Avista CEO pay nearly $875,000

Avista Corp. CEO Gary Ely earned close to $875,000 in 2004 and will receive a 10 percent raise in 2005, according to a Wednesday filing with the federal Securities and Exchange Commission.

Ely’s compensation package and those of other corporate executives were set following a quarterly meeting of the company’s board of directors last week.

Karen Feltes, vice president and corporate secretary for Avista, said the company’s executive pay falls slightly below the halfway mark when compared with other similar-sized companies. Avista compares itself with 29 utility companies identified by an outside consultant as having annual revenues ranging from $1 billion to $3 billion, Feltes said. Avista’s revenues for 2004 were $1.14 billion.

At the board meeting last week, directors approved new base pay rates for executive officers, effective March 1, according to the filing, called an 8-K. Guidelines also were established for awarding bonuses based on whether the company meets certain goals. Executives can receive bonuses ranging from 40 percent to 90 percent of their pay if goals are met. If goals are exceeded, executives can receive up to 150 percent of their pay in bonuses.

Bonuses in 2004 ranged from 40 percent of pay for Ely to 15 percent of pay for Vice President Ronald Peterson. Chief Financial Officer Malyn Malquist, Senior Vice President Scott Morris and Vice President David Meyer all received 25 percent bonuses.

In 2004, Avista’s natural gas rates rose by about $10 a month for Washington residential customers and about $13 a month for Idaho customers due to the rising cost of the commodity and increased business costs, according to the utility. Electric rates also rose by about $4 a month in Idaho. Those increases were partially offset by a credit tied to benefits from the federal hydroelectric system, which dropped electric rates in both states by $1.50 per month. Avista is expected to request an additional rate increase for Washington customers within the next few months.

“Compensation is a cost of doing business,” said Pat Lynch, Avista’s director of corporate communications.

“Our philosophy is to maintain our compensation levels at least on par with market conditions by providing a base salary and incentives that are competitive with the marketplace. We’ve invested a lot in our executives and our employees and we want to retain the best talent we can.”

The board of directors set up the executive compensation package as an incentive for officers to focus on company goals, the filing said. In 2004, the company met its customer-satisfaction and electric-reliability goals but missed on capital expenditures. That budget was off by 1 percent due to early delivery of some equipment that the company did not expect to pay for in 2004, Feltes said.

The company also hit its goal of operations and maintenance costs per customer, which was $259.44 for 2004. However, it did not hit its goals for earnings per share at the corporate level or at its utility, the filing said.

Wednesday’s filing also laid out stock shares to be awarded to executives if corporate goals are met over a three-year period.

To receive 100 percent of the shares, the company must be ranked at the 55th percentile on the S&P 400 MidCap Utilities Index. For example, if at the end of 2007 that goal is met, Ely would receive 64,400 shares.

The share amounts designated for other officers were: 15,500 for Malquist, 15,500 for Morris, 5,300 for Meyer and 5,300 for Peterson.