Bruce Harrell, chair of the City Council's utilities committee, sent out a statement on the $40,000 bonus given to City Light superintendent Jorge Carrasco. The bonus was first reported by the PostGlobe.
Harrell said in part: "Do I think it was prudent for the Mayor to issue an incentive bonus to the Superintendent at this time? No, that would not have been my preference. While some type of retention bonus and incentive bonus could have been justified, I would not have provided the maximum allowed under contract at a time when City Light must reduce its expenses, its wholesale revenues are declining and employee morale needs a boost."
But he also said: "It should be noted that Carrasco has provided leadership to a utility that not only suffered from a lack of leadership, long term strategic planning and financial discipline. In addition, it is currently faced with increased costs, challenging state and federal regulation and an inconsistent and declining wholesale revenue stream. While I would not have approved of the bonus, I am glad we are not searching for a new Superintendent during this critical period in our economy. "
Here's the full statement:
During the week of July 8th, several local media outlets disclosed the Mayor’s decision to provide a $40,000 performance and retention bonus to City Light Superintendent Jorge Carrasco. Uninformed critics of the Mayor’s decision would suggest that the City Council somehow supported or approved of that decision. To my knowledge, no councilmember was involved in that decision or approved of it. The Seattle City Council’s role, by law and legal charter, is to establish the appropriate salary bands, approve fair and reasonable labor agreements and to set compensation schemes intended to establish and maintain a competitive workforce. The Mayor is provided discretion to manage his direct reports within that scheme and the decision as to when and to what extent he should apply those schemes rests there. His decision was consistent with a 2003 ordinance approved by the City Council and consistent with Carrasco’s employment contract. However, these facts should not be construed as endorsing the $40,000 discretionary decision as critics of the Council would suggest.
Do I think it was prudent for the Mayor to issue an incentive bonus to the Superintendent at this time? No, that would not have been my preference. While some type of retention bonus and incentive bonus could have been justified, I would not have provided the maximum allowed under contract at a time when City Light must reduce its expenses, its wholesale revenues are declining and employee morale needs a boost. During tough times, it is critical to send the right message to your employees and rate-paying customers. I would only authorize the maximum if I believed it were absolutely imperative to the success of the organization.
Many studies in salary treatment and employee performance indicate that salary alone is not the driver of performance. High performance can also be achieved by recognition, respect and through empowerment in decision making. Notwithstanding how I would have handled the Superintendent’s bonus issue, I will respect the separation of powers provided by our charter. The legal compensation scheme we have established is consistent with best practices and provides common employment tools for retention. It did not mandate the payment of a $40,000 bonus but appropriately provides a mayor with a scheme to use sound discretion.
A Seattle Times article pointed out that compensation levels and bonuses of publicly traded utilities are much higher. For example, the CEO of Puget Energy earns $788,906 in 2008 as part of his $3.3 million pay package. The CEO of Avista received $2.1 million in 2008 compensation, including a $404,597 bonus and $1.1 million worth of stock awards. By way of comparison, Carrasco earns $224,000 per year.
While these facts are interesting and to some extent provide a context of bonus awards, they are simply that; interesting and should not be construed as a controlling or binding legal precedent.
People should be concerned with any highly paid city executive receiving a bonus. We are in a recession and unemployment rates are high locally, regionally and nationally. Many residents in Seattle are struggling. While criticism of a discretionary bonus is valid, it should be noted that Carrasco has provided leadership to a utility that not only suffered from a lack of leadership, long term strategic planning and financial discipline. In addition, it is currently faced with increased costs, challenging state and federal regulation and an inconsistent and declining wholesale revenue stream. While I would not have approved of the bonus, I am glad we are not searching for a new Superintendent during this critical period in our economy.
