When former Xcel chief executive Wayne Brunetti cleans out his desk Dec. 15, he’ll walk into a retirement package of about $1 million a year plus full medical benefits, financial planning and tax advice.
That’s on top of the $4.05 million he is getting for consulting services, or $24,107 a day from July to December, to ensure “an orderly transition” to new president Richard Kelly.
Brunetti, 65, who held the job for four years, resigned July 1.
If Brunetti chooses, after Dec. 15, he can also sell his 303,260 shares of stock worth about $5.5 million at the price of $18 a share mentioned in a March filing with the Securities and Exchange Commission.
The large compensation package, funded in part by 1.1 million Xcel customers in Colorado, might sound excessive, given rate increases of up to 30 percent approved recently by the Colorado Public Utilities Commission.
Brunetti is just one of hundreds of executives under increasing scrutiny by company boards across the country for lucrative compensation contracts, said Robert Bearman, a lawyer who counsels companies on corporate governance, including compensation, at Patton Boggs LLP’s Denver office.
The problem for company directors, including Xcel’s, is trying to renegotiate executive contracts after they’ve been set at inflated figures.
“The disparity between what executives receive and rank-and-file employees receive has continued to increase, so that is being scrutinized again,” Bearman said. “But it’s hard for boards to say the times have changed.”
Brunetti, through a spokesman, declined to be interviewed.
Brunetti’s retirement pay is less than he would have made had he received the full compensation offered by his contract, which runs through 2007, according to an Xcel Energy filing with the SEC.
The power company manager was originally set to make a base yearly salary of $1.065 million, a bonus for another $1.065 million, and a long-term bonus of an additional $4.4 million, according to the federal filing.
Under the new retirement agreement, Brunetti has agreed not to compete with Xcel for two years after he leaves or to disclose any confidential Xcel information.
While Bearman is critical of mediocre managers receiving huge financial packages for their work, he said executives who deliver results should be recognized. He singled out for praise Richard Notebaert, the former Ameritech executive who took over the helm at Qwest Communications International in 2002 when the telephone company was under a financial cloud.
“This guy got a rich package, but he has delivered,” Bearman said of Notebaert. “I think that overall, there’s a compensation crisis, and there are many mediocre companies that have richly rewarded CEOs. In the Qwest case, that’s the exception.”
Boards also are more closely questioning how much executives receive in stock and stock options, Bearman said. Stock options used to be an incentive for CEOs to do better, he said. Now that company stock is usually worth so much more than an executive’s salary, it’s just overkill, Bearman said.
Edgar Woolard Jr., compensation committee chairman for the New York Stock Exchange, believes his internal pay equity formula can help stop compensation madness. An independent board within a company sets the executive’s pay based on average pay given to senior managers at the company, not the industry.
“It all goes back to accepting that this is a significant problem,” Woolard told The New York Times recently, “and thinking very carefully about it at the compensation committee and the board, and not allowing the CEO to have any input into the process.”
Staff writer Beth Potter can be reached at 303-820-1503 or bpotter@denverpost.com.
