SUPPORTING STATEMENT
We believe executive compensation at Entergy has become not merely excessive, but a significant failure of corporate governance. During 2007, the Board awarded CEO Wayne Leonard $26.2 million in total compensation – an astonishing 77% increase over an already generous compensation package of $14.8 million the previous year.
This was significantly higher than top executive pay at other comparable utility companies. For example, Southern Co. awarded its CEO less than half of Mr. Leonard’s total compensation, despite earning $3.9 billion more in revenue and nearly $600 million more in net income. Indeed, in 2007 Mr. Leonard was the highest paid of all chief executive officers in 19 companies comprising the Philadelphia Utilities Index – collecting more than twice the average CEO pay in the entire index.
We believe an advisory vote on executive pay would give shareholders a powerful vehicle to voice their concerns, and would encourage directors to begin to rein in excessive compensation. In our view, this would provide a far more effective means for shareholders to express their views on this subject, in addition to any communications Entergy might also receive from individual shareholders.
In the Company’s 2008 proxy statement, the Board argued that adopting the proposal might create the “impression” among senior executives that their compensation opportunities “could be limited or negatively affected,” while opportunities at competing companies “would not be similarly constrained.” We believe this argument is specious, especially considering the extravagant compensation our directors have awarded to senior executives.
The Board also argued that a shareholder vote would not provide any “meaningful insight” into specific shareholder concerns. We disagree. When Blockbuster adopted a policy providing for an advisory vote on executive pay in 2008, that company’s CEO stated the policy “will not only improve dialogue with our shareholder base, it will also provide our Board with valuable feedback on our compensation policies. . . .”
A growing number of U.S. companies have adopted policies giving shareholders an advisory vote on executive pay, including Aflac, Blockbuster, H&R Block, Ingersoll-Rand, Littlefield, MBIA, Par Pharmaceuticals, RiskMetrics, Tech Data, and Verizon. We believe Entergy shareholders should also have this opportunity.
Nearly 42% of shares voting “for” or “against” this proposal at Entergy’s meeting last year voted in favor of this resolution. We believe a majority vote this year will encourage directors to adopt this common sense policy. We therefore urge shareholders to vote FOR this proposal.
For more information, please visit our website at www.entergypaywatch.org.
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