Joshua J. Skelton
ALLETEAbout Joshua J. Skelton
Joshua J. Skelton is Vice President and Chief Operating Officer of Minnesota Power (an ALLETE division), a role he has held since August 22, 2022; he previously served as COO of Minnesota Power (Nov 2020–Aug 2022) and VP, Generation Operations & ALLETE Safety (May 2019–Nov 2020). He is 45 years old as of February 13, 2025 . Company performance metrics that drive his incentives include ALLETE’s annual net income and cash from operations in the AIP, and three-year relative TSR versus the EEI index and EPS CAGR in the LTIP; for 2024, ALLETE’s AIP payout was 153.2% of target on strong adjusted net income and cash from operations, while 2022–2024 PSAs paid 89.9% (TSR) and 0% (EPS CAGR) . Actual 2024 Net Income Attributable to ALLETE was $179.34 million and cash from operating activities was $457.08 million (before AIP adjustments) .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Minnesota Power (ALLETE) | Vice President; Chief Operating Officer | Aug 2022 – Present | Operational leadership for regulated utility (executive officer since Aug 22, 2022) |
| Minnesota Power (ALLETE) | Chief Operating Officer | Nov 2020 – Aug 2022 | Led operations prior to elevation to ALLETE VP |
| ALLETE | VP, Generation Operations and ALLETE Safety | May 2019 – Nov 2020 | Ran generation ops and safety programs |
Fixed Compensation
| Metric | 2023 | 2024 |
|---|---|---|
| Base Salary (Summary Compensation Table) | $340,880 | $374,094 |
| Base Salary (as of 12/31) | $356,540 | $377,933 |
| AIP Target (% of base salary as of 12/31) | 45% | 45% |
| Non-Equity Incentive (AIP) Paid | $288,637 | $260,547 |
| Stock Awards (Grant-Date Fair Value) | $192,814 | $221,521 |
| All Other Compensation | $98,700 | $55,715 |
| Total Compensation | $927,536 | $911,877 |
Performance Compensation
Annual Incentive Plan (AIP) – Structure, Targets, Results (Company-level plan driving Skelton’s payout)
| Metric | Weight | Target/Threshold/Superior | Actual (2024) | Payout contribution |
|---|---|---|---|---|
| Net Income | 50% | $191.43m / $212.7m / $233.97m | $221.69m (AIP-calculated) | 71.1% |
| Cash from Operating Activities | 20% | $346.41m / $384.9m / $423.39m | $489.36m (AIP-calculated) | 40.0% |
| Strategic Goals | 18% | See CD&A | Between target/superior | 32.0% |
| Operational Goals | 6% | Reliability metrics | Mixed (mostly near threshold) | 6.73% |
| Safety Goals | 6% | Leading/lagging indicators | Mixed (some zero payouts) | 3.33% |
| Total | 100% | — | — | 153.2% of target |
Skelton-specific AIP details:
- AIP target: 45% of base salary
- 2024 payout rate: 153.2% of target for NEOs excluding ACE-linked exceptions (applies to Skelton)
- 2024 AIP paid: $260,547
Additional context (AIP adjustments): 2024 net income for AIP purposes adjusted to $221.69m (from $179.34m reported) and cash from operating activities to $489.36m (from $457.08m reported) based on pre-set exclusions (e.g., merger costs, rate case items) .
Long-Term Incentive Plan (LTIP) – Structure and 2024 Grants
- Design: 75% Performance Share Awards (PSAs) and 25% RSUs for Skelton; PSAs split 50% relative TSR vs EEI peer group and 50% EPS CAGR; RSUs time-vest after three years .
- 2024 LTIP target opportunity: $225,000 .
| 2024 Grant Component | Target Shares/Units | Grant-Date Fair Value |
|---|---|---|
| PSAs (TSR metric) | 1,168 | $84,808 |
| PSAs (EPS CAGR metric) | 1,380 | $82,027 |
| RSUs (time-based) | 920 | $54,685 |
| PSAs total (max) | — | $333,671 (at maximum) |
LTIP performance results applicable to Skelton’s outstanding awards:
- 2022–2024 cycle: TSR payout 89.9%; EPS CAGR payout 0% .
- For cycles not yet ended, indicative payout factors if ended 12/31/2024: 2023–2025 TSR 100% / EPS 139%; 2024–2026 TSR 50% / EPS 50% .
Equity Ownership & Alignment
Beneficial Ownership and Outstanding Awards
| Item (as of date) | Amount |
|---|---|
| Shares Beneficially Owned (3/14/2025) | 15,306 |
| RSUs counted toward guideline (3/14/2025) | 3,198 |
| Total for guideline purposes (3/14/2025) | 18,504 |
| Guideline requirement (shares) | 5,758 (1x salary) |
| Unvested RSUs (12/31/2024) | 3,453; $223,754 (@$64.80) |
| Unearned PSAs (12/31/2024) | 5,267; $341,302 (@$64.80) |
| 2024 vested RSUs (paid 2/7/2024) | 605 shares; $35,229 value |
- Ownership guideline and compliance: NEOs (other than CEO and newly promoted CFO) met their guidelines as of March 14, 2025; Skelton’s requirement is 1x salary and he exceeds the share count required .
- Pledging/hedging/short sales: Prohibited for NEOs; the company does not pay dividend equivalents on unearned PSAs or unvested RSUs .
- Options: ALLETE does not currently grant stock options and has no outstanding options .
Vesting Schedules and Potential Selling Pressure
- RSUs vest on a three-year schedule: 2022 grant vested 12/31/2024; 2023 grant vests 12/31/2025; 2024 grant vests 12/31/2026 .
- PSAs pay after three-year performance periods (2023–2025; 2024–2026) with payout tied to relative TSR and EPS CAGR; indicative payout factors as of 12/31/2024 noted above .
- Ownership guideline policy requires retaining 100% of shares received (net of taxes) until the guideline is met, reducing near-term selling pressure; Skelton appears to have met the guideline .
Employment Terms
Agreements, Clawback, and Equity Policies
- Employment agreements: None; ALLETE has no individual employment agreements with NEOs .
- Clawback: Executive Compensation Recovery Policy adopted effective Dec 1, 2023 (SEC- and NYSE-compliant); discretionary recovery policy also in place for misconduct .
- Hedging/pledging: Prohibited .
- Dividend equivalents: Not paid on unvested RSUs or unearned PSAs .
Change-in-Control (CIC) Economics and Restrictive Covenants
| CIC Element (assumes CIC and qualifying termination on 12/31/2024) | Skelton |
|---|---|
| Severance multiple (annual compensation) | 2.0x |
| Severance payment (cash) | $1,096,005 |
| PSAs (prorated; greater of target or earned) | $285,026 |
| Unvested RSUs (prorated vest) | $57,512 |
| Benefits (medical/dental/life; company contributions) | $61,879 |
| Outplacement services | $25,000 |
| Total estimated payments | $1,525,422 |
| Trigger type | Double-trigger (CIC + qualifying termination) |
| 280G treatment | Modified cutback to safe harbor if better after-tax; no gross-ups |
| RSU/PSA treatment under CIC | RSUs vest (prorated) upon CIC unless assumed; if assumed, vest on termination within 18 months; PSAs pay on CIC at greater of target or earned (prorated). Post-merger PSA grants convert to time-vesting cash at target . |
| Non-compete | 1 year for NEOs other than CEO/CFO (who are 1.5 years) |
| Non-solicitation | 2 years |
Retirement and Deferred Compensation
| Plan | 2024 Executive Contributions | 2024 Company Contributions | 2024 Aggregate Earnings | Aggregate Balance (12/31/2024) |
|---|---|---|---|---|
| SERP II (non-qualified deferral) | $174,717 (incl. 50% of AIP) | $5,362 | $101,921 | $857,320 |
| Nonunion Pension Plan | — | — | — | Present value: $48,706; 5.67 yrs credited service |
Performance & Track Record
- 2024 outcomes tied to AIP: Adjusted net income of $221.69m (vs. $179.34m reported) and adjusted cash from operating activities of $489.36m (vs. $457.08m reported) drove a 153.2% of target AIP payout for NEOs (including Skelton) .
- LTIP performance: For the 2022–2024 cycle, relative TSR paid at 89.9% of target; EPS CAGR paid at 0% (below threshold), aligning long-term payouts with shareholder returns and earnings growth .
Compensation Structure Analysis
- Cash vs. equity mix: LTIP target increased to $225,000 in 2024 (up from $200,000 in 2023), allocated 75% PSAs and 25% RSUs—maintaining a high at-risk, performance-based mix; AIP target remained 45% of salary .
- Performance rigor: AIP remains 70% weighted to financials; LTIP split across relative TSR and EPS CAGR; 2022–2024 EPS CAGR paid 0% (missed threshold), indicating payout sensitivity to earnings growth .
- Shareholder alignment: Mandatory ownership guidelines (1x salary for Skelton), retention of net shares until guideline met, and prohibitions on hedging/pledging strengthen alignment and limit speculative behavior .
- Governance safeguards: Double-trigger CIC, no option grants or repricing, clawbacks, and no tax gross-ups (except relocation) reduce governance risk .
Investment Implications
- Pay-for-performance is functioning: 2024 AIP above-target on adjusted financial metrics while LTIP paid down for EPS underperformance in 2022–2024—an indicator of discipline in long-term metrics .
- Selling pressure: Upcoming vesting events (RSUs in 2025 and 2026; PSAs for 2023–2025 and 2024–2026) could create periodic liquidity, but ownership-retention requirements and prohibition on hedging/pledging mitigate excess selling .
- Retention risk: CIC severance (2x) and prorated equity vesting provide moderate protection; non-compete (1 year) and non-solicit (2 years) increase switching costs, reducing near-term departure risk despite merger-related uncertainty .
- Alignment: Skelton exceeds his ownership guideline (18,504 vs. 5,758 guideline shares) and has no options or pledging exposure—supportive of investor alignment and reduced governance red flags .
Say-on-Pay support was high in 2024 (94.5%), and the Board employs an independent compensation consultant (Pearl Meyer), suggesting strong shareholder alignment and oversight .