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Santee Cooper executives paid well, but study suggests not well enough [The Post and Courier, Charleston, S.C.]
[September 21, 2014]

Santee Cooper executives paid well, but study suggests not well enough [The Post and Courier, Charleston, S.C.]


(Post & Courier (Charleston, SC) Via Acquire Media NewsEdge) Sept. 21--Santee Cooper's top brass take home some hefty paychecks to provide power to 40 percent of South Carolina's residents, but a salary survey for the state-owned utility suggests they aren't making enough compared to their peers.



Based on a report obtained through the S.C. Freedom of Information Act, the state-owned utility's top seven executives last year earned between $255,000 and $788,000, including base pay, bonuses, retirement and other benefits. Performance-based bonuses ranged from $39,000 for the least senior executive to about $248,000 for the top decision-maker, Lonnie Carter.

Carter, president and CEO of the utility, earns a base salary of just over $450,000. Add in his bonus as determined by the board of directors using a consultant's formula and other benefits, and Carter's total earnings in 2013 topped out at nearly $788,000.


The report, prepared in April by New York City-based Towers Watson consulting firm, also shows the Moncks Corner-based utility's top executives in the lower third of their peer group's pay, suggesting a boost in their pay scale is needed to keep pace with similar-size power providers.

Carter's base pay and targeted total compensation, for instance, falls in the 31 percent range of his peers, according to the report.

The consultant ranked executives' salaries against other investor-owned utilities and public power providers with annual revenues and power-generating capacity in a range of half to two times that of Santee Cooper, which receives no tax dollars.

Santee Cooper's revenues for 2013 were $2.1 billion. Utility revenues used for the survey ranged from $1 billion to $4.1 billion. The names of the other utilities were redacted from the report provided by Santee Cooper. Spokeswoman Mollie Gore said it was because of privacy and competitive reasons.

Santee Cooper's electricity generating capacity is 5,099 megawatts, enough to serve about 2 million South Carolinians. Utilities used for the survey produced between 2,550 megawatts and 10,200 megawatts.

Peer pressure The purpose of the study was to allow the utility to attract, retain and motivate top management to remain competitive in the industry, said Laura Varn, Santee Cooper vice president of human resources management.

"We want to make sure it's competitive with the market salary," Varn said.

The annual incentive bonus is based on a number of factors established by the board.

"They are not gimmes," Varn said of the incentive payouts.

Besides individual performance, criteria include the relative cost of electricity per kilowatt hour, debt service, customer satisfaction and safety.

The board sets Carter's salary, while Carter approves the pay for other executives.

"He is not at the equal level of the peer group," Varn said of Carter's pay.

Leighton Lord, Santee Cooper board chairman, agreed.

"I worry that we don't pay them on par with their peers," Lord said. "Our executives are paid very conservatively for our industry." He said two utilities in the peer group have tried to hire Carter away. "It's a struggle with us," Lord said. "We want to make sure we don't lose someone to a competitor." He added that the board tries to keep pay for all of Santee Cooper's top executives at the same percentile against peers so one's pay scale isn't out of whack against the others.

"We are trying to keep Lonnie in place, and he is trying to keep the other executives in place," Lord said. "If I am a headhunter, I'm trying to hire people at the 25th percentile rather than the 75th percentile." The board reviews its top executives' salaries every six months to make sure they are not too far out of line, Lord said.

"Whether you think they (salaries) are high or low is an opinion, but they are not paid by taxpayers," he said. "Their pay comes from rates. Santee Cooper is self-sustaining." Santee Cooper increased electric rates an average of 3.5 percent each of the past two years, the first since 2009, to help pay for its portion of the $10 billion cost to build two new nuclear units with S.C. Electric & Gas Co. north of Columbia.

Carter received an 8 percent, or $33,000, raise 11 months ago, his first boost in nearly four years.

Staying put Carter, 55, has been with Santee Cooper for 32 years. He said other utilities have reached out to him over the past few years to come and work for them.

"Anytime a headhunter calls you, it's flattering," Carter said. "Sometimes they call, and I have zero interest. I'm not the only person they call." Carter does not intend to leave, though.

"I have no plans to go anywhere anytime soon other than to work," he said. "I have not looked for work since I came to Santee Cooper." Carter said he stays put because, "I have to believe I am making a difference and doing something particularly important. I am very much invested in Santee Cooper." He readily admits the future is unpredictable for any CEO.

"When you are an executive, you are one bad day from retirement," he said. "There are all kinds of reasons that you might not be here." As for his top executives' pay, which he approves, he said, for the most part, they are relatively new in their jobs so their pay is a bit lower than their peers who might have held their positions a bit longer.

Most members of Santee Cooper's executive management have been there at least two or three decades, but other than Carter, who became head of the utility in 2004, they joined the top-tier positions during the past three years.

"We try to keep a balance and pay the market and stay near the 50th percentile, and we try to be measured in what we do when it comes to compensation," Carter said.

Comparable pay Though Carter's salary may appear steep, considering the median household income in South Carolina is about $45,000, it pales when compared to his counterparts at much bigger investor-owned utilities in the Southeast region.

Kevin Marsh, CEO of Cayce-based SCANA Corp., parent of South Carolina Electric & Gas Co., pulls in a base salary of $1.3 million annually.

Added to cash awards, stock options and other benefits, his total yearly pay tops $5.2 million at the investor-owned utility. SCE&G, which serves much of the Lowcountry, has a generating capacity of about 5,200 megawatts, which puts it in the same category as Santee Cooper in the salary survey used by the company.

Lynn Good, CEO of Charlotte-based Duke Energy, earns total pay and benefits of $6.4 million, while her counterpart, Tom Fanning at Southern Co. in Atlanta, makes $7.6 million. Both of those utilities, with their affiliates, have generating capacity nine to 10 times larger than Santee Cooper.

Since the pay report was completed, two of Santee Cooper's top executives have retired.

Jim Brogdon, general counsel, left in June. He recently joined the law firm of Nelson Mullins Riley & Scarborough. His total earnings and benefits at Santee Cooper were about $418,000. He was replaced by former state representative Mike Baxley of Hartsville, who earns $250,000 a year as a base salary.

Also retired since the report was issued is R.M. Singletary, a senior vice president who earned $445,000 in total pay and benefits. He retired in April and was replaced by Pamela Williams. Her base salary is $234,200.

Reach Warren L. Wise at 937-5524.

___ (c)2014 The Post and Courier (Charleston, S.C.) Visit The Post and Courier (Charleston, S.C.) at www.postandcourier.com Distributed by MCT Information Services

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