[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
WASHINGTON WATER POWER
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
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.
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WISE USE MOVEMENT,
David E. Ortman,
P.O. Box 17804
Seattle, WA 98107
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