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500 Fired at Aquila After Exec Bonuses

July 08, 2002|From Associated Press

KANSAS CITY, Mo. — A month before Aquila Inc. announced plans to fire 500 employees to save nearly $35 million a year, five top executives were paid a total of $30 million in bonuses.

Leo Morton, a senior vice president and chief administrative officer, said the incentive pay was crucial because it awarded performance that was excellent at Aquila last year.

"No one anticipated where we are today," Morton said.

When the board's compensation committee decided in February to award bonuses beyond the established salary and incentive packages, it cited rapid growth the previous year. But already, Aquila's stock price had fallen from a high of $37.55 in May to $23.53 on Feb. 1.

Still, the committee of three board members:

* Determined that the nearly $6 million in salary and bonuses destined for Chairman Richard Green Jr. was insufficient because of his work in cultivating the company's energy-trading operation. As a result, the committee put an additional $4.5 million in "discretionary" cash and stock into his paycheck in "recognition of his contribution," pushing his total compensation to more than $10.3 million.

* Decided Robert Green, president and chief executive, deserved an extra $4.5 million in cash and stock. He wound up receiving more than $9.4 million in salary and bonuses.

* Gave three other executives a total of $12 million in bonuses on top of their salaries, most tied to existing incentive packages.

The bonuses were paid in March. A month later, Aquila, formerly known as UtiliCorp United Inc., announced that it would fire 500 employees, a move that would save about $35 million a year. That soon was followed by additional layoffs and the announcement of a cut in dividends for shareholders and of asset sales to further conserve cash.

Aquila has announced a cutback this year in long-term incentive pay, which was a part of the executive bonuses awarded last year.

In its report filed in March with the Securities and Exchange Commission, the committee--whose members are paid about $100,000 annually to serve as directors--said higher compensation was justified because aggressive financial goals had been achieved.

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