Company: EAI
Filing Date: 2025-02-18
Form Type: 10-K
Source: 0000065984-25-000012
Chunk: 1180

Company: ENTERGY ARKANSAS, LLC
Filing Date: 2025-02-18
Form: 10-K
Item: Item 8
Chunk 1180
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 There is no payout for performance below the minimum achievement level and payouts are capped at 200% for performance at or above the maximum achievement level.

(2)There is no payout if the Relative TSR falls within the lowest quartile of the peer companies in the Philadelphia Utility Index and the FFO/Debt Ratio is below the minimum achievement level.

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(3)The Adjusted FFO/Debt Ratio, a non-GAAP financial measure, is the ratio of: (i) adjusted funds from operations calculated as consolidated operating cash flow adjusted for allowance for funds used during construction, working capital, excluding deferred fuel and the effects of securitization revenue and expense, and the Pre-Determined Exclusions (as defined this CD&A) to (ii) total consolidated debt, excluding current and pending securitization debt, in each case calculated to reflect rating agency treatment of interest and principal on the Company’s junior subordinated debentures.  The Adjusted FFO/Debt Ratio is evaluated on an annual basis against the target set for each year, which, for the 2022–2024 performance period, was 15.0%.  The annual results are then averaged to determine the Adjusted FFO/Debt Ratio overall result, which is then further adjusted by ±10 basis points for a favorable or unfavorable change in the Company's corporate credit outlook and ± 20 basis points for an upgrade or downgrade in the corporate credit rating for the Company, with a maximum adjustment of  ±20 basis points.  The Talent and Compensation Committee decided to calculate the Adjusted FFO/Debt Ratio in a manner consistent with the rating agency treatment of such debt, as updated in early 2024, in order to ensure that management’s incentives remained aligned with the goal of optimizing the Company's capital structure while maintaining its credit rating.

In January 2025, the Talent and Compensation Committee reviewed the Company’s Relative TSR and Adjusted FFO/Debt Ratio for the 2022–2024 PUP in order to determine the vesting level of the 2022–2024 PUP.  The Talent and Compensation Committee compared the Company’s TSR against the TSR of the companies that were included in the Philadelphia Utility Index as of the last day of the year preceding the beginning of the three-year performance period, which were (in addition to Entergy):

•AES Corporation•Eversource Energy•Ameren Corporation•Exelon Corporation•American Electric Power Co. Inc.•FirstEnergy Corporation•