Executive Compensation

[NOTE: "Business Week, in its annual look at U.S. corporate CEO compensation, found increases at record levels as boards shifted the mix of executive pay away from cash and toward stock options, corporate profits and stock market compensations. In 1996, the Standard & Poor's 500 stock index rose a stunning 23 percent. Corporate profits rose 11 percent. CEO pay gains, meanwhile, outstripped this growth or shareholder returns with average total compensation raising an astounding 54 percent, to $5,781,300." National Catholic Reporter, 9 May 1997]


WASHINGTON WATER POWER


                                   PROPOSAL 3
                        1994 SHAREHOLDER PROPOSAL

   
    Mr. William D. White, a shareholder of the Company, submitted
the  following proposal.  Mr. White owns jointly with others 559
shares of the Company's Common Stock. Mr. White's address is 520
North Elm Street, Colville, Washington.
    

        ELECTION OF SHAREHOLDERS TO ADVISE COMPENSATION COMMITTEE

    Beginning in 1994,  the Board of  Directors is requested  to
take the  steps necessary  to provide shareholders, at their 
annual meeting, the opportunity to elect three of their members
to serve as advisors to the Compensation Committee.
The elected advisors shall serve as  a liaison between the
Shareholders and the Compensation Committee.  The  Advisors 
shall attend Compensation Committee meetings, and they  shall
advise  and make  recommendations regarding  salaries, benefits, 
incentive  compensation,  and  retirement  compensation  of
executive officers, directors, and key employees of the Company.
They will provide written recommendations to the Board of
Directors regarding management compensation, and they shall
report to shareholders at the Annual Meeting.

   
    Their term of advisement  shall be  for one  year, from 
annual meeting to annual meeting. They shall receive the  same
compensation for meetings attended as committee members.
    

                   SUPPORTING STATEMENT FOR ELECTING ADVISORS

    It is important to shareholders that the Directors and
Executive Officers of our Company be compensated  fairly for
their leadership and service.  Providing incentives and a "just
right"  amount of compensation for  executives is a very
difficult task for the Compensation Committee. Shareholder
Advisors would assist the Committee by providing objective input
and a shareholder perspective.

    SEVERAL REASONS SEEM TO WARRANT  THE ELECTION  OF ADVISORS 
TO ASSIST  WITH COMPENSATION AND BENEFIT RECOMMENDATIONS.

   
    1.  Bonuses and incentive  compensation  for executive 
officers  are often skewed  beyond  reasonable  and  appropriate 
incentives  for  outstanding job performance. In 1990 the five,
chief executive officers as a group received more than
$414,000.00 in incentives and bonuses beyond their basic
compensation. That would average more than $82,000.00 per
executive in extra compensation.
    

    2.  Currently special agreements and  other compensatory
plans for executive managers are  committing hundreds  of
thousands  of unfunded dollars to future executive  benefits
regarding  layoffs, retirement,  and disability plans. More
reasonable plans  and  funded  arrangements  are needed.  Future 
costs may be extremely high unless we begin funding necessary
benefits.

    3.  Shareholder  value  and  Executive  compensation  are 
not in balance.  Executive pay is growing  much faster than
dividend  payout and stock value.  We need a better compensation
and value balance.

    4.   Currently  executive  management   recommends  retainer 
fees,  meeting compensation and retirement  benefits for
Directors.  Directors approve and  fix salaries  for executive 
officers. Advisors  could provide  objective input into
compensation  and  benefit  recommendations  for  Directors  and 
for  Executive Officers.  The  recommendations of  Advisors  for
compensation  and benefits of Directors and Executive Officers
would be from a Shareholder perspective.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS SHAREHOLDER
PROPOSAL FOR THE FOLLOWING REASONS:

   
    The Board of Directors  believes that the  Compensation
Committee, which is made  up of four non-employee  ("outside")
directors, is the best group to make recommendations on
compensation for the  executive officers of the Company.  The
directors  of the Company are elected by shareholders to
represent shareholders.  The proposed  paid  advisory committee 
would  create needless  duplication  and additional  cost.  As 
stated in  the  "Board Compensation  Committee  Report on
Executive Compensation", the Committee's primary purpose in
setting compensation for executive officers is to support the
Company's goal of maximizing the value of shareholder  interests.
The  Committee  uses data  from  various independent outside
sources  in  making recommendations  with  respect to 
compensation  and executive  benefit  plans to  the full  Board
of  Directors. In addition, these directors are  also
shareholders  of  the Company,  with holdings ranging  from
45,068 shares to 2,000 shares of Common Stock of the Company.
    

    As  to the total compensation awarded for 1990 under the
Executive Incentive Compensation Plan to  the named  executive
officers, the  award included  12,297 shares of Company Common
Stock in addition to $298,936 in cash.

    With  respect to  the funding  of benefit  plans, the 
reference in previous proxy statements that  certain executive
officer  and/or director benefit plans were  unfunded  related to

a technical  Internal Revenue  Service determination concerning
the tax consequences of participation in non-qualified benefit
plans.  In fact,  the Company,  beginning in  1985, has 
purchased corporate-owned  life insurance  policies  which,
assuming  actuarial  assumptions are accurate, will
substantially, if not wholly, offset benefit plan obligations.
The Compensation Committee reviews these benefit plans, including
associated potential liability, and  reports and makes
recommendations related thereto, when appropriate, to the
full Board of Directors.

Corporate Accountability | SHAREHOLDER RESOLUTIONS | SEC Regs |

Washington Corporations | Mutual Funds | Related Websites


WISE USE MOVEMENT, David E. Ortman, P.O. Box 17804
Seattle, WA 98107 deom@JPS.NET

1997 Wise Use Movement.


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