See more of the story

Xcel Energy wants to ensure a stable leadership team during its transition to clean energy, so the company's board voted to pay $9 million to Chief Executive Bob Frenzel should he stay through February 2028.

The retention awards were made despite progress on some of the company's recent clean goals being slightly behind target. In total, $11.15 million in time-restricted stock awards were given to Xcel executives to stay.

Xcel's other top four executives received retention awards in 2024 of $350,000 to $800,000 that will be paid if they stay with Xcel through the end of 2026. Frenzel's awards were granted in October; he will receive a third of the awards in February 2027 and the remainder in February 2028, provided he stays with Xcel.

The company disclosed the awards in its annual proxy statement filed last week, which also detailed Frenzel's pay for 2023.

A board committee "made the special award after an evaluation of business risks, need for long-term continuity of leadership required to execute Xcel Energy's vision and strategy and the intense competition for executive talent in the utility industry," the board laid out in the proxy.

Here's an outline of Frenzel's compensation:

Total compensation for the year ended Dec. 31: $5,758,820

Salary: $1,300,000

Non-equity incentive plan compensation: $1,811,160

All other compensation: $70,780

Value realized on vesting shares: $2,576,880

The proxy also outlines median compensation:

Median employee compensation: $140,980

CEO pay ratio: 151 to 1

Total 2021 shareholder return: -8.7

Note: Frenzel joined Xcel in 2016 and was named CEO in 2021. His compensation of $5.8 million in 2023 included the realized value of previously issued stock awards and was 24% lower than last year's total of $7.6 million. The figures for 2023 and 2022 do not include the grant date value of the new equity awards he got in those years.

Frenzel's realized compensation went down in part because executives earned a smaller cash incentive bonus than they did in 2023. Those awards are based on five main metrics: electric system reliability, employee and public safety, customer satisfaction, diversity, equity and inclusion goals and a wind availability factor. Payout of those metrics is also dependent on the company's earnings per share. When the EPS multiplier was applied, executives earned 93% of the targeted amount.

The special retention award of $9 million in restricted stock units to Frenzel is in addition to the $9 million in restricted stock awards that are a regular part of Frenzel's compensation. While the retention stock award is time-based, 80% of the long-term restricted stock awards are based on relative total shareholder return and progress on the company's carbon dioxide emission reduction goals.

In 2023, Frenzel earned 41% less from previously issued long-term equity awards. Xcel's stock performance in relation to its peers in the 2021 to 2023 performance period meant there was no payout for that metric and the company was slightly behind its targeted carbon reduction goals for that three-year period earning executives less than the targeted amount for that goal.

Company officials pointed to statistics that show competition for executive talent in the utility industry.

"One indication of the intense competition in the utility industry is the fact there have been 14 CEO movements within our peer group in the last 12-36 months," company officials noted in an email response.

At least one other utility company CEO has gotten a retention award in recent years but shareholders of that company objected. In 2021, the board of Centerpoint Energy gave then-CEO David Lesar 1 million restricted stock shares whose grant date value was $25.2 million. In 2022, Centerpoint Energy shareholders voted down the annual non-binding advisory vote on executive compensation in part based on that award.

Lesar's retention shares fully vested after three years and he retired Jan. 5. The value of Lesar's restricted share awards that vested in 2023, which included a portion of those retention awards, was $37.6 million.

The Energy and Policy Institute, a utility watchdog organization, points to a discrepancy in rising pay of executives at investor-owned utilities. "There is often a real divergence between what the experience shareholders and executives have and what the experience customers have," said organization spokeswoman Karlee Weinmann.