The executive compensation gods must be crazy
© St. Petersburg Times, published April 4, 2001
On the first day, in 1989, Dick Korpan gets hired at age 47 as chief financial officer of Florida Progress Corp. -- parent of the Florida Power electric utility.
And he saw this was good.
On the second day, Korpan is promoted and in 1992 gets a 36 percent pay raise to $380,000 and a $45,000 bonus.
And he saw this was very good.
On the third day, Korpan's pay jumps in 1993 to $823,604 amid heavy company job cuts.
And he saw running a business built on a monopoly utility was too good to be true.
On the fourth day, Korpan in 1996 gets a 22.6 percent raise to $1.2-million even though company earnings fell.
And he saw this was a corporate gravy train with no stops in sight.
On the fifth day, after years of promising employees and shareholders a future of joint ventures and aggressive expansion, Korpan in 1999 instead sells Florida Progress to a North Carolina power company.
And he saw this was a deal that last year brought him $17.4-million in salary, bonus and golden parachute -- even though he was CEO for only three years.
On the sixth day, Korpan retires to start collecting a retirement pension of $828,845 a year . . . for the rest of his life.
And he was amazed to see he could get paid almost as much doing nothing as he had been paid in a job with a fancy CEO title.
On the seventh day, at 59 years of age, Korpan rested while laughing all the way to the bank.
Sure, I know. In the ever bigger scheme of corporate excess, any fable of Korpan's road to self-enrichment will never rate even a footnote.
But in the Tampa Bay area, Korpan's tale is no mere afterthought. It's a chapter story, told over many years, of how too much compensation for too little leadership became the downfall of a company's independence.
Florida Progress, as lacking in self-esteem as it seemed in its final years, was for decades one of the bigger locally based corporations in Central Florida.
But Florida Progress insisted it could not survive on its own. That selling out to a North Carolina player (of about the same size) was the best option it could deliver its shareholders.
Nonsense. Florida Progress fell on its own sword from corporate exhaustion. The St. Petersburg company lacked the passion and fortitude to fight on its own in the face of increasing competition in the electricity business.
Want proof? Look at TECO Energy, the parent of Tampa Electric Co.
A few years ago, TECO was on the ropes. Stock was down. Top management was in turmoil. Takeover by some bigger power company seemed inevitable.
Now TECO's on the rebound. Showing some backbone. Fresh ideas. Rising share price. And still independent. It's buying into or building power projects in other states and other countries. When TECO managers speak, they actually sound focused. Nor do they cringe at the prospect of industry deregulation.
None of that guarantees TECO won't be picked off by some larger competitor.
But let's give TECO an "A" for trying. For offering up a corporate example in Tampa Bay of not giving up and rolling over so quickly.
Other examples from Florida's power industry are far less flattering.
Just look at this week's unwinding of South Florida's FPL Group deal to buy Entergy Corp. The two energy companies, which together would have been the country's largest power business, called off their merger amid nasty finger pointing.
One thing was not called off. Top FPL Group executives have no plans to return more than $51-million in bonuses received as part of the company's proposed Entergy deal. FPL chief James Broadhead received $36.7-million in compensation last year, including $21-million for the Entergy deal.
Even though the deal collapsed this week, FPL shareholders in December said company executives could keep the bonuses. No matter what.
How did Korpan win $828,845 a year for life? How can Broadhead keep $21-million on a deal gone bad? There's way too much for way too little going on here.
In the boardrooms where these deals get blessed by CEO pals, something's seriously broken.
- Robert Trigaux can be reached at email@example.com or (727) 893-8405.
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