Following an established policy disallowing rate recovery of executive incentive compensation awards, the Hawaii Public Utilities Commission (PUC) has rejected ratepayer funding for a salary plan administered by GTE Hawaiian Telephone Co., Inc. The PUC denied the carrier's attempt to differentiate its executive incentive plan by asserting that the plan was not a "bonus or extra compensation," but part of a total salary package set at a level competitive with market compensation. According to GTE, executives are paid at a level that meets market compensation under the plan, except when performance goals are not met, in which case salary is reduced below market levels. The PUC noted that GTE had claimed that its market salary studies were confidential and had also failed to provide any other proof that actual total salaries paid to company executives matched market compensation. Re GTE Hawaiian Telephone Co., Inc., Dkt. Nos. 7579 et al., June 9, 1995 (Hawaii P.U.C.).
While setting rates for Cincinnati Bell Telephone Co., the Kentucky Public Service Commission (PSC) approved incentive compensation programs used by the carrier for its management and nonmanagement employees. The PSC found that the incentive program for nonmanagement employees clearly constituted part of the normal pay negotiated by the worker's union bargaining unit. Recovery of program costs was allowed because management awards are "at risk" (em that is, some employees do not receive them, or receive only a portion of the allocated award each year (em and overall base salary increases were curtailed when the incentive plan was put in place. Re Cincinnati Bell Telephone Co., Case No. 94-355, May 23, 1995 (Ky.P.S.C.).