SHAREHOLDERS TO PUT LIMITS ON SEMPRA EXECUTIVE PAY
“Felsinger’s salary is a graphic example of the grossly disproportionate salaries that CEOs continue to feast upon even in our current economic malaise. It is offensive in many ways, including the fact that it is partially paid by themoney we pay SDG&E montly.” – Michael Shames, Utility Consumers Action Network (UCAN)
By Miriam Raftery
July 8, 2010 (San Diego) Stockholders at Sempra Energy, parent company of San Diego Gas & Electric Company (SDG&E), have approved a “say on pay” clause giving them power to restrict executive compensation. The vote came in may, following disclosure that Sempra’s chief executive, Donald Felsinger, was the highest-paid executive in San Diego County last year with a $20.9 million annual salary and benefits package, plus a $35 million golden parachute retirement package he woudl receive if the company is ever sold.
SDG&E customers pay indirectly for Felsinger’s salary, said Michael Shames, director of Utility Consumers Action Network (UCAN). “It mostly comes out of shareholder hides,” he noted. But he added, “Felsinger’s salary is a graphic example of the grossly disproportionate salaries that CEOs continue to feast upon, even in our current economic malaise. It is offensive in many ways, including the fact that it is partially paid by the money we pay SDG&E monthly.”
He added that because of Sempra’s holding company structures, government regulators have no control over what the CEO and other Sempra executives are paid; only shareholders have a say – and they executed it with their recent decision, which Shames called “justified.”
Sempra has stated that 85% of Felsinger’s pay is based on the company’s performance, the Union-Tribune reported on July 3rd. The company had earnings of $1.119 billion last year and $1.113 billion in 2008.
“From where we sit, making the compensation package incentive-based is putting the emphasis in the right area for increasing value to shareholders,” Sempra spokesman Doug Kline said, according to the Union-Tribune.
Public outrage over exorbitant executive pay has grown as a result of the Wall Street collapse and the banking bailout. That outrage grew after some banks took federal bailout funds, then awarded massive bonuses to executives—an action that prompted California Senator Barbara Boxer to author legislation that forced banks which had taken TARP bailout funds paid for by taxpayers to return those hefty bonuses to the federal government.
President Barack Obama has appointed a “pay czar” to review compensations and cap pay at some companies that took bailout monies. In addition, Congress established say-on-pay requirements for all public companies as part of financial reform legislation now pending.
The recent action of Sempra stockholders made Sempra the first company in San Diego County to implement say-on-pay rights for shareholders.