A group of public pension funds and a foundation that hold Southern Company stock are accusing the Atlanta utility’s board of “a decision to shield top executives from the impact of poorly executed key projects,” including the troubled Plant Vogtle nuclear expansion.
In an open letter to shareholders, the group urges votes against approval of the company’s executive compensation plan and against re-election of two members of the board of directors at Southern’s May 24 annual meeting.
Votes on compensation plans are non-binding, but board members must win election.
The letter says executive pay at Southern has become “increasingly decoupled from performance.”
It cited the Plant Vogtle expansion, run by subsidiary Georgia Power, and the Kemper “clean coal” plant in Mississippi. Both have been dogged by delays and cost overruns, and the Vogtle project’s future has been further clouded by the recent bankruptcy of a major contractor.
Southern CEO Tom Fanning last year received a compensation package worth $15.8 million, up 34 percent from 2015, the company recently reported. Most of the increase stemmed from a boost in pension values. His pay included a $2.7 million bonus on top of $1.3 million in salary.
The letter claims executive bonuses at Southern have been inflated by a decision by the board’s compensation committee to adjust earnings per share “to exclude the negative earnings impact of the Kemper project and certain other items.”
In both 2015 and 2016, the letter said, “these adjustments meant the difference between executives not even achieving the threshold (earnings per share) level for payout and comfortably exceeding the target level.”
The groups want shareholders to vote against re-election of directors Steven Specker and Dale Klein, both of whom are on the board’s compensation and nuclear operations committees.
The letter was signed by officials at the California State Teachers’ Retirement System; the Seattle City Employees’ Retirement System; the Local Authority Pension Fund Forum; and the Nathan Cummings Foundation. The Local Authority Pension Fund Forum is an association of 73 municipal pension funds in the United Kingdom, according to its website.
The letter did not indicate how much Southern stock the groups hold.
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