Pollution Payday: Analysis of executive compensation and incentives of the largest U.S. investor-owned utilities
Entergy is an electric utility company serving customers in Arkansas, Louisiana, Mississippi and Texas. Entergy’s executive compensation consists of three elements: base salary, annual incentive awards, and long-term incentive awards. Base pay makes up approximately 13% of executive compensation, annual incentives awards make up 17%, and long-term incentive awards make up 70%.
The Board of Directors’ Personnel Committee has the responsibility to determine and approve the compensation of all named executive officers (NEOs). The Personnel Committee retained Pay Governance as its independent executive compensation consultant.
Entergy uses companies included in the Philadelphia Utility Index as a peer group to help determine executive compensation, including part of its long-term incentive awards.
Entergy’s annual incentive awards for all NEOs are determined by tax-adjusted earnings per share (EPS) and operating cash flow, each weighted at 50%. The 2019 tax-adjusted EPS target was $5.30 and the operating cash flow target was $3.1 billion.
Entergy’s long-term incentive rewards executives with ownership of stock primarily based on relative total shareholder return (TSR) compared to the Philadelphia Utility Index, which is weighted at 80%, and the company’s three-year cumulative adjusted EPS, which is weighted at 20%. The 2019 target for relative TSR was the 50th percentile. The Energy and Policy Institute was unable to find disclosure of Entergy’s three-year cumulative adjusted EPS target.
Entergy says that its NEOs receive an annual stock award based on the company’s stock price, their job scope, market data, and their individual performance.
None of Entergy’s NEOs receive compensation based on the company’s decarbonization goals. Advocates have pushed the company to align executive compensation with decarbonization. In New Orleans’ 100% resilient, renewable portfolio standard (RPS) docket, clean energy advocates requested that the New Orleans City Council, which regulates Entergy New Orleans, include a “requirement that mid-and upper-level utility executive compensation and bonuses be expressly tied to RPS achievements,” in a June 2020 filing.
|CEO compensation ranking among utilities studied, 2019||12/19|
|Compensation ratio: CEO to median employee, 2019||110:1|
|Percent change in CEO compensation, 2017-2019||+8.4% ($1,106,029)|
|Maximum payout of performance-based shares as a percentage of target, 2019||200%|
|Is Entergy’s executive compensation structure aligned with decarbonization?||No.|
|Is there evidence from SEC filings that Entergy is using misleading financial metrics to determine executive compensation?||No.|
|What key perquisites or benefits do Entergy executives receive?||Entergy allows its CEO to use corporate aircraft for personal use at company expense; other NEOs can do so subject to the CEO’s approval. The Personnel Committee reviews the level of usage throughout the year. The aggregate incremental aircraft usage cost associated with the CEO’s personal use of corporate aircraft was $56,108 for the 2019 fiscal year. Entergy offered a Supplemental Executive Retirement Plan for CEO Leo P. Denault and closed the plan to new participants in 2014.|