Form 4: Sempra Director Mears Acquires Phantom Shares

Sempra Director Michael N. Mears acquired 140.04 phantom shares as compensation, increasing his beneficial ownership to 20,236.14 derivative securities.

Summary

• Director Michael N. Mears acquired 140.04 phantom shares of Sempra common stock on October 1, 2025.
• The transaction was made pursuant to a Rule 10b5-1(c) plan, indicating a pre-arranged trading plan.
• These phantom shares were acquired as director compensation at a price of $89.26 per share.
• Each phantom share converts to one share of Sempra common stock.
• Following this transaction, Mears beneficially owns 20,236.14 derivative securities, which includes 1,879.66 unvested restricted phantom shares.
• A Power of Attorney was executed on September 18, 2025, authorizing specific individuals to file SEC forms on behalf of Michael N. Mears.

Sentiment

Score: 7

Explanation: The filing indicates a routine compensation event for a director, which is generally positive as it aligns management interests with shareholders. No negative surprises or significant financial impacts are disclosed.

Positives

• Director Michael N. Mears received additional compensation in the form of phantom shares, aligning his interests with shareholders.
• The transaction was conducted under a Rule 10b5-1(c) plan, indicating a pre-arranged and systematic approach to equity compensation.

Negatives

• No specific negative aspects are detailed in this compensation-related filing.

Risks

• 1,879.66 unvested restricted phantom shares are subject to forfeiture if service as a director terminates prior to vesting for reasons other than death, disability, or removal without cause.
• The Power of Attorney explicitly states that neither Sempra nor its attorneys-in-fact assume liability for the reporting person's compliance with Section 16 of the Exchange Act or Rule 144 under the Securities Act, nor does it relieve the reporting person from their compliance responsibilities.

Future Outlook

The filing does not contain specific forward-looking statements or guidance beyond the scheduled transaction date.

Management Comments

• Phantom shares of Sempra Common Stock acquired as director compensation.
• Conversion of Derivative Security is 1 for 1.
• Date exercisable is immediate for shares that have vested.
• Expiration date is Not Applicable.
• Total includes 1,879.66 unvested restricted phantom shares that are subject to forfeiture if service as a director terminates prior to vesting for any reason other than death, disability or removal without cause.
• This power of attorney does not relieve the undersigned from responsibility for compliance with the undersigneds obligations under Section 16 of the Exchange Act and Rule 144 under the Securities Act, including, without limitation, the reporting requirements thereunder.

Industry Context

This Form 4 filing reflects routine director compensation practices within publicly traded companies, where equity-based awards like phantom shares are commonly used to align executive and director interests with long-term shareholder value. The use of a Rule 10b5-1 plan is a standard practice for insiders to manage their equity transactions in compliance with insider trading regulations.

Comparison to Industry Standards

• The use of phantom shares as director compensation is a common practice across various industries, including the utilities sector where Sempra operates, aligning director incentives with company performance.
• The establishment of a Rule 10b5-1 plan for equity transactions is a standard corporate governance practice for directors and executives of publicly traded companies, such as those in the S&P 500, to facilitate orderly and compliant trading of company stock.
• The 1-for-1 conversion of phantom shares to common stock is a typical structure for such equity awards, similar to restricted stock units (RSUs) offered by comparable utility companies like NextEra Energy (NEE) or Duke Energy (DUK).

Corporate Governance

Related Party Transactions

• The acquisition of phantom shares by Director Michael N. Mears from Sempra constitutes a related party transaction as it involves compensation from the company to a member of its board of directors.

Stakeholder Impact

• Shareholders: The acquisition of phantom shares by a director aligns management's interests with shareholders, potentially fostering a long-term perspective on company performance.
• Employees: No direct impact on employees is indicated.
• Customers: No direct impact on customers is indicated.
• Suppliers: No direct impact on suppliers is indicated.
• Creditors: No direct impact on creditors is indicated.

Next Steps

• The unvested restricted phantom shares will vest over time, subject to continued service as a director.
• Michael N. Mears will continue to file Forms 3, 4, and 5 as required by Section 16(a) of the Exchange Act, facilitated by the granted Power of Attorney.

Key Dates

Recommendation

This Form 4 filing details a routine compensation event for a director, involving the acquisition of phantom shares. Such transactions are generally expected and do not typically signal a significant change in the company's fundamental outlook or financial health that would warrant a 'buy' or 'sell' recommendation. The transaction aligns director interests with shareholders, which is a positive, but it is not a catalyst for a strong investment action. Therefore, a 'hold' recommendation is appropriate as it reflects the neutral to slightly positive nature of this specific disclosure without suggesting a change in the broader investment thesis for Sempra.

Keywords

Sempra, SRE, Michael N. Mears, Director Compensation, Phantom Shares, Form 4, Insider Transaction, Beneficial Ownership, Rule 10b5-1, SEC Filing