Members of scana board lack nuclear expertise yet oversaw failed s.c. project while earning a combined $11m business gas mask bong review


This influential group is the board of SCANA Corp., considered one of the most elite and coveted business gigs in the state. And it pays well for a part-time position. Last year, the nine outside directors each took home more than $200,000 in stock and fees.

Among the questionable actions: After an audit early last year raised serious concerns about the work at V.C. Summer, SCANA directors paid themselves more than $2 million in stock and cash for 2016 — a 12 percent raise from 2015. They also heaped extra financial rewards on the CEO and other senior executives.

The directors have big responsibilities, overseeing business decisions on behalf of shareholders of a $4.23 billion-a-year Fortune 1000 company that operates in South Carolina, North Carolina and Georgia. But according to critics, SCANA is lacking in nuclear expertise at the board level, unlike its larger peers in neighboring states.

For now, all eyes are fixed on tiny Jenkinsville, north of Columbia, where SCANA was expanding the V.C. Summer Nuclear Station under a 55-45 partnership with state-run Santee Cooper. Work began in 2009 on what was a landmark project, given it had been about three decades since any new nuclear reactors were built in the U.S. About $9 billion went into the nearly decade-long effort to extend the life of the aging plant by the time lead contractor Westinghouse Electric filed for bankruptcy and work was halted, costing 5,000 workers their jobs.

While the project has been declared dead, SCANA continues to collect about $37 million a month, or a nearly a half-billion dollars annually, from ratepayers through its South Carolina Electric & Gas unit to pay for it, as allowed under state law. About 18 percent of each SCE&G customer’s monthly bill goes toward the debt.

The accountability of the boards became an issue earlier this month. While quizzing Santee Cooper CEO Lonnie Carter at a hearing, state Rep. Micah Caskey asked about the qualifications of the Moncks Corner-based utility’s directors, who, unlike SCANA’s, are political appointees. The lack of technical expertise in the electric utility business bothered the West Columbia Republican.

Lynn Teague took his point a step further through social media. The vice president for issues and action at the League of Women Voters of South Carolina, Teague was watching the hearing. In a Twitter post, she observed that SCANA, like Santee Cooper, also had no directors with any formal training in nuclear energy.

While ratepayers and investors wait for answers, they might be asking whether SCANA’s hand-picked board was up to the rigorous task at hand, whether it could provide the corporate and technical oversight required to stay on top of perhaps the largest and most complex construction project in state history.

"I’m sure there are some nice folks on there," the Charleston Republican said. "They look like they’re well-educated, and I think it’s always good to bring a variety of backgrounds to a board. That’s a plus. … But I don’t see a single person who has any past working experience with nuclear plants or nuclear projects. To me, it’s problematic if they’re asking the state and its citizens to be on the hook for billions of dollars for a project they told us they’re not going to finish."

Leading the board’s five-member Nuclear Oversight Committee, which deals only with the existing reactor at V.C. Summer, is James Roquemore, a respected agricultural entrepreneur who runs a Georgia seed company and Orangeburg-based Super-Sod/Carolina.

SCANA’s two closest investor-owned utility peers have taken a different approach. Charlotte-based Duke Energy has stocked its 13-member board with four directors who have real-world experience, including a former chief nuclear officer for New Orleans-based Entergy Corp.

The proxy advisory firm Institutional Shareholder Services has raised concerns about Marsh, the CEO, also serving as chairman of SCANA. Investors at some publicly traded companies have demanded those top roles be split to keep one decision-maker from amassing too much power and influence.

Maceo Sloan, a Charlotte-based lawyer and investment manager, was first elected as a director in 1997. He was joined by James Bennett, a bank executive with First Citizens in Columbia, and Lynne M. Miller, an environmental consultant from Virginia. Maybank Hagood, CEO of Charleston-based Southern Diversified Distributors Inc., and William M. Bird and Co., has held his board seat for nearly as long, more than 18 years.

"You want to rotate people along to have a more diverse and active board," Elson said last week. "That’s why in these situations … investors are pushing for … limits on directors terms, and … expertise, or some experience, in the area the company specializes in."

"Because our operations and business structure are extremely complex and highly regulated, continuity of service and the development and retention of institutional knowledge help make our board more efficient and effective," according to the company. "That said, we also believe a wide range of tenure, and periodically bringing new members onto the board, allows for consideration of new ideas and processes. We currently have three directors with less than five years’ experience serving on our board."

Marsh’s dual role as CEO and chairman, combined with the lengthy board tenures, are two of the reasons that Institutional Shareholder Services assigned SCANA an overall 9 out of 10 — with 10 being the worst score — on its QualityScore rating, indicating what it called a "high governance risk."

Lucrative fees could be one reason behind the extended stays. Since 2009, when work began on the V.C. Summer project, current and former outside directors have earned a combined $11 million in stock and cash for their services, such as attending quarterly meetings and other required business gatherings, according to filings with the Securities and Exchange Commission.

At the same time, the board boosted the compensation for the five senior managers at SCANA, including base salaries and bonuses, by an average of 7 percent, to a total of $14 million last year. An increase in a subcategory called short-term incentive pay to Marsh and his top nuclear lieutenant, Steve Byrne, was based partly on their oversight of the company’s “nuclear construction activities.”

A board committee approved those increases in February 2016, the same month the so-called Bechtel report that SCANA had commissioned was completed. The secret 130-page independent audit of the V.C. Summer project, which Gov. Henry McMaster released last month, painted a picture of flawed building plans, faulty design work, poor management of contractors and high turnover.

Longtime government watchdog John Crangle, a self-described 40-year investor in SCANA’s stock, is suing the company and its directors in Richland County. In his Sept. 26 complaint, he alleged the board "simply ‘abandoned’ its fiduciary obligations to hold the executives accountable for overseeing and managing the performance of contractors for the project."

Columbia attorney Scott Elliott, who represents large industrial power customers that belong to the S.C. Energy Users Alliance, said it’s difficult to make snap judgments about the board’s actions because it operates in such an "opaque" fashion. Unlike Santee Cooper, SCANA’s board meeting are held in private, and the company isn’t required to disclose many, if any, details about what its directors discuss.