Duke Energy officials defended last year's big pay package for CEO Lynn Good during the company's online-only annual meeting Thursday afternoon. Good got $21.4 million dollars in salary, bonuses, stock and other compensation - nearly double her pay two years before.
During a question-and-answer session, Duke investor relations chief Michael Callahan read this question from a shareholder:
“Why is compensation so over the top for executives, while customers are getting rate increases? Their pay and benefits are outrageous, while many struggle just to pay their bill.”
Good replied that Duke has to pay competitively to attract and retain the best executives amid rapid change in its industry. Then Marie McKee, who chairs the Duke board’s compensation committee, repeated that, specifically referring to Good.
“Lynn's 2017 compensation is not representative of a typical year," McKee said. "It included a one-time performance-based retention sock grant. The board wanted to send Lynn a clear message that we wanted to retain and reward Lynn, but based on the company’s strong performance.”
Duke asked shareholders to endorse its executive compensation plan earlier in the meeting. In the end, holders of 81 percent the shares voting supported Duke's executive pay.
That was lower than other measures on the ballot. Duke said 92 percent of shares voted to re-elect the board of directors, and 97 percent backed the choice of auditor.
Two other resolutions failed. One was a company proposal to eliminate a requirement that annual meeting resolutions get at least 80 percent of votes to pass. It got only 62 percent.
Meanwhile, investors also rejected a shareholder resolution requiring Duke to issue an annual report on its lobbying expenses.
That proposal has a back story. It's identical to a one put forward in past years by Mercy Investment Services of St. Louis, Missouri. But this year it was proposed by a conservative group, the National Center for Public Policy Research.
In a recorded statement during the meeting, the group’s general counsel Justin Danhof said he wanted to block what he called liberal shareholder activists from getting the resolution into the meeting. He urged a vote against it, saying such groups were against free speech and wanted to end capitalism.
It got only 34 percent in the vote - one point more than a year ago.
During the Q&A, Good also answered other pointed questions from shareholders:
- ONLINE-ONLY MEETINGS: Good said Duke ended physical meetings last year as part of an effort to "expand on transparency" with investors. She said double the number of shareholders around the world were able to join last year's first online-only meeting. And she said the company was able to answer more questions, posting the answers to the company's website.
- BOARD DIVERSITY: Asked why there are only two women on Duke's 14-member board, Good agreed the company needs to recruit a more diverse board. But she said the company also has to make sure it has people with the "right skills," time to serve and who represent the company geographically.
- COAL ASH: Someone asked why Duke can't simply ship coal ash - the residue left from burning coal - directly back where it came from. Good's answer was a familiar one to those who have followed the coal ash issue in recent years - that Duke is committed to closing coal ash basins in an environmentally responsible way, "based on science and engineering," and in ways that protect customers and shareholders. Some ash is being moved to new locations, some is being covered and left where it is, and some will be recycled in concrete, Good said. She said Duke has removed about 17 million tons of coal ash in recent years, including 7 million tons last year.
- REPUBLICAN CONVENTION: Another shareholder wondered whether Duke might cover a financial shortfall if Charlotte is picked to host the 2020 Republican National Convention. That's what happened in 2012 when Duke forgave a $6 million loan to the Democratic National Convention in Charlotte. Good's answer: probably not. "We will contribute in a manner consistent with other corporate partners," Good said. "It will be structured differently than it was in 2012."
The meeting lasted about 50 minutes and was streamed live to investors through its website. You can watch a replay at Duke-Energy.com/investors/