Dive Summary:
- As utilities continue to deal with public dissatisfaction, regulatory condemnation and a struggling economy, they attract critics due to one simple fact: CEOs in the U.S. on average earn 475 times the salary of the average U.S. worker.
- Of course, no single company is at fault — boards justify exorbitant CEO salaries by arguing they must attract the best in the business to compete; however, in a paper for the Conference Board, Charles Elson and Craig Ferrere argue that "peer-revenue" benchmarking creates a pointless inflated pay scale that drives CEO salaries through the roof.
To see what the top utility execs make for yourself, here is a list of the 10 highest paid utilities CEOs:
10. William H. Spence, Chairman, President and CEO of PPL Corp. received $5,120,325 in total compensation in 2011.
9. Debra L. Reed, CEO of Sempra Energy, received $8,179,678 in total compensation in 2011.
8. James E. Rogers, Chairman, President and CEO of Duke Energy, received $8,780,258 in total compensation in 2011.
7. Anthony F. Earley Jr., Chairman, President and CEO of PG&E, received $9,541,387 in total compensation in 2011.
6. Benjamin G. S. Fowke III, Chairman, President and CEO of Xcel Energy, received $9,676,420 in total compensation in 2011.
5. Theodore F. Craver Jr., Chairman, President and CEO of Edison International, received $10,843,523 in total compensation in 2011.
4. Kevin Burke, Chairman, President and CEO of Consolidated Edison, received $10,965,047 in total compensation in 2011.
3. Gale E. Klappa, Chairman, President and CEO of Wisconsin Energy, received $11,346,447 in total compensation in 2011.
2. Thomas F. Farrell II, Chairman, President and CEO of Dominion Resources, received $13,993,328 in total compensation in 2011.
1. Anthony J. Alexander, President and CEO of FirstEnergy, received $18,328,895 in total compensation in 2011.
From the article:
"... The goal here is not to foster resentment; rather, it is to create an atmosphere whereby corporate pay standards are fully transparent and are reasonably assessed so as to avoid potential complications and controversies. Indeed, that is gist of not just the Hay Group’s theories but also those of the Conference Board, which emphasizes that boards should directly tie executive pay and shareholder value.
Utilities, of course, are attuned to their local communities and the financial pressures that their stakeholders now face. Keeping salaries in line and avoiding the unwanted attention is therefore paramount. As the economic engines gear up, the eventual rewards should be distributed fairly and throughout the value chain."