NiSource, parent of NIPSCO, puts more money in directors' pockets
BY KEITH BENMAN
kbenman@nwitimes.com
219.933.3326 | Wednesday, February 25, 2009
"What are NiSource board members doing with their $165,000 per year?" asked Shaw Friedman, an attorney representing LaPorte County in NIPSCO's rate case. "Where is the sense of some degree of sacrifice from these people?"
NiSource's proxy statement filed with the U.S. regulators last year shows non-employee company directors in March 2008 hiked the annual retainer they receive to $165,000 per year from $78,000 per year.
But NiSource is contesting assertions that it hiked directors' pay 115 percent, saying the figure is more like 6 percent. The Fortune 500 utility holding company points out while it hiked the retainer, it eliminated per-meeting and other fees directors received.
"The NiSource board of directors has taken several recent actions as part of its commitment to transparency, integrity and responsiveness to shareholders," NiSource spokesman Karl Brack said Tuesday.
By NiSource's reckoning, director compensation was actually $156,000 before last year's changes, with each director receiving an average of $78,000 in fees in addition to the $78,000 retainer.
The median compensation for directors in the utility industry is $165,000 per year, Brack said.
At least one fee paid to some directors remains -- the $15,000 to $20,000 paid to the chairs of some committees, according to the 2008 proxy.
NiSource's directors come from a broad range of backgrounds, including leaders of prominent corporations, a college professor, a former Purdue chancellor and others.
The company is subject to intense scrutiny now in northern Indiana because its NIPSCO subsidiary has applied to state regulators for a 15.6 percent residential electric rate hike. An Indiana Utility Regulatory Commission field hearing is scheduled for Tuesday in Gary.
The retainer hike and fee elimination went into effect in May, so it will not be known until this year's proxy statement is issued what each director actually was paid in 2008.
However, an examination of the company's 2008 proxy statement shows directors received substantial compensation in 2007.
All told, 13 non-employee directors earned $2.4 million in total compensation in 2007, according to the proxy statement.
Those amounts in 2007 ranged from a high of $350,337 for board member Carolyn Woo, a professor at the University of Notre Dame, to a low of $46,029 for former Director Peter McCausland, chief executive officer of Airgas Inc.
The board also eliminated any future accruals for directors' pensions last May.
At hearings on NIPSCO's proposed rate increase in January, Friedman drilled company officials during cross-examination about NIPSCO's perennial bottom ranking in JD Powers' ranking of Midwest utilities customer service.
On Tuesday, he said until that ranking improves, NiSource directors should not be paying themselves even one penny more.
"With NIPSCO performing so poorly, why shouldn't there be some effort by board members or others at the company to defer salaries?" Friedman asked. If you go:
What: Field hearing on NIPSCO's proposed electric rate increase
When: 5 p.m. Tuesday
Where: Savanna Auditorium, Indiana University Northwest
Also: 4:30 p.m. informational meeting on rate case
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