Table of Contents 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934

(Amendment No.   )

 

Filed by the Registrant þ

Filed by a Party other than the Registrant o

Check the appropriate box:

o Preliminary Proxy Statement
o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
þ Definitive Proxy Statement
o Definitive Additional Materials
o Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
 

SEMPRA ENERGY

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check all boxes that apply):

þ No fee required.
o Fee paid previously with preliminary materials.
o Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

 

 

 

 

 

 



March 29, 2023

 

Dear fellow shareholders:

 

I am pleased to invite you to our 2023 Annual Shareholders Meeting, which is scheduled for Friday, May 12, 2023, at 9 a.m., Pacific Time. This year’s meeting will be held virtually, and the accompanying proxy information describes how to participate and the matters to be voted on at the meeting.

In 2022, Sempra demonstrated strong growth across our three platforms – Sempra California, Sempra Texas and Sempra Infrastructure. Today, with added scale and an improved business mix, Sempra is well positioned to serve the growing needs of consumers in key markets in North America and around the world, while staying at the forefront of innovation and integrating cleaner forms of energy through our energy networks.

In part, our success turns on efforts to build a high-performance culture centered around our shared values – do the right thing, champion people and shape the future. Our vision, mission and shared values serve to strengthen the alignment of our talented and diverse workforce around our strategy and support our continued growth. Throughout the Sempra family of companies, our talented workforce continues to spearhead safety, innovation and sustainable business practices.

Our board embodies a wide range of skills and experiences that has enabled it to provide keen oversight throughout challenging macroeconomic and geopolitical conditions. In May 2022, the board appointed Cynthia J. (CJ) Warner to the role of Lead Independent Director, and Sempra has already benefited from CJ’s extensive experience in clean energy, including in operations, strategy and business development. Her leadership experience is an asset to our board and complements the diverse skills and experiences of her fellow directors and our strong commitment to good and prudent governance.

For more information about our business, our 2022 Annual Report to Shareholders is available online at www.sempra.com/2023-annual-meeting and www.proxyvote.com.

Your vote is important. Please review the accompanying materials and promptly vote your shares. As in past years, you can vote in advance of the meeting, via the Internet, by telephone, or by marking, signing, dating, and returning the accompanying proxy card or voting instruction form.

On behalf of your board of directors and management team, we appreciate your vote and thank you for your continued investment in Sempra.

Sincerely,

Jeffrey W. Martin
Chairman and Chief Executive Officer

 

     
     

 

 



March 29, 2023

 

Dear fellow shareholders:

                

As the new Lead Independent Director for Sempra and sitting Chair of the board’s Corporate Governance Committee, I am excited to continue working closely with my fellow board members, our CEO Jeffrey Martin, and our proven senior management team to advance Sempra’s mission to be North America’s premier energy infrastructure company. It is a privilege to have the opportunity to share my deep experience in clean energy and engineering to further this mission and to encourage continued innovation and excellence across the Sempra family of companies.

Sempra’s sustainable business strategy starts with responsible governance and effective oversight by its Board of Directors. The board is highly engaged in strategy discussions and shares management’s continued focus on creating long-term shareholder value through alignment of our capital allocation and sustainability efforts.

Our thoughtful board refreshment process, which is anchored in bringing together a group of directors with the experiences and skills to help deliver shareholder value, has helped us compose a board that is well-qualified to effectively oversee our sustainable business strategy. In addition to our refreshment efforts, the board works hard to remain educated on governance trends and develop additional skills as Sempra’s business evolves and market dynamics shift. Continuing education is provided for all directors throughout the year and, in 2022, included third-party led training on environmental, social and governance matters. Directors also continue to build critical skills outside the boardroom that deepen their expertise in key areas that are important to our business.

We believe that diversity is an important driver of strong performance. We are proud that our refreshment efforts have enhanced the diversity of our board across key characteristics including tenure, gender and racial and ethnic diversity. Of our director nominees, 56% are women or people of color. The Board also is engaged in active, ongoing dialogue with management about building a diverse, inclusive workforce that advances Sempra’s high-performance culture.

Finally, I would note our belief that a successful company must be responsive to the changing needs of its stakeholders. Listening is key to this process. Last year, the board worked with Jeff and Sempra’s senior management team to expand our shareholder engagement program, which builds on our commitment to transparent and effective two-way communication. In our 2022 engagement cycle, I had the pleasure of speaking directly with shareholders and bringing my observations and our shareholders’ comments to the board. The entire board thanks you for your time and for allowing us to gather critical input that helps shape and strengthen Sempra’s policies and initiatives.

On behalf of our entire board, we are sincerely grateful to all of our shareholders for having the opportunity to represent you and serve Sempra by continuing to build sustainable value.

Sincerely,

Cynthia J. (CJ) Warner
Lead Independent Director

 

     
     

 

 

Table of Contents
Notice of Annual Shareholders Meeting   1
Proxy Statement Summary    2
Corporate Governance   10
Board of Directors   10
Board Committees   18
Communications with the Board   21
Director Compensation   22
Audit Committee Report   25
Share Ownership   26
Proposals To Be Voted On    28
Board of Directors Proposals   28
Proposal 1: Election of the Nine Director Nominees Named in this Proxy Statement    28
Proposal 2: Ratification of Appointment of Independent Registered Public Accounting Firm    36
Proposal 3: Advisory Approval of Our Executive Compensation   38
Proposal 4: Advisory Approval of How Often Shareholders Will Vote on an Advisory Basis on Our Executive Compensation   39
Proposal 5: Amendment to Our Articles of Incorporation to Increase the Number of Authorized Shares of Our Common Stock   40
Proposal 6: Amendment to Our Articles of Incorporation to Change the Company’s Legal Name    42
Proposal 7:  Amendments to Our Articles of Incorporation to Make Certain Technical and Administrative Changes   43
Shareholder Proposal    44
Proposal 8: Shareholder Proposal Requiring an Independent Board Chairman    44
Executive Compensation    48
Compensation Discussion and Analysis    48
Compensation and Talent Development Committee Report    73
Compensation Tables    74
About the Annual Shareholders Meeting and Voting    95
Attending the Annual Shareholders Meeting    95
How You Can Vote    96
Information About Proposals To Be Voted On   98
Proxy Materials   101
Information about 2024 Shareholder Proposals and Director Nominations   103
Other Information   105
Appendix A: Reconciliation of Non-GAAP Financial Measures   107
Appendix B: Companies Included in General Industry Market Review   110
Appendix C: Companies Included in Utilities Market Review   111
Appendix D: Performance-Based Annual Bonus Plan—Additional Information   112
Appendix E: Information Regarding Forward-Looking Statements   116
Appendix F: Proposed Certificate of Amendment of Amended and Restated Articles of Incorporation   117

 

     
     

 

 

Notice of Annual
Shareholders Meeting

488 8th Avenue, San Diego, California 92101      (877) 736-7727

               
               
 

 

 

 
               
 

DATE AND TIME

Friday, May 12, 2023
9 a.m. Pacific Time

 

LOCATION

Virtual-only meeting at
www.virtualshareholdermeeting.com/SRE2023

 

RECORD DATE

March 17, 2023

 
               

Business Items

Board Recommendations

1.

Election of the nine director nominees named in the accompanying proxy statement

FOR each director nominee named in the accompanying proxy statement

2.

Ratification of appointment of independent registered public accounting firm

FOR ratification of appointment of independent registered public accounting firm

3.

Advisory approval of our executive compensation

FOR advisory approval of our executive compensation

4.

Advisory approval of how often shareholders will vote on an advisory basis on our executive compensation

Advisory approval of our executive compensation every 1 YEAR

5.

Amendment to our articles of incorporation to increase the number of authorized shares of our common stock

FOR amendment to our articles of incorporation to increase the number of authorized shares of our common stock

6.

Amendment to our articles of incorporation to change the company’s legal name

FOR amendment to our articles of incorporation to change the company’s legal name

7.

Amendments to our articles of incorporation to make certain technical and administrative changes

FOR amendments to our articles of incorporation to make certain technical and administrative changes

8.

Shareholder proposal requiring an independent board chairman

AGAINST shareholder proposal requiring an independent board chairman

 

Consideration of other matters that may properly come before the meeting and any adjournments or postponements thereof, if any


The 2023 annual meeting of shareholders (Annual Shareholders Meeting) of Sempra Energy, doing business and referred to as Sempra, will be conducted online via live audiovisual webcast. In line with our strategic focus on helping enable the energy transition and in support of the health and safety of our shareholders, employees and directors in light of the continued impact of the COVID-19 pandemic, we are holding the Annual Shareholders Meeting online in a virtual-only format that reduces the transportation costs and environmental impact of the Annual Shareholders Meeting and provides all shareholders the opportunity to attend and participate in the meeting from any location. The meeting will begin promptly at 9 a.m. Pacific time and we encourage you to access the meeting site and enter your 16-digit control number prior to the start time. Online check-in will begin at 8:30 a.m. Pacific Time, and you should allow ample time for the check-in procedures the day of the meeting.

You are eligible to participate in the Annual Shareholders Meeting, including to submit questions at the meeting and vote your shares at the meeting prior to the closing of the polls, if you were a shareholder as of the record date for the meeting and you log into the meeting site using the 16-digit control number shown on your notice about the Internet availability of our proxy materials, proxy card or voting instruction form. If you are a beneficial owner of shares held through a bank, broker or other nominee and your voting instruction form does not indicate that you may vote your shares through www.proxyvote.com, please follow the specific instructions provided by your bank, broker or other nominee to obtain a 16-digit control number that may be used to log into the meeting site. Owners of shares in any of the Employee Savings Plans, as defined in the accompanying proxy statement, may submit questions at the meeting but will not be able to vote these shares at the meeting.

Your vote is important. Whether or not you plan to attend the Annual Shareholders Meeting, we encourage you to read the accompanying proxy statement and vote your shares in advance of the meeting. To do so, you may vote via the Internet, by telephone or, if you received a paper copy of our proxy materials, by mail. Internet and telephone voting for holders of record will be available until 11:59 p.m. Eastern Time on May 11, 2023.
For specific instructions on how to attend, participate in and vote at the Annual Shareholders Meeting, see “About the Annual Shareholders Meeting and Voting” in the accompanying proxy statement and the instructions on your notice about the Internet availability of our proxy materials, proxy card or voting instruction form. Our proxy materials, including this Notice of Annual Shareholders Meeting and the accompanying proxy statement and form of proxy card or voting instruction form, are being provided to shareholders beginning on or about March 29, 2023.

April R. Robinson

Corporate Secretary

Important Notice Regarding the Availability of Proxy Materials for the Annual Shareholders
Meeting to be Held on May 12, 2023.

This Notice of Annual Shareholders Meeting, the Accompanying Proxy Statement, the Proxy Card and the
Annual Report to Shareholders are available on the Internet at www.proxyvote.com.

     
    1

 

 

Proxy Statement Summary

This proxy statement is being provided in connection with the 2023 annual meeting of shareholders of Sempra Energy, doing business and referred to as Sempra (Annual Shareholders Meeting). This summary highlights selected information to assist you in your review of this proxy statement. It does not contain all the information you should consider, and you should read the entire proxy statement carefully before voting. More information regarding the performance of Sempra is available in the company’s Annual Report to Shareholders for the year ended December 31, 2022, which accompanies this proxy statement and is available on the Internet on the company’s website at www.sempra.com/2023-annual-meeting and on the SEC’s website at www.sec.gov. For additional information about the Annual Shareholders Meeting and voting, see “About the Annual Shareholders Meeting and Voting” below. This proxy statement and the accompanying form of proxy card or voting instruction form are first being made available to shareholders on or about March 29, 2023. All website references in our proxy materials are inactive textual references, and the information on, or that can be accessed through, such websites does not constitute a part of these materials.

Annual Shareholders Meeting Details

     

DATE/TIME: Friday, May 12, 2023 — 9 a.m. Pacific Time

 

LOCATION: www.virtualshareholdermeeting.com/SRE2023

     

Shareholder Voting Matters

Proposals

Board Recommendations

1.

Election of the nine director nominees named in this proxy statement

FOR each director nominee named in this proxy statement

2.

Ratification of appointment of independent registered public accounting firm

FOR ratification of appointment of independent registered public accounting firm

3.

Advisory approval of our executive compensation

FOR advisory approval of our executive compensation

4.

Advisory approval of how often shareholders will vote on an advisory basis on our executive compensation

Advisory approval of our executive compensation every 1 YEAR

5.

Amendment to our articles of incorporation to increase the number of authorized shares of our common stock

FOR amendment to our articles of incorporation to increase the number of authorized shares of our common stock

6.

Amendment to our articles of incorporation to change the company’s legal name

FOR amendment to our articles of incorporation to change the company’s legal name

7.

Amendments to our articles of incorporation to make certain technical and administrative changes

FOR amendments to our articles of incorporation to make certain technical and administrative changes

8.

Shareholder proposal requiring an independent board chairman

AGAINST shareholder proposal requiring an independent board chairman

     
2   2023 Proxy Statement

 

Proxy Statement Summary

Director Nominees

  Standing Board Committee
    Director   Memberships(A)
Name and Occupation Age Since Independent AC CTD CGC SST EC
 

Andrés Conesa, Ph.D.

Chief Executive Officer, Grupo Aeroméxico, S.A.B. de C.V

53 2017    
 

Pablo A. Ferrero

Independent energy consultant

60 2013      
 

Jeffrey W. Martin

Chairman of the Board, Chief Executive Officer and

President, Sempra

61 2018          
 

Bethany J. Mayer

Executive Advisor, Siris Capital Group LLC

61 2019(B)      
 

Michael N. Mears

Retired Chairman, President and Chief Executive Officer,

Magellan Midstream Partners L.P.

60 2018      
 

Jack T. Taylor

Retired Chief Operating Officer – Americas and Executive

Vice Chair of U.S. Operations, KPMG LLP (U.S.)

71 2013      
 

Cynthia L. Walker

Chief Executive Officer, TES Americas, and Chief Strategy

Officer, TES Group

46 2018        
 

Cynthia J. Warner

Retired President and Chief Executive Officer,

Renewable Energy Group, Inc.

64 2019    
 

James C. Yardley

Retired Executive Vice President, El Paso Corp.

71 2013      
  Board committees with 100% independent director membership  
  Committee Member Committee Chair Audit Committee Financial Expert Lead Independent Director
(A) Director nominee membership in the following standing board committees and other designations as of the mailing date of this proxy statement:
AC = Audit Committee CTD = Compensation and Talent
Development Committee
CGC = Corporate
Governance Committee
SST = Safety, Sustainability
and Technology Committee
EC = Executive Committee
(B) Ms. Mayer previously served as a director from February 2017 through November 2018.

     
  2023 Proxy Statement       3

 

Proxy Statement Summary

Director Nominee Composition

Our board has made it a priority to develop and support a high-performance culture for our board, our management and the rest of our workforce. At the board level, the board seeks directors with diversity of skills and experience and of gender and ethnicity, among other things. To assist our board in maintaining its focus on board diversity, we conduct an annual assessment of each director’s skills, qualifications and experience as well as an annual board evaluation that are each fundamental to the board’s process for assembling a group of directors with a diverse and appropriate mix of experience, competencies and backgrounds. The board uses the results of the assessment and evaluation to critically analyze its effectiveness and skill set, which helps position the board to oversee Sempra’s current and future strategies and operations.

We have a strong track record of board refreshment. We have added four new directors since the beginning of 2018, which includes Jeffrey W. Martin but does not include Bethany J. Mayer due to her prior board service. Under the standards established by the New York Stock Exchange (NYSE), Mr. Martin is not an independent director due to his ongoing service as our Chairman, Chief Executive Officer and President.

Strong Governance Practices

Supported by feedback from our shareholders, we believe our practices and policies described below reflect strong corporate governance practices.

 

Lead Independent Director with clearly defined and robust responsibilities
Annual election of all directors
Proxy access right for shareholder nominations of director candidates
Majority-vote and resignation policy for directors in uncontested elections
Shareholders representing in the aggregate 10% or more of our outstanding shares may call a special meeting of shareholders
Comprehensive, ongoing succession planning for key executives by the board
Strong history of board refreshment designed to maintain balanced and diverse board composition and tenure
Directors should not be nominated to stand for election after attaining age 75
Board-level oversight of sustainability, including enhanced focus of Safety, Sustainability and Technology Committee on environmental, social and governance (ESG) matters
Board-level oversight of human capital management, including diversity and inclusion initiatives
Annual board, director and standing committee evaluations (except for Executive Committee)
Eight of our nine director nominees are independent directors under NYSE independence standards
NYSE-required board committees are composed of 100% independent directors
Director overboarding policy revised in 2020 to align with the preferences and policies of many of our shareholders
Executive sessions of non-management directors at all regular board meetings
Prohibition on hedging or pledging company stock
Robust share ownership guidelines for directors and officers
100% attendance of directors at board and committee meetings in 2022
Active shareholder engagement, including with our Lead Independent Director and the Chair of our Corporate Governance Committee
Code of conduct applicable to directors and principal and executive officers, as well as a separate code of conduct applicable to all employees

     
4   2023 Proxy Statement

 

Proxy Statement Summary

Business and Performance

Company Overview

Sempra’s businesses invest in, develop and operate energy infrastructure and provide electric and gas services to customers, all in North America. Our mission is to be North America’s premier energy infrastructure company, and we are primarily focused on transmission and distribution investments, among other areas, that we believe are capable of producing stable cash flows and earnings visibility, with the goal of delivering safe, reliable and increasingly clean forms of energy to customers and increasing shareholder value.

Sempra California and Sempra Texas

 

Sempra Infrastructure

We own regulated electric and gas utilities in California and hold significant interests in regulated electric utilities in Texas.
We expect our utility businesses to continue to require investments in critical transmission and distribution infrastructure, support the build-out of a cleaner energy system and remain focused on delivering cleaner, safer and more reliable energy.
 
Our energy infrastructure business is primarily focused on supporting the clean energy transition by investing in clean power and energy networks in the U.S. and Mexico, together with infrastructure to support liquefied natural gas (LNG) exports to foreign markets. We believe diverse sources of energy will continue to be important domestically and internationally.
Our revenues for these businesses generally are tied to long-term contracts with counterparties we believe are creditworthy.
 

In addition to focusing on key markets in North America, we are making critical investments in the portion of the energy value chain where we target attractive risk-adjusted returns:

 

 

Everything we do is guided by our vision, mission and values.

     
  2023 Proxy Statement       5

 

Proxy Statement Summary

Performance

Financial Performance Highlights

In 2022, our GAAP earnings per common share (EPS) was $6.62 and our adjusted EPS was $9.21.(1)(2) Our 2022 achievements build on our strong long-term financial performance. Our GAAP EPS was $3.48 in 2012, $1.01 in 2017 and $6.62 in 2022. Since 2012, we have delivered consistently strong adjusted EPS growth, increasing adjusted EPS from $4.32 in 2012 to $5.51 in 2017 and to $9.21 in 2022.(2)

This performance has contributed to our robust long-term growth and shareholder value creation. Our total shareholder return has outpaced the return of the S&P 500 Utilities Index during the past one, five, 10 and 20 years. In addition, our market capitalization almost tripled over the past 10 years from $17 billion at the end of 2012 to $49 billion at the end of 2022.

The company has a long track record of returning value to shareholders:

 

Strong Dividend Growth: The compound annual growth rate (CAGR) of our common stock dividend exceeded the median CAGR for companies in the S&P 500 Utilities Index over the past three, five and 10 years.

  13 Consecutive Years of Dividend Increases: From 2010 to 2022, we increased our annual dividend from $1.56 to $4.58 per common share. The Board of Directors raised the dividend for the thirteenth consecutive year in 2023, increasing the dividend to $4.76 per common share on an annualized basis.
  Share Repurchases: The company’s strong dividend is coupled with $1.25 billion of share repurchases since July 2020, including $750 million of share repurchases that have been completed since November 2021.

Long-Term Growth(3)

 

Total Shareholder Return(5)

Figures 1 and 2

(1)

GAAP means generally accepted accounting principles in the United States of America.

(2)

Adjusted EPS is a non-GAAP financial measure. Adjusted EPS for the years ended December 31, 2012 and 2017 have been updated from their original presentation to exclude additional items to conform to the presentation for the year ended December 31, 2022. For a reconciliation of GAAP EPS to adjusted EPS, see Appendix A to this proxy statement.

(3)

As of or for the years ended December 31, 2012, 2017 and 2022, as the context requires.

(4)

Dollars in billions.

(5)

For periods ended December 31, 2022.

     
6   2023 Proxy Statement

 

Proxy Statement Summary

Strategic Performance Highlights

Key strategic and operational accomplishments are highlighted below:

Sempra

             
       
 

Sempra executed on its disciplined strategy with a focus on investing in energy infrastructure, resulting in strong financial performance

 

Sempra more than doubled its utility rate base from 2017 through 2022 by investing in the #1 and #2 economies in the United States(1)

 

Sempra was ranked #1 ESG Utility Leader by Investor’s Business Daily

 
             

 

Sempra California

             
       
 

SDG&E completed Cleveland National Forest Fire Hardening + Safety Project

 

SDG&E received California Public Utilities Commission (CPUC) approval for 200 MW of utility-owned energy storage

 

SDG&E deployed the region’s first vehicle-to-grid project using local electric school buses capable of sending power to the grid

 
             
       
  SoCalGas achieved voluntary 5% RNG blending target(2)   SoCalGas received CPUC approval for a memorandum account to track spending for preliminary development of Angeles Link, a strategic dedicated hydrogen pipeline(3)   SoCalGas achieved approximately 37% methane reductions below 2015 levels through 2021, nearly at the state’s goal of 40% by 2030  
             

 

Sempra Texas

             
       
 

Oncor released sustainability financing framework and issued $400 million of green bonds in
May 2022

 

Oncor executed its $3 billion 2022 capital plan

 

Oncor announced a vehicle-to-grid collaboration with Toyota Motor North America, the first utility collaboration for Toyota around battery electric vehicles

 
             

Sempra Infrastructure

             
       
 

Sempra sold a 10% noncontrolling interest in Sempra Infrastructure Partners (SI Partners) to an affiliate of Abu Dhabi Investment Authority (ADIA) for $1.7 billion in cash(4)

 

Sempra Infrastructure advanced development of Hackberry Carbon Sequestration project advancing net-zero greenhouse gas emissions strategy(3)

 

Sempra Infrastructure began commercial operations of its refined products storage terminal in Puebla, Mexico

 
             
             

(1)

Rate base for San Diego Gas & Electric Company (SDG&E) and Southern California Gas Company (SoCalGas) represents 13-month weighted-average, excluding construction work in progress (CWIP). Rate base reflects 100% of Oncor Electric Delivery Company LLC’s (Oncor) and Sharyland Utilities, L.L.C.’s actual year-end rate base as of December 31, 2017 and 2022. Economy rankings based on gross domestic product (GDP) according to the U.S. Bureau of Economic Analysis (BEA).

(2)

In 2022, SoCalGas delivered 5% renewable natural gas (RNG) to its “core service” as defined in SoCalGas’ Tariff Rule No. 23.

(3)

The ability to complete major construction and development projects is subject to a number of risks and uncertainties and there can be no assurance of completion.

(4)

Amount of proceeds includes post-closing adjustments and is net of transaction costs.


     
  2023 Proxy Statement       7

 

Proxy Statement Summary

Executive Compensation

2022 Compensation Overview

Our executive compensation program is designed to attract, motivate and retain key executive talent and promote strong, sustainable long-term performance. We place an emphasis on variable performance-based pay, with each component designed to promote value creation and alignment of our management team’s compensation with our long-term strategic objectives.

   

Chief Executive Officer Target Total Direct Compensation


 

Performance-Based Annual Bonus

   

Long-Term Equity-Based Incentives(1)

 

80% ABP Earnings (as defined below)

•   Provides an accurate, comprehensive, and understandable picture of annual financial performance

   

Performance-Based Restricted Stock Units (weighted at two-thirds, collectively)

 One-third based on 3-year relative total shareholder return (TSR), allocated evenly between

 Relative TSR vs. S&P 500 Utilities Index(2)

 Relative TSR vs. S&P 500 Index

  One-third based on 3-year EPS CAGR with payout scale set based on forward consensus estimates of EPS CAGR of S&P 500 Utilities Index peers(2)

     
 

12% Safety Measures (as defined below)

  Promotes safe and responsible operations and the safety of customers and employees

   
 

8% ESG Measures (as defined below)

  Promotes sustainable operations and
strong governance

   
     

Stock Options (weighted at one-third)

 Focus on growth and shareholder alignment

(1)

As used in this proxy statement, the term “long-term equity-based incentives” refers to the annual long-term incentive plan (LTIP) awards granted on January 3, 2022.

(2)

For purposes of long-term equity-based incentives and labor market reviews, all references to the S&P 500 Utilities Index or our S&P 500 Utilities Index peers refer to the companies constituting the S&P 500 Utilities Index, excluding water companies.

Note: The Chief Executive Officer’s pay mix at target is based on 2022 annual base salary, 2022 target performance-based annual bonus and the target grant date value of 2022 long-term equity-based incentives.

2022 Compensation Decisions and Outcomes

Base Salary. Mr. Martin received a 2022 annual salary planning increase of 3.7% and increases for the other named executive officers ranged from 0% to 6.4%. Ms. Sedgwick, who did not receive a base salary increase in 2022, received a 17.9% promotional increase effective December 20, 2021 in connection with her promotion to Chief Administrative Officer.

Performance-Based Annual Bonus. Our 2022 target earnings for annual bonus plan purposes (ABP Earnings) were $2,657 million, an increase of $289 million, or 12%, over our 2021 target ABP Earnings of $2,368 million, and $99 million higher than our 2021 actual ABP Earnings of $2,558 million. The $159 million range between the 2022 ABP Earnings target and maximum goals also continues the trend of broadening this range, which was $142 million in 2021 and $81 million in 2020. Our 2022 ABP Earnings were $2,947 million, an increase of more than 15% above 2021 ABP Earnings. In determining ABP Earnings for 2022, the Compensation and Talent Development Committee made certain predefined adjustments to GAAP earnings. See “Reconciliation of GAAP Earnings to ABP Earnings” on page 62 and Appendix D to this proxy statement for additional information. Based on performance on ABP Earnings, and on the pre-defined employee and public safety measures (Safety Measures) and environmental, social and governance measures (ESG Measures), 2022 annual bonuses were achieved at 191.79% of target.

Long-Term Equity-Based Incentives. Long-term equity-based incentives are the largest single component of the total 2022 target compensation package for each named executive officer. In accordance with our pay-for-performance philosophy, 100% of our Chief Executive Officer’s 2022 annual LTIP award was performance-based, with one-third of the award’s grant date value tied to relative TSR performance, one-third tied to EPS growth and one-third in nonqualified stock options, which the Compensation and Talent Development Committee views as performance-based because their value depends on our stock price increasing over time. The overall payout for the 2020-2022 LTIP awards based on relative TSR and EPS growth was 140% of target.

     
8   2023 Proxy Statement

 

Proxy Statement Summary

Voting Information

Eligibility: Shareholders of our common stock at the close of business on the record date, March 17, 2023, are entitled to notice of the Annual Shareholders Meeting and to vote their shares as described below on each of the proposals to be voted on at the meeting. Each share of common stock is entitled to one vote on each of the director nominees named in this proxy statement and one vote on each of the other proposals to be voted on at the meeting.

Voting by Shareholders of Record: Shareholders of record may vote in the following ways:

 

 

 

 

 
 

Using the Internet at
www.proxyvote.com or
scanning the QR code included
in your proxy materials

 

Calling 1-800-690-6903
in the U.S. and Canada

 

Mailing your marked, dated and signed proxy card

 

Attending the Annual Shareholders
Meeting at
www.virtualshareholdermeeting.
com/SRE2023

 

For Internet and telephone voting in advance of the meeting, you will need to have your notice about the Internet availability of our proxy materials or proxy card available and use the company number and account number shown on the notice and card. Internet and telephone voting in advance of the meeting are available for shareholders of record until 11:59 p.m. Eastern Time on May 11, 2023.

Voting By Other Shareholders: Beneficial owners of shares should follow the voting instructions provided by their bank, broker or other nominee. If you hold shares in any of the Employee Savings Plans, as defined in Question 12 under “About the Annual Shareholders Meeting and Voting” below, your voting instructions with respect to such shares must be received by 8 a.m. Eastern Time on May 9, 2023 for the trustee of the plans to vote your shares in accordance with your instructions. See Question 12 below for additional information.

     
  2023 Proxy Statement       9

 

Corporate Governance

Generally, our business and affairs are managed and all corporate powers are exercised by or under the direction of our Board of Directors. Under our shared governance model, the board establishes fundamental corporate policies and oversees the performance of the company as well as our Chairman and Chief Executive Officer and the other officers to whom the board has delegated authority to manage our day-to-day business operations.

The board has adopted Corporate Governance Guidelines that set forth expectations for director performance, director independence standards, board committee structure and functions, and other policies for the company’s governance. It also has adopted a Code of Business Conduct and Ethics for Directors and Principal and Executive Officers, which applies to each member of the Board of Directors of Sempra, the principal executive, financial and accounting officers (or persons performing similar functions) of Sempra, SDG&E and SoCalGas and all other executive officers of Sempra. Several standing and ad hoc committees assist the board in carrying out its responsibilities, and each standing committee operates under a written charter adopted by the board.

Our Corporate Governance Guidelines, standing committee charters, including our Audit, Compensation and Talent Development and Corporate Governance Committee charters, Code of Business Conduct and Ethics for Directors and Principal and Executive Officers and Code of Business Conduct that applies to all employees of Sempra and any subsidiary or other entity as to which Sempra has majority ownership and control, are all posted on our website at www.sempra.com under the “Corporate governance” tab of the “Investors” tab. Paper copies may be obtained upon request by writing to the attention of our Corporate Secretary at Sempra’s principal executive offices at 488 8th Avenue, San Diego, California 92101. If we either (i) amend a provision of our Code of Business Conduct and Ethics for Directors and Principal and Executive Officers and the amendment relates to any element of the code of ethics definition set forth in Item 406(b) of Securities and Exchange Commission (SEC) Regulation S-K or (ii) grant to our principal executive officer, principal financial officer or principal accounting officer or controller a waiver, including an implicit waiver, from a provision of our Code of Business Conduct and Ethics for Directors and Principal and Executive Officers and the waiver relates to one or more of the elements of the code of ethics definition set forth in Item 406(b) of SEC Regulation S-K, then we intend to describe on our website under the “Corporate governance” tab of the “Investors” tab the date and nature of any such amendment or waiver and, if applicable, the name of the person to whom the waiver was granted, or if we do not make such disclosure on our website, we will include it in a current report on Form 8-K filed with the SEC.

Board of Directors

Functions

In addition to its general oversight role, our Board of Directors performs a number of specific functions, including, among others:

•  Selecting our Chief Executive Officer and overseeing his or her performance and that of other senior management in the operation of the company

•  Reviewing and monitoring strategic, financial and operating plans and budgets and their development and implementation by management

•  Assessing and monitoring risks to the company’s business and evaluating and overseeing risk management strategies

•  Reviewing and approving significant corporate actions

 

•  Fostering the company’s values-driven culture and reviewing and monitoring processes designed to maintain the company’s integrity, including financial statements, compliance with law and ethics and relationships with shareholders, employees, customers, suppliers and other stakeholders

•  Planning for management succession

•  Nominating directors, evaluating board effectiveness, appointing board committee members and overseeing effective corporate governance

 

Leadership Structure

The Board of Directors retains the flexibility to determine, from time to time on an ongoing basis, whether the offices of Chief Executive Officer and Chairman of the Board should be combined or separated and whether an independent director should serve as Chairman of the Board. This flexibility permits the board to organize its functions and conduct its business in a manner it deems most effective in then-prevailing circumstances, and to select the individual it considers to be best-suited to serve as Chairman of the Board at any particular time. The non-management directors have historically evaluated the board’s leadership structure on an annual basis and expect to continue to do so, and their board leadership decisions are made based on their determination of the leadership structure that is in the best interests of our company and our shareholders at the time. Currently, Jeffrey W. Martin serves as both our Chief Executive Officer and our Chairman of the Board. In each annual evaluation of its leadership structure since Mr. Martin’s appointment to these roles, the board has considered various matters, including his qualifications, experience and performance as Chairman, the company’s performance under the existing board leadership structure, the benefits of different leadership structures in facilitating board effectiveness, the composition of the board and the role of our independent directors, and feedback from our shareholders. See “Shareholder Proposal—Proposal 8: Shareholder Proposal Requiring an Independent Board Chairman,” including the board’s statement opposing the shareholder proposal, for more information about these annual evaluations.

     
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Corporate Governance

An important part of the board’s annual deliberations on its leadership structure is the overall composition of the board and the strong role of the company’s independent directors. During periods in which we do not have an independent Chairman of the Board, our Corporate Governance Guidelines require the independent directors to select annually an independent director to serve as the Lead Independent Director (which is referred to as the “Lead Director” in our bylaws). If a Lead Independent Director is appointed, the role has broad powers and responsibilities. The position and role of the Lead Independent Director is intended to expand lines of communication between the board and members of management and it is not intended to reduce the free and open access and communications that each director has with other directors and members of management. Cynthia J. Warner, who has been a director since 2019, was appointed as the Lead Independent Director immediately following our 2022 annual shareholders meeting. Our robust Lead Independent Director role includes the following functions and responsibilities:

•  Provide leadership to the Board of Directors if circumstances arise in which the role of the Chairman of the Board may be, or may be perceived by the Lead Independent Director or by the other independent directors to be, in conflict

•  Preside at all meetings of the Board of Directors at which the Chairman of the Board is not available

•  Organize, convene and preside over executive sessions of the non-management directors

•  Act as the principal liaison between the independent directors and the Chairman of the Board and Chief Executive Officer

•  Review and approve all board and committee agendas and approve information sent to the board, providing input to management on the scope and quality of such information

•  Consult with the Chairman of the Board, Chief Executive Officer and committee Chairs regarding the topics and schedules of the meetings of the board and its committees and approve such schedules to assure that there is sufficient time for discussion of all agenda items

•  Call a special meeting of the Board of Directors or the independent directors at any time, at any place and for any purpose

•  In consultation with the Chief Executive Officer, assist the board, the Corporate Governance Committee and management in complying with the Corporate Governance Guidelines

 

•  Be available for consultation and direct communication with the company’s major shareholders

•  Collect and communicate to the Chairman of the Board and Chief Executive Officer the views and recommendations of the independent directors relating to his or her performance, other than with respect to the annual performance review

•  Consult with the Corporate Governance Committee as part of the committee’s review of director nominations and recommendations of director candidates

•  Together with the Chair of the Corporate Governance Committee and the Chairman of the Board, has the authority to extend the board’s invitation to selected candidates to join or be nominated for election to the board

•  Consult with directors regarding acceptance of memberships on other boards to assure that multiple board service does not conflict or otherwise interfere with such directors’ service to the company

•  Led by the Compensation and Talent Development Committee and together with the Chairman of the Board, report annually to the board on succession planning, including policies and principles for executive officer selection

•  Perform such other duties as may be assigned from time to time by the independent directors

 
 
 
 
 

We conducted an extensive shareholder outreach program in our 2022 engagement cycle regarding our board leadership structure and various other matters, in which we reached out to shareholders representing approximately 63% of our total outstanding shares of common stock and we engaged with holders of approximately 40% of our outstanding shares of common stock. Among the shareholders with whom we engaged, the majority (in terms of number of shares represented) either has no preference for an independent Chairman of the Board or has no preference for an independent Chairman of the Board after taking into account certain additional factors, including that there is a Lead Independent Director with significant duties, as is the case at Sempra.

The Board of Directors believes its independence and oversight of management and company risks are maintained effectively through its flexible leadership structure, including the robust role of the Lead Independent Director, the strong role of our independent directors generally and the board’s overall composition, which currently includes 10 independent directors (91% of the board) and 100% independent director composition of all NYSE-required board committees, and our other sound corporate governance policies and practices.

Based on the foregoing and other factors, the Board of Directors determined in its most recent evaluation of the board’s leadership structure, and continues to believe, that combining the roles of Chief Executive Officer and Chairman of the Board continues to best serve the interests of Sempra and our shareholders.

     
  2023 Proxy Statement       11

 

Corporate Governance

Director Independence

The Board of Directors determines the independence of each of our directors and director nominees by applying the independence standards established by the NYSE. These standards provide that a director is independent only if the board affirmatively determines that the director has no direct or indirect material relationship with the company. Material relationships may include, depending on the circumstances, commercial, industrial, banking, consulting, legal, accounting, charitable, family and other business, professional and personal relationships. These standards also identify various relationships that preclude a determination of director independence.

Applying these standards, the board annually reviews and determines the independence of each of the company’s directors and director nominees. In its most recent review, the board considered, among other things: each non-employee director’s directorships, employment or other service relationships, significant ownership, other affiliations and any of the foregoing relationships of a director’s immediate family members, in each case with or of organizations with which Sempra or any of its subsidiaries or other entities as to which it has majority ownership does business; the absence of any employment relationship between Sempra or any of its subsidiaries or other entities as to which it has majority ownership and each director and his or her immediate family members; the absence of any of the other specific relationships that would preclude a determination of independence under NYSE independence standards; the absence of any affiliation of each director or his or her immediate family members with the company’s independent registered public accounting firm, compensation consultants, legal counsel or investment banks; the absence of any transactions in which a director or his or her immediate family members has a direct or indirect material interest that would require disclosure in this proxy statement under SEC rules regarding related person transactions; and any discretionary contributions we may make to non-profit organizations with which a director or his or her immediate family members are associated. In assessing the materiality of director relationships, the board broadly considers all relevant facts and circumstances both from the standpoint of the director and also from that of persons or organizations with which the director has an affiliation.

Based on this review, the board has affirmatively determined that each of the following non-employee directors, each of whom is a director nominee standing for reelection at the Annual Shareholders Meeting, is an independent director:

                 
 

Andrés Conesa

 

Bethany J. Mayer

 

Jack T. Taylor

 

Cynthia J. Warner

 
 

Pablo A. Ferrero

 

Michael N. Mears

 

Cynthia L. Walker

 

James C. Yardley

 
                 

Based on its review, the board also has affirmatively determined the independence of Alan L. Boeckmann and Maria Contreras-Sweet, who are currently directors but are not standing for reelection as directors in 2023 and will retire from the board immediately following our Annual Shareholders Meeting. Mr. Martin cannot be considered an independent director due to his position as an executive officer of the company.

Director Share Ownership Guideline

The board has established a director share ownership guideline to further strengthen the link between director and shareholder interests. For each of our non-employee directors, the guideline calls for ownership of a number of shares of our common stock having a value of five times the director’s annual base retainer of $90,000, resulting in an ownership guideline equal to $450,000. For these purposes, in addition to shares of our common stock owned directly, share ownership includes phantom shares into which compensation has been deferred and unvested service-based restricted stock units. The Compensation and Talent Development Committee annually reviews adherence to this guideline, which is expected to be attained within five years after becoming a director. Following its review in 2022, the Compensation and Talent Development Committee determined that all of our non-employee directors meet or exceed this guideline.

The board also has established officer share ownership guidelines. For information about these guidelines, see “Executive
Compensation—Compensation Discussion and Analysis—Share Ownership Guidelines.”

Director Overboarding Policy

Our director overboarding policy was revised in 2020 to align with shareholder feedback and the voting policies of some of our major shareholders. Pursuant to the policy, any director or director nominee who is a named executive officer of a public company should not serve on more than two public company boards (including the board of the company for which the director serves as a named executive officer), and such directors and director nominees will be expected to become compliant with this policy in advance of being nominated to stand for election at Sempra’s next annual shareholders meeting. In addition, any director or director nominee who is not also a named executive officer of a public company should not serve on more than four public company boards (including our board). Finally, our Corporate Governance Guidelines provide that no member of the Audit Committee may serve on more than a total of three audit committees of public companies (including our Audit Committee) unless the board affirmatively determines that a director’s multiple service on audit committees does not impair the director’s effectiveness on our Audit Committee.

     
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Corporate Governance

Board, Committee and Shareholder Meetings

At regularly scheduled board and committee meetings, directors review and discuss management reports regarding the company’s performance, prospects and plans, as well as significant opportunities and material risks facing the company and other matters the board considers germane to fulfilling its responsibilities. At least once a year, the board reviews management’s long-term strategic and financial plans, including an annual detailed and comprehensive strategy discussion. The Chairman of the Board or, in certain circumstances as described in “Leadership Structure” above, the Lead Independent Director, presides over each board meeting.

At executive sessions, directors convene in both director-only sessions and sessions with only non-management directors to discuss issues such as succession planning, Chief Executive Officer performance and compensation (the Chief Executive Officer is not present for deliberations or approvals of his own compensation), executive development, board performance and other matters deemed relevant. An executive session is held at each regular board meeting, and any director may call for an executive session at any board meeting. The Lead Independent Director presides over executive sessions in which the Chairman of the Board is not present.

The Chairman of the Board proposes the agenda and schedule for each meeting, which the Lead Independent Director then reviews and modifies or approves. Committee agendas and schedules are set by or in consultation with the applicable committee Chair and with the approval of the Lead Independent Director. All directors are encouraged to propose agenda items, and any director also may raise subjects that are not on the agenda at any meeting.

Information and other materials important to understanding the business to be conducted at each board and committee meeting, to the extent available, are distributed in writing to directors in advance of the meeting. Additional information and materials may be presented at the meetings.

During 2022, the full board held four meetings and committees of the board, including standing and ad hoc committees, collectively held 25 meetings. Directors, on an aggregate basis, attended 100% of the combined number of these meetings. Each incumbent director attended at least 75% of the aggregate number of meetings of the board and each committee of which the director was a member (in each case during the periods when he or she was a member).

The board expects that each director will attend the Annual Shareholders Meeting. All of the members of the board at the time of our 2022 annual shareholders meeting attended that meeting, which was also held virtually.

Evaluation of Board and Director Performance

The Corporate Governance Committee annually leads a self-evaluation by the directors of the performance of the Board of Directors in a number of categories, including board oversight, leadership, composition and independence, conduct of meetings, and committees. In this review, the board’s performance as a whole is assessed and areas in which the board believes performance could improve are identified. The purpose of the review is to increase the effectiveness of the board and its committees, and the results are reviewed with the board and its committees. The results also are considered in connection with board refreshment efforts. In addition, each standing committee, other than the Executive Committee, conducts an annual self-evaluation, in accordance with its charter.

As illustrated below, the board also conducts an annual peer evaluation by which each director is afforded the opportunity to comment anonymously on each other board member’s performance. In order to help ensure the objectivity and integrity of this process, an outside law firm is engaged every year to conduct the peer review portion of this evaluation and compile the results.

 

Each independent director receives an evaluation survey for each other independent director

 

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Directors forward completed surveys to an outside law firm that compiles results, maintaining confidentiality

 

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The law firm provides compiled results to the Corporate Governance Committee Chair who discusses with the Chairman of the Board

 

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The Corporate Governance Committee Chair and Chairman of the Board address specific issues directly with individual directors as needed

 

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The full board discusses results and identifies areas in which the board’s performance can be improved and enhanced to increase board effectiveness

 

Our board annually reviews the individual performance, commitments and qualifications of each director who may wish to be considered for nomination for election for an additional term. The evaluations are reviewed by the Corporate Governance Committee, which makes recommendations to the board regarding nominees to stand for election as directors. Our board appreciates the importance of critically evaluating directors and their contributions to the board in connection with the re-nomination decision, including their collective skills, qualifications and experience, feedback from the annual board evaluation, and individual performance, attendance, participation, independence and outside board and other affiliations.

     
  2023 Proxy Statement       13

 

Corporate Governance

The Board’s Role in Risk Oversight

Risks are inherent in our business operations, including, among others, health, safety and operational risks, human capital risks, regulatory and compliance risks, climate and other environmental risks, cybersecurity risks, business and financial risks and reputational risks.

Sempra’s board has ultimate responsibility for risk oversight. Management has developed an integrated risk management framework to assess, prioritize, manage and monitor risks across the company’s operations. This framework is managed by Sempra’s Chief Compliance Officer, who reports directly to Sempra’s Chief Executive Officer and regularly interacts with the board regarding the company’s risk management practices and policies and other related matters. Consistent with this approach, our Corporate Governance Guidelines provide that the specific functions of the Board of Directors include assessing and monitoring risks and risk management strategies.

The board believes that risk oversight stretches beyond any one committee. As a result, the board has diversified its risk oversight responsibilities across its membership, housing categories of risk oversight within standing board committees by topic and forming ad hoc committees to manage and oversee certain specific risks as needed, which helps to focus committee members on specific risk areas and to funnel risk categories to the committees and committee members best-suited to oversee them. For example, the responsibilities of the board’s Safety, Sustainability and Technology Committee include oversight of a variety of sustainability matters, including climate change, human rights developments and other environmental and social issues affecting the company’s business. This committee, the members of which are all independent directors, also oversees the company’s overall health and safety practices, reinforcing our company’s strong commitment to robust safety practices. Additionally, this committee oversees cybersecurity and other information technology risks and keeps abreast of technology advancements important to our businesses and other current events or developments that could impact our cybersecurity risk. Any risk oversight that does not fall within the responsibility of a particular committee remains with the full board. The committee Chairs periodically report to the full board regarding their respective committees’ risk oversight roles.

The board and its appropriate committees periodically review and evaluate the material risks we face, including short-term, intermediate-term and long-term risks of importance to our businesses, and prioritize their risk review based on likelihood of occurrence, magnitude of impact, immediacy and other factors deemed relevant by our board and its committees. In addition, a review of what are believed to be Sempra’s most material risks and mitigation strategies for these risks is presented by senior management to the full board annually. The board also reviews and monitors strategic, financial and operating plans and goals intended to support sustainable long-term growth, and each of our principal operating companies is responsible for identifying and moderating risk in a manner consistent with these plans and goals. The board fulfills its risk oversight function by, among other things, reviewing reports provided to the board and to appropriate board committees, discussing material risks and opportunities with management, engaging outside experts, selecting director candidates with diverse experience and qualifications, forming ad hoc committees to manage and oversee certain specific risks as needed, and staying informed about developments in our industry and other current events that may signal meaningful emerging risks or otherwise impact the company. Based on the foregoing, the board and its committees establish new or monitor and, as needed, amend existing risk oversight and control mechanisms, policies and practices. In addition, the company has a robust internal audit function that reports directly to the Audit Committee.

The board and its committees oversee risk by establishing policies and practices that apply to various aspects of our businesses, including, among others:

 The appropriate capital structure for our businesses
 Utility investment plans consistent with state policy objectives and regulatory review and approval of significant investments
 Non-utility investment policies, including requiring contractual commitments from third parties to purchase a substantial portion of the capacity or output of major non-utility projects before commencing construction on the projects, subject to exceptions
 An employee compensation program that encourages and rewards sustainable growth in our businesses and is within an acceptable risk profile
 
•  Commitment policies that require board review and/or approval above certain dollar thresholds
 Reviews of the company’s high-performing culture with a focus on key areas of our operations, such as safety, sustainability, diversity and inclusion of our workforce and customer service
 With respect to investments in which we do not operate or control the applicable entity, careful selection of business partners and representation on the entity’s board or equivalent governing body when possible
 
 

For additional information on the responsibilities of our standing board committees, see “Board Committees” below.

The Board’s Oversight of Sustainability Matters

The board recognizes the importance of overseeing risks and opportunities related to environmental stewardship, safety, stakeholder engagement, diversity and inclusion and responsible governance consistent with our vision, mission and values.

As a general practice, the board monitors overall governance processes and delegates specific areas of focus to standing committees, including for sustainability matters. The board has mandated the Safety, Sustainability and Technology Committee with responsibility for the oversight of the company’s risk management and oversight programs and performance related to environmental, health, safety, security, technology, climate change, sustainability, human rights, and other related ESG matters. The board updated the Safety, Sustainability

     
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Corporate Governance

and Technology Committee’s charter in 2020, 2021 and 2022 to strengthen and clarify the way this committee oversees and considers sustainability and other related matters. In addition, the board’s Compensation and Talent Development Committee is responsible for the oversight of the company’s programs and initiatives related to human capital matters, including our commitment to fostering a diverse and inclusive workplace. Additional standing committees, such as the Audit Committee and Corporate Governance Committee also support in overseeing the integration and strengthening of sustainable business practices throughout the organization with respect to their specific areas of responsibility. These committees and the full board continue to strongly focus on the sustainability topics discussed below.

As described below under “Proposal 1: Election of the Nine Director Nominees Named in this Proxy Statement,” our board collectively possesses a broad and deep range of skills for effective oversight of business strategy and risk management, inclusive of sustainable business practices. Our directors come from a variety of backgrounds including global companies, government service and public policy, financial institution leadership, and others, both within and outside of our industry. A number of our directors have had direct exposure to, and in many cases, direct oversight or decision-making responsibility for key environmental, human capital, cybersecurity, and regulatory and government affairs matters. This includes experience and leadership in the global energy industry, including renewable energy, where sustainability and greenhouse gas emissions reduction has been a priority. Our directors also bring knowledge and insight from leadership on other public company boards, deepening our board’s collective understanding of cross-cutting ESG matters. These diverse backgrounds, experiences and insights better equip our directors to guide the company in its assessment and management of evolving sustainability risks and opportunities.

High-Performance Culture

The board actively oversees management’s commitment to building a high-performance culture that is consistent with our company values – do the right thing, champion people and shape the future. Sempra’s high-performance culture has an unwavering focus on safety in everything we do, a commitment to leadership and employee development and a continued dedication to advancing diverse perspectives while creating an inclusive environment for our workforce and the communities we serve.

Safety

Health and safety are foundational to the Sempra family of companies. Safety is engrained in, and a key component of, our company’s culture and our employees and contractors are empowered to take responsibility for their own safety as well as the safety of others. Comprehensive safety management plans that follow applicable safety laws, regulations and protocols are integral to our approach. Each of our operating companies manages the safe operation of its assets, with oversight provided by its board of directors as well as the Sempra board’s Safety, Sustainability and Technology Committee.

The Sempra board oversees management’s efforts to establish the safety culture of the Sempra organization through, among other things, the questions they ask, the focus they place on key organizational issues, the messages they give during direct interaction with employees and the overall compensation programs they approve, including basing a portion of executive compensation on the company’s performance on key safety measures.

Employee Development

Our board, primarily through its Compensation and Talent Development Committee, oversees initiatives in talent recruitment and development and retention of high-potential employees who represent the communities we serve. We invest in a range of programs to advance these objectives, including internal and external mentoring and leadership training, virtual and in-person learning and networking opportunities, workshops and a tuition reimbursement program. In addition, we offer a variety of employee community service opportunities. At our U.S. operations, we support employees’ personal volunteering and charitable giving through Sempra’s charitable matching program.

Diversity and Inclusion

Our board takes an active role in overseeing efforts to promote diversity and inclusion in our workforce and the communities we serve, primarily through its Compensation and Talent Development Committee. The board’s commitment to investing in our employees and advancing our high-performance culture underpins our efforts to create an inclusive workplace where we embrace diverse views and lived experiences and advance a culture that fosters a true sense of belonging.

     
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Corporate Governance

As part of our work to improve the diversity and inclusion efforts within our workplace and in the communities we serve, in 2021 we announced an enterprise-wide diversity and inclusion action plan centered on five strategic pillars:

 

Leading from the top

 

Accelerating engagement

 

Creating opportunity

 

Driving conscious inclusion

 

Partnering with communities

Since then, we have worked to achieve targeted goals under each pillar. A portion of named executive officer compensation is linked to progress on certain diversity and inclusion objectives.

Energy Transition

The board, primarily through its Safety, Sustainability and Technology Committee, takes an active role in providing oversight of Sempra’s strategies to reduce the impact of company operations on the environment as well as support the energy transition in the markets we serve, including our aim to have net-zero greenhouse gas emissions by 2050.(1) This includes reviewing business risks and opportunities in the context of local, national and global energy, economic and climate trends and regulations, as well as overseeing the company’s strategies to maintain a resilient energy infrastructure network to deliver energy safely and reliably. We see innovation and new technologies as central to a clean energy future, enabled by investments in three key capabilities to:

 

Decarbonize key market sectors, including power generation, industry and transportation;

 

Digitalize energy systems, including use of robotics and artificial intelligence; and

 

Diversify energy networks, including the integration of distributed energy resources.

A successful energy transition will require industry leadership, technological advancements that are economically and technically feasible, and broad coordination and support from every level of government, among other things. Following review by the Safety, Sustainability and Technology Committee, we issued our energy transition action plan in 2021, defining representative capabilities and investment opportunities to advance our aim to have net-zero greenhouse gas emissions by mid-century. A portion of named executive officer compensation is linked to achieving milestones in this area.

Transparency

The board recognizes the importance of transparent communication around the key sustainability risks and opportunities that are most relevant to our shareholders and other stakeholders. Periodic materiality assessments that solicit input from our stakeholders inform the topics on which we report. In many cases, our disclosures surpass the standards of our peers or expectations for our industry. The board oversees many of these disclosures, including our annual corporate sustainability report, which addresses risks, opportunities, activities, goals and results in the areas of greenhouse gas emissions (including emissions reductions), climate change, water stewardship, employee and public safety, electric reliability, biodiversity, employee diversity and inclusion, employee and stakeholder engagement, community giving, political engagement and others.

We prepare our sustainability disclosures in alignment with some of the leading sustainability frameworks, including the Global Reporting Initiative (GRI), Sustainability Accounting Standards Board (SASB), Task Force on Climate-related Financial Disclosures (TCFD), CDP (formerly Carbon Disclosure Project) and Edison Electric Institute and American Gas Association combined ESG template. In 2022, we continued to report on certain World Economic Forum Stakeholder Capitalism Metrics to support greater transparency.

In addition to aligning our sustainability reporting with global standards, we also listen carefully to our shareholders and seek to provide transparency on topics of particular focus for them. For example, after robust engagement with our shareholders in 2021 following our receipt of a shareholder proposal on the topic, we began working to further enhance our disclosures on the alignment of our key trade associations with the Paris Agreement and Sempra’s climate positions. To assist in this endeavor, we developed and deployed a standardized trade association survey in consultation with shareholders and other key stakeholders and reported our findings from this survey in our most recent annual corporate sustainability report. As another example, we disclosed our company’s Equal Employment Opportunity-1 (EEO-1) data for the first time in 2021, which is available in the sustainability resource library on our website at www.sempra.com under the “Sustainability” tab. We also include detailed information about our efforts and goals to promote diversity and inclusion in our workforce, including information about the gender and racial/ethnic make-up of our workforce, in our Annual Report to Shareholders and/or our annual corporate sustainability report.

(1)   For this purpose, we expect that achievement of net-zero greenhouse gas emissions will be determined based on company operations in 2050 and greenhouse gas emissions will be calculated according to widely accepted emissions reporting guidelines or mandates at that time. Our current emissions inventory includes both consolidated operations and our Cameron LNG (proportionate ownership share) and TAG Norte Holding joint ventures, which are unconsolidated equity method investments. Where applicable, we try to work with our business partners to manage environmental impacts, including greenhouse gas emissions. Our net-zero aim does not include Oncor, which sets its own goals due to certain ring-fencing measures that limit Sempra’s ability to direct the management or activities of Oncor. In line with California greenhouse gas emissions targets, Sempra California has announced a slightly accelerated timeline and aims to have net-zero greenhouse gas emissions by 2045.

     
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Corporate Governance

Robust Engagement Program

Shareholders

Sempra conducts regular engagement with our shareholders throughout the year, including spring engagement in connection with our annual shareholders meetings and fall/winter “off-season” engagement. This cadence may be supplemented if the company wishes to gain additional feedback from investors on a particular matter. In general, we have been engaging with shareholders more frequently throughout the year to maintain a steady conversation with our investors about their top priorities, and feedback from our engagement program is provided to our board on an ongoing basis. This regular dialogue with shareholders, which is separate from our investor relations team’s engagement efforts, provides Sempra’s board and management team with valuable insight into our shareholders’ priorities and feedback on matters of significance to the company and our shareholders.

 

Key topics discussed during 2022
engagement cycle included:

 

Sempra participants included:

 
 

Energy transition initiatives

 

Lead Independent Director/Committee Chair(1)

 
 

Diversity and inclusion and employee development

 

Chief Administrative Officer and Chief Human Resources Officer

 
 

Board composition, practices and leadership

 

Senior Vice President, Corporate Affairs and Chief Sustainability Officer

 
 

Corporate governance

 

Vice President, Governance and Corporate Secretary

 
 

Executive compensation practices

 

Vice President, Talent Development

 
 

Business strategy

 

Vice President, Investor Relations

 
 

Approach to disclosure and transparency

 

Director, Compensation

 
     

Director, Sustainability

 

(1)    When appropriate, our Lead Independent Director or certain committee Chairs may participate in our meetings with shareholders.

In total, our outreach to shareholders in our 2022 engagement cycle, which included spring, summer and fall 2022 and January 2023 engagements, represented approximately 63% of our total outstanding shares of common stock, and we engaged with holders of approximately 40% of our outstanding shares of common stock (a significant portion of our institutional share ownership). During our 2022 engagement cycle, we made particular efforts to reach out to smaller investors with substantial shareholdings outside our top 50 shareholders in addition to our regular outreach to investors in our top 50 shareholders. This expanded outreach has provided a greater understanding of the viewpoints of a broader spectrum of our investors.

Other Stakeholders

In addition to shareholders, we engage with proxy advisory firms, ESG advocacy organizations, trade associations and other stakeholders who express an interest in our company and its operations. This further informs our practices and disclosures across corporate governance and sustainability matters.

Succession Planning and Management Development

Our Compensation and Talent Development Committee oversees and regularly evaluates leadership succession planning practices and results. The committee reports annually to the Board of Directors on succession planning, including on principles for executive officer selection.

Review of Related Person Transactions

SEC rules require us to describe any transaction since the beginning of 2022 or any currently proposed transaction, in each case involving more than $120,000, in which we were or will be a participant and any of our directors, director nominees, executive officers, persons or entities known by us to be a beneficial owner of more than 5% of our common stock, or any member of their respective immediate families, had or will have a direct or indirect material interest. The charter of our Corporate Governance Committee requires the committee to review and approve any such “related person transaction” that is required to be disclosed. When evaluating any such transaction, the Corporate Governance Committee focuses on a variety of factors on a case-by-case basis, including, among other things, the identity of the related person, the nature and terms of the transaction, the interest of the related person in the transaction and the dollar amount involved. There have been no transactions requiring such review since the beginning of 2022.

     
  2023 Proxy Statement       17

 

Corporate Governance

Director Orientation and Education Programs

Every new director participates in an orientation program and receives materials and briefings to acquaint him or her with our business, industry, management and corporate governance policies and practices. Continuing education is provided for all directors through board materials and presentations, discussions with management, visits to corporate facilities and other sources. Several directors, at the company’s expense, also attend third-party offered education courses and participate in the National Association of Corporate Directors (NACD), of which the company is a member.

Director Access to Senior Management, Independent Accountant and Counsel

Directors have complete access to our senior management and other employees, as well as to our independent registered public accounting firm. Directors also have complete access to counsel, advisors and experts of their choice to assist the board and its committees as needed in discharging its duties.

Retirement Policy

In accordance with our Corporate Governance Guidelines, directors should not be nominated to stand for election after attaining age 75.

Board Committees

Our standing board committees consist of the Audit Committee; Compensation and Talent Development Committee; Corporate Governance Committee; Safety, Sustainability and Technology Committee; and Executive Committee. In addition to these standing board committees, the board may, from time to time, establish ad hoc committees to address particular matters, transactions and projects.

Except for the Executive Committee, all members of all standing board committees are independent directors. The following table sets forth our standing board committees, 2022 meeting information for each committee and membership on each committee as of the mailing date of this proxy statement:

 

Audit

Compensation
and Talent
Development

Corporate
Governance

Safety,
Sustainability
and Technology

Executive

Alan L. Boeckmann

   

 

Andrés Conesa

   

Maria Contreras-Sweet

     

Pablo A. Ferrero

   

 

Jeffrey W. Martin

       

Bethany J. Mayer

     

Michael N. Mears

   

 

Jack T. Taylor

 «

   

Cynthia L. Walker

«

   

 

Cynthia J. Warner

 

 

James C. Yardley

   

 

Number of meetings held in 2022

5

6

5

4

  Committee Member     Committee Chair     Audit Committee Financial Expert


     
18   2023 Proxy Statement

 

Corporate Governance

Audit Committee

Our Audit Committee currently is, and at all times in 2022 was, entirely composed of independent directors under the independence standards for such a committee established by the NYSE and the SEC. It is directly responsible and has sole authority for the appointment, compensation, retention and oversight of our independent registered public accounting firm, which reports directly to the committee. The committee also prepares the report included in this proxy statement under “Audit Committee Report.” In addition, it assists the Board of Directors in fulfilling oversight responsibilities regarding, among other things: 

The company’s internal controls over financial reporting

 The integrity of our financial statements

 Our compliance with legal and regulatory requirements

 

 The independent registered public accounting firm’s qualifications and independence

  The performance of our internal audit function and independent registered public accounting firm

The Audit Committee helps ensure the independence of our independent registered public accounting firm by, among other things, confirming the mandated rotation of the lead audit partner in accordance with SEC rules. The Audit Committee and its Chair are directly involved in the selection of the independent registered public accounting firm’s lead audit partner, including by meeting with the lead audit partner candidate and discussing among the committee members and with management. We most recently rotated our lead audit partner in 2019.

The board has determined that each member of the Audit Committee is financially literate. It also has determined that Mr. Taylor, who chairs the committee, and Ms. Walker, who is a member of the committee, are audit committee financial experts as defined by the rules of the SEC.

Compensation and Talent Development Committee

Our Compensation and Talent Development Committee currently is, and at all times in 2022 was, entirely composed of independent directors under the independence standards for such a committee established by the NYSE and the SEC. It assists the board in the evaluation and compensation of our executives, and it establishes our compensation principles and policies and designs and oversees our executive compensation program. The committee’s responsibilities include, among others:

  Reviewing and approving corporate goals and objectives relevant to the Chief Executive Officer’s compensation
  Evaluating our Chief Executive Officer’s performance in light of those goals and objectives and determining and approving (and recommending for ratification by the board acting solely through the independent directors) his or her compensation level based on the committee’s performance evaluation
  Determining and approving (and periodically reviewing with the board) other executive officer compensation
  Making recommendations to the board with respect to incentive compensation plans and equity-based plans that are subject to board approval
  Evaluating and overseeing risk in our compensation programs
  Overseeing benefit plans and programs
 
  Reviewing and discussing the Compensation Discussion and Analysis required to be included in the company’s proxy statement and annual report on Form 10-K with management and determining whether to recommend to the board that such disclosure be so included
  Producing the report included in this proxy statement under “Compensation and Talent Development Committee Report”
  Reporting to the board annually on succession planning together with the Chairman of the Board and Lead Independent Director, including on principles for executive officer selection
  Reviewing reports on the company’s human capital management policies, initiatives and outcomes, including broader organizational leadership development and career progression and the company’s efforts to build a more diverse and inclusive workplace

     
  2023 Proxy Statement       19

 

Corporate Governance

Corporate Governance Committee

Our Corporate Governance Committee currently is, and at all times in 2022 was, entirely composed of independent directors under the independence standards established by the NYSE. The committee’s responsibilities include, among others:

Identifying individuals qualified to become directors consistent with criteria approved by the board
Recommending to the board nominees to stand for election as directors and candidates to fill board vacancies
Overseeing the evaluation of the board and management
 
Recommending directors for appointment by the board as members of board committees
Developing and recommending to the board corporate governance guidelines
Reviewing public policy priorities on an annual basis, including charitable giving, political contributions and lobbying activities

The committee reviews with the board the skills and characteristics required of directors in the context of the board’s current composition and the needs of the board as a whole in light of the company’s long-term business strategy. It seeks a group of individuals who bring to the board a variety of complementary skills and a range of viewpoints, backgrounds, experiences and other individual qualities and attributes that contribute to overall board diversity. It solicits the names of director candidates from a variety of sources, including, at its discretion, members of the board and search firms. The committee also considers candidates submitted by shareholders pursuant to the process described in Question 32 under “Information About 2024 Shareholder Proposals and Director Nominations” below.

The committee reviews biographical data and other relevant information regarding potential board candidates, may request additional information from the candidates or other sources and, if the committee deems it appropriate, may interview candidates and consult references and others who may assist in candidate evaluation. The committee evaluates all candidates in the same manner, whether identified by shareholders or through other sources.

In considering potential director candidates, the committee evaluates each candidate’s character, integrity, independence, judgment, knowledge, experience, background and other relevant factors to develop an informed opinion of his or her qualifications and ability and dedication to meet the board’s expectations for directors as set forth in our Corporate Governance Guidelines. The committee’s deliberations reflect the board’s requirement that substantially all directors must be independent directors and that all director nominees must be financially literate or must become financially literate within a reasonable period of time after becoming a director. They also reflect the board’s views regarding the appropriate number of directors and the overall composition of the board, including its belief that the membership of the board should reflect diversity and be drawn from a pool of diverse, qualified candidates.

The committee assesses the effectiveness of these director nomination policies and practices as part of its annual review of board composition and board, committee and individual director performance and in its recommendations to the board of nominees to stand for election as directors at the next annual meeting of our shareholders.

The committee, in recommending nominees to stand for election as directors at the Annual Shareholders Meeting, and the board, in approving the director nominees named in this proxy statement, considered, among other things, the individual experience, background, qualifications, attributes and skills of each nominee (including his or her prior contributions to the board), with a view toward constituting a board that, as a whole, is well-qualified to oversee our businesses.

With respect to Dr. Conesa, the committee and the board also considered that he has been the Chief Executive Officer and a director of Grupo Aeroméxico S.A.B. de C.V. since 2005 and that Grupo Aeroméxico filed a voluntary petition under Chapter 11 of the U.S. federal bankruptcy laws in June 2020. The committee and the board concluded that this event does not reflect upon the integrity of Dr. Conesa or his ability and qualifications to serve on our board, but was a direct consequence of the unprecedented global COVID-19 pandemic that resulted in domestic and international travel restrictions and severely impacted the air travel industry.

For additional information about the nominees and their qualifications, see “Proposal 1: Election of the Nine Director Nominees Named in this Proxy Statement.”

     
20   2023 Proxy Statement

 

Corporate Governance

Safety, Sustainability and Technology Committee

Our Safety, Sustainability and Technology Committee currently is entirely composed of independent directors under the independence standards established by the NYSE. This committee’s responsibilities include, among others, assisting the board:

In overseeing the company’s risk management and oversight programs and performance related to health, safety, safety culture, security, cybersecurity, technology, climate change, sustainability, human rights and other related ESG matters (collectively, SST Matters) affecting the company, including employees, customers and the communities in which the company operates
•  In overseeing the policy, laws and regulations pertaining to SST Matters relating to environmental, health and safety laws, regulations and other ESG developments at the global, national, regional and local levels and evaluating ways to address these matters as part of the company’s immediate and longer-term business strategies and operations
 
In overseeing matters relating to technology developments that advance the company’s goals related to SST Matters, including reviewing management’s implementation of risk management protocols concerning cybersecurity issues, including breaches and attacks, privacy and infrastructure security
In reviewing and monitoring the company’s Human Rights Policy and related implementation efforts, including the company’s response to domestic and international developments in human rights that affect the company’s business
In reviewing with management and, where appropriate, making recommendations to management and the Board of Directors regarding the company’s policies, practices and strategies concerning SST Matters

Executive Committee

Our Executive Committee meets on call by the Chairman of this committee to act on emergency or other time-sensitive issues during periods between meetings of the Board of Directors when scheduling or other requirements make it difficult to convene the full board.

Communications with the Board

The board has adopted a Director Communications Screening Policy to facilitate communications with the company’s Board of Directors, which is available on our website under the “Corporate governance” tab of the “Investors” tab. Under this policy, shareholders, employees and other interested parties who wish to communicate with the board, non-management directors as a group, a board committee, the Chair of a board committee or another specific director may do so by writing to the board or the specific directors or group of directors in care of our Corporate Secretary. All such communications regarding accounting, accounting policies, internal accounting controls and procedures, auditing matters, financial reporting processes or disclosure controls and procedures will be relayed to the Audit Committee Chair.

All communications are reviewed by the Corporate Secretary and provided to the directors consistent with a screening policy providing that unsolicited marketing or advertising materials, routine items that can be appropriately addressed by management, and certain other items unrelated to the duties and responsibilities of the board are not relayed to directors. All communications, including any communication that is not relayed, is recorded in a log and made available to any director upon request.

The address to which communications to the board should be sent is:

 

 

C/O Corporate Secretary
Board of Directors
Sempra
488 8th Avenue
San Diego, CA 92101


     
  2023 Proxy Statement       21

 

Corporate Governance

Director Compensation

Overview

The Compensation and Talent Development Committee of the Sempra Board of Directors reviews non-employee director compensation on an annual basis. The committee’s independent compensation consultant, Exequity, annually provides the committee with a report that analyzes the competitiveness of Sempra’s director compensation in total and by component. Any changes to director compensation are approved by the Board of Directors.

Directors who also are employees of the company are not additionally compensated for service as a director. Compensation of Jeffrey W. Martin, our Chairman, Chief Executive Officer and President, is summarized in the 2022 Summary Compensation Table appearing under “Executive Compensation—Compensation Tables” below.

Our 2022 non-employee director compensation program is summarized in the table below.

  2022 Non-Employee Director Compensation Program  
  Board Retainers:      
  Annual Base Retainer $ 90,000  
  Lead Director Retainer $ 40,000  
  Committee Chair Retainers:      
  Audit Committee Chair Retainer $ 20,000  
  Compensation and Talent Development Committee Chair Retainer $ 15,000  
  Other Committee Chair Retainer(A) $ 10,000  
  Committee Member Retainers:      
  Audit Committee Member Retainer $ 20,000  
  Other Committee Member Retainer(B) $ 10,000  
  Equity:      
  Mandatory Deferred Equity $ 50,000  
  Annual Equity Award $ 115,000  
  Initial Equity Award for New Director $ 115,000  
(A) Applicable to the Corporate Governance Committee and Safety, Sustainability and Technology Committee.
(B) Applicable to the Compensation and Talent Development Committee; Corporate Governance Committee; Safety, Sustainability and Technology Committee and Executive Committee.

Retainers

Directors who are not employees of Sempra received annual retainers in 2022 as set forth in the table above. Directors could elect to receive their retainer in cash or to defer it into phantom investment funds (including a fund for which interest is credited at the higher of 110% of the Moody’s Corporate Bond Yield Average or the Moody’s Corporate Bond Yield Average plus 1%) or phantom shares of our common stock.

Equity

Each quarter in 2022, non-employee directors were credited with a number of vested phantom shares of our common stock having a market value of $12,500, which we refer to as Mandatory Deferred Equity, and are required to hold these phantom shares until retirement or other separation from the board. Following the director’s retirement or other separation from the board, the current market value of the shares credited to the director’s account (together with related reinvested dividend equivalents) is paid to the director in cash. Directors also received initial or annual equity awards, which are described below.

In our 2022 director compensation program, any newly appointed non-employee director would have received an initial equity award having a market value of $115,000 and vesting (together with related reinvested dividend equivalents) on the first anniversary of the grant date. Thereafter, at each annual shareholders meeting (other than any annual meeting that is immediately following and in the same calendar year as the director’s initial appointment to the board), each non-employee director who continues to serve as a director receives an annual equity award having a market value of $115,000 that vests (together with related reinvested dividend equivalents) on the date of the next annual shareholders meeting. Directors could elect to receive the initial and annual equity awards in the form of restricted stock units or phantom shares of our common stock.

Unvested restricted stock units or phantom shares of our common stock immediately vest if the director’s service on the board terminates by reason of death, disability or removal without cause. Upon any other termination event, all unvested restricted stock units or phantom shares are forfeited.

     
22   2023 Proxy Statement

 

 

Corporate Governance

Director Compensation Table

We summarize below the 2022 compensation of our non-employee directors who served on our board during the year.

2022 DIRECTOR COMPENSATION TABLE

      Fees Earned or
Paid in Cash
  Stock
Awards(B)
  Change in
Pension Value
and Nonqualified
Deferred
Compensation
Earnings(C)
  All Other
Compensation(D)
  Total  
  Alan L. Boeckmann   $ 110,000     $ 165,000   $ 1,273           $ 20,000   $ 296,273  
  Andrés Conesa   $ 145,000     $ 165,158   $ 1,789       $ 311,947  
  Maria Contreras-Sweet   $ 120,000     $ 165,000   $ 213   $ 4,000   $ 289,213  
  Pablo A. Ferrero   $ 110,000     $ 165,000   $ 494       $ 275,494  
  William D. Jones(A)   $ 58,901     $ 18,407   $ 1,841   $ 25,000   $ 104,149  
  Bethany J. Mayer   $ 120,000     $ 165,000           $ 285,000  
  Michael N. Mears   $ 113,654     $ 165,000   $ 3,464   $ 23,200   $ 305,318  
  Jack T. Taylor   $ 150,000     $ 165,000   $ 17,271   $ 14,000   $ 346,271  
  Cynthia L. Walker   $ 120,000     $ 165,000       $ 25,000   $ 310,000  
  Cynthia J. Warner   $ 155,385     $ 165,158       $ 25,000   $ 345,543  
  James C. Yardley   $ 113,654     $ 165,000       $ 25,000   $ 303,654  
(A) Mr. Jones was not nominated to stand for reelection at our 2022 annual shareholders meeting and retired from the board effective May 13, 2022.
(B) Represents the grant date fair value of the equity awards of restricted stock units and phantom shares of our common stock granted during the year. These amounts represent our grant date estimate of the aggregate compensation expense that we will recognize over the service period of the awards. They are calculated in accordance with GAAP for financial reporting purposes based on the assumptions described in Note 10 of the Notes to Consolidated Financial Statements included in our 2022 Annual Report to Shareholders but disregarding estimates of forfeitures related to service-based vesting conditions. These awards were valued at the fair market value of our shares at the crediting date without reduction for non-transferability. The amounts set forth in this column are equal to the number of shares subject to 2022 awards multiplied by the grant date closing price of Sempra’s common stock. The restricted stock units are settled in shares of Sempra common stock upon vesting. The phantom shares are paid in cash in accordance with the director’s payout election under the terms of the company’s nonqualified deferred compensation plan following the director’s retirement or other separation from the board. Restricted stock unit awards are rounded up to the next whole number of units at grant, while phantom share awards are not rounded at grant but are rounded to the nearest whole number of shares solely for purposes of presentation in these tables.

The following table reflects the components of the stock awards granted to each non-employee director in 2022:

    Mandatory Deferred Equity   Equity Grant   Total  
      Phantom Shares   Restricted Stock
Units
   
  Alan L. Boeckmann $ 50,000   $ 115,000       $ 165,000  
  Andrés Conesa $ 50,000       $ 115,158   $ 165,158  
  Maria Contreras-Sweet $ 50,000   $ 115,000       $ 165,000  
  Pablo A. Ferrero $ 50,000   $ 115,000       $ 165,000  
  William D. Jones(1) $ 18,407           $ 18,407  
  Bethany J. Mayer $ 50,000   $ 115,000       $ 165,000  
  Michael N. Mears $ 50,000   $ 115,000       $ 165,000  
  Jack T. Taylor $ 50,000   $ 115,000       $ 165,000  
  Cynthia L. Walker $ 50,000   $ 115,000       $ 165,000  
  Cynthia J. Warner $ 50,000       $ 115,158   $ 165,158  
  James C. Yardley $ 50,000   $ 115,000       $ 165,000  
(1) Mandatory deferred equity was prorated for Mr. Jones, who retired effective May 13, 2022.

     
  2023 Proxy Statement       23

 

 

Corporate Governance

The following table summarizes outstanding equity balances for each non-employee director at December 31, 2022:

    Phantom
Shares
  Restricted
Stock
Units
  Total  
  Alan L. Boeckmann 27,879     27,879  
  Andrés Conesa 4,136   726   4,862  
  Maria Contreras-Sweet 4,138     4,138  
  Pablo A. Ferrero 5,360     5,360  
  William D. Jones 20,560     20,560   
  Bethany J. Mayer 4,739     4,739  
  Michael N. Mears 5,873     5,873  
  Jack T. Taylor 15,285     15,285  
  Cynthia L. Walker 4,103     4,103  
  Cynthia J. Warner 2,842   726   3,568  
  James C. Yardley 15,022     15,022  

(C) Consists of (i) the aggregate change in the actuarial value of accumulated benefits under defined benefit pension plans and (ii) above-market interest (interest in excess of 120% of the federal long-term rate) on deferred compensation. The 2022 amounts are:
    Change in
Accumulated
Benefits
  Above-Market
Interest
  Total  
  Alan L. Boeckmann                 $ 1,273   $ 1,273  
  Andrés Conesa     $ 1,789   $ 1,789  
  Maria Contreras-Sweet     $ 213   $ 213  
  Pablo A. Ferrero     $ 494   $ 494  
  William D. Jones   (1)   $ 1,841   $ 1,841  
  Bethany J. Mayer            
  Michael N. Mears     $ 3,464   $ 3,464  
  Jack T. Taylor     $ 17,271   $ 17,271  
  Cynthia L. Walker            
  Cynthia J. Warner            
  James C. Yardley            
(1) Only Mr. Jones was entitled to receive pension benefits under a grandfathered pension plan and, upon his retirement on May 13, 2022, he had attained the maximum years of service credit. The annual benefit is based on the annual board retainer at the date the benefit is paid. It commenced upon the latter of the conclusion of his board service or attaining age 65 and continues for a period not to exceed his years of service as a director of predecessor companies plus up to 10 years of service as a director of the company. The actuarial equivalent of the total retirement benefit is paid in a single lump sum upon the conclusion of board service, unless the director has elected to receive the annual benefit. Mr. Jones did not elect to receive the annual benefit upon the conclusion of his board service. As a result, Mr. Jones received a lump sum pension benefit payment of $750,260 following his May 13, 2022 retirement from the board and, as of December 31, 2022, the aggregate actuarial present value of the accumulated benefit under the grandfathered pension plan for Mr. Jones was $0 (compared to $808,803 as of December 31, 2021).
(D) Consists of our contributions to charitable, educational and other non-profit organizations to match the personal contributions of directors on a
dollar-for-dollar basis up to an annual maximum match of $25,000 for each director.

In addition to the compensation for non-employee directors set forth above, Sempra has agreements with these directors that provide for indemnification for monetary damages to the fullest extent permissible under California law, which are intended to help mitigate concern about personal liability in connection with their service for the company.

     
24   2023 Proxy Statement

 

Audit Committee Report

The Audit Committee of the Board of Directors is composed of the four directors named below, all of whom have been determined by the board to be independent directors. The board also has determined that all members of the committee are financially literate and that Mr. Taylor, the Chair of the committee, and Ms. Walker, a member of the committee, are audit committee financial experts as defined by the rules of the Securities and Exchange Commission. The committee’s charter, adopted by the board, is posted on the company’s website at www.sempra.com under the “Corporate governance” tab of the “Investors” tab.

The committee’s responsibilities include appointing the company’s independent registered public accounting firm, pre-approving both audit and non-audit services to be provided by the firm and assisting the board in providing oversight of the company’s financial reporting process. In fulfilling its oversight responsibilities, the committee meets with the company’s independent registered public accounting firm, internal auditors and management to review accounting, auditing, internal control and financial reporting matters.

It is not the committee’s responsibility to plan or conduct audits or to determine that the company’s financial statements and disclosures are complete, accurate and in accordance with accounting principles generally accepted in the United States of America and applicable laws, rules and regulations. Management is responsible for the company’s financial statements, including the estimates and judgments on which they are based, as well as the company’s financial reporting process, accounting policies, internal audit function, internal control over financial reporting, disclosure controls and procedures, and risk management. The company’s independent registered public accounting firm, Deloitte & Touche LLP, is responsible for performing an audit of the company’s annual financial statements, expressing an opinion as to the conformity, in all material respects, of the annual financial statements with accounting principles generally accepted in the United States of America, expressing an opinion as to the effectiveness of the company’s internal control over financial reporting and performing reviews of the company’s quarterly financial statements.

The committee has discussed with Deloitte & Touche LLP the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board and the Securities and Exchange Commission, which require the independent registered public accounting firm to communicate information to the committee regarding the scope and results of its audit of the company’s financial statements, including information with respect to the firm’s responsibilities under auditing standards generally accepted in the United States, significant accounting policies, management judgments and estimates, any significant unusual transactions or audit adjustments, any disagreements with management and any difficulties encountered in performing the audit and other similar matters required to be discussed with the committee by those standards.

The committee also has received from Deloitte & Touche LLP a report providing the disclosures required by the applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Audit Committee concerning independence. Deloitte & Touche LLP also has discussed its independence with the committee and confirmed in the report that, in its professional judgment, it is independent of the company within the meaning of the federal securities laws. The committee also considered whether Deloitte & Touche LLP’s provision of non-audit services to the company and its affiliates is compatible with its independence.

The committee also has reviewed and discussed with the company’s management the audited financial statements included in the company’s Annual Report on Form 10-K for the year ended December 31, 2022, and management’s report on internal control over financial reporting. Management has confirmed to the committee that the financial statements have been prepared with integrity and objectivity and that management has maintained an effective system of internal control over financial reporting. Deloitte & Touche LLP has expressed its professional opinions that the financial statements present fairly, in all material respects, the financial position and results of operations of the company in conformity with accounting principles generally accepted in the United States of America, and that management has maintained an effective system of internal control over financial reporting. In addition, the company’s Chief Executive Officer and Chief Financial Officer have reviewed with the committee the certifications that each will file with the Securities and Exchange Commission pursuant to the requirements of the Sarbanes-Oxley Act of 2002 and the policies and procedures management has adopted to support the certifications.

Based on these considerations, the Audit Committee has recommended to the Board of Directors that the company’s audited financial statements be included in the company’s Annual Report on Form 10-K for the year ended December 31, 2022, for filing with the Securities and Exchange Commission.

Audit Committee
Jack T. Taylor, Chair
Andrés Conesa
Maria Contreras-Sweet
Cynthia L. Walker

     
  2023 Proxy Statement       25

 

Share Ownership

The following table shows the number of shares of our common stock beneficially owned as of March 1, 2023, by each of our directors, by each of our executive officers named in the executive compensation tables in this proxy statement (named executive officers), and by all of our directors and executive officers as a group. The shares of common stock beneficially owned by each of our directors and named executive officers and by our directors and executive officers as a group in each case total less than 1% of our outstanding shares of common stock. In calculating these percentages, shares under the heading “Phantom Shares” are not included because these phantom shares (i) cannot be voted and (ii) may only be settled for cash or cannot be settled for shares of our common stock within 60 days after March 1, 2023. In addition, in calculating these percentages we used the 314,650,040 shares of our common stock that were outstanding as of March 1, 2023.

  Name Beneficial Holdings(A)   Shares Subject
to Exercisable
Options(B)
  Total Without Phantom
Shares
  Phantom Shares(C)   Total Including Phantom Shares  
  Alan L. Boeckmann(D) 6,000     6,000   27,588   33,588  
  Andrés Conesa 8,187     8,187   4,246   12,433  
  Maria Contreras-Sweet(D) 4,063     4,063   3,518   7,581  
  Pablo A. Ferrero 5,492     5,492   4,749   10,241  
  Jeffrey W. Martin 27,799   389,715   417,514   44,974   462,488  
  Bethany J. Mayer 678     678   4,123   4,801  
  Michael N. Mears 2,000     2,000   5,265   7,265  
  Trevor I. Mihalik 19,810   71,610   91,420   17,645   109,065  
  Kevin C. Sagara 14,120   34,484   48,604   14,212   62,816  
  Karen L. Sedgwick 16,388     16,388     16,388  
  Jack T. Taylor 131     131   14,744   14,875  
  Cynthia L. Walker 4,663     4,663   3,482   8,145  
  Peter R. Wall 859     859     859  
  Cynthia J. Warner 1,608     1,608   3,047   4,655  
  James C. Yardley       14,478   14,478  
  Directors and Executive Officers as a Group (15 persons) 111,798   495,809   607,607   162,071   769,678  
(A) None of our directors or executive officers beneficially owned any shares of our 4.875% Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Stock, Series C, as of March 1, 2023; therefore, no such shares are shown in this table.
(B) Shares that may be acquired through the exercise of stock options that currently are exercisable or will become exercisable within 60 days after March 1, 2023.
(C) Phantom shares represent deferred compensation deemed invested in shares of our common stock. These phantom shares track the performance of our common stock but cannot be voted and may only be settled for cash, except for 5,145.83 phantom shares deferred by Mr. Mihalik in connection with the vesting of certain performance-based restricted stock units, which also cannot be voted but may only be settled for shares of our common stock following separation of service from the company. All phantom shares are either fully vested or will vest within 60 days after March 1, 2023.
(D) Mr. Boeckmann and Ms. Contreras-Sweet are not standing for reelection at the Annual Shareholders Meeting and will retire from the board immediately following the meeting.

For information regarding share ownership guidelines applicable to our directors and officers, see “Corporate Governance—Board of Directors—Director Share Ownership Guideline” and “Executive Compensation—Compensation Discussion and Analysis—Share Ownership Guidelines,” respectively.

     
26   2023 Proxy Statement

 

Share Ownership

Based on a review of filings made under Section 13(g) of the Securities Exchange Act of 1934, as amended (Exchange Act), as of December 31, 2022, the following table shows each person or entity known by us to be a beneficial owner of more than 5% of our common stock:

  Name and Address of Beneficial Owner   Shares of Sempra Common Stock   Percent of Class(E)  
 

BlackRock, Inc.(A)

55 East 52nd Street

New York, NY 10055

  29,730,837   9.4%  
 

The Vanguard Group(B)

100 Vanguard Blvd.

Malvern, PA 19355

  28,388,731   9.0%  
 

Capital International Investors, division of

Capital Research and Management Company(C)

333 South Hope Street, 55th Floor

Los Angeles, CA 90071

  23,557,402   7.5%  
 

State Street Corporation(D)

State Street Financial Center

1 Lincoln Street

Boston, MA 02111

  18,020,979   5.7%  
(A) The information regarding BlackRock, Inc. is based solely on a Schedule 13G/A filed by BlackRock, Inc. with the SEC on January 24, 2023 reflecting shares of our common stock beneficially owned as of December 31, 2022 (the BlackRock 13G/A). According to the BlackRock 13G/A, includes sole voting power with respect to 26,947,409 shares and sole dispositive power with respect to 29,730,837 shares.
(B) The information regarding The Vanguard Group is based solely on a Schedule 13G/A filed by The Vanguard Group with the SEC on February 9, 2023 reflecting shares of our common stock beneficially owned as of December 30, 2022 (the Vanguard 13G/A). According to the Vanguard 13G/A, includes shared voting power with respect to 573,466 shares, sole dispositive power with respect to 26,952,457 shares and shared dispositive power with respect to 1,436,274 shares.
(C) The information regarding Capital International Investors, a division of Capital Research and Management Company, as well as certain of its investment management subsidiaries and affiliates (Capital), is based solely on a Schedule 13G/A filed by Capital with the SEC on February 13, 2023 reflecting shares of our common stock beneficially owned as of December 30, 2022 (the Capital 13G/A). According to the Capital 13G/A, includes sole voting power with respect to 23,469,861 shares of our common stock and sole dispositive power with respect to 23,557,402 shares.
(D) The information regarding State Street Corporation is based solely on a Schedule 13G/A filed by State Street Corporation with the SEC on February 7, 2023 reflecting shares of our common stock beneficially owned as of December 31, 2022 (the State Street 13G/A). According to the State Street 13G/A, includes shared voting power with respect to 14,927,600 shares and shared dispositive power with respect to 18,006,339 shares.
(E) The percentages are calculated based on (i) the number of shares of our common stock reflected as being beneficially owned by each beneficial owner as of December 30 or December 31, 2022, as applicable, in its filing made under Section 13(g) of the Exchange Act as described in the other footnotes to this table, and (ii) 314,650,040 shares of our common stock outstanding as of March 1, 2023.

     
  2023 Proxy Statement       27

 

Proposals to be Voted On

Board of Directors Proposals

Proposals 1, 2, 3, 4, 5, 6 and 7 have been included in this proxy statement at the direction of the Board of Directors. The board recommends that you vote “FOR” each of the nine director nominees named in this proxy statement on Proposal 1, “FOR” each of Proposals 2 and 3, for “1 YEAR” on Proposal 4 and “FOR” Proposals 5, 6 and 7.

Proposal 1: Election of the Nine Director Nominees Named in this Proxy Statement

Directors are elected at each annual meeting of our shareholders for terms expiring at the next annual meeting of our shareholders. The Board of Directors has nominated the following individuals to stand for election as directors at the Annual Shareholders Meeting, all of whom are currently directors:

             
  Andrés Conesa   Bethany J. Mayer   Cynthia L. Walker  
  Pablo A. Ferrero   Michael N. Mears   Cynthia J. Warner  
  Jeffrey W. Martin   Jack T. Taylor   James C. Yardley  
             

Properly executed proxies will be voted “FOR” each of these nine nominees unless other voting instructions are provided. If any nominee should become unavailable to serve, the proxies may be voted for a substitute nominee designated by the board, or the board may reduce the authorized number of directors. In no event may the proxies be voted for more than nine nominees.

The board has determined that each non-employee nominee is an independent director under the NYSE independence standards. Information about director independence is described under “Corporate Governance—Board of Directors—Director Independence.”

Of the director nominees named in this proxy statement, 56% are women or people of color; 44% have served less than five years (excluding Bethany J. Mayer from this group due to her service on our board prior to her current appointment), with an average tenure of 6.5 years; and 89% are independent directors under NYSE independence standards. The following summarizes the diversity, tenure and independence of our directors nominated to stand for election at the Annual Shareholders Meeting:

 

     
28   2023 Proxy Statement

 

Proposals to be Voted On

Our board possesses a robust breadth and depth of experience and qualifications to oversee the company’s multiple businesses and global operations. The following chart sets forth the aggregate experience, skills and qualifications of the director nominees named in this proxy statement in areas of particular importance to our businesses:

Skills and Experience

 

Accounting and Finance

Experience in accounting and financial matters, including the oversight of financial statements and operating results

 
 

Business / Markets

Experience as a senior leader specifically in regions and markets where Sempra and its operating companies have operations

 

Corporate Governance

Experience on or supporting a public company board, maintaining board and management accountability, protecting shareholder interests and observing appropriate governance practices

 
 

Cybersecurity

In-depth knowledge of technology and data security systems through industry experience or academia

 
 

Diversity, Equity and Inclusion (DE&I)

Experience participating in or leading executive DE&I councils, chairing/sponsoring employee DE&I councils or business resource groups, signing on to DE&I commitments or mentoring talent from under-represented groups

 
 

Electric and/or Gas Utility

Electric and/or gas utility experience outside of Sempra

 
 

Energy Industry

Experience in the energy industry outside of Sempra

 
 

Government, Regulatory and Public Policy

Experience in managing governmental and regulatory affairs, advancing public policy and community and public relations

 
 

Health and Safety

Experience in oversight of health and safety systems and procedures

 
 

Human Capital Management

Senior experience with human capital management, executive compensation, succession planning and human resource management and development

 
 

Infrastructure Development

Experience in the development and management or oversight of capital projects involving physical systems (e.g., transportation, water and electric systems), real estate acquisitions and construction activities

 
 

Risk Management

Experience in oversight of risk management, or in a senior compliance or regulatory role

 
 

Strategic Planning

Experience in developing corporate strategies and long-term business plans

 
 

Sustainability

Experience in operating responsible and sustainable businesses

 
 

Technology (Operational)

Leadership and oversight experience in technological trends related to clean energy, including emerging technology and/or innovative technology to advance the energy transition

 

     
  2023 Proxy Statement       29

 

Proposals to be Voted On

Biographical information regarding each director nominee named in this proxy statement and his or her qualifications to serve as a director are set forth on the succeeding pages. In each biography below, unless otherwise indicated, the year shown as the beginning of each director’s tenure on the board is the year during which the director was first elected or appointed as a director of Sempra, and the age shown for each director is as of the mailing date of this proxy statement.

Andrés Conesa, Ph.D. | DIRECTOR

Chief Executive Officer, Grupo Aeroméxico, S.A.B. de C.V.

Age: 53

Director since: 2017

Board committees:
Compensation and Talent Development (Chair), Audit and Executive

Other public boards:
Grupo Aeroméxico, S.A.B. de C.V.

Contributions

Dr. Conesa has extensive knowledge of international business activities and has been a leader in promoting sustainable business practices in the air transportation industry. His deep experience with Mexican political, regulatory and financial stakeholders as well as leading organizations through significant political, technology and market change make him a valuable member of our board.

Experience

Dr. Conesa has been the Chief Executive Officer and a director of Grupo Aeroméxico, S.A.B. de C.V., an air transportation services company, since 2005.

Previously, Dr. Conesa held several positions in the Mexico Federal Government: from 2003 to 2005, he was Chairman of the Board of Directors of CINTRA (the holding company of Aeroméxico and Mexicana), and from 1991 to 2004, he served in various capacities at the Mexican Ministry of Finance, most recently as Deputy Undersecretary of Public Credit. He was a member of the Board of Governors of the International Air Transport Association from 2008 until 2018 and served as its Chairman during the 2015 term.

Dr. Conesa is a former director of IEnova, Genomma Lab International and the Mexican Stock Exchange.

     

Pablo A. Ferrero | DIRECTOR

Independent Energy Consultant

Age: 60

Director since: 2013

Board committees:
Corporate Governance and Safety, Sustainability and Technology

Other public boards:
None

Contributions

Mr. Ferrero has extensive executive and board experience in the global energy industry. He has a deep understanding of the energy industry and in particular international energy operations, utility practice and procedure and sustainable development, including clean energy technologies, finance and energy policy. This understanding of international energy operations coupled with his long tenure in roles through the energy industry value chain, make him a valuable member of our board.

Experience

Mr. Ferrero is an independent energy consultant and serves as executive director at MSU Energy, a private power generation company in Argentina.

From 2006 to 2011, Mr. Ferrero served as Executive Vice President for the Southern Cone at AEI Energy, a power generation and distribution and gas transmission and distribution company. From 2004 to 2006, he was the Chief Executive Officer of Transportadora de Gas del Sur S.A. Prior to that, he served in several executive functions at Perez Companc. He is a former director of Metrogas, Pampa Energía, RDA Renting, S.A., Petrobras Energía, EDESA Holding, Emgasud, Servicios Petroleros Argentina, Refinor, Oldelval, Termap, Chilquinta Energía (Chile), Luz del Sur (Peru), Petrolera Andina (Bolivia) and Promigas (Colombia). He was Chairman of the Board of Directors of TGS, Transener, Edesur, Emdersa and EDEN.

Mr. Ferrero served as a member of the Board of Directors of the Argentine Business Council for Sustainable Development, a partner organization to the World Business Council for Sustainable Development, from 2004 to 2006.

     

     
30   2023 Proxy Statement

 

Proposals to be Voted On

Jeffrey W. Martin | CHAIRMAN OF THE BOARD

Chief Executive Officer and President, Sempra

Age: 61

Director since: 2018

Board committees:
Executive (Chair)

Other public boards:
Oncor

Contributions

Mr. Martin, in his position as Chairman and Chief Executive Officer of Sempra, oversees the management of all aspects of our business and leads the overall governance activities of the Board of Directors. His performance and leadership in previous senior executive positions at Sempra, his experience as an employee of the company and its subsidiaries for more than 18 years, and his broad understanding of finance, law and the energy industry, including renewables, emerging technologies and global energy policy, make him a valuable member and leader of our board.

Experience

Mr. Martin has served as a director and as the Chairman and Chief Executive Officer of Sempra since 2018, and since 2020 he also has served as Sempra’s President.

Previously, Mr. Martin served as Executive Vice President and Chief Financial Officer of the company since 2017. Prior to that, he served as the Chief Executive Officer and a director at SDG&E beginning in 2014 and was appointed as President and Chairman in 2015, serving in each of these offices through 2016. From 2010 to 2013, Mr. Martin served as Chief Executive Officer and President of Sempra U.S. Gas & Power (USGP), a previous business unit of the company, and USGP’s predecessor organization, Sempra Generation. Earlier, he served as Vice President of Investor Relations for Sempra.

Prior to joining the company in 2004, Mr. Martin was Chief Financial Officer of NewEnergy, Inc. He also formerly served as corporate counsel at Unisource Energy Corporation and was an attorney at the law firm of Snell & Wilmer, LLP. Mr. Martin currently serves as a director of Oncor, which Sempra indirectly owns at the 80.25% level.

Mr. Martin serves on the board of directors of the American Petroleum Institute and on the board of trustees of the University of San Diego. He also is a governor of the Oil and Gas community and Co-Chair of the Electricity community for the World Economic Forum, and represents Sempra as part of the International Business Council of the World Economic Forum. He previously served on the boards of directors of SoCalGas, the Edison Electric Institute, Business Roundtable, California Chamber of Commerce and National Association of Manufacturers.

     

     
  2023 Proxy Statement       31

 

Proposals to be Voted On

Bethany J. Mayer | DIRECTOR

Executive Advisor, Siris Capital Group, LLC

Age: 61

Director since: 2019

Board committees:
Safety, Sustainability and Technology (Chair) and Executive

Other public boards:
Box Inc. and LAM Research Corporation

Contributions

Ms. Mayer has extensive public company board, executive management and technology experience. Her deep experience in network security, MSc in cybersecurity and experience leading digital transformation along with her leadership and governance experience make her a valuable member of our board.

Experience

Ms. Mayer previously served as a director of Sempra from February 2017 until October 2018 when she was appointed Executive Vice President – Corporate Development and Technology of the company from November 2018 to January 2019.

From January 2018 to May 2021, she was an Executive Partner at Siris Capital Group LLC, a private equity firm that invests in technology companies, and in May 2021 became an Executive Advisor to Siris. From April to December 2017, Ms. Mayer was the President of Ixia Solutions Group of Keysight Technologies, an electronics testing and measurement equipment and software manufacturing company. From 2014 until its acquisition by Keysight Technologies in 2017 she was the President and Chief Executive Officer and a director of Ixia, a provider of testing, visibility and security solutions for physical and virtual networks. Prior to joining Ixia, Ms. Mayer held several key executive roles at HP since 2010, including as Senior Vice President and General Manager of HP’s Network Business Unit. Prior to joining HP, Ms. Mayer served as Senior Vice President, Worldwide Marketing and Corporate Development at Blue Coat Systems and, before that, she held roles at Cisco Systems, Apple Computer and Lockheed Martin.

Ms. Mayer holds a Master of Science degree in cybersecurity risk and strategy from New York University, an executive Master of Business Administration from California State University, Monterey Bay, and a Bachelor of Science from Santa Clara University.

Ms. Mayer is the non-executive Chair of the board of Box Inc. and Chair of its compensation committee. Ms. Mayer also is a board member of LAM Research Corporation. She is a former director of Marvell Technology Group Ltd and Delphi Automotive plc.

     

Michael N. Mears | DIRECTOR

Retired, Chairman, President and Chief Executive Officer, Magellan Midstream Partners, L.P.

Age: 60

Director since: 2018

Board committees:
Corporate Governance and Safety, Sustainability and Technology

Other public boards:
Devon Energy Corporation

Contributions

Mr. Mears possesses extensive executive and public company board and energy industry experience, including in midstream investments and operations. His commercial and operational expertise in the context of global energy markets and the energy transition make him a valuable member of our board.

Experience

Michael N. Mears served as Chairman, President and Chief Executive Officer of Magellan Midstream Partners, L.P., which transports, stores and distributes petroleum and petroleum products, from 2011 to 2022. From 2008 through 2011, he served as Chief Operating Officer of Magellan. Mr. Mears was a Senior Vice President of Magellan GP, LLC, general partner of Magellan, from 2007 through 2008 and a Vice President from 2004 to 2007.

Prior to joining Magellan in 2004, he served as a Vice President of Subsidiaries of The Williams Companies, Inc. from 1996 to 2004. Mr. Mears also worked in various management positions with Williams Pipeline Company (now known as Magellan Pipeline Company, L.P.) since joining Williams in 1985.

Mr. Mears is a director of Devon Energy Corporation. He served as a member of the board of directors of the Association of Oil Pipelines from 2003 until 2022.

     

     
32   2023 Proxy Statement

 

Proposals to be Voted On

Jack T. Taylor | DIRECTOR

Retired, Chief Operating Officer – Americas and
Executive Vice Chair of U.S. Operations, KPMG LLP

Age: 71

Director since: 2013

Board committees:
Audit (Chair), Compensation and Talent Development and Executive

Other public boards:
Genesis Energy LP and Murphy USA Inc.

Contributions

Mr. Taylor has extensive experience with financial, capital markets and public accounting issues as well as a deep knowledge of the energy industry, including global energy markets and the clean energy sector. His experience with financial, capital markets and public accounting issues, together with his executive experience and knowledge of the energy industry, makes him a valuable member of our board.

Experience

Mr. Taylor was the Chief Operating Officer – Americas and Executive Vice Chair of U.S. Operations for KPMG LLP from 2005 to 2010. Mr. Taylor sponsored formation of the KPMG Diversity Advisory Board in 2007 and served as its Chair until his retirement in 2010. From 2001 to 2005, he served as the Vice Chairman of U.S. Audit and Risk Advisory Services for KPMG. He spent over 35 years as a public accountant at KPMG, many of which he worked in a leadership capacity.

Mr. Taylor is an NACD Board Leadership Fellow and a member of the NACD Audit Committee Chair Advisory Council.

Mr. Taylor is a director of Genesis Energy LP and Murphy USA Inc.

     

Cynthia L. Walker | DIRECTOR

Chief Executive Officer, Tree Energy Solutions (TES) Americas, and
Chief Strategy Officer, TES Group

Age: 46

Director since: 2019

Board committees:
Audit and Safety, Sustainability and Technology

Other public boards:
Chord Energy Corporation

Contributions

Ms. Walker has extensive knowledge and executive experience in the clean energy sector, including hydrogen, green hydrogen, natural gas and energy industries. Her experience in the global energy market and the energy transition as well as her prior experience in investment banking, finance and mergers and acquisitions, make her a valuable member of our board.

Experience

Ms. Walker has been Chief Executive Officer of TES Americas and Chief Strategy Officer of TES Group, a green hydrogen company, since October 2022.

Ms. Walker served as Senior Vice President, Midstream & Marketing, for Occidental Petroleum Corporation, an integrated oil and gas exploration and production company, from 2016 until 2019. From 2014 to 2016, she was Occidental’s Senior Vice President, Strategy and Development. She joined Occidental in 2012 as Executive Vice President and Chief Financial Officer. Prior to that, Ms. Walker was a managing director at Goldman Sachs & Co. where she worked for 12 years providing strategic advice in high-profile energy industry transactions as a senior member of the Global Natural Resources Group and Mergers and Acquisitions Group.

Ms. Walker is a director of Chord Energy Corporation and of the Houston Zoo and the Children’s Museum of Houston.

     

     
  2023 Proxy Statement       33

 

Proposals to be Voted On

Cynthia J. Warner | LEAD INDEPENDENT DIRECTOR

Retired, President and Chief Executive Officer, Renewable Energy Group, Inc.

Age: 64

Director since: 2019

Board committees:
Corporate Governance (Chair), Compensation and Talent Development and Executive

Other public boards: Chevron Corporation

Contributions

Ms. Warner brings extensive experience and leadership in the global energy transition, particularly with respect to clean and renewable energy, as well as experience with carbon credits, offsets and other clean energy strategies. Her service as an advisor on key government policy task forces has deepened her expertise on these matters in a state and federal regulatory context. This industry leadership experience makes her a valuable member of our board.

Experience

Ms. Warner served as President and Chief Executive Officer of Renewable Energy Group, Inc. (REGI), an advanced biofuel producer, from January 2019 until its acquisition by Chevron Corporation in May 2022.

Ms. Warner previously served as Executive Vice President of Operations for Andeavor (formerly Tesoro Corporation), a refiner and marketer of petroleum products, from 2016 until 2018, when Andeavor was acquired by Marathon Petroleum Corp. Prior to that, she served as Andeavor’s Executive Vice President of Strategy and Business Development from 2014 to 2016. Ms. Warner previously served as Chairman and Chief Executive Officer of Sapphire Energy, Inc. after a 25-year career at BP and Amoco, Inc. (prior to its acquisition by BP).

Ms. Warner is a member of the National Petroleum Council, Board of Visitors of Vanderbilt University School of Engineering and Advisory Board to the Columbia University Center for Global Energy Policy. Ms. Warner previously served on President Obama’s Renewable Energy Task Force and currently serves on the Iowa Governor’s Carbon Sequestration Task Force.

Ms. Warner was appointed as a director of Chevron Corporation in June 2022 and is a former director of REGI and IDEX Corporation. She serves as our lead independent director.

     

James C. Yardley | DIRECTOR

Retired, Executive Vice President, El Paso Corporation

Age: 71

Director since: 2013

Board committees:
Corporate Governance and Safety, Sustainability and Technology

Other public boards:
None

Contributions

Mr. Yardley has extensive executive and public company board experience in the energy industry, including natural gas and in particular the midstream portion of that industry. This specialized energy industry experience, together with Mr. Yardley’s executive and public company board experience, make him a valuable member of our board.

Experience

Mr. Yardley was Executive Vice President of El Paso Corporation, a natural gas pipeline company and oil and gas producer, and President of its Pipeline Group from 2006 through 2012. Mr. Yardley was also the President and Chief Executive Officer of El Paso Pipeline GP Company LLC, the general partner of El Paso Pipeline Partners, L.P., a master limited partnership that owned and operated interstate natural gas transportation pipelines, storage and other midstream assets, from 2007 through 2012.

From 1998 through 2006, he was the President of Southern Natural Gas Company, previously a unit of El Paso Corporation and now a unit held jointly by Kinder Morgan Inc. and The Southern Company.

Mr. Yardley is a former director of El Paso Pipeline GP Company LLC, and Scorpion Offshore Ltd.

     

     
34   2023 Proxy Statement

 

Proposals to be Voted On

Proposal to be Voted on, Board Recommendation and Vote Required

We are asking our shareholders to vote to elect each of the nine nominees named in this proxy statement as directors of our company. We have not received notice of any additional candidates to be nominated to stand for election as directors at the Annual Shareholders Meeting and the deadline for notice of the nomination of additional candidates has passed. Consequently, the election of directors will be an uncontested election and our bylaw provisions providing for majority voting in uncontested elections will apply. Under these provisions, to be elected as a director, a nominee must receive votes “FOR” his or her election constituting a majority of the shares represented and voting at the Annual Shareholders Meeting at which a quorum is present, and the approving majority also must represent more than 25% of our outstanding shares. If a nominee who currently is serving as a director does not receive sufficient “FOR” votes to be reelected, the director will cease to be a director not later than 90 days following the certification of the election results, and the resulting vacancy on the board may be filled by the remaining directors. If a nominee receives sufficient “FOR” votes, he or she will be reelected to serve until our next annual shareholders meeting and until his or her successor has been elected and qualified or until his or her earlier resignation or removal.

The Board of Directors recommends that you vote “FOR” each of the nine nominees named in this proxy statement for election to the board on Proposal 1.

     
  2023 Proxy Statement       35

 

Proposals to be Voted On

Proposal 2: Ratification of Appointment of Independent Registered Public
Accounting Firm


The Audit Committee of the Board of Directors has retained Deloitte & Touche LLP as the independent registered public accounting firm to audit our financial statements and the effectiveness of our internal control over financial reporting for 2023. Deloitte & Touche LLP has served as our independent registered public accounting firm continuously since our inception in 1998. Deloitte & Touche LLP or its predecessors also have served as the independent registered public accounting firm of SDG&E and SoCalGas or their parent companies continuously since 1935 and 1937, respectively. Representatives of Deloitte & Touche LLP are expected to attend the Annual Shareholders Meeting, will have the opportunity to make a statement if they desire to do so and are expected to be available to respond to appropriate questions from shareholders.

The following table shows fees paid to Deloitte & Touche LLP for services provided to Sempra in 2022 and 2021:

   

2022

 

2021

 

(Dollars in Thousands)

 

Fees

% of Total

 

Fees

 

% of Total

 

Audit fees

                   

Consolidated financial statements, internal controls audits and subsidiary audits

 

$

10,872

   

$

10,166 

     

Regulatory filings and related services

 

$

290

   

$

807 

     

Total audit fees

 

$

11,162

83% 

 

$

10,973 

 

81% 

 

Audit-related fees

                   

Employee benefit plan audits

 

$

520 

   

$

520 

     

Other audit-related services(A)

 

$

1,245

   

$

1,840 

     

Total audit-related fees

 

$

1,765

13%

 

$

2,360 

 

17%

 

Tax fees(B)

 

$

477

3%

 

$

272 

 

2%

 

All other fees(C)

 

$

94

1%

 

$

13 

 

—   

 

Total fees

 

$

13,498

100%

 

$

13,618 

 

100%

 

(A)   Other audit-related services primarily relate to statutory audits and agreed upon procedures.

(B)   Tax fees relate to tax consulting and compliance services.

(C)   All other fees relate to training and conferences.

The Audit Committee is directly responsible for the appointment, compensation, retention and oversight, including the oversight of the audit fee negotiations, of our independent registered public accounting firm. Except where pre-approval is not required by SEC rules, the committee pre-approves all audit, audit-related and permissible non-audit services provided by Deloitte & Touche LLP for Sempra and its subsidiaries, including all services provided by Deloitte & Touche LLP for Sempra in 2022 and 2021. The committee’s pre-approval policies and procedures provide for the general pre-approval of specific types of services and give detailed guidance to management as to the services that are eligible for general pre-approval, and they require specific pre-approval of all other permitted services. For both types of pre-approval, the committee considers whether the services to be provided are consistent with maintaining the firm’s independence. The committee’s policies and procedures also delegate authority to the Chair of the committee to address any requests for pre-approval of services between committee meetings, with any pre-approval decisions to be reported to the committee at its next scheduled meeting.

The Audit Committee regularly meets in executive session with only committee members present and with Deloitte & Touche LLP’s lead engagement partner present, in each case without members of management present. This provides an opportunity for the Audit Committee to assess Deloitte & Touche LLP’s effectiveness and independence for determining reappointment as well as consideration of rotating audit firms. The Audit Committee considers various factors in determining whether to reappoint Deloitte & Touche LLP, including the firm’s level and quality of service and professional integrity and objectivity in executing audits; professional qualifications; understanding of our businesses and industry; capability and expertise in handling the breadth and complexity of our businesses; and independence policies and processes for maintaining independence. The committee also considers external data such as peer reviews and recent Public Company Accounting Oversight Board reports on the firm, as well as the firm’s tenure in serving as our independent registered public accounting firm. Although auditor tenure is one data point to be considered, the Public Company Accounting Oversight Board has acknowledged that there is no conclusive linkage between tenure and audit quality. Deloitte & Touche LLP’s tenure as our independent registered public accounting firm has allowed it to gain institutional knowledge and a deep understanding of our businesses, accounting policies, and internal control over financial reporting, which the Audit Committee considers beneficial. In addition, the Audit Committee and its Chair are directly involved in the selection of the new lead engagement partner in connection with the mandated five-year rotation of the audit firm’s lead engagement partner, which most recently occurred in 2019.

     
36   2023 Proxy Statement

 

Proposals to be Voted On

Proposal to be Voted On, Board Recommendation and Vote Required

We are asking our shareholders to ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for 2023. Ratification would be advisory only, but the Audit Committee may reconsider the appointment if it is not ratified. The members of the Audit Committee and the Board of Directors believe the continued retention of Deloitte & Touche LLP as our independent registered public accounting firm is in the best interests of our company and our shareholders. Ratification requires the receipt of “FOR” votes constituting a majority of the shares represented and voting at the Annual Shareholders Meeting at which a quorum is present, and the approving majority also must represent more than 25% of our outstanding shares.

The Board of Directors recommends that you vote “FOR” Proposal 2.


     
  2023 Proxy Statement       37

 

Proposals to be Voted On

Proposal 3: Advisory Approval of Our Executive Compensation


Pursuant to Section 14A of the Exchange Act, we are asking our shareholders to approve, on an advisory basis, a resolution on the compensation of the named executive officers as reported in this proxy statement. This proposal, commonly known as a “say-on-pay” proposal, gives our shareholders the opportunity to express their views on our 2022 executive compensation program. We currently provide our shareholders the opportunity to vote on a say-on-pay proposal every year, and as a result, the next vote on a say-on-pay proposal following the Annual Shareholders Meeting is expected to occur at our 2024 annual shareholders meeting, subject to the voting results on Proposal 4 described below and, ultimately, our Board of Directors’ determination of the frequency of future advisory votes on our executive compensation.

Proposal to be Voted on, Board Recommendation and Vote Required

We are asking our shareholders to indicate their support for the compensation of our named executive officers as described in this proxy statement by voting in favor of the following resolution:

“RESOLVED, that, as an advisory matter, the shareholders of Sempra approve the compensation paid to the company’s named executive officers as disclosed in the company’s 2023 proxy statement pursuant to Item 402 of Regulation S-K promulgated by the U.S. Securities and Exchange Commission, including the Compensation Discussion and Analysis, compensation tables and narrative discussion.”

Approval requires the receipt of “FOR” votes constituting a majority of the shares represented and voting at the Annual Shareholders Meeting at which a quorum is present, and the approving majority also must represent more than 25% of our outstanding shares.

Even though this say-on-pay vote is advisory and will not be binding on the company, the Compensation and Talent Development Committee and the Board of Directors value the opinions of our shareholders. Accordingly, to the extent there is a significant vote against the compensation of our named executive officers, we will consider our shareholders’ concerns, and the Compensation and Talent Development Committee will evaluate and determine what actions may be necessary or appropriate to address those concerns when making future executive compensation decisions. However, shareholders should note that this advisory vote on executive compensation occurs well after the beginning of the current compensation year. In addition, the different elements of our executive compensation programs are designed to operate in an integrated manner and to complement one another. Therefore, in many cases, it may not be appropriate or feasible to change our executive compensation programs in consideration of any one year’s advisory vote on executive compensation by the time of the following year’s annual meeting of shareholders.

The Board of Directors recommends that you vote “FOR” Proposal 3.


     
38   2023 Proxy Statement

 

Proposals to be Voted On

Proposal 4: Advisory Approval of How Often Shareholders Will Vote on an Advisory Basis on Our Executive Compensation


Pursuant to Section 14A of the Exchange Act, we are asking shareholders to vote, on an advisory basis, on whether future advisory votes on executive compensation of the nature reflected in Proposal 3 above should occur every year, every two years or every three years. This proposal, commonly known as a “say-when-on-pay” proposal, gives our shareholders the opportunity to express their views on how often shareholders will vote on an advisory basis on our executive compensation. We currently provide our shareholders the opportunity to vote on a say-on-pay proposal every year.

Proposal to be Voted on, Board Recommendation and Vote Required

In 2011 and 2017, after careful consideration and dialogue with our shareholders, the Board of Directors determined that holding an advisory vote on executive compensation every year was the most appropriate policy for the company. The board continues to believe that an annual say-on-pay vote is in the best interests of our company and our shareholders and again recommends that shareholders vote for future advisory votes on executive compensation to occur every year.

Although many elements of our executive compensation programs are designed to promote a long-term connection between pay and performance, the board recognizes that executive compensation disclosures are made annually and holding an annual advisory vote on executive compensation provides the company with more direct and immediate feedback from shareholders on our compensation philosophy, policies, practices and disclosures. As a result, the board believes that holding an advisory vote on executive compensation every year is consistent with our practice of regularly seeking input and engaging in dialogue with our shareholders on executive compensation matters and other corporate governance topics.

Shareholders will be able to select one of four choices when voting on this proposal: “1 YEAR,” “2 YEARS,” “3 YEARS” or “ABSTAIN.” Shareholders are not voting to approve or disapprove the board’s recommendation. The option of “1 YEAR,” “2 YEARS” or “3 YEARS” that receives the greatest number of affirmative votes will be the shareholders’ advisory recommendation of the frequency of future advisory votes on executive compensation.

Even though this say-when-on-pay vote is advisory and will not be binding on the company, the board and the Compensation and Talent Development Committee will carefully review the voting results and will take them into consideration when determining the frequency of future say-on-pay votes. Notwithstanding the board’s recommendation and the outcome of the shareholder vote on this proposal, the board may decide to conduct advisory votes on our executive compensation on a more or less frequent basis based on factors it deems relevant, which may include feedback from shareholders and any adoption of material changes to our executive compensation programs.

The Board of Directors recommends that you vote for “1 YEAR” on Proposal 4.

     
  2023 Proxy Statement       39

 

Proposals to be Voted On

Proposal 5: Amendment to Our Articles of Incorporation to Increase the
Number of Authorized Shares of Our Common Stock


Our Board of Directors has approved, and is recommending to our shareholders for approval, an amendment to our articles of incorporation to increase the number of authorized shares of our common stock from 750 million to 1,125 million, and to correspondingly increase the number of authorized shares of our capital stock from 800 million to 1,175 million. The proposed amendment would not increase the authorized number of shares of our preferred stock, which is 50 million shares.

Reasons for the Proposal

Under our articles of incorporation, the total number of shares of common stock we currently have authority to issue is 750 million. As of March 1, 2023, approximately 314,650,040 shares of our common stock were issued and outstanding, and approximately 26.8 million shares of our common stock were reserved for future issuance under our equity-based plans (including under our direct stock purchase plan and 401(k) savings plans). As a result, approximately 408.6 million shares of our common stock, or approximately 54.5% of our total authorized common stock, remain available for issuance for future purposes. The adoption of the proposed amendment would provide an additional 375 million shares of our common stock for future issuance. As of March 1, 2023, assuming the approval of this Proposal 5 and the corresponding amendment of our articles of incorporation as of such date, our issued shares of common stock, together with the shares reserved for future issuance, as a percentage of our authorized shares of common stock would have been approximately 30.4%.

Our Board of Directors believes it is advisable and in the best interests of our company and our shareholders to increase the number of shares of common stock we are authorized to issue to provide a sufficient reserve of shares for the company’s future business and financial needs. These additional authorized shares would provide the company greater flexibility in considering transactions and other corporate purposes for which we may use these shares in the future, including, among others, for (i) stock dividends or stock splits, (ii) sales of common stock or securities convertible into or exchangeable or exercisable for common stock to enhance capital and liquidity, (iii) acquisitions of businesses or assets, (iv) grants and awards under our equity compensation plans and (v) issuances under our direct stock purchase plan and 401(k) savings plans. Having these shares available for issuance would allow us to issue these shares without the expense and delay of a shareholders meeting, unless such action is required by applicable law or the rules of the NYSE. The rules of the NYSE require shareholder approval prior to issuing shares in certain instances, such as when the number of shares to be issued in a transaction would exceed 20% of the number of shares outstanding prior to the issuance, subject to certain exceptions.

We have no plans at this time, written or otherwise, to issue the 375 million shares of common stock we are seeking to add to the number of authorized shares of our common stock in this Proposal 5. However, given the increase of nearly 425% in the market price of our common stock from the establishment of our existing common share authorization in 1998 through March 1, 2023, the Board of Directors may consider a potential stock dividend at some point in the future, assuming this proposal is approved by our shareholders, the amendment to our articles of incorporation to implement the increase to our common share authorization becomes effective, and the Board of Directors determines that (i) market conditions are favorable, (ii) the price of the company's common stock and other factors it deems relevant support such a transaction and (iii) it would be in the best interests of our company and our shareholders.

Possible Effects

The authorization of the additional shares of our common stock pursuant to this proposal would not have any immediate dilutive effect on the proportionate voting power or other rights of existing shareholders. However, to the extent that the additional authorized shares of our common stock are issued in the future, they may, depending on the circumstances of the issuance, decrease existing shareholders’ percentage equity ownership in our company and, depending on the prices at which they are issued, could be dilutive to existing shareholders and have a negative effect on the market price of our common stock. Under our articles of incorporation, shareholders do not have preemptive rights with respect to the issuance of shares of our common stock, which means that current shareholders do not have a prior right to purchase any new issue of our common stock in order to maintain their proportionate ownership of our common stock. The additional shares of our common stock, if and when issued, would have the same rights and privileges as the shares of our common stock that are currently authorized.

The proposed increase in the number of authorized shares of common stock is not intended to impede a change in control of the company, and we are not aware of any current efforts to acquire control of the company. It is possible, however, that the authorization of the additional shares of our common stock pursuant to this proposal could, under certain circumstances, enable the Board of Directors to delay or prevent a change in control by providing the company the capability to engage in actions that would be dilutive to a potential acquirer, pursue alternative transactions or otherwise increase the potential cost to acquire control of the company.

     
40   2023 Proxy Statement

 

Proposals to be Voted On

Proposal to be Voted on, Board Recommendation and Vote Required

We are asking our shareholders to approve an amendment to our articles of incorporation to increase the number of authorized shares of our common stock from 750 million to 1,125 million and to correspondingly increase the number of authorized shares of our capital stock from 800 million to 1,175 million.

If approved, the amendment would amend and restate Section 1 of Article III of our articles of incorporation as follows:

“The total number of shares of all classes of stock that the Corporation is authorized to issue is 1,175,000,000, of which 1,125,000,000 shall be shares of common stock, no par value (“Common Stock”), and 50,000,000 shall be shares of preferred stock (“Preferred Stock”). The Preferred Stock may be issued in one or more series.”

The amendment described in this proposal also is shown in the marked copy of a certificate of amendment of our articles of incorporation attached as Appendix F to this proxy statement.

Approval of this proposal requires the affirmative vote of a majority of the outstanding shares of our common stock entitled to vote at the Annual Shareholders Meeting. Consequently, abstentions will have the same effect as a vote against this proposal.

If approved by our shareholders, we plan to prepare a certificate of amendment of our articles of incorporation to reflect the amendment described in this proposal and file such certificate of amendment with the Secretary of State of the State of California promptly following approval by our shareholders at the Annual Shareholders Meeting. We expect that such certificate of amendment would become effective at the time of that filing or shortly thereafter. If Proposals 6 and 7 are also approved by our shareholders at the Annual Shareholders Meeting, we expect the certificate of amendment we file would also include the amendments contemplated by those proposals. If any of this Proposal 5 or Proposal 6 or Proposal 7 is approved but not the others or if any two of these proposals are approved but not the third, we expect the certificate of amendment we file would reflect the amendment(s) in the proposal(s) that are approved.

In making this recommendation, our Board of Directors is retaining the ability to, without further vote by our shareholders, delay or abandon the amendment set forth in this proposal, in whole but not in part, at any time if the Board of Directors concludes that such action would be in the best interests of our company and our shareholders.

The Board of Directors recommends that you vote “FOR” Proposal 5.


     
  2023 Proxy Statement       41

 

Proposals to be Voted On

Proposal 6: Amendment to Our Articles of Incorporation to Change the Company’s Legal Name


Our Board of Directors has approved, and is recommending to our shareholders for approval, an amendment to our articles of incorporation to change the company’s legal name to “Sempra” from “Sempra Energy”.

Reasons for the Proposal

Our Board of Directors believes it is in the best interests of our company and our shareholders to change our corporate name to “Sempra” to better reflect the company’s current and anticipated future operations. Today, the Sempra family of companies primarily engages and has expertise in infrastructure and infrastructure development, and we are building a strong foundation throughout our organization to continue to be primarily an infrastructure company. Although our infrastructure supports the delivery of energy, our financial model is designed to limit our exposure to energy commodity prices. As a result, our Board of Directors believes the removal of “Energy” from our legal name better captures our financial exposure to the price of energy, while maintaining the Sempra name, which has long been associated with infrastructure and infrastructure development. Additionally, this change to our legal name would align with our current practices, as we currently are doing business as “Sempra”.

The name change will not have any effect on the rights of our existing shareholders. In addition, changing our corporate name will not affect the validity or transferability of stock certificates representing presently outstanding shares, and our shareholders will not be required to exchange any stock certificates presently held by them. Our common stock is currently listed for trading on the NYSE under the symbol “SRE” and on the Mexican Stock Exchange (Bolsa Mexicana de Valores, S.A.B. de C.V.) under the trading symbol SRE.MX. If the amendment described in this Proposal 6 is approved and the change to our company name becomes effective, our common stock will continue to be listed on these exchanges and trade under such symbols.

Proposal to be Voted on, Board Recommendation and Vote Required

We are asking our shareholders to approve an amendment to our articles of incorporation to change the company’s legal name to “Sempra” from “Sempra Energy”. The amendment also would update the defined term for the company to include the term “corporation” as well as “Corporation,” to align with the use of these terms in our articles of incorporation.

If approved, the amendment would amend and restate Article I of our articles of incorporation as follows:

“NAME

The name of the corporation is Sempra (hereinafter, the “Corporation” or the “corporation”).”

The amendment described in this proposal also is shown in the marked copy of a certificate of amendment of our articles of incorporation attached as Appendix F to this proxy statement.

Approval of this proposal requires the affirmative vote of a majority of the outstanding shares of our common stock entitled to vote at the Annual Shareholders Meeting. Consequently, abstentions will have the same effect as a vote against this proposal.

If approved by our shareholders, we plan to prepare a certificate of amendment of our articles of incorporation to reflect the amendment described in this proposal and file such certificate of amendment with the Secretary of State of the State of California promptly following approval by our shareholders at the Annual Shareholders Meeting. We expect that such certificate of amendment would become effective at the time of that filing or shortly thereafter. If Proposals 5 and 7 are also approved by our shareholders at the Annual Shareholders Meeting, we expect the certificate of amendment we file would also include the amendments contemplated by those proposals. If any of Proposal 5, this Proposal 6 or Proposal 7 is approved but not the others or if any two of these proposals are approved but not the third, we expect the certificate of amendment we file would reflect the amendment(s) in the proposal(s) that are approved.

In making this recommendation, our Board of Directors is retaining the ability to, without further vote by our shareholders, delay or abandon the amendment set forth in this proposal, in whole but not in part, at any time if the Board of Directors concludes that such action would be in the best interests of our company and our shareholders.

The Board of Directors recommends that you vote "FOR" Proposal 6.


     
42   2023 Proxy Statement

 

Proposals to be Voted On

Proposal 7: Amendments to Our Articles of Incorporation to Make Certain Technical and Administrative Changes


Our Board of Directors has approved, and is recommending to our shareholders for approval, amendments to our articles of incorporation to remove certain obsolete references and make other technical and administrative changes.

Reasons for the Proposal

The amendments to be approved by this proposal are to remove obsolete references that are outdated and no longer relevant and make certain other technical and administrative changes. These proposed changes are as follows:

 

Removing language from Article III of our articles of incorporation that referred to Sections 502 and 503 of the General Corporation Law of California, because such sections have been repealed or modified such that the reference is no longer needed.

 

Removing language in Article IV of our articles of incorporation stating that “[e]ach director elected after May 8, 2006 shall be elected to hold office until the next annual meeting of shareholders.” This language, when originally adopted, was transitional in nature only, as it was intended to implement our shift away from a staggered Board of Directors in 2006 and is no longer necessary.

 

Adding language to Article IV of our articles of incorporation to clarify that board committees do not have the authority to fill vacancies on our board. This is consistent with the General Corporation Law of California, and the added language merely serves to clarify this alignment.

 

Amending Article V of our articles of incorporation to remove language stating that Article V will become effective only when the company becomes a “listed corporation” within the meaning of Section 301.5 of the General Corporation Law of California and to add language to clarify that Article V shall remain effective for so long as the company remains a “listed corporation.” The language proposed to be removed was originally adopted before the company became such a listed corporation, which occurred in 1998, and has become obsolete. The language proposed to be added aligns with the General Corporation Law of California, which provides that shareholders are entitled to cumulate votes in the election of directors when a company is not a “listed corporation.”

All of the proposed amendments in this Proposal 7 are immaterial changes that do not substantively affect shareholder rights.

Proposal to be Voted on, Board Recommendation and Vote Required

We are asking our shareholders to approve amendments to our articles of incorporation to remove certain obsolete references and make other technical and administrative changes. The amendments described in this proposal are shown in the marked copy of a certificate of amendment of our articles of incorporation attached as Appendix F to this proxy statement.

Approval of this proposal requires the affirmative vote of a majority of the outstanding shares of our common stock entitled to vote at the Annual Shareholders Meeting. Consequently, abstentions will have the same effect as a vote against this proposal.

If approved by our shareholders, we plan to prepare a certificate of amendment of our articles of incorporation to reflect the amendments described in this proposal and file such certificate of amendment with the Secretary of State of the State of California promptly following approval by our shareholders at the Annual Shareholders Meeting. We expect that such certificate of amendment would become effective at the time of that filing or shortly thereafter. If Proposals 5 and 6 are also approved by our shareholders at the Annual Shareholders Meeting, we expect the certificate of amendment we file would also include the amendments contemplated by those proposals. If any of Proposal 5, Proposal 6 or this Proposal 7 is approved but not the others or if any two of these proposals are approved but not the third, we expect the certificate of amendment we file would reflect the amendment(s) in the proposal(s) that are approved.

In making this recommendation, our Board of Directors is retaining the ability to, without further vote by our shareholders, delay or abandon the amendments set forth in this proposal, in whole but not in part, at any time if the Board of Directors concludes that such action would be in the best interests of our company and our shareholders.

The Board of Directors recommends that you vote “FOR” Proposal 7.


     
  2023 Proxy Statement       43

 

Proposals to be Voted On

Shareholder Proposal

Proposal 8 was submitted for inclusion in this proxy statement at the direction of a shareholder of the company and will be submitted to a vote at the Annual Shareholders Meeting if properly presented at the meeting. The board recommends that you vote “AGAINST” Proposal 8. In accordance with SEC rules, the proposal and its supporting statement are being reprinted exactly as they were submitted to Sempra by the proponent and Sempra takes no responsibility for them. The proposal and its supporting statement may contain assertions about the company or other statements that we do not endorse or that we believe are incorrect, but the board has not attempted to refute all of these assertions. We have put a box around the materials provided by the proponent so that readers can easily distinguish between material provided by the proponent and material provided by the company.

Proposal 8: Shareholder Proposal Requiring an Independent Board Chairman


Proposal 8 was submitted by Mr. John Chevedden, who has advised us that he or a representative intends to introduce the proposal included below at the Annual Shareholders Meeting. Sempra has been advised that Mr. Chevedden is the owner of no fewer than 40 shares of Sempra common stock. The company will furnish the address of Mr. Chevedden promptly upon a shareholder’s oral or written request.

The Proposal

Proposal 8 — Independent Board Chairman

Shareholders request that the Board of Directors adopt an enduring policy, and amend the governing documents as necessary in order that 2 separate people hold the office of the Chairman and the office of the CEO.

Whenever possible, the Chairman of the Board shall be an Independent Director.

The Board has the discretion to select a Temporary Chairman of the Board who is not an Independent Director to serve while the Board is seeking an Independent Chairman of the Board on an accelerated basis.

It is a best practice to adopt this policy soon. However this policy could be phased in when there is a contract renewal for our current CEO or for the next CEO transition.

This proposal topic won 52% support at Boeing and 54% support at Baxter International in 2020. Boeing then adopted this proposal topic. The roles of Chairman and CEO are fundamentally different and should be held by 2 directors, a CEO and a Chairman who is completely independent of the CEO and our company.

A Lead Director is no substitute for an independent Board Chairman. According to the Sempra annual meeting proxy the SRE Lead Directors lacks in having exclusive powers. For instance most of these powers are shared with others: 

Acts as one of the liaison persons between the independent directors and the Chairman of the Board.

  Approves board and committee agendas and approves information sent to the board after the material is complied.

  Is one of the persons who consults with the Chairman of the Board, Chief Executive Officer and committee chairs regarding the topics and schedules of board meetings.

  Is one of the persons to consult with the Corporate Governance Committee as part of the committee’s review of director nominations.

  Is one of the persons to consult with directors regarding acceptance of memberships on other boards.

  Is one of the persons involved with succession planning.

When the Lead Director shares roles with others it means that the Lead Director may need to do little or nothing in those roles in a given year.

Plus management fails to give shareholders enough information on this topic to make a more informed decision. There is no comparison of the exclusive powers of the Office of the Chairman and the exclusive powers of the Lead Director.

The ascending complexities of a company with $45 Billion in market capitalization, like Sempra Energy, increasingly demand that 2 persons fill the 2 most important jobs at SRE on an enduring basis - Chairman and CEO

 

Please vote yes:
Independent Board Chairman—Proposal 8

     
44   2023 Proxy Statement

 

Proposals to be Voted On

Board of Directors’ Statement Opposing the Shareholder Proposal Requiring an Independent Board Chairman

The Board of Directors recommends a vote “AGAINST” this proposal because it believes our company and our shareholders are best served by retaining the board’s flexibility to determine, from time to time on an ongoing basis, who should serve as Chairman of the Board.

Our Flexible Board Leadership Structure Facilitates Effective Oversight

The board’s flexible leadership structure enables it to re-evaluate the needs of our company from time to time and make determinations regarding board leadership based upon then-existing conditions, including business needs, individual director skills and experiences, the overall composition of the board and shareholder preferences. The board’s annual deliberations regarding its leadership structure, which currently includes our Chairman and Chief Executive Officer as well as our Lead Independent Director, comprise a robust process, including comprehensive reviews of the company’s performance and the Chairman’s and the board’s effectiveness during the prior year, a thorough evaluation of the role of the company’s independent directors as a whole, extensive shareholder engagement, and thoughtful consideration of potential alternatives to the then-existing leadership structure in light of these factors. In all cases, these and other factors deemed relevant are considered by the board as a whole and by the independent directors meeting separately.

The Board’s Thorough Consideration of the Current Chairman’s Performance

As part of the board’s annual evaluation of its leadership structure, the board thoroughly reviews the performance of the acting Chairman of the Board. Each year since the initial appointment of Jeffrey W. Martin to the Chairman and Chief Executive Officer roles in 2018, the non-management directors have considered Mr. Martin’s particular skills and qualifications, including his extensive leadership and industry experience as a long-tenured employee of the Sempra family of companies with an outstanding career of achievement, as well as his resulting comprehensive understanding of the rules of the CPUC, the principal regulator of our California utilities, and the various other principal factors that impact our businesses. In addition, the board has carefully evaluated Mr. Martin’s contributions as a director, performance as Chairman of the Board and significant accumulated experience since his appointment to each of these roles. During this time, Mr. Martin has contributed to the board additional and valuable perspectives on, among other topics, strategy, business development, mergers and acquisitions, investor relations, succession planning, capital markets activities and regulated utilities. Mr. Martin’s combined service as Chairman and Chief Executive Officer also has allowed him to lead the board while providing critical leadership to our businesses on strategic initiatives and challenges, thus acting as a bridge between the board and the operating organization. The board believes this structure has enhanced board oversight and effectiveness, as Mr. Martin’s involvement in our day-to-day operations has afforded him in-depth and first-hand knowledge of the principal issues, opportunities and challenges facing our company, which enables him to help focus our directors’ time and attention on the company’s most critical matters, while concurrently implementing the board’s oversight role and directly incorporating the board’s goals, strategies and initiatives in his management of our businesses. We believe these benefits of combining the Chairman and Chief Executive Officer roles are particularly impactful in light of the ascending complexities of our businesses, as the proponent notes in the proposal.

Sempra’s Strong Corporate Performance Under its Existing Board Leadership Structure

In its annual deliberations on its leadership structure, the board also considers our company’s performance during various periods to help determine the effectiveness of the acting Chairman of the Board and the existing leadership structure. During Mr. Martin’s tenure as Chairman and Chief Executive Officer, he has effectively led the company and the board through a number of impactful achievements, including those discussed in “Proxy Statement Summary—Business and Performance” above. In addition, our company has outperformed many of our peers with respect to total shareholder return and dividends and has achieved strong EPS growth as follows:

 

We instituted a board leadership structure that requires a strong Lead Independent Director whenever the Chairman is not an independent director or the roles of Chairman and Chief Executive Officer are combined over 10 years ago in 2012. We have had total shareholder return of 221% during that period, which meaningfully outperforms the S&P 500 Utilities Index.(1)

 

We have achieved a CAGR of 46% and 11% for our GAAP EPS and adjusted EPS for the five-year period from 2017 through 2022, respectively.(2)

 

The CAGR of our common stock dividend exceeded the median CAGR for companies in the S&P 500 Utilities Index over the past three, five and 10 years.

(1) The Sempra board adopted revisions to the company’s bylaws and Corporate Governance Guidelines on September 12, 2012 to significantly expand the functions and authorities of the Lead Independent Director when the Chairman is not an independent director or when the roles of the Chairman and Chief Executive Officer are combined. As a result, the total shareholder return of our company and the S&P 500 Utilities Index was calculated for the period from September 12, 2012 through December 31, 2022.
(2) Adjusted EPS is a non-GAAP financial measure. Adjusted EPS for the year ended December 31, 2017 has been updated from its original presentation to exclude additional items to conform to the presentation for the year ended December 31, 2022. For a reconciliation of GAAP EPS to adjusted EPS, see Appendix A to this proxy statement.

     
  2023 Proxy Statement       45

 

Proposals to be Voted On

Our Lead Independent Director and Engaged Independent Directors Provide Strong Independent
Board Leadership

Another important element of the board’s annual evaluation of its leadership structure is the overall composition of the board and the strong role of the company’s independent directors as a whole.

During periods in which we do not have an independent Chairman of the Board, our Corporate Governance Guidelines require an independent director to be selected annually to serve as the Lead Independent Director and prescribe certain functions and responsibilities of this role, in addition to any other duties the independent directors may assign to the Lead Independent Director from time to time as they deem appropriate. These prescribed functions and responsibilities, which were substantially strengthened in 2012 and have been further augmented over time, are broad and similar to those of an independent Chairman of the Board, as described above in “Corporate Governance—Board of Directors—Leadership Structure.” Importantly, and contrary to statements in the proposal, we do not believe shared responsibility for some of these functions renders them less valuable, as the Lead Independent Director is nevertheless required to fulfill these duties. Moreover, many of the shared functions noted in the proposal would be shared among various persons even with an independent Chairman of the Board.

In determining its leadership structure, our board thoroughly reviews the actions of the Lead Independent Director during the past year in fulfilling the responsibilities of the role to evaluate the level of leadership of the position. The board also carefully considers the board’s overall composition and relationships in determining who to appoint as the Lead Independent Director each year, including the relationships among all directors and particularly the relationship of the proposed Lead Independent Director with the Chairman of the Board and with the other independent directors, with a view toward enhancing the effectiveness of the Lead Independent Director role. In 2022, our board determined to refresh the Lead Independent Director position in accordance with our policies related to board leadership rotation and appointed Cynthia J. Warner to this role. Ms. Warner, who has been a director of Sempra since 2019, has brought a fresh perspective to the position as a newer director on our board and a different skill set through her extensive experience and leadership in the global energy industry, particularly with respect to clean and renewable energy, an important aspect of our energy infrastructure businesses that are supporting the clean energy transition.

Additionally, except for Mr. Martin, all members of our board are independent directors, and all standing board committees other than the Executive Committee consist solely of independent directors. Further, our non-management directors meet in executive sessions, which the Lead Independent Director chairs, at every regular board meeting, and any director may call for an executive session at any board meeting. The members of the standing board committees also routinely meet in executive sessions. In addition, our Chairman and Chief Executive Officer’s performance is evaluated annually by the Corporate Governance Committee and the Compensation and Talent Development Committee, each of which is composed entirely of independent directors. These committee structures, as well as the robust responsibilities of our Lead Independent Director and the active and engaged role of our other independent directors, contribute to overall strong independent board leadership that we believe is consistent with best governance practices.

Sempra Has a Strong Track Record of Board Refreshment

Our board regularly reviews board and committee composition and leadership roles to help ensure the full board and each committee has the right balance of experience, competencies and backgrounds and is chaired and otherwise led by the most suitable directors to fulfill their oversight obligations for our company and our shareholders. As part of that process, the full board and the Corporate Governance Committee consider each director’s tenure and the overall tenure of the board and each committee. Our board has added a significant number of new independent directors over the last several years, with five of our eight independent director nominees having joined our board since 2017, and one of our most recently appointed directors now serving as the Lead Independent Director as described above. Of our eight independent director nominees, three have served fewer than five years, four have served between five and 10 years and one has served longer than 10 years. We believe our company and our shareholders are best served by a board composed of a select group of longer-tenured directors who can share their wealth of experience and serve on particular committees where their expertise may be most valuable, mixed with shorter-tenured directors who can offer new and fresh ideas and perspectives to the discourse of the board and its committees. Our board is dedicated to attaining this balance of tenure and refreshment in the composition of the board as a whole, of each of our standing board committees, and of the directors appointed to board leadership positions, including the Lead Independent Director role.

Positive Shareholder Feedback on Our Board Leadership Structure

We believe our board structure is responsive to the overall desires of the holders of a majority of our shares. Shareholders voted on independent chair policy proposals at our 2019, 2020 and 2022 annual shareholders meetings, none of which were approved and received declining support over time (in terms of the percentage of votes cast). In our robust shareholder engagement efforts in our 2022 engagement cycle, we engaged with holders of approximately 40% of our outstanding shares of common stock on a variety of matters, including their views on our board leadership structure. Among the shareholders with whom we engaged, the majority (in terms of number of shares represented) either has no preference for an independent Chairman of the Board or has no preference for an independent Chairman of the Board after taking into account certain additional factors, including that there is a Lead Independent Director with significant duties, as is the case at Sempra. Based upon this feedback and various other factors, the board believes its existing flexible leadership structure is consistent with the preferences of the holders of a majority of our shares.

     
46   2023 Proxy Statement

 

Proposals to be Voted On

Conclusion

The board believes it should retain the flexibility to select the board leadership structure that is best-suited to meet the needs of Sempra and our shareholders in light of prevailing circumstances. Adopting a rigid independent chair policy as requested by this proposal would unduly impair the board’s ability to annually name as Chairman of the Board the director it believes is best-suited for the role and structure its leadership in the manner it believes most effectively serves company and shareholder interests at the time. In addition, our board believes the adoption of such a policy is contrary to the preferences of the holders of a majority of our shares and unnecessary due to Sempra’s strong governance practices, including our robust Lead Independent Director role, active and engaged independent directors and consistent history of board refreshment, as well as the performance of our business and stock price since 2012 when we instituted a strong Lead Independent Director role with functions similar to an independent Chairman of the Board.

The Board of Directors recommends that you vote “AGAINST” Proposal 8.


     
  2023 Proxy Statement       47

 

Executive Compensation

Compensation Discussion and Analysis

Executive Summary

In this Compensation Discussion and Analysis, we:

 

Outline our compensation philosophy and program goals

 

Discuss how the Compensation and Talent Development Committee determines executive pay

 

Describe each element of executive pay, including base salaries, short-term and long-term incentives and executive benefits

 

Describe the rationale for each element of executive pay in the context of our compensation philosophy and program goals

Section Page  
Executive Summary 48  
Business Overview and Strategy 49  
Performance 50  
Shareholder Engagement 52  
2022 Compensation Program Overview 52  
Chief Executive Officer Target Compensation Summary 54  
Pay-for-Performance Alignment 54  
Rigor of Incentive Targets 54  
Compensation Governance 56  
Compensation Philosophy and Program Goals 56  
Labor Market Reviews 56  
Compensation Components 58  
Base Salaries 58  
Performance-Based Annual Bonuses 59  
Long-Term Equity-Based Incentives 62  
Benefit Plans 66  
Severance and Change in Control Arrangements 68  
Compensation and Talent Development Committee Roles and Responsibilities 69  
Management’s Role 70  
Managing Risk in Compensation Plans 70  
Share Ownership Guidelines 72  
Impact of Regulatory Requirements 72  

     
48   2023 Proxy Statement

 

Executive Compensation

This Compensation Discussion and Analysis focuses on the compensation of the following individuals, who we collectively refer to as our named executive officers:

Named Executive Officer

Title

Jeffrey W. Martin

Chairman, Chief Executive Officer and President

Trevor I. Mihalik

Executive Vice President and Chief Financial Officer

Kevin C. Sagara

Executive Vice President and Group President

Karen L. Sedgwick

Chief Administrative Officer and Chief Human Resources Officer

Peter R. Wall

Senior Vice President, Controller and Chief Accounting Officer

Table 1


Business Overview and Strategy

Sempra’s management team has set a clear mission to be North America’s premier energy infrastructure company. In alignment with this, we have:

 

Simplified our business model in order to improve execution, build scale and deliver improved financial results

 

Continued our strategic focus on investing in transmission and distribution infrastructure, which is the portion of the energy value chain where we believe there is an attractive risk/reward profile for our owners

 

Positioned our three integrated growth platforms in highly attractive and contiguous markets in North America to better serve tens of millions of consumers in both the United States and abroad to help enable the energy transition

Our investments are focused on opportunities across our platforms that are backed by regulated returns or long-term contracts, which improves our visibility to our earnings and helps mitigate the risk profile of our businesses.

While the majority of our operations are focused on regulated utilities, we also have a strong non-utility infrastructure business and therefore evaluate our performance against both the S&P 500 Utilities Index and the broader market, including the S&P 500 Index. Our labor market for senior management talent also extends beyond the utility industry, as discussed under “Labor Market Reviews.”

Some significant business achievements over the past five years include:

 

Advancing major infrastructure projects at SDG&E and SoCalGas, such as the deployment of utility-owned energy storage technologies, investments in grid resiliency and mitigation of climate-related vulnerabilities, including wildfires, and the advancement of innovative proposals to support the energy transition, including the Angeles Link green hydrogen pipeline system in early development in the Los Angeles, California region

 

Acquiring an 80.25% indirect interest in Oncor, a regulated electric transmission and distribution business that, with its more than 141,000 miles of transmission and distribution lines, operates the largest transmission and distribution system in Texas based on the number of end-use customers and miles of transmission and distribution lines

 

Establishing our Sempra Infrastructure platform, which develops infrastructure projects in North America across three business
lines — LNG and Net-Zero Solutions, Energy Networks and Clean Power — and has a portfolio of LNG opportunities strategically located in the Pacific and Gulf coasts of North America, and completing the sales of a 20% and a 10% noncontrolling interest in SI Partners to an affiliate of Kohlberg Kravis Roberts & Co. L.P. (KKR) and to ADIA, respectively, for an aggregate of $4.9 billion in cash (including post-closing adjustments and net of transaction costs)

 

Completing a multi-year capital rotation program that resulted in the divestiture of our U.S. renewables business, U.S. non-utility natural gas storage assets and South American businesses, which generated total gross cash proceeds of approximately $8.3 billion

We strive to deliver solid growth across our businesses, which we believe should provide us with a broad spectrum of opportunities to deploy capital on attractive terms. Further, we remain focused on delivering shareholder value by privileging the return of capital to shareholders.

     
  2023 Proxy Statement       49

 

Executive Compensation

Performance

Financial Performance Highlights

In 2022, our GAAP EPS was $6.62 and our adjusted EPS was $9.21.(1) Our 2022 achievements build on our strong long-term financial performance. Our GAAP EPS was $3.48 in 2012, $1.01 in 2017 and $6.62 in 2022. Since 2012, we have delivered consistently strong adjusted EPS growth, increasing adjusted EPS from $4.32 in 2012 to $5.51 in 2017 and to $9.21 in 2022.(1)

This performance has contributed to our robust long-term growth and shareholder value creation. Our total shareholder return has outpaced the return of the S&P 500 Utilities Index during the past one, five, 10 and 20 years. In addition, our market capitalization almost tripled over the past 10 years from $17 billion at the end of 2012 to $49 billion at the end of 2022.

The company has a long track record of returning value to shareholders:

 

Strong Dividend Growth: The CAGR of our common stock dividend exceeded the median CAGR for companies in the S&P 500 Utilities Index over the past three, five and 10 years.

 

13 Consecutive Years of Dividend Increases: From 2010 to 2022, we increased our annual dividend from $1.56 to $4.58 per common share. The Board of Directors raised the dividend for the thirteenth consecutive year in 2023, increasing the dividend to $4.76 per common share on an annualized basis.

 

Share Repurchases: The company’s strong dividend is coupled with $1.25 billion of share repurchases since July 2020, including $750 million of share repurchases that have been completed since November 2021.

Long-Term Growth(2)

 

Total Shareholder Return(4)


Figures 1 and 2

(1) Adjusted EPS is a non-GAAP financial measure. Adjusted EPS for the years ended December 31, 2012 and 2017 have been updated from their original presentation to exclude additional items to conform to the presentation for the year ended December 31, 2022. For a reconciliation of GAAP EPS to adjusted EPS, see Appendix A to this proxy statement.
(2) As of or for the years ended December 31, 2012, 2017 and 2022, as the context requires.
(3) Dollars in billions.
(4) For periods ended December 31, 2022.

     
50   2023 Proxy Statement

 

Executive Compensation

Strategic Performance Highlights

Sempra
             
       
  Sempra executed on its disciplined strategy with a focus on investing in energy infrastructure, resulting in strong financial performance   Sempra more than doubled its utility rate base from 2017 through 2022 by investing in the #1 and #2 economies in the United States(1)   Sempra was ranked #1 ESG Utility Leader by Investor’s Business Daily  
             
             

 

Sempra California
             
       
  SDG&E completed Cleveland National Forest Fire Hardening + Safety Project   SDG&E received CPUC approval for 200 MW of utility-owned energy storage   SDG&E deployed the region’s first vehicle-to-grid project using local electric school buses capable of sending power to the grid  
             
       
  SoCalGas achieved voluntary 5% RNG blending target(2)   SoCalGas received CPUC approval for a memorandum account to track spending for preliminary development of Angeles Link, a strategic dedicated hydrogen pipeline(3)   SoCalGas achieved approximately 37% methane reductions below 2015 levels through 2021, nearly at the state’s goal of 40% by 2030  
             

 

Sempra Texas
             
       
  Oncor released sustainability financing framework and issued $400 million of green bonds in May 2022   Oncor executed its $3 billion 2022 capital plan   Oncor announced a vehicle-to-grid collaboration with Toyota Motor North America, the first utility collaboration for Toyota around battery electric vehicles  
             
             
Sempra Infrastructure
             
       
  Sempra sold a 10% noncontrolling interest in SI Partners to ADIA for $1.7 billion in cash(4)   Sempra Infrastructure advanced development of Hackberry Carbon Sequestration project advancing net-zero greenhouse gas emissions strategy(3)   Sempra Infrastructure began commercial operations of its refined products storage terminal in Puebla, Mexico  
             
             
(1) Rate base for SDG&E and SoCalGas represents 13-month weighted-average, excluding CWIP. Rate base reflects 100% of Oncor’s and Sharyland Utilities, L.L.C.’s actual year-end rate base as of December 31, 2017 and 2022. Economy rankings based on GDP according to BEA.
(2) In 2022, SoCalGas delivered 5% RNG to its “core service” as defined in SoCalGas’ Tariff Rule No. 23.
(3) The ability to complete major construction and development projects is subject to a number of risks and uncertainties and there can be no assurance of completion.
(4) Amount of proceeds includes post-closing adjustments and is net of transaction costs.

     
  2023 Proxy Statement       51

 

Executive Compensation

Shareholder Engagement

Incorporating shareholder feedback into the decision-making process is a critical component of our compensation program and our overall corporate governance philosophy. Our board and management have a long-standing commitment to engaging our shareholders and listening to their perspectives on, among other matters, key performance, governance and compensation matters. With respect to compensation matters, we engage extensively with shareholders to gather feedback on our current compensation program and any potential changes to the program the Compensation and Talent Development Committee is considering. Our Lead Independent Director and Corporate Governance Committee Chair, who serves on the Compensation and Talent Development Committee, participates in these shareholder engagement efforts, including attending many of the meetings with our shareholders, to strengthen the communication of shareholder feedback directly to the board.

During the shareholder engagement cycle beginning in spring 2022 and continuing through January 2023, which was in addition to our normal investor relations outreach, we reached out to shareholders representing approximately 63% of our total outstanding shares of common stock and held telephonic or videoconference meetings with shareholders representing approximately 40% of our total outstanding shares of common stock (a significant portion of our institutional share ownership). During these meetings, we reviewed our executive compensation program and a variety of other topics as discussed under “Corporate Governance — Board of Directors — Robust Engagement Program” above, gathered shareholder feedback on our program and gained insight into their views and priorities with respect to these matters. The Compensation and Talent Development Committee considered insights gained during our shareholder engagement meetings when they incorporated the ESG Measures into the performance-based annual bonus plan in 2021 and when they continued to enhance the ESG Measures in the 2022 performance-based annual bonus plan.

Our shareholders presently have the opportunity to cast an advisory vote on our executive compensation, or a “say-on-pay” vote, once every year at our annual shareholders meetings. At our 2022 annual shareholders meeting, the say-on-pay proposal received more than 94% approval. The Compensation and Talent Development Committee believes this high level of approval affirms our shareholders’ support for our approach to executive compensation, and therefore the committee did not significantly alter our compensation policies or practices for 2022.

2022 Compensation Program Overview

Our executive compensation program is designed to attract, motivate and retain key executive talent and promote strong, sustainable long-term performance. The three components of total direct compensation delivered in our program are: (1) base salary; (2) performance-based annual bonus; and (3) long-term equity-based incentives. We place an emphasis on variable performance-based pay, with each component designed to promote value creation and alignment of our management team’s compensation with our long-term strategic objectives.

Type Component Form   Key Characteristics
Fixed Base Salary Cash   Base salary is targeted to generally align to the median of comparably sized general industry peers (excluding financial services companies)
Variable Performance-Based
Annual Bonus
Cash   Based on ABP Earnings (weighted at 80%), Safety Measures (weighted at 12%) and ESG Measures (weighted at 8%)
    No bonus payment unless company exceeds threshold performance level for the year and maximum payouts are capped
Long-Term
Equity-Based
Incentives
Equity Performance-Based Restricted Stock Units (weighted at two-thirds collectively)
  Relative TSR Performance-Based Restricted Stock Units (weighted at one-third): 3-year relative TSR, allocated evenly between:
   

– Relative TSR measured against S&P 500 Utilities Index; maximum payout requires performance at 90th percentile of S&P 500 Utilities Index peers

   

– Relative TSR measured against S&P 500 Index; maximum payout requires

  performance at 90th percentile of S&P 500 Index peers

 

EPS Growth Performance-Based Restricted Stock Units (weighted a