Energy Biz - July/August 2008 - (Page 46) “The definite, overarching theme is pay is up for executives in the energy business,” noted Chris Crawford, executive director at Longnecker & Associates, a Houston-based executive compensation company that consults for energy and utility companies. He attributed the rise in CEO compensation to the limited supply of seasoned energy talent and the increasing demand for their services. “In a super-regulated environment it takes a sophisticated individual to run an energy company,” Crawford said. A number of baby boomer executives are reaching retirement age, and there’ll be fewer seasoned CEOs in the marketplace. Hence, utilities have to keep CEO compensation packages competitive or face losing their talent. After the oil boom crashed in the 1980s, which also affected utilities, many business people avoided entering the energy field, causing a dearth of executive talent who were in their thirties and forties. “Everyone is going after the same people, exacerbated by companies starting up and investors looking at energy as a good business. Money is flowing in but there aren’t that many Michael Jordans of business that create shareholder value and jobs,” Crawford stated. In fact, SNL Energy’s 2008 survey of the top 100 utility CEOs confirms that compensation packages are on the rise. The top five earners for 2008 were: J. Wayne Leonard, CEO of Entergy Co., whose entire compensation package was $26.2 million, including $15.7 in stock options; followed by $21.3 million for Murry Steven gerber, CEO of Equitable Resources, a natural gas company; $19.7 million for Michael g. Morris, CEO of AEP; $19.5 million for John W. Rowe, CEO of Exelon Corp.; and $15.6 million for Anthony J. Alexander, CEO of First Energy Corp. CEOs of 16 utility companies earned upward of $10 million in compensation, and 44 CEOs earned more than $5 million. Pay for performance has not been inhibiting the rise of CEO compensation. “Just because a board scrutinizes CEO pay doesn’t mean it’s reducing compensation. It’s trying to make sure compensation is aligned with shareholder interest and stock performance,” Crawford added. How can CEO pay packages rise when boards are tying pay to performance? Ed Metz, director of SNL Energy, UTILITy eXecUTIVe comPenSaTIon [year ending Dec. 31, 2007] cOMpany Entergy Equitable Resources American Electric Power Exelon FirstEnergy Dominion Resources Sempra Energy Williams Cos. Constellation Energy Group Wisconsin Energy Cheniere Energy Edison International Southern Company Atlas America FPL Group Energy East Duke Energy PPL Mirant Pepco Holdings Alliant Energy Xcel Energy PG&E Dynegy Progress Energy industry Power Natural Gas Power Power Power Power Power Natural Gas Power Power Natural Gas Power Power Natural Gas Power Power Power Power Power Power Power Power Power Power Power executiVe J. Wayne Leonard Murry Steven Gerber Michael G. Morris John W. Rowe Anthony J. Alexander Thomas F. Farrell II Donald E. Felsinger Steven J. Malcolm Mayo A. Shattuck III Gale E. Klappa Charif Souki John E. Bryson David M. Ratcliffe Edward E. Cohen Lewis Hay III Wesley W. von Schack James E. Rogers James H. Miller Edward R. Muller Dennis R. Wraase William D. Harvey Richard C. Kelly Peter A. Darbee Bruce A. Williamson William D. Johnson age 57 54 61 61 56 53 60 59 53 57 55 64 59 69 52 64 60 59 56 64 58 61 55 48 54 tOtal cOMp. 26,187,510 21,319,134 19,659,476 19,491,556 15,583,672 15,118,207 14,152,180 13,939,210 13,903,696 11,761,866 11,749,571 11,733,648 10,957,921 10,823,317 10,525,923 10,243,787 9,914,319 9,674,133 8,569,571 8,434,769 8,354,512 8,033,106 7,821,073 7,757,804 7,744,448 deferred cOMp. 20,024,698 -9,335,744 120,077 5,940,674 130,134 16,167,695 -6,909,068 1,457,322 -22,948,717 9,232,125 -23,099,014 -68,577,086 141,463 394,295 2,234,889 3,135,671 703,698 2,493,777 -611,134 sOurce: snl energy 46 e n e rgyb i z July/August 2008
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