The two top executives at MidAmerican Energy Holdings Company (MEHC) cashed in stock options worth a total of $123 million last year. The stock options were given the two executives 10 years ago when the utility was acquired by Warren Buffett's Berkshire Hathaway conglomerate.
MEHC Chairman David L. Sokol exercised options on 549,277 shares, valued at $96.1 million, during 2009, and MEHC President and Chief Executive Officer Gregory Abel exercised options on 154,052 shares, valued at $26.9 million, according to the firm's 2009 annual report (page 148) filed March 1 of this year with the U.S. Securities and Exchange Commission (SEC).
According to the report, the stock options were granted the two executives "at the time of Berkshire Hathaway's acquisition of MidAmerican Energy Holdings Company in 2000." MEHC is now a consolidated subsidiary of Berkshire Hathaway, Inc.
In 2009, Sokol's total compensation package from MEHC was nearly $8 million, while Abel's total compensation was $7.2 million.
Sokol was chairman and chief executive of CalEnergy Company, Inc., and Abel was president of CalEnergy, when it purchased MidAmerican Energy Company in 1999. The company was reincorporated as MidAmerican Energy Holdings Company at that same time and then acquired by Berkshire Hathaway the following year.
As of January 31, 2010, Berkshire Hathaway (controlled by Buffett) owned 90 percent of MEHC's voting common stock, Walter Scott, Jr. owned 9 percent and Abel owned 1 percent.
MEHC not only owns and operates MidAmerican Energy (an electric and natural gas utility company), but purchased Pacificorp (an electric utility company) in 2006. It owns two interstate natural gas pipeline companies, two electricity distribution companies in Great Britain, and has a number of independent power projects. It also operates the second-largest residential real estate brokerage firm in the United States. The real estate group was part MidAmerican at the time the utility was acquired by CalEnergy.
Approximately 97 percent of the firm's operating income in 2009 was generated from rate-regulated (gas and electric utility) businesses. MEHC’s principal executive offices are in Des Moines.
During last year's legislative session, MidAmerican lobbyists sought and obtained a $15-million rate add-on to Iowa electric customers' bills to study the feasibility of building a nuclear power plant in Iowa. By going to the state legislature, MidAmerican bypassed the usual ratemaking process through the Iowa Utilities Board.
The legislation, with the support of the Office of Consumer Advocate, passed easily this spring, and Gov. Chet Culver signed the bill.
Consequently, electric bills of residential Iowa customers will reflect a $4 annual charge for the study over the next three years.
MEHC conducted a similar nuclear power plant feasibility study in Idaho in 2007, but did not ask ratepayers there to pay for the research. It later dropped plans for a nuclear plant there.
Sokol has been mentioned as a potential replacement for Buffett when the Omaha billionaire steps down as head of Berkshire Hathaway.
