Golden parachutes for SCANA execs after VC Summer nuclear failure | The State

Top SCANA Corp. executives who led a failed nuclear project that cost S.C. power customers and shareholders billions could be paid roughly $60 million more if the Cayce-based company is sold in the aftermath of the V.C. Summer fiasco.

So-called “golden parachutes,” written into the contracts of those executives in case of a sale or takeover, could trigger payments estimated at $28 million for chief executive Kevin Marsh and roughly $12 million each for two other SCANA leaders, according to The State’s review of the company’s federal filings.

The Fortune 1000 company’s executive pay has enraged S.C. legislators who are investigating the nuclear project’s demise and power customers who still are paying an average of $27 a month for the abandoned reactors.

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Total compensation for SCANA’s executive team has nearly doubled over the past 10 years, as company leaders accepted millions in bonuses for their work on the doomed project.

Meanwhile, SCANA has become a takeover target, with its stock price tumbling and several out-of-state utilities looking to expand to South Carolina.

“All these guys are being rewarded for failure,” said state Rep. James Smith, a Richland Democrat who is running for governor and sits on the House panel investigating the scuttled venture. “You fail in building a nuclear plant. You drive up rates that hurt our economy. You destroy a company, and you get a big payoff for doing all of that.”

Efforts to reach SCANA for comment were unsuccessful.

‘Golden parachutes’ common

Golden parachutes are common in the corporate world, where companies want executives to put shareholders’ interests ahead of their own, according to University of South Carolina management professor Anthony Nyberg.

The contractual provisions are helpful when an investor-owned company’s best option is to sell, Nyberg said. “If you don’t have something in place like that, you’d be pretty reluctant to sell your company and give up your job.”

But the pay of SCANA executives has come under scrutiny since this summer, when the utility and its state-owned partner, Santee Cooper, announced they had pulled the plug on a nine-year, $9 billion effort to build two new nuclear reactors in Fairfield County.

Plagued by construction delays and price overruns, the venture already has cost the utilities’ customers a combined $2.2 billion in 14 total rate hikes – including nine by SCANA subsidiary SCE&G — to pay for part of the nuclear project.

SCE&G customers are on the hook for $2.2 billion more to cover the project’s debts. They currently are billed a total of $37 million a month for the reactors. Santee Cooper’s customers could have to pay $3.4 billion more.

$3 million in V.C. Summer bonuses already paid

As the power bills rose, so did SCANA’s executive pay.

Total compensation for SCANA’s company’s executive team rose to $14 million in 2016 from $8.5 million in 2007, the year S.C. legislators passed a law that green lighted the nuclear project.

Since 2008, Marsh’s team also has collected nearly $3 million in performance-related bonuses for their work on the doomed V.C. Summer project, according to documents SCANA recently provided to a state Senate panel investigating the nuclear venture.

More than $432,000 of those bonuses were paid in 2016, after a Feb. 5, 2016, independent report diagnosed critical problems at the Jenkinsville site.

“That’s just absolute insanity,” state Rep. Kirkman Finlay, R-Richland, said Thursday. “How do you pay a bonus on a plant that is a year from being bankrupt?”

Would-be buyers circling

SCANA leaders could be in for another significant windfall if the company is sold, according to the company’s filings with the U.S. Securities and Exchange Commission.

That’s a real possibility, observers say, as SCANA’s stock price falls and out-of-state utilities consider buying a sizable footprint in the Palmetto State.

Of the four companies negotiating with Gov. Henry McMaster over the possible sale of state-owned Santee Cooper, at least one also has expressed interest in buying SCANA, too, according to two sources close to those talks.

If SCANA is sold, top executives who are fired without cause or leave with “good reason” each would be owed millions of dollars, according to SCANA’s federal filings.

Those payouts would be calculated according to a complex formula that accounts for each executive’s base salary, performance-based pay, company stock ownership and retirement plans. The deals also ensure the departing executives have life and health insurance benefits on the same level they previously had with the company.

It is unclear what SCANA executives would receive in a golden parachute today.

But had that provision been triggered on Dec. 31, 2016, SCANA’s five-man executive team would have received $66.4 million in pay and benefits, according to the company’s most recent SEC filing.

▪ SCANA chief executive Kevin Marsh would have received $28 million – about half of it from retirement plans, accrued vacation days and other pay he has earned but not yet received, SCANA stated.

▪ Chief nuclear officer Stephen Byrne would have been owed $12.8 million.

▪ Chief financial officer Jimmy Addison would have received $11.8 million.

▪ Senior vice president Keller Kissam would have received $5 million.

▪ Former SCANA general counsel Ronald Lindsay would have been owed $8.8 million.

However, Lindsay retired this summer and was replaced by Jim Stuckey. SCANA did not respond to a question about Stuckey’s pay or his potential golden parachute, if any.

Those payouts were calculated when SCANA stock was trading at roughly $73.28 a share.

That stock was selling for $49.19 a share Thursday, the lower price the result of a prolonged sell-off related to the V.C. Summer debacle.

Legislators said Thursday the executives should give up their golden parachutes, or donate them to employees who could be laid off in a potential takeover.

“The reason the company is up for sale is because of the poor management of the nuclear power plant,” Rep. Finlay said. “They should not benefit additionally for that.”