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| Tom Fanning |
Thomas Fanning, CEO of the nation's second largest utility, plans to leave Atlanta-based Southern Company this spring. He is expected to exit with a retirement package reportedly worth about $100 million. Should an executive be so richly rewarded for a tenure that was marked by rampant incompetence and fraud. The answer from longtime Alabama attorney Donald Watkins is "Hell, no!" And he intends to do something about it by seeking to have the assets frozen until a Georgia district attorney (DA) can make a determination about a criminal complaint that has been filed against Southern Company on Fanning's watch.
Watkins, a leading voice in online reporting about scandals engulfing Southern Company, contends the retirement funds are tainted by a massive, long-running accounting-fraud scheme. Under the headline "Thomas Fanning: Will He Pull Off One Last "Con Job" at the Southern Company?" Watkins writes:
Between today and May 24, 2023, I will be working to encourage the Fulton County, Georgia District Attorney’s Office to freeze Thomas Fanning‘s exit package until District Attorney Fani T. Willis has had time to properly investigate the criminal complaint that was filed against Southern Company executives with her office on April 13, 2023. Fanning's exit package is tainted by the massive $27- billion accounting-fraud scheme at his company.
Freezing Fanning's $100-million retirement “payout” is a better option than trying to claw it back after Fanning exits the company.
How to describe Fanning's performance at Southern Company, parent firm to Alabama Power, Georgia Power and other subsidiaries in a six-state service area? One could charitably describe it as "disastrous." Even worse, the shoddy workmanship at the Vogtle nuclear plant near Waynesboro, GA, could be setting the nation up for a Three Mile Island-style disaster in the future.
Despite his many failings, Fanning seems to maintain a swami-like grip on the Southern Company executive branch. Is it deserved? Evidence overwhelmingly indicates it is not. Watkins calls Fanning a "Wall Street version of Harry Houdini" and writes:
Fanning is one board meeting away from walking out the door with a retirement package valued at up to $100 million. His last meeting is scheduled for May 24, 2023.
Fanning is the only CEO of a New York Stock Exchange/Fortune 500 company that built a brand new $7.5-billion energy-production facility – the Kemper project in Mississippi -- that was $4.5 billion over budget and so defective that it had to be demolished in 2021 before the facility was ever placed into commercial service.
Yet, Thomas Fanning was not fired. Like the great escape artist, magic man, and stunt performer Harry Houdini, Fanning escaped a firing.
Fanning's "cult of personality" still seems to resonate with the most important decision-makers at Southern Company. Writes Watkins:
At the Southern Company board of directors’ special meeting on April 17, 2023, CEO Thomas Fanning rallied the troops to remain publicly united in the face of two separate criminal complaints (i.e., alleging a massive accounting-fraud scheme and racketeering conduct under state of Georgia criminal statutes and federal criminal laws) and one complaint with the U.S. Nuclear Regulatory Commission (alleging that the Southern Company is “unfit” to hold its Owner/Operator’s license for Units 3 and 4 at the Vogtle Nuclear Power Plant in Waynesboro, Georgia).
Fanning encouraged the troops to circle the wagons around him, as they have done since construction cost overruns started at the company’s coal gasification plant in Kemper, Mississippi, ten years ago.
Even though the Southern Company has not been profitable in years and is living off borrowed money, the board of directors maintained and perpetuated its “fake it 'til you make it” front by declaring a $0.70 per share quarterly dividend. The dividend was a 2.9% increase from its last quarterly dividend of $0.68.
Like the previous dividends in recent years, it was paid from borrowed money, instead of earnings. It was the 22nd straight quarterly dividend increase -- which is a red flag, in and of itself.
Will "Harry Houdini" escape again, this time with about $100 million in tow? Not if Watkins has a say in the matter:
Fanning has mismanaged construction costs at the Vogtle Nuclear Power Plant Units 3 and 4, which was originally estimated to cost $14 billion dollars, to the point that they have skyrocketed to $35 billion dollars today.
Units 3 and 4 were originally scheduled to be placed in service in April 2016 and April 2017, respectively. The Southern Company’s construction of Units 3 and 4 has been so shoddy and mismanaged that there is no concrete date when these two defective nuclear power Units will pass final inspection and be placed into service.
The Vogtle construction project has been compared to Three Mile Island – the only U.S. nuclear power plant to experience a meltdown and closure. This project is to the nuclear power industry what “lemon cars” are to the automobile manufacturing industry, except a meltdown at Vogtle would be a catastrophic Three Mile Island level event in-waiting.
Yet, Fanning has not been fired. His Houdini magic still works on his board members, a couple of whom privately question whether Fanning is a Bernie Madoff “con man.”
Instead, with a Jim Jones-like power of persuasion, Fanning has duped a majority of his board members into believing that a CEO of a historically unprofitable publicly traded company, which has lost $28 billion on three defective construction projects during a ten-year period, is doing such a great job that he actually deserves a retirement package from the company of up to $100 million.
I do not share this view, and I am not alone. There are "insiders" in the executive suite of the Southern Company's headquarters in Atlanta who share my view in this regard. Fanning's retirement package constitutes corporate irresponsibility and recklessness in the first degree.
He certainly isn't worth $100M. Getting rid of an executive with that type of track record would be easy, you're fired, not a $100M pay out. Can't see where he has performed any useful functions to increase profitability of the company. Glad I'm not a share holder.
ReplyDeleteNice reporting.
Nobody is worth that! And they just keep giving the customers the big f u and middle finger! Real classy people. But $100 million will make it so you don’t care I suppose. Imagine how many impoverished or abused people that would help. A tenth of that would provide a really comfortable retirement.
ReplyDeleteYes, and he's being rewarded for performing poorly at his job. Boards that approve packages like this apparently feel no obligation to the public.
ReplyDelete