UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.      )

Filed by the Registrant  ☒                             Filed by a Party other than the Registrant  ☐

Check the appropriate box:

VISTRA ENERGY CORP.

(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):

Notice of 2018 Annual Meeting

of Stockholders and

Proxy Statement

2018 Annual Meeting of Stockholders:

Tuesday, May 1, 2018, at 8:30 a.m.

Omni Mandalay Hotel at Las Colinas

221 East Las Colinas Boulevard

Irving, Texas 75039

6555 Sierra Drive

Irving, Texas 75039

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

April 3, 2018

To the Stockholders of Vistra Energy Corp.:

The 2018 Annual Meeting of Stockholders (the “2018 Annual Meeting”) of Vistra Energy Corp. will be held at the Omni Mandalay Hotel at Las Colinas, 221 East Las Colinas Boulevard, Irving, Texas 75039 on Tuesday, May 1, 2018 at 8:30 a.m. for the following purposes:

The Board of Directors has fixed the close of business on March 23, 2018 as the time as of which stockholders entitled to notice of, and to vote at, the meeting and any adjournments thereof shall be determined.

Whether or not you will be able to attend the meeting, PLEASE VOTE YOUR SHARES PROMPTLY BY EITHER SIGNING AND RETURNING THE ACCOMPANYING PROXY CARD OR CASTING YOUR VOTE VIA TELEPHONE OR THE INTERNET AS DIRECTED ON THE PROXY CARD. No postage need be affixed to the enclosed reply envelope if it is mailed from within the United States.

6555 Sierra Drive

Irving, Texas 75039

PROXY STATEMENT

April 3, 2018

GENERAL INFORMATION

A proxy in the accompanying form is solicited by the Board of Directors (the “Board”) of Vistra Energy Corp. (the “Company”) on behalf of the Company for use at the 2018 Annual Meeting of Stockholders (the “2018 Annual Meeting”) to be held at the Omni Mandalay Hotel at Las Colinas, 221 East Las Colinas Boulevard, Irving, Texas 75039 on Tuesday, May 1, 2018 at 8:30 a.m. and any adjournments thereof for the purposes set forth in the accompanying Notice.

The close of business on March 23, 2018 has been fixed as the time as of which stockholders entitled to notice of, and to vote with respect to, the 2018 Annual Meeting and any adjournments thereof shall be determined. At such date there were outstanding and entitled to vote 428,482,450 shares of Company common stock. Each share is entitled to one vote on all matters submitted to a vote of the stockholders at the 2018 Annual Meeting.

These materials are being mailed or given to stockholders on or about April 3, 2018, and include the Notice, Proxy Statement, proxy card and 2017 Annual Report to Stockholders (the “Annual Report”), which includes our audited consolidated financial statements. The Company will bear the costs of solicitation.

Stockholders of record may vote by one of the following methods: (i) completing and signing the proxy card and mailing it to the Company in the enclosed postage-paid envelope; (ii) calling the toll-free telephone number (1-866-829-5001) provided on the proxy card; (iii) voting on the Internet at the website www.proxypush.com/VST; or (iv) in person at the 2018 Annual Meeting. Voting by telephone is not available to stockholders outside of the United States. Complete instructions for voting by any of the above methods are included on the proxy card. Stockholders who hold their shares in street name should refer to information forwarded to them by the bank, broker, or other holder of record of their shares for their voting options. If you are not a stockholder of record, you must provide a proxy executed in your favor from your broker, bank, trust or other nominee in order to be able to vote in person at the meeting.

The shares represented by any proxy duly given as a result of this request will be voted in the manner directed by the stockholder giving such proxy. If no direction is given, the proxy will be voted FOR Proposals 1, 2, 3 and 5 and FOR the approval, on a non-binding advisory basis, of a frequency of ONE YEAR as the frequency with which stockholders are provided an advisory vote on compensation of our named executive officers with respect to Proposal 4. The proxy will be voted in the discretion of the persons named in the proxy on any other matters which may come before the 2018 Annual Meeting. Any proxy given pursuant to this solicitation is revocable at the option of the person executing the same, before its exercise at the 2018 Annual Meeting, by (i) calling the toll-free telephone number listed above, (ii) accessing the Internet website www.proxypush.com/VST, or (iii) providing written notice to the Secretary of the Company at 6555 Sierra Drive, Irving, Texas 75039.

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The Company has adopted a confidential voting policy. Accordingly, tabulation of proxies and votes cast at the meeting will be conducted by an independent agent and the votes of individual stockholders will generally be kept private and not disclosed to the Company.

The presence in person or by proxy of the holders of a majority of the shares of the Company common stock entitled to vote shall constitute a quorum necessary to transact business at the 2018 Annual Meeting. Directors shall be elected and the frequency with which stockholders will be provided an advisory vote on compensation of our named executive officers shall be authorized by plurality of the votes cast at the 2018 Annual Meeting; abstentions, withholds and non-votes will have no effect. The ratification of our independent registered public accounting firm and the approval (on an advisory basis) of named executive officer compensation shall be authorized by the affirmative vote of at least a majority of the voting power represented in person or by proxy at the 2018 Annual Meeting and entitled to vote thereon.

STOCKHOLDERS’ PROPOSALS FOR THE 2019 ANNUAL MEETING

If a stockholder wants us to include a proposal in our proxy statement and form of proxy for presentation at the 2019 annual meeting of stockholders, under the rules of the SEC, the proposal must be received by the Secretary of the Company at 6555 Sierra Drive, Irving, Texas 75039 on or before the close of business on December 4, 2018 (the 120^th day before the one-year anniversary date of the release of these proxy materials to stockholders).

The Company’s restated bylaws require advance notice for any business to be brought before a meeting of stockholders. For business to be properly brought before the 2019 annual meeting of stockholders by a stockholder, written notice of the stockholder proposal must be received by the Secretary of the Company at 6555 Sierra Drive, Irving, Texas 75039 between January 1, 2019 (not earlier than the 120^th day before the one-year anniversary date of the 2018 Annual Meeting) and January 31, 2019 (not later than the 90^th day before the one-year anniversary date of the 2018 Annual Meeting). The stockholder’s notice to the Secretary must contain a brief description of the business to be brought before the 2019 annual meeting of stockholders and the reasons for conducting such business at the meeting, as well as certain other information. Additional information concerning the advance notice requirement may be obtained from the Secretary of the Company at the address provided above or on the Company’s website.

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MANAGEMENT

The following table sets forth information regarding our current executive officers and directors as of the date hereof. Ages are as of April 3, 2018.

Directors

Scott B. Helm, Chairman of the Board, has served as a director since July 2017 and as Chairman of the Board since October 2017. During the last five years, Mr. Helm has been a private investor. Previously, Mr. Helm was a founding partner of Energy Capital Partners, a private equity firm focused on investing in North American energy infrastructure. Prior to joining Energy Capital Partners, he worked as a consultant to the private equity consortium leading the acquisition at Texas Genco. Before that, he served as Executive Vice President and Chief Financial Officer at Orion Power Holdings, Inc., a publicly listed company that owned and operated power plants. Mr. Helm began his career at Goldman, Sachs & Co., first working in the fixed income division then moving to the investment banking division. He received a bachelor’s degree in business administration from Washington University in St. Louis.

Mr. Helm was selected to serve on the Board because of his extensive financial and industry knowledge. His specific experience in the energy industry and as a public company chief financial officer allow him to provide valuable guidance to the Board.

Curtis A. Morgan, President, Chief Executive Officer and Director, has served as the President, Chief Executive Officer and Director of the Company since October 3, 2016. Prior to joining the Company, he served as an Operating Partner with Energy Capital Partners, a private equity firm focused on investing in North American energy infrastructure, and prior to this position Mr. Morgan served as the Chief Executive Officer and President of EquiPower Resources Corp., a power generation company, since May 2010. Prior to joining EquiPower Resources Corp., he served as an Operating Partner of Energy Capital Partners from May 2009 to May 2010. Prior to joining Energy Capital Partners, he served as President and Chief Executive Officer of FirstLight Power Enterprises from November 2006 to April 2009. Mr. Morgan has also held various leadership roles at NRG Energy, Mirant Corporation, Reliant Energy and Amoco Corporation.

During his 35-year career, Mr. Morgan has held leadership responsibilities in nearly every major U.S. power market. In overseeing all aspects of the Company’s operations as the President and Chief Executive Officer, Mr. Morgan has particular knowledge about the Company that he brings to the Board.

Gavin R. Baiera has served as a director since October 3, 2016. Through July 2017, Mr. Baiera was a managing director at Angelo, Gordon & Co. (“Angelo”) where he was the global head of the firm’s corporate credit activities and portfolio manager for its distressed funds. Mr. Baiera was also a managing director and member of Angelo’s executive committee. Prior to joining Angelo in 2008, Mr. Baiera was the co-head of the strategic finance group at Morgan Stanley, which was responsible for all origination, underwriting, and distribution of restructuring transactions. Prior to that, Mr. Baiera worked at General Electric Capital Corporation concentrating on underwriting and investing in restructuring transactions. Mr. Baiera began his career at GE Capital in its financial management program. Mr. Baiera has served on numerous boards of directors including, most recently, MACH Gen, Orbitz Worldwide, and Travelport Worldwide.

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Mr. Baiera was selected to serve on the Board because of his extensive experience in corporate finance and strategic business planning activities.

Jennifer Box has served as a director since October 3, 2016. Ms. Box is a managing director at Oaktree Capital Management where she is focused on investments in the shipping, power, energy, media and technology sectors. Prior to joining Oaktree in 2009, Ms. Box spent three and a half years as an investment analyst in the Distressed Debt Group at The Blackstone Group. Prior to Blackstone, she was an associate consultant at the Boston Consulting Group. Ms. Box graduated summa cum laude with a B.S. degree in economics and a minor in mathematics from Duke University, where she was elected to Phi Beta Kappa. She is a CFA charterholder. Ms. Box was nominated as a director pursuant to that certain Stockholder’s Agreement, by and between the Company and Oaktree Capital Management, L.P. and certain of its affiliated entities, dated as of October 3, 2016.

Ms. Box was selected to serve on the Board because of her extensive business and investment expertise as well as specific experience advising and managing companies in the energy industry.

Brian K. Ferraioli has served as a director since May 2017. Through December 2016, Mr. Ferraioli served as Executive Vice President and Chief Financial Officer of KBR, Inc., a global engineering, construction, and services company supporting the energy, petrochemicals, government services, and civil infrastructure sectors. Prior to KBR, Mr. Ferraioli was Executive Vice President and Chief Financial Officer at The Shaw Group, Inc., an engineering, construction, and fabrication company serving the electric power generation and government services industries. Prior to that, Mr. Ferraioli worked 28 years in various finance and accounting functions with Foster Wheeler AG, a Swiss global conglomerate that provides design, engineering, construction, manufacturing, development, and plant operations. In addition to the Company, Mr. Ferraioli serves on the boards of Team, Inc. and Charah, LLC. He previously served on the boards of Babcock & Wilcox Enterprises, Babcock & Wilcox, Inc. and Adolfson & Peterson, a private construction company. Mr. Ferraioli graduated with a bachelor’s degree in accounting from Seton Hall University and received a master of business administration from Columbia University. Mr. Ferraioli is also a National Association of Corporate Directors Governance Fellow.

Mr. Ferraioli has over 38 years of experience in senior-level finance and accounting roles in the engineering and construction industry. In addition, his extensive background with publicly traded companies makes him a valuable member of our board of directors.

Jeff D. Hunter has served as a director since October 3, 2016. Mr. Hunter is currently Senior Managing Director of Quinbrook Infrastructure Partners and a member of the Quinbrook Investment Committee, where he is responsible for deal origination and asset management in North America. Between 2013 and 2016, he was a managing partner of Power Capital Partners, an energy focused investment firm. Prior to this, he was Executive Vice President and Chief Financial Officer of U.S. Power Generating Company. Mr. Hunter has also held leadership positions at PA Consulting Group and El Paso Merchant Energy and was a consultant for MRP Generating Company, LLC. Mr. Hunter currently serves as the non-executive director on the board of directors of Texas Transmission Holdings, a privately held business.

Mr. Hunter brings to the Board extensive experience in the financial industry, including his experience as a chief financial officer. He also brings to the Board substantive knowledge about a variety of issues related to the Company’s business.

Cyrus Madon has served as a director since October 3, 2016. Mr. Madon is a senior managing partner and head of Brookfield’s private equity group and Chief Executive Officer of Brookfield Business Partners. Mr. Madon joined Brookfield in 1998 as Chief Financial Officer of Brookfield’s real estate brokerage business. During his tenure, he has held a number of senior roles across the organization, including head of Brookfield’s corporate lending business. Mr. Madon began his career at PricewaterhouseCoopers where he worked in corporate finance and recovery, both in Canada and the United Kingdom. Mr. Madon is on the board of the Junior Achievement of Canada Foundation. Mr. Madon was nominated as a director pursuant to that certain Stockholder’s Agreement, by and between the Company and Brookfield Asset Management Private Institutional Capital Advisor (Canada), dated as of October 3, 2016.

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Mr. Madon was selected to serve on the Board because of his extensive business and investment expertise as well as experience as a chief financial officer.

Geoffrey D. Strong has served as a director since October 3, 2016. Mr. Strong is a Senior Partner of Apollo Management, where he focuses on investments in the energy sector for the firm’s private equity funds. Prior to Apollo, Mr. Strong was an investor in the private equity group at Blackstone, where he also focused primarily on the energy sector. Before joining Blackstone, Mr. Strong was Vice President of Morgan Stanley Capital Partners, the private equity business within Morgan Stanley. In addition to the Company, Mr. Strong serves on the boards of directors of Apex Energy, Caelus Energy, Chisolm Oil and Gas, Double Eagle Energy I, Double Eagle Energy II, and Double Eagle Energy III, each of which is a privately held business. Mr. Strong was nominated as a director pursuant to that certain Stockholder’s Agreement, by and between the Company and Apollo Management Holdings, L.P., dated as of October 3, 2016.

Mr. Strong was selected to serve on the Board because of his extensive business and investment expertise as well as specific experience advising and managing companies in the energy industry.

Executive Officers

The executive officers of the Company consist of the following executives, except for Mr. Morgan, whose information is listed above.

James A. Burke, Executive Vice President and Chief Operating Officer, has served as the Executive Vice President and Chief Operating Officer of the Company since October 3, 2016. Prior to joining the Company, he served as Executive Vice President of Energy Future Holdings Corp. (the “Predecessor”) since February 2013 and President and Chief Executive of TXU Energy, a subsidiary of the Company, since August 2005. Previously, Mr. Burke was Senior Vice President Consumer Markets of TXU Energy. Mr. Burke started his career with Deloitte Consulting, and held a variety of roles with The Coca-Cola Company, Reliant Energy and Gexa Energy prior to TXU Energy. Mr. Burke also serves as the Chairman of the board of directors of Marucci Sports, a privately held business.

J. William Holden, Executive Vice President and Chief Financial Officer, has served as the Executive Vice President and Chief Financial Officer of the Company since December 5, 2016. Prior to joining the Company, Mr. Holden served as an Executive Vice President and Senior Advisor at The Taffrail Group, LLC, an international strategic-advisory firm, from February 2013 until December 2016, where he advised a range of domestic and overseas clients on mergers, acquisitions and post-merger integration. From December 2010 until January 2013, Mr. Holden served as the Executive Vice President and Chief Financial Officer of GenOn Energy, Inc., a power generation company, where he was responsible for overseeing the accounting, finance, tax, risk control, human resources and information technology groups. Prior to serving in that role, he held various treasury, risk, operational, business development and international positions during his tenure at GenOn Energy, Inc./Mirant Corporation. Mr. Holden started his career with Southern Company and held various corporate finance roles over almost a decade at Southern.

Carrie Lee Kirby, Executive Vice President and Chief Administrative Officer, has served as the Executive Vice President and Chief Administrative Officer of the Company since October 3, 2016. Prior to this, Ms. Kirby was the Executive Vice President of Human Resources for the Predecessor, leading the human resources functions across the Predecessor and its subsidiaries, Luminant and TXU Energy. She was previously Vice President of Human Resources at TXU Energy, where she was originally recruited in 2006 as a Human Resources Director to support the power generation business in its construction and expansion efforts. Prior to joining TXU Energy, Ms. Kirby was Director of Human Resources at Delinea Corporation, a software services company targeting the energy industry. Before that, she was Director of Human Resources for Netrake, a startup voice-over IP hardware development company. She began her career in the executive search business as a consultant for Ray & Berndtson, supporting the technology practice. In addition to her service at the Company, Ms. Kirby chairs the board of the Teaching Trust, an education policy and leadership development organization focused on developing urban school leaders. Ms. Kirby is also a member of the Patient Advocacy Committee for Presbyterian Hospital of Dallas and sits on the executive committee of the Women’s Business Council Southwest.

Stephanie Zapata Moore, Executive Vice President and General Counsel, has served as the Executive Vice President and General Counsel of the Company since October 3, 2016. Prior to joining the Company, Ms. Moore served as Vice President and General Counsel of Luminant since April 2012. Previously, Ms. Moore was Senior Counsel of Luminant from March 2007 to April 2012 and Counsel of a predecessor to Luminant from November 2005 to March 2007. Prior to joining Luminant, Ms. Moore was an associate at Gardere Wynne Sewell LLP where she engaged in a corporate practice.

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Sara Graziano, Senior Vice President of Corporate Development and Strategy, has served as the Senior Vice President of Corporate Development of the Company since October 3, 2016. Prior to joining the Company in October 2016, Ms. Graziano was a Principal at Energy Capital Partners, a private equity firm focused on investing in North American energy infrastructure, with more than $13 billion in commitments and a track record of investments in the power generation space. She was involved in all areas of the firm’s investment activities, including fossil and renewable power generation, midstream oil and gas, and energy and industrial services. Prior to joining Energy Capital Partners, Ms. Graziano led the strategies and analysis group at FirstLight Power Enterprises, an Energy Capital portfolio company that owned and operated approximately 1,400 MW of primarily hydroelectric plants in New England. Her group was responsible for asset optimization, commodity trading and hedging strategies, and business development activities. Before joining FirstLight, Ms. Graziano spent four years at Charles River Associates, consulting for clients in the power and natural gas industries, with a particular focus on the development of proprietary tools for fundamental and statistical modeling of commodity prices and volatility for use in asset valuation and risk management. Ms. Graziano served on the Board of Directors of USD Partners LP from October 2014 – October 2016. Ms. Graziano received a bachelor of arts in Economics from Wellesley College and a master’s of business administration from Harvard Business School, where she was a Baker Scholar.

Scott A. Hudson, Senior Vice President and President of TXU Energy, has served as Senior Vice President of Vistra Corporate Services Company since October 3, 2016 and President of TXU Energy since March 2017. Prior to joining the Company, he served as Chief Operating Officer of TXU Energy since 2011. Previously, Mr. Hudson held senior leadership positions with MBNA America, ChoicePoint and LexisNexis and practiced as a commercial lawyer with Troutman Sanders LLP.

Stephen J. Muscato, Senior Vice President and Chief Commercial Officer, has served as Senior Vice President of Vistra Corporate Services Company since October 3, 2016, and Chief Commercial Officer since January 2018. Prior to joining the Company, he served as Senior Vice President and Chief Commercial Officer of Luminant since 2013. Previously, Mr. Muscato held other senior leadership positions with Luminant.

Director Qualifications

In addition to each director’s individual qualifications mentioned above, the Company believes that each of its directors possesses high ethical standards, acts with integrity, and exercises careful judgment. Each is committed to employing his or her skills and abilities in the long-term interests of the Company and its stockholders. Collectively, our directors are knowledgeable and experienced in business, governmental, and civic endeavors, further qualifying them for service as members of the Board.

Director Selection

The Board has been divided into three classes. At each annual meeting of stockholders, one class of directors will be elected to serve a three-year term. Directors are elected by plurality of the votes cast at the meeting. This means that, at the 2018 Annual Meeting, the two (or three, if the Merger (as defined below) closes prior to the date of the 2018 Annual Meeting) individuals nominated for election to the Board who receive the most FOR votes among votes properly cast in person, through internet or phone access, or by proxy will be elected to serve on the Board for a term that will expire at the 2021 annual meeting of stockholders. Each holder of our common stock is entitled to one vote for each share held and no such holder has cumulative voting rights.

The Nominating and Governance Committee of the Board (the “Nominating and Governance Committee”) is responsible for identifying individuals qualified to become Board members and recommending to the Board nominees for election as directors of the Company. The Nominating and Governance Committee’s policy is to consider recommendations for such nominees, including those submitted by stockholders, on the bases described below. In this regard, stockholders may recommend nominees by writing to the Nominating and Governance Committee c/o the Secretary of the Company, 6555 Sierra Drive, Irving, TX 75039. Any such recommendations received by the Secretary of the Company will be promptly provided to the Nominating and Governance Committee. Recommendations to be considered by the Nominating and Governance Committee for inclusion in the Company’s proxy for the 2019 annual meeting of stockholders must be received by the Secretary of the Company not later than the close of business on December 4, 2018.

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In identifying and evaluating director nominees, the Nominating and Governance Committee may consult with members of the Board, Company management, consultants, and other individuals likely to possess an understanding of the Company’s business and knowledge of suitable candidates. In making its recommendations, the Nominating and Governance Committee assesses the requisite skills and qualifications of nominees and the composition of the Board as a whole in the context of the Board’s criteria and needs. Such assessments will be consistent with the Board’s criteria for membership, including: (i) not less than a majority of directors shall satisfy the New York Stock Exchange (“NYSE”) independence requirements; (ii) all directors shall possess strong judgment, character, expertise, skills and knowledge useful to the oversight of the Company’s business; diversity of experience and viewpoints; business, governmental, civic or other relevant experience; and (iii) consideration will be given to the extent to which the interplay of the nominee’s qualifications with those of other Board members will build a Board that is effective, in light of the Company’s business and structure.

The Board and the board of directors of Dynegy Inc. (the “Dynegy Board”) each approved an Agreement and Plan of Merger, dated as of October 29, 2017 (the “Merger Agreement”), by and between the Company and Dynegy, Inc. (“Dynegy”), pursuant to which Dynegy will, subject to certain regulatory approvals and other customary closing conditions, merge with and into the Company, with the Company continuing as the surviving corporation (the “Merger”). The stockholders of each of the Company and Dynegy approved the Merger at special meetings on March 2, 2018. The consummation of the Merger is subject to a number of conditions, including certain regulatory approvals. Pursuant to the Merger Agreement, the Board will take all necessary actions so that, immediately following the completion of the Merger, the size of the Board will be increased to 11 directors and three directors serving on the Dynegy Board immediately prior to the effective time of the Merger will be appointed as members of the Board. The Merger Agreement provides that:

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PROPOSALS 1 AND 2 – ELECTION OF DIRECTORS

As of the date of this notice of annual meeting of stockholders, the Merger has not been consummated. The Company expects that the merger will close promptly upon the satisfaction of certain remaining conditions, including receipt of certain regulatory approvals. Accordingly, the Merger may or may not close prior to the date of the 2018 Annual Meeting. In light of this uncertainty, the Company is seeking stockholder votes for two alternative proposals for the election of directors. Proposal 1 assumes the Merger has closed prior to the 2018 Annual Meeting and the Company has already appointed three Dynegy Board Members as required by the Merger Agreement. Proposal 2 assumes the Merger has not closed prior to the 2018 Annual Meeting.

If the Company and Dynegy consummate the Merger prior to the 2018 Annual Meeting, then (a) three Class II director positions will be subject to election, (b) your vote with respect to this Proposal 1 shall be effective and (c) your vote with respect to Proposal 2 shall have no effect. If the Company and Dynegy have not consummated the Merger prior to the 2018 Annual Meeting, then (i) only two Class II director positions will be subject to election, (ii) your vote with respect to this Proposal 1 shall have no effect, and (iii) your vote with respect to Proposal 2 shall be effective. EVEN THOUGH THE VOTING RESULTS WITH RESPECT TO EITHER PROPOSAL 1 OR PROPOSAL 2 (BUT NOT BOTH) WILL BE EFFECTIVE FOR PURPOSES OF ELECTING CLASS II DIRECTORS, PLEASE VOTE YOUR SHARES WITH RESPECT TO BOTH PROPOSALS.

PROPOSAL 1 – ELECTION OF DIRECTORS IF MERGER CLOSES PRIOR TO 2018 ANNUAL MEETING

Nominees

It is the intent of the Board that the persons named in the proxy will vote your shares in favor of the nominees for directors listed hereinafter, unless such authority is affirmatively withheld. Mr. Ferraioli and Mr. Hunter are current members of the Board and Ms. Ackermann is a current member of the Dynegy Board.

The names of the nominees for the three Class II director positions to serve until the 2021 annual meeting of stockholders are set forth below:

Certain biographical information for each of Mr. Ferraioli and Mr. Hunter is listed above. Hilary E. Ackermann, 62, served as a director of Dynegy since October 1, 2012 and is anticipated to be appointed to the Vistra Energy Board at the consummation of the Merger. Ms. Ackermann was Chief Risk Officer with Goldman Sachs Bank USA from October 2008 to 2011. In this role, she managed Credit, Market and Operational Risk for Goldman Sachs’ commercial bank; developed the bank’s risk management infrastructure including policies and procedures and processes; maintained ongoing relationship with bank regulators including the New York Fed, the NY State Banking Department and the FDIC; chaired the Operational risk, Credit risk and Middle Market Loan Committees; served as Vice Chair of the Bank Risk Committee; was a member of the Community Investment, Business Standards and New Activities Committees; was a member of the GS Group level Credit Policy and Capital Committees; and chaired the GS Group level Operational Risk Committee. Ms. Ackermann served as Managing Director, Credit Department of Goldman, Sachs & Co. from January 2002 until October 2008, as VP, Credit Department from 1989 to 2001, and as an Associate in the Credit Department from 1985 to 1988. Prior to joining Goldman, Sachs & Co., Ms. Ackermann served as assistant head of the Credit Department of Swiss Bank Corporation from 1981 until 1985. Ms. Ackermann currently serves on the private board of directors of Credit Suisse Holdings (USA), Inc. and each of Hartford Series Fund, Inc., Hartford HLS Series Fund II, Inc., The Hartford Mutual Funds, Inc. and The Hartford Mutual Funds II, Inc. and previously served on the public board of directors of Apollo Investment Corporation.

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PROPOSAL 2 – ELECTION OF DIRECTORS IF MERGER CLOSES AFTER 2018 ANNUAL MEETING

Nominees

It is the intent of the Board that the persons named in the proxy will vote your shares in favor of the nominees for directors listed hereinafter, unless such authority is affirmatively withheld. All nominees are current members of the Board.

The names of the nominees for the two Class II director positions to serve until the 2021 annual meeting of stockholders are set forth below:

Certain biographical information for each of Mr. Ferraioli and Mr. Hunter is listed above.

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BOARD RISK OVERSIGHT

In the normal course of business, the Company is exposed to a variety of risks. For a complete description of the risk factors associated with our business, see Part I, Item 1A “Risk Factors” of our 2017 Annual Report on Form 10-K, which is included in our Annual Report. The Audit Committee oversees the Company’s risk management policies, while the Board reviews the key enterprise risks affecting the Company’s business. Additionally, the Board monitors the ways in which the Company attempts to prudently minimize risks, to the extent reasonably practicable and consistent with the Company’s long-term strategies. The Company has a Risk Management Committee, chaired by the Company’s Chief Financial Officer, comprised of key operating, finance, legal and control executives. The committee meets throughout the year to review exposures and controls. At least annually, the Company’s Chief Financial Officer presents a comprehensive review of the Company’s corporate risk policy to the Audit Committee, discussing the risk control organization and risk control practices. The Board receives a top-tier risk report annually and receives updates at other meetings during the year on any particular matters relating to risk controls that management believes need to be brought to the attention of the Board.

DIRECTOR INDEPENDENCE

In order for a director to be considered independent under NYSE regulations, the Board must determine that such director has no material relationship with the Company, either directly, or as a partner, shareholder or officer of an organization that has such a relationship. To assist it in its determinations regarding the independence of its members, the Board utilizes the following categorical standards, which reflect and give effect to the independence requirements of the NYSE:

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For purposes of these standards, an “immediate family member” includes a person’s spouse, parents, children, siblings, mothers and fathers-in-law, sons and daughters-in-law, brothers and sisters-in-law, and anyone (other than domestic employees) who shares such person’s home. The term “immediate family member” does not include stepchildren who do not share a stepparent’s home or the in-laws of such stepchildren. When applying the three-year look back provisions provided for in items 2 through 6 above, the Board will not consider individuals who are no longer immediate family members as a result of legal separation or divorce, or those who have died or become incapacitated. In addition, references to the “Company” in this Independence of Directors section include any subsidiary of the Company.

In addition to satisfying the above independence requirements, a director who serves as a member of the audit committee of the Board (the “Audit Committee”) may not (i) accept directly or indirectly any consulting, advisory or compensatory fee from the Company, other than in that director’s capacity as a member of the Board or any of the Board’s committees or (ii) be an affiliated person of the Company apart from the affiliation occasioned by the director’s service as a member of the Board or any of the Board’s committees. Compensatory fees do not include the receipt of fixed amounts of compensation under a retirement plan (including deferred compensation) for prior service with the Company provided that such compensation is not contingent in any way on continued service. A director would be deemed an affiliated person of the Company if that director, directly or indirectly, through one or more intermediaries, controls, or is controlled by, or is under common control with, the Company. The beneficial ownership of 10% or less of the voting equity stock of the Company does not constitute control for this purpose.

Based on the application of the foregoing standards and pursuant to the requirements of the NYSE and the Securities and Exchange Commission (the “SEC”), the Board has determined that:

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BUSINESS RELATIONSHIPS AND RELATED PERSON TRANSACTIONS POLICY

The audit committee will review and approve transactions with our directors, officers, holders of more than 5% of our voting securities or affiliates or immediate family members of any of the foregoing. Prior to approving any transaction with any such related party, the Audit Committee will consider the material facts as to the related party’s relationship with us and interest in the transaction. Related party transactions will not be approved unless the Audit Committee or the disinterested members of the Board as a whole has approved the transaction. Since January 1, 2017, the Company has not entered into any transaction, and there is not currently proposed any transaction, with a value in excess of $120,000 in which any such related party has a direct or indirect material interest.

CORPORATE GOVERNANCE

MEETINGS OF THE BOARD AND ITS COMMITTEES

The standing committees of the Board and the membership of each committee are shown below. The Board has adopted a written charter for each standing committee. These charters are maintained on the Company’s website at www.vistraenergy.com.

Board of Directors

In 2017, the directors attended a total of 98% of the meetings of the Board and the committees on which they serve. In 2017, the Board held a total of twenty-three meetings. Non-management directors meet regularly in executive session and Mr. Helm presides over those executive sessions.

Audit Committee

The Audit Committee is a separately-designated standing audit committee as required by SEC regulations and NYSE rules. Messrs. Ferraioli, Helm and Hunter serve on the Audit Committee, and Mr. Ferraioli serves as the Chair of the Audit Committee. The Board has determined that Messrs. Ferraioli, Helm and Hunter are independent as such term is defined in the NYSE rules and as required by Rule 10A-3 of the Securities and Exchange Act of 1934 (the “Exchange Act”). The Board has determined that each member of the Audit Committee possesses the necessary level of financial literacy required to enable him to serve effectively as an Audit Committee member. The Board has also determined that Messrs. Ferraioli, Helm and Hunter qualify as Audit Committee Financial Experts. No Audit Committee member serves on more than three audit committees of public companies, including the Audit Committee. The Audit Committee oversees (i) the quality and integrity of the financial statements of the Company; (ii) the Company’s financial reporting processes and financial statement audits; (iii) the independent registered public accountant’s qualifications and independence; (iv) the performance of the Company’s internal audit function and independent registered public accountant; (v) the systems of disclosure controls and procedures; and (vi) the Company’s system of internal controls over financial reporting, accounting, legal compliance and ethics, including the effectiveness of disclosure controls and controls over processes that could have a significant impact on the Company’s financial statements. The Audit Committee held nine meetings in 2017.

Nominating and Governance Committee

Mr. Madon and Mr. Strong serve on the Nominating and Governance Committee, and the Board has determined that Messrs. Madon and Strong are independent as such term is defined in the NYSE rules. The Nominating and Governance Committee (i) identifies individuals qualified to become directors and recommends to the Board the nominees to stand for election as directors; (ii) oversees, and assumes a leadership role in, the governance of the Company including recommending Corporate Governance Guidelines for the Board’s consideration; (iii) leads the Board in its annual evaluation of its performance; and (iv) recommends to the Board nominees for each committee of the Board. The Nominating and Governance Committee held six meetings in 2017.

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Compensation Committee

Mr. Baiera and Ms. Box serve on the compensation committee of the Board (the “Compensation Committee”), and Mr. Baiera serves as the Chair of the Compensation Committee. The Board has determined that each of Mr. Baiera and Ms. Box are independent as such term is defined in the NYSE rules. The Compensation Committee (i) reviews and approves corporate goals and objectives relevant to the compensation of the Chief Executive Officer (“CEO”), evaluates the CEO’s performance in light of those goals and objectives, and determines and recommends to the Board the CEO’s compensation based on this evaluation; (ii) oversees the evaluation of executive officers (and other senior officers and key employees) other than the CEO and reviews, determines and approves their compensation levels, (iii) oversees and makes recommendations to the Board with respect to the adoption, amendment or termination of incentive compensation, equity-based and other executive compensation and benefits plans, policies and practices; (iv) reviews and discusses with the Board executive management succession planning; (v) makes recommendations to the Board with respect to the compensation of the Company’s outside directors; and (vi) produces the Compensation Committee’s report on executive compensation as required by the SEC to be included in the Company’s annual proxy statement. The Compensation Committee held six meetings in 2017.

COMPENSATION OF DIRECTORS

Members of the Board who are not officers of the Company and not Chair of the Audit Committee receive an annual board retainer of $80,000 and an annual committee retainer of $15,000. The Chair of the Board receives an annual board retainer of $150,000. The Chair of the Audit Committee receives an annual board retainer of $90,000 and an annual committee retainer of $25,000. Members of the Board who are not officers of the Company receive an annual equity award in the amount of $100,000. The Chair of the Board receives an annual equity award in the amount of $150,000. Certain members of the Board have elected to be paid in cash in lieu of their equity award. For Messrs. Madon and Strong and Ms. Box, director fees are paid directly to entities affiliated with the employer of such director for firm use and are not redirected to the individual directors. All directors are reimbursed for reasonable expenses incurred in connection with their services as directors. Please see the section entitled “Compensation Discussion and Analysis—Director Compensation” below for more information.

CORPORATE GOVERNANCE DOCUMENTS

The Company maintains certain corporate governance documents on its website at www.vistraenergy.com. The Company’s Corporate Governance Guidelines and charters of the committees of the Board, including the Audit Committee, the Nominating and Governance Committee and the Compensation Committee, in each case as currently in effect, can be accessed by selecting the tab labeled “Corporate Governance” on the home page of the Company’s website. The Company’s Code of Conduct that applies to the Company’s employees, officers, including the CEO and Chief Financial Officer, and directors, is also available on the Company’s website. In accordance with SEC regulations, any amendments to the Code of Conduct will be posted on the Company’s website. The Board has adopted a written policy regarding transactions with related parties. It is included in the Corporate Governance Guidelines available on the Company’s website. Printed copies of the corporate governance documents that are posted on the Company’s website are also available to any stockholder upon request to the Secretary of the Company, 6555 Sierra Drive, Irving, TX 75039.

DIRECTOR ATTENDANCE AT ANNUAL MEETINGS OF STOCKHOLDERS

As detailed in our Corporate Governance Guidelines, Board members are requested and encouraged to attend the annual meeting of stockholders. All directors were in attendance at the 2017 annual meeting of stockholders.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Exchange Act requires our executive officers, directors and persons who own more than 10% of our equity securities to file reports of ownership and changes in ownership with the SEC and the NYSE. Executive officers, directors and greater than 10% stockholders are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file. Based on a review of the copies furnished to us in 2017 and upon representations that no Forms 5 were required, we believe that all persons subject to these reporting requirements filed the required reports on a timely basis.

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COMMUNICATIONS WITH DIRECTORS

Stockholders and other interested parties may communicate with the directors, including all non-management or independent directors, by writing to them c/o the Secretary of the Company, 6555 Sierra Drive, Irving, TX 75039.

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BENEFICIAL OWNERSHIP OF COMMON STOCK OF THE COMPANY

The following table sets forth information, as of March 23, 2018, regarding the beneficial ownership of our common stock by: (1) each of our current directors and nominees for director, (2) each of our current named executive officers, (3) all of our directors and executive officers as a group, and (4) each person or entity we know that beneficially owns more than 5% of our outstanding shares of common stock.

Beneficial ownership for the purposes of this table is determined in accordance with the rules and regulations of the SEC. Under such rules, beneficial ownership includes any shares as to which a person has sole or shared voting power or investment power and any shares that the stockholder has the right to dispose of or acquire within 60 days of March 23, 2018. Common stock subject to options, regardless of whether such arrangement is currently in the money, that are currently exercisable within 60 days of March 23, 2018, are deemed to be outstanding and beneficially owned by the holder of the options, and common stock issuable upon vesting of restricted stock units (“RSUs”) that are vested, or will vest within 60 days of March 23, 2018, is deemed to be outstanding and beneficially owned by the holder of such RSUs. The shares underlying any outstanding options or RSUs, however, are not deemed outstanding for the purposes of computing the percentage ownership of any other stockholder. Percentages of beneficial ownership are based on 428,482,450 shares of common stock outstanding as of March 23, 2018. Except as disclosed in the footnotes to this table, we believe that each stockholder identified in the table possesses sole voting and investment power over all shares of common stock shown as beneficially owned by the stockholder.

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

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EXECUTIVE COMPENSATION

Compensation Committee

During 2017, the Compensation Committee (the “Compensation Committee”) of the Vistra Energy Corp. (“the Company”) Board of Directors (the “Board”) consisted of two directors: Gavin R. Baiera and Jennifer Box. The primary responsibilities of the Compensation Committee are to:

Compensation Risk Assessment

Our management team initiates the Company’s internal risk review and assessment process for our compensation policies and practices by assessing, among other things: (1) the mix of cash and equity payouts at various compensation levels; (2) the performance time horizons used by our plans; (3) the use of multiple financial and operational performance metrics that are readily monitored and reviewed; (4) the incorporation of both operational and financial goals and individual performance modifiers; (5) the inclusion of maximum caps and other plan-based mitigants on the amount of our awards; and (6) multiple levels of review and approval of awards (including approval of our Compensation Committee with respect to awards to executive officers and awards to other employees that exceed monetary thresholds). Following their assessment, our management team prepares a report, which is provided to the Company’s Compensation Committee for review. The Company Compensation Committee reviews the report and provides it to the Audit Committee. The Company’s management and Compensation Committee have determined that the risks arising from the Company’s compensation policies and practices are not reasonably likely to have a material adverse effect on the Company.

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COMPENSATION DISCUSSION & ANALYSIS

EXECUTIVE SUMMARY

The Company is a recently formed entity created in connection with its emergence from bankruptcy on October 3, 2016. Throughout 2017, the Company Compensation Committee (“Compensation Committee”) took steps to facilitate the transition of the Company’s compensation practices towards those of a public company and further strengthen the alignment between its executives’ interests and those of its stakeholders in accordance with the Company’s compensation philosophy. Most notably, in 2017, the Compensation Committee approved the Company’s first annual equity awards. These awards include stock options, restricted stock units that are subject only to time-vesting conditions (“RSUs”) and restricted stock units that are subject to both time and performance-vesting conditions (“PSUs”). These awards also include extended vesting schedules in order to align the annual grant process with an ongoing first quarter timeline.

Compensation Philosophy

The Company has a pay-for-performance compensation philosophy, which places an emphasis on pay-at-risk; a significant portion of its executive officers’ compensation is comprised of variable compensation. The Company’s compensation program is intended to attract and motivate top-talent executive officers as leaders and compensate executive officers appropriately for their contribution to the attainment of the Company’s financial, operational and strategic objectives. In addition, the Company believes it is important to retain its top-tier talent and strongly align their interests with the Company’s stakeholders by emphasizing incentive-based compensation. To achieve the goals of its compensation philosophy, the Company believes that:

2017 Named Executive Officers

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These five employees represent the Company’s Named Executive Officers for 2017 – while this proxy statement specifically discusses the compensation relating to the Company’s Named Executive Officers, the practices and programs described herein generally extend more broadly across the Company’s executive leadership team.

PERFORMANCE OVERVIEW

In this section, the Company provides highlights of its performance in 2017, reflecting factors considered by the Compensation Committee in assessing variable pay outcomes for the Named Executive Officers.

Pay for Performance

The Compensation Committee designed the majority of the Company’s Named Executive Officers’ compensation to be linked directly to corporate, business unit (or area of responsibility) and company stock price performance. For example, each Named Executive Officer’s annual performance-based cash bonus is based primarily on the achievement of certain corporate and business unit financial and operational targets, and the annual equity grants made in the fourth quarter of 2017 to the Named Executive Officers were awarded in the form of stock options, RSUs and PSUs.

Performance Highlights

Highlights of our 2017 performance are summarized below. These, along with other factors detailed in the disclosure, resulted in annual bonus outcomes ranging from 132 to 195% of target.

The Company’s Executive Annual Incentive Plan (“EAIP”) places the greatest weighting on a combination of adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”), total costs, and free cash flow. Together, these metrics show the results of the organization’s focus on achieving business results while exercising discipline in cost decisions. As seen below, the Company Adjusted EBITDA came close to meeting its target, which was set above the midpoint of guidance to drive performance, while cost management significantly outperformed its target, and adjusted free cash flow exceeded its target as well, collectively contributing to strong incentive plan payouts.

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CORPORATE GOVERNANCE PRACTICES

In this section, the Company provides details of its corporate governance framework, procedures and practices as they relate to Named Executive Officer compensation.

Advisors to the Compensation Committee

Independent Advisors

During 2017, Willis Towers Watson, who advised the Company’s Predecessor’s Compensation Committee as well, provided ongoing advisory services to the Company and its Compensation Committee on various aspects of its executive compensation and benefits practices, including, but not limited to, the development of the compensation structure.

In accordance with the Compensation Committee’s charter, the Compensation Committee determined that Willis Towers Watson is sufficiently independent to appropriately advise the Compensation Committee on compensation matters and that its relationship with Willis Towers Watson does not give rise to any conflict of interest. Going forward, the Compensation Committee expects that it will continue to engage compensation consultants when and as appropriate, and will conduct an assessment of consultants’ independence prior to any such engagement.

COMPENSATION PHILOSOPHY

In this section, the Company provides details of its Named Executive Officer compensation framework, practices and outcomes for 2017.

Compensation Philosophy

The Company’s compensation program is intended to attract and motivate top-talent executive officers as leaders and compensate executive officers appropriately for their contribution to the attainment of its financial, operational and strategic objectives. In addition, the Company believes it is important to retain its top tier talent and strongly align their interests with the Company stakeholders’ interests by emphasizing incentive-based compensation. The Company utilizes the following elements of compensation to achieve these objectives:

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Compensation Determination Process

Use of Market Data

The Company establishes target compensation levels that are consistent with market practice and internal equity considerations (including position, responsibility and contribution) relative to base salaries, annual incentives and long-term incentives, as well as with the Compensation Committee’s assessment of the appropriate pay mix for a particular position. In order to gauge the competitiveness of its compensation programs, the Company reviews compensation practices and pay opportunities from the energy services industry and general industry survey data, as well as from a selection of publicly-traded peer companies. The Company attempts to position itself to attract and retain qualified senior executives in the face of competitive pressures in its relevant labor markets.

Specifically during 2017, the Company used information regarding the pay practices of the energy services industry and general industry companies provided by its compensation consultant, regressed to the Company’s revenue size. The Company believes that revenue is an appropriate indicator of the size and complexity of an organization, which should be considered in determining compensation levels. The compensation data resulting from this analysis was a significant factor considered by the Compensation Committee with respect to its executive compensation decisions for the Named Executive Officers.

During 2017, the Company also utilized a compensation peer group as an additional reference point when determining executive compensation. This peer group consisted of a select group of companies that the Compensation Committee believes are representative of the talent market in which the Company competes. The Company’s compensation peer group consisted of the following companies for 2017:

The Compensation Committee does not target any particular level of total compensation or individual component of compensation against the peer group; rather, the Compensation Committee considers the range of total compensation provided by the Company’s peers, together with information from published surveys, in determining the appropriate mix and level of total compensation for its executives.

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Compensation of the Chief Executive Officer (CEO)

In determining the compensation of the CEO, the Compensation Committee annually follows a thorough and detailed process. At the end of each year, the Compensation Committee reviews a self-assessment prepared by the CEO regarding his performance and the performance of the Company’s businesses and meets (with and without the CEO) to evaluate and discuss his performance and the performance of the Company’s businesses.

While the Compensation Committee tries to ensure that a substantial portion of the CEO’s compensation is directly linked to his performance and the performance of the Company’s businesses, the Compensation Committee also seeks to set his compensation in a manner that is competitive with compensation for similarly performing executive officers with similar responsibilities in companies the Company considers to be its peers.

As discussed under “Employment Agreements” below, the Company has entered into an employment agreement with its current CEO, Curtis A. Morgan, which addresses certain elements of his compensation and benefit package.

Compensation of Other Named Executive Officers

In determining the compensation of each of the Company’s Named Executive Officers (other than the CEO), the Compensation Committee seeks the input of the CEO. At the end of each year, the CEO reviews a self-assessment prepared by each Named Executive Officer and assesses the Named Executive Officer’s performance against business unit (or area of responsibility) and individual goals and objectives. The Compensation Committee and the CEO then review the CEO’s assessments of such Named Executive Officers and, in that context, the Compensation Committee approves the compensation for each Named Executive Officer.

Role of the Compensation Consultant

To add rigor in the review process and to inform the Compensation Committee of market trends, the Compensation Committee engages the services of Willis Towers Watson, an independent executive compensation consultant, to analyze the Company’s executive compensation structure and plan designs and to assess whether the compensation program is competitive and supports the Compensation Committee’s goal to align the interests of executive officers with those of stockholders. Willis Towers Watson may also directly provide the Compensation Committee with market data, which the Compensation Committee references when determining compensation for executive officers. The Compensation Committee has authorized Willis Towers Watson to interact with the Company’s management, as needed, on behalf of the Compensation Committee. Willis Towers Watson does not provide any other services to the Company outside of matters pertaining to executive and director compensation and related corporate governance matters.

The Compensation Committee has the sole authority to approve the independent compensation consultant’s fees and terms of the engagement. Thus, the Compensation Committee annually reviews its relationship with, and assesses the independence of, Willis Towers Watson to ensure executive compensation consulting independence.

Base Salary

The Company believes that base salary should consider the scope and complexity of an executive officer’s position and the level of responsibility required to perform his or her job. It also believes that a competitive level of base salary is required to attract, motivate and retain qualified talent. The Company wants to ensure its cash compensation is competitive and sufficient to incent executive officers to remain with us, recognizing its high-performance expectations across a broad set of operational, financial, customer service and community-oriented goals and objectives.

The Compensation Committee regularly reviews base salaries and periodically uses independent compensation consultants to ensure the base salaries are market-competitive. The Compensation Committee may also review an executive officer’s base salary from time to time during a year, including if the executive officer is given a promotion or if his or her responsibilities are significantly modified.

The following table provides detail on the base salaries of the Company’s Named Executive Officers. Base salaries for Messrs. Morgan, Burke and Holden were initially set by their employment agreements, and base salaries for Messrs. Hudson and Muscato were determined based on market data and role and responsibilities.

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Subject to the Employment Agreements with Messrs. Morgan, Burke and Holden, which are described under “Employment Agreements” below, the Compensation Committee may change the base salaries for all of the Named Executive Officers at any time based on updated market data, updated roles and responsibilities and the CEO’s recommendation. Board approval is required to change the base salary for Mr. Morgan.

2017 Base Salaries

Annual Incentive Plan

Summary

The EAIP provides an annual performance-based cash bonus for the successful attainment of certain financial and operational performance targets that are established annually by the Compensation Committee. Under the terms of the EAIP, performance against these targets, which are set at challenging levels to incentivize exceptional performance (while at the same time balancing the needs for safety and investment in the Company’s business), drives bonus funding.

Performance Framework

As a general matter, target-level performance is based on the Company’s board-approved financial and operational plan (the “Financial Plan”) for each upcoming year. The Compensation Committee sets high expectations for the Company’s executive officers and therefore annually selects a target performance level that constitutes above average performance for the business, which the Compensation Committee expects the business to achieve during the upcoming year. Threshold and superior levels are for performance levels that are below or above Financial Plan-based expectations, respectively. Based on the level of attainment of these performance targets, an aggregate EAIP funding percentage amount for all participants is determined.

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Financial and Operational Performance Targets for 2017

The following table provides a summary (including relevant weighting) of the performance targets under the EAIP for the Company’s Named Executive Officers:

The Company focuses the majority of its metrics on financial parameters that align with shareholder value: Adjusted EBITDA, Cost Management, and Adjusted Free Cash Flow. The Company performed well against each of these metrics in 2017. The target for Adjusted EBITDA was set above the midpoint of guidance in order to drive strong performance. The organization took a disciplined approach to maximizing the combination of these three key metrics. In addition to the Company financial metrics, the Committee set goals to ensure that the management team was continuing to drive the performance of each of the key business units, Luminant and TXU Energy. The Luminant Operational and Financial Metrics consist of core processes that lead to consistent and safe operations while also driving the Luminant portion of the Company financial metrics. TXU Energy Operational and Financial Metrics focus on core customer operations that drive both high customer satisfaction and high performance of the TXU Energy portion of the Company Financial metrics.

Individual Performance Modifier

After approving actual performance against the applicable targets under the EAIP, and on a basis independent of such target performance calculations, the Compensation Committee and the CEO review the performance of each of the Company’s executive officers on an individual and comparative basis. Based on this review, which includes an analysis of both objective and subjective criteria, as determined by the Compensation Committee in its sole discretion, including the CEO’s recommendations (with respect to all executive officers other than himself), the Compensation Committee approves an individual performance modifier for each executive officer.

Under the terms of the EAIP, the individual performance modifier can range from an outstanding rating (150%) to an unacceptable rating (0%). To calculate an executive officer’s final annual cash incentive bonus, the executive officer’s corporate/business unit payout percentages are multiplied by the executive officer’s target incentive level, which is computed as a percentage of annualized base salary, and then by the executive officer’s individual performance modifier, subject to the aggregate cap of 200% of such executive officer’s target bonus for executives under employment agreements.

Actual Awards

The following table provides a summary of the 2017 performance-based cash bonus for each Named Executive Officer under the EAIP, and the discussion below highlights the key factors used in determining the awards. The Company paid 80% of the target bonus percentage to Named Executive Officers in December 2017 in anticipation of tax law changes that would impact deductions for executive compensation. The Company chose 80% based on a conservative review of projected year-end results and the fact that the Compensation Committee had not yet reviewed the recommendations for individual performance modifiers for the Named Executive Officers. The Compensation Committee and the Board (as applicable) have now certified financial results for 2017 and approved the individual performance modifiers for all Named Executive Officers. All of our Named Executive Officers earned in excess of 100% of their respective target bonuses and will be paid the additional earned amounts (the amounts in excess of 80% of their respective target bonuses previously paid) in March 2018.

Mr. Morgan led the Company organization through a transformational year in 2017. Key CCGT acquisitions were made in the first half of the year, plant closure decisions were made in the second half of the year, and the Dynegy merger was announced in the fourth quarter, as well. While the generation business was transforming, the retail business continued to deliver strong performance. Throughout the year, Mr. Morgan continued to develop a strong team environment for high performance and consistent decision-making. Given these and other significant achievements, the Board approved an individual performance modifier that increased Mr. Morgan’s incentive award.

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Mr. Burke played a key role in all of the decisions around the generation fleet in 2017. The generation fleet had strong safety performance, commercial availability, and mining productivity, while implementing operational performance initiatives across the fleet. The analysis that led to the announcement of plant and mine closures in 2017 positioned the fleet for a strong 2018. The retail business had another strong year in 2017, including both financial performance and customer satisfaction ratings. In addition, he continued to lead the retail organization to continued strong market share and innovation. Given these and other significant achievements, the Compensation Committee approved an individual performance modifier that increased Mr. Burke’s incentive award.

Mr. Holden also played a key role in the mergers and acquisitions activity conducted in 2017, while leading the finance organization and interfacing with external stockholders. Mr. Holden led the effort to develop key investor relations initiatives supporting the decisions to close power plants and to merge with Dynegy. Given these and other significant achievements, the Compensation Committee approved an individual performance modifier that increased Mr. Holden’s incentive award.

Mr. Hudson continued to drive performance in the competitive ERCOT retail market. The retail business continues to deliver market leading customer service and market leading innovation. The retail business delivered strong financial results in a continuously strong competitive market. Given these and other significant achievements, the Compensation Committee approved an individual performance modifier that increased Mr. Hudson’s incentive award.

Mr. Muscato led the commercial organization to a strong year. The commercial team supported the generation fleet and retail business and identified key market dynamics to drive value. Given these and other significant achievements, the Compensation Committee approved an individual performance modifier that increased Mr. Muscato’s incentive award.

Long-Term Incentive Plan

The Board awarded its first annual equity grants to the Company’s Named Executive Officers in the fourth quarter of 2017. Based on market data and consultations with Willis Towers Watson, the target mix of each Named Executive Officer’s equity award was allocated as follows: 45% in PSUs, 30% in RSUs and the remaining 25% in stock options.

These awards were intended to serve as a retention and motivational tool and align the interests of the Company’s executive officers with the interests of the Company’s stockholders. Award sizes were determined based on an evaluation of internal pay equity, and compensation levels for comparable positions among peer companies, the energy services industry and general industry. The award values were benchmarked against overall market data and proxy data from the Company’s peer group. The vesting schedules for these October 2017 grants were extended approximately five months in order to better align future grants and vesting schedules with a traditional first quarter grant date timeline. The awards fully vest in March 2021.

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Awards Granted in 2017

Performance Share Units (45% of 2017 Equity Grants)

45% of the targeted equity value was granted in the form of PSUs that vest based on performance over a three-year period. The initial metric approved for the PSUs was achieving positive net income in 2017. This metric was set for purposes of satisfying Section 162(m) of the Internal Revenue Code. In the first quarter of 2018, the Compensation Committee approved final metrics for the PSUs. As seen below, these metrics include Adjusted EBITDA, a metric to be set each year but measured based on cumulative three-year outcome; Generation Availability Index, a metric set each year but measured based on a three-year performance average target of 100%; and Retail Performance Index, a metric set each year but measured based on a three-year performance average target of 100%.

The Compensation Committee believes these metrics will focus the management team on long-term shareholder value creation and the development of a sustainable high performing business.

Restricted Stock Units (30% of 2017 Equity Grants)

30% of the targeted value was granted in the form of RSUs that vest ratably over a three-year period (with an extended vesting schedule for 2017 grants). The number of RSUs awarded to each executive was determined by dividing the targeted RSU value for each executive by the closing price of the Company’s common stock on the grant date as reported on the NYSE in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“ASC 718”).

Stock Options (25% of 2017 Equity Grants)

25% of the targeted equity value was granted in the form of non-qualified stock options that vest ratably over a three-year period (with an extended vesting schedule for 2017 grants) and expire after 10 years. The exercise price of each option was the closing price of the Company’s common stock on the date of grant as reported on the NYSE. The number of options granted was determined by dividing the targeted stock option value for each executive by the value of each option, which was computed using the Black-Scholes option-pricing model using the same assumptions that the Company uses in calculating the compensation expense attributable to such grants under ASC 718.

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2017 Equity Awards

The values included in the following table reflect the fair value of such equity awards as of the grant date.

Future Equity Awards

In the future, the Compensation Committee may provide additional grants and forms of equity to drive certain aspects of the Company’s operating and financial performance as the Compensation Committee sees fit, and as supported by market data and the executive’s performance. The Compensation Committee believes that long-term incentive compensation is an important component of the Company’s compensation program because it has the potential for retaining and motivating executives, aligning executives’ financial interests with the interests of stockholders, and rewarding the achievement of the Company’s long-term strategic and financial goals.

Benefits and Perquisites

Benefits

The Company’s executive officers generally have the opportunity to participate in certain of the Company’s broad-based employee compensation plans, including the Company’s Thrift (401(k)) Plan (the “Thrift Plan”), and health and welfare plans. Please refer to the footnotes to the Summary Compensation Table below.

Perquisites

The Company provided its executives with certain perquisites, including financial planning services, during 2017.

Employment Arrangements and Severance Benefits

The Company has entered into employment agreements with Mr. Morgan, Mr. Burke and Mr. Holden. Each of the employment agreements provides that certain payments and benefits will be paid upon the expiration of the agreement or an earlier termination of the Named Executive Officer’s employment under various circumstances, including a termination without cause, a resignation for good reason and a qualifying termination of employment within a fixed period of time following a change in control of the Company.

In addition, Mr. Hudson and Mr. Muscato are participants in the Company’s Executive Severance Plan (the “Severance Plan”) and Executive Change in Control Policy (the “Change in Control Policy”). The Severance Plan provides certain severance benefits to the Company’s executive officers and other qualified employees upon the employee’s termination under various circumstances, including a termination without cause and a resignation for good reason. The Change in Control Policy provides certain severance benefits to the Company’s executive officers and other qualified employees upon the employee’s termination of employment within a fixed period of time following a change in control of the Company.

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The change in control severance benefits for our Named Executive Officers include a “double trigger” provision, which requires both (a) a change in control of the Company and (b) a termination of employment before any applicable Named Executive Officer is entitled to receive any severance payment.

The Company believes that these provisions are important in order to attract, motivate and retain the caliber of executive officers that its business requires and provide incentive for its executive officers to fully consider potential changes that are in the Company’s and its stockholders’ best interests, even if such changes could result in the executive officers’ termination of employment.

Other Compensation Policies

Insider Trading Policy

Under the Company’s insider trading policy, members of the Board and all of the Company’s officers and employees shall not engage in any derivative transactions involving any securities of the Company, including hedging transactions, pledges of Company securities as collateral or short sales thereof.

Accounting, Tax and Other Considerations

Accounting Considerations

The Company follows ASC 718 for its stock-based compensation awards, and the compensation that it pays to its executives is expensed in the Company’s financial statements as required by U.S. GAAP.

As one of many factors, the Compensation Committee considers the financial statement impact in determining the amount of, and allocation among the elements of, executive compensation.

Income Tax Considerations

Given changes to 162(m) of the Internal Revenue Code effective in 2018, even though the Company’s full year-end performance review and bonus process had not yet been completed, it paid 80% of target bonuses for the Named Executive Officers in December of 2017. The remaining amounts due are being paid through the annual process that yielded the total payments described earlier.    

Risk Assessment

The Company’s management team annually initiates the Company’s internal risk review and assessment process for the Company’s compensation policies and practices by assessing, among other things: (1) the mix of cash and equity payouts at various compensation levels; (2) the performance time horizons used by the Company’s plans; (3) the use of multiple financial and operational performance metrics that are readily monitored and reviewed; (4) the incorporation of both operational and financial goals and individual performance modifiers; (5) the inclusion of maximum caps and other plan-based mitigants on the amount of its awards; and (6) multiple levels of review and approval of awards (including approval of the Compensation Committee with respect to awards to executive officers and awards to other employees that exceed monetary thresholds). Following their assessment, the Company’s management team prepares a report, which is provided to the Compensation Committee for review. The Compensation Committee reviews the report and provides it to the Audit Committee. The Company’s management and the Compensation Committee have determined that the risks arising from the Company’s compensation policies and practices are not reasonably likely to have a material adverse effect on the Company.

Say on Pay Vote

In May 2017, the Company’s stockholders were asked to approve, on an advisory basis, the Company’s 2016 executive compensation programs. A substantial majority (99.9%) of the votes cast on the “say-on-pay” proposal at that meeting were voted in favor of the proposal. The “say-on-pay” advisory vote serves as a tool to guide the Board and the Compensation Committee in ensuring alignment of the Company’s executive compensation programs with stockholder interests. The Compensation Committee believes that these results reaffirm the Company’s stockholders’ support of the Company’s approach to executive compensation. The Compensation Committee will continue to use the “say-on-pay” vote as a guidepost for stockholder sentiment and believes it is critical to maintain and continually develop this program to promote ongoing stockholder engagement, communication and transparency.

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Compensation Committee Interlocks and Insider Participation

None of the Company’s directors who currently serve, or during the past year have served, as members of the Compensation Committee is, or has, at any time, been one of the Company’s officers or employees. None of the Company’s executive officers currently serves, or has served during the last completed fiscal year, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving as a member of the Board or the Company’s Compensation Committee.

COMPENSATION COMMITTEE REPORT

ON EXECUTIVE COMPENSATION

Our executive compensation program is administered and reviewed by the Compensation Committee. The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with management and, based on such review and discussion, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement.

This report is submitted by the members of the Compensation Committee of the Board as of March 22, 2018.

Compensation Committee

Gavin R. Baiera (Chair)

Jennifer Box

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Summary Compensation Table—2017

The following table provides information for the period from October 3, 2016 – December 31, 2016 (the “2016 Stub Period”) and the fiscal year ended December 31, 2017 regarding the aggregate compensation paid to the Company’s Named Executive Officers.

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For purposes of preparing this table, all perquisites are valued on the basis of the actual cost to the Company.

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Grants of Plan-Based Awards – 2017

The following table sets forth information regarding grants of compensatory awards to the Named Executive Officers for 2017.

For a discussion of certain material terms of the employment agreements with certain Named Executive Officers, please see “Compensation Philosophy” and “Potential Payments upon Termination or Change in Control.”

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Outstanding Equity Awards at Fiscal Year-End – 2017

The following table sets forth information regarding outstanding equity awards to the Named Executive Officers at fiscal year-end for 2017.

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Option Exercises and Stock Vested – 2017

The following table sets forth information regarding the exercise of options and the vesting of stock awards by each Named Executive Officer during 2017.

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Potential Payments upon Termination or Change in Control

The following tables and narrative below describe payments to each of the Named Executive Officers (or, as applicable, enhancements to payments or benefits) in the event of his or her termination, including if such termination is voluntary, for cause, as a result of death, as a result of disability, without cause or for good reason or in connection with a change in control of the Company.

Employment Arrangements with Contingent Payments

As of December 31, 2017, each of Messrs. Morgan, Burke and Holden had employment agreements with change in control and severance provisions. With respect to these employment agreements, a change in control is generally defined as (i) a transaction that results in the acquisition of 30% or more of the Company’s common stock, (ii) a change in the composition of the Board such that members of the Board during any consecutive 12-month period cease to constitute a majority of the Board, (iii) the approval by the stockholders of the Company of a plan of complete dissolution or liquidation of the Company, or (iv) a transaction that results in a merger or sale of substantially all of the Company’s assets or capital stock to another person who is not an affiliate of the Company.

Each employment agreement includes customary non-compete and non-solicitation provisions that generally restrict the Named Executive Officer’s ability to compete with us or solicit the Company’s customers or employees for his or her own personal benefit during the term of the employment agreement and 24 months after the employment agreement expires or is terminated.

Executive Severance Plan and Executive Change in Control Policy

As of December 31, 2017, each of Messrs. Hudson and Muscato were participants in the Severance Plan and Change in Control Policy. With respect to the Change in Control Policy, a change in control is generally defined as (i) a transaction that results in the acquisition of 25% or more of the Company’s common stock, (ii) a change in the composition of the Board such that the incumbent members of the Board cease to constitute a majority of the Board, (iii) the consummation of a plan of complete dissolution or liquidation of the Company, or (iv) a transaction that results in a merger or sale of substantially all of the Company’s assets or capital stock to another person who is not an affiliate of the Company.

The Severance Plan includes customary non-solicitation provisions that generally restrict the applicable Named Executive Officer’s ability to solicit any employee, consultant or contractor for his own personal benefit for a period of one year after a termination contemplated under the Severance Plan.

The following tables describe payments to which each Named Executive Officer is entitled under the employment agreement or Severance Plan and Change in Control Policy, as applicable, assuming termination of employment as of December 31, 2017.

Excise Tax Gross-Ups

Our Named Executive Officers are not entitled to an excise tax gross-up payment in the event that any benefit or payment by the Company is determined to be subject to the excise tax imposed by Internal Revenue Code Section 4999.

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1. Mr. Morgan

Potential Payments to Mr. Morgan upon Termination as of December 31, 2017 (per employment agreement in effect as of December 31, 2017)

Mr. Morgan has entered into an employment agreement that provides for certain payments and benefits upon the expiration or termination of the agreement under the following circumstances:

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2. Mr. Burke

Potential Payments to Mr. Burke upon Termination as of December 31, 2017 (per employment agreement in effect as of December 31, 2017)

Mr. Burke has entered into an employment agreement that provides for certain payments and benefits upon the expiration or termination of the agreement under the following circumstances:

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3. Mr. Holden

Potential Payments to Mr. Holden upon Termination as of December 31, 2017 (per employment agreement in effect as of December 31, 2017)

Mr. Holden has entered into an employment agreement that provides for certain payments and benefits upon the expiration or termination of the agreement under the following circumstances:

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4. Mr. Hudson

Potential Payments to Mr. Hudson upon Termination as of December 31, 2017 (per the Executive Severance Plan and Executive Change in Control Policy in effect as of December 31, 2017)