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IdaCorp Pinches Pennies for Execs by Ken Dey Idaho Statesman, April 13, 2004

Lean 2003 means no pay raises, bonuses

The fallout from the energy crisis continues to be felt in the paychecks of executives at the holding company for Idaho Power Co.

In 2003, IdaCorp's top six executives didn't receive pay increases, and they all failed to qualify for bonuses under the company's executive compensation plan, according to the company's annual proxy statement filed Monday with the Securities and Exchange Commission.

The company's board of directors said it made the decision to freeze salaries because the company has had a couple of difficult years financially following record earnings in 2000 and 2001 at the height of the energy crisis.

The executives also failed to qualify for bonuses because the company earned only $46.6 million for the year, well below the $68.4 million minimum the board said would be required to receive bonuses.

The salary of CEO Jan Packwood remained at $580,000 for 2003. Packwood was also granted $203,000 in restricted stock for the year, the same amount he was granted in 2002, bringing his total compensation to just under $800,000.

This is the second year that executives have failed to receive a bonus, but last year Packwood and others declined bonuses voluntarily due to the firm's financial woes and declining stock price.

Last year Packwood turned down a $290,000 bonus.

"What you're seeing is a reflection of the fact that for two years running, the company has understood it's been a challenging time for customers and shareowners, and during such time it's inappropriate to increase executive compensation," company spokesman Jeff Beaman said Monday.

Beaman said the majority of IdaCorp employees also didn't receive pay increases in 2003.

Jim Bellessa, an analyst with D.A. Davidson Co. in Great Falls, Mont., said the board was right not to raise salaries.

"The company didn't do very well over the year," he said. "And over a couple years period, we've had to watch the stock price drop from a high in the upper 40s to a low in the 20s."

Bellessa said it also was a wise move by the company to remain conservative on its salaries given Idaho Power's request, now pending before the Idaho Public Utilities Commission, to raise rates by an average of 14 percent.

The company initially requested a 17.7 percent increase, but revised that increase downward in late March after adjusting for some changes in salary and pension expenses.

"They don't want to be showing themselves off as being greedy managers who are raking in the dough while asking rate payers to pay more," Bellessa said.

But he said the firm's poor performance wasn't just the fault of the executives.

The drought has sapped the company's ability to generate power from its hydropower dams, forcing it to buy more expensive power on the wholesale market.

In 2003, it also completed its exit from the energy trading business by shuttering IdaCorp Energy, the unregulated subsidiary that brought in record revenues during the California energy crisis.

At the height of the energy crisis, IdaCorp reported revenues that topped $5 billion, but in 2003 IdaCorp reported only $823 million for total revenue.

The drop in revenue and earnings also led the board of directors to cut the dividend last fall from $1.86 a share to $1.20 a share, the first dividend cut in 14 years.

In February Packwood told analysts that the company expects the situation to improve in 2004 if it receives what he called much needed rate relief and if the water situation improves.

But just four months into the new year, those two things may be in question. The company is awaiting the Idaho Public Utilities Commission decision on whether to approve an average 14 percent increase in electricity rates.

IdaCorp's six executives received no bonuses or salary increases for 2003. Here's each executive's salary, with the value of restricted stock award in parentheses:

• Jan Packwood, president, CEO, $580,000, ($203,000).
• J. LaMont Keen, Idaho Power president and COO, $350,000, ($105,000).
• James Miller, Idaho Power senior vice president for Delivery, $250,000, ($62,500).
• Robert Stahman, general counsel and secretary, $200,000, ($50,000).
• Darrel Anderson, chief financial officer, $185,000, ($55,500).
• A. Bryan Kearney, chief information officer, $183,000, ($45,750).