DEF: Centuri Holdings Sets Date for 2025 Annual Stockholders Meeting, Outlines Key Proposals

Centuri Holdings, Inc. announces its 2025 Annual Meeting of Stockholders to be held virtually on April 16, 2025, featuring proposals for director elections, executive compensation, and auditor ratification.

Summary

• Centuri Holdings, Inc. will hold its Annual Meeting of Stockholders virtually on April 16, 2025, at 10:00 AM Mountain Standard Time.
• Stockholders of record as of February 24, 2025, are entitled to vote.
• The meeting will address the election of seven directors, an advisory vote on executive compensation, the frequency of advisory votes on executive compensation, and the ratification of PricewaterhouseCoopers LLP as the independent registered public accounting firm for fiscal 2025.
• The Board recommends voting FOR each director nominee, FOR the approval of executive compensation, for a 1-YEAR frequency of advisory votes on executive compensation, and FOR the ratification of PricewaterhouseCoopers LLP.
• The company is a controlled company under NYSE rules, exempting it from certain corporate governance requirements.
• Southwest Gas Holdings owns approximately 81.0% of Centuri's outstanding shares of common stock.
• The Board has determined that directors Julie A. Dill, Andrew W. Evans, Christopher A. Krummel, Anne L. Mariucci and Charles R. Patton have no material relationships with the Company and are independent.
• The company's executive compensation program includes base salary, annual cash incentives, long-term cash incentives, health, welfare, and retirement benefits, and employment agreements.
• The Compensation Committee approved merit increases for our NEOs to reflect performance achievements and to ensure market competitiveness.
• The 2024 annual incentive plan was linked to the achievement of performance goals relating to Adjusted EBITDA, free cash flow and safety.
• For 2024, Centuri achieved $233.5 million Adjusted EBITDA and $136.8 million in free cash flow, each of which exceeded the threshold level of performance.
• The company did not achieve threshold performance over the one-year performance period ended on December 31, 2024, and, as a result, no cash awards were earned at the conclusion of that performance cycle for the long-term incentive plan.
• The company has a clawback policy that allows it to recoup incentive compensation in the event of an accounting restatement.
• The company has entered into a Tax Assets Agreement with Southwest Gas Holdings to address arrangements with respect to certain unutilized tax assets.

Sentiment

Score: 6

Explanation: The document is neutral in tone, primarily providing factual information about the upcoming annual meeting and related proposals. While there are some positive aspects, such as the Board's recommendations, there are also negative aspects, such as the company not achieving threshold performance for the long-term incentive plan.

Positives

• The Board recommends voting FOR all director nominees, executive compensation approval, a 1-YEAR frequency for say-on-pay votes, and auditor ratification.
• The 2024 annual incentive plan was linked to the achievement of performance goals relating to Adjusted EBITDA, free cash flow and safety.
• For 2024, Centuri achieved $233.5 million Adjusted EBITDA and $136.8 million in free cash flow, each of which exceeded the threshold level of performance.
• The company has a clawback policy that allows it to recoup incentive compensation in the event of an accounting restatement.

Negatives

• The company did not achieve threshold performance over the one-year performance period ended on December 31, 2024, and, as a result, no cash awards were earned at the conclusion of that performance cycle for the long-term incentive plan.

Risks

• As a controlled company, Centuri is exempt from certain corporate governance requirements of the NYSE.
• Southwest Gas Holdings has significant control over Centuri, which could lead to decisions that favor Southwest Gas Holdings interests.
• The company did not achieve threshold performance over the one-year performance period ended on December 31, 2024, and, as a result, no cash awards were earned at the conclusion of that performance cycle for the long-term incentive plan.
• The Tax Matters Agreement imposes certain restrictions on us and our subsidiaries (including restrictions on share issuances, redemptions, mergers or other business combinations, sales of assets and similar transactions) that are intended to preserve the ability of Southwest Gas Holdings to effectuate the Distribution and related transactions in a tax-free manner.

Future Outlook

Southwest Gas Holdings intends to dispose of all or a portion of its remaining indirect equity interest in Centuri through one or more sales of common stock or exchange offers.

Management Comments

• Christian I. Brown, President and Chief Executive Officer: 'Your interest and participation in the affairs of our Company are greatly appreciated.'

Industry Context

Centuri operates in the strategic infrastructure services sector, partnering with regulated utilities to build and maintain energy networks. The company's performance and compensation practices are benchmarked against peer companies in the Construction and Engineering Services industries.

Comparison to Industry Standards

• The compensation peer group for our NEOs were selected because they represent those publicly-traded companies considered by the Compensation Committee to be the most comparable to the Company in terms of revenue, market capitalization, business operations, operational complexity and overall financial performance.
• For setting 2024 executive compensation, the peer group was composed of the following 15 companies in the Construction and Engineering Services industries and other related industry classifications: Ameresco, Inc., MDU Resources Group, Inc., Comfort Systems USA, Inc., MYR Group Inc., Dycom Industries, Inc., Primoris Services Corporation, EMCOR Group, Inc., Sterling Infrastructure, Inc., Granite Construction Inc., Team, Inc., IES Holdings, Inc., Tetra Tech, Inc., KBR, Inc., Tutor Perini Corporation, MasTec, Inc.

Management Changes

Related Party Transactions

• The company performs various construction services for Southwest Gas Corporation, a wholly owned subsidiary of Southwest Gas Holdings.
• William J. Fehrman, our former chief executive officer and former member of our Board began serving as the chief executive officer and president of AEP in August of 2024. AEP is one of our current customers.

Stakeholder Impact

• The outcome of the advisory votes on executive compensation and the frequency of such votes will be considered by the Board when making future decisions.
• The election of directors will determine the leadership and oversight of the company.
• The ratification of the independent auditor ensures the integrity of the company's financial reporting.

Next Steps

• Stockholders are encouraged to vote on the proposals outlined in the proxy statement.
• The Board will consider the outcome of the advisory votes on executive compensation and the frequency of such votes when making future decisions.

Key Dates