WisBusiness: State Utility Execs’ Salaries Go Up, But Two See Bonus Cuts

By Brian E. Clark

MADISON – The chairmen of five publicly traded utilities serving the Badger State all received salary increases in 2005 – some of them hefty — according to documents filed with the U.S. Securities and Exchange Commission.

When bonuses are figured in, however, the heads of two Madison-based power companies – MGE Energy and Alliant Energy – actually saw their total compensation packages decline from 2004.

In stark contrast to those two, the bonus for Gale E. Klappa, chairman of Milwaukee-based Wisconsin Energy Corp., went from $1.79 million in 2004 to $1.93 million in 2005. Klappa’s salary also increased from $856,668 to $961,752.

Wisconsin Energy is the biggest utility in the state, with more than 1.1 million electricity and 1 million gas customers. It also serves Michigan’s Upper Peninsula.

Klappa received the largest bonus possible, officials said, because the utility surpassed its financial goals. At a recent shareholders’ meeting, Klappa defended his and other executives’ compensation and said it was below the median for comparable utilities.

Klappa’s large bonus was also due, in part, to the utility’s success in receiving permission from regulatory agencies to open new power plants, including the controversial Oak Creek coal-fired facility on Lake Michigan.

Shares for Wisconsin Energy closed at $39.16 on Tuesday, up slightly from $39.06 at the start of 2006.

Charlie Higley, executive director of the consumer group known as Citizens Utility Board, said his organization remains concerned about the what he called “seemingly excessive” compensation for executives of publicly regulated utilities.

“We understand that not all their salaries are paid for by ratepayers, but it is a partial factor,” he said. “It should concern all of us because the majority of people earn much, much less.

“Still, these executives are getting far less than some energy company chiefs, like former Exxon Mobil chairman Lee Raymond, who recently got an obscene retirement package of $400 million,” he said.

Todd Stuart, the new executive director of the Wisconsin Industrial Energy Group (WIEG), said he had “no comment” when asked about utility executives’ pay.

But last year, former WIEG leader Nino Amato blasted the power company leaders’ salary and benefit packages. Amato said compensation for utility leaders had gone up between 73 percent and 450 percent since 1997.

Two years ago, MGE Energy Chairman Gary Wolter’s total compensation was $547,672, with $389,672 coming from his salary and $158,000 from a bonus. MGE has 136,000 electricity customers and more than 137,000 natural gas customers.

In 2005, Wolter’s salary increased to $407,252, but his bonus was more than halved to $77,000 for a total package of $484,252 – a drop of more than $63,000.

Wolter declined to discuss the bonus decrease. Through a spokesman, he said the company’s executive compensation committee would have no comment.

But at the MGE’s annual meeting in Madison last week, Wolter said that while the company remains strong, volatile natural gas prices hurt the utility’s performance. Rising interest rates also have hurt its stock value, he said.

Shares of MGE stock closed at $30.66 on Tuesday, down from $33.57 at the start of 2006.

In one sense, 2005 was a good year for William D. Harvey, who received a hefty raise when he was promoted to chief executive officer of Alliant Energy. In February of 2006, he became chairman. His salary increased by more than $125,000 in 2005, rising from $459,552 to $584,692.

But Harvey’s bonus, which was $206,802 in 2004, disappeared in 2005. That meant his total compensation dropped by more than $81,000.

Scott Smith, a spokesman for Alliant, said Harvey did not receive a 2005 bonus because the company did not meet minimum financial targets for performance.

Alliant struggled in 2005 as it sold off some of its controversial foreign holdings acquired under previous chairman Erroll Davis, Jr. Though its utility units showed a profit, losses from investments abroad resulted in an overall loss for the year.

Harvey has moved to reposition the company as a Midwestern power provider. It has approximately 1.4 million customers in Wisconsin, Iowa, Minnesota and Illinois, according to its Web site.

At the company’s annual shareholder meeting in Madison earlier this month, Harvey declared that Alliant is “back to the basics.”

Though Alliant posted a first quarter loss of $1.6 million for the first quarter of 2006, analysts and investors have responded well to the changes and its shares are now at or near the 52-week high.

Shares closed at $34.13 on Tuesday, up from $28.04 at the beginning of this year.

At Green Bay-based WPS Resources Corp., chairman Larry Weyers’ salary increased from $600,000 in 2004 to $625,000 in 2005. His bonus also climbed from $777,060 in 2004 to $890,485 in 2005, according to SEC filings.

The company has nearly a million electric and natural gas customers, primarily in northern Wisconsin and the Upper Peninsula of Michigan.

Shares for WPS closed at $48.35 on Tuesday, down from $55.66 at the beginning of 2006.

Richard Kelly, who became chairman of Minneapolis-based Xcel Energy last year, saw his salary rise from $655,000 in 2004 to $810,000 in 2005. His bonus went from $205,571 to $212,966.

Xcel’s now-retired chairman, Wayne Brunetti, received a salary of $1,020,625 in 2005 and a bonus of $292,976. The previous year, his salary was $1,065,000 and a bonus of $457,909.

Minneapolis-based Xcel operates in 10 states and includes four operating companies, including Northern States Power, which has more than 320,000 electricity and natural gas customers in Wisconsin and the Upper Peninsula of Michigan.

Shares of Xcel closed at $18.52 on Tuesday, down from $18.33 at the start of this year.