Avista Corp. paid its top executive about $5.5 million in total compensation last year.
Scott Morris, chairman and chief executive officer of the Spokane-based utility, earned about 90 percent more than the $2.9 million he earned in total compensation during 2013. Most of the raise came from bonuses and gains in his retirement plan.
Morris’s base salary grew 3 percent to $723,461, according to the company’s preliminary proxy statement filed Friday with the U.S. Securities and Exchange Commission.
He also received two bonuses: a $191,506 cash bonus from last summer’s sale of Ecova, Avista’s energy management subsidiary, and a cash award of $1.1 million because the utility met or exceeded goals related to things such as customer service satisfaction, earnings per share and targeted times for restoring power after outages.
Morris also received $238,340 from the company’s 401(k) match, cashed-in vacation time and sale of Ecova stock.
The biggest increase in Morris’ pay package came from a $1.6 million gain in the value of his company pension plan, based on actuarial tables. The stock market’s strong performance increased the pension plan’s value, said Jessie Wuerst, an Avista spokeswoman.
Morris receives part of his total compensation as “take-home” pay, she said. About $1.5 million of the 2014 compensation reflects future stock awards that Morris could earn if Avista meets certain targets over a three-year period.
Morris, 57, has led Avista since January 2008. The company provides electric and natural gas service to more than 600,000 customers in Eastern Washington, North Idaho and Oregon.
A typical household pays about 24 cents each month on their bills for Avista’s top five executives’ salaries and cash awards, Wuerst said.
“This perception that because bills are going up, all this money is going into Scott’s pocket is just erroneous,” she said.
Avista stockholders also contribute to executive pay through stock awards, Wuerst added. Stock awards are paid from the company’s shareholder equity, which is the sum of its stock value and retained earnings.
Executive pay is scrutinized by public utilities commissions in Washington and Idaho, which decide whether Avista can raise its electric and natural gas rates. Earlier this month, Avista filed a request in Washington that would raise combined electric and gas bills by nearly $12 per month for a typical household. The company also is seeking an $8.50 increase in basic monthly fees.
The Washington Utilities and Transportation Commission has set a clear precedent that “in the era of high executive pay,” most of the costs must be borne by shareholders, not ratepayers, said Amanda Maxwell, a spokeswoman for the commission. Though executive pay accounts for a small portion of customer bills, it’s a topic of interest to the state attorney general’s Public Counsel Division, which advocates for residential and small businesses in rate cases, said Lisa Gafken, an assistant attorney general.
In 2012, Public Counsel challenged the amount of executive pay reflected in Avista’s customers’ rates. The challenge wasn’t successful, but it restarted the discussion at the Utilities and Transportation Commission about executive pay, she said.
Avista and other utilities survey what peer companies are paying their executives, and adjust their pay accordingly. So, the raises can become a self-perpetuating cycle, Gafken said.
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