PPL Corp

How We Align PPL’s Compen sation Program with Performance

We align our compensation program with corporate strategy through several types of performance-related incentives.

Annual cash incentives for NEOs are based upon (1) corporate earnings per share from ongoing operations as adjusted for compensation purposes, or Corporate EPS, (2) Transition Services Agreement, or TSA, Execution, (3) corporate and business segment operational goals, and (4) individual performance. Beginning in 2022 and continuing in 2023, our performance-based long-term incentives awards were based upon (1) relative total shareowner return, or TSR, (2) corporate earnings growth, or EG, and (3) corporate environmental, social and governance metrics, or ESG. All of our goals align with our commitment to create long-term value for shareowners.

The selection of measures is given careful consideration, with a view to both short-term and longer-term strategic goals, while focusing on areas most within management’s control. Our annual cash incentive awards measure performance based upon achievement of select financial and operational goals. Earnings are central to our business strategy and a primary focus of the investment community. Corporate EPS performance measures have historically been central to the annual compensation program for our NEOs. TSA Execution goals were added to focus the organization on successfully integrating applications that would allow us to end services provided under the TSA on time and on budget, which is critical for PPL to optimize centralization efforts. Successful completion of these efforts will benefit customers across the organization, as well as help us meet our financial goals and regulatory obligations. For 2023, all NEOs were also compensated based on achievement of operational goals at each business segment as well as individual contributions towards the company’s focus in the areas of safety; diversity, equity and inclusion; employee engagement; environmental stewardship; and the modeling of the company’s corporate values.

Our equity-based awards use relative TSR, EG and ESG metrics to further align executives’ interests with the long-term interests of shareowners. The TSR metric provides a comparison of our three-year TSR performance relative to the companies in the PHLX Utility Sector Index (UTY). The EG metric measures the change in the company’s ongoing earnings over the three-year performance period. The ESG metrics measure three priority ESG measures tied to climate-related performance over the three-year performance period. This approach provides a robust assessment of multiple aspects of our performance and how the market is responding to our current and prospective operational performance in comparison to our peers, which is correlated to market performance.

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Although virtually all PPL operations are fully regulated, the company operates in multiple regulatory environments that vary significantly by region. To align our NEOs’ actions with the company’s overall goals, NEO performance objectives are focused on enterprise-wide metrics that measure the financial and operational performance of PPL, as well as operational metrics for its largest business segments during 2023. This provides direct alignment to our goal of increasing shareowner value.

Further information about the targets that apply to specific awards for each NEO is set out in “2023 Named Executive Officer Compensation” beginning on page 46 of this CD&A.

A substantial portion of NEO compensation is delivered in the form of equity, and our senior executives are subject to Executive Equity Ownership Guidelines as described on page 60. These practices directly align our compensation structure with our performance by linking NEO compensation to share price appreciation and sustainable long-term shareowner value creation.

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