CPS Energy Trustees Meeting to Retain CEO Beneby

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President and CEO of CPS Doyle N. Beneby. Photo by Scott Ball.

For the fourth time this year, the agenda for CPS Energy‘s monthly board meeting states that trustees will meet in closed executive session and then return to an open public meeting for “discussion and possible vote regarding CEO compensation.” For the last three meetings, however, trustees ended their meeting without public discussion or action regarding President and CEO Doyle Beneby’s compensation.

Trustees are prepared to act tomorrow morning and they are facing a very real deadline: Beneby is considering a job offer outside of San Antonio that apparently would pay substantially more than he now earns as one of the highest paid public sector executives in San Antonio. CPS Energy Board Chair Nora Chávez, a municipal finances expert and managing director of Texas Public Finance group for Stifel Nicolaus & Company confirmed Tuesday that the board is acting to retain Beneby.

“Yes, we have been contemplating the CEO’s performance for the past couple of months, and we are ready to take action,” Chávez said. “Mr. Beneby has done an outstanding job in leading CPS Energy. The facts, stats and his performance speak for themselves. I can validate that Mr. Beneby has informed the Board that he is considering options external to CPS Energy. The Board hopes to continue conversations with Mr. Beneby about a longer-term contract to keep him here in San Antonio.”

Wednesday’s 9 a.m. board meeting was moved up from Monday, April 27, the first business day after Fiesta, apparently because of the job offer. The publicly posted agenda on the CPS Energy website was changed Friday to show the new meeting time.

Neither Chávez or Beneby would speak about the job offer, or whether a board decision Wednesday to increase his compensation will result in his agreement to sign a new contract.

“It has been a pleasure leading CPS Energy over the past five years, and I am thankful to our incredible CPS Energy team of employees for their support, and for their commitment to furthering our mission of delivering world-class value to our local community,” Beneby said in a statement when asked for comment on this story. “I am honored that the Board is reviewing my contract and compensation package, and I look forward to ongoing discussions.”  

The CPS Energy board consists of four appointed members, one from each geographic quadrant of the city, and the mayor serves in an ex officio role, reflecting the fact that the utility is a municipal asset and 14% of its gross revenues flow into the City’s general fund each year. That means Mayor Ivy Taylor, who is seeking election to a full term on a crowded ballot, will have a vote on the matter. The other trustees include Vice Chair Edward Kelley, the retired president and CEO of USAA Real Estate;  Dr. Homero Guevara, an economics professor at Northwest Vista College; and Derrick Howard, the executive director of Freeman Coliseum.

Reports have circulated in the business community for several months that Beneby was being recruited to leave CPS Energy and San Antonio for a more lucrative leadership position elsewhere. One business leader said Beneby has been the target of several recruitment efforts, and that were he to accept a position with an investor-owned utility, it would be worth millions of dollars in stock options as well as a substantially higher salary and bonus.

The board at the CPS board of trustees meeting.  Photo by Scott Ball.

The CPS Energy board and senior executives during a recent meeting. Photo by Scott Ball.

Beneby is one of the highest paid public sector executives in the city, yet his compensation is below the median rate for top utility executives. CPS Energy is the nation’s largest municipal electric and gas utility, but across the board its managers and salaried employees are paid less than their counterparts nationwide, according to a study the utility commissioned.

His accomplishments since his hiring in 2010 are considerable:

  • Beneby shifted hundreds of millions of dollars away from aging coal plants and instead expanded the utility’s investment in renewable energy sources with a goal of generating 20% of all energy from renewables by 2020. The move anticipated new regulatory action limiting coal plant emissions and the growing demand for clean energy alternatives.
  • The shift in capital led to major rate relief for customers and to the construction of a multi-site 400MW solar energy network that now is partially built and in operation. CPS Energy ranks number one nationally in wind-generated energy and number six in solar-generated energy among all municipal utilities. Purchase of an existing natural gas plant further reduced San Antonio’s dependence on coal-generated power.
  • Beneby’s New Energy Economy initiative has brought 600 new jobs to San Antonio, and led several companies to relocate their operations here in return for long-term contracts with CPS Energy. It also led to construction of the $130 million Mission Solar manufacturing facility at Brooks City Base.
  • Ratepayers pay the lowest energy prices in any of the nation’s top 30 cities, in part because of deferred rate increases. Planned rate increases in the utility’s long-term strategic plan were eliminated for 2012-13, 2014-15, and could be eliminated for 2016-17. That represents about 20% in canceled rate increases.
  • CPS Energy has maintained a AA+ credit rating, unequaled by any other Texas energy utility.
  •  CPS Energy is on track to contribute a record $365 million to the City of San Antonio in 2015, nearly one-third of the City’s $1.1 billion General Fund.

Beneby earns a base salary of $425,000 a year, deferred income equal to 50% of his base salary, and a performance bonus that can add hundreds of thousands of dollars more if he meets or achieve goals, which he has done in prior years. In a good year, Beneby can double his base salary. He is in the second year of a three-year contract that expires Jan. 31, 2016.

CPS Energy, in terms of size and reach, has 3,000 employees who serve 765,000 electric customers and 335,000 natural gas customers in a 1,515 sq. mile service area that includes Bexar County and parts of seven other South Texas counties. It has $2.7 billion in annual operating revenue.

Larry Weis, general manager of Austin Energy, which is owned by the City of Austin, earns a base salary of $314,000. Austin Energy, by comparison, is the eighth largest municipal utility in the nation, with 1,672 employees serving 430,582 customers, with $900 million in annual operating revenues. It contributes about $105 million annually to the City of Austin’s general fund.

A better comparison to measure Beneby’s compensation would be his counterpart, Mark Bonsall, general manager and CEO of Phoenix-based Salt River Project, a municipal utility which provides electricity, gas and water to about 985,00o customers. Bonsall earns a base salary of $863,00, which is set at 75% of the average paid to CEOs of municipal and investor owned utilities.

The highest paid municipal utility CEOs received compensation packages well above what Beneby earns in San Antonio, but none are paid as well as the top executives of investor-owned utilities, who tend to oversee larger operations that market power over broader regions to a larger customer base.

David Crane, the CEO of NRG Energy in Houston, the nation’s largest competitive energy generator, earns a base salary of $1.2 million with total compensation averaging between $4-5 million annually. Bob Shapard, CEO of Oncor in Dallas, which provides electricity to 10 million people in Texas, earns $1.6 million in salary, bonus and other compensation.

It isn’t possible for CPS Energy trustees to find exact comparisons because no two municipal utilities are the same size, and unlike CPS Energy, some operate alongside natural gas providers, while CPS Energy provides both. Some, like Salt River Power, also are the water utility.

Public sector executive salaries are a sensitive subject in general, and especially so in San Antonio, and the trustees likely will draw media fire for increasing Beneby’s compensation. I’m not neutral on the matter, either. I’ve admired Beneby’s leadership and innovation since his hiring five years ago when I was still editor of the Express-News, and afterwards, I spent four months working for him as a consultant as he undertook internal restructuring of the organization that led to enough cost savings to cancel long-planned rate increases.

Former Mayor Julián Castro was fond of declaring San Antonio the seventh largest city in the United States. As a metropolitan statistical area, however, San Antonio-New Braunfels is still ranked 25th on the U.S. Census list. Business leaders I interviewed strongly support Beneby and believe he has earned a more competitive compensation package, but many acknowledged that the board and Beneby will take heat, regardless of his performance metrics.

San Antonio City Manager Sheryl Sculley

San Antonio City Manager Sheryl Sculley

City Manager Sheryl Sculley often is attacked by those who do not support her annual salary of $400,000 and a recent bonus of $65,000, even though she went four years without a salary increase from 2008-2013. Under Sculley’s leadership, San Antonio has become the only U.S. city with a population of more than one million people with a Triple A credit rating from all three major rating agencies. Residents have not had a tax increase in the decade she has been in her position.

Interestingly, the city’s highest paid public sector leader, Dr. William Henrich, president of the UT Health Science Center, earns just over $700,000 a year, but seldom is the subject of criticism, perhaps because he is in the news less than Sculley or Beneby, or perhaps people are less apt to speak critically of a physician. Henrich is a specialist in kidney diseases.

“The very best public sector leaders can save citizens tens of millions of dollars a year, but frankly, the media could care less, and the public does not fully appreciate that return on investment,” said one San Antonio CEO, who said he did not want to be quoted and be seen as pressuring CPS Energy trustees. “To simply focus on someone’s compensation package at the expense of looking at what that individual saves ratepayers over the long-term with strong, smart leadership is self-defeating.”

San Antonio Hispanic Chamber of Commerce President and CEO Ramiro Cavazos

San Antonio Hispanic Chamber of Commerce President and CEO Ramiro Cavazos

“We love high wages when we are on the receiving end, but we have more trouble understanding the importance of compensating top talent to keep them in our city,” said Ramiro Cavazos, CEO and president of the San Antonio Hispanic Chamber of Commerce. “Doyle Beneby has been a tremendous CEO and one that any utility in the nation would be happy to have as CEO. He’s innovative and he happens to be a strong financial manager, too. We need leaders like him who can look into the future. I’m a big believer that you get what you pay for.”

Yet San Antonio is a city where the mayor and City Council still work full-time for a token honorarium, unchanged since it was first set in 1951: $20 a week for city council members and $50 a week for the mayor. Voters in the May 9 City Election will decide whether to amend the City Charter and start to pay officeholders modest salaries equal to the median household income in San Antonio. Even if the measure passes, officeholders will earn less than a first-year public school teacher and there will be no provisions for future salary increases. The mayor and council members also would earn less than half what Bexar County Judge Nelson Wolff and members of the Commissioners Court are paid, even though the county budget is substantially smaller. Yet county salaries seldom draw much public attention.

Henry Cisneros, chairman of CityView and the former San Antonio mayor and Secretary of Housing and Urban Development in the Clinton administration, was the keynote speaker at the annual San Antonio Chamber of Commerce gala at the Grand Hyatt Hotel . Courtesy photo.

Chairman of CityView and of the San Antonio Chamber of Commerce Henry Cisneros. Courtesy photo.

“Doyle Beneby is the best thing to happen to CPS Energy in a very long time, someone who has taken the organization to a new level, someone who could take other parts of our city’s infrastructure to a new level,” said Henry Cisneros, chairman of CityView and chairman of the San Antonio Chamber of Commerce. “It would be a major loss – I would put it in the category of a setback for the city – so it would be foolish not to keep a person who wants to stay in San Antonio if he can.”

Cisneros said Beneby is serving as the chamber’s vice chair, and in that role is exploring ways for local government entities to work together more effectively and efficiently.

Full disclosure: As noted in the story, I consulted with CPS Energy for several months in 2012, and my wife, Monika Maeckle, is a former CPS Energy communications director who still  works as a part-time consultant for the utility on environmental and new energy issues.

*Featured/top image: CPS Energy President and CEO Doyle Beneby. Photo by Scott Ball.  

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14 thoughts on “CPS Energy Trustees Meeting to Retain CEO Beneby

  1. Let him walk! The guys reeks of pursuit of the 1 percent lifestyle and thinks he is underpaid at over 400K..bye!

  2. People need to look at the facts. CPSE generates over 2 BILLION in revenue a year and contributes substantially to the city budget. The CEO’s pay is pennies of that amount, yet his ability to affect the contributed amount is HUGE. Would anyone be in a uproar if CPS contributed $10 million less to the city? No, because no one looks at the details, yet everyone is scrutinizing the man that could easily do that to the city. Some people will walk over a dollar to pick up a penny.

  3. For those saying let him go, do you believe they’ll find a significantly cheaper replacement? If so, what’s a fair salary for this person?

  4. Beneby has “earned” his salary on the backs of the full time working stiffs out in the field. Cut jobs, force remaining staff to pick up the slack. Then when the ratepayers wonder why service is so slow, throw out smoke and mirror temporary fixes like hiring short term contractors who don’t give a rat’s ass about the work. Wait for public outcry to die down. Resume job cuts. Celebrate!! You cut costs so pick up that bonus and claim you deserve more.

  5. The longstanding ‘maybe’ goal of a 20% renewable energy mix by 2020 – even with a planned and partially built 400MW solar energy network – is serious foot-dragging in a sunny and windy state, particularly when compared with Austin at 31% today and aiming for 35% by 2020 (likely to be achieved in 2016) and 50%+ and net-zero greenhouse gas emissions in the near future.

    Where’s the update on CPS Energy’s recently tendered Community Solar and Rooftop Solar programs? Are these programs considered aspects of the planned and partially built 400mw solar ‘network’?

    More importantly, where are the meaningful renewable energy goals, achievements and shared benefits? Including considering the water costs of current non-renewable approaches to energy production in San Antonio?

    San Antonio seems to be stuck at a 16% renewable energy mix and is noticeably lacking solar panels on public buildings and structures including schools as well as commitments to 100% renewable energy use by COSA and other public entities.

    Current avenues for subscribing to and supporting 100% renewable energy (‘windricity’) are poorly promoted and incentivized and the latest ‘community’ solar programs (replacing 2010’s ‘solartricity’?) seem aimless and at odds with the solar industry – including Tesla partner and solar sales, lease and loan company SolarCity, which has criticized CPS Energy management in national press: http://www.usatoday.com/story/money/columnist/2015/02/15/loveless-solar-power-san-antonio/23384349/

    Other cities in Texas and elsewhere have surpassed San Antonio in regards to renewable energy mix and commitments, raising questions about the quality and cost of CPS Energy public utility management. COSA needs to get in front of this public utility and steer it towards serving the city’s and residents interests – with or without Beneby.

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