Record CEO Pay Increases Amid Rising Consumer Bills

High bills are linked to continuing inflation, the Iran-Ukraine war and rapid datacenter expansion. Most utilities operate as regulated monopolies, limiting customer choice and placing oversight in state commissions that critics say are industry-friendly.

The Guardian

Bill Ferhman of American Electric Power saw his pay jump $23 million (176 %) to $36.6 million; Tim Cawley of ConEd rose $4.9 million (33 %) to $20 million; Jason Wells of CenterPoint Energy received a $6 million increase despite missing a four-outage reliability threshold; Xcel’s Bob Frenzel earned a $3.1 million (23 %) boost after adjusting customer-satisfaction metrics; DTE’s Jerry Norcia was paid $14 million even though his company recorded high outage rates.

The Guardian

ConEd says executive compensation is meant to attract and retain leadership for its complex energy system and that most pay is performance-based and funded by shareholders. Southern Company asserts its program is tied to delivering clean, safe, reliable and affordable energy while keeping costs down. AEP adds that its structure aligns leadership incentives with the long-term interests of customers, communities and shareholders.

The Guardian

EPI’s Jonathan Kim calls the raises unjust and the salaries excessive, arguing that utilities appear to prioritize profit over reliable service. Chris Gilmer-Hill of the Michigan Environmental Justice Council says the bonuses mainly incentivize higher shareholder returns rather than improve reliability or affordability.

The Guardian

Utilities claim pay is performance-based, yet the EPI review shows raises for CEOs who missed reliability or customer-satisfaction targets, such as Ferhman’s 173,000 service interruptions and CenterPoint’s Jason Wells receiving a bonus despite failing the outage metric. No verification of the metrics is provided.

The Guardian

• “It’s the idea that we should be footing the bill for these people’s grotesquely large salaries,” — Jonathan Kim, Research Associate, EPI

The Guardian

• “Executive compensation is designed to attract and retain the leadership required to operate one of the most complex energy systems in the world, drive Con Edison’s nation-leading reliability and deliver on New York’s clean energy goals. The majority of executive compensation is performance based and paid by shareholders.” — ConEd spokesperson

The Guardian

• “The justification for these huge bonuses and pay is that it’s an incentive to increase shareholder profits, and that’s at the core of everything here,” — Chris Gilmer-Hill, Policy Manager, Michigan Environmental Justice Council

The Guardian

• “More policymakers are thinking about this,” — Jonathan Kim, Research Associate, EPI

The Guardian

State legislators in Michigan, Maryland and other states are reviewing caps on executive pay, while watchdog groups plan further analyses and regulators face mounting pressure to align CEO incentives with reliable, affordable service for ratepayers.

The Guardian