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Colorado Springs City Council rejects CEO pay increase

February 25, 2014 Updated: February 25, 2014 at 10:15 pm
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Colorado Springs City Council members Jill Gaebler, right, and Val Snider talk after a 5-4 vote against a $171,000 raise for Colorado Springs Utilities CEO Jerry Forte Tuesday, February 25, 2014. Michael Ciaglo, The Gazette

A proposed $171,000 pay raise for the Colorado Springs Utilities CEO was too much to bite off at once, council members said Tuesday.

In a 5-4 vote, the City Council rejected the proposed salary increase and incentive package for Utilities CEO Jerry Forte, who has a base salary of $276,750 and a performance-based incentive package of about $60,000 a year.

But the issue may not be dead. Three council members - Andy Pico, Don Knight and Joel Miller - said they might consider a smaller raise.

Under the proposal, Forte's base salary would have increased to $447,000 and he would have received $25,000 incentive pay a year for the next two years and $26,400 a year in a savings account to cover medical insurance when he retired.

"It was just too much all at once," Miller said.

The salary issue was decided on the same day that the City Council approved, in a 7-2 vote, increases in electric and natural gas rates. The increases are tied directly to increasing fuel costs, said council member Merv Bennett. The fuel portion of the Utilities bill is adjusted sometimes twice a year as the market changes, he said. A recent cold-weather snap across the country drove natual gas prices up and Utilities must adjust rates to cover the cost, he said.

The last six adjustments have been down, Bennett said.

Council member Don Knight wanted to delay the vote to see if prices come down. Council voted 7-2 to make the adjustments now.

For a typical residential customer, the approved increases will cost about $37 more a year. The new rates kick in March 1.

The juxtaposition of rate increases and salary increases didn't sit well with council member Helen Collins, who voted against both issues.

"The average citizen sees you asking for a rate increase and then turning around and giving the CEO a tremendous raise," she said.

She said she would not support the salary increase when people are struggling to pay their bills.

Council member Jan Martin argued that the raise was necessary because Forte's total compensation - base salary and incentive package - falls 45 percent below the market median of CEOs who run similar size public and private utility companies, according to an executive compensation study commissioned by the Utilities board. Martin said Forte's base salary had not increased in seven years.

It puts Utilities in a bind if Forte retires and the board tries to replace him with the same salary, she said. Forte's salary was compared to 42 utility CEOs. The compensation study found that Forte's base salary is 38 percent below market median salaries of utilities of similar size and scope.

Based on the study, Forte's total compensation should be $622,000, Martin said.

"Jan is right, when we come to recruit, we will have to recruit out of these businesses," Bennett said. "It is a responsible decision if we want the talent we need - this is a $1.1 billion company."

But council members who voted against the raise and incentive package said it would be better if the salary increases were phased in over time.

"Do we need to do it all at once - it's an awfully big number," Pico said.

Only one person spoke against the proposed salary increase during the citizen comment session. But council members were pummeled with emails urging them to vote no on the raise.

Forte could not be reached Tuesday for comment. Monday he said he trusted that the council would do the right thing for Utilities.

Forte did not seek the salary increase, said council member Jill Gaebler. The Utilities board, which is the City Council, sought the salary information because the board has a policy that it will pay its employees at market median.

"I take that very seriously," she said.

Martin said the Utilities personnel committee will regroup and possibly come back with a proposal. "The one positive is we helped inform the public of this important issue facing Utilities," she said.

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