PUD chief rewarded with bonuses on top of $337,000 salary

EVERETT — Snohomish County Public Utility District general manager Steve Klein recently received a contract renewal that could pay him healthy bonuses on top of his $337,000 salary.

Klein, 58, has directed the PUD since April 2006. His new contract extend

s to April 2016.

Commissioners give Klein credit for programs to generate home-grown electricity and for his experience and management skills.

“He’s certainly the best general manager we’ve ever had,” said board President Dave Aldrich, who has been a commissioner since 2003 and previou

sly worked for the PUD as a policy analyst.

Klein had received other offers and was eligible for retirement through the state pension plan he received from his years at Tacoma Power, PUD officials said.

“We’d like to keep Steve here,” Aldrich said.

The three-member PUD board of directors unanimously approved the renewal April 5.

Klein’s deal allows him to receive a merit-based retention bonus of 15 percent of his salary each April through 2015, at the commission’s discretion. He also will receive the same cost-of-living increases as other employees.

The 15 percent would not accrue on top of previous bonuses, Commissioner Toni Olson said. That means in 2012 Klein could receive an additional 15 percent of $337,000, or $50,550. Each subsequent year, he would receive 15 percent of his base salary including cost-of-living adjustments, but excluding previous merit bonuses.

If Klein receives the bonus each year, he stands to earn more than $200,000 on top of his regular salary over the life of the contract.

If he chooses, Klein can put the bonuses into his retirement plans or spread each payment out over the year in which it is approved, according to the resolution approved by the board.

Klein declined to comment Wednesday.

“I respectfully feel there is nothing I could add that would enhance the informational value of the story,” he said in an email.

Klein’s salary is among the low end for executives among comparable public utility districts nationwide, said Carl Mycoff, co-owner of the utility executive search firm Mycoff, Fry, and Prouse near Denver.

Mycoff was hired by the PUD to lead its executive search in 2006, which resulted in the hiring of Klein. Mycoff, Fry and Prouse has been in business since 1974, according to the company’s website.

The ballpark average salary for top executives at public utilities is roughly $450,000 to $500,000, Mycoff said.

Still, Klein makes more than Jorge Carrasco, superintendent of Seattle City Light, who earns $225,000. A public utility, City Light serves about 400,000 accounts and about 1 million people in Seattle and several suburbs.

The Snohomish County PUD serves 321,000 accounts and all of the county’s 711,000 residents who are on the power grid.

Mycoff said bonuses of the type offered Klein are becoming more common as public utilities try to retain their talent.

“The only reason Klein stays there is because he likes that kind of utility,” Mycoff said. “He could make more money elsewhere in a heartbeat with his skills.”

Privately held firms, including Puget Sound Energy of Bellevue, generally pay their top bosses much more than do public utilities, Mycoff said.

Last year, Puget Sound Energy CEO Steve Reynolds made $825,000 in base pay and more than $1.8 million in total compensation, including stock options. In 2009, his total compensation was nearly $8 million.

Reynolds retired early this year and was replaced by Kimberly Harris, who made slightly more than $500,000 as second-in-charge of the utility in 2010, according to a company document. Her salary for 2011 was not available.

Puget Sound Energy is owned by Puget Holdings, a group of infrastructure investors including the Macquarie Group of Australia. The utility serves 750,000 natural gas customers in 11 counties, including in Snohomish County, and 1 million electricity customers.

Olson, a former Snohomish PUD employee, said Klein’s bonuses won’t be a slam-dunk. She said board members will compare his performance with how the utility is meeting goals under its long-term plan, which include continued new power generation.

The PUD now creates up to 19 percent of its own electricity through small hydroelectric dams, wind and biomass. It also is researching tidal and geothermal power. Officials said Klein has helped the utility get $31 million in grants for those new programs. The utility still purchases 81 percent of its electricity from the Bonneville Power Administration.

Part of Klein’s new contract includes a $650 monthly allowance for automobile travel expenses.

“As I understand, it’s rather typical for people in his position,” Aldrich said, adding that Klein travels a lot around the region. Having him submit mileage “could be an administrative nightmare,” the commissioner said.

Aldrich said the previous general manager, former Everett Mayor Ed Hansen, did an admirable job restoring the agency to fiscal solvency after it became ensnared in the Enron investment fiasco.

Now, Klein has built on that stability, Aldrich said. He described Klein as engaging, focused and a good negotiator.

“He’s one of the more ethical people you ever come across, he’s a straight-shooter, he doesn’t dissemble, he doesn’t try to pull the wool over people’s eyes,” he said. “He tells you what the problems are and he assumes full responsibility for taking care of them.”

Bill Sheets: 425-339-3439; sheets@heraldnet.com.

Salaries for neighboring chiefs

Kimberly Harris, Puget Sound Energy: $506,000 (2010 as second-in-charge, promoted to CEO this year). The privately owned utility provides electricity to 1 million people and natural gas to 750,000.

Jorge Carrasco, Seattle City Light: $225,000. The public utility serves about 1 million people.

David Johnson, Skagit PUD: $141,075 (retired at end of 2010; current interim chief makes $100,000). Skagit, which is a water-only utility, serves 65,000.