Southern Company unveiled a new greenhouse gas reduction bonus package for CEO Tom Fanning, worth as much as $2 million this year, according to its 2019 proxy statement filed with the Securities and Exchange Commission. The Southern Company board of directors set the greenhouse gas (GHG) reduction goal low enough to ensure that Fanning would receive the bonus without any changes in plans from Southern Company. In fact, Fanning has likely already secured his bonus, according to filings and announcements made by the company at or around the time of the bonus plan becoming public.

The bonus package claims to align Fanning’s compensation to the company’s move to be “low- to no-carbon” by 2050, but Fanning will receive credit for the development of Southern’s liquified natural gas business. The transportation and combustion of natural gas emits greenhouse gases. 

The company has continued touting its “low- to no-carbon” pledge, even in light of conflicting testimony from its subsidiaries to regulators. As Southern’s CEO, Fanning has denied that carbon dioxide is a primary contributor to global warming.

How Fanning’s Bonus Works

The incentive plan lays out two pathways for Fanning, a quantitative and qualitative pathway. 

Quantitatively, Fanning can receive his bonus by either adding zero-carbon capacity to the Southern Company system or by removing coal. The quantitative section makes no mention of natural gas. Qualitatively, Fanning can earn a “modifier” on his quantitative payout from items such as research and development, national leadership in energy policy, and venture capital spending.

Quantitative Scoring and Payout

Qualitative Modifier

In short, Fanning will receive at least part of his bonus for greenhouse gas emissions as long as Southern Company either eliminates enough coal capacity or adds enough zero-carbon capacity to total 2,641 megawatts (MW) or more.

Coal Closures and Zero-Carbon Additions

Southern Company has already announced the closure of three coal plants representing 2,548 megawatts (MW). The Georgia Power integrated resource plan (IRP) proposed settlement calls for 1,650 MW of new solar, as of the time of publication. Current GHG reduction announcements by the company total 4,198 MW compared to Fanning’s bonus goal of 3,080 MW. Fanning’s quantitative bonus potential caps at 3,518 MW, well below Southern’s already planned actions. 

That makes Southern’s proxy statement description of the bonus program as an “incentive,” a misnomer, since it is not incenting any new actions from Fanning. The program does not indicate if Fanning will receive credit toward his bonus upon announcement or when a plant is added or removed from service.

Announced Closures and Additions 


Nameplate Capacity (MW)Source
Gorgas Steam Plant1,417SourceWatch
Hammond Steam Generating Station953SourceWatch
McIntosh Steam Plant178SourceWatch
Georgia-based Solar Additions1,650Georgia Integrated Resource Plan Stipulation
Total4,198

In addition to announced actions, Fanning could receive credit for the construction of the Vogtle Unit 3 nuclear plant or the closure of the coal-fired Plant Bowen Units 1 and 2. Southern Company reaffirmed a November 2021 in-service date for the over-budget Vogtle Unit 3 on its 1st quarter 2019 earning call. Plant Bowen Units 1 and 2 have not been slated for closure but the Georgia IRP settlement proposal limits Southern’s capital investments in the plant, signaling an impending closure.

Possible Closures and Additions


Nameplate Capacity (MW)Source
Vogtle Unit 3 (addition)1,117Wikipedia
Plant Bowen Units 1 and 2 (closure)1,595SourceWatch
Total2,712

Fanning’s favorable terms have him scheduled to max out his GHG reduction bonus, even if Southern Company struggles to bring Vogtle Unit 3 online, continues to operate Plant Bowen Units 1 and 2, and the company continues to grow its natural gas business with no real change in direction toward faster decarbonization.

Photo source: YouTube

Posted by Daniel Tait

Daniel Tait is a Research and Communication Manager for the Energy and Policy Institute. Prior to joining EPI, he was CEO of Energy Alabama, a non-profit advocacy organization. Daniel was named the 2015 International Young Energy Professional of the Year by the Association of Energy Engineers and acts as Vice President of the Association of Energy Engineers, Huntsville Chapter. He graduated from the University of Alabama in Huntsville with a degree in International Trade and Foreign Language.

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