Good morning, and welcome to the annual and special meeting of shareholders of Fortis Inc. My name is Stephanie Amaimo, and I'm Vice President, Investor Relations with Fortis. As a visitor of this land, I would like to begin by acknowledging lands on which we gather as traditional territories of diverse indigenous groups. We acknowledge with respect the diverse histories and cultures of the Beothuk, Mi'kmaq, Innu and Inuit of the province of Newfoundland and Labrador. If you're joining us virtually, please take a moment to acknowledge the importance of the lands to which you call home. At Fortis, we strive to respect relationships with all peoples as we search for collective healing and true reconciliation and honor this beautiful land together. I am pleased to be joining you in person today to support the facilitation of our hybrid meeting.
All shareholders, whether present in person or online, will be able to ask questions, vote, and participate. Before we begin, I will call the meeting to order. I will briefly review procedures regarding voting and asking questions. Registered shareholders and duly appointed proxy holders are eligible to vote during the meeting. If you already voted ahead of the meeting, your vote has been counted and you do not need to vote again. If you have not yet voted and would like to cast your vote, shareholders in person with us today can return paper copy ballots to the scrutineer's table to my left. Shareholders joining virtually may vote by online ballot for each matter brought forward at this meeting. To vote online, you must have logged in as a registered shareholder. Further instructions can be found on the left-hand side of your screen.
Only registered shareholders and duly appointed proxy holders will be able to address the meeting and ask questions during the formal conduct of business. If you are in person today, you may raise your hand and proceed to the nearest microphone. If you are online, you can click the messaging tab at the top of your screen and type your question. We will address questions that directly relate to a particular motion at the appropriate time of the meeting, and we will address general questions from either shareholders or guests following management's presentation. For questions submitting online, I will read the questions aloud, and the chair of the board or the president and CEO as appropriate will respond. If we receive questions of a similar theme, we may combine or otherwise paraphrase your question in interest of addressing as many questions as possible.
We have reserved 20 minutes for questions and answers. A complete list of our questions received and our responses will be posted to the website following the meeting, including any questions received that were not able to be addressed during the Q&A period. I will now invite the Chair of our Board, Doug Haughey, to call this meeting to order.
Thanks, Stephanie. How is everyone today? It's great to be back. Good morning, everyone. I'm very pleased to call this 35th annual and special meeting of Fortis to order. My name is Doug Haughey. I'm the Chair of the Board of Directors of Fortis, and I'll serve as chair of this meeting. Welcome everyone. It's great to be here. On behalf of my board colleagues, I'd like to welcome all of you to the Holiday Inn St. John's. We'd also like to welcome everyone attending virtually via the Lumi platform. We're hosting this meeting in a hybrid format, both in person and online, to allow shareholders the opportunity to participate from the location of their choice. We thank you all for joining us today. Now, the Fortis Board of Directors leadership and leadership team are deeply proud of Fortis' roots in Newfoundland and Labrador.
It feels great to get back here in the province. It's the first in-person gathering of our board and leadership team in more than two years. Being reunited is a very welcome change. Now, although we have reduced seating capacity today, respecting pandemic health and safety concerns, I'm delighted to see so many familiar faces in the room. It's really great. This past year, Fortis continued to navigate the ongoing COVID-19 pandemic while delivering essential energy to over 3.4 million customers in Canada, the United States, and the Caribbean. The board could not be prouder of the efforts of our people to serve our customers and communities while continuing to deliver strong results for our shareholders.
Now, before we get to the formal part of the agenda, I'd like to briefly comment on some important areas of focus for Fortis during the past year. The board remains dedicated to driving progress in environment, social, and governance matters. In 2021, the Governance and Nominating Committee became the Governance and Sustainability Committee to better reflect our strategic focus on environmental and social issues. We also introduced a new measure in executive compensation to link incentive compensation to carbon reduction and climate change priorities. You'll learn more about our performance over the year and our goals for the future during management's presentation. The Fortis board also enhanced its board diversity objectives. This year, we're very proud to put forward 13 highly qualified director nominees who provide diverse views, strong, relevant experience to the Fortis board.
Among the nominated directors are seven women, two individuals who self-identify as visible minorities. This diversity is an important milestone as we continue to progress toward ensuring that our board, our management team, and our workforce better reflect the communities we serve. Now as we reflect on the progress over the past year and the opportunities that lie ahead, your board remains committed to the long-term interests of shareholders and delivering a cleaner energy future. With me at the podium this morning are Dave Hutchens, your President and Chief Executive Officer, and Jocelyn Perry, Executive Vice President and Chief Financial Officer, and Jim Reid, Executive Vice President, Chief Legal Officer, and Corporate Secretary. Other members of our board of directors and management team are also present with us in person today.
The formal business of this meeting will follow the agenda as set forth in the notice of meeting, including the proxy circular with five main items of business. We'll begin with receiving the financial statements for the year ended December 31, 2021, followed by the election of your directors, the appointment of your auditors for 2022, and authorization of directors to fix their remuneration, and our annual advisory vote on the company's approach to executive compensation. The final piece of business will be the consideration by shareholders of a resolution approving an increase in the number of common shares available under the employee share purchase plan. Following the conclusion of the formal portion of the meeting, we'll hear management's remarks from David and Jocelyn.
Now, as in prior years, to expedite the meeting, several shareholders have agreed to move and second the formal motions, and I will call on them as appropriate. Computershare Trust Company of Canada acts as our transfer agent and registrar of our common shares, and with your consent, I appoint Colleen Nielsen of Computershare and Bernard Young of Fortis to act as scrutineers for this meeting. I further appoint Jim Reid, Executive Vice President, Chief Legal Officer, and Corporate Secretary of Fortis to act as secretary for the meeting. Now I'll ask Jim to read the scrutineer's report. Jim?
We have received an affidavit from Computershare, our transfer agent, that the documents required to be delivered to shareholders were mailed on or before March 31st, 2022 to the shareholders of record as of March 18th, 2022. The scrutineers have confirmed that there is a quorum present. Notice of the meeting having been given within the time prescribed in the bylaw and a quorum being present, I can confirm that this meeting is validly constituted for the transaction of business.
Great. Thank you, Jim. The secretary has reported that the notice was properly given and that a quorum is present, so I therefore declare this meeting validly constituted for the transaction of business. During the meeting, I may pause from time to time to check in with the secretary as we coordinate both in-person, the in-person and virtual experience for our participants. We'll begin today by presenting our consolidated financial statements for the year ended December 31, 2021. The 2021 annual report was mailed to shareholders who indicated their preference to receive a printed copy, while others were able to access the electronic version via our website. The Fortis consolidated financial statements begin on page 59 of the annual report. The unqualified opinion of the auditors, Deloitte LLP, is found on page 56 of the report.
Now, before we move to our next item of business, I'll take a moment to explain our voting practice. The majority of votes are voted today by proxy. These votes have been tabulated by Computershare up to the proxy cutoff time of 10:30 A.M. Newfoundland Daylight Time on Tuesday, May 3, 2022. Commencing with the introduction of our majority voting policy for the election of directors at the 2010 annual meeting, we implemented a ballot vote to ensure that all shares voted at the meeting, both in person and virtually, as well as all shares voted by proxy, are tabulated and reported. I'm pleased to report that all resolutions today received strong support from shareholders voting by proxy. Since the majority of shareholders have expressed their wishes by proxy, we can confirm that all matters considered by the shareholders at this meeting have been approved.
We do, though, want to tabulate all votes cast by proxy as well as all votes cast live during the meeting. To complete your vote in person today, we ask that you pass your ballots to the scrutineer or raise your hand so that your ballots may be collected. For those attending virtually, we will open up voting for all resolutions at the conclusion of the reading of the first motion. Voting will close after the reading of the final motion, and as a reminder, if you have already voted by proxy, you do not need to revote. Okay, let's move to the election of directors for 2022. The board of directors of Fortis is proud to put forward 13 highly qualified candidates for election to the board this year. The nominated directors are pictured on the current slide.
Their biographies are included in the proxy circular. 12 of the nominated directors currently serve on the board. Our slate of directors is committed, active, and engaged, and working hard on your behalf to oversee the affairs of the corporation. One of our nominees is standing for election for the first time, Lisa Crutchfield. Lisa has over 30 years of leadership experience in energy and utility industries and is a managing principal of Hudson Strategic Advisors LLC, an economic analysis and strategic advisory firm to the energy, financial services, and government sectors. We welcome the extensive experience that Lisa will bring to our board, and we're very pleased to propose her for nomination. Now I can report that all of the nominated directors are independent, except for Dave Hutchens , your President and CEO. The resolution to elect directors is set out on page 13 of the circular.
I believe Anthony Keeping has a motion to place before us.
I'm assuming the mic's on. Yes.
Yep.
I am a shareholder of Fortis, and I hereby move that Tracey C. Ball, Pierre J. Blouin, Paul J. Bonavia, Lawrence T. Borgard, Maura J. Clark, Lisa Crutchfield, Margarita K. Dilley, Julie A. Dobson, Lisa L. Durocher, Douglas J. Haughey, David G. Hutchens, Gianna M. Manes, and Jo Mark Zurel be elected as directors of Fortis to hold office until the close of the next annual meeting or until the successors are elected or appointed.
Thanks very much, Anthony. I'll ask Julie Avery to second that motion.
I second the motion.
Thank you, Julie. We'll now proceed to a vote. I remind you that the board of directors and management recommend that you vote for all of the nominated directors. For those of you online who are registered shareholders or appointed proxy holders and have not yet voted during the meeting, you can vote now by selecting the polling icon on the navigation bar at the top of your screen. For those of you in the room who are entitled to vote, if you haven't already returned your ballot, please raise your hand so that the scrutineers can collect it from you. I'm advised that the tabulation of shares represented by proxy confirms that each of the nominees received more votes in favor than votes withheld, and that no nominee received less than 97% favorable vote. Based on the proxy vote, I can declare your directors elected.
Now I'm going to ask each one of our directors present to stand as I call their name and, please hold your applause, until we've introduced all of them. Tracey Ball, Pierre Blouin, Paul Bonavia, Lawrence Borgard, Maura Clark . Or sorry, Maura Clark. Lisa Crutchfield, Margarita Dilley, Julie Dobson, Lisa Durocher, David G. Hutchens, Gianna Manes, Jo Marc Zurel, and yours truly, Doug Haughey. Ladies and gentlemen, your Fortis board of directors, and I'm very proud to be serving with each and every one of them. Our next item of business is to appoint the auditors for 2022 and to authorize directors to fix their remuneration. In this regard, I believe that Peter Upshall has a motion. Peter?
I hereby move that Deloitte LLP be appointed auditors of Fortis until the close of the next annual meeting or until their successors are appointed, and that the directors be and are hereby authorized to fix the remuneration of the auditors at such amount as they may, in their discretion, determine.
Thank you, Peter. I'll ask Ashley Pike to second the motion.
I second the motion.
Thank you, Ashley. So is there any discussion? Hearing none, we'll now proceed to a vote. The board of directors and management recommend that you vote for the appointment of the auditors. Based on the proxy information that we've received, over 99% of the proxy votes were cast in favor of the appointment of Deloitte LLP as auditors. I therefore declare that Deloitte LLP are appointed auditors for Fortis Inc. for 2022 and that the directors are authorized to fix the remuneration. Now the next item of business is the advisory vote on the Fortis approach to executive compensation. As part of the company's ongoing commitment to strong corporate governance, the board adopted an annual non-binding advisory vote to accept the company's approach to executive compensation.
The resolution is discussed on page 14 of the circular, and I'll ask Alison Fitzgerald to propose the resolution in this regard. Alison?
I hereby move on an advisory basis and not to diminish the role and responsibilities of the board of directors of Fortis. The shareholders of Fortis accept the approach to executive compensation as described in the compensation discussion and analysis section of the Management Information Circular of Fortis, dated March eighteenth, 2022.
Great. Thank you, Alison. I'll ask Kealey Martin to second the motion.
I second the motion.
Thanks, Kealey. Is there any discussion related to this item of business? Okay, hearing none. Thank you. We'll now proceed to a vote. The board of directors and management again recommend that you vote for the advisory vote on the corporation's approach to executive compensation. The proxy results indicate that almost 93% of shares voted by proxy accept the company's approach to executive compensation and therefore I declare the motion carried. Our last item of formal business, everyone, is a resolution approving an increase in the number of common shares available under the second amended and restated 2012 employee share purchase plan. The full text of the relevant resolution is set forth on pages 14 and 15 of the circular.
To be effective, the ordinary resolution must be approved by a majority of the votes, in other words, 50% +1, cast by or on behalf of shareholders present in person or by proxy at the meeting. I'll ask Craig Vey to propose the resolution. Craig?
I hereby move that the ordinary resolution, which is set out on page 15 of the Management Information Circular of Fortis, dated March 18, 2022, be approved and adopted.
Thanks, Craig. I'll ask Denise O'Keefe to second the motion, please.
I second the motion.
Thanks, Denise. Is there any discussion related to this item? Hearing none, we'll now proceed to a vote. The board of directors and management again recommend that you vote for the resolution approving an increase in the number of common shares available under the amended and restated 2012 employee share purchase plan. The proxy results indicate that almost 99% of the shares voted by proxy approved the increase in the share reserve under the employee share purchase plan, and I therefore declare the motion carried. Everyone, all motions voted have now been moved and seconded and based on proxy results, have all been carried. We'll now proceed to close online voting for this meeting, and I will ask scrutineers to confirm to the secretary the results of the voting.
Everyone, while this is taking place, you know, I'd like to take the opportunity to thank our shareholders who took the time to vote their shares today, whether you voted in person or by proxy. We really do sincerely appreciate your continuing support of Fortis. I'll now ask our secretary to confirm the voting results of the five motions placed before the meeting this morning. Final vote results will be published this afternoon in a press release available on the Fortis website as well as filed on SEDAR and EDGAR. Jim, could you please confirm the results of the motions?
Mr. Chair, based on votes received by proxy prior to the proxy cutoff time and votes received online and in person today, all motions have been carried.
Great. Thank you, Jim. Everyone, based on the report of our secretary, I can confirm that all motions brought before the meeting have been carried. This concludes the formal business of the meeting. Before I pass things over to David and Jocelyn for management's presentation, I'll ask Greg Murphy for a motion to terminate. Greg?
Morning, everyone. I hereby move that the meeting be terminated.
Thank you very much. Gordon Payne, could you second the motion?
I second the motion.
Thanks, Greg. Thanks, Gordon. Everyone, I declare this thirty-fifth annual and special meeting of Fortis Inc. terminated. I'll be back with a couple of wrap-up comments at the end. Thank you, everyone.
Thank you, Doug. As a reminder for those online, to ask a question, select the messaging icon at the top of your screen. Type your message in the text box, and then click the Send button. If you're in the room today and would like to ask a question at the end of management's presentation, please proceed to the nearest microphone. I note that David and Jocelyn's statements this morning may include forward-looking information. Details regarding forward-looking information are on screen and can also be found in our annual report and is updated in our first quarter report to shareholders. Actual results can differ materially from our forecast projections included in the forward-looking information presented today. Unless otherwise indicated, all financial information referenced is in Canadian dollars. I will now pass things over to David and Jocelyn for management's presentation.
We are proven.
Proven.
Proven.
We are diverse.
Diverse.
Diverse.
We are strong.
Strong.
Strong.
We are growing.
Growing.
Growing.
We are Fortis.
Good morning, shareholders and guests. Thank you for joining us today. That video is so uplifting and sums up perfectly who we are and what we stand for. It's a great way to start our presentation of the 2021 performance of your company. To kick things off, I'll start by introducing our Fortis executive team. Please stand as I call your name. Previously introduced by Doug, we have Jocelyn Perry, Executive Vice President and Chief Financial Officer. Jim Reid, Executive Vice President, Chief Legal Officer, and Corporate Secretary. We also have Gary Smith, Executive Vice President, Operations and Innovation. Gary recently took on additional responsibilities with the retirement of Jim Laurito, our Executive Vice President of Business Development and Chief Technology Officer. We thank Jim for his insights, leadership, and commitment to Fortis. Nora Duke, our Executive Vice President, Sustainability and Chief Human Resource Officer.
After an incredible 36-year career with Fortis, Nora is transitioning to retirement at the end of June. Nora has played a significant role in the growth and success of Fortis. We are grateful for your dedication, leadership, and guidance. Thank you, Nora. We wish you all the best in your upcoming retirement. Jim Reid will assume oversight of sustainability, human resources, communications, and government relations, in addition to his legal and governance portfolio, effective July 1, 2022. Next up, I will introduce the CEOs of our utility subsidiaries. This week marks the first time we have all been together in person as a group since September 2019, and it's been fantastic. I ask that you stand as you're introduced, starting with Linda Apsey, ITC Holdings. Roger Dall'Antonia, FortisBC. Ruth Forbes, Fortis Turks and Caicos. Charles Freni, Central Hudson. Susan Gray, UNS Energy.
Richard Hew, Caribbean Utilities. Kay Menzies, BECOL in Belize. Gary Murray, Newfoundland Power. Jason Roberts, Maritime Electric. Janine Sullivan, FortisAlberta. Not in attendance today is our FortisOntario president and CEO, Scott Hawkes. Our leadership team spans east to west and north to south in 17 jurisdictions throughout North America. Great local leadership has been critical to our success, particularly in these recent years. Thank you for your dedication and commitment to the communities that we serve. There are key features of Fortis that shape our business and growth strategy, creating a low-risk, highly diversified value proposition for you, our shareholders. We are a premium North American electric and gas energy delivery business. With CAD 58 billion in assets, Fortis is 99% regulated and operates with a decentralized business model. Each of those CEOs I just introduced lead their companies locally.
I strongly believe that in order to make the best decisions, management teams need to be close to the customers, regulators, and communities that they serve. When you layer on our Fortis network, it allows us to share our best practices across our 9,100 employees and create more value than we ever could individually. We're leveraging our great businesses and local teams to find opportunities to grow. We remain committed to operational excellence. Foundational to our performance is a strong reliability and safety culture, as evidenced by another year of outperformance relative to industry averages. While we always maintain a critical focus on cyber and physical infrastructure security, we continue to enhance these protections through updated technology, awareness training, and quick information dissemination. Last year, we delivered steady growth while progressing our clean energy goals.
We invested CAD 3.6 billion of capital to support the continued delivery of reliable electricity and natural gas to our customers, which included CAD 600 million in cleaner energy investments. For 2022, we are on track with our plan to invest CAD 4 billion in our systems, with CAD 1 billion already invested in the first quarter. Wataynikaneyap Power is constructing an 1,800 km transmission line that will connect 17 remote First Nations communities to the Ontario power grid for the first time. The project is majority-owned by 24 First Nations in Northwestern Ontario. Fortis has a 39% ownership interest, and we are the project manager. We're 2 years into a 4-year construction schedule, and the project is more than 50% complete. During the peak construction period in 2021, there were approximately 1,000 workers at various remote construction sites.
We advanced many ESG priorities over the past year. Just yesterday, we announced a 2050 net zero greenhouse gas emissions target. This commitment builds on our existing reduction target to reduce Scope 1 emissions 75% by 2035. I am pleased to report that we have reduced Scope 1 emissions by 20% already since 2019. In 2021, Tucson Electric Power added 450 MW of wind and solar generation, close to doubling its renewable generation year-over-year. Tucson Electric Power plans to add an additional 2,000 MW of wind and solar and 1,400 MW of battery storage by 2035. Fortis also became a supporter of the Task Force on Climate-Related Financial Disclosures in 2021.
We recently issued our first TCFD and climate assessment report, which provides information to stakeholders about our strategy and our ability to successfully operate long-term in a world increasingly impacted by climate change. Transmission will be a critical component of the clean energy transition in the U.S., and ITC's footprint spans seven states in the Midwest that are right in the middle of key transmission opportunities. ITC also continues to make progress on the Lake Erie Connector project, which would deliver 1,000 megawatts of power between Ontario and PJM markets in the United States. We continue to take meaningful action to progress our sustainability strategy, and that strategy goes well beyond the exciting things happening in our electricity businesses. Approximately 20% of our business is natural gas, primarily located at FortisBC.
This utility is the largest distributor of natural gas in British Columbia and is driving innovation and taking steps to create a lower carbon future while providing customers with safe and reliable energy. As an example, FortisBC is investing in hydrogen and renewable natural gas opportunities. There's going to be tremendous innovation and new technology in the energy sector as North America transitions to cleaner energy, and Fortis will play an important role in this transition and will benefit from the long runway of investment and growth opportunities. Now I will turn things over to Jocelyn for an update on our financial performance as well as our five-year capital plan.
Thank you, David, and good morning to everyone. It does feel good to be back. In 2021, we delivered steady growth to our shareholders. Looking at our annual results, reported earnings per common share were CAD 2.61, CAD 0.01 higher than 2020, and adjusted earnings for the year was CAD 2.59 per common share, CAD 0.02 higher than 2020. The increase in EPS year-over-year was achieved despite a lower foreign exchange rate, which decreased EPS by CAD 0.10. Excluding foreign exchange impacts, adjusted EPS grew by CAD 0.12 or approximately 5% in 2021. The growth in 2021 was driven by our regulated utilities. Our largest utility, ITC, increased EPS by CAD 0.07, reflecting strong earnings growth at that utility. This is a good example of the organic growth taking place across our group of companies.
We had a good start to 2022. Q1 2022 adjusted net earnings were approximately CAD 369 million or 78 cents per common share. As David mentioned, during the first quarter, we made capital investments of CAD 1 billion and our 2022 CAD 4 billion capital plan remains on track. This past October, we rolled out our new five-year CAD 20 billion capital plan through 2026. Reflecting approximately CAD 4 billion of average annual investment in our utilities. This is the largest five-year capital plan in our history. The plan consists virtually of all regulated investments with a diverse mix of projects supporting rate-based growth across all our utilities. With investments spanning the entire energy delivery chain, approximately CAD 3.8 billion of the five-year capital plan is allocated to cleaner energy investments aimed at improving our already low carbon footprint.
Our five-year capital plan is low risk, balanced, and highly executable. Large projects valued more than CAD 200 million account for just 15% of our capital plan. We are focused on responsible, cost-effective investments that provide the most value for our customers. The plan is expected to increase rate base by over CAD 10 billion from approximately CAD 31 billion in 2021 to nearly CAD 42 billion in 2026, supporting an average annual rate base growth of approximately 6%. We were active in the debt capital markets again in 2021 with over CAD 1 billion in long-term debt raised at attractive rates right across our businesses, highlighted by ITC's inaugural green offering. With the backdrop of a rising interest rate environment, several long-term debt issuances were accelerated in 2021 and again in 2022, locking in those attractive rates.
While our regulated utilities, we finance our debt at Fortis to refinance the debt at Fortis, but then we issued debt at our subsidiaries to support their capital programs. To date, in 2022, approximately CAD 900 million in long-term debt was issued in the first quarter across our businesses. We have just amended our CAD 1.3 billion corporate revolving credit facility to incorporate sustainability-linked pricing adjustments with associated, which is associated with certain diversity and environmental goals. Pricing may increase or decrease under the facility based on performance about diversity goals related to representation of females and visible minority or indigenous persons on the Fortis board, as well as reducing annual Scope 1 GHG emissions along our path of achieving a 75% reduction by 2035.
Our CAD 20 billion capital plan is expected to be primarily funded with cash from operations, debt issued at our regulated utilities, and our dividend reinvestment program. The funding plan will allow us to maintain a steady capital structure through 2026. This plan, coupled with Fortis' low business risk profile, provides financial flexibility with CAD 3.3 billion available on our credit facilities and positions us comfortably within our existing investment-grade credit ratings. With that, I'll turn the call back to David.
Thank you, Jocelyn. Our long history of achieving strong shareholder returns continued in 2021, with a 1-year total shareholder return of 21.8%. Looking back over a 20-year timeframe, Fortis has delivered an average annual total shareholder return of approximately 13% or 975% in total, exceeding the returns generated by the benchmark indices. If we look back over the last 5 years, our annual capital expenditures increased 20%. Our mid-year rate base increased 28%. Our 5-year capital plan increased 54%, and our market cap grew by 74%. These metrics speak to the consistent performance Fortis is known for. Consistency is what this bar chart is all about.
In 2021, we increased our dividends paid per common share to CAD 2.05, an approximately 6% increase compared to 2020, marking 48 consecutive years of dividend increases. Looking ahead, we remain committed to building on this record through the execution of our growth strategy and a targeted 6% average annual dividend growth rate through 2025. At Fortis, our value proposition is strong and getting stronger. We are a group of well-run, regulated businesses with broad regional diversity. We have a highly executable, low risk, 5-year capital plan that results in an annual rate base growth of 6%. We have a long runway of additional investment opportunities that will be needed to transition to cleaner energy and support reliable energy service.
With 93% of our assets being transmission and distribution, we have a light environmental footprint and have made commitments to make it even lighter. Our strategy is simple: to be a premium company to all of our stakeholders, our employees, our customers, communities, planet, and of course you, our shareholders. I would like to thank all of our employees and our utilities, whose dedication day in and day out allows us to provide exemplary service to our customers. My thanks and gratitude to you, our shareholders, for investing in Fortis and for joining us today. After this meeting, we would have traditionally had the opportunity to socialize at a meal across the hall. Today, however, we have decided to take a more safety-conscious approach to this in-person meeting because of COVID-19, and to reduce its transmission.
In lieu of hosting that lunch, however, we will be donating to a local community organization to provide food security assistance to those who are in need. Lunch will be served next year. I'm looking forward to the lobster and the cod au gratin. That you can count on. With that, I'll turn things over to Stephanie to facilitate our Q&A session. Thank you.
Thank you, David and Jocelyn. We'll now move to the question-and-answer period. To get started, maybe I'll open it up to the floor in the room here to see if anyone has any questions.
Yes, you can just approach the mic and go ahead and ask it.
Max Crane, shareholder. This is more of a compliment to the board of directors for providing the captioning on the left and then on my right way. As a hard of hearing and person, it's a blessing. I thank when I approached Mr. Perry a number of years ago about this, he agreed with it and brought it to the board. I would like to add to that captioning, if possible, if the captioning could be on the video portion shown at the top of the screen in this auditorium. I have experienced this in previous conferences with the Hearing Association, which I've attended nationally and internationally over my number of years.
It is possible, I think if the hard of hearing people who are shareholders couldn't look straight up and have a look to the side or to the left or to the right or sit appropriately, or if it's straight before them, they would understand the proceedings a lot clearer. Again, I thank you, board of directors, and especially Mr. Perry, for making this possible, and hope this suggestion will go through and at our next annual meeting. Thank you very much.
Thank you. Appreciate that. We will take your comments to heart. I know I saw Karen McCarthy, who runs all of this, shaking her head up and down. We'll make sure we address those concerns. Thank you for the compliments for the board. I couldn't agree more. Any other questions? Yes, please.
Good morning.
Good morning.
Ann Hughes, I wanted to commend the Board of Fortis because 21 years ago, I stood up at a shareholders meeting, excuse me, and said that there was one female, Dr. Linda Inkpen, on the board of directors. 13 years later, there were two. It's an absolute pleasure to see 7, I believe, this time on the board of directors. Congratulations to Fortis for achieving this. Thank you.
Thank you. If I'm not mistaken, were you here in 2014 as well? Because yes, I remember you standing up. I was sitting in a different seat, and I remember you standing up, and it was when Tracey Ball, I think, joined the board. Ida Goodreau was on the board, and you said, "It's good to see two. When are you gonna get more?" I have to say that, because of the leadership of folks like Barry Perry, who's in the audience here today, and the focus of Douglas Haughey as chair and David Norris as prior chair, that kind of drive and those kind of comments and understanding the value of diversity on a board have been, again, taken to heart.
A lot of people have policies, we can show you. That's a testament to this company and the management team and the board of directors. Any other questions? Stephanie, are we getting any online?
Yes, we do.
I'm not begging for them, but if we have ones online, I'd love to address them.
Yes, we did have a couple questions that were pre-submitted ahead of the meeting, from Mr. Derek Hutchens. I will read those out loud. First of all, let me on behalf of all shareholders thank all 9,100 company personnel for helping to make this company as successful as it is. Thank you. First question is addressed to management. Mr. President, the board being extremely proud of its 40 years of consecutive dividend increases states that with the help of its aggressive projected rate-based growth over the next 5 years, it will be able to maintain its 6% average annual dividend growth. With its adjusted dividend payout ratio of almost 80%, can you shed some light on how you plan to position the company for future growth through acquisition given this policy? Thank you.
Yes. Thank you, Mr. Hutchens, for that. I guess it's odd for Mr. Hutchens to say thank you to Mr. Hutchens, but that is the name of the person who submitted the question as well. But thank you, Mr. Hutchens, for those questions. I hope you're listening online as well. I hope all things are well with you. I'll say that the CAD 20 billion five-year capital plan that we have is. While it's a big capital plan, and as I've said many times, it's low risk and highly executable, we think the best way for us to provide value is to grow organically.
We are not just looking at that CAD 20 billion-dollar capital plan, but looking at additional opportunities I mentioned in that long runway as we go into a cleaner energy transition period, and find additional growth opportunities. That's our number one organic growth view that we have, because again, that does provide the best value for you as a shareholder, that 1-for-1 dollar investment turning into rate base and eventually earnings. But also, you know, we are a management team with fiduciary duties, and we look at everything that we can out there in the market to find additional opportunities for creating value for you as shareholders. All of those things are in our view and in our mind.
Great. We have three more addressed to the chairman. Mr. Chairman, Fortis has a unique operating model, as you are aware, but I was wondering if you've ever considered that there may be a lot of, in quotations, senior management fat, given all the independent board members and senior management personnel at each of the subsidiary companies. Thank you.
Well, great to hear from you, Derek. You know what? Look, I think it's a reasonable question. In our view, I think the answer is actually quite the opposite. You know, we strongly believe in the autonomous operating model of Fortis. You know, largely with an independent board focused on local issues in local markets with local regulators. You know, honestly, if you look at the results, it's hard to argue with the Fortis model. We've generated those results, and a big reason for that is that local focus. You know, I'm looking at our subsidiary CEOs right here, and you know, I can tell you that I'm convinced that they can deliver better results by operating with an independent board and largely autonomously in their local regions.
It seems to me that, you know, if we can generate those kinds of results with a business model that may be a little more expensive than others, it's still definitely the right thing to do. I think the board has concluded that the benefits clearly outweigh the costs, and the results clearly speak for themselves.
Great. Two more follow-up questions. Mr. Chairman, in your management information circular, you provided pertinent information about your named executives, including board members. In the future, may I suggest that the same information be provided for the full list of company senior executives listed in the annual report? Thank you.
That's an interesting one. So Derek, the way I would look at it is that, you know, there's four sort of principles of executive compensation. You know, it has to be performance driven, it has to be balanced in terms of objectives. We have to pay competitively, and it has to be risk balanced or risk managed, so we don't get results that we didn't expect from compensation systems. I can give you high confidence that that's the way we run our business, and that we pay at the median, and that our salaries for all of our executives are competitive with the market, and we have processes in place to make sure they're not outlandish. You know, the idea of disclosing beyond our top five named executive officers, number one, it's not required.
Number two, it's highly unusual. I don't know of another company that would do that. You know, I'll acknowledge it's more prevalent in public enterprises, government enterprises, you know, where we have sunshine lists and whatever. I think that the Fortis shareholder is benefiting from not having that kind of disclosure. I can tell you with virtual certainty that many of our executives don't want their compensation published. You know, it would probably put the company at some kind of a competitive disadvantage. Look, I'm you know, I hear you, but this is one where I don't think we'll be doing that anytime soon.
Thank you. Last question for you, Mr. Chairman. Many of your board members and senior management personnel serve on the boards of various subsidiaries. Do they receive directors' fees or similar compensation from the subsidiaries? If so, will you put a stop to this policy immediately at this? In my opinion, it's double-dipping. Thank you.
Oh, Derek, you're going deep today. Look, yes. I'll say yes. We do have board members and executives who serve on subsidiary boards, and they do receive the normal board fees that would be payable to those board members. When you think about it makes sense, right? Directors of those independent subsidiaries have a fiduciary obligation primarily to that company.
It makes sense to treat our executives who are directors of those companies and one or two of our board members here to treat them the same as the independent directors on that board. I can also tell you that, and I think this is particularly important, in the case of our executives who are serving on those subsidiary boards, our policy is that we will independently benchmark their total compensation, and we include those board fees in that total. You know, to say it's double-dipping, I think is wrong. It's not. The last thing you mentioned was board members. Fortis board members who are serving on subsidiary boards. We have two directors who do that now.
Margarita Dilley chairs the Central Hudson board. Tracey Ball chaired the FortisAlberta board and is currently on the FortisBC board. I can tell you, they ought to be compensated for the work they do on those committees because they are vital contributors to those boards. I guess the corollary to all of that, we get huge benefit from our executives and directors sitting on those subsidiary boards. You know, I always talk about communication, coordination and cooperation across businesses and that is one terrific way to make it happen. You know, Derek Hutchens, I hear you, but I think it's the right thing to do, and we've carefully considered it, and we're probably gonna continue to do it.
Thank you. We did receive one more question here online from Richard Duggan of VOCM News. This question is for Mr. President Hutchens. Can you give some details on Fortis' plans moving forward, specifically in Newfoundland and Labrador? Any big plans or projects coming up that you'd like to highlight? Thanks.
Yeah. There aren't any large projects coming up in the near future. As we have said over the years, my predecessor has said it, I've said it, you know, we're interested in being more involved in the energy plan here in Newfoundland. You know, we will raise our hand and do what we can to help solve the energy issues that, of course, every province and every state within our jurisdiction faces. We would love to look for additional opportunities and actively do that. I guess take this as notice. We've always got our hand up to look at, you know, additional things to do here in Newfoundland and Labrador.
Great. One more question that came in. This question is also for management. How confident are you that you can reach the 75% GHG reduction target by 2035? Can you please elaborate?
Yeah, that's a great question, and I would love to elaborate. How much time do you have? Because this is one of my most exciting things to talk about. If you ask our shareholders what are the top three things that they're looking for, obviously they're looking for growth, they're looking for low risk, and they're looking for a great ESG story. As I mentioned, we start with a great ESG story by being primarily a transmission and distribution company. That little bit of percentage, that percentage that we have as generation, fossil generation, which is only 5% of our assets, is where we're focusing a lot of our energy to remove that. Pun intended, I guess. A lot of our focus is removing that fossil energy.
The way that we're doing it is very straightforward and you can see it. You can see it in our documents. You can see it in our presentations. Most of this emissions reductions will happen in Arizona as we shut down fossil fleets there and replace them with renewable energy, wind and solar and battery storage. That's a great story. It's a clear path. We don't need any new, brand-new fancy technology or innovation to do it. We know exactly what to do. We can do it cost-effectively, actually saving our customers money in most cases. We have that clear path.
We have such a clear path for that 75% reduction that, you know, and having 20%, we just already in the first two years of setting that target have reduced those emissions by 20%. We felt that it was so clear we needed to stretch a little bit, and that's why we added that net zero goal just the other day. That is so that we can continue that focus where everybody needs to look, which is having that net zero world out in that future in 2050. As we go from here to 75%, clear as a bell how we're gonna get there, you know, obviously things can change along the way and we'll adapt, but we absolutely are confident in being able to hit that target.
Now we've raised the bar and said, now we gotta remove that last 25%. We'll be paying attention to new technology as it develops and making sure that we can get there. That's what you as shareholders want. That's what our stakeholders want. That's what our employees want, and that's what our customers want. That's a great spot to end on unless there's other questions.
No further questions. Actually, this concludes our Q&A session, online, so I'd like to turn it over to Doug for final comments, please.
Okay. Well, thank you, Stephanie, for hosting this today. Much appreciated. The first thing the chair wants to do is apologize to Maura Clark. The chair obviously is an idiot and can't read. But then you knew that already. Anyways, we wanna say thanks so much for the questions today. They really are an important part of an annual and special meeting. Special thanks, I think are very much in order to everyone who helped organize this hybrid meeting. As you can imagine, it's very complex. That includes some more critical Fortis employees, the audiovisual teams who are in the back, and obviously the staff of the Holiday Inn.
On behalf of my board colleagues, a great group of people, we'd like to thank the entire Fortis team, including the folks from all across all of our businesses, for the strong performance in 2021. It was exceptional given some very challenging times. We all thank you for that. We also want to thank all of our shareholders who participated both in person and online today. Thank you for the continuing support of the company. It's much appreciated. That's a wrap. I declare the meeting closed. Thanks, everyone. Take care.