Document

DEF 14A 1 a2022definitiveproxystatem.htm DEF 14A Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

SCHEDULE 14A

(RULE 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No. ____ )

Filed by the Registrant x

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))

x Definitive Proxy Statement

¨ Definitive Additional Materials

¨ Soliciting Material under § 240.14a-12

THE AES 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 all boxes that apply):

x No fee required.

¨ Fee paid previously with preliminary materials

¨ Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11

Table of Contents


LETTER TO STOCKHOLDERS			1
NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS			2
PROXY STATEMENT			3
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS			4
PROXY STATEMENT SUMMARY			4
CORPORATE GOVERNANCE AT AES			8
Corporate Governance Practices			8
Environmental and Social Highlights			10
Related Person Policies and Procedures			14
Communications with the Board or Its Committees			15
Additional Governance Information			15
BOARD AND COMMITTEE GOVERNANCE			16
Board Leadership Structure			16
Director Independence			16
Director Attendance			17
Board Committees			17
Board’s Role in Risk Management			20
Board and Committee Evaluations			22
Director Characteristics and Succession Planning			22
Director Nominations by Stockholders			24
Board of Directors - Biographies			26
DIRECTOR COMPENSATION			37
Director Compensation Program			37
Director Compensation (2021)			38
EXECUTIVE COMPENSATION			40
COMPENSATION DISCUSSION AND ANALYSIS (“CD&A”)			40
Executive Summary			40
Our Executive Compensation Process			42
Our Executive Compensation Philosophy			42
Role of the Compensation Committee, Independent Compensation Consultant, and Management			43
How We Use Survey Data in our Executive Compensation Process			45
Overview of AES Total Compensation			45
2021 Compensation Determinations			46
Other Relevant Compensation Elements and Policies			54
Summary Compensation Table (2021, 2020 and 2019)			57


Grants of Plan-Based Awards (2021)			60
Narrative Disclosure Relative to the Summary Compensation Table and the Grants of Plan-Based Awards Table			62
Outstanding Equity Awards at Fiscal Year-End (2021)			63
Option Exercises and Stock Vested (2021)			65
Non-Qualified Deferred Compensation (2021)			66
Narrative Disclosure Relating to the Non-Qualified Deferred Compensation Table			68
Potential Payments Upon Termination or Change-in-Control			69
Additional Information Relating to Potential Payments Upon Termination of Employment or Change-in-Control			70
Payment of Long-Term Compensation Awards in the Event of Termination or Change-in-Control as Determined by the Provisions Set Forth in the 2003 Long-Term Compensation Plan (for all NEOs)			71
CEO Pay Ratio			73
Compensation Committee Report			74
Risk Assessment			74
AUDIT MATTERS			76
Report of the Financial Audit Committee			76
Information Regarding the Independent Registered Public Accounting Firm			77
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, DIRECTORS, AND EXECUTIVE OFFICERS			78
Shares Beneficially Owned by Directors and Executive Officers			78
Shares Beneficially Owned by Greater Than 5% Stockholders			79
ANNUAL MEETING PROPOSALS			81
Proposal 1: Election of Directors			81
Proposal 2: Approval, on an Advisory Basis, of the Company’s Executive Compensation			82
Proposal 3: Ratification of the Appointment of Ernst & Young LLP as the Independent Auditor of the Company for Fiscal Year 2022			83
Proposal 4: If Properly Presented, to Vote on a Non-Binding Stockholder Proposal to subject Termination Pay to Stockholder Approval			84
IMPORTANT INFORMATION ABOUT AES’ VIRTUAL ANNUAL MEETING			88
QUESTIONS AND ANSWERS REGARDING THE PROXY STATEMENT AND ANNUAL MEETING			90

March 7, 2022

Dear Fellow Stockholder:

It is my pleasure to invite you to participate in The AES Corporation (the “Company”) 2022 Annual Meeting of Stockholders (the “Annual Meeting”), which will be conducted virtually via live webcast on Thursday, April 21, 2022, starting at 9:30 a.m. EDT. The Board of Directors (the “Board”) believes that hosting a virtual meeting enables increased Stockholder participation and access, improves efficiency, and reduces costs. A virtual meeting is also environmentally friendly and is in line with our commitment to sustainable business practices. Stockholders will be able to listen, vote and submit questions from their home or any location with internet connectivity. Additional information on how to attend and participate in the Annual Meeting can be found on page 88 of the accompanying Proxy Statement.

The agenda items for the Annual Meeting are: (i) election of directors, (ii) approval, on an advisory basis, of the Company’s executive compensation, (iii) ratification of the appointment of Ernst & Young LLP as the independent auditor of the Company for fiscal year 2022, and (iv) if properly presented, to vote on a non-binding Stockholder proposal to subject termination pay to Stockholder approval. These proposals are described in more detail in the following Notice of 2022 Annual Meeting of Stockholders and Proxy Statement.

We are proud of the execution of our strategic priorities. In 2021, we signed 5 GW of new power purchase agreements for new renewables projects, surpassing our original target of 3 to 4 GW and including a 10-year supply agreement with Google for 500 MW of 24/7 carbon-free energy in Virginia.

As further described in Board and Committee Governance beginning on page 16 of the accompanying Proxy Statement, we continue to review and improve our governance practices, and the Board undertook a number of governance initiatives during 2021, such as strengthening our Board succession and recruitment processes, in line with AES’ strategy, to better develop leadership as the Company evolves. We consider a diverse mix of director candidates as part of our succession and recruitment planning. Today, 45% of our Directors are women and 36% of our Directors identify as racially or ethnically diverse.

Your Vote is Important. Stockholder attendance at our annual meetings helps maintain communications between the Company and our Stockholders and improves Stockholders’ understanding of our business and culture. We hope you will be able to join us. Whether or not you plan on attending the Annual Meeting, you can ensure that your shares are represented at the meeting by promptly voting and submitting your proxy by internet or telephone, or returning by your Proxy Card or voting instruction card. Additional information on how to vote can be found in the Proxy Statement Summary.

Sincerely,

John B. Morse, Jr.

Chairman and Lead Independent Director

2022 Proxy Statement | 1

Notice of 2022 Annual Meeting of Stockholders


Date & Time						Location
9:30 a.m. EDT April 21, 2022						meetnow.global/M4FZLMK

Record Date
Stockholders of record at the close of business on February 25, 2022 are entitled to notice of, and to vote at, The AES Corporation (the “Company”) 2022 Annual Meeting of Stockholders (the “Annual Meeting”).

Items of business
1. Election of directors; 2. Approval, on an advisory basis, of the Company’s executive compensation; 3. Ratification of the appointment of Ernst & Young LLP as the independent auditor of the Company for fiscal year 2022; 4. If properly presented, to vote on a non-binding Stockholder proposal to subject termination pay to Stockholder approval; and 5. To transact such other business as may properly come before the Annual Meeting.

Proxy Voting
Your vote is important. Please vote your shares promptly to ensure the presence of a quorum during the Annual Meeting. You may vote your shares via the internet, by telephone, or by signing, dating, and returning your Proxy Card or voting instruction card. For specific voting instructions, please refer to the information provided in the following Proxy Statement or the voting instructions you receive via the internet or mail.

Important notice regarding the availability of proxy materials for the Annual Meeting to be held on Thursday, April 21, 2022: the Proxy Statement, Annual Report on Form 10-K and related proxy materials are available free of charge at www.envisionreports.com/aes.

By Order of the Board of Directors,

Paul L. Freedman

Executive Vice President, General Counsel and Corporate Secretary

March 7, 2022

2022 Proxy Statement | 2

PROXY STATEMENT

The AES Corporation

4300 Wilson Blvd.

Arlington, VA 22203, USA

www.aes.com

March 7, 2022

The Board of Directors (the “Board”) of The AES Corporation (the “Company” or “AES”) is soliciting proxies to be voted on the Stockholders’ behalf at the 2022 Annual Meeting of Stockholders (the “Annual Meeting”).

The Annual Meeting will commence at 9:30 a.m. EDT on Thursday, April 21, 2022. The Annual Meeting will be held virtually via live webcast and Stockholders of record as of February 25, 2022 may attend and participate in the Annual Meeting at meetnow.global/M4FZLMK.

This Proxy Statement provides information regarding the matters to be voted on at the Annual Meeting, as well as other information that may be useful to you. In accordance with rules adopted by the United States Securities and Exchange Commission (the “SEC”), instead of mailing a printed copy of our proxy materials to each Stockholder of record, we are furnishing proxy materials to our Stockholders on the internet. If you received a Notice of Internet Availability of Proxy Materials (the “Notice”) by mail, you will not receive a printed copy of the proxy materials other than as described below. Instead, the Notice will instruct you as to how you may access and review all of the important information contained in the proxy materials. The Notice also instructs you as to how you may submit your Proxy over the internet. If you received a Notice by mail and would like to receive a printed copy of our proxy materials, you should follow the instructions for requesting such materials included in the Notice.

This Proxy Statement, the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 (the “AES Form 10-K”) and related proxy materials are first being made available to Stockholders on March 7, 2022. These materials are available at www.envisionreports.com/aes for registered holders of AES stock and at www.edocumentview.com/aes for beneficial holders of AES stock. In accordance with SEC rules, each of these websites provides complete anonymity with respect to a Stockholder accessing the websites.

At the close of business on February 25, 2022, the record date, there were 667,395,142 shares of common stock outstanding. Each share of common stock is entitled to one vote.

2022 Proxy Statement | 3

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Proxy Statement may contain forward-looking statements regarding us, our business, prospects and our results of operations, including our expectations regarding the impact of the COVID-19 pandemic on our business, that are subject to certain risks and uncertainties posed by many factors and events that could cause our actual business, prospects and results of operations to differ materially from those that may be anticipated by such forward-looking statements. These statements include, but are not limited to, statements regarding management’s intent, beliefs, and current expectations and typically contain, but are not limited to, the terms “anticipate,” “potential,” “expect,” “forecast,” “target,” “will,” “would,” “intend,” “believe,” “project,” “estimate,” “strategy”, “future”, “opportunity”, “plan,” “strive,” “seek,” “aim,” “work towards” and similar words. Forward-looking statements are not intended to be a guarantee of future results, but instead constitute current expectations based on reasonable assumptions. Factors that could cause or contribute to such differences include, but are not limited to, those described in the AES Form 10-K and subsequent filings with the SEC.

Readers are cautioned not to place undue reliance on these forward-looking statements which speak only as of the date of this proxy statement. We undertake no obligation to revise any forward-looking statements in order to reflect events or circumstances that may subsequently arise, except as required by law. If we do update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements. Readers are urged to carefully review and consider the various disclosures made by us in this proxy statements and in our other reports filed with the SEC that advise of the risks and factors that may affect our business.

PROXY STATEMENT SUMMARY

This summary highlights information contained elsewhere in this Proxy Statement. Please refer to the complete Proxy Statement and the AES Form 10-K before you vote.

MEETING INFORMATION

2022 Annual Meeting of Stockholders

Date and Time:

Your Vote is Important!

You may vote online before the Annual Meeting by submitting a proxy over the internet or by telephone. If you requested a paper copy of the proxy materials, including a paper copy of the Proxy Card, you may vote by mail.

April 21, 2022, 9:30 a.m. EDT

Record Date:

February 25, 2022

Location:

meetnow.global/M4FZLMK

Online

By Phone

By Mail

Registered Holders: www.envisionreports.com/aes

Beneficial Holders: www.edocumentview.com/aes

Call the phone number located on the top of your Proxy Card or voting instruction card

Complete, sign, date and return your Proxy Card or voting instruction card in the envelope provided

2022 Proxy Statement | 4


Voting Matters			Board of Directors’ Recommendations
1. Election of Directors			FOR each Director Nominee
2. Approval, on an Advisory Basis, of the Company’s Executive Compensation			FOR
3. Ratification of the Appointment of Ernst & Young LLP as the Independent Auditor of the Company for Fiscal Year 2022			FOR
4. If Properly Presented, to Vote on a Non-Binding Stockholder Proposal to Subject Termination Pay to Stockholder Approval			AGAINST

Corporate Governance

Our Corporate Governance Policies Reflect Best Practices


Annual Election of All Directors						97% Average Attendance of Incumbent Directors at Board and Committee Meetings

Non-Executive, Independent Chair Since 2003						Financial Audit, Compensation and Governance Committee Members Are All Independent

Ten of Eleven Director Nominees Are Independent						Directors Are Subject to Rigorous Stock Ownership Requirements

Annual Board and Committee Self-Evaluations and Review of Director Qualifications						Director Compensation Reviewed Annually

Executive Sessions of Independent Directors Held at Each Regularly Scheduled Board Meeting, and Directors Meet Periodically Throughout the Year with Individual Members of Management						Three Financial Audit Committee Members Are Audit Committee Financial Experts

Directors Subject to Term Limits; Average Tenure is Less than Seven Years						Five of Eleven Director Nominees Are Women; Four of Eleven Director Nominees are Racially/Ethnically Diverse

Women and Racially/Ethnically Diverse Individuals Included in the Initial Pool from which Director Nominees are Chosen						Board Oversight of Cybersecurity Programs, Policies, and Practices

Governance Committee Oversight Over Environmental and Safety Programs, Policies, and Practices						Compensation Committee Oversight Over Human Capital Management Matters, Including Talent Acquisition, Development, Retention and Diversity & Inclusion

Director Nominee Statistics. The following table highlights some of the characteristics of our Director nominees. Further discussion on the qualifications and experience of Director nominees is included in the Director Characteristics and Succession Planning section of this Proxy Statement.

2022 Proxy Statement | 5

Gender Diversity

Racial/Ethnic Diversity

Average Age

Independence

Average Tenure

45%

36%

65.3

years

91%

6.8

years

2021 Stockholder Engagement Program

We place great value on Stockholder outreach, and engage regularly with our investors to gain insight into the governance issues about which they care most. We seek a collaborative and mutually beneficial approach to issues of importance to investors that affect our business and aim to ensure that our corporate governance practices are informed by, and generally are in line with, our Stockholders’ expectations. In 2021, we engaged with Stockholders to discuss topics, including, but not limited to, Environmental, Social and Governance (“ESG”) matters, including climate-related disclosures, and diversity and inclusion efforts.

Executive Compensation

Our philosophy is to provide compensation opportunities within a competitive range of the 50th percentile of survey data specific to our revenue size and industry. We then design our incentive plans to pay for performance, with more compensation paid when performance exceeds expectations and less compensation paid when performance does not meet expectations. Thus, the actual compensation realized by our Named Executive Officers (“NEOs”) will depend on our actual performance.

AES’ Compensation Committee has a practice of reviewing executive compensation program components, targets and payouts on an annual basis to ensure the strength of our pay-for-performance alignment. Our performance is evaluated against both short-term goals, which support AES’ business strategy, and long-term goals, which measure the creation of sustainable Stockholder value.

Compensation and Benefits Best Practices


Target Total Compensation at Approximately the 50th Percentile						Director and Executive Officer Stock Ownership Guidelines

Independent Consultant Retained by the Compensation Committee						Executive Compensation Clawback Policy

Double-Trigger Change-in-Control Vesting with Equity Awards						No Change-in-Control Excise Tax Gross-Ups

No Perquisites for our Executive Officers						No Backdating or Option Repricing

All AES Employees Prohibited from Hedging or Pledging of AES Stock						Annual Review of Risk Related to Compensation Programs

No Special Retirement Benefit Formulas for Executive Officers						Target Relative Pay-for-Performance Alignment

Mix of AES-Specific and Relative Performance Goals						Caps on Annual and Long-Term Incentive Payouts

2022 Proxy Statement | 6

In 2021, AES received over 95% support for its NEO compensation based on the shares voted in favor of the 2021 Say on Pay proposal. In 2021, as in prior years, the Compensation Committee considered input from our Stockholders and other stakeholders as part of its annual review of AES’ executive compensation program.

Please see the Compensation Discussion and Analysis section in this Proxy Statement for a detailed description of our executive compensation programs.

2022 Proxy Statement | 7

CORPORATE GOVERNANCE AT AES

Corporate Governance Practices

AES is committed to best practices in corporate governance. Highlights for our corporate governance practices are described below:

•Independent Board. Ten out of eleven Director nominees are independent.

•Separation of the Roles of Chief Executive Officer (“CEO”) and Chairman. These roles are separate and our Chairman is an independent Director.

•Annual Elections of Directors by Majority Vote. All of our Directors are accountable to Stockholders through an annual election with a majority vote standard.

•No Supermajority Voting Provisions. Neither our Sixth Restated Certificate of Incorporation (“Charter”) or our Amended and Restated By-Laws (“By-Laws”) contain any supermajority voting provisions.

•Proxy Access. Stockholders may nominate Directors through proxy access.

•Stockholder Right to Call a Special Meeting. Stockholders holding 25% of the outstanding shares of the Company’s stock have the right to call special meetings of Stockholders.

•Stockholder Right to Act by Written Consent. Stockholders have the right to act by a written consent signed by Stockholders holding no less than the minimum number of votes necessary to authorize an action at a meeting.

•Rigorous Director Stock Ownership Requirements. Non-employee Directors are expected to hold equity ownership in the Company of at least five times the Director’s annual Board retainer within five years after election to the Board.

•Communication with the Board. Stockholders may communicate with any individual Director, any Board committee, or the full Board.

•Director Engagement. Our Directors attended an average of 97% of Board and committee meetings in 2021 (held during the period in which the director served).

•Annual Say on Pay Vote. The Company’s Say on Pay approval rating exceeded 93% at each annual meeting since 2011.

•Annual Board and Committee Self-Evaluations. Through this process, the Board annually reviews the qualifications, experiences, and contributions of its Directors to provide for a Board that comprises the right mix to achieve AES’ strategic goals.

•Limit on Director Tenure to Ensure Fresh Board Perspectives. Under our Corporate Governance Guidelines, we expect that Directors will serve for at least four consecutive one-year terms but no more than 15 cumulative one-year terms.

2022 Proxy Statement | 8

•Diverse Pool of Director Nominee Candidates. Our Corporate Governance Guidelines require that qualified women and racially/ethnically diverse individuals are included in the initial pool of candidates from which director nominees are chosen.

•Recognition. We have received recognition for our governance practices, including:

2022 Proxy Statement | 9

Environmental and Social Highlights

AES strives to improve lives by delivering greener and, smarter energy solutions the world needs. We are developing a wide range of initiatives that are designed to improve the lives of our employees, customers and their communities; protect the communities in which we operate; empower our people and businesses; and improve long-term returns to our investors.

We have received numerous recognitions for our environmental and social practices, some of which are highlighted below:

2022 Proxy Statement | 10

The Company has a number of environmental and social initiatives described in further detail below.


Environment
Environmental stewardship and leadership are key parts of our business and we aim to develop environmentally responsible energy solutions.

Environmental Policy and Practices			AES’ environmental policy seeks to:
			Work towards a smarter, greener energy future and help our industry transition to low-carbon and zero-carbon sources of energy.
			Take decisive, measurable actions to both transform our own  generation  portfolio and help others decarbonize by co-creating innovative energy solutions.
			Incorporate our business principles and practices in our culture and in the daily management of our business.


Sustainable Operations			We are committed to lowering our greenhouse gas emissions and helping to create a clean energy future by shifting our portfolio towards less carbon-intensive sources of generation with an emphasis on zero-carbon technologies like wind and solar. We have grown our renewables business significantly in recent years and in 2021, we signed contracts for approximately 5,000 MW of new wind, solar and energy storage projects, an increase of more than 60% compared to 2020. We are working toward developing new solutions that are expected to enable other sectors of the economy and our customers to make their operations more sustainable. For example, in 2021, we launched the first large-scale solution that utilizes wind, solar, hydro and storage resources to ensure the customer receives hour-by-hour carbon-free energy to meet its needs throughout the year.
			In 2020, we achieved our goal of reducing coal-fired generation to below 30% of total Mwh on a pro-forma basis (Pro-forma based on annual generation in MWh from the portfolio as of, or expected by, the relevant date, adjusted for: (i) (+) generation from new assets added to the portfolio; and (ii) (-) actual generation from announced asset sales or retirements). In 2021, we accelerated our goal by five years, aiming to reduce pro-forma generation from coal to below 10% by 2025. This year, we announced our intent to reduce coal generation to zero by the end of 2025, subject to necessary approvals.


Social
Stakeholder engagement is integrated into our global strategy and we strive to develop strong, proactive and consistent relationships with all our stakeholders, including our people, customers, investors, communities, creditors, governments, partners, regulatory agencies and trade associations among others. Our people are instrumental to helping us meet the world’s energy needs and supporting our people is a foundational value for AES. The success we have achieved would not be possible without the leadership, motivation, knowledge and skills that our people bring to work every day.

2022 Proxy Statement | 11


Safety and Health			We take steps to implement safe operations at our facilities around the world, so each person can return home safely. Conducting safe operations is the cornerstone of our daily activities and decisions. To help keep our people safe, AES has established a Safety Management System (“SMS”) Global Safety Standard that applies to all AES employees, as well as contractors working in AES facilities and construction projects. The SMS requires continuous safety performance monitoring, risk assessment, and performance of periodic integrated environmental, health, and safety audits. The SMS provides a consistent framework for all AES operational businesses and construction projects to set expectations for risk identification and reduction, measure performance, and drive continuous improvements. AES calculates lost time incident (“LTI”) rates for our employees and contractors based on OSHA standards, based on 200,000 labor hours, which equates to 100 workers who work 40 hours per week and 50 weeks per year. In 2021, there was a 11% decrease in LTI cases. In 2021, AES’ LTI Rate was 0.075 for AES people, 0.107 for operational contractors, and 0.028 for construction contractors. In 2021, the Company had no work-related fatalities.
			We aim to put safety first and we measure our successes by how safely we achieve our goals, including by linking a portion of incentive compensation to our safety performance.
			In response to the COVID-19 pandemic, we implemented significant changes that we determined were in the best interest of our people and communities. We implemented programs to encourage vaccination and testing programs across our facilities in addition to further safety measures for employees continuing critical on-site work. In addition, AES people worked from home to the extent they were able to.

Stakeholder Engagement			AES businesses directly engage with their local communities and support programs that aim to make a community stronger economically, socially and environmentally. Working together with our partners and various stakeholders, we tailor our social impact programs to respond to the needs of our communities, maximize resources and deliver long-lasting benefits.
			Strong partnerships allow us to work together to integrate innovative energy solutions, develop positive social impact programs and create long-term value within communities. Partners include government agencies, development agencies, municipalities, non-governmental organizations, universities and technical institutions, business partners and subcontractors.

Human Rights			We believe it is our responsibility to conduct business with the highest level of integrity, ethics and compliance.
			The AES Human Rights Policy formalizes our long-standing commitment to uphold and respect human rights.


Talent Management			We have a comprehensive approach to managing our talent and our developing leaders to assist our people in possessing the right skills for today and tomorrow, whether that requires us to build new business models or leverage leading technologies. To empower employees, we provide a range of development programs and opportunities, skills, and resources they need to be successful by focusing on experience and exposure, as well as formal programs including our ACE Academy for Talent Development. For example, our Global Energy4Talent Trainee Program provides passionate early career professionals with experience and exposure throughout the company. Throughout the two-year program with rotations every six months, trainees are responsible for leading strategic projects developed with the help of an AES mentor and area leaders. This program is designed to encourage new and fresh perspectives that feeds innovation while supporting the sharing of best practices across the organization.

2022 Proxy Statement | 12


Global Diversity and Inclusion			At AES, we believe that our individual differences make us stronger. Our Diversity and Inclusion Program complements who we are by reinforcing our values and supporting our mission and strategy.
			Our Diversity and Inclusion Program aims to: Create a common language and understanding about diversity and inclusion; Take actions to reduce unconscious bias to increase inclusivity; Foster a culture of diversity and inclusivity; and Track our program’s results leveraging a balanced scorecard approach, which considers tracking gender balance in talent pools and leadership positions, training participation, and community engagements, among other metrics.

Our Culture			In 2021, several AES businesses received “Great Place to Work” designations by the Great Place to Work Institute in the following countries and regions: Argentina Chile Central America and Caribbean Puerto Rico Mexico

2022 Proxy Statement | 13

Related Person Policies and Procedures

Our Governance Committee has adopted, in writing, The AES Corporation Policy and Procedures With Respect to Related Person Transactions, which sets forth the procedures for the review, approval, ratification, and oversight of any transaction, arrangement or relationship (including indebtedness or guarantee of indebtedness), or any series of similar transactions, arrangements or relationships in which (i) the Company (including any of its subsidiaries) was, is or will be a participant and the amount involved exceeds $120,000 and (ii) any Director or Executive Officer of the Company, any Director nominee, any person who is known to be the beneficial owner of more than 5% of any class of the Company’s voting securities, any immediate family member of any of the foregoing person, or any firm, corporation or other entity in which any of the of the foregoing persons is employed or is a partner or principal or in a similar position or in which such person has a 10% or greater beneficial ownership interest (each, a “Related Person”), had, has, or will have, a direct or indirect material interest, except those transactions, arrangements or relationships that would not be required to be disclosed pursuant to SEC rules after considering the materiality thresholds and exceptions to disclosure set forth in Item 404 of Regulation S-K (a “Related Person Transaction”). Under this policy, prior to entering into, or amending, a potential Related Person Transaction, the Related Person or applicable business unit leader must notify the General Counsel who will assess whether the transaction is a Related Person Transaction. If the General Counsel determines that the proposed transaction is a Related Person Transaction, the details of the transaction will be submitted to the Financial Audit Committee (the “Audit Committee”) for review and consideration. The Audit Committee will either approve or reject it after taking into account factors including, but not limited to, the following:

•the benefits to the Company;

•the materiality and character of the Related Person’s direct or indirect interest, and the actual or apparent conflict of interest of the Related Person;

•the impact on a Director’s independence in the event the Related Person is a Director or a Director nominee, an immediate family member of a Director or a Director nominee or an entity in which a Director or a Director nominee is an executive officer, partner, or principal;

•the commercial reasonableness of the Related Person Transaction and the availability of other sources for comparable products or services;

•the terms of the Related Person Transaction;

•the terms available to unrelated third parties or to employees generally;

•any reputational risk the Related Person Transaction may pose to the Company; and

•any other relevant information.

In the event that the General Counsel determines that it is not reasonable or practicable for the Company to wait until the next Audit Committee meeting to review a Related Person Transaction, the details of the Related Person Transaction may be submitted to a member of the Audit Committee who will possess delegated authority to act on behalf of the Audit Committee between Audit Committee meetings with respect to the review and approval of Related Person Transactions. Any approvals by such member between Audit Committee meetings must be reported to and ratified by the Audit Committee at the next Audit Committee meeting.

In addition, in the event that the Company becomes aware of a Related Person Transaction that has not been the subject of a reasonable prior review and approval or previous ratification under the policy, such transaction will be submitted to the Audit Committee or its delegate as promptly as practicable for consideration. The Audit Committee or its delegate will evaluate all options with respect to the transaction, including, but not limited to, ratification, amendment or termination of the transaction.

If a Related Person Transaction will be ongoing, the Audit Committee will be responsible for overseeing such Related Person Transaction and may establish guidelines for the Company’s management team to follow in its ongoing dealings with the Related Person. At the Audit Committee’s first meeting of each fiscal year, the Audit Committee shall review any previously approved or ratified Related Person Transactions that remain ongoing to evaluate their continued appropriateness.

There were no Related Person Transactions in 2021.

2022 Proxy Statement | 14

Communications with the Board or Its Committees

The Board offers several e-mail addresses, as set forth below, for Stockholders and interested parties to send communications through the Company’s Office of the Corporate Secretary of the Company to the Board as a whole, to individual non-management Directors and/or to the following committees of the Board:

AES Board of Directors or Individual Directors:

Governance Committee:

Compensation Committee:

AESDirectors@aes.com

NomGovCommitteeChair@aes.com

CompCommitteeChair@aes.com

Financial Audit Committee:

Innovation and Technology Committee:

AuditCommitteeChair@aes.com

InnovationCommitteeChair@aes.com

A member of the Corporate Secretary’s Office will forward to the relevant party all communications that, in his or her judgment, are appropriate for consideration by such party. Examples of communications that would not be considered as appropriate for consideration by the full Board or individual Directors include commercial solicitations, requests for employment and matters not relevant to Stockholders, the functioning of the Board or the affairs of the Company.

Additional Governance Information

Our Corporate Governance Documents


Certificate of Incorporation						Financial Audit Committee Charter

By-Laws						Compensation Committee Charter

Corporate Governance Guidelines						Governance Committee Charter

Code of Conduct						Innovation and Technology Committee Charter

Our Corporate Governance Guidelines and Committee Charters have been adopted by the Board. These and our other Corporate Governance documents are available on the Company’s website (https://www.aes.com/investors/governance). Copies of the documents are available in print without charge by making a written request to: Office of the Corporate Secretary, The AES Corporation, 4300 Wilson Boulevard, Arlington, VA 22203.

AES Code of Business Conduct

The Code of Conduct was adopted by the Board and governs the actions of Directors and everyone who works at AES, including employees of AES’ subsidiaries and affiliates. The Code of Conduct is available on the Company’s website (https://www.aes.com/ethics-compliance). A copy of the Code of Conduct is available in print without charge by making a written request to: Office of the Corporate Secretary, The AES Corporation, 4300 Wilson Boulevard, Arlington, VA 22203. If any amendments to, or waivers from, the Code of Conduct are made, we will disclose such amendments or waivers on our website (https://www.aes.com).

References to our website throughout this Proxy Statement are provided for convenience only and the content on our website does not constitute a part of this Proxy Statement.

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BOARD AND COMMITTEE GOVERNANCE

Board Leadership Structure

Our Corporate Governance Guidelines require the separation of the offices of the Chairman of the Board (“Chairman”) and CEO. The Chairman of the Board is selected by a majority vote of the members of the Board. If the Chairman is independent, he or she will also serve as Lead Independent Director. If the Chairman is not independent, the Company’s independent Directors will designate one of the independent Directors on the Board who has served for at least one year to serve as the Lead Independent Director. The Lead Independent Director’s duties include calling meetings of the independent directors, approving information and meeting agendas sent to the Board, coordinating the activities of the independent Directors, coordinating the agenda for and moderating sessions of the Board’s independent Directors, approving meeting schedules to assure that there is sufficient time for discussion of all agenda items, being available for consultation and direct communication if requested by majority stockholders and facilitating communications among the other members of the Board. We believe this structure, coupled with independent Directors serving as Chairs of each of our Board Committees, provides strong leadership for our Board and independent risk oversight, while positioning our CEO as the leader of the Company for our investors, counterparties, employees and other stakeholders.

Our Board determines the best leadership structure for the Company. As part of our annual Board self-evaluation process, the Board evaluates issues such as independence of the Board, communication between Directors and Management, the relationship between the CEO and the Chairman, and other matters that may be relevant to our leadership structure. The Company recognizes that in the event that circumstances facing the Company change, a different leadership structure may be in the best interests of the Company and its Stockholders.

Director Independence

Our Board currently has ten independent members. We have four Board Committees, three of which comprise solely independent Directors, with a different independent Director serving as Chair of each such Committee.

We are required to have a majority of independent Directors serving on our Board and may only have independent Directors serving on each of our (i) Audit Committee, (ii) Compensation Committee and (iii) Governance Committee pursuant to the rules of the New York Stock Exchange (the “NYSE”) and, with respect to our Audit Committee, the rules and regulations under the Securities Exchange Act of 1934 (the “Exchange Act”).

Under the NYSE rules, no Director qualifies as “independent” unless the Board affirmatively determines that the Director has no material relationship with the Company (directly, or as a partner, Stockholder, or officer of an organization that has a relationship with the Company). The Board makes independence determinations based on all relevant facts and circumstances when assessing the materiality of any relationship between the Company and a Director or a Director’s affiliation with other businesses or entities that have a relationship with the Company.

Our Board undertook an annual review of Director independence in February 2022, considering the criteria for independence set forth in the listing standards of the NYSE and any other relevant facts and circumstances that may have come to the Board’s attention, after inquiry, relating to transactions, relationships or arrangements between a Director or any member of their immediate family (or any entity of which a Director or an immediate family member is an Executive Officer, general partner or significant equity holder) on the one hand, and AES or any of its subsidiaries or affiliates, on the other hand, that might signal potential conflicts of interest, or that might influence the Director’s relationship with AES or any of its subsidiaries. The Board considered the independence issue not merely from the standpoint of the Director, but also from that of the persons or organizations with which the Director or Director nominee is affiliated.

Based on its review, our Board determined that Messrs. Miller, Monié, and Morse, Mses. Davidson, Koeppel, Laulis, Sebastian, and Shaughnessy and Drs. Khanna and Naím each qualify as independent under the NYSE rules. In addition, our Board determined that Mr. Ubben, who served as a director through February 2021, was independent under the NYSE rules. Mr. Gluski is not considered independent because of his employment with the Company. Our Board also determined that Mr. Miller, Mses. Davidson, Sebastian and Shaughnessy, and Drs. Khanna and Naím qualify as independent under the independence standards for audit committee members under the Exchange Act.

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Director Attendance

Under our Corporate Governance Guidelines, Directors are expected to attend Board meetings and meetings of Committees on which they serve in person or by telephone conference, and Directors are encouraged to attend the Company’s annual meeting.

In 2021, our Board convened sixteen times and our Board Committees convened for the number of meetings specified in the chart below, and no Director attended less than 75% of the aggregate of all meetings of the Board and the Committees on which such Director served (held during the period in which the Director served). Non-management Directors met in executive session after each of the sixteen meetings of the Board in 2021, with Mr. Morse presiding as Chairman and Lead Independent Director. All Directors serving at the time of the 2021 Annual Meeting of Stockholders on April 22, 2021 attended such meeting.

Board Committees

In 2021, the Board maintained four standing Committees:

•Audit Committee

•Compensation Committee;

•Governance Committee; and

•Innovation and Technology Committee.

Each standing committee operates under a written charter that has been approved by the Board. Committee charters are available on our website. The table below shows the Directors who are currently members or chairs of each of the standing Board Committees and the number of meetings each committee held in 2021.

Director

Audit

Compensation

Governance

Innovation and Technology

Andrés R. Gluski

Janet G. Davidson(2)

Tarun Khanna(2)

Chair

Holly K. Koeppel

Chair

Julia M. Laulis

James H. Miller (1)(2)

Chair

Alain Monié

Chair

John B. Morse, Jr. (3)

Moisés Naím(2)

Teresa M. Sebastian (1)(2)

Maura Shaughnessy (1)

Number of Meetings in 2021

(1) Designated as an “audit committee financial expert” as defined by the rules and regulations of the SEC.

(2) Designated as “financially literate” as required by the NYSE rules.

(3) Chairman and Lead Independent Director, serves as an ex-officio member of each committee (with no voting authority as to such committees).

Financial Audit Committee. The primary functions of the Audit Committee are to assist the Board in the oversight of:

•the integrity of the financial statements of the Company and its subsidiaries;

•the effectiveness of the Company’s internal controls over financial reporting;

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•the Company’s compliance with legal and regulatory requirements;

•the qualifications, independence and performance of the Company’s independent registered public accounting firm (the “Independent Auditor”);

•the performance of the Company’s internal audit function; and

•the preparation of the audit committee report included in the Company’s annual Proxy Statement.

All members of the Audit Committee are independent within the meaning of the SEC rules and under the listing standards of the NYSE. The Board has also determined that each member of the Audit Committee is “financially literate” as required by the NYSE rules, and that each of Mr. Miller, Ms. Sebastian and Ms. Shaughnessy are Audit Committee Financial Experts pursuant to SEC rules based on, among other things, the experience of such member, as described under the Board of Directors - Biographies section of this Proxy Statement.

Compensation Committee. The primary functions of the Compensation Committee are to:

•review and evaluate at least annually the performance of the CEO and other executive officers of the Company, including setting goals and objectives, and to set executive compensation, including incentive awards and related performance goals;

•provide oversight of the Company’s executive compensation and benefit plans and practices;

•make recommendations to the Board to modify AES’ executive compensation and benefit programs to align with the Company’s compensation goals;

•review, discuss and make recommendations to the Board on say on pay and say on frequency matters and related Stockholder engagement;

•review and oversee matters related to human capital management, including, talent acquisition, development, retention, and diversity and inclusion;

•assess the stock ownership guidelines for executive officers;

•review Management’s succession planning; and

•prepare the compensation committee report included in the Company’s proxy statement.

The Board determined that all Compensation Committee members are independent within the meaning of SEC rules and current listing standards of the NYSE. In addition, each member of the Compensation Committee is a “Non-Employee Director” as defined in Rule 16b-3 under the Exchange Act.

At the commencement of each year, AES’ NEOs (other than the CEO) discuss their position-specific goals and objectives for the upcoming year with the CEO. In the first quarter of the following year, the CEO performs an assessment of each NEO’s performance against his or her stated goals and, in the case of our CEO, our Compensation Committee reviews and assesses his performance against his stated goals and objectives.

Based on our CEO’s performance, the Compensation Committee provides an evaluation, approves and recommends that the Board approves the CEO’s compensation. The Compensation Committee reviews and approves, and then recommends the Board approves, the compensation recommendations submitted by the CEO as to the other NEOs.

Additionally, the Compensation Committee makes recommendations to the Board to modify AES’ compensation and benefit programs if it believes that such programs are not consistent with the Company’s executive compensation goals or could otherwise be improved. Under the Compensation Committee’s Charter, it may form subcommittees and delegate to such subcommittees, other Board members and/or Officers such power and authority, as the Compensation Committee deems appropriate in accordance with the Compensation Committee Charter and any applicable law, regulation or listing standard. The Compensation Committee has also delegated to the CEO, subject to review by the Compensation Committee and the Board, the power to set compensation for non-Executive Officers. Under the 2003 Long Term Compensation Plan, the Compensation Committee is also permitted to delegate its authority, responsibilities and powers to any person selected by it and has expressly authorized our CEO to make equity grants to non-Executive Officers in compliance with law.

The Compensation Committee directly retains the services of its own independent outside consultant to assist it in reviewing and/or advising the amount and/or form of executive compensation. Meridian Compensation Partners, LLC

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(“Meridian”) is the firm retained by the Compensation Committee for these purposes and is precluded from providing other non-Board related services to AES. The Compensation Committee conducted an assessment to evaluate whether the work performed by Meridian raises a conflict of interest. Based upon that assessment, the Compensation Committee determined that no conflict of interest exists. The Compensation Committee has the sole authority to hire and dismiss its consultant. Meridian provided objective input and analysis to the Compensation Committee throughout the year including regarding market data trends, regulatory initiatives, governance best practices and emerging governance norms. For further information concerning the independent outside consultant’s role in relation to NEO compensation, please refer to the Role of the Compensation Committee, Independent Consultant and Management section in the Compensation Discussion and Analysis (“CD&A”) of this Proxy Statement.

Management regularly obtains market survey data based on comparable companies from Willis Towers Watson. Meridian reviews the market survey data prior to it being shared with the Compensation Committee to ensure the data sources are appropriate for purposes of comparing our NEOs’ compensation to comparable executives at similarly-sized general industry and power industry companies.

The Compensation Committee has instructed the Executive Vice President and Chief Human Resources Officer (“CHRO”) to provide information to the Compensation Committee that is required for developing compensation programs and determining executive compensation. The CHRO works directly with the Compensation Committee’s independent consultant in the preparation of the background material for the Compensation Committee. For further information regarding our executive compensation practices refer to the CD&A of this Proxy Statement.

The compensation of our Directors is established by the Governance Committee. See Director Compensation in this Proxy Statement for a description of our Governance Committee’s processes and procedures for determining Director compensation.

Governance Committee. The primary functions of the Governance Committee are to:

•identify and provide recommendations for potential Director nominees for election to the Board;

•advise the Board with respect to Board composition, procedures and committees;

•develop and recommend to the Board corporate governance guidelines (and any amendments thereto) applicable to the Company;

•oversee and implement the process for evaluating the performance of Board members;

•review the principles for determining the form and amount of Director compensation;

•consider governance and social responsibility issues relating to the Company;

•review the Company’s contributions to trade associations, including any amounts related to charitable, political and lobbying expenditures;

•review and oversee the Company’s environmental and safety programs, policies, and practices related to sustainability, climate change, and employee health and safety; and

•review of the Company’s dispute resolution, operations, construction, insurance, regulation, and lobbying matters.

Consistent with the requirements of the Governance Committee Charter, the Board determined that all Governance Committee members are independent within the meaning of the listing standards of the NYSE.

Innovation and Technology Committee. The Innovation and Technology Committee is responsible for:

•overseeing the Company’s efforts to foster growth through innovation;

•evaluating the Company’s efforts to identify and assess risks and opportunities in the power industry and adjacent industries arising from emerging or competing technologies; and

•reviewing technologies and innovations deployed or contemplated by the Company for use in the power industry and adjacent industries.

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Board’s Role in Risk Management

Management is responsible for the management and assessment of risk at the Company, including communication of the most material risks to the Board and its Committees. The Board provides oversight over the risk management practices implemented by Management, except for the oversight of risks that have been specifically delegated to a Committee of the Board. If the oversight of a specific area of risk has been delegated to a Committee, the full Board receives reports from the Committee Chairs at each regularly-scheduled full Board meeting. The full Board may assume oversight over a particular risk, when appropriate. The Board’s and each Committee’s reviews of their respective areas of risk oversight responsibilities occur principally through regular reports from Management to the Board on these areas of risk, and discussions with Management regarding risk assessment and risk management as follows:

The Board believes that its leadership structure, along with its Committee structure, allows the Board to oversee enterprise risks at an appropriate and effective level.

Risk Management Oversight Structure


Responsible Party						Area of Risk Oversight
Board						All operational, financial, strategic, brand and reputational risk with the oversight of specific risks delegated to Committees.
						Financial performance and outlook, which may include an analysis of key external and internal drivers of performance, prospective sources and uses of funds.
						Currency, commodity, hydrology, and interest rate risk, as reported on by the Chief Risk Officer.
						In addition to the regular Committee Chair reports, the Board receives reports on specific areas of risk from time to time, such as regulatory, geopolitical, cyclical, or other risks.
						Periodic review and oversight of the Company’s cybersecurity programs, policies, and practices, including review of the state of the Company’s cybersecurity programs, emerging cybersecurity developments and threats, and the Company’s strategy to mitigate cybersecurity risks.

Audit Committee						The integrity of the Company’s financial statements, internal controls over financial reporting and disclosure controls and procedures (including the performance of the Company’s internal audit function).
						The performance of the Independent Auditor.
						The effectiveness of the Company’s Ethics and Compliance Program.
						Major financial risk exposures and the steps management has taken to monitor and control such exposures.

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Governance Committee

Environmental and safety programs, policies, and practices related to sustainability, climate change, and employee health and safety.

Significant issues affecting the operations of the subsidiaries of the Company, including, but not limited to, the performance of generation, utility, and distribution businesses, efficiency at subsidiaries’ plants, and tariffs.

Social responsibility matters related to business conduct, public policy, human rights, charitable organizations, and community affairs and relations.

Significant pending or threatened litigation, arbitration or other disputes and government investigations, examinations, inquiries, demands, or proceedings, or any other significant claim or complaint alleging that the Company is not in compliance with applicable laws, regulations or industry standards.

The construction and execution of major projects, such as new power plant development and construction and transmission, distribution, infrastructure, and liquefied natural gas-related projects.

Compensation Committee

Compensation practices, including practices related to hiring and retention, succession planning, and training of employees.

Human capital management, including talent acquisition, development, retention, and diversity and inclusion.

Innovation and Technology Committee

Technologies and innovations used by the Company and emerging or competing technology developments.

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Board and Committee Evaluations

The Company recognizes that a strong and constructive evaluation process is essential to good corporate governance and Board effectiveness. Through the Company’s evaluation process, Directors provide feedback and assess Board, Committee and individual Director performance. The process is managed by the Office of the Corporate Secretary with oversight by the Governance Committee. Our annual evaluation process is focused on three areas: (1) the Board, (2) Board Committees, and (3) individual Directors. The Governance Committee annually reviews the format of the evaluation process, including whether to utilize a third-party facilitator. In 2021 the evaluation process was conducted by the Chairman of the Board and Chair of the Governance Committee and included the steps described below. In addition to participation in a full Board evaluation, each Committee completes an annual evaluation to identify any potential modifications to the Committee.

Director Characteristics and Succession Planning

The Board’s succession planning uses a framework that:

•Defines and assesses culture and dynamics;

•Enhances annual assessments of the Board and individual Directors; and

•Establishes a multi-year view of the Board’s refreshment rotation and recruitment strategy to strategically plan for Board openings.

As part of the Board evaluation discussed above, the Board assesses the attributes, competencies and experiences required in light of the Company’s strategy, changing business needs, and the future of the business. The performance and skills assessments are a fundamental element of the Board’s multi-year succession planning. The Governance Committee does not have specific minimum qualifications that must be met for a prospective Director candidate to be considered as a Director nominee, however, the Board measures the qualification of potential candidates against the leadership attributes, competencies and experiences described below. Candidates for nomination to the Board may be suggested by current Directors, Management, Stockholders, or a third-party search firm engaged to assist with Director recruitment. In the case of a third-party search firm, the Governance Committee will pay a fee for such a firm to assist it in the recruitment and identification of potential candidates for the Board. The Governance Committee generally provides the search firm with guidance as to the attributes, competencies and experiences that the Governance Committee is seeking in potential candidates, and the search firm identifies candidates for the Governance Committee’s consideration. Ms. Shaughnessy, who was elected to our Board in July 2021, was identified as a Director candidate by the CEO.

Our Board is committed to diversity among its members. When identifying candidates for Board membership, the Governance Committee includes, and requests any search firm it engages to include, qualified women and racially/ ethnically diverse individuals in the initial pool of potential director candidates for the Board. The Governance Committee

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and the Board assess the effectiveness of this policy in promoting a diverse Board as part of their regular review of the Company’s Corporate Governance Guidelines and by monitoring changes in the Board’s diversity mix along a variety of dimensions over time.

Additionally, when considering director nominees, including incumbent directors eligible for re-election, nominees to fill vacancies on the Board, and nominees recommended by Stockholders, the Governance Committee measures the candidates against a set of 16 leadership attributes, competencies and experiences. These characteristics are grouped and summarized below:

•Global mindset, including stakeholder and market insights;

•Business agility, including customer centricity and data driven decision making;

•Operations management, including public company, executive and industry experience;

•Finance and investment experience, including financial strategies;

•U.S. corporate governance and sustainability experience;

•Innovation and technology, including disruptive technologies and digital understanding;

•Strategic and transformational leadership, including business acumen and insights on people, organizational dynamics and talent management; and

•Diversity along a variety of dimensions, including the candidate’s professional and personal experience, background, perspective and viewpoint as well as the candidate’s race, ethnicity, national origin, gender, sexual orientation, age, and other self-identified diversity characteristics.

The Governance Committee identifies Directors to recommend to the Board for election by the Stockholders and to fill vacancies between Stockholder meetings. The Governance Committee makes a preliminary review of a prospective candidate’s background, career experience, and qualifications based on available information. If a consensus is reached that a candidate would likely contribute positively to the Board’s mix of skills and experiences, the Governance Committee conducts interviews with the candidate and may invite other Board members or members of Management to interview the candidate to assess the candidate’s overall qualifications. The Governance Committee considers the candidate against the criteria adopted in light of the Board’s then current composition and the needs of the Board and its Committees and makes a recommendation to the Board as to whether the candidate should be nominated for election. This process is the same for all candidates, including Director candidates identified by Stockholders, and was followed with respect to Ms. Shaughnessy.

SEC Form DEF 14A filed by The AES Corporation