This article has been updated.
CPS Energy’s Board of Trustees approved a contract for new President and CEO Rudy Garza on Tuesday morning that would pay him $655,000 annually.
It will be the first time the utility’s CEO compensation does not include incentive or at-risk pay based on meeting certain metrics. CPS Energy ended its executive bonus program in 2020, canceling $13 million in bonuses that would have gone to 1,800 employees at the beginning of the pandemic.
Earlier in the day, utility officials declined to disclose details of the contract, then issued a press release Tuesday afternoon. In addition to salary information, the release states that Garza has a three-year contract with a two-year extension option.
Garza told reporters after the meeting he is “very satisfied” with his compensation package.
Trustees voted 4-1 to approve Garza’s new contract during their monthly board meeting. Two weeks ago, the utility voted to conclude its search for a new CEO and begin contract negotiations with Garza.
Trustee John Steen was the sole vote against Garza’s appointment, voicing dissatisfaction with both the CEO search process and the selection of Garza. The other four trustees, including Mayor Ron Nirenberg, who sits on the board in an ex-officio capacity, articulated strong support for Garza and congratulated him on dropping ‘interim’ from his title.
Steen also was the sole trustee to vote against concluding the CEO search last month. On Tuesday Steen called Garza “a fine person and capable executive,” whose resume “does not describe a person who’s positioned himself to lead a $13 billion electric and gas utility.”
Vice Chair Janie Gonzalez, who led the CEO search, dismissed Steen’s comments as subjective and noted the groundswell of support Garza has received from employees and fellow energy industry leaders.
“At the end of the day, we went through a very thorough process,” Gonzalez said. “This is not a handout; Rudy’s here because he earned this position.” But she noted that as the utility’s first Hispanic president and CEO, Garza will likely be held to a higher level of scrutiny.
Garza acknowledged his unorthodox path from his hometown Corpus Christi to the corner office in an emotional interview after the meeting.
“Where I come from, the road to get here is a lot different,” he said, holding back tears. “I’ve actually had calls from members of the community telling me how important me being successful in this role is to them. That’s what it means.”
Former CEO Paula Gold-Williams, who stepped down in October of last year after criticism of her handling of the 2021 winter storm and an exodus of longtime executives, earned an annual salary of $485,850, but typically earned closer to $1 million once bonuses were factored in.
Also during Tuesday’s meeting, Garza and the board briefly discussed the $75 million in additional revenue CPS Energy paid to the city this year.
CPS Energy returns roughly 14% of its gross revenues to the city annually, which makes up about one-third of the city’s general fund. With record heat this summer and high natural gas prices, that revenue was far higher than expected, about $436 million instead of the projected $361.2 million.
City Council has been debating how to spend the money; the city manager had proposed returning much of it to CPS Energy customers in the form of a rebate, but that option appears to be on life support, as several council members have advocated for investing the funds toward city efforts to address climate change instead.
While Garza gave no official stance on which of these plans he’d like to see enacted, he confirmed that the utility is supportive of the city’s proposal to infuse up to $7.5 million into CPS Energy’s Residential Energy Assistance Program.
Garza said if the city does decide to refund customers, it will likely be in customers’ November bills, as it may be too late to include them in October bills.
During his financial report, CPS Energy’s Chief Financial Officer Cory Kuchinsky told the board that the utility itself is not facing any kind of windfall. While it has taken in more revenue from higher bills due to the unrelenting heat, that increase will likely be a wash due to underperforming wholesale revenue and high natural gas prices, he said.
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