Entergy, Inc. is one of the biggest utility companies in the United States, with operations across Texas, Louisiana, Mississippi, and Arkansas. The company was built as a regulated monopoly, with government-guaranteed rates and revenue stream, and ballooned in size during the deregulation of electrical power supply and production that swept across the U.S. in the 1990s. The claims of that initiative sound laughable now—lower rates, more reliable service—but our elected officials said it was just sound public policy. Louisiana’s congressional delegation, J. Bennett Johnston, John Breaux and Billy Tauzin, led the charge.One of the advantages they claimed for the private sector, its flexibility, has turned out to be true. As we are seeing now with major financial institutions, private businesses always argue for less regulation and smaller government, except when they want a handout. That was the predicament of Entergy after Hurricane Katrina, which forced part of the company—Entergy New Orleans, Inc.—into bankruptcy by barging into the Gulf Coast in 2005.
The rest of Entergy was fine. By operating as a holding company for separately incorporated divisions, the company gets the financial power of a large organization, and its executives get the mega-salaries, but if misfortune strikes they limit the damage by seeking bankruptcy protection, another big government program that wealthy Americans regularly use, and bitch about endlessly when the other 98% of us do.
Anyway, Entergy Inc. decided, probably after a lot of soul searching, that their New Orleans division needed to go on welfare. The company demanded that the state of Louisiana hand over $200 million of its scarce Community Development Block Grant funds, which are allocated by the federal government. The CDBG program was intended to fund things like affordable housing, anti-poverty programs, and infrastructure development, like maybe housing for some of the folks still living in trailers down there, you would presume. But big corporations somehow end up getting their mitts on a lot of the money, even with dedicated public servants like our congressmen minding the store.
Entergy got the money, and Entergy New Orleans was able to emerge from bankruptcy and jack up its rates only moderately in Louisiana, the poorest state in the country, which manages to have lots of oil, several oil refineries, and some of the nation’s highest utility rates. The company’s board of directors and its CEO, Wayne Leonard (photo above), were so happy about the turn of events that they decided they deserved a raise. The company’s recent proxy statement reveals that compensation for the top five executives jumped by 60% in 2007, to $42 million, more than 20% of the CDBG grant. Leonard alone made $26.2 million.
You would think the company might want to keep the relationship between their incredible greed and the public bailout kind of quiet, but there it is, in the 2007 proxy statement’s Compensation Discussion and Analysis: “In assessing individual and management performance overall (with respect to stock option grants and overall compensation), the Committee noted the following significant achievements… Our receipt of authorization for $200 million of community development block grants with $181 million received in 2007.” (Entergy, Inc. DEF-14A 3/19/08)
This makes Barack Obama’s call for a law giving shareholders the right to an advisory vote on executive compensation (which is the law in the UK) seem like a great idea, albeit of the door closing with the horse out the barn variety, closing the door symbolically anyway since it’s only an advisory vote. Shareholders propose resolutions about this every year and the corporations always oppose them. Corporations and their lobbyists are naturally screaming their heads off about Obama’s bill and “big government,” so that is something.
This is deregulation in action. Louisiana citizens can’t look to the public officials who foisted this fucking mess on them for help—Johnston, Breaux and Tauzin are all lobbyists now, when they aren’t busy sitting on corporate boards of directors. Tauzin is on Entergy’s, which paid him $167,777 for his advice and counsel last year.
