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News Release
Commission Sees Disconnect Between U S WEST Service, Executive Pay
January 4, 1999 (1999 - 002)
Contacts:  Ron Eachus, Commission Chair, 503 378-6611; Terry Lambeth, Senior Telecommunications Analyst, 503 378-6123; Ron Karten, Public Information Officer, 503 378-8962
Salem, Ore. – The Oregon Public Utility Commission (OPUC) today criticized U S WEST for providing its officers huge increases in executive compensation at the same time the company continues to have service quality problems and declines to invest in improving the telephone service in rural communities.
According to a staff memorandum, U S WEST will provide its Oregon officers with an average 23% compensation increase in 1999. Compensation for the U S WEST Chief Executive Officer will increase 62% to $4.3 million including salary and bonuses.
Calling the increases an "insult to ratepayers," Commission Chairman Ron Eachus said, "Clearly there’s a disconnect between what they provide their customers and what they give their executives."
"Customers can’t get the service they’re entitled to, yet the company increases executive salaries 23%. Communities are told U S WEST won’t invest in their area, but the CEO gets a 50% increase in benefits in the last two years."
The Commission said it was particularly concerned about continuing complaints from smaller rural communities where U S WEST says that it won’t invest in the area because it can’t make a profit.
"That’s simply not true," Commission Joan Smith explained. "The way rates are set, they get a reasonable return on their investment whether it’s made in Oakridge or in Portland."
The Commission decided to begin a series of hearings to investigate the complaints from rural communities about the lack of investment. No schedule has been set yet.
Commissioner Eachus said he thought U S WEST was engaging in a form of "economic blackmail," in which it refuses to invest in rural communities and then supports legislation that would allow it to buy its way out of regulatory oversight by contributing to a rural infrastructure fund.
The Commission nevertheless approved the company’s budget of expenditures at the meeting. It is routine for the Commission to approve such compensation packages for accounting purposes only, but during a subsequent rate case, to decline to include all incentives and bonuses in rates.
For 1999, U S WEST has budgeted $2.2 million for officers compensation in Oregon, which is a 23% increase from 1998.
Since 1997, total compensation for the Chief Executive Officer and the Chief Financial Officer has doubled and average compensations for all officers’ has increased by almost 50 percent.
The company’s budget also revealed that while this year’s Oregon Legislature is in session, the company will spend $250,000 for lobbying. During the 1997 session, the company spent $200,000.
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