Entergy: Request for Report on Compensation Incentives Rewarding Reductions Of Carbon Emissionss
- The UN IPCC “Synthesis Report” states that “Continued emission of greenhouse gases will cause … long-lasting changes in all components of the climate system, increasing the likelihood of severe, pervasive and irreversible impacts for people and ecosystems.”
Entergy’s service territory is vulnerable to destructive storms: “climate and weather disasters in the [Southeast] have exceeded the total number of billion dollar disasters experienced in all other regions of the country combined”. (National Climate Assessment 2014, Southeast Chapter)
Hurricane Katrina bankrupted Entergy Louisiana, and hurricanes Katrina, Rita, Ike, and Gustav cost Entergy $2.8 billion in restoration costs. (Entergy CDP 2013)
Though Entergy has sustained massive losses related to climate intensified disasters, Entergy is also helping to cause climate change. Entergy’s total corporate carbon emissions rose from the prior year in 2007, 2008, 2010, 2011, and 2013. (American Carbon Registry, Entergy Account)
Entergy’s aging coal plants, Independence and White Bluffs, disproportionately contribute to the company’s carbon emissions. These two plants represent 11% of Entergy’s fuel mix (Ceres, Benchmarking Air Emissions, 2014) but result in approximately 33% of the company’s Scope 1 emissions (Entergy CDP 2014), and were listed as two of the nation’s most polluting power plants in the U.S. (“America’s Dirtiest Power Plants”, Environment America, Sept 2014). Entergy has announced no plans to retire the plants despite increasing regulatory risk.
A United Nations’ report found that “Companies should link appropriate [Environmental, Social, Governance] metrics to reward systems in a way that they form a meaningful component of the overall remuneration framework.” Similarly, “[d]isclosures of relevant ESG goals and their associated links to compensation should be integrated into official pay disclosures.” (UNEP & UN Global Compact, “Integrating ESG Issues into Executive Pay, 2012)
“Increased investor attention to non-traditional drivers of value has led some companies to include sustainability metrics in the design of their executive incentive programs.” (GMI Ratings “Sustainability Metrics in Executive Pay” 2014). Indeed, more and more companies have added specific, measurable GHG reduction metrics to executive compensation plans. Such companies include Intel, Xcel Energy, Alcoa, ING, National Grid, Shell, Suncor Energy, among others. (ConferenceBoard, “Linking Executive Compensation to Sustainability Performance.”, 2012)
Although the company’s proxies occasionally reference consideration of non-financial factors in setting bonus levels, no standardized metrics based on carbon reduction have been included in the company’s incentives packages.
RESOLVED: Entergy shareholders request that the Board’s Personnel Committee, create a new compensation incentive, when setting senior executive compensation and/or bonuses, that directly and routinely rewards specific, measurable reductions of tons of carbon emitted by Entergy in the preceding year.