Avista CEO earned $2.2 million

Scott Morris, Avista Corp.’s chairman, president and chief executive officer, earned $2.2 million in total compensation last year, the utility reported Tuesday.

Morris was promoted to Avista’s top executive on Jan. 1, 2008, when former Chairman and CEO Gary Ely retired. Morris’ salary mirrors what Ely earned in the job during 2007.

Morris was previously president and chief operating officer of Avista Utilities, the firm’s state-regulated utility business. He earned $1.1 million in that position in 2007.

“Our executives are paid midrange of what their peers are paid,” said Jessie Wuerst, an Avista spokeswoman. “That’s what it takes to run a $2 billion company.”

In addition to Morris, one other Avista employee earned more than $1 million last year – Executive Vice President Malyn Malquist, who plans to retire next Tuesday.

Avista’s annual proxy statement lists earnings for the company’s top six executives. The proxy was filed Tuesday afternoon with the U.S. Securities and Exchange Commission.

Morris’ 2008 income included $626,308 in salary; $404,597 in cash incentives; $620,897 in stock awards; and $10,350 in other compensation. An increase in the value of Morris’ retirement plan – $559,753 – is also part of his total income, even though it’s not a cash payment or a stock award, Wuerst said.

Executive pay is a sensitive issue at Avista, especially with customers shouldering steep hikes in electric and natural gas rates in the past two years.

Avista’s board of directors sets the pay guidelines, including the criteria for stock awards and cash incentives.

Ratepayers, through their utility bills, pay for 41 percent of executives’ salaries and cash incentives, said Wuerst, the Avista spokeswoman. About 22 cents of an average utility bill goes toward executive compensation, she said.

Stock awards and other executive compensation are paid from Avista’s $997 million in stockholders’ equity, which is the sum of its stock value and retained earnings.

Cash incentives for company executives are based on Avista meeting certain benchmarks, such as targets for the length of time needed to restore power after outages. Wuerst said that stock awards given to executives reward the long-term growth in the value of Avista’s stock. Shareholders have reapproved the program several times, and they’ll vote on it again in May at Avista’s annual meeting, she said.

Executive salaries are scrutinized by public utilities commissions in Washington and Idaho, which decides whether Avista can raise its electric and natural gas rates. In January, Avista filed requests in both states that would raise monthly bills by $9 to $10 per month.

“The company is entitled to pay whatever it would like to pay its executives,” said Simon ffitch, a Washington state assistant attorney general who advocates for consumers during rate cases. “The question that the Washington Utilities and Transportation Commission has to ask is, what is a fair level for the ratepayers to have to contribute?”

In Avista and other investor-owned utilities, executives divide their time between making sure that customers get good service, and running the company to produce profits for shareholders, ffitch said.

Part of rate-setting is allocating how much customers should pay for executive salaries, and how much shareholders should pay, he said.