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FPL pay and raises disclosed, defended

TALLAHASSEE — When Florida Power & Light chief Armando Olivera was asked Tuesday whether he and company executives would be willing to give up a pay raise to help struggling consumers with their bills, he offered a short answer:

“No,” he said, “because that would be short- sighted.”

Olivera, who as FPL’s CEO is paid $3.6 million a year, told state regulators that although the economy is tight, executive pay is crucial to the successful operation of the company and the pay packages offered by FPL are justified.

“It may not look good to the average person who is struggling by,” Olivera said. “When we have to recruit a nuclear vice president, a chief financial officer, you go into the marketplace and you have to pay market rate to get these people, and it’s these people who have really built the company to what it is.”

FPL documents submitted to the Public Service Commission and obtained by the Herald/Times show that FPL has budgeted about $40.5 million for 42 executive salary packages in 2009. If the company’s request for a rate increase of 30 percent is approved, FPL will pay those officials $41.5 million in salary, stock options and incentive pay, the documents show.

Olivera said FPL gave its 11,000 employees an average salary increase of 2 percent this year and ruled out a salary freeze despite the tough economy because of “the competitive nature” of its workforce.

Olivera explained that FPL relies on dozens of highly skilled employees to generate, distribute and maintain a system that is reliable and efficient. Many highly specialized people, such as nuclear engineers, are in high demand in other states and the company needs to pay them well. “We need good people and these people need to be compensated,” he said. “If we don’t, these people will go another place.”

Robert Scheffel Wright, the attorney for the Florida Retail Federation, which opposes the rate increase, pressed Olivera further.

“In what you have characterized as a bleak economy, do you believe that it is fair to ask FPL’s customers to pay rates that include paying you $3.6 million a year or more for your compensation?” he asked.

“Yes,” Olivera answered. “This is not about me. This is about the whole team... To pay our people less than that would ultimately result in higher cost.”

Olivera said that all of his pay comes from customer revenues. He said that customers pay 68 percent of the $7.4 million compensation package paid to Lewis Hay, the head of parent company FPL Group, and shareholders pay the rest.

The 42 executives listed in the FPL documents as making a total of $40.5 million include vice presidents for distribution, power generation, marketing, auditing, nuclear projects, consumer service, engineering and regulatory affairs.

FPL pays those executives a base salary as well as stock awards and incentive pay, Olivera said. The company says the total compensation cost of its 11,000 employees is about $1 billion a year; 4 percent, or about 440 employees, make more than $165,000 a year.

The PSC released the salary detail to the Herald/Times but blacked out documents that reveal both the names and specific compensation because it said it can’t make the information public since FPL is challenging the commission’s order to disclose the data. The commission ordered the salary data released last week because it wants to decide whether FPL is spending too much of its customers’ money on salary and bonus packages.

On Tuesday, Gov. Charlie Crist joined Attorney General Bill McCollum and Chief Financial Officer Alex Sink — who each earn about $133,000 a year — in opposing the rate increase. When pressed, Crist seemed ambivalent about whether FPL should comply with the commission request to disclose its salary data.

“It wouldn’t bother me,” he said, adding: “I don’t know much about it.”

Wright, the Florida Retail Federation attorney, said the salary data is central to the PSC’s attempt to decide whether FPL’s rate increase request is “fair and just and reasonable.”

He asked why Olivera should be paid more than Miami-Dade Schools Superintendent Alberto Carvalho, who manages more employees and is paid $275,000 a year plus benefits.

“We’re not talking about recruiting school superintendents at FPL,” Olivera responded.

“When we go into the marketplace, we have to pay executive rates... I’m not taking anything away from school superintendents but it’s the reality of the world we live in.”

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