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Southern Co. chairman and chief executive Tom Fanning’s pay fell sharply last year to $8.44 million, but most of the reduction is the result of an accounting change for the leader of Georgia Power’s parent company.
The pay hit could have been bigger had Southern’s board not adjusted a goal midstream, diluting the impact on Fanning and thousands of other eligible headquarters employees from more than $1 billion in overruns and delays at a Southern power plant in Mississippi.
Still, the pay-for-performance chunk of Fanning’s compensation dropped to about $1.2 million, down nearly $900,000 from the year before. The company said it exceeded targets in key areas such as safety, reliability and customer satisfaction. But it fell below two profit goals, largely because of the Mississippi plant problems. But the compensation committee shifted one of the profit goal calculations for headquarters employees in order to ease the effect on employees not part of the company’s Mississippi Power unit.
As a result Fanning received hundreds of thousands of dollars more than he would have otherwise.
Fanning’s salary rose 3 percent to $1.15 million, and the value of his stock and options awards increased. But changes in the way the company accounts for the value of his pension caused a nearly $4 million decline in his total compensation, though it doesn’t reduce Fanning’s actual benefits.
Southern disclosed Fanning’s compensation in advance of its annual meeting May 28.
New York City comptroller John Liu, representing city pension and retirement funds, is pushing a shareholder proposal for Southern’s chairmanship to be held only by an independent director. Having an employee as chairman is “a conflict of interest that we believe can result in excessive management influence on the board” and can lead to higher executive compensation, according to Liu’s submission.
Southern’s board is against the proposal. The company said it wants flexibility to consider the chairman’s role case-by-case. It also noted that only independent board members are on the committee that advises on executive compensation.