Santee Electric CEO addresses 2008 payments to board members

HEMINGWAY — Large payments to members of the Santee Electric Cooperative Board of Trustees that prompted some public backlash were the result of a one-time payment from a terminated financial plan, according to officials from the electrical co-op.

Santee Electric CEO Floyd Keels said the termination of a financial plan for board members who were non-employees of the co-op caused the inflated numbers on the organization’s 2008 report of board member compensation.

An IRS 409a Nonqualified Deferred Compensation Plan funded by contributions made from each of the members of the board who were not co-op employees was first implemented in 1989, Keels said. Tax advantages associated with the plan changed under new IRS regulations implemented in 2008, causing the co-op to cease using in the plan and distribute the balance to participating members.

Keels provided a March 23 memo to the board from Ronnie A. Sabb, the co-op’s attorney, explaining the changes. The memo states Santee Electric terminated the 409a plan and distributed the net value of the benefits to the participants in a one-time payment, the large amounts listed on the co-op’s 990-form from 2008.

“Those individuals were participants under the plan,” Keels said, referring to the people on the 990-form, posted online by the IRS, which received payment. “It was a self-funded plan not funded by the co-op.”

The memo states the program was set up to compensate some non-employee board members to “replace benefits lost due to the operation of the IRS qualified plans” for co-op employees.

“Although the distribution does exaggerate the affected individuals’ compensation for 2008, the excess amount is actually then net present value of a one-time payment,” the memo stated. “And SEC will be fully reimbursed by the self funded arrangement.”

Keels also said that because the plan was originally implemented in 1989, former board members or spouses of deceased board members received payment for the time they made contributions, reiterating that the payments were one-time only and would not be seen in the future.

Controversy surrounding the large payments came about earlier this year when Tommy Stuckey, a Nesmith resident and co-op member, submitted a Freedom of Information Act request in February. Stuckey raised questions involving Santee Electric’s policy of payments to various members, including reimbursement for travel expenses, per diem rates and other compensation policies.

Keels said that while he didn’t believe the co-op fell under the umbrella requiring them to respond to the Freedom of Information Act request, Santee Electric legal representatives responded to Stuckey’s inquiries late last week.

Stuckey said he doesn’t want to comment yet on the matter.

S.C. Press Association Executive Director Bill Rogers said that the co-op is a private entity and isn’t required by law to heed Freedom of Information Act requests.

“There was no response necessary to the public until we got the questions from (Stuckey),” Keels said. “Although 990’s are public, we respond to questions on 990’s as they come up.”

Keels said that while the large payments might have caused concern for co-op members, given the increasing cost of power in recent years, those 2008 payments from the plan were in no way related to energy costs throughout the co-op.