DEF 14A

What are you voting on?

We are asking our shareholders to ratify the selection of Deloitte as the independent registered public accounting firm of our consolidated financial statements and our internal controls over financial reporting for 2022. Although the Audit Committee has direct responsibility for the appointment of the independent registered public accounting firm, as a matter of good corporate governance, the Board submits its selection of the independent registered public accounting firm to our shareholders for ratification.

Voting recommendation:

The Board unanimously recommends a vote FOR the ratification of the appointment of Deloitte as the independent registered public accounting firm.

DEF 14A 1 d263788ddef14a.htm DEF 14A DEF 14A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A INFORMATION

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

(Amendment No. )

Filed by the Registrant ☒

Filed by a Party other than the Registrant ☐

Check the appropriate box:


☐ Preliminary Proxy Statement		☐ Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
☒ Definitive Proxy Statement

☐ Definitive Additional Materials

☐ Soliciting Material under §240.14a-12

AVISTA CORPORATION

(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):

☒

No fee required.

☐

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 the transaction applies:

(2)

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(3)

Per unit price or other underlying value of the 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):

(4)

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(5)

Total fee paid:

☐

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:

(2)

Form, Schedule or Registration Statement No.:

(3)

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(4)

Date Filed:

LOGO

March 31, 2022

Dear Fellow Shareholder:

Avista’s 2022 Annual Meeting will be held at 8:15 a.m. Pacific Time on Thursday, May 12, 2022. During these unusual times, in an effort to support the health and well-being of our employees and shareholders, please note that this year’s Annual Meeting of Shareholders will once again be held in a virtual format only. You will not be able to attend the Annual Meeting in person.

You will be able to participate in the Annual Meeting, vote, and submit your questions and comments during the Annual Meeting via live webcast by visiting www.virtualshareholdermeeting.com/AVA2022. Whether or not you plan to participate in the Annual Meeting, we urge you to vote and submit your proxy prior to the Annual Meeting by mail, telephone or through the internet as soon as possible, following the instructions printed on your proxy card and/or proxy notice.

I think we can all agree that 2021 was definitely memorable, as we all navigated through the second year of this global pandemic. During Avista’s Annual Meeting, I look forward to providing an update on Avista’s progress and performance over the past year and highlight the strategic steps we’re taking to prepare for the future. As we reflect on these challenging times, I want to applaud our employees for making it possible to achieve all that we accomplished in 2021.

The Proxy Statement accompanies the 2021 Annual Report to Shareholders (the “Annual Report”), which contains information about our Company’s performance, including our audited financial statements.

As you’ll see in our Annual Report, this year’s theme is “Onward”—it exemplifies our approach to constantly challenge ourselves to press onward. Regardless of the circumstances or what the future brings, we are devoted to delivering on our commitment to all our stakeholders, including you, our shareholders.

Thank you for your continued interest in and support of Avista.

Sincerely,

LOGO

Dennis P. Vermillion

President & Chief Executive Officer

LOGO

1411 E. Mission Ave.

Spokane, Washington 99202

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

The Annual Meeting of Avista will be held virtually by live webcast on Thursday, May 12, 2022 at 8:15 a.m. Pacific Time. The purposes of the meeting are to:

(1)

elect eleven directors identified in the accompanying proxy statement to serve until the 2023 Annual Meeting of Shareholders;

(2)

ratify the appointment of Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu, Ltd., and their respective affiliates (collectively, “Deloitte”) as the Company’s independent registered public accounting firm for 2022;

(3)

hold an advisory (non-binding) vote on executive compensation; and

(4)

transact other business that may come before the meeting or any adjournment or postponement thereof.

While the Annual Meeting will be conducted “virtually,” solely by live webcast, shareholders of record or their proxies or other legal representatives are entitled to participate in the meeting and participants will be able to ask questions, make comments and vote on the matters brought before the meeting.

The website for the Annual Meeting is www.virtualshareholdermeeting.com/AVA2022.

If you are a holder of record of common stock at the close of business on March 11, 2022, the record date, and have your control number, then you will be able to vote during the Annual Meeting by following the instructions available on the meeting website during the meeting. The 16-digit control number can be found on your proxy card or voting instructions form. If you do not have your control number, you may attend as a guest (non-shareholder) but will not be able to vote your shares at the virtual meeting. Closed captioning will be provided for the duration of the Annual Meeting.

Whether or not they intend to participate in the Annual Meeting, shareholders are urged to vote and submit their proxies, prior to the Annual Meeting, by mail, telephone, or through the internet as promptly as possible. Please sign and date the proxy card and return it promptly or cast your vote via telephone or through the internet in accordance with the instructions on the proxy card and/or proxy notice.

By Order of the Board,

LOGO

Gregory C. Hesler

Vice President, General Counsel,

Corporate Secretary and Chief Ethics/Compliance Officer

Spokane, Washington

March 31, 2022

THIS PROXY STATEMENT AND THE 2021 ANNUAL REPORT ARE AVAILABLE ON THE INTERNET AT HTTP://PROXYVOTE.COM

Important Voting Information

Brokerage firms, banks and other nominees generally have the authority to vote their customers’ shares when their customers do not provide voting instructions. However, with respect to certain specified matters, when such an entity does not receive instructions from its customers, shares cannot be voted on those matters. This is called a “broker non-vote.” Matters on which organizations that are members of the New York Stock Exchange (the “NYSE”) may not vote without instructions include the election of directors, matters relating to executive compensation and matters relating to certain corporate governance issues. For Avista Corporation (“Avista,” or the “Company”), this means that NYSE member organizations may not vote shares on Proposals 1 and 3 if you have not given them instructions on how to vote. Please be sure to give any brokerage firm, bank, or other financial institution that holds shares on your behalf specific voting instructions so that your shares will be voted as you direct.

Your Participation in Voting the Shares You Own is Important

Your vote is important. Whether or not you plan to participate in the 2022 Annual Meeting of Shareholders (the “Annual Meeting”), we urge you to vote and submit your proxy, prior to the Annual Meeting, by mail, telephone, or through the internet as promptly as possible. If you are submitting your proxy by mail, you should complete, sign, and date your proxy card, and return it in the envelope provided. If you plan to vote by telephone or through the internet, voting instructions are printed on your proxy card and/or proxy notice. If you hold your shares through an account with a brokerage firm, bank, or other nominee, please follow the instructions you receive from them to vote your shares.

More Information is available

If you have any questions about the proxy voting process, please contact the broker, bank or other financial institution where you hold your shares. The Securities and Exchange Commission (the “SEC”) also has a website (www.sec.gov/spotlight/proxymatters.shtml) with more information about your rights as a shareholder. Additionally, you may contact our Investor Relations Department at (509) 495-4203.

Technical Issues

Contact (844) 986-0822 or (303) 562-9302 (International) for any technical difficulties or trouble accessing the virtual meeting, or if you are unable to locate your 16-digit control number.

Questions

During the meeting, questions can only be submitted in the question box provided at: www.virtualshareholdermeeting.com/AVA2022.

Replays

A replay of the Annual Meeting will be posted as soon as practical at: https://investor.avistacorp.com along with answers to shareholder questions pertinent to meeting matters that are received before and during the Annual Meeting that cannot be answered due to time constraints.


REVIEW YOUR PROXY STATEMENT AND VOTE IN ONE OF FOUR WAYS:


	VIA THE INTERNET Go to the website address shown on your proxy card and vote via the internet	BY MAIL Mark, sign, date and return the enclosed proxy card in the postage-paid envelope


	BY TELEPHONE Use the toll-free number shown on your proxy card	VIRTUAL LIVE WEBCAST www.virtualshareholdermeeting.com/AVA2022 Online access begins at 7:45 a.m. The meeting begins at 8:15 a.m. All times are Pacific Time.

TABLE OF CONTENTS


About the Annual Meeting			1
Proxy Summary			4
Governance Highlights			4
Compensation Highlights			6
Proposal 1—Election of Directors			7
Corporate Governance Matters			16
Director Compensation			23
Audit Committee Report			25
Proposal 2—Ratification of Appointment of Deloitte as Independent Registered Public Accounting Firm for 2022			27
Compensation Discussion and Analysis (“CD&A”)			30
Executive Compensation Tables			46
Proposal 3—Advisory Vote on Executive Compensation			59
Security Ownership of Certain Beneficial Owners and Management			60
Section 16 (a) Beneficial Ownership Reporting Compliance			62
Annual Report and Financial Statements			62
Householding			62
Other Business			62
2023 Annual Meeting Information			63

AVISTA CORPORATION

1411 East Mission Avenue

Spokane, Washington 99202

PROXY STATEMENT

FOR THE ANNUAL MEETING

TO BE HELD ON MAY 12, 2022

ABOUT THE ANNUAL MEETING

As noted in the Notice of Annual Meeting of Shareholders, the Annual Meeting will be held “virtually,” solely by live webcast.

Why am I receiving these materials and who is soliciting my vote?

The Board is soliciting your vote in connection with the Annual Meeting or at any adjournment or postponement thereof. The Company intends to mail this Proxy Statement and the accompanying proxy card to shareholders on or about March 31, 2022.

What is the purpose of the meeting?

The meeting will be the Company’s regular Annual Meeting. You will be voting on the following matters at the Annual Meeting:

(1)

Election of eleven directors.

(2)

Ratification of the appointment of Deloitte as the Company’s independent registered public accounting firm for 2022.

(3)

Advisory (non-binding) vote on executive compensation.

(4)

Transaction of other business that may come before the meeting or any adjournment or postponement thereof.

How does the Board recommend I vote?

The Board recommends a vote:

Proposal 1: For the election of eleven directors.

Proposal 2: For ratification of the appointment of Deloitte as the Company’s independent registered public accounting firm for 2022.

Proposal 3: For the advisory (non-binding) vote on executive compensation.

Who is entitled to vote at the Annual Meeting?

The Company’s common stock is the only class of securities with general voting rights. The Board has set March 11, 2022, as the record date for the Annual Meeting (the “Record Date”). Only shareholders who own common stock at the close of business on the Record Date may attend and vote at the Annual Meeting.

What are the voting rights of holders of common stock?

Each share of common stock is entitled to one vote. There is no cumulative voting. At the close of business on the Record Date, 72,191,571 shares of common stock were outstanding and entitled to vote.

How many shares must be present to hold the Annual Meeting?

Under Washington law, action may be taken on matters submitted to shareholders only if a quorum is present. The presence at the virtual meeting of holders of a majority of the shares of common stock outstanding as of the Record Date or their proxies will constitute a quorum. Shares represented by proxy are deemed present for quorum purposes even if abstention is instructed or if no instructions are given. Subject to certain statutory exceptions, once a share is represented for any purpose at a meeting, it is deemed present for quorum purposes for the remainder of the meeting.



		Avista			1

ABOUT THE ANNUAL MEETING

How do I vote shares registered in my name?

If you hold shares that were registered in your name on the Record Date, then you, as the registered holder of those shares, may vote those shares:

Before the Annual Meeting:

•

By completing, dating and signing your proxy card and returning it to the Company by mail in the envelope provided; or

•

By telephone or through the internet, following the instructions on your proxy card.

During the Annual Meeting:

•

By following the instructions on the website for the meeting—be sure to have your 16-digit control number available.

How do I vote shares held through a broker, bank or other nominee?

If you are the beneficial owner of shares held through a broker, bank or other nominee, then you are not a record holder of these shares and may vote them only by instructing the registered holder how to vote them.

You should follow the voting instructions given to you by the broker, bank or other nominee that holds your shares. Generally, you will be able to give your voting instructions by mail, by telephone or through the internet.

The Company’s common stock is listed on the NYSE. Under NYSE rules, brokerage firms, banks and other nominees that are members of the NYSE generally have the authority to vote shares when their customers do not give voting instructions. However, NYSE rules prohibit member organizations from voting on certain types of matters without specific instructions from the beneficial owners—if a beneficial owner does not give instructions on such a matter, the member organization cannot vote on that matter. This is called a “broker non-vote.” Matters on which NYSE member organizations may not vote without instructions include the election of directors, matters relating to executive compensation and matters relating to certain corporate governance issues. For Avista, this means that NYSE member organizations may not vote on Proposals 1 and 3 unless you have given instructions on how to vote. Please be sure to give specific voting instructions to any broker, bank, or other financial institution that holds your shares so that your shares can be voted.

How do I vote shares held through an employee plan?

If you are the beneficial owner of shares through participation in the Company’s 401(k) plan, then you are not the record holder of these shares and may vote them only by instructing the plan trustee or agent how to vote them.

You should follow the voting instructions given to you by the trustee or agent for the 401(k) plan. Generally, you will be able to give your voting instructions by mail, by telephone or through the internet.

How can I revoke my proxy or change my vote after returning my proxy card or giving voting instructions?

If you were a registered holder as of the Record Date and returned a proxy card, you may revoke your proxy or change your vote at any time before it is exercised at the Annual Meeting by giving written notice to the Corporate Secretary of the Company. You may also change your vote by timely delivering a later-dated proxy or a later-dated vote by telephone or through the internet.

If you were not a registered holder as of the Record Date and wish to change or revoke your voting instructions, you should follow the instructions given to you by your broker, bank or other financial institution that holds your shares.

How many votes are required to elect directors and approve the other proposals?

Proposal 1—for the election of directors, a nominee will be elected if the number of votes cast “for” exceeds the number of votes cast “against.” Brokers may not vote on this proposal without instructions from the beneficial owner. Abstentions or broker non-votes with respect to any shares will have no effect on the election of a nominee since those shares will not be voted either “for” or “against” that nominee. Likewise, if you are the registered holder (and not a broker) of the shares and sign but give no instructions on the proxy card with respect to a nominee, the shares represented by that proxy card will not be



2		Avista

ABOUT THE ANNUAL MEETING

voted either “for” or “against” that nominee and will have no effect on his or her election. Shareholders may not cumulate votes in the election of directors. If an incumbent director does not receive a majority of votes cast with respect to his/her re-election in an uncontested election, he/she would continue to serve a term that would terminate on the date that is the earliest of: (i) the date of the commencement of the term of a new director selected by the Board to fill the office held by such director, (ii) the effective date of the resignation of such director, or (iii) December 31, 2022.

Proposal 2—the proposal for ratifying the appointment of the firm of Deloitte as the independent registered public accounting firm of the Company for 2022, will be approved if the number of votes cast “for” exceeds the number of votes cast “against.” Brokers may vote on this proposal without instructions from the beneficial owner. Abstentions with respect to any shares will have no impact on the outcome of this proposal since those shares will not be voted at all. If you are the registered holder of the shares and sign but give no instructions on the proxy card with respect to this proposal, the shares represented by that proxy card will be voted for this proposal.

Proposal 3—the advisory (non-binding) vote on executive compensation will be approved if the number of votes cast “for” exceeds the number of votes cast “against.” Brokers may not vote on this proposal without instructions from the beneficial owner. Abstentions and broker non-votes with respect to any shares will have no impact on this proposal since those shares will not be voted at all. If you are the registered holder (and not a broker) of the shares and sign but give no instructions on the proxy card with respect to this proposal, the shares represented by that proxy card will be voted for this proposal.

Who pays for the proxy solicitation and how will the Company solicit votes?

The expense of soliciting proxies will be borne by the Company. Proxies will be solicited by the Company primarily by mail but may also be solicited personally and by telephone at nominal expense to the Company by directors, officers, and regular employees of the Company. In addition, the Company has engaged D.F. King & Co., Inc. at a cost of $8,500 plus out-of-pocket expenses, to solicit proxies in the same manner. The Company will also request banks, brokerage houses, custodians, nominees, and other record holders of the Company’s common stock to forward copies of the proxy soliciting materials and the Company’s 2021 Annual Report to the beneficial owners of such stock, and the Company will reimburse such record holders for their expenses in connection therewith.

Who can I contact if I have questions or need assistance in voting my shares?

If you have any questions about the proxy voting process, please contact the broker, bank or other financial institution where you hold your shares. You may also contact our Investor Relations Department at (509) 495-4203. Additionally, the SEC has a website (www.sec.gov/spotlight/proxymatters.shtml) with more information about your rights as a shareholder.



		Avista			3

PROXY SUMMARY

GOVERNANCE HIGHLIGHTS—2021

Our Company is committed to maintaining the highest standards of corporate governance. Strong corporate governance practices help us achieve our performance goals and maintain the trust and confidence of our investors, employees, customers, regulatory agencies and other stakeholders. Our corporate governance practices are described in more detail starting on page 16 and in our Governance Guidelines, which can be found in the Corporate Governance section of our website at https://avistacorp.gcs-web.com/corporate-governance.


Director Independence		• Nine of the Company’s eleven director nominees are independent. • The Chairman of the Board (“Chairman”) and the President/Chief Executive Officer (“CEO”) are the only non-independent directors. • During 2021, the Board committees (except the Executive Committee and the Finance Committee) were composed exclusively of independent directors. • The average tenure of our directors is 8.5 years and their average age is 60. • The Board is committed to board refreshment. Our Board has added five new members in the past six years, four of whom are independent.

Board Leadership		• The Company has an independent Lead Director, selected by the Board. • The Lead Director serves as liaison between management and the other non-management directors. The Lead Director’s specific duties are set forth starting on page 16. • The positions of Chairman and CEO are separated.

Independent Director Executive Sessions		• The independent directors regularly meet in executive sessions without management. • The Lead Director presides at executive sessions.

Board Oversight of Risk Management		• The Board and its committees consider enterprise risk in connection with all Company operations including, but not limited to, regulatory, operating, compliance, energy commodity risks, external mandates, wildfire resiliency, financial, technological and strategic threats. • The Board reviews Avista’s systematic approach to identifying, assessing and managing risks faced by the Company.

Stock Ownership Requirements		• Independent directors are expected to achieve a minimum investment of five times the minimum equity portion of their retainer in Company common stock and are expected to retain at least that level of investment during their tenure on the Board. • The stock ownership policy for the Company’s executive officers requires executive officers to own shares based on their position and salary: • Chief Executive Officer—5 times salary • President—4 times salary • Executive Vice President and Senior Vice Presidents—2.5 times salary • Vice Presidents—1 times salary • Directors and officers are prohibited from engaging in short sales, pledging, or hedging the economic interest in their Company shares.



4		Avista

GOVERNANCE HIGHLIGHTS—2021


Board Practices		• The Board regularly assesses its performance through Board, committee and individual director evaluations. • Continuing director education is provided during regular Board and committee meetings, including education by outside experts, and by supporting attendance at outside programs. • Directors may not stand for election after age 72. • The Governance and Corporate Responsibility Committee (“Governance Committee”) leads the full Board in considering Board competencies and refreshment in light of Company strategy. • The Board has adopted a policy that provides that the Board will include candidates with a diversity of ethnicity and gender in the pool for possible Board members.

Accountability		• The Board proactively adopted Proxy Access for director nominees. • All directors stand for election annually. • In uncontested elections, directors must be elected by a majority of votes cast.

Environmental, Social and Governance (“ESG”): Building Trust and Accountability

The Company understands that its commitment to sustainability, stewardship and corporate citizenship is important, not only to our shareholders, but to our communities and other constituencies. For over 130 years, these commitments have guided us in what we do. We have long been committed to conducting our business in ways that are principled, transparent and accountable, and we recognize the importance of ESG disclosure as a means of making our commitments more transparent. For these reasons, the Board’s Governance Committee has caused the Company to pursue an initiative for enhanced ESG disclosure that is grounded in the Company’s commitments to the environment, its employees, its customers and the communities we serve, as well as ethical governance. Information about the Company’s commitments is available on our website at https://investor.avistacorp.com/corporate-responsibility/our-commitment. Material on our website, including information regarding our corporate responsibility commitments and related ESG reports and metrics, is not part of nor intended to be incorporated into this Proxy Statement.



		Avista			5

COMPENSATION HIGHLIGHTS—2021

In 2021, the Compensation and Organization Committee (“Compensation Committee”) established performance goals for the Company based on input from the CEO and aligned the short-term and long-term incentive plans with those goals. Our incentive arrangements allow us to focus on maintaining an attractive financial profile while creating long-term value for shareholders and customers.

As summarized below, the compensation earned by our Named Executive Officers (“NEOs”) in 2021 reflects our corporate performance for the fiscal year.

• The Compensation Committee approved base salary adjustments ranging from 2.0% to 3.0% for our NEOs based on market comparisons, its assessment of individual performance and other factors as discussed in more detail below in the Compensation Discussion and Analysis, beginning on page 30.

• Our 2021 Cost Per Customer metric exceeded the target, resulting in a 141% payout. Our Consolidated Earnings Per Share performance also exceeded target resulting in a 129% payout for this metric. The Customer Satisfaction and Average Response Time metrics also performed above target, resulting in a total annual cash incentive payment of 111% of target.

• In early 2022, our NEOs received a payout for one-third of their restricted stock units (“RSUs”) granted in each of 2019, 2020 and 2021, along with the associated dividend equivalents. These RSUs are time-based, and one-third vest each year over a three-year period.

• Our Total Shareholder Return (“TSR”) exceeded our three-year TSR threshold, which resulted in a final payment of 76% of the performance shares related to TSR granted in 2019 for the 2019-2021 performance period and the associated dividend equivalents.

• Our Cumulative Earnings Per Share (“CEPS”) exceeded our three-year CEPS threshold, which resulted in payment of 69% of the performance shares related to CEPS granted in 2019 for the 2019-2021 performance period and the associated dividend equivalents.

• Our CEO’s pay is 28 times higher than our median employee’s pay.



6		Avista

PROPOSAL 1—ELECTION OF DIRECTORS


What are you voting on?		Shareholders are being asked to elect director nominees for a one-year term. This section includes information about the Board of Directors and each director nominee.

Voting Recommendation:		The Board of Directors unanimously recommends a vote FOR each of the nominees for director and urges beneficial owners, if they are not the record holders, to instruct their brokers or other nominees to vote for each director.

Director Selection Process

The Board is elected by the shareholders to oversee their interests in the long-term overall success of the Company’s business and its financial strength. Our directors have diverse backgrounds and experience and represent a broad spectrum of viewpoints.

The Board has a robust and effective director nomination and evaluation process. The Board has delegated to the Governance Committee the responsibility for reviewing and recommending to the Board nominees for director. The Governance Committee annually reviews with the Board the composition of the Board as a whole and recommends, if necessary, steps to be taken so that the Board reflects the appropriate balance of knowledge, experience, competencies and expertise, all in the context of an assessment of the needs of the Board and the Company at the time. In evaluating a director candidate, the Governance Committee considers the knowledge, experience, integrity, business acumen and judgment of that candidate; the potential contribution of that candidate to the diversity of backgrounds, experience and competencies that the Board desires to have represented; willingness of that candidate to consider strategic proposals; and any other criteria established by the Board, as well as any core competencies or technical expertise necessary to staff the Board Committees.

For longer-serving directors, the Governance Committee also considers the tenure of a director and whether the duration of service impairs such director’s independence from management, as demonstrated by the director’s relationship with management and the director’s participation in Board and committee deliberations. Directors must be able to commit the requisite time for preparation and attendance at regularly scheduled Board and committee meetings, as well as be able to participate in other matters necessary to ensure that good corporate governance is practiced.

The Board is committed to actively seek out highly qualified women and minority candidates and to include such individuals in each Board candidate pool. The Board considers diversity of experience, skills, background, and viewpoint, as well as diversity in race, gender and culture when considering individual candidates.

The Board considers the appropriate size of the Board and the needs of the Company with respect to the particular talents and experience of its directors. In evaluating individual director candidates, the Board takes into consideration the criteria set forth in the Company’s Corporate Governance Guidelines (available on the Company’s website at https://avistacorp.gcs-web.com/corporate-governance), including, but not limited to:

•

The qualifications, knowledge, competencies, abilities and executive leadership experience of nominees, as well as work experience at the executive leadership level in his/her field of expertise;

•

Familiarity with the energy/utility industry;

•

Recognition by other leaders as a person of integrity and outstanding professional competence with a proven record of accomplishments;

•

Experience in a regulatory arena;

•

Knowledge of the business of, and/or facilities for, the generation, purchase, transmission and/or distribution of electric energy and/or the purchase, storage and/or distribution of natural gas;

•

Attributes that would enhance the diversity and perspective of the Board; and

•

Knowledge of the customers, community and employee base.



		Avista			7

PROPOSAL 1—ELECTION OF DIRECTORS

The Board believes that it must continue to refresh itself. During the last six years, the Board has added five new members, four of whom are independent, as a result of retirements and departures due to professional and personal commitments. The Board consists of directors with a range of experience at policy-making levels in business, government and other areas that are relevant to the Company’s activities. The average tenure of the current director nominees is 8.5 years and the average age is 60.

The Governance Committee identifies nominees by first evaluating the current members of the Board. Current members of the Board with competencies and experience that are relevant to the Company’s business strategies and who are willing to continue in service are considered for re-nomination. If any member of the Board did not wish to continue in service, or if the Governance Committee decided not to nominate a member for re-election, the Committee then would identify the desired qualifications, competencies, expertise, diversity, abilities and experience of a new nominee in light of the criteria set forth above. Current members of the Board are polled for recommendations of individuals meeting the criteria described above. The Governance Committee may also consider candidates recommended by management, employees or others. The Governance Committee may, at its discretion, engage executive search firms to identify qualified and diverse individuals.

Shareholder Recommendations and Nominations of Director Candidates; Proxy Access

The Governance Committee will consider written recommendations for candidates for the Board that are made by shareholders. Recommendations must include detailed biographical material indicating the qualifications of the candidate for the Board and must include a written statement from the candidate of willingness and availability to serve. The Governance Committee will consider any candidate recommended in good faith by a shareholder. The Governance Committee will evaluate director nominees in the same manner as other candidates are evaluated; as discussed above.

While candidates for director are usually nominated by the Board (after consideration and recommendation by the Governance Committee, as discussed above), shareholders may directly nominate candidates for election as directors. In order to do so, shareholders must follow the procedures set forth in the Company’s Bylaws (“Bylaws”), referred to under “2023 Annual Meeting Information,” on page 63. The Chair of the meeting may refuse to acknowledge any nomination not made in compliance with the Bylaws.

In addition, subject to the satisfaction of additional requirements and conditions, and to the exceptions and limitations set forth in the Bylaws, each registered shareholder (or group of not more than 20 shareholders) who has owned at least 3% of the Company’s outstanding shares of common stock for at least three years, may designate one nominee for election as a director of the Company for inclusion in management’s proxy soliciting materials for each Annual Meeting of Shareholders; provided, however, that management is not required to include a number of such designees greater than 20% of the total number of members of the Board of Directors; and provided, further, that the designating shareholder(s) and the designated nominee(s) shall also meet the eligibility and other requirements set forth in the Bylaws.

Current Nominees

Eleven directors are to be elected to hold office for a one-year term, and until a qualified successor is elected. The Company’s Restated Articles of Incorporation and Bylaws provide for up to 11 directors, as specified from time to time by the Board. The Board has fixed the number of directors at 11.

Upon recommendation from the Governance Committee, the Board has nominated Julie A. Bentz, Kristianne Blake, Donald C. Burke, Rebecca A. Klein, Sena M. Kwawu, Scott H. Maw, Scott L. Morris, Jeffry L. Philipps, Heidi B. Stanley, Dennis P. Vermillion and Janet D. Widmann to be re-elected as directors for a one-year term to expire at the Annual Meeting in 2023 and until their successors shall have been elected. The nominees have consented to serve as directors, and the Board has no reason to believe that any nominee will be unable to serve. If a nominee should become unavailable, your shares will be voted for a Board-approved substitute. The Board has concluded that all nominees with the exception of Messrs. Morris and Vermillion, are independent and that all nominees satisfy the various criteria for nomination as directors.

Included in each nominee’s biography is an assessment of the specific qualifications, competencies, attributes and experience of such nominee based on the qualifications described above.



8		Avista

PROPOSAL 1—ELECTION OF DIRECTORS

All director nominees exhibit:



High Integrity		A Commitment to Sustainability

Knowledge of Corporate Governance Requirements and Practices		A Commitment to the Long-Term Interests of our Shareholders

Leadership Experience		Strong Business Judgment

A Proven Record of Success		Innovative Thinking

Our director nominees bring a balance of relevant skills to the boardroom, as well as an effective mix of diversity and experience. The following graph sets out a summary of the director nominees’ core competencies:

LOGO



		Avista			9

PROPOSAL 1—ELECTION OF DIRECTORS


JULIE A. BENTZ Director since 2021 Environmental Committee Finance Committee				Major General (Retired) Bentz, age 57, is one of the principals of BDR LLC (tree farm and fish hatchery management) and the sole principal of HOMR LLC (national security and leadership consultancy). She retired in 2019 after a successful 33-year career, spanning active, reserve and National Guard commissioned service. She has been a recurring member of the White House National Security Council Staff and Homeland Security Council for the Executive Office of the President. While working at the White House, her roles included Senior Advisor for Emerging Technologies and Director of Strategic Capabilities. During her career, she also held numerous roles in the Department of Defense at the Pentagon. She holds a M.S. in National Security Strategy from the National Defense University, a Ph.D. and M.S. in Nuclear Engineering from the University of Missouri, and a B.A. in Radiological Health from Oregon State University.

KRISTIANNE BLAKE Director since 2000 Audit Committee Governance Committee – Chair Executive Committee Lead Director				Ms. Blake, age 68, was president of the accounting firm of Kristianne Gates Blake, P.S. for 34 years. She continues to provide tax and financial planning services for select clients. Ms. Blake has an extensive background in public accounting. She was a Certified Public Accountant for 30 years and she worked for 12 years for an international accounting firm. She has served for 24 years on various boards of public companies and registered investment companies including service as a board chair, audit committee chair and governance committee member. Ms. Blake is currently serving as audit committee chair for the Russell Investment Company and the Russell Investment Funds. She previously served on the boards of the Principal Funds, Inc., the Principal Variable Contracts Funds, Inc., and Laird Norton Wealth Management. Ms. Blake served for 12 years as a Regent at the University of Washington. She has extensive involvement in the Spokane community, having served on many nonprofit and economic development boards. Ms. Blake serves as the Lead Director of the Board.



10		Avista

PROPOSAL 1—ELECTION OF DIRECTORS


Mr. Burke, age 61, currently serves as an independent director for the Virtus mutual fund complex and the Duff & Phelps closed-end fund complex. Prior to these roles, Mr. Burke served as an independent trustee for the Goldman Sachs mutual fund complex. In addition, from 2006 to 2010, Mr. Burke served as a trustee for numerous global funds that were advised by BlackRock, Inc. From 2006 to 2009, he was a managing director of BlackRock and served as the president and CEO of the BlackRock U.S. mutual funds. In this role, Mr. Burke was responsible for the accounting, tax and regulatory reporting requirements for over 300 open and closed-end mutual funds. Mr. Burke joined BlackRock in connection with the merger with Merrill Lynch Investment Managers (“MLIM”), taking a lead role in the integration of the two firms’ operating infrastructures. While at MLIM, Mr. Burke was the Head of Global Operations and Client Services and also served as the Treasurer and Chief Financial Officer (“CFO”) of the MLIM mutual funds. He started his career with Deloitte & Touche LLP (formerly Deloitte Haskins & Sells). Mr. Burke is a certified public accountant and received a Bachelor of Science degree in Accounting and Economics from the University of Delaware and a Master of Business Administration in Taxation from Pace University. Mr. Burke has held a number of leadership roles throughout his career including leading a global operations organization with employees located across four continents. He brings significant financial experience to the board from his years in public accounting and his role as the treasurer and CFO of numerous mutual funds. Mr. Burke is the designated Audit Committee Financial Expert of the Board. He has extensive board experience, having served on the audit, compliance, governance & nominating, and contract review committees of various boards. He has also served on a number of nonprofit boards.				DONALD C. BURKE Director since 2011 Audit Committee – Chair Governance Committee

Ms. Klein, age 56, is Principal of Klein Energy, LLC, an energy consulting company based in Austin, Texas. Over the last 25 years she has worked in Washington, DC and in Texas in the energy, telecommunications and national security arenas. Ms. Klein’s professional experience also includes service with KPMG Consulting (now Deloitte) where she headed the development of the company’s Office of Government Affairs and Industry Relations in Washington, DC. She also served as a Senior Fellow with Georgetown University’s McDonough School of Business. She has served as chair of the board of the Lower Colorado River Authority, a public power utility owning generation, transmission and water services across the central Texas area. In addition, she sits on the boards of GroupNIRE, a company focused on developing energy resources from early stage technologies to commercial deployment, Aiqueous, a water software company, and San Jose Water Group, which operates as a holding company with the following subsidiaries: San Jose Water Company in California; Connecticut Water Company, Avon Water Company and Heritage Village Company in Connecticut; Maine Water Company in Maine; and SJWTX, Inc. She is also the Founder and a director of the Texas Energy Poverty Research Institute. Ms. Klein earned a Juris Doctor from St. Mary’s University School of Law in San Antonio, Texas. She also holds a Master of Arts in National Security Studies from Georgetown University, a Bachelor of Arts in Human Biology from Stanford University, and an MBA from MIT. She is a member of the State Bar of Texas. She has served as a commissioner and chair of the Texas Public Utilities Commission. She is also a retired Lieutenant Colonel of the Air Force Reserve. Her areas of legal expertise include energy and telecommunications.				REBECCA A. KLEIN Director since 2010 Compensation Committee Environmental Committee – Chair



		Avista			11

PROPOSAL 1—ELECTION OF DIRECTORS


SENA M. KWAWU Director since 2021 Environmental Committee Finance Committee				Mr. Kwawu, age 53, has been senior vice president of operations of Frontdoor, Inc. a home services company, with a broad range of services, from flexible home service plans to on-demand solutions since January 2020. He leads service operations and contractor relations for the company’s network of 17,000 prequalified contractor firms and 60,000 technicians. He is responsible for efficiently scaling operations, leveraging a “digital first” approach to deliver enhanced customer experiences and support business growth. Mr. Kwawu is an operational and finance leader with more than 25 years of multifunctional experience in high growth and mature public companies across multiple industries. Prior to joining Frontdoor, Mr. Kwawu was with Starbucks, where he served as senior vice president of finance and business operations, leading data management, call centers (internal and external) and the shared services organization. He joined Starbucks as the senior vice president, global supply chain finance. His career also includes global leadership roles with State Street Corporation, Genworth Financial and General Electric Company. He currently serves as a board member and vice chair of the non-profit VillageReach, and he is the treasurer and a board member of The Executive Leadership Council. He holds a bachelor’s degree in business administration from George Washington University and an M.B.A. from University of Michigan. He also holds a patent for a system and method for pool risk assessment for life insurance.

SCOTT H. MAW Director since 2016 Compensation Committee – Chair Governance Committee				Mr. Maw, age 54, served as executive vice president and CFO of Starbucks Coffee Company (“Starbucks”) from February 2014 until his retirement in November 2018. He was responsible for that company’s Global Finance organization. Prior to that, he served as senior vice president of Corporate Finance of Starbucks where he was responsible for corporate finance, including accounting, tax and treasury. Mr. Maw also had oversight of all financial and securities-related regulatory filings. He joined Starbucks as global controller in 2011. Prior to joining Starbucks, Mr. Maw served as CFO of SeaBright Insurance Company from 2010 to 2011. From 2008 to February 2010 he served as CFO of the Consumer Banking division of JPMorgan Chase & Co., having held a similar position at Washington Mutual Bank (“WaMu”). He was responsible for all finance and accounting functions for the retail branch networks of those banks. From 1994 to 2003, he served in various finance leadership positions at General Electric Company, including serving as CFO of GE Insurance Holdings, Inc. in London. Mr. Maw graduated from Gonzaga University with a B.A. in Accounting. He currently serves on the Board of Trustees for Gonzaga University, as well as the Board of Directors for Root, Inc., an insurance company, and Alcon, Inc. a Swiss medical company specializing in eye care products. He is also the lead independent director of Chipotle Mexican Grill, Inc., and serves as audit committee chair for both Alcon and Chipotle.



12		Avista

PROPOSAL 1—ELECTION OF DIRECTORS


Mr. Morris, age 64, has been Chairman of the Company since January 2008. From January 2008 to October 1, 2019, he also served as the Company’s CEO. From January 2008 to January 2018 he served as the Company’s President. From May 2006 to December 2007, he served as the Company’s President and Chief Operating Officer (“COO”). Mr. Morris was hired by the Company in 1981 and his experience includes management positions in construction and customer service and general manager of the Company’s Oregon utility business. He was elected as a vice president in November 2000 and in February 2002 he was elected as a senior vice president. He is a graduate of Gonzaga University and received his master’s degree from Gonzaga University in organizational leadership. He also attended the Stanford Business School Financial Management Program and the Kidder Peabody School of Financial Management. Mr. Morris serves on the boards of McKinstry Co. and California Water Service. He is a Trustee Emeritus of Gonzaga University. He recently joined the Board of Iron Horse Acquisitions, a diversity media and entertainment SPAC company. He has served on a number of Spokane nonprofit and economic development Boards. Mr. Morris has extensive utility experience having spent his entire career in the industry. He brings to the Board a deep knowledge and understanding of the Company and its subsidiaries, having served in a number of management capacities throughout the Company, including president of Utility Operations, managing the Company’s Oregon gas operations, customer service, and construction areas and CEO of the Company’s subsidiary, Ecova. He has experience leading a number of economic development and business association boards.				SCOTT L. MORRIS Director since 2007 Chairman of the Board Finance Committee Executive Committee – Chair

Mr. Philipps, age 66, was President and CEO of Rosauers Supermarkets, Inc. from July 2000 to August 2021. He served as Chair of the Washington Food Industry Association in 2012, Chair of the 2012 and 2020 campaigns for United Way of Spokane County, Board Chair of Greater Spokane Incorporated (GSI) from 2012-13, and Council President of the Inland NW Council for the Boy Scouts of America from 2015-2017. He is currently involved with a number of local community and non-profit organizations including the Providence Community Mission Board where he serves as Board Chair, the Inland NW Council of the Boy Scouts of America, the Innovia Foundation, and Greater Spokane Incorporated where he chairs Life Sciences Spokane, an initiative to develop and support a life and bio-sciences economy in Spokane. He serves on community advisory boards of the UW-GU Regional Health Partnership and WSU’s Elson S. Floyd College of Medicine. He is a two-time nominee for the Public Library Foundation Citizen Hall of Fame and was named “Retailer of the Year” twice by the Washington Food Industry Association. Mr. Philipps is a graduate of Carroll College in Helena, Montana where he earned BA degrees in Business, Economics and Accounting.				JEFFRY L. PHILIPPS Director since 2019 Compensation Committee Finance Committee



		Avista			13

PROPOSAL 1—ELECTION OF DIRECTORS


HEIDI B. STANLEY Director since 2006 Audit Committee Environmental Committee Executive Committee				Ms. Stanley, age 65, is co-owner and chair of Empire Bolt & Screw, Inc., a privately-held international distribution company headquartered in Spokane, Washington. Prior to this, Ms. Stanley had 24 years of experience in the banking industry. She served as CEO and chair of Sterling Savings Bank from January 2009 to October 2009. From January 2008 to December 2008, she served as director, vice chair, president & CEO. From October 2003 to December 2007, she served as director, vice chair and COO. Prior to this, she held a variety of leadership positions with increasingly higher levels of managerial responsibility. Prior to joining Sterling in 1985, Ms. Stanley worked for IBM in San Francisco, California and Tucson, Arizona. Ms. Stanley’s varied business experiences have provided a diverse business perspective on risk analysis, operations, policy development, mergers and acquisitions, board governance and capital markets. Since June 2016, Ms. Stanley has served as a director of Forterra, Inc., a for-profit wholly-owned subsidiary of the Association of Washington Business. She served on many industry and business boards and has been active in the Spokane region and with many statewide organizations. Her community leadership extends beyond the business community and includes board involvement with numerous charitable, educational and cultural organizations. Ms. Stanley is the founding chair of Greater Spokane Incorporated, former chair of the Association of Washington Business, former chair of the Spokane area YMCA, and former board member of the Spokane Symphony. She currently serves on the board of the Washington Policy Center. Ms. Stanley graduated from Washington State University with a Bachelor of Arts degree in Business Administration.

DENNIS P. VERMILLION Director since 2018 President and CEO Executive Committee				Mr. Vermillion, age 60, has been president of Avista since January 1, 2018 and CEO since October 1, 2019. Prior to that, he served as senior vice president of Avista and president of the Avista Utilities division from 2009 to 2018. He also serves as chairman of the board for Avista subsidiary Alaska Electric Light and Power Company. Mr. Vermillion joined Avista in 1985 and has held various staff and management positions. His experience covers a broad range of activities, including leadership, energy trading and marketing, risk management, scheduling, resource operations, power/transmission contracting, resource planning and coordination, regulatory issues and production cost modeling. Mr. Vermillion has served as Vice President of Energy Resources of Avista Utilities and prior to that, as President and COO of Avista Energy from February 2001 until its sale in June 2007. He currently serves as a board member of Western Energy Institute (WEI), the American Gas Association (AGA), Edison Electric Institute (EEI), Washington Roundtable, Greater Spokane Inc., and the Avista Foundation. Mr. Vermillion is a past chairman of WEI, formerly served on the Board of the Spokane County United Way and is a past chairman of the Spokane County campaign. He is a graduate of Washington State University with a Bachelor of Science degree in Electrical Engineering.



14		Avista

PROPOSAL 1—ELECTION OF DIRECTORS

Ms. Widmann, age 55, most recently served as the president and CEO of Kids Care Dental, a private equity-owned pediatric dental, orthodontic and oral surgery company. She has more than 25 years of executive experience in health care service and technology-enabled health care companies, having previously served as executive vice president of Blue Shield of California, a national health plan based in San Francisco accountable for overall profit and loss responsibility for Blue Shield’s $15 billion in annual revenue and its 3.5 million members.

Ms. Widmann began her career at Health Net, eventually serving as the COO of its dental and vision subsidiaries. Ms. Widmann serves on the board of directors for Delta Dental of California and Cutera (NASDAQ: CUTR). Ms. Widmann was appointed to the California Health Professions Education Foundation and previously served on the Board of the Bay Area Business Council. Ms. Widmann has been consistently named one of the “Most Influential Women in the Bay Area” by the San Francisco Business Journal. She is an active member of The Committee of 200, McKinsey & Company’s Bay Area Women’s Executive Roundtable, and the International Women’s Forum. Ms. Widmann holds a Bachelor of Science degree in Health Administration from California State University, Northridge and a Master of Health Administration degree from the University of Southern California.

LOGO

JANET D. WIDMANN

Director since 2014

Finance Committee – Chair

Governance Committee

The Board recommends a vote “FOR” all director nominees.



		Avista			15

CORPORATE GOVERNANCE MATTERS

Corporate Governance Principles

The Board is responsible for directing the management of the business and affairs of the Company. As such, the Board gives the Company’s executive officers strategic direction and oversees their operation of the Company’s business and their conduct of its affairs, with a view to serving the best interests of the Company and its shareholders and other stakeholders.

The Board has adopted Governance Guidelines to address matters including qualification of directors, standards of independence for directors, election of directors, responsibilities and expectations of directors, and evaluation of director and committee performance. The Governance Guidelines are reviewed annually and updated as necessary. The Governance Guidelines, along with the Bylaws, Board Committee Charters, and the Code of Conduct, provide the framework for the governance of the Company.

Board Leadership Structure

The Board does not have a policy as to whether the role of CEO should be separate from that of the Chairman, nor, if the roles are separate, whether the Chairman should be selected from the independent directors. The Board selects the Chairman in a manner that it determines to be in the best interests of the Company and its shareholders. This flexibility has allowed the Board to determine whether the role should be separated based on the individuals and the circumstances existing at that time. The Board believes that the Company has been well served by this leadership structure.

Annually, the Board examines its governance practices, including the separation of the positions of the Chairman and the CEO and the independence of the Chairman. The Board believes that it needs to retain the ability to balance the independent Board structure with the flexibility to appoint as Chairman someone with hands-on knowledge of and experience in the operations of the Company. Currently, the roles of Chairman and CEO are separated. Mr. Morris, who retired as CEO, effective October 1, 2019, serves as the Chairman of the Board. The Company is led by Mr. Vermillion, who has served as its President since January 1, 2018 and President and CEO since October 1, 2019.

Duties of the Chairman

The Chairman’s duties include:

•

Chairing all meetings of the Board in a manner that effectively utilizes the Board’s time and which takes full advantage of the skills, expertise and experience that each director has to offer;

•

Working with the Lead Director and CEO to establish schedules and agendas for Board meetings, with input from other directors and management;

•

Together with the Lead Director, recommending an agenda to the Board for its approval for each shareholder meeting;

•

Providing input to the Chair of the Governance Committee on new Board member candidates and the selection of the Board committee members;

•

Facilitating and encouraging constructive and useful communication between the Board and management;

•

Providing leadership to the Board in the establishment of positions that the Board may take on issues to come before shareholder meetings;

•

Presiding at all shareholder meetings; and

•

With input from the CEO, ensuring that the Board is provided with full information on the condition of the Company, its businesses, the risks facing the Company and the environment in which it operates.

Lead Director

The Board has also established the position of an independent Lead Director. Ms. Blake was elected on May 11, 2020, to serve as Lead Director for a three-year term. The Lead Director’s duties include:

•

Maintaining an active, positive and collaborative relationship with the Chairman and the CEO;



16		Avista

CORPORATE GOVERNANCE MATTERS

•

Keeping an open line of communication that provides for dissemination of information to the Board and discussion before actions are finalized;

•

Serving as primary liaison between independent directors, the Chairman and the CEO;

•

Presiding at all meetings at which the Chairman is not present, including executive sessions of the independent directors held at each regularly scheduled Board meeting;

•

Calling meetings of the independent directors when necessary and appropriate; and

•

Working with the Chairman to set meeting schedules and agendas for the Board meetings, including soliciting input from the other independent directors on items for the Board agendas, to ensure that appropriate agenda items are included and that there is adequate time for discussion of these items.

The Lead Director is available for communications and consultation with major shareholders. The Company has a mechanism for shareholders and other interested parties to communicate with the Lead Director and independent directors as a group, or on an individual basis. (See “Communications with Shareholders” on page 20.)

Director Independence

The Board has been, and continues to be, a strong proponent of director independence. It is the policy of the Board that a majority of the directors be independent from management and that the Board not engage in transactions that would conflict with the best interests of the Company’s business.

The Company’s corporate governance structures and practices provide for a strong, independent Board and include several independent oversight mechanisms:

•

All members of the Board are independent except for Messrs. Morris and Vermillion.

•

All members of the Board committees are independent, except for Mr. Morris who chairs the Executive Committee and is a member of the Finance Committee, and Mr. Vermillion who is a member of the Executive Committee.

•

Each Board Committee has a separate independent Chair, except for the Executive Committee.

•

All Board committees may seek legal, financial or other expert advice from sources independent from management.

The Board believes this governance structure and these practices ensure that strong and independent directors will continue to effectively oversee the Company’s management and key issues related to its long-range business plans, long-range strategic decisions, risks and integrity.

Independence determinations are made on an annual basis at the time the Board approves nominees for election at the next Annual Meeting and, if a director joins the Board between Annual Meetings, at such time. To assist in this determination, the Board adopted Categorical Standards for Independence of Directors (the “Categorical Standards”). As a result of this review, the Board has affirmatively determined that the directors nominated for election at the Annual Meeting are independent of the Company and its management, with the exception of Messrs. Morris and Vermillion. Mr. Vermillion is an inside director because of his employment as President and CEO of the Company, and Mr. Morris is not considered independent because he served as the Company’s CEO prior to his retirement from such position and an employee of the Company on March 1, 2020. He is currently serving as Chairman.

Related Party Transactions

The Board recognizes that related party transactions present a heightened risk of conflicts of interest and/or improper valuation of transactions (or the perception thereof) and, therefore, has adopted a Related Party Transaction Policy, which is followed in connection with all related party transactions involving the Company and specified related persons that include directors (including nominees) and executive officers, certain family members and certain shareholders, all as outlined in the applicable rules of the SEC. During its annual review, the Board considered whether there were any transactions or relationships between directors or members of their immediate families (or any entity of which a director or an immediate family member is an executive officer, general partner, or significant equity holder) and members of the Company’s senior management or their affiliates that are inconsistent with a determination that the director is independent.

SEC rules require that the Company disclose any related party transaction in which the amount involved exceeds $120,000 in the last year. The Governance Committee has determined that the Company had no related party transactions that are reportable for 2021.



		Avista			17

CORPORATE GOVERNANCE MATTERS

In making its determination, the Board considered that the Company and its subsidiaries in the ordinary course of business have during the last three years purchased products and services from companies at which some of our directors were officers, board members, or investors during 2021. The Board specifically considered the following relationships, which it determined are immaterial to the director’s independence:

•

Ms. Stanley is co-owner and chair of the board of a company that has for many years, commencing prior to the time Ms. Stanley became a director of the Company, sold, and continues to sell, hardware supplies to the Company in arm’s-length transactions. The amount paid to that company in 2021 was $53,977.77, which did not exceed the threshold amount in the SEC rules. The amount paid in each of the prior three years was comparable in amount and did not exceed the threshold amount.

•

Mr. Taylor, who retired from the Avista Board on June 21, 2021, is a board member of a corporation that owns and operates radio stations in Idaho, Washington and Oregon. In 2021, the Company’s advertising agency purchased radio advertisements on some of those stations in arm’s-length transactions. The amount paid to that company in 2021 was $3,343.90, which did not exceed the threshold amount in the SEC rules. The amount paid in each of the prior three years was comparable in amount and did not exceed the threshold amount.

Board Meetings

The Board strongly encourages its members to attend all Board and committee meetings and the Annual Meeting. The Board held four meetings in 2021. The attendance at all Board and committee meetings was 100%. All the directors attended the prior year’s Annual Meeting and all directors are planning to attend the upcoming Annual Meeting.

Meetings of Independent Directors

The independent directors meet at each regularly scheduled Board meeting. The Lead Director chairs these sessions. The Lead Director establishes the agenda for each session and also determines which, if any, other individuals, including members of management and independent advisors, should be available for each such meeting.

Board Risk Oversight

The Board plays an active role in the identification of the major risks affecting the Company and the oversight of the Company’s risk management. For organizational purposes, the Board has categorized the various risks facing the Company as follows:


• utility regulatory		• external mandates

• operational		• financial

• climate change		• energy commodity

• cyber and technology		• compliance

• strategic

While the board retains full responsibility for the general oversight of the management of all categories of risk, it has delegated to and allocated among its committees first oversight responsibility regarding specific categories of risk. The allocation of categories of risk to the respective committees is described generally below and is more specifically set forth in the committee charters. While management is responsible for the day-to-day management of risk, appropriate Company officers make periodic reports to the respective committees or, if circumstances so warrant, to the full Board, and responds to specific inquiries made by the committees and/or the Board. Following a risk report to a committee, the chair of that committee reports to the full Board. This process facilitates the coordination of the oversight and management of the various categories of risk, particularly with respect to the interrelationships among various risks.

See Item 1A – “Risk factors” and Item 7 – “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Enterprise Risk Management” in the Annual Report for discussions of the various risks within the general categories listed above and the Company’s risk management processes and procedures.

CEO Succession Plan

Succession plans for our CEO and other officers are an important part of the Company’s long-term success, and the Company has in place a succession-planning process that reflects the Company’s long-term business strategy. The Compensation



18		Avista

CORPORATE GOVERNANCE MATTERS

Committee conducts an annual review of the succession plans for our CEO and other executives of the Company and receives quarterly updates on the plans. Our CEO and the Compensation Committee review those succession plans annually with the full Board. The succession plans reflect the Board’s belief that the Company should regularly identify internal candidates for the CEO and other executive positions and that it should develop those candidates for consideration when a transition is planned or necessary. Accordingly, management has identified internal candidates in various phases of development and has implemented development plans to assure the candidates’ readiness. Those development plans identify the candidates’ strengths and developmental opportunities, and the Compensation Committee receives periodic updates and regularly reviews the candidates’ progress. In addition to internal development pools, to assure selection of the best candidate(s), the Company may recruit externally if such approach would better suit the Company’s strategic needs. The Compensation Committee believes that the Company’s succession planning process provides a good structure to assure that the Company will have qualified successors for its executive officers.

The Board has adopted a Contingency CEO Succession Plan to outline the procedures for the temporary appointment of an interim CEO to avoid a vacancy in leadership that may occur because of an absence event due to death, illness, disability, or sudden departure of our CEO.

Board and Committee Evaluations

The Board conducts an annual assessment of its performance and effectiveness. The process is coordinated by the Board Chair and the Chair of the Governance Committee and is proctored through written assessments completed by each director. Areas of inquiry include, among other things, the following:

•

Overall Board performance and areas of focus including strategic and business issues, challenges and opportunities;

•

Succession planning;

•

Board Committee structure and composition;

•

Board culture;

•

Board composition;

•

Management performance, including quality of materials, provided to the directors; and

•

Board meeting logistics.

Each Board committee also conducts an annual assessment of its performance and effectiveness through written assessments completed by each committee member. Areas of inquiry include, among other things, the following:

•

The sufficiency of their Charters;

•

Whether committee members possess the right skills and experience or whether additional education or training is required;

•

Whether there are sufficient meetings covering the right topics; and

•

Whether meeting materials are effective.

Individual Director Assessments

Annually, the Board Chair conducts an objective assessment of the quality of each Board member, considering such factors as attendance, participation, engagement with other Board members, and any other factors deemed appropriate. This process includes a discussion between the Board Chair and the Chairs of each Board Committee, as well as individual interviews of each director. The process provides an opportunity for input on individual director performance, as well as practical input from each director on what the Board should continue doing, start doing and stop doing. The information gathered through the assessment process is reviewed by the Governance Committee and considered in its recommendation of Board members to stand for election each year.

A summary of all committee assessment results is provided to the Governance Committee and the Board for review and discussion.



		Avista			19

CORPORATE GOVERNANCE MATTERS

Director Orientation and Continuing Education

The Governance Committee and management are responsible for director orientation programs. Orientation programs are designed to familiarize new directors with the Company’s business strategies and policies. The Governance Committee is also responsible for director continuing education. Continuing education programs for directors include a combination of internally developed materials and presentations and outside programs presented by third parties. Financial and administrative support is available to directors for attendance at academic or other independent programs.

Director Retirement Policy

Directors may not stand for election after age 72.

Code of Conduct

The Company has adopted a Code of Conduct that applies to members of the Board and our employees, including our CEO (the principal executive officer) and our CFO (the principal financial officer).

Information on Company Website

The Company’s Corporate Governance Guidelines, the Code of Conduct, and the Related Party Transaction Policy are available on the Company’s website at https://avistacorp.gcs-web.com/corporate-governance. A written copy of any of these documents will be provided free of charge to any person upon request to the Corporate Secretary’s office at 1411 East Mission Avenue, P.O. Box 3727 (MSC-10), Spokane, Washington 99220.

Communications with Shareholders

Shareholders and other interested parties may send correspondence to our Board or to any individual director to the Corporate Secretary’s office at 1411 East Mission Avenue, P.O. Box 3727 (MSC-10), Spokane, Washington 99220. Concerns about accounting, internal accounting controls or auditing matters should be directed to the Chair of the Audit Committee at the same address. All communications will be forwarded to the person(s) to whom they are addressed, unless it is determined that the communication:

•

Does not relate to the business or affairs of the Company or the functioning or constitution of the Board or any of its committees;

•

Relates to routine or insignificant matters that do not warrant the attention of the Board;

•

Is an advertisement or other commercial solicitation or communication;

•

Is frivolous or offensive; or

•

Is otherwise not appropriate for delivery to directors.

The director or directors who receive any such communication have discretion to determine whether the subject matter of the communication should be brought to the attention of the full Board or one or more of its committees and whether any response to the person sending the communication is appropriate. Any such response will be made through the Company’s Corporate Secretary or General Counsel and only in accordance with the Company’s policies and procedures and applicable laws and regulations relating to the disclosure of information.

Board Committees

The Board has six standing committees—Audit Committee, Compensation Committee, Governance Committee, Finance Committee, Environmental Committee and Executive Committee. The committees, their membership as of the end of 2021, and their principal responsibilities are described below.

Audit

Compensation

Governance

Environmental

Finance

Executive

Members

Burke (Chair)

Maw (Chair)

Blake (Chair)

Klein (Chair)

Widmann (Chair)

Morris (Chair)

Blake

Klein

Burke

Bentz

Blake

Stanley

Philipps

Maw

Kwawu

Stanley

Widmann

Stanley

Morris

Vermillion

Philipps

Number of Meetings in 2021



20		Avista

CORPORATE GOVERNANCE MATTERS

Each committee of the Board has adopted a Charter that has been approved by the Board. The Charters are reviewed on an annual basis and amendments are made as needed. The committee Charters are available on the Company’s website at https://avistacorp.gcs-web.com/corporate-governance. A written copy of our committee Charters will be provided free of charge to any person upon request to the Corporate Secretary’s office at 1411 East Mission Avenue, P.O. Box 3727 (MSC-10), Spokane, Washington 99220.

Audit Committee—Assists the Board in overseeing the integrity of and the risks related to the Company’s financial statements and accounting compliance, the Company’s compliance program, the qualifications and independence of the independent registered public accounting firm, and the performance of the Company’s internal audit function and independent registered public accounting firm. The Audit Committee also reviews the integrity of the Company’s systems of internal controls regarding accounting, financial reporting, disclosure, compliance and ethics that management and the Board have established, including without limitation all internal controls established and maintained pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”). The Audit Committee oversees management of the Company’s exposure to accounting and financial risk, including questionable accounting or possible fraud, and oversees generally, to assist the full Board, the Company’s overall risk assessment and risk management processes. Only independent directors sit on the Audit Committee. The Board has determined that Mr. Burke is an “Audit Committee Financial Expert,” as defined in the SEC rules.

Compensation Committee—Considers and approves, as well as oversees the operational risks associated with, compensation and benefits of executive officers of the Company, as well as human capital management generally. This includes overseeing the organizational structure of the Company’s management and succession planning for our CEO and other executive officers.

For a discussion of the Company’s processes and procedures for the consideration and determination of executive officer compensation (including the role of executive officers and compensation consultants in determining or recommending the amount or form of compensation) see the CD&A starting on page 30.

The Compensation Committee is composed entirely of independent directors, as defined by the rules of the NYSE, and within the Company’s Categorical Standards. In addition, the Compensation Committee is intended to comply with the “non-employee director” requirements of Rule 16b-3 under the Exchange Act, and to the extent still applicable, the “outside director” requirements of Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”).

Governance Committee—Advises the Board on corporate governance matters and oversees the risks relating to such matters, including recommending guidelines for the composition and size of the Board and its committees, evaluating Board effectiveness and organizational structure and setting director compensation (see the section on Director Compensation on page 23). The Governance Committee oversees, among other things, issues regarding conflicts of interest, independence and compliance with SEC and NYSE rules and reviews the allocation of risk management oversight to the various Board committees. The Governance Committee provides general strategic oversight of the Company’s programs and practices relating to ESG. The Governance Committee also develops Board membership criteria and reviews potential director candidates. Recommendations for director nominees are presented to the full Board for approval. See Proposal 1—“Election of Directors” on page 7. Only independent directors sit on the Governance Committee.

Environmental, Technology and Operations Committee—Assists the Board in overseeing risks associated with the Company’s business and operational risks, other than financial risks. This includes regulatory, environmental compliance, employee and public safety, climate change, energy, commodity, cyber and physical security, cyber technology strategy, and external mandates.

Finance Committee—Assists the Board in overseeing that corporate management has in place strategies, budgets, forecasts, and financial plans and programs, including adequate liquidity, to enable the Company to meet its goals and objectives and oversees the associated risks. The Finance Committee’s activities and recommendations include reviewing management’s qualitative and quantitative financial plans and objectives for both the short and long-term; approving strategies with appropriate action plans to help ensure that financial objectives are met; having in place a system to monitor progress toward financial goals, including monitoring commodity price and counterparty credit risk, overseeing and monitoring employee



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CORPORATE GOVERNANCE MATTERS

benefit plan investment performance and approving changes in investment policies and strategies, and monitoring management’s program for hedging or otherwise mitigating financial and commercial risk; and providing strategic oversight of the Company’s non-regulated investments and businesses.

Executive Committee—Has and may exercise, when the Board is not in session, all the powers of the Board that may be lawfully delegated, subject to such limitations as may be provided in the Bylaws, by resolutions of the Board, or by law. Generally, such action would only be taken to expedite Board authorization for certain corporate business matters when circumstances do not allow the time, or when it is otherwise not practicable, for the entire Board to meet.



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DIRECTOR COMPENSATION – 2021

The Board regularly reviews director compensation with the assistance of Meridian Compensation Partners (the same consultant used for executive compensation) to determine whether it is appropriate and competitive in light of market circumstances and prevailing best practices for corporate governance for the energy/utility industry. Through this review process, the Board targets overall director compensation to the median of the same peer group used to review executive compensation (see page 34 for the peer group.) The elements of director compensation reflect the Board’s view that compensation to the independent directors should consist of an appropriate mix of cash and stock. The cash portion of the retainer is paid quarterly, and the stock portion is paid annually (as soon as practicable following the Annual Meeting). Employee directors are not compensated for their Board service.

Elements of Director Compensation


Pay Element	2021 Compensation

Annual Retainer (cash and stock)	Board Members:	$	190,000
	(Directors receive an annual retainer of $190,000, with $110,000 automatically paid in stock. Directors have the option of taking the remaining $80,000 in cash, stock or a combination of both cash and stock.)

Committee Chair Retainers (Cash)	Audit Committee:	$	20,000
	Compensation Committee:	$	15,000
	Environmental Committee:	$	15,000
	Finance Committee:	$	15,000
	Governance Committee:	$	15,000
	Lead Director:	$	25,000
	Non-Executive Chairman:	$	100,000

Meeting Fees (Cash)	Board and Committee Meetings	$	1,500

In September 2021, directors received a $20,000 increase to their annual retainer for the total of $190,000 a year. The Governance, Environmental, and Finance Committees Chair Retainers increased from $11,250 to $15,000 per year; and the Audit Committee Chair Retainer increased from $15,000 to $20,000.

Each director is entitled to reimbursement of reasonable out-of-pocket expenses incurred in connection with meetings of the Board or its committees and related activities, including third party director education courses and materials. These expenses include travel to and from the meetings, as well as any expenses they incur while attending the meetings.

Director Stock Ownership Policy

The Company has a minimum stock ownership expectation for all Board members. Outside directors are expected to achieve a minimum investment of five times the minimum stock portion of their retainer (currently, five times $110,000 = $550,000), and retain at least that level of investment while a Board member. Shares previously deferred under the former Non-Employee Director Stock Plan count for purposes of determining whether a director has achieved the ownership expectation.

The ownership expectation illustrates the Board’s philosophy of the importance of stock ownership for directors to further strengthen the commonality of interest between the Board and shareholders. The Governance Committee annually reviews director holdings to determine whether they meet ownership expectations.

There were no annual stock option grants or non-stock incentive plan compensation payments to directors for services in 2021 and none are currently contemplated under the current compensation structure. The Company also does not provide a retirement plan or deferred compensation plan to its directors. Listed below is compensation paid to each non-employee director who served during any part of the 2021 fiscal year.



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DIRECTOR COMPENSATION – 2021

Director Compensation Table—2021


	Annual Retainer				All Other Compensation ($)(4)		Total Compensation($)(5)
Director Name	Director Compensation Paid in Cash($)(2)		Director Compensation Paid in Stock($)(2)(3)		All Other Compensation ($)(4)		Total Compensation($)(5)

Julie A. Bentz(1)		$ 5,453	$	31,667			$	37,667

Kristianne Blake		$ 141,549	$	96,618	$	4,257	$	242,424

Donald C. Burke		$ 120,716	$	96,618			$	217,333

Rebecca A. Klein		$ 112,049	$	96,618			$	208,667

Sena M. Kwawu(1)		$ 38,382	$	96,618			$	135,000

Scott H. Maw		$ 107,049	$	96,618			$	203,667

Scott L. Morris		$ 192,049	$	96,618			$	288,667

Jeffry L. Philipps		$ 98,049	$	96,618			$	194,667

Marc F. Racicot(6)		$ 75,334		—			$	75,334

Heidi B. Stanley		$ 101,049	$	96,618			$	197,667

R. John Taylor(7)		$ 311,608	$	89,964	$	2,129	$	403,700

Janet Widmann		$ 113,549	$	96,618			$	210,167

Totals		$ 1,423,785	$	991,172	$	6,386	$	2,414,957

(1)	Ms. Bentz and Mr. Kwawu joined the Board during 2021 and, as a consequence, their compensation was prorated to reflect a partial year’s service.

(2)	Amounts in these columns include cash retainers, stock issuances, Chair retainers, and Board and committee meeting fees.

(3)	Stock is issued in whole shares based on the current market price at the time of issuance. Stock is fully vested upon issuance. All fractional shares are paid in cash.

(4)

Amounts for Ms. Blake and Mr. Taylor include dividends paid on those shares that were deferred prior to December 31, 2004, under the former Non-Employee Director Stock Plan. (Ms. Blake and Mr. Taylor are the only directors who deferred receipt of stock until a later date. Ms. Blake has 2,519 deferred shares and Mr. Taylor had 5,496 deferred shares until he cashed out those shares upon his retirement on June 21, 2021.)

(5)	The Company does not provide perquisites or other personal benefits to its Board members.

(6)	Mr. Racicot retired from the Board on May 11, 2021.

(7)	The Director Compensation Paid in Cash amount includes a cash out of Mr. Taylor’s 5,496 deferred shares from the former Non-Employee Director Stock Plan.

Prohibition Against Hedging and Similar Transactions

Pursuant to our Insider Trading Policy, directors, officers and employees are prohibited from engaging in short-sales, zero-cost collars, forward sales contracts, pledging, hedging or otherwise offsetting any decrease in the market value of their Company shares.



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AUDIT COMMITTEE REPORT

Charter and Responsibilities

The Audit Committee operates under a written Charter adopted by the Board that outlines its responsibilities and the practices it follows. The Charter can be found on the Company’s website at https://avistacorp.gcs-web.com/corporate-governance. The Audit Committee reviews and assesses the adequacy of its Charter at least annually, and, when appropriate, recommends changes to the Board.

The Audit Committee is composed of non-management directors who meet the independence and financial literacy requirements of the NYSE and additional, heightened independence criteria applicable to members of the Audit Committee under SEC and NYSE rules. The Audit Committee recommended to the Board the designation of Donald C. Burke as the Audit Committee Financial Expert solely for the purposes of compliance with the rules and regulations of the SEC implementing Section 407 of the Sarbanes-Oxley Act. The Board approved this recommendation.

The Audit Committee assists the Board in overseeing the integrity of the Company’s financial statements, the Company’s compliance with legal and regulatory requirements, the Company’s Code of Conduct, the Company’s enterprise risk management program and the independent auditor’s qualifications and independence. The Audit Committee also assists the Board in fulfilling its responsibility for oversight of the Company’s systems of internal controls, including, without limitation, those established and maintained pursuant to the Exchange Act, as amended, and the Sarbanes-Oxley Act. In addition, the Audit Committee participates in external education sessions and educational sessions developed by management, at the request of the Audit Committee.

2021 Activity

During 2021, the Audit Committee fulfilled its duties and responsibilities as outlined in the Charter. Six meetings were held, with meeting agendas established by the Audit Committee’s Chair and the Director of Internal Audit. Specifically, the Audit Committee:

•

Reviewed and discussed with management and Deloitte, the independent auditor, the Company’s unaudited quarterly financial statements and management’s discussion and analysis of financial condition and results of operations.

•

Reviewed with the CEO and CFO their certifications as to the accuracy of the Company’s financial statements and the establishment and maintenance of internal controls and procedures.

•

Reviewed with management all earnings press releases relating to 2021 annual and quarterly earnings prior to their issuance.

•

Reviewed and discussed with Deloitte various matters including, without limitation, all critical audit matters, critical accounting policies, practices and estimates, significant changes in accounting principles or the application thereof, and the effect of regulation on the Company’s financial performance and results of operations.

•

Discussed with management, the internal auditors, and the independent auditor the quality and adequacy of the Company’s systems of internal controls, and the internal audit functions, responsibilities, performance, and staffing.

•

Reviewed the audit plans, audit scopes, and identification of audit risks with the independent and the internal auditors.

•

Received from Deloitte a letter and other disclosures regarding the independent auditor’s communications with the Audit Committee concerning the independent auditor’s independence. The independent auditor advised the Audit Committee that said letter and other disclosures were required by the PCAOB auditor standards. The Audit Committee discussed with the independent auditor the latter’s independence.

•

Was advised by Deloitte that the matters discussed by Deloitte and the Audit Committee constituted all matters that PCAOB standards required Deloitte to discuss with the Audit Committee.

•

Reviewed and approved the services and fees of the Company’s independent auditor.

•

Reviewed and approved the non-audit services performed by the Company’s auditor and concluded that such services were consistent with the maintenance of independence.

•

Reviewed the performance of Deloitte and approved its reappointment in 2021 as the Company’s independent registered public accounting firm.



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AUDIT COMMITTEE REPORT

2021 Financial Statements

The Audit Committee reviewed and discussed with management and Deloitte the Company’s audited financial statements and management’s discussion and analysis of financial condition and results of operations for the year ended December 31, 2021. Additionally, the Committee reviewed Management’s Report on Internal Control Over Financial Reporting and the Auditor’s Report on the effectiveness of internal control over financial reporting. Based on its review and discussions, the Audit Committee recommended to the full board, and the full board approved the inclusion of the Company’s audited financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, for filing with the SEC.

This report is provided by the following independent directors, who comprise the Audit Committee:


Donald C. Burke—Chair		Kristianne Blake		Heidi B. Stanley



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PROPOSAL 2—RATIFICATION OF APPOINTMENT OF DELOITTE AS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2022

The Audit Committee has the direct responsibility to hire, evaluate and, where appropriate, replace the Company’s independent auditor and, in its capacity as a committee of the Board, is directly responsible for the appointment, compensation, and general oversight of the work of the independent auditor. The Audit Committee has appointed Deloitte as the Company’s independent registered public accounting firm for continuing audit work in 2022.

Shareholder approval is not required for the appointment of Deloitte. However, the appointment is being submitted to shareholders for ratification. Should the shareholders fail to ratify the appointment of Deloitte, such failure (1) would have no effect on the validity of such appointment for 2022 (given the difficulty and expense of changing the independent registered public accounting firm midway through a year) and (2) would be a factor to be taken into account, together with other relevant factors, by the Audit Committee in the selection and appointment of the independent registered public accounting firm for 2023 (but would not necessarily be the determining factor).

Annual Evaluation and Selection of the Independent Auditor

The Audit Committee annually reviews Deloitte’s independence and performance in deciding whether to retain Deloitte or engage another independent auditor. In the course of these reviews, the Audit Committee considers, among other things:

•

Deloitte’s historical and recent performance on the Company’s audit.

•

Deloitte’s depth, expertise, and knowledge of the Company’s business and industry.

•

The quality and candor of Deloitte’s communications with the Audit Committee and management.

•

How effectively Deloitte maintained its independence and employed its independent judgment, objectivity, and professional skepticism.

•

Available external data about quality and performance, including recent PCAOB reports on Deloitte.

•

The appropriateness of Deloitte’s fees.

•

Deloitte’s tenure as the Company’s independent auditor, including the benefits of having a long-tenured auditor, and the safeguards in place to maintain its independence.

Long Tenure Benefits

•

Higher audit quality. Through years of experience with the Company, Deloitte (including its predecessors) has gained institutional knowledge of, and deep expertise regarding, the Company’s operations and businesses, accounting policies and practices, and internal control over financial reporting.

•

No onboarding or educating new auditor. Onboarding a new auditor requires a significant time commitment that could distract from management’s focus on financial reporting and internal controls.



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PROPOSAL 2—RATIFICATION OF APPOINTMENT OF DELOITTE AS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2022

Independence Controls

•

Thorough Audit Committee oversight. The Audit Committee meets with Deloitte at least four times per year. The committee also performs a comprehensive annual evaluation to determine whether to engage Deloitte. This evaluation includes assessments of Deloitte’s qualifications and performance; approach to promoting and monitoring audit quality; quality and candor of communications; and independence, objectivity, and professional skepticism. The Audit Committee also has an active role in selecting the lead partner.

•

Rigorous limits on non-audit services. The Audit Committee has a policy that requires preapproval of all non-audit services, subject to a de minimis exception, and Deloitte is engaged only when it is best suited for the job.

•

Strong internal Deloitte independence process. Deloitte conducts periodic internal quality reviews of its audit work, assesses the adequacy of partners and other personnel working on the Company’s account, and rotates the lead partner every five years.

•

Strong regulatory framework. Deloitte, as an independent registered public accounting firm, is subject to PCAOB inspections, peer reviews, and PCAOB and SEC oversight.

As a result of its evaluation, the Audit Committee concluded that the selection of Deloitte as the independent registered public accounting firm for 2022 is in the best interests of the Company and its shareholders. The Audit Committee made this recommendation to the full board and the full board approved.

Audit Fees and All Other Fees

The Audit Committee approves the fees paid to Deloitte for audit and non-audit services and receives periodic reports on the amount of fees paid. The aggregate fees for audit and other services provided by Deloitte in 2021 and 2020 were:



	2021		2020

Audit Fees(a)	$	1,775,806	$	1,736,046

Audit-Related Fees(b)		3,000		3,000

Tax Fees(c)		5,800		311,710

All Other Fees(d)		6,484		7,074

Total	$	1,791,090	$	2,057,830


Footnotes:

(a)	Audit services performed in 2021 and 2020 for which audit fees were billed consisted of:

•

Audit of the Company’s annual consolidated financial statements and internal controls over financial reporting.

•

Reviews of the Company’s quarterly reports on Form 10-Q.

•

Comfort letters, statutory and regulatory audits, consents, and other services related to SEC matters.

(b)	Audit-related services performed in 2021 and 2020 consisted of agreed-upon procedures.

(c)	Tax fees for technical tax advice and planning performed in 2021 and 2020 related to income tax accounting methods, credits and incentives, state taxes, and various other tax matters.

(d)	All other services performed in 2021 and 2020 consisted of licensing of accounting literature research databases, attendance at training seminars, and other miscellaneous projects.

Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors

The Audit Committee is required to pre-approve the audit and permissible non-audit services to be performed. The Audit Committee has adopted what it terms its Audit Committee Pre-Approval Policy (the “Policy”), which sets forth the procedures and conditions pursuant to which services proposed to be performed by the Company’s independent registered public accounting firm may be pre-approved. All services provided by Deloitte in 2021 and 2020 were pre-approved in accordance with the Policy adopted by the Audit Committee.



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PROPOSAL 2—RATIFICATION OF APPOINTMENT OF DELOITTE AS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2022

The Audit Committee intends to pre-approve services, whether specifically or pursuant to general pre-approvals according to the Policy, only if the provision of such services is consistent with SEC and PCAOB rules on auditor independence and all other applicable laws and regulations. In rendering general or specific pre-approvals, the Audit Committee will consider whether the independent registered public accounting firm’s provision of specific services, or categories of services, would be inconsistent with the independence of the auditor.

Hiring Restrictions for Deloitte Employees

The Audit Committee has adopted a policy that has certain restrictions on the Company’s hiring of any Deloitte partner, director, manager, staff member, advising member of the department of professional practice, reviewing tax professional, and any other individuals responsible for providing audit assurance on any aspect of Deloitte’s audit and review of the Company’s financial statements.

Other Information

The Company has been advised by Deloitte that neither the firm, nor any covered person of the firm, has any financial interest, direct or indirect, in any capacity in the Company or its subsidiaries. A representative of Deloitte is expected to attend the Annual Meeting with the opportunity to make a statement if he/she desires to do so and is expected to be available to respond to appropriate questions.

Ratification of the appointment of the independent auditors requires the affirmative vote of a majority of the votes cast by the holders of the shares of common stock voting in person or by proxy at the Annual Meeting.

The Board recommends a vote “FOR” the ratification of the appointment of Deloitte as the Independent Registered Public Accounting Firm.



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COMPENSATION DISCUSSION AND ANALYSIS (“CD&A”)

This CD&A provides information about the compensation objectives and policies for our NEOs and puts in perspective the quantitative and narrative disclosures in the compensation tables included in this Proxy Statement. Our NEOs for 2021 were:

•

Dennis P. Vermillion, President and CEO

•

Mark T. Thies, Executive Vice President, CFO and Treasurer

•

Jason R. Thackston, Sr. Vice President, Energy Resources and Environmental Compliance Officer

•

Kevin J. Christie, Sr. Vice President, External Affairs and Chief Customer Officer

•

Heather L. Rosentrater, Sr. Vice President, Energy Delivery and Shared Services

The CD&A also describes the following:

•

Our business results impact on incentive compensation;

•

Our decision-making process on compensation design and pay levels, including our compensation governance approach;

•

Our compensation philosophy and objectives; and

•

The elements of the Company’s executive compensation program.

Business Results Impact on Incentive Compensation

The Compensation Committee, with input from the CEO, establishes target incentive compensation for our NEOs at the beginning of each performance period. The Board establishes target incentive compensation for our CEO also at the beginning of each performance period. Actual pay varies above or below the target based on individual, organizational, and stock performance. Because a substantial portion of each NEO’s compensation is in the form of equity, our NEOs’ actual compensation aligns closely with changes in the stock price.

We employ several quantitative criteria to assess the performance of our NEOs. Our objectives include achieving the EPS target, achieving favorable TSR relative to our peers, managing our costs per customer, customer satisfaction, our response time to natural gas emergency calls, reliability of service, and business development. The charts below illustrate the relationship between our 2021 financial performance targets and our actual performance.

Recent Performance Results: Select Annual Incentive Plan Metrics

LOGO



30		Avista

COMPENSATION DISCUSSION AND ANALYSIS (“CD&A”)

Recent Performance Results: Long-Term Incentive Plan Metrics

LOGO

Chief Executive Officer: 2021 Target Compensation vs. Realized Compensation

The chart below illustrates the relationship between our 2021 performance and our CEO’s 2021 compensation.

LOGO

The target amount shown for the RSUs is the grant date fair value of the portion of the 2019, 2020, and 2021 awards that could have vested if the CEO was not terminated on December 31, 2021. The target amount for the CEO’s performance shares represents the aggregate grant date fair value of the 2019 awards that could have vested if the TSR and the three-year CEPS performance conditions were met for the 2019-2021 performance period. The amount shown as the actual compensation realized by our CEO for 2021 includes his base salary, the actual annual cash incentive plan amount paid in early 2022 for 2021 performance, the value, as of the vesting date, of the RSUs that vested in early 2022, and the actual value, as of the vesting date, of the performance share units (“PSUs”) that were realized for the 2019 – 2021 performance period. Values for RSUs and PSUs do not include dividend equivalents.



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COMPENSATION DISCUSSION AND ANALYSIS (“CD&A”)

Compensation Governance Practices

The Company highly values strong compensation governance practices. We believe our executive compensation practices align with our corporate values and provide a foundation for success. The governance practices that we employ, and those that we avoid, include:



Practices We Employ		Practices We Avoid
• We align pay and performance • We mitigate undue risk (see Risk Mitigation Overview on page 33) • We maintain stock ownership guidelines consistent with market practices • We maintain a recoupment (i.e., clawback) policy that allows the Company to recoup compensation due to financial and other detrimental misconduct • We pay CIC severance solely upon a double trigger • The Compensation Committee reviews NEO tally sheets annually • The Compensation Committee is composed entirely of independent directors • The Compensation Committee engages an independent compensation consultant • The Compensation Committee regularly meets in executive sessions without management present		• We do not provide perquisites • We do not permit hedging or short sales of Company stock by directors or officers • We do not permit pledging of company stock by directors or officers • We do not pay dividends or dividend equivalents on performance awards until the awards are earned • We do not provide any tax gross-ups under our CIC Plan • We no longer offer additional Supplemental Executive Retirement Plan (“SERP”) service credits as a recruitment tool for hiring executives

2021 Say on Pay Advisory Vote

At the May 2021 Annual Meeting, 97.63% of the votes cast were in support of our Say on Pay advisory resolution on our executive compensation. We view this outcome as a signal of strong shareholder support for our executive compensation philosophy, policies and practices.

Decision Making Process

Role of the Compensation Committee

The Compensation Committee makes all compensation decisions regarding our CEO, our other NEOs and other executive officers, including the level of cash compensation and equity awards. Our CEO annually evaluates each executive officer’s performance and presents his evaluation to the Compensation Committee for its consideration with respect to salary adjustments, annual incentive opportunity and annual equity award amounts. The Compensation Committee annually reviews the CEO’s performance, which it considers in the development of the CEO’s salary adjustments, annual incentive opportunity and annual equity award amounts.

Role of the Compensation Consultant

The Compensation Committee selects and retains an independent compensation consultant to support its oversight of our executive compensation programs. For 2021, the Compensation Committee engaged Meridian as its independent compensation consultant. (The Committee also purchased survey information from the Willis Towers Watson (“WTW”) Energy Services Executive Compensation database but did not otherwise consult with WTW.) Meridian provides the Compensation Committee consulting services solely relating to executive compensation and governance matters. In accordance with NYSE rules, the Compensation Committee determined that Meridian is independent and, further, that no conflicts of interest arose due to Meridian’s services rendered to the Compensation Committee.

A representative of Meridian attended Compensation Committee meetings in 2021 and advised the Compensation Committee on the principal aspects of executive compensation, including the competitiveness of program design and award values and specific analyses with respect to our executive officers.



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COMPENSATION DISCUSSION AND ANALYSIS (“CD&A”)

The Compensation Committee determines the work to be performed by Meridian. Meridian works with our Vice President of Safety & Human Resources and his staff to gather data required in preparing its analyses for Compensation Committee review. Meridian provides services or advice to management only to the extent requested by the Compensation Committee.

Meridian interacts with management to gather information and obtain recommendations, but the Compensation Committee Chair determines if and when Meridian’s advice and materials can be shared with management. When important pay decisions are made, Meridian provides advice to the Compensation Committee in an executive session without Company management present. This approach ensures that the Compensation Committee receives objective advice from Meridian so that the Compensation Committee can make independent decisions about executive pay.

Role of Management

Our CEO provides input to the Compensation Committee with respect to each executive officer’s (other than himself) total compensation and each component of compensation.

At the request of the Compensation Committee, both the Vice President of Safety & Human Resources and our CEO regularly attend Compensation Committee meetings, excluding the executive sessions during which their respective compensation and other matters are discussed.

Risk Mitigation Overview

The Compensation Committee believes that the Company’s compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on the Company. In establishing pay practices for the Company, the Compensation Committee’s goal is to design a compensation structure that does not encourage inappropriate risk-taking by employees or executive officers. The following features of the compensation structure reflect this approach:

•

Short and long-term incentive payments are capped;

•

Annual cash incentive design balances key performance metrics that are focused on financial results and system sustainability over time;

•

The total compensation program does not guarantee bonuses and has multiple financial and non-financial performance measures;

•

The Compensation Committee reviews both short-term and long-term financial scenarios to ensure the plan design does not encourage executives to take excessive risks but also does not discourage appropriate risks;

•

Stock ownership guidelines are in place to strengthen the alignment of the financial interests of executives with those of shareholders;

•

Directors and officers are prohibited from engaging in short-sales, zero-cost collars, forward sales contracts, pledging, hedging or otherwise offsetting any decrease in the market value of their Company shares; and

•

The Company maintains a formal recoupment (i.e., clawback) policy.

Elements of Compensation

Compensation Philosophy and Objectives

Our compensation program is designed to align the interests of our NEOs with those of our shareholders and to pay for achieved performance. To accomplish these objectives, our compensation program incents executive officers to achieve specific annual, long-term, and strategic goals and improves shareholder value. The Compensation Committee believes that the overall compensation of our senior executives should be weighted toward variable performance-based compensation. As a result, a significant portion of compensation is linked with goals related to specific items of corporate performance that are likely to produce long-term shareholder and customer value.



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COMPENSATION DISCUSSION AND ANALYSIS (“CD&A”)

The charts below show the portion of target compensation that is variable and, therefore, is “at risk” for our CEO and the average for our other NEOs. Variable compensation includes annual incentives, RSUs and performance shares. The charts also show the portion of target compensation for our CEO and the average target compensation for our other NEOs that is directly linked to share value, including RSUs and performance shares.


CEO		OTHER NEOS

Competitive Analysis and Peer Group

The Compensation Committee believes it is important to provide a compensation structure that is competitive with compensation paid to comparable executives of companies within the energy/utility industry to ensure the Company is able to attract and retain quality employees in key positions to lead the Company. To achieve this objective, the Compensation Committee works with Meridian to conduct an annual competitive review of its total compensation program for our CEO and other NEOs. Through the review process, the Compensation Committee generally targets overall total compensation levels (base, short-term incentive and long-term incentives) at the median of the peer group. Pay components for an individual NEO may be higher or lower than the median depending on an individual’s role, responsibilities, and performance within the Company. The Compensation Committee believes this target positioning is effective to attract and retain our executives.

The Compensation Committee annually compares each element of NEO total compensation against a peer group of publicly traded companies within the energy/utility industry of similar revenue size and market capitalization. For 2021, our NEO compensation was compared with market data, as disclosed in proxy statements, from the fifteen companies in the S&P 400 Mid-Cap Utilities Index (“Proxy Peer Group”). This group is designed to be representative of the Company’s business, size and competitive market for talent.

The use of publicly disclosed data allows the Company to maintain a consistent peer group. The Proxy Peer Group can change slightly from year to year due to changes in company size and weightings determined by S&P; however, there were no changes from the index group used in 2020. The median revenues and market capitalization of the Proxy Peer Group were $1.8 billion and $4.1 billion, respectively. This compares with Avista’s revenues of $1.4 billion and market capitalization of $2.7 billion. The companies comprising the 2021 Proxy Peer Group were:


ALLETE, Inc.	MDU Resources Group Inc.	ONE Gas, Inc.
Black Hills Corporation	National Fuel Gas Company	PNM Resources, Inc.
Essential Utilities, Inc.	New Jersey Resources Corporation	Southwest Gas Holdings, Inc.
Hawaiian Electric Industries, Inc.	NorthWestern Corporation	Spire Inc.
IDACORP, Inc.	OGE Energy Corp.	UGI Corporation

To supplement market data derived from the Proxy Peer Group, the Compensation Committee also considered benchmark compensation data derived from the WTW Energy Services Executive Compensation database, which covered comparable



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COMPENSATION DISCUSSION AND ANALYSIS (“CD&A”)

diversified energy companies with revenues between $1 billion and $3 billion and with median revenues of $1.5 billion. This supplemental compensation data helped to inform the Compensation Committee on broad market compensation practices and trends within the energy services sector.

Performance Management

The Compensation Committee believes in aligning pay with performance. To help accomplish that alignment, all executives receive annual performance reviews conducted by their direct manager, and the Compensation Committee reviews each NEO’s performance ratings.

At the beginning of each calendar year, the Compensation Committee asks our CEO to develop specific performance targets and goals for his role based on strategic goals for the Company set by the Board. The Compensation Committee reviews and approves our CEO’s goals at its annual February meeting and presents those goals to the full Board for its information and review. The Compensation Committee quarterly reviews our CEO’s performance relative to his targets and provides quarterly status updates to the full Board. At the end of the year, the Compensation Committee reviews our CEO’s year-end results as part of its overall CEO annual performance review process.

Base Salary

Our NEOs are provided with an annual base salary to compensate them for services rendered during the year. The Compensation Committee reviews the base salary of all executive officers at least annually. The factors that influence the Compensation Committee’s decisions in setting the annual base salary for our NEOs include the market data provided by Meridian and each NEO’s job complexity, experience and breadth of knowledge in the utility and diversified energy industry. The Compensation Committee also considers each NEO’s responsibilities, which may include electric and natural gas utility operations, as well as subsidiary operations, and recognizes that the Company operates in several states, which requires quality relationships and interaction with multiple regulatory agencies.

2021 Base Salaries

In addition to considering the factors noted above, the Compensation Committee also reviews performance results from the prior year to determine how our CEO performed against specific targets and operational goals established at the beginning of the prior year. Our CEO’s annual performance goals for 2020 were generally related to strategic planning, financial performance, safety targets, diversified energy resource management, regulatory and legislative matters, succession planning, governance and customer value delivery. When reviewing the CEO’s base salary for 2021, the Compensation Committee agreed that our CEO had met the established goals for 2020 performance.

The Compensation Committee also reviewed performance ratings of each of the other NEOs to determine appropriate adjustments in base salary. The Committee considered market data and individual performance in determining 2021 salary increases The table below outlines the changes to base salary in 2021 for our NEOs.


	2020 Salary		% Increase			2021 Salary

D. P. Vermillion	$	750,000		3.0	%	$	772,500

M. T. Thies	$	454,000		2.0	%	$	463,000

J. R. Thackston	$	335,000		3.0	%	$	345,000

K. J. Christie	$	335,000		3.0	%	$	345,000

SEC Form DEF 14A filed by Avista Corporation