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Dynegy DEF 14A 2016

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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 ý

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))

ý

 

Definitive Proxy Statement

o

 

Definitive Additional Materials

o

 

Soliciting Material under §240.14a-12

 

Dynegy Inc.

(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 the appropriate box):

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No fee required.

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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
    (1)   Title of each class of securities to which transaction applies:
        
 
    (2)   Aggregate number of securities to which transaction applies:
        
 
    (3)   Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
        
 
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Fee paid previously with preliminary materials.

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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

 

(1)

 

Amount Previously Paid:
        
 
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  Dynegy Inc.
601 Travis, Suite 1400
Houston, Texas 77002
  Pat Wood III
Chairman of the Board


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ANNUAL MEETING—May 20, 2016

March 31, 2016

To our stockholders:

It is my pleasure to invite you to attend the 2016 Annual Meeting of stockholders of Dynegy Inc., which will be held on May 20, 2016, at 10:00 a.m., Central Time. You will be able to attend the 2016 Annual Meeting, vote, and submit your questions during the meeting via live webcast through the link www.virtualshareholdermeeting.com/DYN16. You will need the control number included with these proxy materials to attend the Annual Meeting. Only persons who were stockholders of record at the close of business on March 22, 2016 are entitled to notice of, and to vote at, the Annual Meeting.

We intend to take advantage of the Securities and Exchange Commission rules that allow issuers to furnish proxy materials to their stockholders over the internet. We believe that these rules allow us to provide our stockholders with the information they desire while lowering costs of delivery and reducing the environmental impact.

As Dynegy stockholders, your vote is important; please vote your shares as soon as possible.    You may vote your shares by internet or telephone (or, if you received a printed set of materials by mail, by returning the accompanying proxy card). Voting in advance of the meeting will not deprive you of your right to participate in the virtual meeting and to vote your shares during the live webcast if you so choose.

Sincerely,

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Pat Wood III
Chairman of the Board



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  Dynegy Inc.
601 Travis, Suite 1400
Houston, Texas 77002

NOTICE OF 2016 ANNUAL MEETING OF STOCKHOLDERS

Meeting Date:   May 20, 2016
Time:   10:00 a.m. (Central)
Via live webcast:   www.virtualshareholdermeeting.com/DYN16
    You will need the control number provided on the Notice of Internet Availability of Proxy Materials or your proxy card (if applicable).

ITEMS OF BUSINESS:

1.
To elect seven directors to serve until the 2017 Annual Meeting of Stockholders;
2.
To approve, on an advisory basis, the compensation of Dynegy's named executive officers as described in this proxy statement;
3.
To act upon a proposal to approve amendments to our 2012 Long Term Incentive Plan; and
4.
To act upon a proposal to ratify the appointment of Ernst & Young LLP as Dynegy's independent registered public accountants for the fiscal year ending December 31, 2016.

Additionally, if needed, the stockholders may act upon any other matters that may properly come before the meeting (including a proposal to adjourn the meeting to solicit additional proxies) or any reconvened meeting after an adjournment or postponement of the meeting.

The close of business on March 22, 2016 has been fixed as the record date for the determination of stockholders entitled to receive notice of and to vote at the Annual Meeting and any reconvened meeting after an adjournment or postponement of the meeting.

You are cordially invited to attend the meeting. PLEASE VOTE AS SOON AS POSSIBLE.

By Order of the Board of Directors,

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Kelly D. Tlachac
Corporate Secretary

March 31, 2016



PROXY SUMMARY INFORMATION

This summary is included to provide an introduction and overview of the information contained in this proxy statement. This is a summary only and does not contain all of the information we have included in our 2016 proxy statement. You should refer to the full Proxy Statement that follows for more information about us and the proposals you are being asked to consider.

2015 BUSINESS HIGHLIGHTS
 
Achieved 2015 Guidance range for Adjusted EBITDA and Free Cash Flow

Completed the EquiPower and Duke acquisitions in April 2015

Announced a $250 million share repurchase program in August 2015 and completed ahead of schedule in November

Completed environmental compliance five-year cost estimates, implementation plans and timeline for cooling water intakes, or 316(b), effluent limitation guidelines, or ELG, and coal combustion residuals, or CCR

Continue to be on track to achieve coal combustion by-products, or CCB, re-use target of 100% by 2020

Each of the six combined cycle gas turbine, or CCGT, facilities in PJM Interconnection, LLC, or PJM, set annual production records

Achieved $155 million in transaction synergies for the EquiPower and Duke acquisitions

Successfully cleared volumes in the PJM auctions that will provide capacity revenues in excess of $1.6 billion

Re-commissioned 225MW of previously mothballed combustion turbines at Joppa

EXECUTIVE COMPENSATION
 

Our executive compensation program reflects a fundamental belief that rewards should be competitive, both in elements and amount, with the broad labor market in which we compete for executive talent and commensurate with the Company's and the individual executive's performance.

Pay for Performance—Our total compensation for each individual provides reasonable upside potential for exceptional performance; as well as risk of no payment, with respect to incentive compensation, when performance objectives are not achieved. Our variable pay programs are designed as forward-looking incentives that reflect individual and corporate performance during the year under review.

Alignment with Stockholder Value—Our LTI awards encourage share price improvement and a strong link to stockholder interests. Our compensation programs are designed and administered to maximize stockholder value.

Market Competiveness—Our overall compensation strategy recognizes that attraction and retention of key talent is critical to the attainment of our stated business goals and objectives and to the creation of value for our stockholders.
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Proxy Summary Information


Executive Compensation

  Corporate Governance Highlights

 
The mix of pay across base salary, short-term incentive and long-term incentive awards are most heavily weighted towards at-risk pay, aligning performance with stockholder value.       Our practices include a number of policies and structures that we believe are "best practices" including:

Separation of Chairman of the Board and Chief Executive Officer positions;

   

CEO Total Target Compensation

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Regular meetings of our non-management and independent directors;

Policies prohibiting pledging and hedging transactions involving our common stock by directors and executive officers;

Stock ownership guidelines applicable to directors and officers;

Elimination of employment agreements, except for the
CEO;

 

 

All Other NEOs Total Target Compensation

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Majority voting policy;

No excise tax gross-ups;

Change in control and severance benefits that are subject to "double trigger;"

An independent executive compensation consultant hired by and reporting to the Compensation and Human Resources Committee; and

Clawback mechanism in place for incentive awards.

 

 

             

PROPOSALS FOR STOCKHOLDER ACTION

        For More
Information


  Board
Recommendation


 
Proposal 1: Election of Directors       Page 16       ü For    

Pat Wood III
Paul M. Barbas
Richard L. Kuersteiner
John R. Sult

  Hilary E. Ackermann
Robert C. Flexon
Jeffrey S. Stein
                   
Proposal 2: Advisory Vote on our 2015 Executive Compensation       Page 63       ü For    
Proposal 3: Approval of Amendments to our 2012 Long Term Incentive Plan       Page 67       ü For    
Proposal 4: Ratification of Independent Registered Public Accountants for 2016       Page 85       ü For    
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Proxy Summary Information


ANNUAL MEETING INFORMATION

Time and Date:   10:00 a.m. (CT) on Friday, May 20, 2016        

Virtual Meeting:

 

Live webcast through the link
www.virtualshareholdermeeting.com/DYN16

 

You will need the control number provided on the Notice of Internet Availability of Proxy Materials or your proxy card (if applicable).

Record Date:

 

March 22, 2016

 

 

 

 

 

 
                 

Voting Methods:

 


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    Attending the
meeting via live
webcast


 
Submitting your proxy
by internet
(
http://www.proxyvote.com)
or telephone
1-800-690-6903




 
If you request a printed copy of the proxy materials, completing, signing, dating and returning the proxy card in the envelope provided   Scanning this QR code to access the voting site from your mobile device

Requesting Copies
of Materials:

 

Current and prospective investors can also access or order free copies of our Annual Report, proxy statement, Notice and other financial information through the Investor Relations section of our web site at www.dynegy.com, by calling 713-507-6400 or by writing to Investor Relations Department, Dynegy Inc., 601 Travis, Suite 1400, Houston, Texas 77002.
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PROXY STATEMENT

GENERAL INFORMATION

Why am I receiving these materials?

The Board of Directors of Dynegy Inc., or the Board, has made these materials available to you over the internet, or has delivered printed versions of these materials to you by mail, in connection with the Board's solicitation of proxies for use at the 2016 Annual Meeting of Stockholders, or the Annual Meeting. The Annual Meeting is scheduled to be held on Friday, May 20, 2016 at 10:00 a.m., Central Time, via live webcast through the link www.virtualshareholdermeeting.com/DYN16. You will need the control number provided on the Notice of Internet Availability of Proxy Materials or your proxy card (if applicable). This solicitation is for proxies for use at the Annual Meeting or at any reconvened meeting after an adjournment or postponement of the Annual Meeting.

What is included with these materials?

These materials include our proxy statement for the Annual Meeting and our 2015 Annual Report to Stockholders, or Annual Report, which includes our audited consolidated financial statements. If you received printed versions of these materials, a proxy card for the Annual Meeting is also included.

What items will be voted on at the Annual Meeting?

There are four items that will be voted on at the Annual Meeting:

1.
The election of seven directors to serve until the 2017 Annual Meeting of Stockholders;

2.
A proposal to approve, on an advisory basis, the compensation of Dynegy's named executive officers as described in this proxy statement;

3.
A proposal to approve amendments to our 2012 Long Term Incentive Plan; and

4.
A proposal to ratify the appointment of Ernst & Young LLP as Dynegy's independent registered public accountants for the fiscal year ending December 31, 2016.

Additionally, if needed, the stockholders may act upon any other matters that may properly come before the meeting (including a proposal to adjourn the meeting to solicit additional proxies) or any reconvened meeting after an adjournment or postponement of the meeting.

What are the Board's voting recommendations?

The persons named as proxies were designated by the Board. Any proxy given pursuant to this solicitation and received prior to the Annual Meeting will be voted as specified in the proxy card. If you return a properly executed proxy card but do not mark any voting selections, then your proxy will be voted as follows in accordance with the recommendations of the Board:

Proposal 1— FOR the election of seven directors to the Board;

Proposal 2— FOR approval of the compensation of Dynegy's named executive officers described in this proxy statement;

Proposal 3— FOR approval of the amendments to our 2012 Long Term Incentive Plan; and

Proposal 4— FOR ratification of the appointment of Ernst & Young LLP as our independent registered public accountants.
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General Information


Why did I receive a one-page notice in the mail regarding the internet availability of proxy materials instead of a full set of proxy materials?

Pursuant to the rules adopted by the Securities and Exchange Commission, or SEC, we are providing electronic access to our proxy materials over the internet. Accordingly, we sent a Notice of Internet Availability of Proxy Materials, or Notice, to our stockholders of record and beneficial owners, which was first mailed on or about March 31, 2016. Instructions on how to access the proxy materials over the internet are included in the Notice.

Stockholders may also request via the internet to receive a printed set of the proxy materials at www.proxyvote.com, by sending an email to sendmaterial@proxyvote.com, or calling 1-800-579-1639. In addition, stockholders may request via the internet, telephone or by email to receive proxy materials in printed form on an ongoing basis.

Current and prospective investors can also access or order free copies of our Annual Report, proxy statement, Notice and other financial information through the Investor Relations section of our web site at www.dynegy.com, by calling 713-507-6400 or by writing to Investor Relations Department, Dynegy Inc., 601 Travis, Suite 1400, Houston, Texas 77002.

How can I get electronic access to the proxy materials?

The Notice provides you with instructions regarding how to:

View proxy materials for the Annual Meeting on the internet; and

Instruct us to send our future proxy materials to you electronically by email.

Choosing to receive your future proxy materials by email will save us the cost of printing and mailing documents to you and will reduce the impact of our Annual Meetings on the environment. If you choose to receive future proxy materials by email, you will receive an email next year with instructions containing a link to those materials and a link to the proxy voting site. Your election to receive proxy materials by email will remain in effect until you terminate it. Internet/telephone voting for the Annual Meeting will close at 11:59 p.m., Eastern Time, on May 19, 2016.

Why did I only receive one set of materials when there is more than one stockholder at my address?

If two or more stockholders share one address, each such stockholder may not receive a separate copy of our Annual Report, proxy statement or Notice. Stockholders who do not receive a separate copy of our Annual Report, proxy statement or Notice and want to receive a separate copy may request to receive a separate copy of, or additional copies of, our Annual Report, proxy statement or Notice via the internet, email or telephone as outlined above. Stockholders who share an address and receive multiple copies of our Annual Report, proxy statement or Notice may also request to receive a single copy by following the instructions above.

What is the quorum requirement for the Annual Meeting?

Under our bylaws, a quorum is a majority of the outstanding shares of our common stock entitled to vote at the meeting, represented in person (through internet access) or by proxy. Abstentions and broker non-votes shall be counted in determining that a quorum is present for the meeting.

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General Information


Where is the Annual Meeting?

You are invited to attend the Annual Meeting online through the link www.virtualshareholdermeeting.com/DYN16. The Control Number provided on your Notice or proxy card is necessary to access this site.

As of the record date, March 22, 2016, there were outstanding 117,240,697 shares of common stock.

What is the difference between holding shares as a stockholder of record and as a beneficial owner of shares held in street name?

Stockholder of Record.    If your shares are registered in your name with our transfer agent, Computershare, you are considered the stockholder of record with respect to those shares, and the Notice was sent directly to you by us.

Beneficial Owner of Shares Held in Street Name.    If your shares are held in an account at a brokerage firm, bank, broker dealer or other similar organization, then you are the beneficial owner of shares held in "street name," and the Notice was forwarded to you by that organization. The organization holding your account is considered the stockholder of record for purposes of voting at the Annual Meeting. As a beneficial owner, you have the right to direct that organization on how to vote the shares held in your account.

If I am a stockholder of record of Dynegy's shares, how do I vote?

If you are a stockholder of record you may vote by proxy over the internet by following the instructions provided in the Notice, by telephone, or, if you received printed copies of the proxy materials, you may also vote by mail. You may also vote at the Annual Meeting through the link www.virtualshareholdermeeting.com/DYN16. The Control Number provided on your Notice or proxy card is necessary to access this site. Please vote as soon as possible.

If I am a beneficial owner of shares held in street name, how do I vote?

If you are a beneficial owner of shares held in street name, please refer to the Notice, proxy card, or voting information form forwarded to you by your broker or other nominee to see what voting options are available to you. Please vote as soon as possible.

What happens if I do not give specific voting instructions?

Stockholder of Record.    If you are a stockholder of record and you:

indicate when voting on the internet or by telephone that you wish to vote as recommended by our Board; or

if you sign and return a proxy card without giving specific voting instructions,

then the proxy holders will vote your shares in the manner recommended by our Board on Proposals 1-4 in this proxy statement and as the proxy holders may determine in their discretion with respect to any other matters properly presented for a vote at the Annual Meeting.

Beneficial Owner of Shares Held in Street Name; "Broker Non-Votes."    If you are a beneficial owner of shares held in street name and do not provide the organization that holds your shares with specific voting instructions, under the rules of the New York Stock Exchange, or NYSE, the organization that holds your shares may generally vote on routine matters but cannot vote on non-routine matters. If the organization that holds your shares does not receive instructions from you on how to vote your shares on a non-routine matter, the organization that holds your shares will inform our Inspector of Election that it does not have the authority to vote on this matter with respect to your shares. This is generally referred to as a "broker non-vote." When our Inspector of Election tabulates the votes for any particular matter, broker non-votes will be counted for purposes of determining whether a quorum is present for that matter, but will not otherwise be counted.

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General Information


For example, please note that brokers may not vote your shares on the election of directors, the proposal regarding named executive officer compensation or the proposal regarding amendments to our 2012 Long Term Incentive Plan in the absence of your specific instructions as to how to vote. Please provide your broker with voting instructions as soon as possible so that your vote can be counted. We encourage you to provide voting instructions to the organization that holds your shares by carefully following the instructions provided in the Notice.

Which ballot measures are considered "routine" or "non-routine"?

Proposal 4 (Ratification of Appointment of Independent Registered Public Accountants) involves a matter that we believe will be considered routine.

Proposal 1 (Election of Directors), Proposal 2 (Approval of Compensation of our Named Executive Officers) and Proposal 3 (Approval of Amendments to our 2012 Long Term Incentive Plan) involve matters that we believe will be considered non-routine.

How are abstentions and broker non-votes treated?

For the purpose of determining whether a quorum is present, abstentions and broker non-votes shall be counted in determining the number of outstanding shares represented in person (through internet access) or by proxy for each matter.

For each "non-routine" proposal, including whether the stockholders have elected the seven director nominees, broker non-votes are not counted. Please note that brokers may not vote your shares on the election of directors, the proposal regarding named executive officer compensation or the proposal regarding amendments to our 2012 Long Term Incentive Plan in the absence of your specific instructions as to how to vote. Please provide your broker with voting instructions as soon as possible so that your vote can be counted. You cannot abstain in the election of directors—you can only vote FOR the director nominees or WITHHOLD VOTES for such nominees.

For each proposal other than the election of directors an abstention will have the same effect as a vote AGAINST such proposal.

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General Information


What is the voting requirement to approve each of the proposals?

The following table sets forth the voting requirement with respect to each of the proposals:

Proposal 1—   Election of seven directors to serve until the 2017 Annual Meeting of Stockholders   Seven persons have been nominated by the Board for election to serve as directors for one-year terms.

The holders of our common stock are entitled to vote on the election of the directors. The directors are elected by a plurality of the shares of common stock represented in person (through internet access) or by proxy and entitled to vote on the election of directors, subject to our majority voting policy discussed below. This means that the seven individuals nominated for election to the Board who receive the most FOR votes among votes properly cast in person (through internet access) or by proxy will be elected. Each holder of our common stock is entitled to one vote for each share held and does not have cumulative voting rights.

Only FOR or WITHHELD votes are counted in determining whether a plurality has been cast in favor of a director nominee. You cannot abstain in the election of directors and broker non-votes are not counted. A WITHHELD vote will have the same effect as a vote AGAINST the election of a director nominee under our majority voting policy, which is described below.


 

 

 

 

Majority voting policy: In an uncontested election, any director nominee who receives a greater number of votes WITHHELD for his or her election than votes FOR such election must offer his or her resignation to the Board promptly following certification of the stockholder vote. The Corporate Governance and Nominating Committee, or Nominating Committee, is required to recommend to the Board whether such offered resignation should be accepted or rejected. The Board will determine whether to accept or reject the resignation offer and will promptly disclose its decision making process and decision regarding an offered resignation in a document furnished to or filed with the SEC. Please read our Amended and Restated Corporate Governance Guidelines posted in the "Corporate Governance" section of our web site at www.dynegy.com for more information regarding our majority voting policy.
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General Information



Proposal 2—

 

Act upon a proposal to approve, on an advisory basis, the compensation of Dynegy's named executive officers as described in this proxy statement

 

The affirmative vote of a majority of the shares of common stock represented in person (through internet access) or by proxy at the meeting and entitled to vote is required to approve, on an advisory basis, the compensation of Dynegy's named executive officers. Each holder of our common stock is entitled to one vote for each share held. Abstentions will have the same effect as a vote AGAINST this proposal. Broker non-votes are not counted.

Proposal 3—

 

Act upon a proposal to approve amendments to our 2012 Long Term Incentive Plan

 

The affirmative vote of a majority of the votes cast is required to approve the proposal to approve amendments to our 2012 Long Term Incentive Plan. Each holder of our common stock is entitled to one vote for each share held. Abstentions will have the same effect as a vote AGAINST this proposal. Broker non-votes are not counted.

Proposal 4—

 

Ratification of the appointment of Ernst & Young LLP as Dynegy's independent registered public accountants for the fiscal year ending December 31, 2016

 

The affirmative vote of a majority of the shares of common stock represented in person (through internet access) or by proxy at the meeting and entitled to vote is required to ratify the choice of independent registered public accountants. Each holder of our common stock is entitled to one vote for each share held. Abstentions will have the same effect as a vote AGAINST this proposal.

May I change my vote after I have voted?

You may revoke your proxy and change your vote at any time before the final vote at the Annual Meeting by:

Executing and submitting a revised proxy (including a telephone or internet vote, which must be received by 11:59 p.m., Eastern Time, on May 19, 2016);

Sending written notice of revocation to our Corporate Secretary at the address provided below (which must be received by 11:59 p.m., Eastern Time, on May 19, 2016); or

Voting at the Annual Meeting through the link www.virtualshareholdermeeting.com/DYN16. The Control Number provided on your Notice or proxy card is necessary to access this site.

In the absence of a revocation, shares represented by proxies will be voted at the Annual Meeting.

Is my vote confidential?

Proxy instructions, ballots and voting tabulations that identify individual stockholders are handled in a manner that protects your voting privacy. Your vote will not be disclosed either within Dynegy or to third parties, except:

As necessary to meet applicable legal requirements;

To allow for the tabulation and certification of votes; and

To facilitate a proxy solicitation.

Who is paying the cost of this proxy solicitation?

We will bear the cost of soliciting proxies. Proxies may be solicited by mail or facsimile, or by our directors, officers or employees, without extra compensation, in person or by telephone. We have retained Morrow & Co., LLC, 470 West Ave. Stamford, Connecticut 06902, to assist in the solicitation of proxies for a fee of approximately $9,000 plus out-of-pocket expenses and telephone solicitation expenses. We will reimburse brokerage houses and other custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses for forwarding solicitation material to the beneficial owners of our common stock.

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General Information


What if I have questions about the proposals?

Questions concerning the proposals to be acted upon at the Annual Meeting should be directed to:

Dynegy Inc.
Attention: Investor Relations Department
601 Travis, Suite 1400, Houston, Texas 77002
713.507.6400

OR

Morrow & Co., LLC
470 West Ave.
Stamford, CT 06902
1.800.662.5200

How can I find out if I am a stockholder of record entitled to vote?

For a period of at least ten days before the Annual Meeting, a complete list of stockholders of record entitled to vote at the Annual Meeting will be available during ordinary business hours at our principal executive office, 601 Travis Street, Suite 1400, Houston, TX 77002, for inspection by stockholders of record for proper purposes. The list of stockholders will also be available at the Annual Meeting through the link www.virtualshareholdermeeting.com/DYN16. The Control Number provided on your Notice or proxy card is necessary to access this site.

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REFERENCES TO DYNEGY AND COMMON STOCK

Unless otherwise indicated, references to "Dynegy," the "Company," "we," "our," and "us" in the biographical and compensation information for directors and executive officers below refers to Board membership, employment and compensation with respect to Dynegy Inc.

INCORPORATION BY REFERENCE

To the extent that this proxy statement is incorporated by reference into any other filing by us under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, or the Exchange Act, the sections of this proxy statement entitled "Compensation and Human Resources Committee Report" and "Audit Committee Report" will not be deemed incorporated unless specifically provided otherwise in such filing, to the extent permitted by the rules of the SEC. Information contained on or connected to our web site is not incorporated by reference into this proxy statement and should not be considered part of this proxy statement or any other filing that we make with the SEC.

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CORPORATE GOVERNANCE

GOVERNANCE DOCUMENTS

The following governance documents are posted in the "Corporate Governance" section of our web site at www.dynegy.com and are available upon request to our Corporate Secretary:

Third Amended and Restated Certificate of Incorporation;

Sixth Amended and Restated Bylaws;

Corporate Governance Guidelines;

Code of Business Conduct and Ethics;

Code of Ethics for Senior Financial Professionals;

Related Party Transactions Policy;

Complaint and Reporting Procedures for Accounting and Auditing Matters (Whistleblower Policy);

Policy for Communications with Directors;

Audit Committee Charter;

Compensation and Human Resources Committee Charter;

Corporate Governance and Nominating Committee Charter; and

Finance and Commercial Oversight Committee Charter.

CORPORATE GOVERNANCE GUIDELINES

Our Corporate Governance Guidelines govern the qualifications and conduct of the Board. The Corporate Governance Guidelines address, among other things:

Our prohibition against directors and executive officers holding our securities in a margin account or pledging our securities, absent Company approval;

Our prohibition against directors and executive officers engaging in any hedging transaction with respect to our securities held by them;
The independence and other qualifications of our Board members, with respect to which we require that at least 75% of our Board members be independent of Dynegy and our management;

The requirement that any director nominee in an uncontested election who receives a greater number of votes "withheld" for his or her election than votes "for" such election must offer his or her resignation to the Board;

The separation of Chairman of the Board, or Chairman, and Chief Executive Officer positions;

The regular meetings of our non-management and independent directors;

The nomination of persons for election to our Board;

The evaluation of performance of our Board and its committees;

Our expectation that our Board members will attend all annual stockholder meetings;

Compensation of our Board and stock ownership guidelines for non-management directors;

The approval of the compensation of the Chief Executive Officer;

The review of development and succession plans for the Chief Executive Officer and other executive officers; and

The review of performance based compensation of our senior executives following a restatement that impacts the achievement of performance targets relating to that compensation.
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Corporate Governance


CODE OF BUSINESS CONDUCT AND ETHICS

Our Code of Business Conduct and Ethics applies to all of our directors, officers and employees. The key principles of this code include acting legally and ethically, notifying appropriate persons upon becoming aware of issues, obtaining confidential advice and dealing fairly with our stakeholders.

CODE OF ETHICS FOR SENIOR FINANCIAL PROFESSIONALS

Our Code of Ethics for Senior Financial Professionals applies to our Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer and other designated senior financial professionals. The key principles of this code include acting legally and ethically, promoting honest business conduct and providing timely and meaningful financial disclosures to our stockholders.

COMPLAINT AND REPORTING PROCEDURES FOR ACCOUNTING AND AUDITING MATTERS

Our Complaint and Reporting Procedures for Accounting and Auditing Matters provide for (1) the receipt, retention and treatment of complaints, reports and concerns regarding accounting, internal accounting controls or auditing matters, and (2) the confidential, anonymous submission of complaints, reports and concerns by employees regarding questionable accounting or auditing matters, in each case relating to Dynegy. Complaints may be made through a toll free "Integrity Helpline" telephone number, operated by an independent third party, and a dedicated email address. Complaints received are logged by the Ethics and Compliance Office, communicated to the chairman of our Audit Committee and investigated, under the supervision of our Audit Committee, by our Internal Audit department or Ethics and Compliance Office. In accordance with applicable law, these procedures prohibit us from taking adverse action against any person submitting a good faith complaint, report or concern.

POLICY FOR COMMUNICATIONS WITH DIRECTORS

Our Policy for Communications with Directors provides a means for stockholders and other interested parties to communicate with the Board. Under this policy, stockholders and other interested parties may communicate with the Board or specific members of the Board by sending a letter to Dynegy Inc., Communications with Directors, Attn: Corporate Secretary, Dynegy Inc., 601 Travis, Suite 1400, Houston, Texas 77002.

DIRECTOR ATTENDANCE AT ANNUAL MEETINGS

As detailed in our Corporate Governance Guidelines, Board members are requested and encouraged to attend the Annual Meeting. All of the members of the Board then in office attended last year's annual meeting held on June 3, 2015.

BOARD RISK OVERSIGHT

The Board has ultimate responsibility for protecting stockholder value. Among other things, the Board is responsible for understanding the risks to which we are exposed, approving management's strategy to manage these risks, establishing policies that monitor and manage defined risks and measuring management's performance against the strategy. The Board's oversight responsibility for managing risk is detailed in our Risk Policy Statement.

The Risk Policy Statement provides a structure around risk and defines the risks that we accept in the normal course of business. The Risk Policy Statement, in some instances, requires that separate policy documentation be in place including Interest Rate Risk and Investment Policy, Disclosure Controls and Procedures Policy, Risk Management and Insurance Policy, Credit Risk Policy, Investment Policy (Employee Benefit Plans), and Commodity Risk Policy. Although not mandated by the Risk Policy Statement, our Delegation of Authority policy and the Code of Business Conduct and Ethics are complementary and critical to the risk management process. Our Executive Management Team is responsible for managing the above risks and reports on such

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matters to the applicable Board committees. Further, our Ethics and Compliance Office reports functionally to the Audit Committee Chairman and meets regularly with the Audit Committee. The Risk Policy Statement can be amended with the approval of our Audit Committee on behalf of the Board.

The Audit Committee oversees the risks associated with the integrity of our financial statements and our compliance with legal and regulatory requirements. In addition, the Audit Committee discusses policies with respect to risk assessment and risk management, including major financial risk exposure and the steps management has taken to monitor and control such exposures. The Audit Committee reviews with management, internal auditors, and external auditors the accounting policies, the system of internal control over financial reporting and the quality and appropriateness of disclosure and content in the financial statements or other external financial communications. The Audit Committee also performs oversight of the business ethics and compliance program, reviews the programs and policies designed to assure compliance with our Code of Business Conduct and Ethics and applicable laws and regulations and monitors the results of the compliance efforts.

The Compensation and Human Resources Committee, or Compensation Committee, oversees risks primarily associated with our ability to attract, motivate and retain quality talent, particularly executive talent, and disclosure of our executive compensation philosophies, strategies and activities. As part of our ongoing formal process for assessing and monitoring risk related to our compensation programs and for reviewing certain policies to ensure that the appropriate controls exist to mitigate any identified risk, the Compensation Committee conducted a risk assessment in 2015 to reaffirm that our incentive programs do not encourage excessive risk-taking. This involved a review of a set of risk assessment considerations related to our short-term incentive, or STI, and long-term incentive, or LTI, programs.

Following this review, the Compensation Committee concluded that our incentive programs collectively foster cooperation and focus award opportunities on measures that are aligned with our business strategy and the interests of our stockholders and do not encourage excessive risk-taking behaviors.

The Nominating Committee oversees risks primarily associated with our ability to attract, motivate and retain quality directors, and our corporate governance programs and practices and our compliance therewith. Additionally, the Nominating Committee evaluates the performance of the Board, its committees and management annually and considers risk management effectiveness as part of their evaluation.

The Finance and Commercial Oversight Committee, or Finance Committee, oversees risks primarily with respect to oversight of our capital structure, financing and treasury matters and oversight of management's process for the identification, evaluation and mitigation of our financial and commercial related risks. Further, as part of their risk assessment responsibility, the Finance Committee oversees our commodity risk monitored by our risk control group and receives regular reporting regarding commodity risk management effectiveness.

The full Board oversees risks primarily associated with our commercial and operating performance and our environmental, health and safety performance. The full Board also receives quarterly updates from all Board committees, and they provide guidance to individual committee activities as appropriate.

BOARD LEADERSHIP STRUCTURE; SEPARATION OF POSITIONS OF CHAIRMAN AND CHIEF EXECUTIVE OFFICER

As discussed in our Corporate Governance Guidelines, the Board believes the position of Chairman should be held by a non-management director and not the Chief Executive Officer. Mr. Flexon, as President and Chief Executive Officer, is responsible for setting the strategic direction for the Company and the day-to-day leadership and performance of the Company, while Mr. Wood, as Chairman, provides overall leadership to the Board in its oversight function. As such, he serves as the presiding director of executive sessions of the non-management and independent directors.

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Corporate Governance


STOCK OWNERSHIP GUIDELINES

We have stock ownership guidelines for directors, members of the executive management team and other officers. We believe that a significant ownership stake by directors and officers leads to a stronger alignment of interests between directors, officers and stockholders. These guidelines, which were developed with the assistance of an independent compensation consultant, support our corporate governance focus and provide further alignment of interests among our directors and executive officers and stockholders.

Directors

Each non-management director is expected to own a meaningful amount of Dynegy common stock; specifically, it is expected that within three years of joining the Board, a non-management director shall own at least the number of shares equivalent to three times their annual cash retainer. For purposes of this guideline: (1) each share of common stock owned on any date (a "measuring date") by a director shall be deemed to have a value equal to the greater of (a) the trading price of a share of the Company's common stock as of the date the applicable share was granted to the director or (b) the trading price of a share of the Company's common stock as of the measuring date; and (2) shares owned outright, phantom stock units, shares or units of restricted stock and shares subject to deferred compensation shall be counted as shares of common stock owned by the director (with the value thereof determined in accordance with clause (1) above).

Officers

The shares counted for purposes of our officers' common stock ownership guidelines include shares owned outright, unvested restricted stock units, or RSUs, stock options (vested, in-the-money), and other share based equivalents that we may use from time to time. The holding requirements are expressed as a multiple of base salary and vary by level, specifically for the Chief Executive Officer and Executive Vice President levels they are as follows:

Chief Executive Officer   5 × annual base salary
Executive Vice President   3 × annual base salary

Upon our emergence from bankruptcy on October 1, 2012 (the "Effective Date") and pursuant to the terms of our Plan of Reorganization, all outstanding equity awards of the Company as of the Effective Date were cancelled. As such, the stock ownership guidelines for our executives are subject to a mandatory five-year compliance period that started on the Effective Date, and executives are encouraged to accumulate one-fifth of their holding requirement during each year of the five-year period and may not sell any shares until executives have successfully met the holding requirement. The Nominating Committee will monitor each executive's progress toward the required holding requirement on an annual basis. At the end of the five-year period, if any executive fails to attain the required level of common stock ownership, action may be taken, in the discretion of the Nominating Committee considering all factors it deems relevant, including awarding annual incentive cash bonuses in the form of restricted shares or requiring an executive to refrain from disposing of any vested shares and shares realized from any option exercise.

CHARITABLE CONTRIBUTIONS

During 2015, we did not make any contributions to any charitable organization in which an independent director served as an executive officer.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Exchange Act requires our executive officers, directors and persons who own more than 10% of our equity securities to file reports of ownership and changes in ownership with the SEC and the

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NYSE. Executive officers, directors and greater than 10% stockholders are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file.

Based solely upon a review of the copies of such forms furnished to us in 2015 and upon written representations that no Forms 5 were required, we believe that all persons subject to these reporting requirements filed the required reports on a timely basis.

REVIEW AND APPROVAL OF TRANSACTIONS WITH RELATED PERSONS

Our Board adopted a written policy relating to the approval of transactions with related parties. In general, for purposes of this policy, a related party transaction is a transaction to which we are a party, or a material amendment to any such transaction, and with respect to which a related party is directly, or to our knowledge, indirectly, a party. Under our policy, a "related party" is an executive officer, director or nominee for director of ours, a person known to us to be the beneficial owner of more than 5% of our voting securities, an immediate family member of an executive officer, director, nominee for director or 5% stockholder, and any entity owned or controlled by any of the foregoing individuals or in which any such individual serves as an executive officer or general partner or, together with any other such individuals, owns 10% or more of the equity interests of such an entity. Our policy requires the Audit Committee or, at the Board's discretion, a majority of directors disinterested from the transaction, to review and approve related party transactions. In reviewing and approving any related party transaction or material amendments to any such transaction, the Audit Committee must satisfy itself that it has been fully informed as to the related party's relationship and interest and as to the material facts of the transaction and must determine that the related party transaction is fair to us.

A copy of our related party transactions policy is available on our web site at http://www.dynegy.com/downloads/Dynegy_Corporate_Governance_Related_Party_Transactions.pdf.

AFFIRMATIVE DETERMINATIONS REGARDING DIRECTOR INDEPENDENCE AND OTHER MATTERS

The Board previously determined that each of the following directors who served in 2015 is "independent" as such term is defined in the NYSE Listed Company Standards:

Pat Wood III
Hilary E. Ackermann
Paul M. Barbas
Richard L. Kuersteiner
Jeffrey S. Stein
John R. Sult

The Board has also determined that each member of the Audit Committee, the Compensation Committee and the Nominating Committee meets the independence requirements applicable to those committees prescribed by the NYSE and the SEC. The Board has further determined that more than one of the members of the Audit Committee, including its current Chairman, Mr. Sult, are "audit committee financial experts" as such term is defined in Item 407(d) of the SEC's Regulation S-K.

The Nominating Committee reviewed the answers to annual questionnaires completed by the directors and nominees as well as the above described legal standards for Board and committee member independence and the criteria applied to determine "audit committee financial expert" status. On the basis of this review, the Nominating Committee made its recommendation to the full Board and the Board made its independence and "audit committee financial expert" determinations after consideration of the Nominating Committee's recommendation and a review of the materials made available to the Nominating Committee.

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DIRECTOR NOMINATION PROCESS AND QUALIFICATION REVIEW OF DIRECTOR NOMINEES

Process

Our director nominees are approved by the Board after considering the recommendation of the Nominating Committee. A copy of the Nominating Committee's charter is available at http://www.dynegy.com/downloads/Dynegy_Corporate_Governance_and_Nominating_Committee_Charter.pdf.

Our Certificate of Incorporation provides that the number of our directors shall be fixed from time to time exclusively by our Board. The Board has fixed the number of our directors currently at seven, subject to adjustment by the Board in accordance with our Certificate of Incorporation.

The Nominating Committee reviews annually the composition of the Board as a whole and recommends, if necessary, measures to be taken so that the Board reflects the appropriate balance of knowledge, experience, skills, expertise and diversity required for the Board as a whole and contains at least the minimum number of independent directors required by applicable laws and regulations. The Nominating Committee is responsible for ensuring that the composition of the Board accurately reflects the needs of our business and, in furtherance of this goal, proposing the nomination of directors for purposes of obtaining the appropriate members and skills. The Nominating Committee identifies nominees in various ways. The committee considers the current directors that have expressed an interest in and that continue to satisfy the criteria for serving on the Board as set forth in our Corporate Governance Guidelines. Other nominees that may be proposed by current directors, members of management or by stockholders are also considered. From time to time, the committee engages a professional firm to identify and evaluate potential director nominees.

Qualifications

All director nominees, whether proposed by a stockholder or otherwise, are evaluated in accordance with the qualifications set forth in our Corporate Governance Guidelines. These guidelines require that directors possess the highest personal and professional ethics, integrity and values and be committed to representing the long-term interests of our stockholders at large. They must also have an inquisitive and objective perspective, practical wisdom, mature judgment and sufficient personal resources such that any director compensation to be received from the Company would not be sufficiently meaningful to impact their judgment in reviewing matters coming before the Board. Finally, they must be able to work compatibly with the other members of the Board and otherwise have the experience and skills necessary to enable them to serve as productive members of the Board. Directors also must be willing to devote sufficient time to carrying out their fiduciary duties and other responsibilities effectively and should be committed to serve on the Board for an extended period of time. For additional information, please read our Corporate Governance Guidelines.

In connection with the director nominations for the 2016 Annual Meeting, the Nominating Committee also considered the nominees' (1) experience in the energy industry and understanding of the energy and commodity markets, (2) experience in finance and commercial risk management, (3) publicly traded company and board experience, (4) knowledge in the areas of laws and regulations related to environmental, health, safety, regulatory and other key industry issues, (5) strategic planning skills, (6) knowledge of corporate governance issues coupled with an appreciation of their practical application, and (7) accounting expertise, including audit, internal controls and risk management.

Each nominee brings a strong and unique background and set of skills to the Board, giving the Board as a whole competence and experience in a wide variety of areas, including energy, wholesale power generation and marketing, commodities, risk management, strategic planning, legal, corporate governance and board service, executive management, regulatory and policy development, accounting and finance, operations, and economics. For information concerning each director's various qualifications, attributes, skills and experience of our director nominees considered important by the Board in determining that such nominee should serve as a director as well as each nominee's principal occupation, directorships and additional biographical information, please see "Proposal 1—Election of Directors—Information on Director Nominees."

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Diversity

The Board does not have a formal policy with respect to Board nominee diversity. In recommending proposed nominees to the full Board, the Nominating Committee is charged with building and maintaining a board that has an ideal mix of talent and experience to achieve our business objectives in the current environment. In particular, the Nominating Committee is focused on relevant subject matter expertise, depth of knowledge in key areas that are important to us, and diversity of thought, background, perspective and experience so as to facilitate robust debate and broad thinking on strategies and tactics pursued by us.

Future director nominations

For purposes of the 2017 Annual Meeting, the Nominating Committee will consider any director nominations from a stockholder received by the Corporate Secretary by the close of business on February 19, 2017, but not before the close of business on January 20, 2017. See "Future Stockholder Proposals" below for more information. Any such nomination must be accompanied in writing by all information relating to such person that is required under the federal securities laws, including such person's written consent to be named in the proxy statement as a nominee and to serve as a director if elected. The nominating stockholder must also submit its name and address, as well as that of the beneficial owner if applicable, and the number of shares of our common stock that are owned beneficially and of record by such stockholder and such beneficial owner. Finally, the nominating stockholder must discuss the nominee's qualifications to serve as a director as described in our Corporate Governance Guidelines.

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PROPOSAL 1—ELECTION OF DIRECTORS

DIRECTORS

Seven directors are to be elected at the Annual Meeting by the holders of common stock to each serve a one-year term. The directors are elected by a plurality of the shares of common stock represented in person (through internet access) or by proxy and entitled to vote on the election of directors, subject to our majority voting policy discussed below. This means that the seven individuals nominated for election to the Board as directors who receive the most FOR votes among votes properly cast in person (through internet access) or by proxy will be elected. Only FOR or WITHHELD votes are counted in determining whether a plurality has been cast in favor of a director nominee. Under our Certificate of Incorporation, stockholders do not have cumulative voting rights. If you withhold authority to vote with respect to the election of some or all of the director nominees, your shares will not be voted with respect to those nominees indicated.

Under our majority voting policy, in an uncontested election, any director nominee who receives a greater number of votes WITHHELD for his or her election than votes FOR such election must offer his or her resignation to the Board promptly following certification of the stockholder vote.

Broker non-votes are not counted for purposes of election of directors. You cannot abstain in the election of directors.

Unless you withhold authority to vote or instruct otherwise, a properly executed proxy will be voted FOR the election of the nominees listed below as the proxies may determine. Although the Board does not contemplate that any of the nominees will be unable to serve, if such a situation arises prior to the Annual Meeting, the persons appointed as proxies will vote for the election of such other persons that may be nominated by the Board.

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INFORMATION ON DIRECTOR NOMINEES

All of the nominees for director are currently directors of Dynegy. Below is biographical information regarding the nominees, including their names, ages, business experience and qualifications to serve as a director, other directorships, if any, and the length of their service as a director of Dynegy.

      

Robert C. Flexon, 57
Director since 2011


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President and Chief Executive Officer

Prior Experience:

UGI Corporation—Chief Financial Officer

Foster Wheeler AG—Chief Executive Officer, Board Director

NRG Energy—Chief Financial Officer, Chief Operating Officer

Hercules and ARCO—various financial roles

Mr. Flexon, who oversaw Dynegy's turnaround in 2012, brings executive management and operating experience in many areas of the energy business, including wholesale power generation. Mr. Flexon also has a broad background in accounting and finance, and significant corporate financial expertise and management experience as a result of his service as a chief financial officer and other senior financial leadership positions.

Mr. Flexon has served as President and Chief Executive Officer since July 2011 and a director of Dynegy since June 2011. Prior to joining Dynegy, Mr. Flexon served as the Chief Financial Officer of UGI Corporation, a distributor and marketer of energy products and related services from February 2011 to July 2011. Mr. Flexon was the Chief Executive Officer of Foster Wheeler AG from June to October 2010 and the President and Chief Executive Officer of Foster Wheeler USA from November 2009 to May 2010. Prior to joining Foster Wheeler, Mr. Flexon was Executive Vice President and Chief Financial Officer of NRG Energy, Inc. from February to November 2009. Mr. Flexon previously served as Executive Vice President and Chief Operating Officer of NRG Energy from March 2008 to February 2009 and as its Executive Vice President and Chief Financial Officer from 2004 to 2008. Prior to joining NRG Energy, Mr. Flexon held executive positions with Hercules, Inc. and various key positions, including General Auditor, with Atlantic Richfield Company. Mr. Flexon holds a Bachelor of Science degree in Accounting from Villanova University. Mr. Flexon served on the public board of directors of Foster Wheeler from 2006 until 2009 and from May to October 2010 and is currently serving on the Board of Neighborhood Centers, the largest not-for-profit in Texas.

      
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Proposal 1—Election of Directors


      
      

Pat Wood III, 53
Director since 2012


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Chairman of the Board
Principal—Wood3 Resources

Current Public Directorships:

Quanta Services Inc.; SunPower Corp.; and Memorial Resources Development Corp.

Prior Experience:

Federal Energy Regulatory Commission—Chairman

Public Utility Commission of Texas—Chairman

Baker Botts L.L.P.—Attorney

Arco Indonesia—Associate Project Engineer

Mr. Wood currently serves as our Board's non-executive Chairman. Mr. Wood brings significant strategic and operational management experience to the Board. Mr. Wood holds a Bachelor of Science in Civil Engineering and a Juris Doctor degree, and has demonstrated strong leadership skills through nearly ten years of regulatory leadership in the energy sector. Mr. Wood brings a unique perspective from and extensive knowledge with regard to the energy regulatory process and energy policy development at the government level, his years of service as a director of other public and private companies, and his energy infrastructure development expertise.

Mr. Wood is serving as the Board's non-executive Chairman and has served as a principal of Wood3 Resources, an energy infrastructure developer, since July 2005. From 2001 until July 2005, Mr. Wood served as chairman of the Federal Energy Regulatory Commission. From 1995 until 2001, he chaired the Public Utility Commission of Texas. Prior to 1995, Mr. Wood was an attorney with Baker Botts L.L.P., a global law firm, and an associate project engineer with Arco Indonesia, an oil and gas company, in Jakarta. Mr. Wood currently serves on the public boards of directors of Quanta Services Inc., SunPower Corp. and Memorial Resources Development Corp.

      
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Hilary E. Ackermann, 60
Director since 2012


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  Current Public Directorship:

Apollo Investment Corporation

Current Private Directorship:

Hartford Funds (as detailed below)

Prior Experience:

Goldman Sachs Bank USA—Chief Risk Officer; Chaired Operational Risk, Credit Risk and Middle Market Loan Committees; Vice Chair of Bank Risk Committee; Chair GS Group level Operational Risk Committee

Goldman Sachs & Co—Managing Director, Credit Risk Management & Advisory

Swiss Bank Corporation—Assistant Department Head

Ms. Ackermann brings extensive experience assessing credit for major banking institutions, covering a variety of industries including the power generation, electrical utilities and natural resources sectors, as well as in depth coverage of commodities trading including, oil, natural gas and power as a risk manager. Ms. Ackerman currently serves as our Chair of the Finance and Commercial Oversight Committee and, as chair, she contributes significantly to the review and evaluation of our business strategy, capital structure and risk management goals.

Ms. Ackermann was Chief Risk Officer with Goldman Sachs Bank USA from October 2008 to 2011. In this role, she managed Credit, Market and Operational Risk for Goldman Sach's commercial bank; developed the bank's risk management infrastructure including policies and procedures and processes; maintained ongoing relationship with bank regulators including New York Fed, NY State Banking Department and the FDIC; chaired Operational risk, Credit risk and Middle Market Loan Committees; served as Vice Chair of Bank Risk Committee; was a member of Community Investment, Business Standards and New Activities Committees; was a member of GS Group level Credit Policy and Capital Committees; and chaired GS Group level Operational Risk Committee. Ms. Ackermann served as Managing Director, Credit Department of Goldman, Sachs & Co. from January 2002 until October 2008, as VP, Credit Department from 1989 to 2001, and as an Associate in the Credit Department from 1985 to 1988. Prior to joining Goldman, Sachs, Ms. Ackermann served as Assistant Department Head of Swiss Bank Corporation from 1981 until 1985. Ms. Ackermann currently serves on the public board of directors of Apollo Investment Corporation and also serves on the private board of directors of each of Hartford Series Fund, Inc., Hartford HLS Series Fund II, Inc., The Hartford Mutual Funds, Inc. and The Hartford Mutual Funds II, Inc.

      
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Proposal 1—Election of Directors


      
      

Paul M. Barbas, 59
Director since 2012


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Current Public Directorship:

Pepco Holdings,  Inc.

Prior Experience:

DPL Inc. and DP&L—President and Chief Executive Officer; Board Director

Chesapeake Utilities Corporation—Executive Vice President & Chief Operating Officer; Vice President;

Chesapeake Service Company—President;

Allegheny Power—Executive Vice President; President of Ventures unit

Mr. Barbas brings extensive utility, management and oversight experience, having served in executive management positions with various utility and other companies. He also has a broad background in finance and marketing and brings a strong understanding of power operations and energy markets. He contributes significantly to the oversight responsibilities on matters relating to executive compensation and compensation strategy and serves as our Compensation and Human Resources Committee chair.

Mr. Barbas was President and Chief Executive Officer of DPL Inc. and its principal subsidiary, The Dayton Power and Light Company (DP&L), from October 2006 until December 2011. He also served on the board of directors of DPL Inc. and DP&L. He previously served as Executive Vice President and Chief Operating Officer of Chesapeake Utilities Corporation, a diversified utility company engaged in natural gas distribution, transmission and marketing, propane gas distribution and wholesale marketing and other related services from 2005 until October 2006, as Executive Vice President from 2004 until 2005, and as President of Chesapeake Service Company and Vice President of Chesapeake Utilities Corporation, from 2003 until 2004. From 2001 until 2003, he was Executive Vice President of Allegheny Power, responsible for the operational and strategic functions of a $2.7 billion company serving 1.6 million customers with 3,200 employees. He joined Allegheny Energy in 1999 as President of its Ventures unit. Mr. Barbas also serves on the public board of Pepco Holdings, Inc.

      
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Richard Lee Kuersteiner, 76
Director since 2012


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Prior Experience:

Franklin Templeton Investments—Associate General Counsel; Director of Restructuring; Managing Corporate Counsel

Dex Media, Inc.—Board Director

Mr. Kuersteiner has a broad background in corporate governance and complex restructuring transactions and has been a long-standing member of the Stanford Institutional Investors Forum. He has employed his more than 40 years of legal experience by facilitating the restructuring of over 100 major corporations and has served on, or chaired, numerous official creditors' committees, which provides the Board with a unique analytical view from the perspective of a large institutional investor. He leads the Board's corporate governance review and oversight processes and serves as our Corporate Governance and Nominating Committee chair.

Mr. Kuersteiner was a member of the Franklin Templeton Investments legal department in San Mateo, California from 1990 until May 2012. At Franklin he served in various capacities including as Associate General Counsel and Director of Restructuring and Managing Corporate Counsel. For many years he also was an officer of virtually all of the Franklin, Templeton and Mutual Series funds. In February 2010 when R H Donnelley Corporation emerged from Chapter 11 bankruptcy as Dex One Corporation, he joined its board of directors. On April 30, 2013, Dex One Corporation merged with Super Media, creating Dex Media, Inc. Mr. Kuersteiner stepped down as a director of Dex Media, Inc. upon completion of his term in May 2014.

      
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Proposal 1—Election of Directors


      
      

Jeffrey S. Stein, 46
Director since 2012


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Co-Founder and Managing Partner of Power Capital Partners LLC
Founder and Managing Partner of Stein Advisors LLC

Current Public Directorship:

Ambac Financial Group, Inc.—Chairman of the Board

Current Private Directorships:

Granite Ridge Holdings, LLC and MLR Petroleum LLC

Prior Experience:

Durham Asset Management LLC—Co-Founder and Principal; Co-Director of Research

The Delaware Bay Company,  Inc.—Director

Shearson Lehman Brothers—Associate in Capital Preservation & Restructuring Group

US Power Generating Company and KGen Power Corporation—Board Director

Mr. Stein is an investment professional with over 22 years of experience in the high yield, distressed debt and special situations asset class who has substantial experience investing in the merchant power and regulated electric utility industries. Mr. Stein has invested in numerous power companies representing a broad array of power plants diversified by fuel source, position on the dispatch curve, geographic location and technology. Mr. Stein has been actively involved in the hedging, refinancing, restructuring and sale of various power assets. Mr. Stein currently serves, or has served, on the private boards of other merchant power companies, and in such capacity has focused on capital allocation, plant operating and financial performance, capital structure optimization, hedging and risk management.

Mr. Stein is a Co-Founder and Managing Partner of Power Capital Advisors LLC, a financial advisory and merchant banking firm focused on energy, power and commodity-related project development and restructuring investments. Mr. Stein is Founder and Managing Partner of Stein Advisors LLC, a financial advisory firm that provides consulting services, primarily through corporate board representation, to institutional investors focused on distressed debt and special situations investments. Previously Mr. Stein was a Co-Founder and Principal of Durham Asset Management LLC, a global event-driven distressed debt and special situations asset management firm. From January 2003 through December 2009, Mr. Stein served as the Co-Director of Research at Durham responsible for the identification, evaluation and management of investments for the various Durham portfolios. From July 1997 to December 2002, Mr. Stein was a Director at The Delaware Bay Company, Inc., a boutique research and investment banking firm focused on the distressed debt and special situations asset class. From September 1991 to August 1995, Mr. Stein was an Associate at Shearson Lehman Brothers in the Capital Preservation & Restructuring Group. Mr. Stein currently serves on the public board as Chairman of the Board of Ambac Financial Group, Inc. (NASDAQ: AMBC) and as a director on the private boards of Granite Ridge Holdings, LLC and MLR Petroleum LLC. Mr. Stein previously served as a director on the boards of US Power Generating Company and KGen Power Corporation.

      
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John R. Sult, 56
Director since 2012


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Executive Vice President and Chief Financial Officer—Marathon Oil Corporation

Current Private Directorship:

Melior Innovations Inc.

Prior Experience:

El Paso Corporation—Executive Vice President and Chief Financial Officer; Senior Vice President and Chief Financial Officer; Senior Vice President and Controller; Chief Accounting Officer

El Paso Pipeline GP Company, L.L.C.—Executive Vice President, Chief Financial Officer and Director; Senior Vice President and Chief Financial Officer; Senior Vice President, Chief Financial Officer and Controller

El Paso Pipeline Group—Senior Vice President, Chief Financial Officer and Controller

Halliburton Energy Services—Vice President and Controller

Arthur Andersen LLP—Audit Partner

Mr. Sult, through his experience in executive financial positions with large public companies, brings significant knowledge of accounting, capital structures, finance, financial reporting, strategic planning and forecasting. Mr. Sult has extensive knowledge of the energy industry. Further, he has served as an audit partner at a major accounting firm, which, in addition to his other experience, qualifies him as an "audit committee financial expert." He currently serves as the chair of the Audit Committee and, as the chair, he contributes significantly to the oversight of the integrity of our financial statements, internal controls and ethics and compliance functions.

Mr. Sult has served as Executive Vice President and Chief Financial Officer of Marathon Oil Corporation since September 2013. He was Executive Vice President and Chief Financial Officer of El Paso Corporation from March 2010 until May 2012. He previously served as Senior Vice President and Chief Financial Officer from November 2009 until March 2010, and as Senior Vice President and Controller from November 2005 until November 2009. Mr. Sult served as Executive Vice President, Chief Financial Officer and director of El Paso Pipeline GP Company, L.L.C., the general partner of El Paso Pipeline Partners, L.P., from July 2010 until May 2012, as Senior Vice President and Chief Financial Officer from November 2009 until July 2010, and as Senior Vice President, Chief Financial Officer and Controller from August 2007 until November 2009. Mr. Sult also served as Chief Accounting Officer of El Paso Corporation and as Senior Vice President, Chief Financial Officer and Controller of El Paso's Pipeline Group from November 2005 to November 2009. Prior to joining El Paso, Mr. Sult served as Vice President and Controller of Halliburton Energy Services from August 2004 until October 2005. Prior to joining Halliburton, Mr. Sult managed an independent consulting practice that provided a broad range of finance and accounting advisory services and assistance to public companies in the energy industry. Prior to private practice, Mr. Sult was an audit partner with Arthur Andersen LLP. Mr. Sult currently serves on the board of directors of Melior Innovations Inc., a private company.

      

The Board unanimously recommends that stockholders vote FOR the election of
these director nominees to the Board.

GRAPHIC    2016 Proxy Statement    23

Proposal 1—Election of Directors


DIRECTORS' MEETINGS AND COMMITTEES OF THE BOARD

Our Board held 14 meetings during 2015. Each director attended at least 90% of the total number of meetings of the Board and the total number of meetings held by all committees on which he or she served during the period for which he or she has been a director. Under our Corporate Governance Guidelines, directors who are not members of a particular committee are entitled to attend meetings of each such committee.

The following table reflects the members of each of the committees of the Board and the number of meetings held during 2015.

Name

    Audit

  Compensation &
Human
Resources



  Corporate
Governance &
Nominating



  Finance &
Commercial
Oversight



 

Robert C. Flexon

                                   

Pat Wood III(1)

                      X            

Hilary E. Ackermann

      X                      
CHAIR
   

Paul M. Barbas

      X      
CHAIR
                   

Richard L. Kuersteiner

              X      
CHAIR
           

Jeffrey S. Stein

              X       X       X    

John R. Sult(2)

     
CHAIR
                      X    

Number of Meetings

      8       10       2       4    
(1)
As Chairman of the Board, Mr. Wood is an ex officio member of the Audit, Compensation and Finance committees and has a standing invitation to attend all such committee meetings. He also serves as the presiding director of executive sessions of the non-management and independent directors.

(2)
Designated Audit Committee Financial Expert.


CHAIR
  Committee Chair

COMMITTEES

Committee Composition

The current members of each of the committees of the Board, as well as the current Chairman of each of the committees of the Board, are identified in the following paragraphs.

Audit Committee.    The Audit Committee, which is comprised of Messrs. Sult (Chair) and Barbas and Ms. Ackermann, met a total of 8 times during 2015. Each member of the Audit Committee is independent as such term is defined in the NYSE and SEC rules. The Board has determined that each member of the Audit Committee possesses the necessary level of financial literacy required to enable him or her to serve effectively as an Audit Committee member, and all members qualify as Audit Committee Financial Experts, including our designated Financial Expert, Mr. Sult, our Audit Committee Chair. No Audit Committee member serves on more than three audit committees of public companies, including our Audit Committee. The Audit Committee operates under a written charter adopted by the Board on October 30, 2012. The charter is reviewed annually and is available in the "Corporate Governance" section of our web site at http://www.dynegy.com/downloads/Dynegy_Audit_Committee_Charter.pdf.

We maintain an Internal Audit department to provide management and the Audit Committee with ongoing assessments of our risk management processes, system of internal controls and our internal control over financial reporting compliance activities. The Audit Committee, among other duties, assists the Board in its oversight of: the integrity of our financial statements, including a discussion of the quality of the accounting principles, the reasonableness of significant judgments and the clarity of disclosures in the financial statements; recommending to the Board the filing of our audited financial statements; our disclosure controls and procedures and internal control over financial reporting; our compliance with legal and regulatory requirements and Code of Business Conduct and Ethics; the evaluation, appointment and retention of our

24     GRAPHIC    2016 Proxy Statement

Proposal 1—Election of Directors


independent registered public accountant, including a review of their qualifications, services, independence, fees and performance; the performance of our internal audit function; the performance of our business ethics and compliance function; and enterprise risk management process, policies and procedures. The Audit Committee reviews in advance and pre-approves, explicitly, audit and permissible non-audit services provided to us by our independent registered public accountant. For more information regarding the Audit Committee's approval procedures, please read "Audit Committee Pre-Approval Policy" below. Further, the Audit Committee provides an open venue of communication between management, the internal audit function, ethics and compliance function, independent registered public accountants and Board. The Audit Committee meets with the Internal Audit department, Ethics and Compliance Office and Ernst & Young LLP, or EY, with and without management present, to discuss the results of their examinations and evaluations.

Our independent registered public accountants, EY are responsible for auditing our consolidated financial statements and the effectiveness of our internal control over financial reporting in accordance with standards of the Public Company Accounting Oversight Board (United States) and issuing their reports based on that audit.

Compensation and Human Resources Committee.    The Compensation Committee, which is comprised of Messrs. Barbas (Chair), Kuersteiner and Stein, met a total of 10 times during 2015. Each member of the Compensation Committee is independent as such term is defined in the NYSE and SEC rules. The Compensation Committee operates under a written charter adopted by the Board. The charter is available in the "Corporate Governance" section of our web site http://www.dynegy.com/downloads/Dynegy_Compensation_and_Human_Resources_Committee_Charter.pdf. The purpose of the Compensation Committee is to, among other duties, assist our Board in fulfilling the Board's oversight responsibilities on matters relating to executive compensation, oversee our overall compensation strategy and our equity based compensation plans, prepare the annual Compensation and Compensation Committee report required by SEC rules and review and discuss with our management the Compensation Discussion and Analysis to be included in our annual proxy statement to stockholders. The Compensation Committee does not assist the Board with respect to director compensation, which is the responsibility of the Nominating Committee. For more information regarding the role and scope of authority of the Compensation Committee in determining executive compensation, please read "Compensation Discussion and Analysis" below.

The Compensation Committee may delegate specific responsibilities to one or more subcommittees to the extent permitted by law, NYSE listing standards and our governing documents. The Compensation Committee has retained Meridian Compensation Partners, LLC, or Meridian, as its independent compensation consultant. Meridian reports directly to the Compensation Committee. For a discussion of the role of the independent compensation consultant retained by the Compensation Committee in recommending executive compensation and the participation of our Chief Executive Officer in the review of the compensation of other executives that report to the Chief Executive Officer, please read "Compensation Discussion and Analysis" below.

Corporate Governance and Nominating Committee.    The Nominating Committee, which is comprised of Messrs. Kuersteiner (Chair), Stein and Wood, met a total of 2 times during 2015. Each member of the Nominating Committee is independent as such term is defined in the NYSE rules. The Nominating Committee operates under a written charter adopted by the Board. The charter is available in the "Corporate Governance" section of our web site http://www.dynegy.com/downloads/Dynegy_Corporate_Governance_and_Nominating_Committee_Charter.pdf. The Nominating Committee is responsible for identifying director nominees, assisting the Board with respect to director compensation, developing and reviewing our Corporate Governance Guidelines, succession planning and overseeing the evaluation of the Board and management.

Finance and Commercial Oversight Committee.    The Finance Committee, which is comprised of Ms. Ackermann (Chair) and Messrs. Stein and Sult, met a total of 4 times during 2015. The Finance Committee operates under a written charter adopted by the Board. The charter is available in the "Corporate Governance" section of our web site at http://www.dynegy.com/downloads/Dynegy_Finance_and_Commercial_Oversight_Committee_Charter.pdf. The Finance Committee is responsible for oversight of the Company's capital structure, financing and treasury matters and oversight of management's process for the identification, evaluation and mitigation of financial and commercial related risks to the Company.

GRAPHIC    2016 Proxy Statement    25

DIRECTOR COMPENSATION

DIRECTOR COMPENSATION FOR 2015

The key terms of our non-management director compensation include the following:

Board Annual Retainer (paid in cash)

 

$75,000; paid in quarterly installments.

Committee Annual Retainers
    (paid in cash)

 

Chair (paid in quarterly installments)

Audit—$25,000

Compensation—$20,000

Finance & Commercial Oversight—$20,000

Nominating—$15,000

 

Members (paid in quarterly installments)

Audit—$10,000

Compensation—$10,000

Finance & Commercial Oversight—$10,000

Nominating—$5,000

Annual Equity Award

 

Annual award value of $110,000 to be granted in RSUs using the closing stock price on the grant date.

Annual awards to be granted on the date of Dynegy's Annual Stockholder Meeting with one year vesting from the date of grant.

Non-Executive Chairman Annual Retainer

 

Additional retainer of $150,000.

Deliver through a mix of cash (50%), paid in quarterly installments, and RSUs (50%).

RSUs to be granted on the date of Dynegy's Annual Stockholder Meeting with one year vesting from the date of grant.

Other

 

Reimbursement for reasonable out-of-pocket expenses incurred in connection with travel to and from, and attendance at, meetings of the Board or its committees and related activities, including director education courses and materials.

26     GRAPHIC    2016 Proxy Statement

Director Compensation


The following table sets forth certain information regarding the compensation earned by or awarded to each non-management director who served on our Board in 2015. Directors who were also employees of Dynegy were not compensated for their services as directors.

Name


  Fees
Earned or
Paid in
Cash




  Stock
Awards(1)


  Option
Awards


  Non-Equity
Incentive
Plan
Compensation




  Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings







  All Other
Compensation


  Total

 

Pat Wood III(2)(3)

      $155,000       $185,000       $—       $—       $—       $—       $340,000    

Hilary E. Ackermann

      $105,000       $110,000       $—       $—       $—       $—       $215,000    

Paul M. Barbas

      $105,000       $110,000       $—       $—       $—       $—       $215,000    

Richard L. Kuersteiner

      $100,000       $110,000       $—       $—       $—       $—       $210,000    

Jeffrey S. Stein(3)

      $100,000       $110,000       $—       $—       $—       $—       $210,000    

John R. Sult

      $110,000       $110,000       $—       $—       $—       $—       $220,000    
(1)
Directors received an annual award granted under the Dynegy Inc. 2012 Long Term Incentive Plan, or 2012 Long Term Incentive Plan, in RSUs on June 3, 2015 with a vesting date of June 3, 2016. The values shown under "Stock Awards" reflect the aggregate grant date fair value computed in accordance with FASB ASC Topic 718.

(2)
Mr. Wood is serving as our non-executive Chairman of the Board.

(3)
Mr. Wood has deferred receipt of the amount realized from the vesting of the RSUs granted on June 3, 2015 until the earlier of (1) January 10, 2019, or (2) his separation from service as a director of Dynegy. Messrs. Stein and Sult and Ms. Ackermann each have deferred receipt of the amount realized from the vesting of the RSUs granted on June 3, 2015 until their separation from service as a director of Dynegy.

CERTAIN TRANSACTIONS AND OTHER MATTERS

For a description of certain transactions with management and others, certain business relationships and compliance with Section 16(a) of the Exchange Act, see "Executive Compensation—Potential Payments Upon Termination or Change in Control," "Transactions with Related Persons, Promoters and Certain Control Persons" and "Section 16(a) Beneficial Ownership Reporting Compliance."

GRAPHIC    2016 Proxy Statement    27

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information as of March 22, 2016 regarding the beneficial ownership of our common stock by: (1) each of our current directors; (2) each of our current executive officers; (3) all of our directors and executive officers as a group; and (4) each person or entity we know to beneficially own more than 5% of our outstanding shares of common stock.

Beneficial ownership for the purposes of this table is determined in accordance with the rules and regulations of the SEC. Under such rules, beneficial ownership includes any shares as to which a person has sole or shared voting power or investment power and any shares which the person has the right to dispose or acquire within 60 days of March 22, 2016. Common stock subject to options and warrants, regardless of whether such arrangement is currently in the money, that are currently exercisable or exercisable within 60 days of March 22, 2016 are deemed to be outstanding and beneficially owned by the person holding the options or warrants, and common stock issuable upon vesting of RSUs that is vested or will vest within 60 days of March 22, 2016 is deemed to be outstanding and beneficially owned by the person holding the RSUs. These shares, however, are not deemed outstanding for the purposes of computing the percentage ownership of any other person. Percentage of beneficial ownership is based on 117,240,697 shares of common stock outstanding as of March 22, 2016. Except as disclosed in the footnotes to this table, we believe that each stockholder identified in the table possesses sole voting and investment power over all shares of common stock shown as beneficially owned by the stockholder.

All percentages and share amounts are approximate based on current information available to us. The information available to us may be incomplete.

28     GRAPHIC    2016 Proxy Statement

Security Ownership Of Certain Beneficial Owners And Management


Unless otherwise noted, the address for each person listed on the table is c/o Dynegy Inc., 601 Travis, Suite 1400, Houston, Texas 77002. The address for BlackRock, Inc. is 55 East 52nd Street, New York, NY 10055 and the address for Massachusetts Financial Services Company is 111 Huntington Avenue, Boston MA 02199.

      Amount and Nature of Shares
Beneficially Owned(1)


 
         

Name

      Number

    Percent of Class

 

5% Stockholders

                   

BlackRock, Inc.

      13,817,714       11.8%    

Massachusetts Financial Services Co. (2)

      12,518,477       10.7%    

FMR LLC

      10,967,870       9.4%    

Oaktree Capital Group, LLC

      9,840,696       8.4%    

Carlson Capital, L.P.

      9,396,360       8.0%    

The Vanguard Group, Inc.

      8,100,338       6.9%    

Luminus Management, LLC.

      7,214,323       6.2%    

D.E. Shaw & Co., L.P.

      6,889,567       5.9%    

Executive Officers and Directors

                   

Robert C. Flexon(3)

      726,593       *    

Clint C. Freeland(4)

      186,779       *    

Catherine C. James(5)

      172,536       *    

Carolyn J. Burke(6)

      172,665       *    

Henry D. Jones(7)

      152,679       *    

Mario E. Alonso(8)

      47,633       *    

Julius Cox(9)

      39,841       *    

Martin W. Daley(10)

      47,125       *    

Daniel P. Thompson(11)

      49,459       *    

Sheree M. Petrone(12)

      31,747       *    

Pat Wood III(13)

      45,023       *    

Hilary E. Ackermann(14)

      15,489       *    

Paul M. Barbas(15)

      18,072       *    

Richard L. Kuersteiner(16)

      60,061       *    

John R. Sult(17)

      25,039       *    

Jeffrey S. Stein(18)

      15,489       *    

All executive officers and directors as a group (16 persons)

      1,806,230       1.5%    
*
Percentage ownership of less than one percent.

(1)
Shares shown in the table above include shares held in the beneficial owner's name or jointly with others, or in the name of a bank, nominee or trustee for the beneficial owner's account.

(2)
Shares of common stock consists of sum of (1) shares of common stock and (2) shares of Series A 5.375% mandatory convertible preferred stock on an as-converted basis to shares of common stock.

(3)
Includes for Mr. Flexon, 5,337 and 517,136 shares issuable upon the exercise of our warrants and options, respectively. Amount shown does not include: 1) 19,105 RSUs and 46,531 options, each granted on March 3, 2014, pursuant to the 2012 Long Term Incentive Plan, and vest ratably over three years, with the third vesting period taking place on March 3, 2017; 2) 40,174 RSUs and 99,322 options, each granted on March 3, 2015, pursuant to the 2012 Long Term Incentive Plan, and vest ratably over three years, with the second vesting period taking place on March 3, 2017; 3) 153,563 RSUs granted on May 11, 2015, pursuant to the 2012 Long Term Incentive Plan, which vests on April 30, 2018; and 4) 172,625 RSUs and 311,785 options, each granted on March 8, 2016, pursuant to the 2012 Long Term Incentive Plan, and vest ratably over three years, with the first vesting period taking place on March 8, 2017.
GRAPHIC    2016 Proxy Statement    29

Security Ownership Of Certain Beneficial Owners And Management


(4)
Includes for Mr. Freeland, 1,055 and 138,913 shares issuable on the exercise of our warrants and options, respectively. Amount shown does not include: 1) 4,776 RSUs and 11,633 options, each granted on March 3, 2014, pursuant to the 2012 Long Term Incentive Plan, and vest ratably over three years, with the third vesting period taking place on March 3, 2017; 2) 9,422 RSUs and 23,295 options, each granted on March 3, 2015, pursuant to the 2012 Long Term Incentive Plan, and vest ratably over three years, with the second vesting period taking place on March 3, 2017; and 3) 32,538 RSUs and 58,768 options, each granted on March 8, 2016, pursuant to the 2012 Long Term Incentive Plan, and vest ratably over three years, with the first vesting period taking place on March 8, 2017.

(5)
Includes for Ms. James, 1,158 and 129,334 shares issuable on the exercise of our warrants and options, respectively. Amount shown does not include: 1) 4,631 RSUs and 11,280 options, each granted on March 3, 2014, pursuant to the 2012 Long Term Incentive Plan, and vest ratably over three years, with the third vesting period taking place on March 3, 2017; 2) 7,709 RSUs and 19,060 options, each granted on March 3, 2015, pursuant to the 2012 Long Term Incentive Plan, and vest ratably over three years, with the second vesting period taking place on March 3, 2017; and 3) 29,101 RSUs and 52,561 options, each granted on March 8, 2016, pursuant to the 2012 Long Term Incentive Plan, and vest ratably over three years, with the first vesting period taking place on March 8, 2017.

(6)
Includes for Ms. Burke, 1,016 and 127,644 shares issuable on the exercise of our warrants and options, respectively. Amount shown does not include: 1) 4,631 RSUs and 11,280 options, each granted on March 3, 2014, pursuant to the 2012 Long Term Incentive Plan, and vest ratably over three years, with the third vesting period taking place on March 3, 2017; 2) 7,709 RSUs and 19,060 options, each granted on March 3, 2015, pursuant to the 2012 Long Term Incentive Plan, and vest ratably over three years, with the second vesting period taking place on March 3, 2017; and 3) 29,378 RSUs and 53,061 options, each granted on March 8, 2016, pursuant to the 2012 Long Term Incentive Plan, and vest ratably over three years, with the first vesting period taking place on March 8, 2017.

(7)
Includes for Mr. Jones, 5 and 79,609 shares issuable on the exercise of warrants and options, respectively. Amount also includes 15,202 RSUs and 23,759 options, each granted on April 1, 2013, pursuant to the 2012 Long Term Incentive Plan, which will vest on April 1, 2016. Amount shown does not include: 1) 4,631 RSUs and 11,280 options, each granted on March 3, 2014, pursuant to the 2012 Long Term Incentive Plan, and vest ratably over three years, with the third vesting period taking place on March 3, 2017; 2) 7,709 RSUs and 19,060 options, each granted on March 3, 2015, pursuant to the 2012 Long Term Incentive Plan, and vest ratably over three years, with the second vesting period taking place on March 3, 2017; and 3) 33,391 RSUs and 60,309 options, each granted on March 8, 2016, pursuant to the 2012 Long Term Incentive Plan, and vest ratably over three years, with the first vesting period taking place on March 8, 2017.

(8)
Includes for Mr. Alonso, 421 and 34,386 shares issuable on the exercise of our warrants and options, respectively. Amount also includes 5,501 RSUs granted on April 1, 2015, which will vest on April 1, 2016. Amount shown does not include: 1) 2,026 RSUs and 4,935 options, each granted on March 3, 2014, pursuant to the 2012 Long Term Incentive Plan, and vest ratably over three years, with the third vesting period taking place on March 3, 2017; 2) 5,140 RSUs and 12,706 options, each granted on March 3, 2015, pursuant to the 2012 Long Term Incentive Plan, and vest ratably over three years, with the second vesting period taking place on March 3, 2017; 3) 11,001 RSUs granted on April 1, 2015, pursuant to the 2012 Long Term Incentive Plan, and vest ratably over three years, with the second vesting period taking place on April 1, 2017; and 21,396 RSUs and 38,645 options, each granted on March 8, 2016, pursuant to the 2012 Long Term Incentive Plan, and vest ratably over three years, with the first vesting period taking place on March 8, 2017.

(9)
Includes for Mr. Cox, 30,037 shares issuable on the exercise of our options. Amount shown does not include: 1) 1,187 RSUs and 2,890 options, each granted on March 3, 2014, pursuant to the 2012 Long Term Incentive Plan, and vest ratably over three years, with the third vesting period taking place on March 3, 2017; 2) 4,668 RSUs and 11,542 options, each granted on March 3, 2015, pursuant to the 2012 Long Term Incentive Plan, and vest ratably over three years, with the second vesting period taking place on March 3, 2017; and 3) 16,629 RSUs and 30,035 options, each granted on March 8, 2016, pursuant to the 2012 Long Term Incentive Plan, and vest ratably over three years, with the first vesting period taking place on March 8, 2017.

(10)
Includes for Mr. Daley 35,116 shares issuable on the exercise of options and 455 shares held indirectly. Amount shown does not include: 1) 1,158 RSUs and 2,820 options, each granted on March 3, 2014, pursuant to the 2012 Long Term Incentive Plan, and vest ratably over three years, with the third vesting period taking place on March 3, 2017; 2) 4,711 RSUs and 11,648 options, each granted on March 3, 2015, pursuant to the 2012 Long Term Incentive Plan, and vest ratably over three years, with the second vesting period taking place on March 3, 2017; 3) 18,340 RSUs and 33,124 options, each granted on March 28, 2016, pursuant to the 2012 Long Term Incentive Plan, and vest ratably over three years, with the first vesting period taking place on March 8, 2017; and 4) 1,357 RSUs held indirectly.

(11)
Includes for Mr. Thompson 37,638 shares issuable on the exercise of options. Amount shown does not include: 1) 1,302 RSUs and 3,172 options, each granted on March 3, 2014, pursuant to the 2012 Long Term Incentive Plan, and vest ratably over three years, with the third vesting period taking place on March 3, 2017; 2) 4,711 RSUs and 11,648 options, each granted on March 3, 2015, pursuant to the 2012 Long Term Incentive Plan, and vest ratably over three years, with the second vesting period taking place on March 3, 2017; and 3) 18,340 RSUs and 33,124 options, each granted on March 8, 2016, pursuant to the 2012 Long Term Incentive Plan, and vest ratably over three years, with the first vesting period taking place on March 8, 2017.

(12)
Includes for Ms. Petrone 23,237 shares issuable on the exercise of options. Amount shown does not include: 1) 1,129 RSUs and 2,749 options, each granted on March 3, 2014, pursuant to the 2012 Long Term Incentive Plan, and vest ratably over three years, with the third vesting period taking place on March 3, 2017; 2) 3,854 RSUs and 9,530 options, each granted on March 3, 2015, pursuant to the 2012 Long Term Incentive Plan, and vest ratably over three years, with the second vesting period taking place on March 3, 2017; and 3) 17,128 RSUs and 30,936 options, each granted on March 8, 2016, pursuant to the 2012 Long Term Incentive Plan, and vest ratably over three years, with the first vesting period taking place on March 8, 2017.

(13)
Includes for Mr. Wood, 5,707 RSUs granted pursuant to the 2012 Long Term Incentive Plan, which vest on June 3, 2016.

(14)
Includes for Ms. Ackermann, 1,000 shares held indirectly and 3,393 RSUs granted pursuant to the 2012 Long Term Incentive Plan, which vest on June 3, 2016.

(15)
Includes for Mr. Barbas, 3,393 RSUs granted pursuant to the 2012 Long Term Incentive Plan, which vest on June 3, 2016.

(16)
Includes for Mr. Kuersteiner, 7,604 shares issuable upon the exercise of our warrants, 3,393 RSUs granted pursuant to the 2012 Long Term Incentive Plan, which vest on June 3, 2016, and 37,968 shares issuable upon the conversion of 14,713 shares of Series A 5.375% mandatory convertible preferred stock.

(17)
Includes for Mr. Sult, 3,393 RSUs granted pursuant to the 2012 Long Term Incentive Plan, which vest on June 3, 2016.

(18)
Includes for Mr. Stein, 3,393 RSUs granted pursuant to the 2012 Long Term Incentive Plan, which vest on June 3, 2016.
30     GRAPHIC    2016 Proxy Statement

EXECUTIVE OFFICERS

The executive officers as of March 22, 2016 named below will serve in such capacities until the next annual meeting of our Board, or until their respective successors have been duly elected and qualified, or until their earlier death, resignation, disqualification or removal from office.

      

Robert C. Flexon, 57
Served since 2011

PHOTO

 

President and Chief Executive Officer

Mr. Flexon has served as President and Chief Executive Officer since July 2011 and a director of Dynegy since June 2011. Prior to joining Dynegy, Mr. Flexon served as the Chief Financial Officer of UGI Corporation, a distributor and marketer of energy products and related services from February to July 2011. Mr. Flexon was the Chief Executive Officer of Foster Wheeler AG from June to October 2010 and the President and Chief Executive Officer of Foster Wheeler USA from November 2009 to May 2010. Prior to joining Foster Wheeler, Mr. Flexon was Executive Vice President and Chief Financial Officer of NRG Energy, Inc. from February to November 2009. Mr. Flexon previously served as Executive Vice President and Chief Operating Officer of NRG Energy from March 2008 to February 2009 and as its Executive Vice President and Chief Financial Officer from 2004 to 2008. Prior to joining NRG Energy, Mr. Flexon held executive positions with Hercules, Inc. and various key positions, including General Auditor, with Atlantic Richfield Company. Mr. Flexon holds a Bachelor of Science degree in Accounting from Villanova University. Mr. Flexon served on the public board of directors of Foster Wheeler from 2006 until 2009 and from May to October 2010 and is currently serving on the Board of Neighborhood Centers, the largest not-for-profit in Texas.

      
      

Mario E. Alonso, 45
Served since 2001

PHOTO

 

Executive Vice President, Strategic Development

Mr. Alonso has served as Executive Vice President, Strategic Development since February 2014 and Vice President, Strategic Development from June 2012 to February 2014. Mr. Alonso is responsible for leading Dynegy's strategic planning and corporate development activities. Mr. Alonso served as Vice President and Treasurer from July 2011 to June 2012, Vice President—Strategic Planning from December 2008 to July 2011 and Managing Director—Strategic Planning from June 2007 to December 2008. Prior to June 2007, Mr. Alonso served in various roles within the Company's Strategic Planning and Treasury Departments. Prior to joining Dynegy in 2001, Mr. Alonso was with Enron Corporation.

      
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Executive Officers


      
      

Carolyn J. Burke, 48
Served since 2011

PHOTO

 

Executive Vice President, Business Operations and Systems

Ms. Burke has served as Executive Vice President, Business Operations and Systems since July 2015 with overall responsibility for Procurement, Safety, Environmental, Information Technology, Construction & Engineering, Outage Services and PRIDE—the Company's signature continuous margin and process improvement program. She also retains her role as Chief Integration Officer, held since October 2014, with overall responsibility for integration activities, most recently for Dynegy's $6 billion EquiPower and Duke merchant portfolio acquisitions, and the Company's project management office. Ms. Burke served as Executive Vice President and Chief Administrative Officer from August 2011 to October 2014. Prior to joining Dynegy, Ms. Burke served as Global Controller for J.P. Morgan's Global Commodities business from March 2008 to August 2011. Ms. Burke served as NRG Energy Inc.'s Vice President and Corporate Controller from September 2006 to March 2008 and its Executive Director of Planning and Analysis from April 2004 to September 2006. Prior to joining NRG, Ms. Burke held various key financial roles at Yale University, the University of Pennsylvania and at Atlantic Richfield Company (now British Petroleum).

      
      

Catherine C. James, 50
Served since 2011

PHOTO

 

Executive Vice President, General Counsel and Chief Compliance Officer

Ms. James has served as Executive Vice President, General Counsel and Chief Compliance Officer since September 2011. Ms. James is responsible for managing all legal affairs, including legal services supporting Dynegy's operational, commercial and corporate areas, as well as ethics and compliance. Prior to joining Dynegy, Ms. James served as General Counsel for NRG Gulf Coast and Reliant Energy in August 2011. Ms. James served as General Counsel for NRG Texas and Reliant Energy from August 2010 to August 2011 and as General Counsel for NRG Texas from November 2007 to August 2010. Prior to joining NRG Energy, Inc., Ms. James held various key legal roles at Calpine Corporation, Reliant Energy, The Coastal Corporation and Chevron.

      
      

Julius Cox, 44
Served since 2001

PHOTO

 

Executive Vice President and Chief Administrative Officer

Mr. Cox has served as Executive Vice President and Chief Administrative Officer since October 2014. Mr. Cox is responsible for Dynegy's corporate functions including Human Resources, Investor Relations, Communications, Regulatory Affairs and Business Services. Mr. Cox served as Vice President, Human Resources & Business Services from May 2012 to October 2014, Vice President, Human Resources from January 2006 to May 2012 and Managing Director—HR Business Services from May 2004 to January 2006. Prior to 2004, Mr. Cox served in various roles in Dynegy's HR Business Partner and Compensation functions. Prior to joining Dynegy in 2001, Mr. Cox was a consultant at Arthur Andersen LLP and has also held various roles in human resources at Shell Oil and Neiman Marcus.

      
32     GRAPHIC    2016 Proxy Statement

Executive Officers


      
      

Martin W. Daley, 60
Served since 2001

PHOTO

 

Executive Vice President, Plant Operations—Gas

Mr. Daley has served as our Executive Vice President—Plant Operations, Gas since April 2015. Mr. Daley is responsible for the management and operation of Dynegy's fleet of gas generating facilities and its Brayton Point coal fired facility. Mr. Daley served as Vice President and General Manager, Gas Operations from July 2011 to April 2015, Managing Director, Asset Management—Eastern Region from March 2007 to June 2011, and as Senior Director, Regulatory Affairs & Administrative Services from February 2001 to March 2007. Prior to joining Dynegy in February 2001, Mr. Daley held various positions within Central Hudson Gas & Electric, including Superintendent—General Plant Services, Plant Services Supervisor, Production facilities, and Corporate Environmental Affairs.

      
      

Clint C. Freeland, 47
Served since 2011

PHOTO

 

Executive Vice President and Chief Financial Officer

Mr. Freeland has served as Executive Vice President and Chief Financial Officer since July 2011. Mr. Freeland is responsible for Dynegy's financial affairs, including finance and accounting, treasury, tax and banking and credit agency relationships. Prior to joining Dynegy, Mr. Freeland served as Senior Vice President, Strategy & Financial Structure of NRG Energy, Inc. from February 2009 to July 2011. Mr. Freeland served as NRG's Senior Vice President and Chief Financial Officer from February 2008 to February 2009 and its Vice President and Treasurer from April 2006 to February 2008. Prior to joining NRG, Mr. Freeland held various key financial roles within the energy sector.

      
      

Henry D. Jones, 55
Served since 2013

PHOTO

 

Executive Vice President and Chief Commercial Officer

Mr. Jones has served as Executive Vice President and Chief Commercial Officer since April 2013. Mr. Jones is responsible for Dynegy's commercial and asset management functions for its power generation business. In addition, Mr. Jones leads a team that develops and executes both hedging and term contracting options for the entire fleet. Prior to joining Dynegy, Mr. Jones served as Managing Director, North American Power and Gas Sales, and Origination at Deutsche Bank starting in May 2010, and managed Deutsche Bank's North American Power and Gas trading activity starting in August 2012. Prior to joining Deutsche Bank, Mr. Jones was the Chief Operating Officer and Head of Trading at EDF Trading North America from August 2009 to February 2010, Head of Electricity Trading at EDF Trading Markets Limited from August 2008 to July 2009, and Director of Renewable Fuels Trading from July 2007 to July 2008. Mr. Jones was an investor, co-founder and chairman of Renewable Fuel Supply Limited from December 2003 to July 2007. Prior to 2003, Mr. Jones served in a variety of commercial positions with several domestic and international energy companies, including AEP Energy Services Ltd. and Duke Energy Corporation.

      
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Executive Officers


      
      

Sheree M. Petrone, 59
Served since 2013

PHOTO

 

Executive Vice President, Retail

Ms. Petrone has served as our Executive Vice President, Retail since April 2015. Ms. Petrone is responsible for leading and overseeing all aspects of Dynegy's retail electric sales business, including business development, customer care and operations. Ms. Petrone also serves as President of Illinois Power Marketing Company (d/b/a Homefield Energy) and Dynegy Energy Services, LLC, Dynegy's power marketing and energy entities, since December 2013. Ms. Petrone served as Vice President, Retail from August 2013 to April 2015. Prior to joining Dynegy in August 2013, Ms. Petrone held various positions within Exelon Corporation from March 1999 to June 2013, including Vice President, Commercial Integration, Energy Trading & Marketing, Vice President, Fuels, Environmental Trading and Marketing, Vice President, Retail Energy Company (Exelon Energy), and Director of Finance and Planning (PECO Energy). Ms. Petrone also held business development roles with Trigen, a cogeneration project developer majority owned by Suez Lyonnaise des Eaux from May 1987 to March 1999.

      
      

Daniel P. Thompson, 62
Served since 2001

PHOTO

 

Executive Vice President, Plant Operations—Coal

Mr. Thompson has served as our Executive Vice President—Plant Operations, Coal since April 2015. Mr. Thompson is responsible for the safe and efficient operation of our fleet of coal generating facilities. Mr. Thompson served as Vice President and General Manager—Coal Operations from October 2011 to April 2015, Vice President, Operations—West Region from April 2007 to September 2011, and Vice President, Operations—Northeast Region from March 2001 to March 2007. Prior to joining Dynegy in March 2001, Mr. Thompson held various positions within Illinois Power Company, including Vice President, Engineering—Generation and Plant Manager, and held various maintenance management positions with both Pfizer, Inc. and Kilngas R&D (an Allis Chalmers subsidiary).

      
34     GRAPHIC    2016 Proxy Statement

COMPENSATION DISCUSSION AND ANALYSIS

The following discussion should be read together with the compensation tables and disclosures for our named executive officers included under "Executive Compensation." The following discussion contains statements regarding future company performance targets and goals. These targets and goals are disclosed in the limited context of our compensation programs and should not be considered as statements of our expectations or estimates of results or other guidance; to that end, these targets and goals will not be subject to updating.

INTRODUCTION

This section explains our executive compensation program, including philosophy, policies, practices and key compensation decisions for 2015 as it relates to our named executive officers, or Named Executive Officers. Compensation for our Named Executive Officers is further described in the Summary Compensation Tables and other compensation tables contained in this proxy statement.

2015 Named Executive Officers

Name

  Title in 2015
Robert C. Flexon       President and Chief Executive Officer
Clint C. Freeland       Executive Vice President and Chief Financial Officer
Carolyn J. Burke       Executive Vice President, Business Operations and Systems
Catherine C. James       Executive Vice President, General Counsel and Chief Compliance Officer
Henry D. Jones       Executive Vice President and Chief Commercial Officer

These Named Executive Officers, together with our other senior executives whose compensation is determined by the Compensation Committee and our Board, are referred to as our "Executive Management Team".

BUSINESS HIGHLIGHTS AND PERFORMANCE

Despite a challenging environment, primarily driven by low commodity prices and abnormally moderate weather, 2015 marked a number of significant achievements for Dynegy. We successfully integrated the Duke and EquiPower acquisitions in April, doubling our generation footprint and bringing our total generation to more than 26,000 megawatts. The significant impact these transactions was immediately realized as they provided meaningful contributions to Dynegy's performance relative to our 2015 Critical Success Factors. Moreover, these transactions transformed Dynegy into the third largest independent power producer, with added scale in the structured markets of PJM and ISO—NE and resulted in accretive earnings—nearly $600 million in Adjusted EBITDA(1) in 2015. We achieved our financial targets, ended the year with $1.5 billion in liquidity and achieved $155 million in transaction synergies, exceeding the initial target of $40 million. In August we announced a $250 million share repurchase program and successfully completed it in November. We also completed the prior iteration of our PRIDE program, PRIDE Accelerated, one year ahead of schedule, meeting our target of $135 million in Adjusted EBITDA contributions and exceeding the target of $165 million in balance sheet improvements by $81 million.

   


(1)
We define Adjusted EBITDA as EBITDA adjusted to exclude (i) gains or losses on the sale of certain assets, (ii) the impacts of mark-to-market changes on derivatives related to our generation portfolio, as well as interest rate swaps and warrants, (iii) the impact of impairment charges and certain other costs such as those associated with the acquisitions, (iv) income or expense on up front premiums received or paid for financial options in periods other than the strike periods, (v) income or loss attributable to noncontrolling interest, and (vi) earnings or losses from unconsolidated investments. Adjusted EBITDA also includes cash distributions from Dynegy's unconsolidated investments.
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Compensation Discussion and Analysis


On the operations front, the annual production records set by our CCGT fleet in PJM combined with the results from our newly acquired plants and higher capacity revenues, helped to offset mild weather in the markets where we operate. Over the course of the year we added 92 MW of low cost uprates in PJM and successfully re-commissioned 225 MW of previously mothballed combustion turbines at our Joppa facility. We expect to generate almost $2.4 billion in capacity revenue over Planning Years 2016/2017 through 2018/2019 providing a significant portion of known gross margin over this period. These accomplishments, along with the commitment and dedication of our employees, and our culture of collaboration and agility, all positioned us to successfully compete in a dynamic energy marketplace in 2015 and beyond.

While the accomplishments above, led by our experienced and talented management team, were significant, the Compensation Committee also recognizes the meaningful impact that the recent and sudden downturn in the market had on our stock price. The Compensation Committee believes that our compensation plans and policies are well-designed and are structured to ensure that the compensation of all employees, including our Named Executive Officers, is aligned with the long-term interests of our stockholders. Accordingly, the Compensation Committee employed discretion to lower the final quantitative results of the 2015 short-term incentive program by nearly10% to better reflect the significant downturn in equity value experienced by our stockholders, please see "2015 STI Results" for further details. Additionally, our Named Executive Officers have experienced an average loss of nearly 80% of the realizable value of long-term incentives granted since 2013, including the vesting of the 2013 Performance Share Units, which cliff vested at the end of 2015 and resulted in no payment. These results are consistent with our desire to ensure that our compensation programs are designed to both pay for performance and ensure alignment with stockholder value.

Key Features of our Executive Compensation Program

We Do...

  We Do Not...

ü

Pay for Performance via a compensation structure that includes a competitive base salary and performance based STI and LTI awards that are aligned with stockholder interests

ü

Provide LTI that include Performance Share Units based on Total Stockholder Return ("TSR") and cap these awards when TSR outperforms the peer group but is negative

ü

Have change in control benefits that are subject to "double trigger" provisions, requiring both the occurrence of a change in control event and involuntary termination

ü

Maintain and enforce stock ownership requirements for all officers that require attainment of ownership levels before equity transactions can occur

ü

Have a claw-back mechanism in place for incentive awards

ü

Establish a performance-based bonus pool

ü

Have an independent compensation consultant that reports directly to the Compensation Committee

ü

Conduct an annual risk assessment to ensure that the structure and design of our incentive compensation programs are not reasonably likely to result in excessive risk-taking that could have a material adverse impact on the Company

     

×

Offer supplemental executive retirement plan benefits

×

Engage in option backdating or re-pricing

×

Permit hedging or pledging of Company Stock by Directors or Officers

×

Provide excise tax assistance upon a change in control

×

Provide any material perquisites to executives, other than reimbursement for financial planning and tax advice

×

Other than our CEO, have employment agreements for our Named Executive Officers

×

Encourage excessive risk or inappropriate risk taking though our incentive programs; our plans focus on aligning our compensation policies with the long-term interests of our stockholders

×

Guarantee bonuses

36     GRAPHIC    2016 Proxy Statement

Compensation Discussion and Analysis


EXECUTIVE COMPENSATION PROGRAM OVERVIEW

Philosophy and Objectives of our Executive Compensation Programs

The executive compensation program, administered by the Compensation Committee, is primarily designed to attract, motivate and retain a highly qualified Executive Management Team capable of effectively managing and growing our business. Our executive compensation program reflects a fundamental belief that rewards should be competitive, both in elements and amount, with the broad labor market in which we compete for executive talent and commensurate with the Company's and the individual executive's performance.

Pay for Performance—Our total compensation for each individual provides reasonable upside potential for exceptional performance; as well as risk of no payment, with respect to incentive compensation, when performance objectives are not achieved. Our variable pay programs are designed as forward-looking incentives that reflect individual and corporate performance during the year under review.

Alignment with Stockholder Value—Our LTI awards encourage share price improvement and a strong link to stockholder interests. Our compensation programs are designed and administered to maximize stockholder value.

Market Competiveness—Our overall compensation strategy recognizes that attraction and retention of key talent is critical to the attainment of our stated business goals and objectives and to the creation of value for our stockholders.

Elements of our Executive Compensation Program

In 2015, the Compensation Committee continued to refine our executive compensation program as detailed below. The Compensation Committee strives to promote a pay for performance culture. The executive compensation program was designed to incorporate three primary elements: base salary, STI, and LTI awards.

Element

  Key Characteristics

  Pay at risk
Base Salary      

Base Salary reflects each Named Executive Officer's scope, experience, qualifications, and impact to the outcomes of the organization

The Compensation Committee considers job responsibilities, budget for annual merit increases, external benchmark data, internal pay equity, and individual performance to determine the level of base salary for each Named Executive Officer

      No
Short-Term Incentive Awards      

STI awards are based on annual performance against specific identified financial, strategic, and operational goals and are designed to motivate Named Executive Officers to achieve short-term outcomes critical to our success and sustainable long-term value to our stockholders

STI performance period is January 1 through December 31 of each year

STI awards are paid out on or before March 15 following the end of the performance period

A funding gate must be achieved before any payout occurs

Payout may range from zero to two times target bonus opportunity

      Yes; payout based on achievement of pre-established company goals and individual performance factors
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Compensation Discussion and Analysis


Element

  Key Characteristics

  Pay at risk
Long-Term Incentive Awards      

LTI awards are structured to achieve a variety of objectives, including attracting and retaining executives, aligning executives' financial interests with the interest of stockholders; and rewarding the achievement of long-term strategic goals

LTI Awards for our Named Executive Officers are awarded with a mix of Performance Share Unit Awards, Restricted Stock Unit Awards and Stock Options

      Yes; payout strongly linked to Dynegy's share price performance
        Performance Share Unit Awards ("PSU's")

Significant portion of LTI mix

PSUs reward for performance relative to our peer group of companies

Award payouts capped if our Total Stockholder Return, or TSR, is negative

      Yes; value linked to Dynegy's TSR relative to peers
        Restricted Stock Unit Awards

Subject to three-year vesting

      Yes, value linked to Dynegy's share price
        Stock Option Awards

Subject to three-year vesting

      Yes, value present only when Dynegy's share price increases above the strike price (stock price on the day of grant)

For 2015, the mix of pay across base salary, STI, and LTI awards for the CEO and the other Named Executive Officers was most heavily weighted towards at-risk pay, aligning performance with stockholder value.

CEO Total Target Compensation(1)   All Other NEOs Total Target Compensation


CHART

 


CHART

(1)
Does not include the restricted stock unit grant awarded on May 11, 2015 to Mr. Flexon in connection with the renewal of his employment agreement.

Peer Group and Benchmarking

The Compensation Committee uses compensation benchmarking data to provide a competitive market context to its decisions regarding compensation for the Named Executive Officers. To assist the Compensation Committee with setting 2015 target compensation levels, Meridian prepared a benchmarking review to assess the competitiveness of each element of compensation for the Named Executive Officers, and to provide information regarding incentive plan designs and pay practices within the energy industry.

The Compensation Committee reviewed and discussed the benchmarking data, and used the data to inform its compensation decisions. The Compensation Committee believes the combination of these two data perspectives offers an appropriate and credible basis for benchmarking the compensation of the Named Executive Officers. The Committee will continue to evaluate this approach and available data sources, and make changes as appropriate.

38     GRAPHIC    2016 Proxy Statement

Compensation Discussion and Analysis


The benchmarking approach for the 2014-2015 officer benchmarking cycle uses two sources of market data to assess the competitiveness of Dynegy's executive compensation program—information contained in the public disclosures of a selected group of peer companies, and data from the Equilar Executive Compensation Survey.

Selection of the peer companies presents certain challenges, due to the limited number of directly comparable companies. While the Compensation Committee, with the assistance of Meridian, has worked to develop a representative list of peer companies, given the unique profile and business model of independent power producers, or IPPs, there are only two direct peer companies in the current peer group—NRG Energy Inc. and Calpine Corporation (a third IPP, Talen Energy Corporation, will be added in 2016). Therefore, the Committee elected to include companies from three segments of the energy industry—independent power producers, electric utilities and multi-utilities (i.e., electric and gas) to provide a more robust peer group. Specific factors considered in selection of the peer group include:

Financial and Operational Metrics—assets, revenues, market capitalization, enterprise value;

Operational Scope—merchant generation capacity, industry segment, commercial, retail and commodity focus;

Market-Based Factors—labor market requirements (e.g., finance, operations, commercial), competition for executive talent, comparability of pay data; and

External stockholder and governance evaluations of Dynegy's pay levels and practices.

The Compensation Committee reviews the composition of the peer group annually and considers changes as warranted. The peer group used in the benchmarking review used to make compensation decisions for 2015 consisted of the following twelve companies, which is the same set of companies that comprised our peer group in 2014, or our selected peer group.

Peer Companies

AES Corporation

     

Entergy Corporation

Ameren Corporation

     

First Energy Corporation

Atlantic Power Corporation

     

NRG Energy Inc.

Calpine Corporation

     

PPL Corporation

DTE Energy Company

     

Public Service Enterprise Group Inc.

Edison International

     

TransAlta Corporation

Data from the Equilar Executive Compensation Survey are based on 36 energy industry companies of comparable size to Dynegy (median revenue of $3.2 billion). If insufficient energy industry data are available, general industry data is used. Please see the table in Annex A for a listing of the companies included in the survey data.

Position matches are developed for each of the Named Executive Officers to positions with similar roles and responsibilities at both the peer companies and in the surveys. The Compensation Committee does not target specific percentiles within the benchmark data provided by these sources when making compensation decisions. Rather, the Compensation Committee considers the competitive ranges and determines the appropriate competitive positioning for each Named Executive Officer based on a variety of factors including its assessment of the individual skills, expertise and performance relative to the market benchmarks.

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Compensation Discussion and Analysis


2015 COMPENSATION

Base Salary

The Compensation Committee considers job responsibilities, external benchmark data, internal pay equity, and individual performance to determine the level of base salary for each Named Executive Officer. In early 2015, the Compensation Committee reviewed these factors and base salaries for the Named Executive Officers and approved increases as indicated below:

Named Executive Officer


  Base Salary
as of
December 2014



  Base Salary
as of
December 2015



  Percentage
Increase from
2014



 

Robert Flexon

      $1,000,000       $1,100,000       10%    

Clint Freeland

      $520,000       $570,000       9.6%    

Carolyn Burke

      $500,000       $515,000       3%    

Catherine James

      $495,000       $510,000       3%    

Henry Jones

      $495,000       $510,000       3%    

The Compensation Committee recommended increases for Mr. Freeland, Ms. Burke, Ms. James, and Mr. Jones comparable to the peer market levels, job complexity, and individual performance. The 9.6% increase in Mr. Freeland's base salary reflects both his 2015 performance in leading the Finance organization as well as to bring his base salary in line with other CFO's in the selected peer group. Mr. Flexon's salary increase was based on benchmark data from our selected peer group, the Company's performance, and his individual contribution to the organization's success. The Compensation Committee sought to bring Mr. Flexon's salary closer to competitive benchmark levels and as such recommended a base salary adjustment, which was subsequently approved by the full Board.

Short-term Incentive Plan

The Dynegy Inc. Incentive Compensation Plan, or STI Plan, serves as a variable, at-risk mechanism to reward our Named Executive Officers and other eligible employees for the achievement of short-term performance objectives critical to our success. The STI Plan contains a number of components established to emphasize pay for performance by providing cash awards for the achievement of pre-determined levels of Company performance.

Performance-Based Bonus Pool

Annual bonus awards are paid from a performance-based bonus pool designed to fund bonus awards paid to our Named Executive Officers and other executives as determined through the STI Plan, and to allow for full tax deductibility of such bonuses. Each year, the Compensation Committee identifies executives covered under the bonus pool for that year, the performance-based formula used to fund the bonus pool, and the individual share of the bonus pool for each employee covered under the bonus pool.

To comply with Section 162(m) of the Internal Revenue Code, bonus awards that may be paid from the bonus pool are subject to the Compensation Committee's authority to reduce, but not increase, the amount of each covered executive's share of the bonus pool. The Compensation Committee may, in its sole discretion, increase or decrease individual bonus awards calculated under the STI Plan (as discussed below), provided that the resulting bonus award does not exceed the executive's individual share of the pool. Further, the exercise of negative discretion with respect to one covered executive may not result in an increase in the amount payable to another covered executive; and the sum of all covered executives' allocable shares of the pool may not exceed 100% of the total bonus pool.

In early 2015, the Compensation Committee established that the 2015 bonus pool would be funded in an amount equal to 5% of the Company's Adjusted EBITDA for the year. The Compensation Committee also

40     GRAPHIC    2016 Proxy Statement

Compensation Discussion and Analysis


identified the executives covered under the bonus pool, which included our Named Executive Officers, and assigned to the covered executives individual shares of the bonus pool. As discussed below, the design of the STI Plan provides each of our Named Executive Officers with the opportunity to earn up to a maximum of 200% of their individual bonus target, based on the Company's performance relative to pre-established performance components and levels of achievement. Provided that bonus award payouts to each executive covered under the pool does not exceed their individual share, the awards will be fully-deductible.

How Bonus Awards are Determined

Once the minimum performance level is achieved, STI awards are determined through the following calculation.

CHART

Individual Bonus Targets.    The STI target bonus opportunities for each Named Executive Officer were set at the time of their employment with Dynegy; however, the Compensation Committee, in conjunction with Meridian, reviews the STI targets each year for competitive alignment. For 2015, the STI target for Mr. Flexon was increased from 100% to 110%, for the first time since his employment with Dynegy in 2011, to position his target cash compensation in line with other CEO's in the selected peer group. The Compensation Committee believes the target bonus opportunities for the remaining Named Executive Officers are appropriately positioned relative to competitive benchmark levels and remain the same. The 2015 STI targets for each of the Named Executive Officers, expressed as a percentage of base salary, are as follows:

Named Executive Officer


  Target Bonus Opportunity
(percent of base pay)


 

Robert Flexon

      110%    

Clint Freeland

      75%    

Carolyn Burke

      75%    

Catherine James

      75%    

Henry Jones

      75%    

STI Plan Funding.    Performance objectives for the STI program are approved annually by the Compensation Committee and Board. Each year the Compensation Committee establishes a minimum performance funding gate. If the funding gate metric is not achieved, no STI awards are paid to any employee, including the Named Executive Officers. At the start of 2015, the Compensation Committee approved a funding gate for 2015 as Operating Cash Flow of $152 million. Following the closing of the Duke and EquiPower acquisitions, the funding gate was adjusted upward to $387 million to reflect the accretive impact of these transactions.

Funding for the STI awards is based on performance relative to Compensation Committee-approved Critical Success Factors and related performance metrics, which represent specific financial, strategic, operational and safety goals that are important indicators of our overall performance. The attainment of these goals directly relates to the achievement of sustainable long-term total returns for our stockholders. Each of the Critical Success Factors is weighted, and performance is measured against overall year-end performance to determine

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Compensation Discussion and Analysis


the overall funding of the STI program. In early 2015, the Compensation Committee approved the Critical Success Factors and the performance metrics to be used in determining STI awards for the year, as follows:

Critical Success Factors


  Weighting

 

Capital Allocation

      35%    

Safety and Compliance

      20%    

Reliability

      15%    

Integration

      15%    

Commercial Management

      15%    

Individual Performance Adjustment.    In addition to the formulaic calculation of overall Company results relative to the Critical Success Factors, individual performance adjustments are made to determine bonus award payouts under the STI Plan. The individual performance adjustment is designed to recognize each Named Executive Officer's individual achievements for the respective performance year and may result in STI award payouts above or below actual funding percentage determined through the formulaic calculation. For 2015, the individual performance adjustments ranged from approximately 7% to 13% above actual funding for our named executive officers.

2015 STI Results.    In March 2016, the Compensation Committee determined that the 2015 funding gate of $387 million in Operating Cash Flow had been achieved. The Compensation Committee also reviewed the Company's performance relative to the 2015 Critical Success Factors and certified the quantitative result as 84.4% of target. The Compensation Committee carefully reviewed the attainment level for each of the Critical Success Factors and Mr. Flexon's recommendation to lower the funding level as a result of the loss of equity value experienced by Dynegy's stockholders over the course of 2015. In consideration of these factors, the Compensation Committee approved the total funding level at 75% of target. The detailed performance results relative to the Critical Success Factors are summarized in the following table.

Critical Success Factors


 
Capital Allocation

Adjusted EBITDA: Achieved $850 million vs. Threshold of $916 million (within public guidance range)

Free Cash Flow(2): Achieved $186 million vs. Threshold of $164 million (within public guidance range)

Completed the EquiPower and Duke acquisitions in April 2015

Announced a $250 million share repurchase program in August 2015, initially targeted for completion in 2016, which was completed in November ahead of schedule

   
Safety & Compliance

Safety targets not met for employee and contractor recordable/lost time injuries: Employee Recordables Actual 38 vs. Target <26

Completed environmental compliance five-year cost estimates, implementation plans and timeline for 316(b), ELG and CCR

Achieved 60% CCB re-use in 2015 vs target of 61%

Installed 100% of ground watering monitoring wells at the Coal facilities

Maintained a strong controls environment across the organization with no Significant Deficiencies or Material Weaknesses, no NERC violations and 100% of represented and non-represented employee population completing required ethics and compliance training