Form 4: Clearway Energy Executive Reports Stock Transactions Following RSU Vesting

Michael Taft Murphy, Chief Investment Officer of Clearway Energy, reports the vesting of restricted stock units (RSUs) and relative performance stock units (RPSUs), along with associated tax obligations satisfied through the surrender of Class C Common Stock.

Summary

• On April 15, 2024, Michael Taft Murphy, Chief Investment Officer of Clearway Energy, reported transactions related to the vesting of restricted stock units (RSUs) and the grant of relative performance stock units (RPSUs).
• Mr. Murphy surrendered shares of Class C Common Stock to satisfy tax obligations related to the vesting of RSUs granted in 2021, 2022, and 2023.
• Specifically, 1,244 shares were surrendered related to the 2021 RSU vesting, 629 shares for the 2022 vesting, and 805 shares for the 2023 vesting.
• These transactions resulted in adjustments to the number of Class C Common Stock shares beneficially owned by Mr. Murphy.
• Additionally, Mr. Murphy was granted 14,870 Relative Performance Stock Units (RPSUs) on April 15, 2024, which will convert to Class C Common Stock on April 15, 2027, based on Clearway Energy's total shareholder return (TSR) relative to a peer group.
• The number of shares received from the RPSUs can range from 3,710 to 22,305 depending on the TSR performance.

Sentiment

Score: 7

Explanation: The document reflects standard executive compensation practices. The vesting of RSUs and grant of RPSUs are generally positive indicators of alignment between management and shareholder interests. The sentiment is neutral to slightly positive.

Positives

• The vesting of RSUs indicates that Mr. Murphy has met certain performance or time-based requirements set by the company.
• The grant of RPSUs aligns Mr. Murphy's compensation with the company's long-term performance and shareholder value.

Future Outlook

The number of shares ultimately received from the RPSUs will depend on Clearway Energy's total shareholder return (TSR) relative to its peer group over the three-year performance period ending April 15, 2027.

Industry Context

Equity compensation is a common practice in the energy industry to align executive incentives with shareholder value. The use of performance-based units, such as RPSUs, is intended to further incentivize executives to achieve specific financial or operational goals.

Comparison to Industry Standards

• Companies like NextEra Energy Partners, Brookfield Renewable Partners, and Atlantica Sustainable Infrastructure also utilize equity-based compensation, including RSUs and performance-based units, to incentivize their executives.
• The vesting schedules and performance metrics associated with these equity grants vary across companies, but the underlying principle of aligning executive compensation with shareholder value remains consistent.
• Clearway's use of TSR relative to a peer group is a common approach to measuring performance and ensuring that executives are rewarded for outperforming their competitors.

Stakeholder Impact

• The vesting of RSUs and grant of RPSUs have a minor dilutive effect on existing shareholders.
• The performance-based nature of the RPSUs aligns executive incentives with shareholder value, potentially benefiting shareholders in the long term.

Key Dates