Glimmers of light on Florida Power and Light ... by gimleteye

In Monday's Herald Business Section, "Court records reveal trouble at Turkey Point", readers are provided a rare sighting of details surrounding the resignation of Turkey Point's former senior licensed operator, David Hoffman, amidst a plant shutdown and disputed restart based on safety concerns. It is timely, given that the Public Service Commission is soon to decide whether to grant a rate increase to FPL that will put the burden of $20 billion in new nuclear reactors on ratepayers.

On 4 Jan, three FPL employees filed a report with the PSC alleging that FPL Group ripped off the rate-payers for about $1billion.

(HIT ON IMAGE TO ENLARGE IT)
Here's how it worked, according to one source:

1. FPL Group consolidates yearly reporting for subsidiaries FPL Co. and Next-Era under the single FPL Group tax report.
2. Next-Era pays a low tax rate because of its wind generation portfolio. FPL Group applied this low rate to the whole report.
3. FPL Co. charged rate-payers for the normal corporate tax rate on FPL Co. income.
4. FPL Group pocketed the ~10% difference, which employees allege added up to about $1 billion.

FPL employees had earlier described this practice to the PSC, but were ignored. See pages TR 576 through TR 585 of this filing:

FPL whistleblowers are bringing it up again now with mostly new PSC members. Rate payers, that would be you and me, should be irate.

A reader alerted Eyeonmiami to another brief moment of light another reference to FPL's corporate culture and who benefits. It is a story from the last decade, but still you have to wonder where the money goes:


"Some Directors may have immaculate pedigrees, know their social graces, graduate from well-known institutions of higher learning, become members of the most prestigious/elite organizations, gain riches beyond belief, but are total blind to conflicts of interest and lack common sense. "In April 2001, directors of utility FPL Group Inc. faced a sticky problem. A few months earlier, they'd awarded top executives $62 million in bonuses linked to a merger.... Now the deal had fallen apart and shareholders were clamoring to get the money back. ... After three years and millions in legal bills, executives returned $9 million, based largely on a technicality. Insurers paid another $12.5 million. The FPL saga is an object lesson in why companies rarely recoup money paid to executives for results they didn't actually achieve. Although the concept seems simple, at least from an ethical point of view, so-called 'clawbacks' of executive pay are in practice disruptive, divisive and difficult to pull off. In addition to a murky legal environment, the process is complicated by compensation contracts and insurance provisions. Most boards don't try recovering the money. Those that do often get mired in years of litigation. ... FPL's clawback tale began in December 2000 when shareholders approved the company's $8 billion merger with Entergy Corp. The approval triggered payment of $92 million in cash bonuses to nearly 700 managers. Like many companies, Juno Beach, Fla.-based FPL, the parent of Florida Power & Light Co., had a 'change of control' provision in its compensation plan, designed to retain top talent during a merger or acquisition. FPL's provision was unusually liberal. It took effect even if FPL shareholders ended up owning a significant majority of the merged company. FPL also required the payments to be made when shareholders approved a deal, rather than waiting for it to be completed. Two-thirds of the money went to FPL's top eight officers. The chairman and CEO at the time, James L. Broadhead, received the biggest chunk -- $22.6 million. ... In April 2001, the two companies called off the deal. Former FPL director Marshall Criser says it was only after the deal collapsed that he realized the merger bonuses had already been paid. Mr. Criser, a lawyer, says he expected the board to ask Mr. Broadhead and others to return the money. ... Some directors upset about the payments felt they had no grounds to demand repayment, says Willard Dover, a lawyer and former FPL director. Mr. Dover says some directors also feared hurting relations with Mr. Broadhead and other officers, given the close ties between the executives and the board. Mr. Dover himself used to hunt with an FPL executive. At least three independent directors were friends of Mr. Broadhead.... Mr. Broadhead and FPL's general counsel, who also received the bonus, asserted publicly and to directors that the payments were justified by language in the compensation plans. ... In May 2001, they (FPL directors) formed a committee to review the payments. Directors relied heavily on advice from the company's management. To staff the committee, Mr. Broadhead recommended Mr. Dover and two other directors, and the board agreed. The committee also hired a law firm recommended by FPL's general counsel. After eight months of work, the committee replaced the law firm, citing an appearance of a conflict of interest. In court documents, the directors said they were unaware that the firm, Steel Hector & Davis, had earlier had the job of reviewing and approving the controversial compensation plan. After 16 months of study, the board decided in September 2002 not to pursue repayment of the bonuses. ... Meanwhile, the judge hearing the shareholder suits ruled against the company in a key preliminary ruling. In January 2004, Florida District Judge Alan Gold ... noted that the board's committee had been hand-picked by Mr. Broadhead, and that two of the three members had initially approved the awards as part of the compensation committee. The judge also questioned the independence of FPL's first set of lawyers. The ruling prompted FPL's board and executives to settle the shareholder suit in late 2004. Mr. Broadhead and other executives agreed to repay $22.25 million of their $62 million. Of that, the executives paid $9.75 million according to court documents; insurers covered the rest. ... [T]he long drama prompted changes. In a series of amendments starting in 2001, FPL's board revised the change-of-control provision to take effect only after a merger is completed. It cut potential bonuses in half and made it harder to trigger such a payment." (WSJ, 11/20/06, "Check, Please ---Companies Discover It's Hard To Reclaim Pay From Executives --- Even in Case of Malfeasance, 'Clawbacks' Are Divisive And the Rules Murky ---The Merger That Never Was") If this is an "object lesson," Shareholders are in deep trouble."

What about ratepayers?