KMI and the $1 club

Kinder Morgan’s CEO has voluntarily taken $1 in salary for a very long time.  The chief operating officer, Steven Kean, looks like he will follow in his boss’ footsteps.  Kean will still get paid stock so his overall compensation won’t be as low as Richard Kinder’s.  Still, I think it reflects very well on management’s integrity.  From the proxy statement:

In 2013, Mr. Kean made a similar request to Mr. Kinder to change his annual base salary to $1. Mr. Kean also requested that he receive no annual bonus from us or any of our affiliates. As a result, Mr. Kean’s total compensation consists of a restricted stock grant received in 2013 which is subject to six-year cliff vesting, dividend equivalents paid on that restricted stock, and benefits available to our U.S. employees generally (such as healthcare, life insurance and 401(k) plan benefits). There are no plans at this time to grant additional restricted stock to Mr. Kean until the vesting terms of his 2013 grant have been met.

As well, part of compensation is based on Kinder Morgan having a good safety track record.  Management has incentivized itself not to corners on maintenance capex.  I firmly believe that Richard Kinder has tried hard to ensure that the company’s incentives drive his officers to create long-term value.

2012:

A third objective which could potentially decrease or increase the budgeted pool of bonus dollars for 2011 was a goal to improve our environmental, health, and safety performance by (i) beating industry average incident rates; (ii) improving incident rates compared to our previous three year averages.

2013:

A third objective which could potentially decrease or increase the budgeted pool of bonus dollars for 2012 was a goal to achieve our environmental, health, and safety performance objectives by (i) beating industry average incident rates; (ii) improving incident rates compared to our previous three year averages; and (iii) experiencing no significant incidents in our operations or expansions.

2014:

A fourth objective, which could potentially decrease or increase the budgeted pool of bonus dollars for 2013, was to achieve our environmental, health, and safety performance objectives by: (i) beating industry average incident rates; (ii) improving incident rates compared to our previous three-year averages; and (iii) experiencing no significant incidents in our operations or expansions.

*Disclosure:  Long KMI calls and warrants.

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