Consumers are paying millions of dollars to utility executives
Published November 24, 2021
In 2015, the Securities and Exchange Commission adopted a rule requiring public companies to disclose how chief executive officer (CEO) compensation compares to median employee income. When the SEC began requiring companies to publish CEO to employee pay ratios, it provided consumers with a way of being more informed about the businesses they frequent, including the public utilities many of us pay in order to have gas and electricity. Ultimately, many of the costs associated with compensating utility CEOs are borne by ratepayers, and, for that reason, we feel it is important to share some of those figures.
When looking at the compensation amounts below, keep in mind that the median household income in Minnesota was just under $75,000 in 2019, with half of the population earning less than this amount, and half earning more.
Xcel
In 2020, Xcel’s CEO was compensated $16,805,589, which included a base salary of $1,350,000 and millions in stock awards, pension increases, and incentive plan payments. Xcel’s CEO was compensated 139 times more than the median Xcel employee earning $120,597, and 225 times more than the median household in Minnesota. (Sidenote: Xcel also boasts Minnesota’s 8th-highest paid CEO.)
Minnesota Energy Resources (WEC Energy Group)
Minnesota Energy Resources Corporation is a subsidiary of WEC Energy Group. The CEO of WEC Energy Group was compensated $18,136,171, with a base salary of $1,068,828. The CEO was compensated 131 times more than the median WEC employee earning $138,849, and 243 times more than the median household.
CenterPoint Energy
CenterPoint Energy’s CEO was compensated $11,946,295 in 2020, with a base salary of $675,000. The CEO was compensated 121 times more than the median CenterPoint employee earning $103,993, and 160 times more than the median household.
Great Plains Natural Gas (MDU Resources Group)
Great Plains Natural Gas Co. is part of Montana-Dakota Utilities Co., a subsidiary of MDU Resources Group. The CEO of MDU Resources Group was compensated $6,423,410 in 2020, with a base salary of $960,000. MDU’s CEO was compensated 68 times more than the median MDU employee earning $94,463, and 86 times more than the median household.
Minnesota Power (ALLETE)
Minnesota Power is an operating division of ALLETE, Inc. In 2020, there was a change of CEOs within the company. After ALLETE calculated for that change, the CEO was compensated the equivalent of $2,067,829, or 19 times more than the median ALLETE employee earning $108,922. The CEO was compensated 28 times more than the median household.
Conclusion
Public utilities may argue that these high compensation amounts are warranted—managing a public utility is a complicated job and one that demands effective leadership. To be clear, we agree that it is important for utilities to employ leaders with unique expertise and skill set. Ultimately, effective leadership can and should help public utilities ensure they reliably provide important gas and electric services to their customers. That said, utilities also need to provide reliable service in a cost-effective manner, such that the rates they charge are “just and reasonable” to ratepayers. It is hard to ignore how high these compensation levels are compared to that of the average Minnesotan household—particularly now, as Minnesotans suffer from the impacts of a global pandemic, feel the effects of rising gas prices, and face the potential for significantly increased electricity and gas rates as a result of numerous public utility rate cases.
As consumer advocates, CUB is participating in these rate cases and working to ensure Minnesotans receive reliable, clean, and affordable gas and electricity. But it is just as important that you, as a consumer, stay informed. We encourage you to make your thoughts known by submitting comments in dockets before the Public Utilities Commission.
As always, if you have any questions, feel free to contact us at 651-300-4701 or at info@cubminnesota.org.