(Bloomberg) -- Puerto Rico’s bankrupt electric utility is getting a new boss: for $750,000 a year.
Former General Electric executive Rafael Diaz-Granados will replace Walter Higgins as chief executive officer of the Puerto Rico Electric Power Authority, according to a statement from the utility. His salary, up from the controversial $450,000 base pay that Higgins garnered during his short tenure.
Higgins is quitting after just four months on the job, marking an abrupt departure for a polarizing outsider who gave investors hope of a course correction even as his own rich compensation package stirred controversy locally. Higgins mentioned his salary as the reason for his departure in an email Wednesday to Prepa’s staff.
“Even if some legal arguments could have been made, it became very clear to me that the politics related to my compensation made it impossible for the contract to be fulfilled,” Higgins wrote in the email, which was confirmed by Prepa.
Higgins, who arrived on the island from Nevada without even speaking much Spanish, brought 40 years of management experience to Prepa, which had been plagued by decades of corruption and mismanagement, all of which was laid bare in Hurricane Maria. He will continue to collaborate with the agency, according to remarks Wednesday from Governor Ricardo Rossello.
Residents questioned Higgins base salary of $450,000 plus bonuses. Investors saw him as an outsider who could fix the utility’s long-running problems.
Amid the furor over Higgins’ salary, Puerto Rico’s legislature passed a measure to prevent him from receiving bonus compensation, and his successor’s higher base salary appeared to be a work-around. In its press release, the utility said $750,000 a year was consistent with industry standards for similarly large and complex companies.
Higgins didn’t immediately respond to an email seeking comment.
Diaz-Granados has served on Prepa’s board since July 2017. He spent 15 years at General Electric, including as president and chief executive officer of GE Spain and Portugal and GE Mexico. He has a B.A. in economics from Harvard University and a J.D. from Georgetown University. Prior to General Electric, he worked as a lawyer at O’Melveny & Myers, which is representing Puerto Rico in its bankruptcy.
Diaz-Granados is originally from Colombia and speaks English, Spanish, Portuguese and German.
Prepa is struggling to rebuild its electrical grid after Hurricane Maria struck the island last year, leaving most residents without power for months. The system, which relies on oil to produce electricity, suffers from years of mismanagement and neglect.
Prepa fell into bankruptcy last year and is seeking to reduce $9 billion of debt. Prices on Puerto Rico securities, including Prepa bonds, have increased this year as the commonwealth works through its own bankruptcy process.
Prepa bonds maturing in 2040 traded Wednesday at an average price of 42.6 cents on the dollar, up from about 30 cents at the start of the year, according to data compiled by Bloomberg.
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