each of our current directors, other than our Chief Executive Officer, Mr. Austin, has no material relationship with Quanta (either directly or as a partner, stockholder or officer of an organization that has a relationship with Quanta) and is “independent” within the meaning of the NYSE corporate governance listing standards. The Board has made these determinations based in part on its finding that these independent directors meet the categorical standards for director independence set forth in our Corporate Governance Guidelines and in the NYSE corporate governance listing standards. With each current director other than Mr. Austin deemed independent, the Board exceeds the NYSE requirement that a majority of directors be independent.

 

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CORPORATE GOVERNANCE

 

When evaluating the independence of Mr. Jackman, the Board considered Quanta’s employment of his son, who is employed at a non-management level and received less than $120,000 in aggregate compensation during 2021. When evaluating the independence of Ms. Wyrsch, the Board considered her service as a director of National Grid plc, a customer of Quanta. The Board determined that these relationships were not material and that the positions held by these individuals and the amounts involved did not prevent a finding of independence under the NYSE standards or our Corporate Governance Guidelines.

When evaluating the independence of Mr. Wood, who is currently a director but has not been nominated for re-election at the Annual Meeting, the Board considered his service as a director of SunPower Corporation, a potential customer of Quanta, and his service as an officer of Hunt Energy Network, which recently engaged in a transaction with an operating company of Quanta, as described in further detail in Certain Transaction – Related Party Transactions. The Board also considered Mr. Wood’s service as a board representative of LUMA Energy, LLC, an entity that is partially owned by, but not in a consolidated group with, Quanta and that directly compensates Mr. Wood for his service on its board. The Board determined that these relationships were not material and that the positions held by Mr. Wood and the amounts involved did not prevent a finding of independence under the NYSE standards or our Corporate Governance Guidelines.

Our Corporate Governance Guidelines, which include our categorical standards for director independence, are posted in the Investor Relations / Governance section of our website at www.quantaservices.com.

Executive Sessions of Non-Management Directors

In accordance with the NYSE corporate governance listing standards, our non-management directors, each of whom is “independent” within the meaning of NYSE corporate governance listing standards and our Corporate Governance Guidelines, meet in executive session without management at each regularly scheduled Board meeting. The executive sessions are presided over by the Chairman of the Board or, if the Chairman of the Board is not independent, by the Lead Director, or in the absence of an independent Chairman of the Board or Lead Director, by an independent director selected by the executive session participants.

Director Meetings

During the year ended December 31, 2021, the Board held seven meetings. Each director attended every meeting of the Board and at least 75% of the meetings of the committees of the Board on which they served. We encourage, but do not require, the members of the Board to attend the annual meeting of stockholders. Last year, all directors, other than a director not standing for re-election at the meeting, attended the annual meeting of stockholders.

 

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CORPORATE GOVERNANCE

 

Committees of the Board

The Board has four standing committees: the Audit Committee, the Compensation Committee, the Governance and Nominating Committee, and the Investment Committee. The Board has examined the composition of each standing committee and has determined that each member of these committees is “independent” within the meaning of SEC regulations, NYSE corporate governance listing standards and our Corporate Governance Guidelines. Each standing committee operates under a formal charter adopted by the Board that governs its responsibilities, all of which are posted in the Investor Relations / Governance section of our website at www.quantaservices.com. The current membership and the number of meetings held during the last fiscal year and the primary responsibilities of each committee are set forth below:

Audit Committee

 

		Chairman of the Committee   Worthing F. Jackman(I)(F)   Committee Members   Vincent D. Foster(I)(F)   Bernard Fried(I)(F)   Meetings During 2021:   8
•  Appointing, compensating and overseeing the independent registered public accounting firm, considering, among other things, the accounting firm’s qualifications, independence and performance   •  Reviewing and approving audit and non-audit services performed by the accounting firm and determining whether the performance of such services is compatible with the accounting firm’s independence   •  Reviewing and approving the scope and procedures of the accounting firm’s annual audit, and reviewing the final audit, including any comments, recommendations or problems encountered   •  Reviewing and discussing with the accounting firm, among other things, critical accounting policies and practices and any alternative treatments of financial information within generally accepted accounting principles in the United States (“GAAP”)   •  Conducting an annual review of the accounting firm’s internal quality control measures and all relationships between the accounting firm and Quanta, as well as the lead partner of the accounting firm and partner rotation requirements under applicable rules and regulations   •  Reviewing management’s report on internal control over financial reporting and the accounting firm’s attestation of Quanta’s internal control over financial reporting   •  Reviewing any significant deficiencies or material weaknesses in the design or operation of Quanta’s internal control over financial reporting and any fraud involving management or other financial reporting personnel   •  Monitoring the quality and integrity of financial statements and earnings press releases, as well as the financial information and earnings guidance provided therein (including non-GAAP information)   •  Overseeing systems of disclosure controls and procedures   •  Reviewing the performance of Quanta’s internal audit function, including the internal audit director, and the scope and results of the annual internal audit plan   •  Establishing and maintaining procedures for receipt, retention and treatment of complaints regarding accounting, internal controls and auditing matters and for the confidential submission of employee reports regarding questionable accounting or auditing matters   •  Considering policies with respect to risk assessment and risk management   •  Overseeing Quanta’s compliance program and regularly reviewing with the Company’s chief compliance officer the implementation and effectiveness of the program, including actual and alleged violations of the company’s code of conduct   •  Reviewing and approving, as appropriate, related party transactions

 

(I)

Independent within the meaning of SEC regulations, NYSE corporate governance listing standards and our Corporate Governance Guidelines

(F)

Audit Committee Financial Expert within the meaning of SEC regulations, as determined by the Board

 

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CORPORATE GOVERNANCE

 

Compensation Committee

 

		Chairman of the Committee     Doyle N. Beneby(I)   Committee Members   Bernard Fried(I) Worthing F. Jackman(I) Martha B. Wyrsch(I)   Meetings During 2021:   6
•  Reviewing, approving and overseeing the administration of Quanta’s incentive compensation plans, including the issuance of awards pursuant to equity-based incentive plans   •  Evaluating the Chief Executive Officer’s performance annually in light of Quanta’s compensation goals and objectives and determining the Chief Executive Officer’s compensation based on this evaluation   •  Reviewing and approving all compensation of other executive officers of Quanta and reviewing management’s recommendations with respect to compensation of leadership personnel at Quanta’s key operating companies and other subsidiaries   •  Reviewing and approving executive officer employment agreements and other compensation arrangements   •  Reviewing the relationships between risk management policies and practices and compensation, including whether compensation arrangements encourage excessive risk-taking   •  Considering the results of the most recent stockholder advisory vote on the compensation of Quanta’s NEOs

Governance and Nominating Committee

 

		Chairman of the Committee     Pat Wood, III(I)   Committee Members   Holli C. Ladhani(I)   Margaret B. Shannon(I)   Martha B. Wyrsch(I)   Meetings During 2021: 12
•  Developing, recommending and periodically reviewing corporate governance principles applicable to the Board and Quanta   •  Establishing qualifications for membership on the Board and its committees and evaluating the structure of the Board   •  Making recommendations to the Board regarding persons to be nominated for election or re-election to the Board and appointment of directors to Board committees   •  Evaluating policies regarding the recruitment of directors   •  Making recommendations to the Board regarding persons proposed by the Chief Executive Officer to be elected as executive officers of Quanta   •  Supporting the Board’s Chief Executive Officer succession planning and talent development for succession candidates   •  Periodically reviewing the processes for succession planning and talent development of Quanta’s executive officers and the leadership personnel at Quanta’s key operating companies and subsidiaries   •  Periodically reviewing Quanta’s enterprise risk management processes   •  Periodically reviewing and discussing with management environmental, social and governance matters, and Quanta’s public reporting on corporate responsibility and sustainability   •  Periodically reviewing and discussing with management the Company’s practices and policies relating to the support of business, charitable, educational and industry/trade organizations and with respect to political activity   •  Making recommendations to the Board regarding compensation and benefits for non-employee directors

 

(I)

Independent within the meaning of SEC regulations, NYSE corporate governance listing standards and our Corporate Governance Guidelines

 

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CORPORATE GOVERNANCE

 

Investment Committee

 

		Chairman of the Committee     Vincent D. Foster(I)   Committee Members   Doyle N. Beneby(I) Holly C. Ladhani(I) Margaret B. Shannon(I) Pat Wood, III(I)   Meetings During 2021:   6
•  Considering and approving certain acquisitions, investments and dispositions by Quanta, including the terms, transaction structure, and consideration involved   •  Evaluating certain capital expenditures by Quanta that are outside the capital budget approved by the Board   •  Monitoring ongoing activities in connection with certain investments and acquisitions   •  Tracking certain completed acquisitions and investments   •  Conducting a qualitative and quantitative review of certain historical transactions   •  Assessing policies regarding transactions that hedge certain commodity, interest rate, currency and other business risks

 

(I)

Independent within the meaning of SEC regulations, NYSE corporate governance listing standards and our Corporate Governance Guidelines

Compensation Committee Interlocks and Insider Participation

No member of the Compensation Committee served as an employee or officer of Quanta or any of its subsidiaries during 2021, was formerly an officer of Quanta or any of its subsidiaries, or had any relationship with Quanta requiring disclosure herein as a related party transaction. Additionally, no executive officers served on the compensation committee or as a director of another company, one of whose executive officers served on Quanta’s Compensation Committee or as a director of Quanta.

Code of Conduct

The Board has adopted a Code of Conduct that applies to all directors, officers and employees of Quanta and its subsidiaries, including the principal executive officer, principal financial officer and principal accounting officer or controller. The Code of Conduct is posted in the Investor Relations / Governance section of our website at www.quantaservices.com. We intend to post at the above location on our website any amendments or waivers to the Code of Conduct that are required to be disclosed pursuant to Item 5.05 of Form 8-K.

Engagement and Communications with the Board

The Board believes that effective corporate governance includes constructive conversations and the development of long-term relationships with our stockholders. We value such engagement and believe it is important to address any questions or concerns on Company policies and practices. We also review and analyze the voting results and feedback from our annual meetings to identify any topics of interest or concern.

 

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CORPORATE GOVERNANCE

 

Members of our management have historically engaged in extensive investor outreach on a variety of financial and operational topics, including long-term strategy, capital allocation priorities and industry dynamics. In a given year, we have numerous interactions with stockholders and members of the investment community on these matters and host or participate in various investor conferences and events.

We also conduct an annual stockholder engagement program focused on corporate responsibility and sustainability topics, as well as other governance- and compensation-related topics, including executive compensation, board structure and composition, oversight of strategy and risk, and equity incentive compensation grant practices. Our engagement team includes members of senior management, and when requested, independent directors or subject matter experts, and seeks to identify and address any areas of concern. During the fourth quarter of 2021 and the first quarter of 2022, in connection with this program, we contacted stockholders representing approximately 50% of Quanta’s outstanding common stock as of September 30, 2021 and ultimately engaged with more than half of the stockholders contacted. Management and the Board received and reviewed valuable feedback on several topics, including, among other things, those set forth below.

 

•

Sustainability Matters. Key discussion topics included human capital management (e.g., workforce safety and training) and diversity, equity and inclusion efforts; environmental impact and stewardship; business strategy alignment with climate change impacts; and importance of alignment with sustainability reporting frameworks.

 

•

Governance Matters. Key discussion topics included board diversity and director recruitment process; board tenure considerations; political activity by the Company; and continued Board and management oversight of key sustainability matters.

 

•

Compensation-Related Matters. Key discussion topics included financial and operational metrics utilized in the company’s compensation program, including sustainability-related metrics; grant practices with respect to equity-based compensation; and overall structure of equity awards to key personnel (e.g., vesting period, performance-based vs. time-based).

This feedback helped inform subsequent discussions and decisions regarding our governance and compensation practices, as well as our sustainability priorities. For example, during the first quarter of 2022, Quanta adopted an enterprise-wide political activity policy covering political contributions and lobbying activity by the Company, which incorporated certain feedback received in connection with stockholder engagements. Additionally, in its upcoming 2021 corporate sustainability report, Quanta intends to publish further quantitative information pertaining to its environmental impact, employee safety and training and other sustainability matters, and input from our stockholder engagements was utilized in shaping our priorities with respect to these metrics.

 

 

 

 

 

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CORPORATE GOVERNANCE

 

Stockholders and other interested parties may communicate with one or more of our directors, including our non-management directors or independent directors as a group, a committee or the full Board by writing to Corporate Secretary at the address for our corporate headquarters, which is currently: Quanta Services, Inc., 2800 Post Oak Blvd., Suite 2600, Houston, Texas 77056. All communications will be reviewed by the Corporate Secretary and forwarded to one or more of our directors, as appropriate.

Board and Committee Evaluations

Board and committee evaluations play an important role in ensuring the effective functioning of the Board. Therefore, the Board and each committee conduct annual self-assessments, which are overseen by the Governance and Nominating Committee. The results of these assessments are compiled, without attribution, and sent to the directors for a full Board assessment and to the committee members of each committee for a committee assessment. Additionally, the Chairman of the Board conducts one-on-one discussions with each director to gather feedback on Board and committee operations, practices and performance. Information derived from the evaluation process is also considered by the Governance and Nominating Committee when searching for and evaluating potential future director candidates.

 

 

Identifying and Evaluating Nominees for Director

The Governance and Nominating Committee regularly evaluates the appropriate size of the Board and whether any vacancies on the Board are expected due to retirement or otherwise. If any vacancies are anticipated or arise, the Governance and Nominating Committee will consider director candidates suggested by incumbent directors, management, third-party search firms and others. The Governance and Nominating Committee will also consider director nominations by stockholders that are made in compliance with our bylaws. All applications, recommendations or proposed nominations for Board membership received by Quanta will be referred to the Governance and Nominating Committee. The manner in which the qualifications of a nominee are evaluated does not differ if the nominee is recommended by a stockholder.

The Governance and Nominating Committee has the authority to retain, at Quanta’s expense, a third-party search firm to help identify and facilitate the screening and interview process of potential director nominees. Once a potential director nominee is identified or recommended, the committee makes an initial determination as to whether to conduct a full evaluation based on,

 

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CORPORATE GOVERNANCE

 

among other things, the information provided with the recommendation, the committee’s own knowledge of the candidate, supplemental inquiries to the recommending person or others, or a background check. If the committee determines to further pursue the candidate, the candidate is evaluated based on the qualifications described below.

The Governance and Nominating Committee also considers other relevant factors it deems appropriate, such as the current composition of the Board (including with respect to diversity in experience, background, gender and ethnicity), the balance of management and independent directors, the need for a certain Board committee expertise, and the candidate’s activities unrelated to Quanta (including service as a director on the boards of other public companies). After this evaluation, the committee determines whether to interview the candidate and may ask the candidate to meet with members of Quanta’s management or other Board members. After completing its evaluation, if the committee believes the candidate would be a valuable addition to the Board, it will recommend to the Board the candidate’s nomination for appointment or election as a director.

The Board values diversity in its broadest sense. With that goal in mind, and pursuant to our Corporate Governance Guidelines, the Board endeavors to have a group of directors representing:

 

•

diverse experiences at policy-making levels of organizations that are relevant to Quanta’s activities and operations, which may come from business, government, education, technology and non-profit organizations;

 

•

diversity of tenure, which ensures a proper balance between Board refreshment and director continuity; and

 

•

diverse backgrounds and attributes including with respect to gender, ethnicity and geography.

The Board has further committed to identifying and appointing a group of diverse directors by adopting a formal policy within our Corporate Governance Guidelines, which requires that the initial pool of qualified candidates identified in connection with a new independent director search must include women and ethnically diverse candidates.

In alignment with these principles, the Board has taken deliberate steps to identify and appoint qualified, diverse candidates meeting the above characteristics, including in connection with its completed director candidate searches in 2016, 2019 and 2021. Through these candidate searches, the Board has identified and appointed three directors with diverse attributes, and the Board remains committed to continue to identify and consider diverse director candidates in future director searches.

Director Qualifications

Our Corporate Governance Guidelines contain Board membership qualifications that the Governance and Nominating Committee considers in selecting nominees for our Board. The guidelines state that members of the Board should possess the highest standards of personal and professional ethics, integrity and values, and be committed to representing the long-term interests of our stockholders, and must have an inquisitive and objective perspective, practical wisdom, mature judgment, the willingness to speak their mind and the ability to challenge and stimulate management in a constructive manner. The guidelines also provide that Board members should have experience in areas that are relevant to Quanta’s business and demonstrated leadership skills in the organizations with which they are or have been affiliated. The Board wants its members to represent a broad range of viewpoints and backgrounds, and our Corporate Governance Guidelines expressly mention seeking candidates who would add gender and ethnic diversity to our Board. Members of the Board must also be willing to devote sufficient time to carrying out their duties and responsibilities effectively and should be committed to serve for an extended period of time. As such, a Board member should not serve on more than four public company boards, and a Board member that is a chief executive officer (or equivalent position) with another public company should not serve on more than three public company boards. Board members will not be nominated for election to the Board if the election would occur after their 75^th birthday; however, the full Board may make exceptions in special circumstances.

Director Compensation

The Governance and Nominating Committee has the responsibility of recommending to the Board compensation and benefits for non-employee directors. The committee is guided by certain director compensation principles set forth in our Corporate Governance Guidelines:

 

•

compensation should fairly pay directors for work required;

 

•

compensation should be appropriate and competitive to ensure Quanta’s ability to attract and retain highly qualified directors;

 

•

compensation should align directors’ interests with the long-term interests of stockholders; and

 

•

the structure of the compensation should be simple, transparent and easy for stockholders to understand.

 

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CORPORATE GOVERNANCE

 

The Governance and Nominating Committee and the Board aim to set director compensation levels at or near the market median relative to directors at companies of comparable size, industry, and scope of operations in order to ensure directors are paid competitively for their time commitment and responsibilities. A market competitive compensation package is important because it enables us to attract and retain highly qualified directors who are critical to our long-term success. Additional director compensation practices have been adopted to align with market best practices and ensure director interests are closely aligned with the interests of our stockholders as set forth below.

 

•

Annual Limit on Total Compensation. We adopted a meaningful annual limit on non-employee director compensation, as described further in Annual Limit on Non-Employee Director Compensation.

 

•

Stock Ownership Guidelines. We maintain meaningful stock ownership guidelines that align our directors’ long-term interests with those of our stockholders, as described further in Stock Ownership Guidelines for Non-Employee Directors.

 

•

Anti-Hedging / Pledging Policy. We maintain a policy that prohibits directors from hedging the economic risk of ownership of Quanta common stock or pledging Quanta securities as collateral for a loan absent pre-clearance and demonstration of financial capacity to repay without resorting to the pledged securities.

 

•

Appropriate Compensation Mix. The majority of director compensation is equity-based. Cash retainers, including incremental Board and committee leadership retainers, are intended to provide fixed compensation for time spent, while the equity-based compensation component recognizes director responsibility for strategic oversight and stockholder value.

 

•

Annual Review. Our Governance and Nominating Committee re-assesses our non-employee director compensation annually and intends to continue to engage an independent compensation consultant to perform a comprehensive market analysis of our director compensation program and practices. The results of this review for 2020 and 2021 are described in Compensation Program Review and Prospective Change.

 

•

No Additional Compensation for Employee Directors. Directors who also serve as employees of Quanta receive no additional compensation for director service.

Current Director Compensation

At every annual meeting of stockholders at which a non-employee director is elected or re-elected, each such director receives (i) an annual award of RSUs having a value of $150,000 and (ii) subject to the prospective increase in the annual Board membership cash retainer described below, the applicable following annual cash retainer(s):

 

		Annual Membership Cash Retainer					Annual Cash Retainer Supplement    For Committee Chairmanship
Board of Directors			$	85,000					–
Audit Committee			$	15,000				$	20,000
Compensation Committee			$	10,000				$	15,000
Governance and Nominating Committee			$	10,000				$	15,000
Investment Committee			$	10,000				$	15,000

Upon initial appointment to the Board other than at an annual meeting of stockholders, a non-employee director receives (for the period from the appointment through the end of the current director service year) a pro-rata portion of the annual equity award and applicable annual cash amounts. Our non-employee Chairman of the Board receives additional annual compensation in the amount of $180,000, of which 50% is payable in cash and 50% is payable in RSUs. Upon the initial appointment of a non-employee Chairman of the Board, other than immediately following the annual meeting of stockholders, such director receives (for the period from the appointment through the end of the current director service year) a pro rata portion of the additional annual compensation.

Unless the non-employee director’s Board service is terminated earlier, RSUs generally vest in full upon conclusion of the director service year. Subject to the terms of applicable award agreements, unvested RSUs held by (i) any non-employee director who is not nominated for or elected to a new term, including for example, due to a reduction in the size of the Board, age precluding a re-nomination, the identification of a new nominee, or the desire to retire at the end of a term, or (ii) any non-employee director who resigns at Quanta’s convenience, including any resignation resulting from the non-employee director’s failure to receive a majority of the votes cast in an election for directors as required by Quanta’s bylaws, vest in full on the earlier of (a) the conclusion of the director service year, or (b) the date of such non-employee director’s termination of service. RSUs are generally settled in shares of Quanta common stock, provided that a non-employee director may elect to settle up to 50% of any award in cash if he or she is in compliance with Quanta’s stock ownership guidelines as of the date of settlement and is expected to remain in compliance immediately following settlement.

 

         19

 

CORPORATE GOVERNANCE

 

Generally, meeting fees are not paid to our non-employee directors. However, in order to compensate for the time required to accommodate extraordinary meeting activity, each non-employee director receives a fee for attendance at the tenth and any subsequent Board meeting or the tenth and any subsequent committee meeting, in each case during a single director service year, as follows: $2,000 for attendance at an in-person board meeting; $1,000 for participation at a telephonic board meeting; $1,000 for attendance at an in-person committee meeting; and $500 for participation at a telephonic committee meeting.

Directors are also reimbursed for reasonable out-of-pocket expenses incurred to attend meetings of the Board or the committees thereof, and for other expenses reasonably incurred in their capacity as directors of Quanta. Directors who are also employees of Quanta or any of its subsidiaries do not receive additional compensation for serving as directors. Currently, eight non-employee director nominees are standing for election at the annual meeting. As an executive officer of Quanta, Mr. Austin received no compensation for his service as a director of Quanta.

Compensation Program Review and Prospective Change

During the prior three fiscal years, the Governance and Nominating Committee retained a compensation consultant to, among other things, review and provide observations and recommendations regarding Quanta’s non-employee director compensation program and highlight relevant trends in director compensation. The consultant examined director compensation data for a group of peer companies, as well as director compensation survey data, and presented its findings and observations to the Governance and Nominating Committee. After considering the implications of the ongoing COVID-19 pandemic and the current economic environment, the Board, upon recommendation of the Governance and Nominating Committee, decided to forego any changes to the director compensation program in 2020 and 2021.

However, after reviewing the information presented during the fourth quarter of 2021 and upon recommendation by the Governance and Nominating Committee, in order to better align with competitive peer group practices, the Board approved a $15,000 increase in the annual Board membership cash retainer (from $85,000 to $100,000), and a $10,000 increase in the dollar value of the annual RSU award for Board membership (from $150,000 to $160,000). The prospective changes are scheduled to be effective as of May 27, 2022, and no other changes to the director compensation program were made.

Annual Limit on Non-Employee Director Compensation

The 2019 Omnibus Plan contains an annual limit on non-employee director compensation, inclusive of all cash compensation and any awards under the 2019 Omnibus Plan that may be made to a non-employee director for service during any calendar year. The annual limit is $500,000 per year, provided that a newly elected director may receive up to $750,000 for his or her initial calendar year of service on the Board and a director serving as Chairman of the Board or Lead Director may receive up to $750,000 for service during any calendar year.

Deferred Compensation Plan for Non-Employee Directors

Non-employee directors are eligible to participate in a deferred compensation plan maintained by Quanta. No later than December 31 of each year, each non-employee director may voluntarily elect to defer all or a portion (in 5% increments) of his or her annual cash retainers, including but not limited to, compensation for board membership, committee membership and board/committee leadership, and RSUs to be earned with respect to services performed in the following year. Deferral elections are irrevocable and if no deferral election is made, no compensation is deferred. Deferred cash amounts are allocated to a separate recordkeeping account maintained for the non-employee director that reflects the amounts deferred and any earnings (positive or negative). The account is credited with returns according to the performance of certain deemed investment choices selected by the non-employee director from time to time. However, Quanta has no obligation to provide any deemed investment choice other than a default investment option selected by the Compensation Committee. The interest rate earned on the deferred cash amounts is not above-market or preferential. Deferred RSUs are recorded in an account maintained for the non-employee director that reflects the number of shares deferred. Quanta also makes a cash payment of dividend equivalents on the shares deferred at the same time and at the same rate as dividends are paid on Quanta common stock. In general, deferred compensation is distributed to the non-employee director (or his or her beneficiary) upon the director leaving the Board or at a date elected in advance by the director. Additionally, deferred amounts can be distributed upon certain unforeseen emergencies suffered by the non-employee director or upon a change in control of Quanta.

 

    20

 

CORPORATE GOVERNANCE

 

Stock Ownership Guidelines for Non-Employee Directors

Non-employee directors are required to hold stock with a value equivalent to five times the annual cash retainer for Board membership (excluding the annual cash retainer for committee membership or any supplement for serving as a committee chairman or as Chairman of the Board). Non-employee directors have five years from the fiscal year-end following initial election to the Board to accumulate the stock ownership prescribed by the guidelines. As of December 31, 2021, all non-employee directors were in compliance with the requirements of the stock ownership guidelines. Specifically, Messrs. Beneby, Foster, Fried, Jackman, McClanahan and Wood and Ms. Shannon and Ms. Wyrsch exceeded the prescribed ownership level, and Ms. Ladhani, who was appointed in July 2021, was making ratable progress toward the prescribed ownership level within her accumulation period, which ends as of December 31, 2026.

2021 Director Compensation Table

The following table sets forth the compensation for each non-employee director during the 2021 fiscal year.

 

Name		Fees Earned or Paid in Cash ($)				Stock Awards(1) ($)				All Other Compensation ($)				Total ($)
Doyle N. Beneby			120,000				149,392				–				269,392
Vincent D. Foster			125,000				149,392				–				274,392
Bernard Fried			110,000				149,392				–				259,392
Worthing F. Jackman			130,000				149,392				–				279,392
Holli C. Ladhani			90,403				132,725				–				223,128
David M. McClanahan			175,000				239,046				–				414,046
Margaret B. Shannon			105,000				149,392				–				254,392
Pat Wood, III			120,000				149,392				–				269,392
Martha B. Wyrsch			105,000				149,392				–				254,392
J. Michal Conaway(2)			–				–				10,000				10,000

 

(1)

The amounts shown reflect the aggregate grant date fair value (based on the closing price of Quanta common stock on the date of grant) of RSUs granted during the fiscal year ended December 31, 2021 calculated in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718, as further described in Note 14 to the Company’s audited consolidated financial statements in its 2021 Annual Report on Form 10-K. The value ultimately realized by the directors upon the actual vesting of the awards may or may not be equal to this determined value. The average of the closing prices of Quanta common stock for the twenty consecutive trading days immediately preceding the date of grant was used to determine the number of RSUs granted. As of December 31, 2021, Mr. McClanahan held unvested awards covering 2,501 shares, Ms. Ladhani held unvested awards covering 1,479 shares and each of the remaining non-employee directors held unvested awards covering 1,563 shares.

(2)

Mr. Conaway did not stand for re-election at Quanta’s 2021 annual meeting of stockholders and, accordingly, did not receive any annual cash retainers or equity awards during 2021 in respect of his Board service. However, in light of his dedicated service to the Board over the course of 14 years, he was awarded a retirement gift in the form of a travel voucher in the amount shown.

 

         21

 

EXECUTIVE

OFFICERS

The current executive officers of Quanta are as follows:

 

Name		Age		Current Position(s) with Quanta
Earl C. (Duke) Austin, Jr.		52		President, Chief Executive Officer and Director
Derrick A. Jensen		51		Chief Financial Officer
Paul C. Gregory		58		Chief Strategy Officer
Redgie Probst		45		Chief Operating Officer
Donald C. Wayne		55		Executive Vice President and General Counsel
Jayshree Desai		50		Chief Corporate Development Officer
Paul M. Nobel		54		Vice President and Chief Accounting Officer
Dorothy Upperman		59		Vice President – Tax

Earl C. (Duke) Austin, Jr. For a description of the business background of Mr. Austin, see Quanta Board of Directors – Director Nominees above.

Derrick A. Jensen has served as our Chief Financial Officer since May 2012. He previously served as our Senior Vice President – Finance, Administration and as Chief Accounting Officer from March 2011 to May 2012, as our Vice President and Chief Accounting Officer from March 1999 to March 2011 and as our Controller from December 1997 until March 2009. Prior to joining Quanta, he served as a manager for the public accounting firm of Arthur Andersen LLP. Mr. Jensen holds a Bachelor of Business Administration degree in Accounting and became a Certified Public Accountant in the State of Texas in 1997.

Paul C. Gregory has served as our Chief Strategy Officer since January 2017. He previously served as our President – Underground Utility and Infrastructure Division from January 2017 to January 2022. He also previously provided consulting services to Quanta from 2014 until December 2016, focusing on Quanta’s underground utility, pipeline and industrial services operations, corporate strategy and mergers and acquisitions activity. Mr. Gregory also previously served as President and Chief Executive Officer of Gregory & Cook Construction, Inc., a pipeline and related infrastructure construction company, from 1998 until 2008. Mr. Gregory holds a Bachelor of Business Administration degree in Finance and a Master of Business Administration degree.

Redgie Probst has served as our Chief Operating Officer since January 2022. He previously served as our President – Electric Power Division from March 2019 to January 2022, as Senior Vice President – Electric Power from May 2018 to March 2019 and as Regional Vice President – Electric Power from June 2016 until May 2018. He also previously served as President and Chief Executive Officer of Probst Electric Inc. and Summit Line Construction, Inc., electric specialty contracting companies that he founded in 2004 and 2008, respectively, and that were acquired by Quanta in November 2013. His responsibilities in those positions included oversight of business strategy and operations matters. Mr. Probst attended Utah Valley University for its line workers program and is a certified journeyman lineman, master electrician and journeyman substation technician.

Donald C. Wayne has served as our Executive Vice President and General Counsel since May 2017. He previously served as Senior Vice President, General Counsel and Corporate Secretary of Archrock, Inc., a publicly traded provider of natural gas compression and related products and services, from November 2015 through May 2017, and in similar roles for its predecessor companies, Exterran Holdings, Inc. and Universal Compression Holdings, Inc., from August 2006 through November 2015. Mr. Wayne also served, from August 2006 through May 2017, as Senior Vice President and General Counsel of Archrock GP LLC and in similar roles for the other managing general partners of Archrock Partners, L.P. and its predecessor entities, each a publicly traded master limited partnership, and as a director of Archrock GP LLC from November 2015 through May 2017. Mr. Wayne also previously served as Vice President and General Counsel of U.S. Concrete, Inc., a publicly traded provider of ready-mixed concrete and related products and services, from 1999 to 2006. Prior to joining U.S. Concrete, Inc., he served as an attorney with the law firm of Akin, Gump, Strauss, Hauer & Feld, L.L.P. Mr. Wayne holds a Bachelor of Arts degree, a Master of Business Administration degree and a Juris Doctor degree.

Jayshree Desai has served as our Chief Corporate Development Officer since January 2020. She previously served as President and a director of ConnectGen LLC, a renewal energy company focused on utility-scale renewable energy and storage development,

 

     22

 

EXECUTIVE OFFICERS

 

from July 2018 through December 2019, where she had primary responsibility for organizational management, business strategy and

capital allocation. Ms. Desai also previously served as Chief Operating Officer of Clean Line Energy Partners LLC, an electric transmission development company, from January 2010 through July 2018, where she had primary responsibility for, among other things, strategic planning, finance and capital management and human resources. She also previously served as Chief Financial Officer of Horizon Wind Energy (now EDP Renewables North America), a renewable energy company, from 2002 through 2010, where she had primary responsibility for finance, accounting, tax, treasury and information technology operations. In addition, Ms. Desai has served as a director of TPI Composites, Inc., a publicly traded independent manufacturer of wind turbine components, since October 2017. Ms. Desai holds a Bachelor of Business Administration degree and a Master of Business Administration degree.

Paul M. Nobel has served as our Vice President and Chief Accounting Officer since May 2021. He previously served as interim Chief Financial Officer of Lilis Energy, Inc., an exploration and development company operating in Texas and New Mexico, from February 2020 to July 2020, where he had primary responsibility for finance and treasury functions. He also previously served as Senior Vice President and Chief Accounting Officer of Kosmos Energy Ltd., a publicly traded international full-cycle offshore oil and gas exploration and production company, from July 2012 to November 2019, and as Senior Vice President and Chief Accounting Officer of World Fuel Services Corporation, a publicly traded global energy management company serving commercial and industrial customers, from July 2005 to July 2012. In these previous positions, Mr. Nobel had primary responsibility for the accounting and reporting functions and significant responsibility with respect to tax, financial planning and analysis and risk management. He also previously served as a senior manager for the public accounting firm of Deloitte & Touche LLP. Mr. Nobel holds a Bachelor of Science degree in Accounting and is a Certified Public Accountant.

Dorothy Upperman has served as our Vice President – Tax since October 2014. She previously served in various tax management roles with Wal-Mart Stores, Inc., including Sr. Director, Income Tax from 2008 to October 2014 and Director of Federal Audits & SOX Controls from 2007 to 2008. From 1998 to 2004, Ms. Upperman held various positions with Ernst & Young, LLP, most recently serving as Senior Manager. Ms. Upperman holds a Bachelor of Business Administration degree in Accounting and is a Certified Public Accountant.

 

         23

 

COMPENSATION DISCUSSION &

ANALYSIS

Compensation Committee Report

We have reviewed and discussed the following Compensation Discussion and Analysis with management. Based on our review and discussions with management, we have recommended to Quanta’s Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement.

This report is furnished by the Compensation Committee of the Board of Directors.

Doyle N. Beneby, Chairman

Bernard Fried

Worthing F. Jackman

Martha B. Wyrsch

Executive Summary

This Compensation Discussion and Analysis describes Quanta’s executive compensation program for 2021. We use this program to attract, motivate and retain the employees who lead our Company. In particular, this section explains the Compensation Committee’s guiding principles for executive compensation and how the Compensation Committee made its compensation decisions for our NEOs for 2021.

Named Executive Officers

Our NEOs for 2021 include the following five executive officers:

 

Name		Position(s) with Quanta during 2021
Earl C. (Duke) Austin, Jr.(1)		President, Chief Executive Officer and Chief Operating Officer
Derrick A. Jensen		Chief Financial Officer
Paul C. Gregory(2)		Chief Strategy Officer and President – Underground Utility and Infrastructure Division
Redgie Probst(1)		President – Electric Power Division
Donald C. Wayne		Executive Vice President and General Counsel

 

(1)	Mr. Probst served as our President – Electric Power Division through January 25, 2022 and was appointed Chief Operating Officer effective January 26, 2022. Mr. Austin ceased to serve as our Chief Operating Officer concurrently with Mr. Probst’s appointment to such position.

(2)	Mr. Gregory also served as our President – Underground Utility and Infrastructure Division through January 25, 2022.

 

     24

 

COMPENSATION DISCUSSION & ANALYSIS

 

Key 2021 Performance Highlights

During 2021, Quanta continued to execute and perform at a high level and achieved strong financial results despite the ongoing impact of the COVID-19 pandemic, including with respect to changing workforce and operating requirements, supply chain disruptions and other logistical challenges, and volatility with respect to capital markets and demand and spending across many sectors of the overall economy. Despite these uncertainties, Quanta’s management and employees remained focused on continuing to collaborate with customers and operate at a high level, develop, expand and differentiate the services offered to customers, execute key strategic initiatives designed to position the Company for long-term success, and deliver value to stakeholders.

 

2021 Company Performance
p Revenues		Record annual revenues of $12.98 billion (15.9% increase as compared to 2020)
p Net Income		Record net income attributable to common stock of approximately $486.0 million (9.1% increase as compared to 2020)
p Diluted EPS		Record diluted earnings per share attributable to common stock of $3.34 per share (8.8% increase as compared to 2020)
p Remaining Performance      Obligations and Backlog		Meaningful increase in remaining performance obligations and backlog as of year-end 2021 as compared to year-end 2020, positioning the Company well for future performance
p Cash Dividend		Increased per share cash dividend amount paid in 2021 by 20% as compared to 2020

Quanta also continued to move forward on its strategic initiatives, which are expected to position the Company for successful financial performance in the medium and long term. Certain achievements during 2021 are described below.

 

•

Transformational Acquisition. Completed the acquisition of Blattner, a premier utility-scale renewable energy infrastructure solutions provider in North America, with decades of experience and a strong safety culture. The acquisition of Blattner represents Quanta’s largest acquisition to date and transforms our ability to collaborate with customers on their energy-transition strategies. Blattner’s services also represent the majority of our new renewable energy solutions operating segment.

 

•

Emergency Restoration Services. Generated another record year of revenues attributable to emergency restoration services, while also expanding our emergency response capabilities. These capabilities allow us to quickly mobilize significant resources in support of our customers in response to increasing severe weather events and disasters.

 

•

Expansion of Other Key Services. Continued development and expansion of certain other services on which we are strategically focused, including front-end design, engineering, permitting, environmental and program management capabilities and communications services.

 

•

Development of Craft Skilled Labor. Commenced operations at the LUMA College for Technical Training in Puerto Rico, with the first class of electric utility line workers graduating in October 2021. This educational institution was developed along with ATCO, our partner in the LUMA Energy, LLC joint venture, and is designed to support the advancement of craft skilled labor in Puerto Rico.

 

•

Maintained Strong Financial Profile. We maintained our investment grade credit rating while issuing $1.5 billion of senior notes and expanding our senior credit facility to finance the acquisition of Blattner, which we believe highlights the merits of the acquisition and our strong financial profile, as well as the expected sustainability and positive outlook for our business.

Overview of 2021 Executive Compensation Decisions

Key executive compensation decisions by our Compensation Committee affecting our NEOs’ 2021 compensation included the following.

 

•

2021 Financial Performance Targets. Based on Quanta’s continued strong performance, the primary financial performance targets established for the 2021 annual and long-term incentive plans generally represent meaningful increases as compared to prior performance targets.

 

         25

 

COMPENSATION DISCUSSION & ANALYSIS

 

 

 

 

(1)	For a reconciliation of AIP Adjusted EBITDA to operating income determined in accordance with GAAP see Appendix A to this Proxy Statement

 

•

Payouts Under the 2021 Annual Incentive Plan. Based on the strong financial and operational performance in 2021 described above, the Company’s overall performance resulted in total payout at approximately 166% of target, as described in further detail in Annual Incentive Plan. Quanta’s performance in 2021 also completed another consecutive year in which a number of record results were achieved.

 

 

 

•

Payouts Under the 3-Year Performance Period Completed in 2021. Quanta’s continued strong performance of its strategic initiatives again resulted in improvement in return on invested capital (“ROIC”) and capital efficiency, profitable growth and stock price appreciation for the 3-year performance period ending December 31, 2021. As described in further detail in Executive Compensation Decisions for 2021 – Results for the 3-Year Performance Period Ended December 31, 2021, Quanta’s performance during this period exceeded the maximum performance goals that were set with respect to ROIC improvement and average capital efficiency and resulted in relative total stockholder return (“TSR”) between the 50th and 75th percentile of the established peer group. These performance outcomes resulted in the maximum achievement of 200% with respect to the 3-year performance period under our 2019 long-term incentive plan.

 

 

 

•

2021 Base Salary, Target Award Levels and Performance-Based Mix. In light of the current economic environment, the Compensation Committee did not approve any increases to base salary and target incentive compensation under the 2021 annual

 

    26

 

COMPENSATION DISCUSSION & ANALYSIS

 

and long-term equity incentive plans for the NEOs, other than with respect to Mr. Probst in order to better align his compensation with his responsibilities at Quanta and in light of his appointment as Chief Operating Officer in January 2022. The Compensation Committee also decided that the percentage of the NEOs’ target equity incentive amounts subject to performance metrics over a 3-year period would remain the same for 2021 (namely, 70% for Mr. Austin and 60% for the other NEOs), with the remaining amounts awarded in the form of RSUs that vest over a 3-year period subject to continued service.

 

•

No Reduction or Adjustment for COVID-19 Pandemic. Similar to 2020, our 2021 compensation program targets were set by the Compensation Committee without discount for the impact of the COVID-19 pandemic, and as a result of the Company’s ability to perform notwithstanding certain challenging circumstances arising from the pandemic, the Compensation Committee, as supported by the CEO, did not make any mid- or end-of-cycle adjustments to the performance/payout scales under any of the Company’s compensation plans or include any adjustments directly related to the COVID-19 pandemic.

 

•

Continued Refinement of Sustainability Performance Metrics. As described in further detail in Elements of Executive Compensation and Executive Compensation Decisions for 2021, the Compensation Committee continued to review and refine the performance metrics aligned with sustainability-related strategic initiatives and adopted a revised safety performance metric in the 2021 annual incentive plan. The new metric is designed to provide an enhanced overall assessment of safety performance by measuring and targeting a reduction in significant safety events.

Say-on-Pay Vote

At Quanta’s 2021 annual meeting of stockholders, more than 96% of our stockholders voting on the “say-on-pay” proposal approved the compensation of our NEOs as described in our proxy statement filed in 2021. Accordingly, the Compensation Committee did not implement any changes to our executive compensation program as a result of the advisory vote. However, as described further in Executive Compensation Decisions for 2021, the Compensation Committee did revise the safety performance metric included in the 2021 annual incentive plan, with the objective to enhance its ability to assess the overall safety performance of the Company and determined to transition to evaluating relative TSR performance based on a single broad-based market index (i.e., the S&P MidCap 400 Index) under the 2021 long-term incentive plan. Additionally, as a key objective of our stockholder engagement program, which is described further in Corporate Governance – Engagement and Communications with the Board, members of senior management and the Board solicit feedback from stockholders on our executive compensation program that is relayed directly to the full Board to be considered when evaluating opportunities to further enhance our executive compensation programs and practices in future years. The Compensation Committee also continues to monitor trends and developments to ensure that Quanta provides the appropriate executive compensation incentives to remain competitively positioned to attract and retain executive talent and to ensure that management’s interests are aligned with those of our stockholders.

How Our Performance is Linked to Pay

Quanta’s NEO compensation is primarily comprised of base salary, annual cash incentives and long-term equity incentives. Our compensation philosophy links executive compensation to both individual and Company performance. Base salaries are generally set based upon, among other things, the median of our competitive market, the nature of the position and the contribution, experience, level of responsibility and length of service of the NEO. Target annual incentives generally reflect competitive market levels and practices, with upside opportunity for performance above target levels. Performance measures are designed to align the interests of executives with stockholders, reward successful achievement of annual financial and operating goals while maintaining focus on long-term financial performance and sustainability, and incentivize successful capital allocation strategies, as discussed in further detail in Executive Compensation Decisions for 2021.

 

         27

 

COMPENSATION DISCUSSION & ANALYSIS

 

2021 TARGET COMPENSATION MIX

 

The Compensation Committee considers the median target total direct compensation for officers in our peer group when setting compensation levels for each NEO. Additionally, the Compensation Committee believes that a significant portion of the target compensation of the NEOs should be at risk. The short-term cash incentive awards and long-term equity incentive awards to our NEOs are “at risk” compensation, meaning those awards are either variable based on the level of performance compared to our incentive targets or peer group performance or are subject to continued employment and stock price performance during a 3-year vesting period. Further, equity-based incentive awards under our 2021 long-term incentive plan represented a substantial portion of each NEO’s compensation as a percentage of total direct compensation and a significant portion of such equity-based incentive awards (70% with respect to the CEO and 60% with respect to the other NEOs) are subject to measurable company performance over a 3-year performance period. Equity-based awards play an important role in our compensation program because they provide incentives for the creation of stockholder value and promote executive retention and an ownership culture.

Good Governance and Best Practices

We are committed to strong governance standards that ensure our executive compensation programs are closely aligned with the interests of our stockholders, as evidenced by the policies and practices described below.

 

•

Stock Ownership Guidelines. We maintain meaningful stock ownership guidelines that align our executives’ long-term interests with those of our stockholders and discourage excessive risk-taking.

 

•

Clawback Policy. We include a clawback provision in each of our incentive compensation plans and have adopted a standalone clawback policy, both of which permit our Board to recover from executive officers and key employees of Quanta and its subsidiaries cash or equity incentive compensation in certain circumstances involving a restatement of the Company’s financial statements.

 

•

Anti-Pledging Policy. We maintain a policy that prohibits directors and executive officers from pledging Quanta securities as collateral for a loan absent pre-clearance and demonstration of financial capacity to repay without resorting to the pledged securities.

 

•

Anti-Hedging Policy. We maintain a policy that prohibits directors and executive officers from hedging the economic risk of ownership of Quanta common stock.

 

•

Annual Review. Our Compensation Committee engages its own independent compensation consultant, which performs an annual comprehensive market analysis of our executive compensation program and pay levels.

 

•

Annual Say-on-Pay Vote. We provide our stockholders with an annual opportunity to participate in an advisory vote on the compensation of our NEOs.

 

•

No Gross-Up. Our employment agreements with NEOs do not provide for gross-ups of excise taxes on severance or payments in connection with a change of control.

 

•

Performance-Based Compensation. The majority of the target compensation for our NEOs is subject to objective and measurable financial and operational performance metrics.

 

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•

Performance Thresholds and Maximums. All performance-based awards require that the Company achieve a threshold level of performance to receive any award and provide for a cap on the maximum award in the event the established performance criteria is dramatically exceeded.

 

•

Modest Perquisites. Our NEOs receive a modest amount of perquisites, which are intended to promote wellness, provide convenience in light of the demands of their positions, assist them in serving necessary business purposes, and provide a competitive compensation package.

 

•

Sustainability Performance Metrics. Both short-term cash incentive compensation and long-term equity incentive compensation for NEOs are tied to successful performance of sustainability initiatives, including employee safety measures and efficient utilization of equipment.

Compensation Philosophy

Each member of the Compensation Committee is independent within the meaning of SEC regulations, the NYSE corporate governance listing standards and our Corporate Governance Guidelines. The Compensation Committee administers the compensation programs for all of our NEOs, and its guiding principles for NEO compensation are set forth below.

 

Principle		Description
Competitive		Compensation programs and levels are competitive with market practices of similarly situated companies, allowing for attraction and retention of Quanta’s key contributors
Equitable		Compensation programs should be administered equitably throughout the Company
Performance-Based		Incentive payouts should vary based on measurable Company performance, specifically as it relates to achievement in prior and current years, Quanta’s overall business plan and the experience of stockholders
Affordable		Decisions relative to compensation programs and levels should consider the affordability of the compensation program on an ongoing basis
Balanced		Compensation programs should be designed to balance short-term and long-term business interests, employees and stockholder interests, costs / benefits and motivational value
Strategy and Culture		Compensation programs should support Quanta’s overall business strategy and reflect Quanta’s ownership culture
Prudent Risk Taking		Compensation programs should reflect the risk profile of Quanta’s business and avoid motivating outsized risks that could materially impact the business, as described further in Risk Considerations in Our Compensation Program
Transparent		Performance measures, outcomes and administration of compensation programs should be able to be communicated transparently to Quanta’s interested stakeholders
Compliant		Quanta’s compensation programs are designed and administered to comply with applicable laws and regulations and should take into account investor and proxy advisor policies

Beginning in the first quarter of the fiscal year, the Compensation Committee determines the terms of our annual and long-term incentive plans and establishes the performance metrics that will be used in evaluating the performance of the NEOs under the plans. In addition, the Compensation Committee establishes prospective base salary rates and target incentive percentages for each NEO for the current annual and long-term performance periods. Following the end of the fiscal year, the Compensation Committee meets to discuss our prior year’s performance, evaluate the performance of our NEOs, and determine the amounts, if any, that will be awarded to each NEO under the incentive plans.

As set forth above, the Compensation Committee seeks to maintain the competitiveness of our executive compensation levels with those of our peers and competitors. The Compensation Committee considers various factors in determining overall compensation and each compensation component, including (i) the results of compensation benchmarking studies and changes in compensation practices of our competitors; (ii) economic and market conditions; (iii) changes in our business operations; (iv) the executive officer’s position, experience, length of service and performance; (v) Company performance; and (vi) the judgment of each member of the Compensation Committee based upon prior experiences with executive compensation matters.

 

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COMPENSATION DISCUSSION & ANALYSIS

 

Elements of Executive Compensation

The key components of our current compensation and benefits programs for our NEOs are summarized in the table below. Each component has a critical role in motivating and rewarding strong performance and retaining the NEOs who deliver such performance. The Compensation Committee considers each compensation component individually and all compensation components in the aggregate when making compensation decisions.

 

Compensation Element		Form of Compensation		Performance / Payment Criteria		Purpose
Base Salary		Cash		Individual performance and experience in the role are factors		To provide fixed compensation necessary to attract and retain key executives and to offset the cyclicality in our business that may impact variable pay
Short-Term Incentive		Cash		Tied to the achievement of performance targets related to (i) AIP Adjusted EBITDA, (ii) AIP Adjusted EBITDA margin, and (iii) safety performance, in each case established by the Compensation Committee		To incentivize and reward achievement of annual financial and operational performance targets, which focus on profitable growth and safe execution
Long-Term Incentive		PSUs		PSUs cliff-vest at the end of a 3-year performance period, subject to continued service, and are tied to the achievement of performance targets related to (i) ROIC, coupled with relative TSR, (ii) property and equipment utilization (i.e., capital efficiency), (iii) idle time for the Company’s fleet of vehicles and (iv) composite driver safety rating, in each case established by the Compensation Committee		To incentivize achievement of our long-term financial performance targets that focus on strategic initiatives   To align management and stockholder interests and to attract and retain key executives   To incentivize sustainable performance through reduced environmental impact and enhanced employee safety
		RSUs		RSUs vest over three years in equal annual installments, subject to continued service		To attract and retain key executives and to align management and stockholder interests
Retirement Benefits		401(k) Matching   Non-Qualified Deferred Compensation Plan		–		To provide a competitive compensation package
Perquisites		Executive Physical Program   Annual Perquisite Allowance   CEO Aircraft Usage   Identity Theft Protection and Monitoring		–		To maintain the health and safety of executives, to provide a competitive compensation package and, in certain cases, to optimize key executives’ time

 

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COMPENSATION DISCUSSION & ANALYSIS

 

During 2021, the Compensation Committee undertook a review of certain aspects of the compensation program, considering input from the CEO, other senior management of the Company and its compensation consultant, and made certain refinements as summarized below and further described in Executive Compensation Decisions for 2021.

 

•

Annual Incentive Plan – Safety Performance. The Compensation Committee evaluated the safety performance metric included in the annual incentive plan, with the objective of transitioning to a new indicator for assessing overall safety performance of the Company. The Compensation Committee concluded that transitioning to a performance indicator tied to the measurement and targeted reduction of significant safety events (i.e., life-altering events) was an appropriate change to this performance metric, as reducing these events is a key operational focus of the Company and of utmost importance to the overall safety of Quanta’s employees.

 

•

Long-Term Incentive Plan – Relative TSR. The Compensation Committee evaluated the benchmark group for determining relative TSR performance by the Company, considering several indices and peer groups. The Compensation Committee decided to transition to evaluating relative TSR performance based on a single broad-based market index – the S&P MidCap 400 Index – because, among other things, it contains the majority of the Company’s direct competitors and has a more proportionate weighting toward industrial companies than certain other indices considered.

Executive Compensation Decisions for 2021

Base Salary

Base salary is a critical element of NEO compensation because it provides a base level of monthly income that is consistent with competitive practices. Base salaries for NEOs are determined annually by the Compensation Committee during the first quarter of the fiscal year, taking into account such factors as competitive industry salaries (especially the salary practices of companies in our peer group described below in Compensation Process), a subjective assessment of the nature of the position, and the contributions, experience, level of responsibility and length of service of the NEO. During 2021, the Compensation Committee, after taking into account, among other things, the overall economic environment as a result of the COVID-19 pandemic, the results of a benchmarking study performed by its compensation consultant and a recommendation from Mr. Austin (other than with respect to himself), concluded to increase the base salary only for Mr. Probst to better align his salary with his responsibilities at Quanta.

 

Named Executive Officer		2021 Base Salary Rate (After Increase)				Percentage Increase from Prior Base Salary Rate
Mr. Austin		$	1,150,000				—
Mr. Jensen		$	679,800				—
Mr. Gregory		$	875,500				—
Mr. Probst(1)		$	700,000				7.7	%
Mr. Wayne		$	566,500				—

 

(1)

Mr. Probst’s base salary was $650,000 through March 31, 2021 and was increased to $700,000 for the remainder of 2021.

Annual Incentive Plan

Our annual incentive plan for senior leadership is designed to provide our NEOs with performance awards payable annually in recognition of Quanta achieving specified financial and safety performance targets, which are approved by the Compensation Committee at the beginning of the fiscal year. The Compensation Committee elects to pay such performance awards in cash.

Awards for an eligible NEO that begins employment during the performance year will be pro-rated from the date of hire, unless otherwise determined by the Chief Executive Officer and with the approval of the Compensation Committee. Generally, an NEO must be employed by Quanta on the date any cash incentive compensation is paid, and otherwise forfeits any and all rights to such compensation. However, an NEO who ceased to be employed prior to the payment date has the potential to receive an award (or some portion thereof) pursuant to contractual provisions or as otherwise determined by the CEO (other than with respect to himself) and with approval of the Compensation Committee. See Executive Compensation – Potential Payments Upon Termination or Change in Control.

 

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COMPENSATION DISCUSSION & ANALYSIS

 

The payout for each NEO under the annual incentive plan is calculated as a percentage of such NEO’s base salary (the “AIP Target Incentive”), which is then multiplied by the weighted achievement percentage associated with the Company performance metrics, as set forth in the following calculation:

 

The Compensation Committee, after taking into account, among other things, the results of a benchmarking study performed by its compensation consultant, recommendations from Mr. Austin (other than with respect to himself), each NEO’s position, experience, level of responsibility and length of service, established the target incentives under the 2021 annual incentive plan set forth below. The target percentages were unchanged from 2020 for each NEO other than Mr. Probst. For Mr. Probst, in connection with his appointment as Chief Operating Officer, as described further in Executive Officer Transition Matters, the Compensation Committee calculated his 2021 target incentive amount based on his new target bonus opportunity as Chief Operating Officer.

 

Named Executive Officer		Base Salary Rate Utilized				Target Incentive (% of Base Salary Rate)				Target Incentive (Amount)
Mr. Austin		$	1,150,000				125	%		$	1,437,500
Mr. Jensen		$	679,800				110	%		$	747,780
Mr. Gregory		$	875,500				110	%		$	963,050
Mr. Probst		$	800,000				110	%		$	880,000
Mr. Wayne		$	566,500				90	%		$	509,850

Adjusted EBITDA Component

Calculation. The adjusted EBITDA component of the annual incentive plan, which accounts for 60% of a participant’s annual incentive opportunity, is based on Quanta’s achievement of annual adjusted EBITDA, defined for purposes of the annual incentive plan as operating income, plus amortization, depreciation and stock based compensation, adjusted for investments in unconsolidated affiliates and other operational activities affecting net income that are not included in operating income (“AIP Adjusted EBITDA”). Additional adjustments to actual AIP Adjusted EBITDA may be considered and approved by the Compensation Committee, including but not limited to, acquired business results (net of acquisition and integration costs), fair value changes in contingent consideration liabilities associated with acquired businesses, impairments and other charges related to divested or discontinued businesses, foreign currency exchange rate fluctuations, unforecasted strategic initiatives, and other unforeseen, unusual or one-time items.

Rationale. Generally, short-term incentives motivate and reward achievement and performance of Quanta’s annual financial and operational goals. The Compensation Committee believes this performance metric is a valuable measure of cash-based operating performance and encourages our NEOs to grow the Company’s business, including through expanding and developing relationships with existing and potential customers and expanding service offerings in existing and adjacent markets. Further, when combined with the margin-based performance metric discussed below, NEOs are encouraged to ensure that such growth is profitable and does not include excessive risk.

 

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COMPENSATION DISCUSSION & ANALYSIS

 

Performance / Achievement. Performance with respect to this component is measured by comparing actual AIP Adjusted EBITDA for the performance year to a target amount of AIP Adjusted EBITDA, which was established based on the amount of AIP Adjusted EBITDA correlated with the midpoint of the Company’s full-year 2021 earnings guidance, as announced during the first quarter of

the year, and the Company’s 2021 business plan. Based upon the performance/payout scale adopted by the Compensation Committee for the 2021 performance year, NEOs could earn cash awards for this component of the annual incentive plan as follows (when performance falls between the designated payout points above the threshold amount, the cash awards are determined by interpolation):

 

AIP Adjusted EBITDA (in millions)		Achievement Percentage
Less than $1,023.7			0	%
$1,023.7			25	%
$1,046.4			50	%
$1,137.4			100	%
$1,171.5			150	%
$1,251.2 or greater			200	%

The 2021 target amount of AIP Adjusted EBITDA represented an approximate 6.7% increase from actual AIP Adjusted EBITDA achieved in 2020. For the 2021 performance year, the Compensation Committee concluded that actual AIP Adjusted EBITDA was $1,176 million, which represents an achievement percentage of 152.8%. For a reconciliation of AIP Adjusted EBITDA to operating income for the year ended 2021 determined in accordance with GAAP, see Appendix A to this Proxy Statement.

Adjusted EBITDA Margin Component

Calculation. The adjusted EBITDA margin component of the annual incentive plan, which accounts for 20% of a participant’s annual incentive opportunity, is based on Quanta’s achievement of annual targeted margin performance on the AIP Adjusted EBITDA earned by the Company. Adjusted EBITDA margin is measured as AIP Adjusted EBITDA (as defined above), divided by consolidated revenues (adjusted to exclude foreign currency exchange rate fluctuations and revenues attributable to businesses acquired during the performance year) (“AIP Adjusted EBITDA margin”).

Rationale. The Compensation Committee believes this performance metric is highly correlated with stockholder return and reinforces the Company’s focus on margin improvement and profitable growth, which complements the AIP Adjusted EBITDA metric described above by penalizing management for focusing solely on revenue growth. The Compensation Committee also believes this metric supports the ROIC component included in the long-term incentive plan described below by rewarding the investment of capital in a manner that results in a profitable return.

Performance / Achievement. Performance with respect to this component is measured by actual AIP Adjusted EBITDA margin for the performance year as compared to a target margin, which was established based on the target amount of AIP Adjusted EBITDA set forth above and the midpoint of the Company’s full-year 2021 revenue guidance, announced during the first quarter of the year, and the Company’s 2021 business plan. Based upon the performance/payout scale adopted by the Compensation Committee for the 2021 performance year, NEOs could earn cash awards for this component of the annual incentive plan as follows (when performance falls between the designated payout points above the threshold amount, the cash awards are determined by interpolation):

 

AIP Adjusted EBITDA Margin		Achievement Percentage
Less than 8.91%			0	%
8.91%			25	%
9.06%			50	%
9.21%			100	%
9.36%			150	%
9.56% or greater			200	%

The 2021 target AIP Adjusted EBITDA margin represented an approximate 8% increase from target AIP Adjusted EBITDA margin under the Company’s prior year annual incentive plan. While the 2021 target AIP Adjusted EBITDA margin was below actual performance for the prior year, the Compensation Committee determined that it was appropriate based on the overall significant

 

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COMPENSATION DISCUSSION & ANALYSIS

 

increase in targeted margin performance as compared to the targets in prior years (i.e., 106 bps increase as compared to target AIP Adjusted EBITDA margin utilized with respect to the 2019 performance scale for this metric), as well as the fact that maintaining similar margin performance from the prior year while continuing to expand the business and given the remaining overall macroeconomic uncertainty represented a challenging and valuable goal for the Company that would motivate management and yield similar incentive opportunities as prior years.

For the 2021 performance year, the Compensation Committee concluded that actual AIP Adjusted EBITDA margin was 9.44%, which represents an achievement percentage of 170.9%. For a reconciliation of adjusted consolidated revenues to consolidated revenues determined in accordance with GAAP and a calculation of AIP Adjusted EBITDA margin for the year ended 2021, see Appendix A to this Proxy Statement.

Safety Performance Component

Calculation. The final component of the annual incentive plan, which accounts for the remaining 20% of a participant’s annual incentive opportunity, is based on the Company’s achievement of a measurable safety performance goal. Performance with respect to this component is measured based on improvement with respect to the incidence of significant safety events (e.g., life-altering safety events) for the performance year as compared to performance with respect to such events in the prior year. As described in Elements of Executive Compensation, this performance indicator was adopted in the 2021 annual incentive plan, as the Compensation Committee concluded that utilizing such a metric was an appropriate enhancement in evaluating the Company’s overall safety performance, as a reduction of these events is a key operational focus of the Company and of the utmost importance to the overall safety of Quanta’s employees. Performance with respect to significant safety events is calculated through an internal safety predictive measure and is defined as the number of significant safety events in the performance year, multiplied by 1,000,000, and divided by the Company’s total workhours for the applicable year.

Rationale. Generally, this goal aligns with the Company’s strategic priority of a commitment to workforce safety and management’s expectation that the Company will achieve industry-leading safety performance. Furthermore, the Compensation Committee believes utilization of a metric relating to significant safety events is appropriate given the importance of preventing such events and that measuring these events can often provide greater insight into the overall safety performance of the Company than traditional safety metrics. Furthermore, it has been a key strategic initiative of the Company to track, analyze and reduce significant safety events, and the Company has utilized significant resources in recent years developing the internal predictive measure designed to measure such events. Therefore, the Compensation Committee believes that achievement of this goal has a significant positive impact on both short-term financial performance by reducing costs associated with safety incidents and long-term performance and sustainability, as safe performance impacts the Company’s ability to maintain and increase its business with existing and potential customers and attract and retain employees.

Performance / Achievement. For 2021, target performance with respect to significant safety events was set based on improvement from prior year performance. Specifically, the NEOs could earn cash awards for this component of the annual incentive plan as follows (when performance falls between the designated payout points, the cash awards are determined by interpolation):

 

Improvement from Prior Year		Achievement Percentage
5.0%			25	%
10.0%			100	%
15.0%			200	%

For the 2021 performance year, the Company’s performance with respect to significant safety events improved 31%, resulting in an achievement percentage of greater than 200% for that metric. As a result, the overall achievement percentage for the safety performance component was 200%.

 

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COMPENSATION DISCUSSION & ANALYSIS

 

Overall Performance and Payout

Overall performance based on the weighted results set forth above resulted in a total achievement percentage of 165.9%, and therefore the total payout to each NEO under the 2021 annual incentive plan was as follows:

 

Named Executive Officer		Achievement Percentage				Total AIP Incentive Award Earned
Mr. Austin			165.9	%		$	2,384,813
Mr. Jensen			165.9	%		$	1,240,567
Mr. Gregory			165.9	%		$	1,597,700
Mr. Probst			165.9	%		$	1,459,920
Mr. Wayne			165.9	%		$	845,841

Long-Term Incentive Plan

Our long-term incentive plan for senior leadership is designed to provide our NEOs with long-term incentive awards payable in equity. The targeted incentive amount for each NEO under the long-term incentive plan is determined annually by the Compensation Committee (the “Long-Term Target Incentive”). The Compensation Committee approved the following Long-Term Target Incentives for 2021 after taking into account, among other things, the results of a benchmarking study performed by its compensation consultant, recommendations from Mr. Austin (other than with respect to himself), each NEO’s position, experience, level of responsibility and length of service, and with respect to Mr. Probst, his relatively new role and additional responsibilities with Quanta:

 

Named Executive Officer		2020 Total Long-Term Target Incentive (% of Base Salary)				2021 Total Long-Term Target Incentive (% of Base Salary)				2021 Total Long-Term Target Incentive (Amount)
Mr. Austin			600	%			600	%		$	6,900,000
Mr. Jensen			275	%			275	%		$	1,869,450
Mr. Gregory			350	%			350	%		$	3,064,250
Mr. Probst			225	%			275	%		$	1,925,000
Mr. Wayne			225	%			225	%		$	1,274,625

Generally, an NEO must be employed by Quanta on the date an award vests or is earned under the long-term incentive plan or otherwise forfeits any and all rights to such award. However, an NEO who ceases to be employed prior to the completion of the 3-year performance period described below has the potential to receive an award (or some portion thereof) pursuant to contractual provisions or as otherwise determined by the Chief Executive Officer (other than with respect to himself) and with approval of the Compensation Committee. See Executive Compensation – Potential Payments Upon Termination or Change in Control. Awards for an NEO who becomes a participant in the long-term incentive plan during the performance period are pro-rated from the date of hire; however, in any event, an NEO must be employed by October 1st of the first year of the 3-year performance period to be eligible to participate.

PSU Component

The first component of the long-term incentive plan, which accounts for 60% (or with respect to Mr. Austin, 70%) of an NEO’s Long-Term Target Incentive, consists of PSUs that cliff-vest at the end of a 3-year performance period based on achievement of 3-year Company performance goals determined by the Compensation Committee (the “Long-Term PSU Component”). Under the 2021 long-term incentive plan, the Compensation Committee approved the following PSU awards:

 

Named Executive Officer		Long-Term PSU Component (Weighted %)				Target Long-Term PSU Component (Amount)				Performance Units Granted(1)
Mr. Austin			70	%		$	4,830,000				56,850
Mr. Jensen			60	%		$	1,121,670				13,202
Mr. Gregory			60	%		$	1,838,550				21,640
Mr. Probst			60	%		$	1,155,000				13,594
Mr. Wayne			60	%		$	764,775				9,001

 

(1)	The number of PSUs granted is determined by dividing the dollar amount of the target Long-Term PSU Component by the average of closing price of Quanta common stock for the twenty consecutive trading days immediately preceding the grant date.