Entergy 2012 Annual Report Download - page 11

Creating Sustainable Value
for Our Stakeholders
LEVERAGING HUMAN CAPITAL
ENTERGY SUSTAINABILITY HIGHLIGHTS
Throughout 2012, we announced and began implementing
key elements of our executive succession plan that had been
developed over many years by our board of directors. The
smooth transition is a testament to the depth of talent in
Entergy’s organization. We believe our human capital is
a vital asset and a key source of advantage that must be
aligned and managed with our overall strategy and direction.
We are focused on building a competitive, efficient business
environment in which engaged employees, supported by
the appropriate technologies and resources, are focused on
delivering sustainable value to our stakeholders.
In 2012, our efforts to create sustainable economic,
environmental and social value were recognized once again
by the Dow Jones Sustainability Indexes. Entergy was named
to the DJSI World Index and the North America Index, the
11th consecutive year we have been named to one or both.
We present here the strategies we implemented in 2012 on
behalf of our stakeholders.
FOR OUR OWNERS
We create value by aspiring to provide top-quartile returns
through the relentless pursuit of opportunities to optimize our
business. Delivering industry-leading returns enables us to
attract capital to invest in and grow our business. However,
recent performance has fallen short of our goals. Declining
power prices, driven by low natural gas prices, a challenging
economy and slow recovery in certain markets have had
a negative effect. Our one- and five-year total shareholder
return has significantly trailed our peer group, the
Philadelphia Utility Index, as well as the S&P 500 Index.
In 2012, total shareholder return was -8.4 percent, compared
to -0.6 percent for our peer group and 16.0 percent for the
S&P 500 Index. As-reported earnings per share decreased
to $4.76 from $7.55 in 2011. The steep as-reported drop
included a special impairment charge to write down the
carrying values of the Vermont Yankee Nuclear Power
Station and related assets to their fair value. On an
operational basis, 2012 earnings per share of $6.23 were
also lower than the prior year, but exceeded our original
2012 earnings guidance range. At the same time, we returned
nearly $590 million in cash dividend payments to owners
of our common stock, while maintaining solid credit
and liquidity.
While our point of view on future power prices grew more
positive in 2012, we realize we must deal with the reality
of today’s markets. We continue to project growth at the
utility business, while executing on initiatives and evaluating
further opportunities to improve cash flows and reduce
risks. Our five-year financial outlook for 2010 through
2014 included deploying $4 billion to shareholders through
dividends and share repurchases, and we continue on that
path. Our board of directors will consider Entergy’s dividend
policy in conjunction with the successful completion of the
ITC transaction. While the Entergy dividend may change at
that time, our objective remains that the combination of the
Entergy and ITC dividends, which will be paid to all Entergy
shareholders after transaction close, be accretive to the
current Entergy dividend.
We believe Entergy exists to serve its stakeholders. Our goal is to create sustainable
value for our owners, customers, employees and the communities we serve. To
do that, we use a deliberate process to develop expectations on the key economic,
environmental and social issues that present material opportunities and risks to
Entergy or its stakeholders. Our expectations are informed by sophisticated analyses
and are dynamically adjusted as internal and external conditions change. Our business
strategy is based on our dynamic views on these drivers and has two main dimensions:
operational excellence and portfolio management.
Transitions | Entergy Corporation and Subsidiaries 2012
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