Compensation is still inconsistent, especially compared with other industries.
Richard Stavros is the executive editor of Public Utilities Fortnightly.
On the whole, energy industry chief executive officers make big money, no question. But when you start to look at the industry itself, you find that there are huge inconsistencies with how much energy chiefs earn among their peer group, and compared with other industries. Some experts say that CEO pay in the energy industry is largely determined by whether an energy company is still involved in regulated or unregulated businesses.
If you look at Calpine CEO Peter Cartwright, that theory may prove correct. Calpine is one of the nation's largest independent power producers, and is not involved in heavily regulated, vertically integrated businesses. Cartwright earned a base salary and bonus of almost $2 million in 2001, according to Forbes, which is on par with the utility industry.
But unlike regulated industries, he took home almost $21 million in stock gains in addition to his base and bonus. Of course, merchant power development is a riskier business, and Cartwright may not be able to claim the same stock gain in 2002, as Calpine's stock price has plummeted from a 2001 high of $60 dollars to $11 dollars at the end of April.
Similarly, El Paso CEO William A. Wise had the second highest base and bonus in the industry after Dynegy CEO Chuck Watson (see Figure 1). But Wise, in a stratosphere to himself, was paid even better than Cartwright with stock gains of just over $22 million, in addition to a base and bonus of almost $5 million. If stock gains are included with base and bonus, the merchant development and energy trading chiefs had the best pay in the industry in 2001. Of course, 2002 may be a different story. El Paso's stock declined from a high of $70 last year to $40 in late April.