Dive Brief:
- Hawaiian Electric Industries (HECO) CEO Connie Lau will receive $11.6 million if the sale to NextEra Energy is completed, but the utility chief told regulators that "change-in-control" payment predates the proposed merger by about seven years, the Honolulu Star-Advertiser reports.
- Answering questions about the merger, Lau said she does not believe she is overcompensated, but recognizes some utility customers have questioned her salary and the so-called "golden parachute" payment.
- Initial talks of a merger began in June 2014, the companies said, at a lunch hosted by the Edison Electric Institute (EEI) in Las Vegas, Nevada.
Dive Insight:
Defending their proposed merger to the state's consumer advocate, NextEra and HECO have filed more than 150 pages with the Hawaii Public Utilities Commission (PUC), outlining the origins of the deal and addressing concerns about CEO Lau's compensation.
Lau is due $11.6 million if the deal is completed, and last year her compensation package was $3.6 million. But very little of that is paid by utility consumers, she explained. Many who question her salary do not realize it includes HECO's ownership of American Savings Bank.
"I do not believe that I am overcompensated as the president and CEO of HEI," Lau said in the filing. "I am aware that some Hawaii consumers have complained about the level of my compensation ... None of my compensation is in Hawaiian Electric's or Maui Electric's base rates, and only a minimal amount of base salary (about $41,500 or less than 50 cents per customer per year) remains charged to HELCO (Hawaii Electric Light Co.)."
The filing also revealed a little insight into the deal's history: NextEra CEO Jim Robo initially raised the idea of a merger at an EEI event in Las Vegas, presenting Lau with a written offer. While Lau said the company wasn't for sale, she also told Robo "if a bonafide offer was made, we would exercise our fiduciary duties to review and act accordingly."
The PUC is reviewing the deal, and a decision is expected next year. Announced in December 2014, the deal values HECO at $4.3 billion, but Hawaii Gov. David Ige has said he is opposed to the merger, and it has sparked a movement on the islands to form a public utility as an alternative to the merger.
Amid questions of NextEra's commitment to renewables, many believe the acquisition may not be in line with the state's goal to move to 100% clean power by 2045.
NextEra points to it position as the largest renewables generator in North America as evidence it can deliver on the state's goals, but merger opponents worry about the manner in which it might execute those plans. They say Florida Power & Light, a regulated utility owned by NextEra, has a weak record on rooftop solar and is fighting a ballot proposition the solar industry supports in Florida.
Should the deal fall through, NextEra will have to pay HECO a $90 million termination fee, the companies also told regulators.
