Two fired executives may get large severance packages

Wednesday, May 22, 2002 | 10:53 a.m.

Former Nevada Power Co. President Mark Ruelle and a former senior vice president may be in line for lucrative severance packages now that they are gone from the company.

But the severance arrangements specified in the latest annual report issued by Nevada Power parent Sierra Pacific Resources in March were written in a way that leave them open for interpretation by the corporate board of directors.

One possible interpretation is that Ruelle and Steven Oldham, former senior vice president of energy supply, could receive as much as three years' worth of base salary plus bonuses. Both men, who became unemployed Monday as part of a management shake-up, also left the company with substantial stock holdings in Sierra Pacific.

For Ruelle, whose salary was $280,962 last year, severance pay could work out to as much as $842,886 from base salary alone if the three-year maximum is applied. Oldham, paid $219,039 in salary last year, would receive as much as $657,117 if his base pay was tripled.

As of March 11, Oldham held 55,891 shares of Sierra Pacific stock and Ruelle owned 47,244 shares. At the closing price of $6.52 per share Tuesday on the New York Stock Exchange, those holdings were worth $364,409 and $308,030 respectively.

When former Sierra Pacific Chairman Michael Niggli resigned in July 2000, he was given triple his base pay plus stock options for a total severance package worth slightly more than $3 million.

Walt Higgins, Sierra Pacific chairman and chief executive officer, declined comment Tuesday on potential severance packages for Ruelle, Oldham and two other vice presidents who also lost their jobs Monday.

But among the conditions that trigger severance pay for executives such as Ruelle and Oldham, according to the annual report, is a "termination of employment by the employee for good reason." In a press release issued Monday, Higgins said that Oldham retired and that Ruelle left to pursue "other opportunities."

Douglas Ponn, former vice president of public policy, and Paul Heagen, former vice president of corporate communications and marketing, also were out of jobs. Ponn retired and Heagen returned to his own consulting business, according to Higgins. Both Ponn and Heagen had severance plans in the event of a corporate takeover or liquidation but Sierra Pacific's annual report did not specify whether they were eligible for severance pay in the event of other circumstances.

Niggli's severance package was paid by corporate shareholders, not ratepayers. State Consumer Advocate Timothy Hay, a leading critic of Nevada Power and its business practices, said the same ought to be the case for Ruelle and the others.