CU executive compensation near average

In its latest study of City Utilities of Springfield's compensation and benefits, Milliman Inc. said executive compensation levels are overall in line with similar utilities across the country, though individual positions teeter above and below the mark.

John Hankerson, principal and strategic rewards practice leader for Seattle-based actuarial and consulting firm Milliman, presented the findings during the Oct. 30 Board of Public Utilities meeting.

Hankerson said that executive salaries on a whole are slightly below the 50th percentile for total cash compensation among the 16 utilities in the study. The total compensation comparison was recommended by the state audit of the utility conducted in 2007, and Milliman recommended that CU put the compensation comparison in writing in its pay philosophy statement.

When adding in other benefits, three of the seven executives are above the average, with General Manager John Twitty's $407,712 total annual compensation - including benefits - nearly 8 percent above the 50th percentile. In contrast, Chief Financial Officer Jim Shuler's $184,566 compensation is 14 percent below the 50th percentile.

The study shows the higher compensations are mostly due to retirement benefits, a result of CU's membership in the Missouri Local Government Employees Retirement System, or LAGERS. That fits with the utility's stated goal of having cash compensation near the average and benefits at or slightly above the midpoint.

Hankerson pointed out that the retirement benefit, for all CU employees, is better than three quarters of comparable utilities. Several board members noted that retirement makes up the largest portion of the benefit package, though the utility is obligated to stay in LAGERS.

"You always have to be worried about doing whatever you can to attract and retain the best people," Hankerson said. "But (retirement) is a big item, and it's not very flexible. You are constrained by a number of things that are unusual."

Hankerson also noted that if CU is looking at its total compensation with benefits as its comparison point, the utility has some options if it feels a change is necessary.

"You may look at it and say, 'What we'd really rather do is put a little more into cash and take away some of the benefit,' or you might make things more specific in benefits," Hankerson told the board. "That's your decision."

GM Twitty, however, didn't feel that significant changes, such as freezing the salaries of 70 CU positions made after Milliman's last survey in 2003, would be necessary.

"We target our benefits to provide average or slightly above average benefits to all our employees," Twitty said at the meeting. "There were significant changes made (in 2003), and we listened to what the board at the time said they wanted us to do. The information here suggests we hit that as well as we could hit it."

The only other recommendation from Milliman related to executive pay was to put in the pay philosophy statement that executive salaries would be compared to a range of public, private and other sources - similar to the Milliman survey.

Board member Virginia Fry, who was also on the board in 2003, said that the employee salaries overall - both executive and nonexecutive - are in the right position. She noted that the utility doesn't have to take drastic measures, such as salary freezes, this time.

"It's one thing to look at the whole package and say we're a little high here or a little low, but if you're one of those employees whose salary was frozen, it's just not much fun," Fry said. "This was an effort to get it to where we thought it needed to be." [[In-content Ad]]