Thursday, August 22, 2019

Houston, Texas-Based Utility CenterPoint Energy's Top-Tier Executives Average Pay Raise Was a Very Reasonable 5.8% Per Year During the Past Ten Years (2009-2018). Evansville, Indiana Utility Vectren, Which Was Acquired By CenterPoint Energy in Early 2019, Saw Its Top-Tier Executives Average Pay Increase By a Much Higher 13.2% Per Year During the Nine Years (2009 to 2017) and This Excluded Any Golden Parachute Payments. In Addition, Vectren's Four Top-Tier Executives Were Projected to Get Potential Change in Control Payments (Golden Parachutes) of $48.433 Mil, Which Was MORE THAN FOUR TIMES the Total Executive Compensation They Received in Annual 2017 of $11.208 Mil.

The third Democratic 2020 Presidential candidate televised debate will be held in Houston, Texas on September 12 and 13, 2019.  Texas is also the home state of Julian Castro and Beto O'Rourke, who have both gained significant momentum in the past month.

The key issue to Texas citizens should be the huge and continuing Income Inequality Expansion which is at the core of many critical problems the US faces.

Thus I will be doing research and making posts on the average pay raise per year that the Top-Tier Executives of Texas Companies were rewarded with in the past ten years.  And I'll start with the large Texas Non-Oil & Gas Companies. 

The 15th Texas Non-Oil & Gas Company I am addressing here is Utility Company CenterPoint Energy.  

From annual compensation information contained in Company Proxy Statement filings with the US SEC, the first chart below shows CenterPoint Energy's Top-Tier Executives Annual Total Compensation for each of two consecutive full years of employment for the past ten years. 

CenterPoint Energy's Top-Tier Executives Average Pay Raise was a very reasonable 5.8% per year for the past ten years, which tied for the lowest of the 15 very large Texas Non-Oil & Gas Companies I have addressed so far.
  1. American Airlines Group +85.9% per year for nine of the past 10 years
  2. Invitation Homes +78.6% per year for the past two years
  3. LyondellBasell +45.9% per year for the past eight years
  4. Yum China Holdings +23.8% per year for the past 5 years
  5. D R Horton +20.1% per year for the past ten years
  6. Sysco +18.7% per year for the past ten years
  7. Waste Connections +18.1% per year for the past ten years
  8. Southwest Airlines +18.0% per year for the past ten years
  9. AT&T +13.8% per year for the past ten years
  10. Waste Management +13.2% per year for the past ten years
  11. Match Group +12.2% per year for the past six years
  12. Texas Instruments +7.2% per year for the past ten years
  13. Crown Castle International +6.3% per year for the past ten years
  14. Kimberly-Clark +5.8% per year for the past ten years
  15. CenterPoint Energy +5.8% per year for the past ten years

FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE
Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec
CenterPoint Energy 2018 2017 2017 2016 2016 2015 2015 2014 2014 2013
Top-Tier Total Total Total Total Total Total Total Total Total Total
Executive Comp Comp Comp Comp Comp Comp Comp Comp Comp Comp
$ 000s $ 000s $ 000s $ 000s $ 000s $ 000s $ 000s $ 000s $ 000s $ 000s
Scott Prochazka CEO       8,888       8,025       8,025       6,738       6,738       4,816       4,816       4,897    
William Rogers CFO       2,253       2,333       2,333       1,994  N/A   N/A     
Tracy Bridge President Electric Division       2,048       2,030       2,030       1,827       1,827       1,610       1,610       1,632    
Milton Carroll Executive Chairman       2,886       2,731       2,731       2,534       2,534       2,462       2,462       2,553  N/A   N/A 
Dana O'Brien General Counsel       1,872       1,795
Joseph McGoldrick President Gas Division       1,936       2,138       2,138       2,028    
Gary Whitlock Former CFO  N/A   N/A        2,165       2,012
Thomas Standish Former EVP       2,421       1,778
 Totals      17,947     16,914     15,119     13,093     13,035     11,026     11,026     11,110       4,586       3,790
Annual % Change vs Prior Year 6.1% 15.5% 18.2% -0.8% 21.0%
5 Year Average Per Year % Change 12.0%
FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE
Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec
CenterPoint Energy 2013 2012 2012 2011 2011 2010 2010 2009 2009 2008
Top-Tier Total Total Total Total Total Total Total Total Total Total
Executive Comp Comp Comp Comp Comp Comp Comp Comp Comp Comp
$ 000s $ 000s $ 000s $ 000s $ 000s $ 000s $ 000s $ 000s $ 000s $ 000s
Milton Carroll Executive Chairman  N/A   N/A 
Gary Whitlock Former CFO       2,012       2,436       2,436       2,002       2,002       1,888       1,888       1,829       1,829       1,924
Thomas Standish Former EVP       1,778       2,992       2,992       2,289       2,289       2,092       2,092       2,450       2,450       2,090
David McClanahan CEO       5,172       7,903       7,903       6,472       6,472       5,393       5,393       7,619       7,619       6,489
Scott Rozzell General Counsel       1,903       2,337       2,337       2,369       2,369       1,769       1,769       1,720       1,720       1,807
Gregory Harper Pres Pipelines&Field Services       1,107       1,120       1,120       1,084       1,084          943  N/A    N/A  
 Totals      10,865     15,668     16,775     14,252     14,252     12,226     12,226     14,561     13,618     12,310
Annual % Change vs Prior Year -30.7% 17.7% 16.6% -16.0% 10.6%
5 Year Average Per Year % Change -0.4%
10 Year Average Per Year % Change 5.8%



CenterPoint Energy acquired Evansville, Indiana-based Utility Company Vectren very early in 2019.

 From annual compensation information contained in annual Company Proxy Statement filings with the US SEC (DEF 14A), the second chart below shows Vectren"s Top-Tier Executives Annual Total Compensation for each of two consecutive full years of employment for the nine years from 2019 to 2017.  The chart also shows the Potential Change in Control Payments (Golden Parachute Payments) to each of  Vectren's four Top-Tier Executives, which was obtained from a Proxy Statement (DEFM14A) filed with the SEC on July 16, 2018, prior to the acquisition.
Potential FYE FYE FYE FYE FYE FYE FYE FYE FYE
Vectren Corp Change Dec Dec Dec Dec Dec Dec Dec Dec Dec
Evansville, Indiana Utility Co in 2017 2017 2016 2016 2015 2015 2014 2014 2013
Top-Tier Control Total Total Total Total Total Total Total Total Total
Executive Payments Comp Comp Comp Comp Comp Comp Comp Comp Comp
$ 000s $ 000s $ 000s $ 000s $ 000s $ 000s $ 000s $ 000s $ 000s $ 000s
Carl Chapman CEO     31,637       6,221       6,221       5,555       5,555       5,518       5,501       6,764       6,764       4,672
Susan Hardwick CFO       5,488       1,293       1,293       1,145       1,145          963          963          845  N/A   N/A 
Eric Schach COO       6,313       1,848       1,848       1,296       1,296       1,036       1,035          925  N/A   N/A 
Ronald Christian Chief Legal Officer       4,995       1,846       1,846       1,667       1,667       1,555       1,554       1,747       1,747       1,298
Jerome Benkert Former Chief Admin Officer  N/A   N/A        1,877       1,460
William Doty Former EVP Utility Operations  N/A   N/A 
 Totals      48,433     11,208     11,208       9,663       9,663       9,072       9,053     10,281     10,388       7,430
Annual % Change vs Prior Year 332.1% 16.0% 6.5% -11.9% 39.8%
4 Year Avg Per Year % Change 2014 to 2017 12.6%
FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE
Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec
Vectren Corp 2013 2012 2012 2011 2011 2010 2010 2009 2009 2008
Top-Tier Total Total Total Total Total Total Total Total Total Total
Executive Comp Comp Comp Comp Comp Comp Comp Comp Comp Comp
$ 000s $ 000s $ 000s $ 000s $ 000s $ 000s $ 000s $ 000s $ 000s $ 000s
Carl Chapman CEO       4,672       4,685       4,685       3,149       3,148       2,158       2,158       1,549       1,549       1,609
Ronald Christian Chief Legal Officer       1,298       1,467       1,467       1,128       1,127       1,039       1,039          910          910          809
Jerome Benkert Former CFO       1,460       1,747       1,747       1,336       1,336       1,220       1,220       1,069       1,069       1,031
William Doty Former EVP Utility Operations       1,167       1,615       1,615       1,232       1,231       1,095       1,095          928          928          927
John Bohls President Energy Marketing  N/A   N/A           847          738          736          778    
Neil Ellerbrook Non-Executive Chair  N/A   N/A        3,498       3,826
 Totals        8,597       9,514     10,361       7,583       7,578       6,290       5,512       4,456       7,954       8,202
Annual % Change vs Prior Year -9.6% 36.6% 20.5% 23.7% -3.0%
5 Year Average Per Year % Change 13.6%
9 Year Avg Per Year % Change 2009 to 2017 13.2%


There have been many US Government laws enacted in the past two decades that have substantially increased income inequality expansion but the only highly effective US Government law enacted by either party in the past two decades that has substantially reduced income inequality expansion is Obamacare and the political right is continually trying to repeal and replace it and three of the top four Democratic Presidential candidates now leading in the polls are effectively running as their principal issue to do in essence precisely the same thing ..... repeal and replace Obamacare ..... but to do it with either a pure or a version of Medicare For All.  

The pure Medicare For All advocated by both Bernie Sanders and Elizabeth Warren and which was co-sponsored in a US Senate bill by Kamala Harris is off-the-charts enormously expensive and would take up an enormous amount of wasted time with no positive result since it has no chance of getting passed legislatively.  The US Government CBO hasn't been able to score the cost of a pure version of Medicare For All so far because the proposals have not been nearly specific enough.  If and when they are specific enough, the CBO scoring will make people shake in their boots and wonder just how any Presidential candidate could propose something so fiscally preposterous.  Just given their near-sighted stance on a pure version of Medicare For All, if the Democratic nominee is any of the three of them, it will be extremely difficult for any of them to beat Trump in the general election.  It is that simple.

On the other hand, if Elizabeth Warren got more rational and wisely altered her position some on Medicare For All, she would have a very good chance of beating Trump. 

My objective is to get a better handle on just why the US has such massive continuing Income Inequality Expansion ..... it appears to be predominantly about the relative long-term annual pay raise percentages for the executives of a Company vs the many non-executive employees of a Company, coupled with the stock price appreciation subsequent to the time the company executives were rewarded in their pay with stock equity compensation.

To fix Income Inequality driven mainly by Company and its Board of Director choices on Percentage Annual Pay Raises, the US Government should step in and pass wisely-designed, simple but effective Fair Pay Raise Income Inequality Narrowing Company tax incentives for rewarding non-executive employees with fair pay increases ..... the carrot ..... and Company tax disincentives for rewarding executive employees with clearly excessively high pay increases ..... the stick.  I am certain ..... it is simple math ..... that this tax proposal would be very effective in substantially reducing the huge income inequality expansion that has occurred for decades in annual percentage pay raises between company executives and the rest of the company employees. 

And the continuing annual net tax revenues raised by the US Government here should be set up in a separate fund to be used only for wise additional income inequality narrowing initiatives.  This fund should be run by an outside group made up entirely of minorities harmed the most by Income Inequality Expansion of the past decades  .....all women, all blacks, all Latinos, all other non-white people, all past and present union members, all LGBTQ, all non-employee contract workers and all middle and lower income people of all ages, including those retired.

Also, the US Government should require all US Corporate Boards to include at least one worker representative and to exclude any Company Executive.

And lastly, the US Federal Government should ban Golden Parachutes.
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