As rates rise, exec pay soars

Salaries and other compensation for four of five senior executive positions at Sierra Pacific Resources more than doubled over five years, exceeding even recommendations from an expert hired by the company, according to the attorney general's Bureau of Consumer Protection.

The compensation for former CEO and Chairman Walt Higgins, for example, was $4.9 million for the 12 months ending June 30, 2007, up from $1.5 million five years earlier, according to Phil Williamson, an analyst with the bureau.

During roughly the same five-year period, Nevada Power rates increased 30 percent, according to the staff of the Public Utilities Commission.

Williamson analyzed the pay level of utility executives in written testimony filed in a rate case for Sierra Pacific Power Co. of Reno.

Nevada Power Co., like the Reno company, is a subsidiary of Sierra Pacific Resources, and the same arguments could be raised again in a December rate case filing for Nevada Power.

In his analysis, Williamson concluded that compensation for four of five top executives at the utility holding company more than doubled over the five years.

The four individuals who were holding those positions in June 2007 were: Higgins; current CEO and President Michael Yackira; Donald "Pat" Shalmy, former corporate senior vice president and president of Nevada Power; and Roberto Denis, senior vice president.

William Rogers, vice president and treasurer at the time of the survey, is a relatively new employee and was in a position with lower overall pay increases.

One of the executives received a major promotion in the five years covered by the survey.

Yackira, previously executive vice president and chief financial officer, was named president and chief operating officer of the utility holding company in February 2007 before the end of the five years.

Otherwise, "we think the positions stayed substantially the same," Williamson said.

The utility company disputes Williamson's conclusions.

Tim Eggen, corporate director of human resources at Sierra, said Williamson's calculations were incorrect, although he was unable to provide his own percentage increases for all of the executives' total compensation.

"Some of the conclusions (the analyst) drew were pretty faulty," Eggen said. "He was very creative in the way he covered the math."

For instance, Eggen said Williamson included moving expenses for executives and stock compensation that Higgins received for performance in past years. Neither of those should be included in the total for compensation, Eggen said.

Based on Nevada Power's calculations, salaries, excluding Higgins' pay, increased only 5 percent yearly for five senior company executives -- Yackira, Shalmy, Rogers, Denis and Jeffrey Ceccarelli, senior vice president -- covered in the report, Eggen said. He said the 5 percent figure doesn't include other types of compensation.

Ceccarelli, a Northern Nevada executive, was not included in the bureau's list of senior executives because his job title changed significantly over the period covered.

Eric Witkoski, chief of the bureau and state consumer advocate, dismissed Eggen's argument, saying moving expenses and stock awards are part of the total compensation to executives.

Richard Meischeid, managing principal of Towers Perrin, who provided expert testimony for the utility, said Sierra Pacific's executive pay was comparable to the executive pay at similarly sized utilities.

But, Witkoski said, the utility's pay for key top executives exceeded even Towers Perrin's average.

Eggen called it "just silliness" to argue that some executives shouldn't make more than the average.

Witkoski disagreed, saying the Towers Perrin survey of compensation is self-fulfilling.

He said the compensation firm surveys compensation levels at utilities, the pay scales go up at some utilities, and Towers Perrin, therefore, concludes compensation increases are justified for executives at other utilities.

Witkoski called Towers Perrin "the increased salary club."

Contact reporter John G. Edwards at jedwards@reviewjournal.com or 702-383-0420.