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Despite the financial fiasco, nuclear executives busily planning for more bonuses

Even after nuclear catastrophe, SCANA execs eye bonuses, Post and Courier, BY STEVE BAILEY, 20Aug 17

So with consumers yelling for heads to roll, what is South Carolina Electric & Gas planning next? The largest stock buyback in the company’s history, which will help shareholders and bolster executive bonuses.   Kevin Marsh, chief executive officer of SCANA Corp., SCE&G’s parent company, has told us that he is “deeply disappointed and sorry” the utility has decided to abandon two nuclear reactors after spending $9 billion with its partner, state-owned Santee Cooper. The company says it wants to use its share of a $2.2 billion settlement with its bankrupt contractor’s parent to avoid more rate increases….
But SCANA has said almost nothing about its plan for a big stock buyback that will be important to growth in its earning per share. And earnings per share, or EPS, will be important to Marsh and about 250 other managers if they are to keep those bonuses coming……

At the end of June, SCANA had only $91 million in cash, company reports show. Thus, the utility must generate more than $1.1 billion in excess cash over five years to complete the buyback. This cash would be generated on the backs of customers, or ratepayers, and will reward shareholders without providing any rate relief.

The buyout needs no regulatory approval, unlike the $4.9 billion SCANA is seeking to recoup for the failed reactors.

Under SCANA’s plan, ratepayers will be paying for others’ mistakes for 60 years, but earnings will be unaffected, Chief Financial Officer Jimmy Addison told the analysts. ….

critics say buybacks promote short-term thinking over long-term investment in the business. Executives use buybacks to increase stock prices and boost their pay, they say.

“Combined with pressure from Wall Street, stock-based incentives make senior executives extremely motivated to do buybacks on a colossal and systemic scale,” William Lazonick, a professor of economics at the University of Massachusetts Lowell, wrote in a ground-breaking Harvard Business Review article, “Profits Without Prosperity,” in 2014

Take SCANA. According to the company’s proxy statement, half of executives’ incentive pay is based on earnings per share. In 2016, for instance, Marsh and his top executives got 130 percent of their bonuses pegged to EPS because the company exceeded its target by 16 cents a share. They also got 100 percent of their bonuses tied to their personal goals, including “oversight” of the Fairfield reactors.

This is not a joke — it is right there in black and white…..

The cost of the V.C. Summer reactors has doubled, and construction is years behind schedule. Executives typically get fired for this kind of stuff, not bonuses.

But Marsh still has his job because he has protected his bosses — the shareholders — from the costs of the company’s mistakes and shifted them to customers.

He has gotten paid handsomely for the job he has done — and the buyback will help keep the good times rolling.


August 21, 2017 - Posted by | business and costs, USA

1 Comment »

  1. […] Post and Courier article cross-posted in Nuclear News as “Despite the financial fiasco, nuclear executives busily planning for more bonuses at… […]

    Pingback by Even after nuclear catastrophe, SCANA execs eye bonuses | AIR SPACE | March 14, 2018 | Reply

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