Todd Lester of Navigant Consulting presented the firm’s Report on Director Compensation to the Pedernales Electric Cooperative Board of Directors at Monday’s meeting in Johnson City. The report stated, “With one exception, the average total compensation of PEC’s directors exceeds director compensation levels at the other largest cooperatives in the U.S. and Texas.”
However, Navigant’s report also presented a compensation comparison that was “normalized” due to the “significant differences in size between PEC and many of the largest cooperatives.” After normalizing the data based on six factors (assets, revenues, capital investment, miles of line, employees and members), the report showed “average compensation per director at PEC is at or below the median on three metrics and approaching or above the 75th percentile on three other metrics.”
Navigant did not include a cost of living adjustment in its “normalizing” process. Lester said in an interview after the formal presentation that Navigant and the PEC’s Compensation Committee discussed applying a cost of living adjustment, but elected not to do so.
Since the PEC has 17 members on its board and the average board of directors’ size is between 7 and 10 members, Navigant also prepared a comparison of total PEC board compensation cost as a percentage of total revenue. The report showed that total board compensation at PEC just below the highest for large cooperatives and at the 75th percentile of investor owned utilities.
PEC directors have been paid $2,000 per month plus $750 per “voting meeting” since 2005. Average fees paid per director in 2007 totaled $38,500, representing attendance at approximately 19 meetings plus the fixed monthly fee. Average benefits paid per director in 2007 were $11,200, for a total compensation figure of $49,800.
Navigant was commissioned by the PEC’s Compensation Committee to “research the structure and compensation policies and practices of boards at various electric utilities in Texas and across the U.S. including cooperatives and investor-owned electric utilities, as well as publicly traded utility and energy companies.”
The entire 34 page report, including charts, is available online at pec.coop. The PEC encourages members to review the report and give feedback prior to June.