Gov demands new Puerto Rico power utility CEO $750,000 salary reduced
SAN JUAN – The salary of the new Puerto Rico Electric Power Authority (Prepa) CEO, Rafael Díaz Granados, set by the utility’s governing board at $750,000 a year, would be much higher than what was being paid to his predecessor, Walter Higgins III, who resigned Wednesday.
Higgins stepped down precisely because of issues with his $400,000 salary, as he confirmed in a letter to the utility’s employees.
In a statement Thursday, Gov. Ricardo Rosselló threatened to take action if the amount is not lowered.
“The salary granted by the Governing Board of the Electric Power Authority (Prepa) to the new executive director is not proportional to the financial condition of PREPA, the fiscal situation of the Government, or to the feelings of a People who are making sacrifices to lift Puerto Rico up.
“The Governing Board of PREPA must temper the salary to what I am proposing or, alternatively, the members who are not willing to do so must resign their positions, so that these are assumed by people who work arduously on the search for a good executive director willing to work for a salary that fits the reality of PREPA,” the governor wrote.
Díaz Granados, a retired General Electric executive and energy entrepreneur, was appointed Wednesday as CEO during a meeting held by Prepa’s Governing Board, of which he is a member. He had been appointed by Rosselló to a five-year term on July 29, 2017, as an independent member.
The president of the Irrigation & Electrical Workers Union (Utier by its Spanish acronym), Ángel Figueroa Jaramillo, reacted to news of the new CEO’s salary, tweeting: “What brazenness! And what lack of respect for the country and the workers of Prepa. While they take away our rights, they threaten our Health Plan and Retirement System. They grant these salaries never seen in the Government, to the businessmen who want to steal from the country.”
According to a Prepa statement, Díaz Granados has “global” executive experience in the “management, restructuring and optimization of multimillion-dollar corporations” and is “prepared to lead” Prepa to the “next phase of efficiency.”
Díaz Granados “led large energy, technology and healthcare companies throughout Europe and Latin America in the past, and has the necessary characteristics to direct PREPA and Puerto Rico to move from the recovery phase to the revitalization phase,” the utility statement added.
“The importance of an independent leadership in the Authority is that it represents a cornerstone, not only to get out of bankruptcy and the restoration of electric service, but also to establish a model for the generation and distribution of energy in Puerto Rico that will convert the public corporation into a global example of low energy cost, resilience, sustainability, participation and empowerment of customers. Under the leadership of Díaz-Granados, the Authority will continue to surpass itself to provide energy reliability to each Puerto Rican and prepare for privatization. His professional background is sufficient evidence that he has the skills and characteristics necessary to lead the transformation of our electrical industry, ” Prepa Chairman Ernesto Sgroi said.
As part of this transition, Higgins resigned as the CEO but will continue as member of Prepa’s Governing Board. After his departure, which happens after a mutual agreement with the board, there will be no payment, remuneration or any bonus.
The incoming CEO’s $750,000 a year salary is consistent with the compensation paid to power industry professionals in companies of similar “size, complexity and scope” to the public corporation, it assured.
This salary amount is lower than that obtained through the formula provided by the American Public Power Association: Salary = 138,100.90 + (0.2899022 x electric revenues in 1000’s). Prepa revenues amount to $3.2 billion a year.
In a bio of Díaz Granados published by Prepa, the utility said he is a former Fortune 10 senior executive, who will focus on customer service and meeting the changing markets’ demands.
He is an adviser to the Open Cleantech board, a capital fund for investments in renewable energy in Latin America. In addition, he advises Spencer Stuart’s Healthcare Practice, with an emphasis on the medical technology and biopharma sectors.
“Between 2000 and 2014, he led several GE business operations. Recently, as Global Simplification Leader, he achieved the operational transformation of GE’s global health business, GE Healthcare, with more than $18 billion in annual sales and 50,000 employees, instituted new operational mechanisms and a new organizational structure, while reducing costs for more than $1 billion,” Prepa said.
He headed the GE Healthcare Six Sigma Center of Excellence, was named general counsel for GE Latin America, based in Mexico City; became president and CEO of GE Mexico; and then president and CEO of GE Spain and Portugal, based in Madrid.
As executive director of GE Mexico, he “led the first large-scale cogeneration project for PEMEX and the installation of thirteen aero power turbines with a 400 MW [megawatt] distributed energy capacity for Luz y Fuerza in Mexico City,” Prepa said.
An online search reveals Díaz Granados was born in Colombia and moved to Miami as a teenager, earned a degree in economics from Harvard University and a degree in international law from Georgetown. He then began his career as an attorney in private practice, worked for the U.S. Securities and Exchange Commission and the law firms of Covington & Burling in Washington and O’Melveny & Myers in New York, which now represents Puerto Rico in its bankruptcy proceedings under the Puerto Rico Oversight, Management and Economic Stability Act (Promesa).
He speaks English, Spanish, Portuguese and German.
–Cybernews contributed to this report.