After a rocky end to 2015, Sempra Energy handsomely rewarded its top executives evenas the company faces investor complaints over lost share value related to the multimonthAliso Canyon gas storage leak.
Debra Reed, CEO and chairman, received a $3.17 million bonusfor 2015 despite the leak, which drove residentsfrom their homes and prompted California to declare a state of emergency. Coupled with a base salary that increased20%, the bonus helped make 2015 Reed's highest cash earnings year, according toa recent proxy filing and S&P Capital IQ data.
Sempra President Mark Snell also had his highest annual cashcompensation in 2015, aided by a $1.53 million bonus.
In Sempra's performance-based pay equation, the company's earningswere weighted at 85%, while safety and customer satisfaction measures were weightedat 15%. The company's adjusted earningswere $1.31 billion, or $5.21 per share, in 2015, beating both 2014 numbers and consensusestimates for Sempra's performance.
Still, Sempra subsidiary SouthernCalifornia Gas Co.'s Aliso Canyon incident, along with a employee fatality, cut into executive compensation to a degree.
"For 2015, the compensation committee determined that therewould be no payout for certain operational performance measures," the companysaid in the proxy filing. "In light of the Aliso Canyon natural gas leak, negativediscretion was exercised to provide no payout for SoCalGas safety measures and certaincustomer satisfaction measures. The committee also reduced the payout for the SDG&Eemployee safety measure to zero due to a work-related employee death."
SoCalGas discovered the Aliso Canyon leak in late October 2015but was unable to seal the breached well until mid-February. Sempra executives saidin late February that they expect the Aliso Canyon leak to cost the company before fines and litigation,and the incident has had a negative impact on share values.
Sempra has also been targeted by a number of class-action lawsuits from shareholders, and onMarch 28 the securities litigation firm Brower Piven announced yet another. Accordingto the complaint, a Nov. 23, 2015, class action against SoCalGas filed by area residents"significantly" drove down the value of Sempra shares. The Brower Pivenlawsuit would apply to investors that bought Sempra shares between May 14, 2015,and Nov. 23, 2015.
Sempra's share value dropped off in the late fall of 2015 andhas been somewhat slower than the S&P 500 utilities index, which dropped moremoderately, to regain value. In early November 2015, Sempra shares traded for upwardof $105, but by early January, they were down by about 17%, near $87. By mid-March,however, Sempra shares were back above $100.