Wednesday, March 12, 2008

Empire pay packages a disconnect for customers

In the March 10 Turner Report, I wrote about the information provided in an SEC filing about Empire District Electric Company officials' pay packages. I have incorporated that information into my column for this week's Newton County News,which is reprinted below:

A recurring theme in the news over the past few years has been the disconnect between the amount of money company CEOS receive and the take-home pay of their employees.
Time after time, we have heard stories about CEOs who receive incredible pay increases at the same time as they are shutting down plants, putting hundreds or thousands out of work, and sending jobs overseas so stockholders can receive a few more dollars for their investment.
And while the laid off workers face the prospect of being unemployed for long periods of time, or having to learn an entirely different kind of job, the CEOS of these major companies have it written into their contracts, that they not only will receive generous lump sum payments, but they also retain all of their benefits for a year or two. (And who can blame them for having contracts like that? It’s the board of directors that willingly provides them?)
One company that cannot be accused of slicing jobs or outsourcing its work overseas is Empire District Electric Company, but judging from a proxy statement filed this week with the Securities and Exchange Commission, the disconnect can be found there, as well.
Five Empire District Electric Company officials saw their pay packages increase more than $400,000 during calendar year 2007, despite the onslaught of two ice storms that left thousands of their customers without power.
And should the day ever come when CEO William Gipson's services are no longer required by Empire, he will walk away with more than $2.3 million, according to the proxy statement.

Gipson's base salary only increased from $300,000 to $315,000, but his pay package included a $5,000 bonus, $239,075 in stock awards, $65,647 in stock options, $155,626 in non-equity incentive plan compensation, $135,662 in deferred compensation earnings, and $9,896 listed as "all other compensation."

The total package amounted to $925,206, up from $759,906 in 2006.

If things ever go south for Gipson and he happens to lose his job at Empire, don't worry about where he will get his next meal. His severance plan, which is also included in the proxy statement, is worth more than $2.3 million, including $1,221,504 in severance pay, $155,926 in "incentive bonus”) (though how can you give an incentive for someone who no longer works for you is a difficult concept to grasp), $12,548 in stock options, $177,408 in divident equivalents, $252,068 in performance-based restricted stock, $31,356 in "benefits continuance," $504,233 in "excise tax and related gross-up."

The total amount of Gipson's severance package is $2,354,743.
Gipson's top officers also have generous pay and severance packages, according to the proxy report.
With generous pay packages like those outlined in the SEC filing, I would wager that few, if any, of Empire’s upper echelon spent even a few minutes without power during the 2007 ice storms.
That kind of money can buy a lot of generators.


Anonymous said...

Since when did it become a crime to make money? This is absurd! There is a parable in the Bible about different people making different wages. It basically states, if you agree to work for lesser wages then you should not be jealous of those that make more. For those lower on the totem pole, they agreed to make the wages they do. Randy, stop crying! You whine more than anyone I know...

Anonymous said...

I agree. And if your such a great investigative reporter Mr. Turner then why don't you actually talk to the people who have such a "disconnect" and find out what thier level of responsibility is versus the management team. Last time I checked the customer service reps and switchboard operators didn't have to report to shareholders, regulatory agencies and the board of directors. You Democrat colors are shining through.....punish those who make money and give it to the ones who don't do squat.

Anonymous said...

If I read my Bible correctly, there's also a little something something about it being easier for a camel to fit through the eye of a needle than for a rich man to enter the kingdom of heaven.

After last year's ice storms, Empire customers should go to heaven, as we've already seen hell. Two weeks without power! But our bills stayed the same. Sounds like Gipson has his money to keep him warm.