Energy Biz - July/August 2008 - (Page 45) P f a o y R P e R f o R m a n c e New Trends in Executive Compensation By Gary M. Stern Illustration by Jürgen Mantzke year ago, The Associated Press reported that the salaries of CEOs of the Standard & Poor’s 500 had “skyrocketed and reached stratospheric heights so that half were making $8.3 million a year and more.” Almost one year later, The Wall Street Journal noted, “Directors, facing unprecedented pressure from investors, lawmakers and regulators, are increasingly cutting back the pay-setting power of CEOs.” Are the compensation packages of utility CEOs also being reduced by directors, or is utility CEO pay rising? A year ago, pay packages for utility executives had escalated due to deregulation, which made the profits of utilities as competitive as most other companies. Compensation packages including stock options and deferred payments had risen to $12 million to $20 million annually for CEOs at Constellation Energy, Exelon, Entergy, AEP and Duke Energy. In 2008, utility CEOs are facing two contradictory trends in compensation. An SNL Energy survey reveals that CEO compensation at most utilities has been rising. At the same time that pay packages are expanding, many boards are linking compensation to performance and not just rubberstamping bonuses and stock options. Nonetheless, many boards seem reluctant to crack down on rising CEO bonuses, continue to offer more stock options and sometimes yield to CEO demands even when the stock price is lagging. www.energycentral.com e n e rgyb i z 45 a http://www.energycentral.com
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