NIPSCO's chief executive received a 31 percent pay raise to $1.9 million last year while telling state regulators the utility needs more money from customers to cover increased costs.
CEO Jimmy Staton's pay increased in 2010 mainly because of incentive payouts tied to his work on the NIPSCO rate cases and because corporate parent NiSource Inc. surpassed performance goals, according to the company's annual proxy statement filed with the U.S. Securities and Exchange Commission.
The increases came in a year when NIPSCO won an order authorizing an almost 17 percent increase in residential electric rates and then later reversed itself, asking state regulators for a smaller 7.9 percent increase.
Staton's pay increase also reflects that he took on responsibility for NIPSCO and other Indiana businesses in March 2010 when then-NIPSCO CEO Eileen O'Neill Odum resigned, said NiSource spokesman Mike Banas. Staton also has retained his post as NiSource vice president in charge of its gas distribution businesses in six states.
"I think the average ratepayer will have questions, there is no question about that," Banas said. "But we are one of the country's largest utilities and one of the country's largest pipeline companies."
Consumer advocates say the escalation of utility executive pay is coming at a time when state regulators and state government seem oblivious to the rights of consumers.
"You are seeing these huge pay increases for CEOs while customers are struggling to pay for what is a basic human need," said Kerwin Olson, a utility campaign organizer for the Citizens Action Coalition.
The lawyer representing the city of Hammond in the current NIPSCO rate case, Shaw Friedman, said Mayor Thomas McDermott Jr. already has deplored any increases to NIPSCO and NiSource executive salaries while customers are being asked to pay more.
Staton's boss, NiSource CEO Robert Skaggs Jr., also received a healthy boost of 39 percent in overall compensation to almost $5.77 million in 2010, although more than half of that was due to a change in how his pension will be paid out.
In a Wall Street Journal survey, Skaggs' 2009 total compensation was pegged at $4.24 million by the Hay Group, ranking him seventh from the bottom out of 35 CEOs at major U.S. utilities.
The NiSource compensation committee uses a market basket of executive pay at 27 energy companies in its review of executive compensation, according to Banas. Skaggs' pay remains below average for those companies, he said.
That review also is used for setting pay for other top executives such as Staton, although exact comparisons are not possible because of the unique duties of his job, Banas said.
NiSource earnings per share in 2010 were 14 percent above the year before and shareholders realized a total return of approximately 21 percent, according to NiSource.
For Skaggs, $611,561 of his increase came in the incentive categories of bonus, stock awards and nonequity incentives. All of those are tied to individual or company performance.
Company director compensation was down about 25 percent at NiSource, as this is the first year that no director is collecting any type of pension or pension cash-out benefit. That is in line with NiSource's corporate governance philosophy that directors should not collect pension benefits, according to Banas.
Pension cash-outs caused controversy in recent years, as they supercharged some directors' total compensation.