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Xcel 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 million.

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 shares voted.

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 directors.

Leatherdale heads Xcel's compensation committee, but he was not a member of UnitedHealth's compensation panel.  Kelly later defended Leatherdale.

"We shouldn't rush to judgment," Kelly said, referring to the ongoing federal investigation into UnitedHealth.

Mike Meyers 612-673-1746 meyers@startribune.com

http://www.startribune.com/535/story/1203030.html