stockholders won't link exec pay, performance
At the company's annual meeting, shareholders also voted down a
proposal to split the jobs of CEO and chairman -- and voiced
concerns about their dividends.
By Mike Meyers
Minneapolis Star Tribune
Thursday, May 23, 2007
Shareholders of Xcel Energy Inc. on Wednesday defeated a
proposal to curb executive pay and influence, but the meeting
revealed that a significant number of shareholders are restive
about the idea of the same person serving as CEO and chairman.
A proposal to bar the CEO from also holding the title of board
chairman got 35 percent of the votes cast, the same percentage
as last year.
The annual meeting at the Minneapolis Convention Center also
included calls from shareholders for higher dividends, and
criticism that Xcel has kept a board member whose activities as
a director of United Health Group Inc. are subject to
investigations by the Securities and Exchange Commission and by
other oversight bodies.
Xcel announced a 3-cent-a-share increase in its quarterly
dividend, effective in July. But the new 92-cent annual rate
did not satisfy some shareholders, who recalled that the annual
payout was $1.50 a share before 2002, when financial troubles
led the company to pare the dividend by half.
A shareholder who identified himself as Dan Ramirez said that he
was unimpressed by Xcel's annual dividend gains in recent years,
"a paltry 3 percent." Executive pay, he said, has risen faster.
Referring to the company-reported compensation of Xcel Chief
Executive and Chairman Richard Kelly, Ramirez said, "I think $11
million is obscene."
After the meeting, Kelly said that reporting rules can inflate
the estimated amount of an executive's pay.
He said he makes closer to $5 million, but that he has seen
newspaper accounts offering estimates of $4 million to $14
Actual pay "goes up and down by huge numbers," Kelly said,
depending on assumptions about stock performance.
In a speech to shareholders, Kelly said that investors have done
well over the past year.
"In 2006, Xcel Energy's total return was 30.5 percent, compared
with 22.6 percent for our utility peer group," he said.
Longtime shareholder Gerald Armstrong, of Denver, championed two
proposals: The first would have split the posts of chief
executive and chairman of the board.
That proposal was defeated.
The second proposal would have linked executive pay to Xcel's
performance compared with peer companies, limiting bonuses.
"Why not?" Armstrong said. Pointing to Kelly, he said that the
CEO looked to have had his hair styled before the meeting. Xcel,
Armstrong said, should treat Kelly as he treats his barber.
"You don't leave tips unless the work is done well," he said.
The proposal to rein in pay won less than 16 percent of the
Armstrong also said that Xcel erred in keeping Douglas
Leatherdale on its board after the U.S. Securities and Exchange
Commission began a probe into charges of backdating stock
options at UnitedHealth Group, where Leatherdale, who formerly
headed the St. Paul Companies Inc., also is a board member.
He also said that consulting firm Towers Perrin should not be
evaluating executive and director pay, a situation that he said
encourages logrolling on compensation for officers and
Leatherdale heads Xcel's compensation committee, but he was not
a member of UnitedHealth's compensation panel. Kelly later
"We shouldn't rush to judgment," Kelly said, referring to the
ongoing federal investigation into UnitedHealth.
Mike Meyers • 612-673-1746 •