AEP CEO Morris earned $7.1M in 2009, down 27 percent as he got no performance-based bonus

AEP CEO earned less in 2009 as he got no bonus

COLUMBUS, Ohio — The top executive of American Electric Power received total compensation of $7.1 million in 2009, a 27 percent drop from the previous year, according to an Associated Press calculation of figures disclosed in a regulatory filing.

Chairman, President and CEO Mike Morris went without a performance-based bonus in 2009, a year that AEP, one of the nation’s biggest power companies, posted earnings per share below target and suffered two workplace fatalities,

Morris received base pay of $1.3 million in 2009, the same as in 2008. He also received stock options valued at $5.3 million on the day they were granted, down 12 percent from the $6 million in similar awards he received in 2008.

He also received $572,230 in perks, compared with $818,438 in perks in 2008.

But the big drop in Morris’ pay was due to the fact that he and other top executives received no performance-based bonus last year. His performance-based bonus totaled $1.7 million in 2008.

The major reason was because the company’s earnings came in at $2.97 per share, below the target of $3.20 per share.

The executives saw any remaining bonus potential cut to zero because of the fatalities. The company’s annual performance objectives reduces bonuses if there is a workplace death.

Like other power companies, AEP — with 5.2 million customers in 11 states — has been hurt by the economic downturn that has lowered demand for electricity. Demand was off 11 percent from 2008, including a 15.6 percent drop among industrial customers.

To help offset the weakness, companies have been slashing capital expenses and payroll costs.

AEP, based in Columbus, Ohio, has frozen the salaries of Morris and other executives and made it more difficult to reach incentive targets. It also has cut back on perks.

The Associated Press formula is designed to isolate the value the company’s board placed on an executive’s total compensation package during the last fiscal year. It includes salary, bonus, performance-related bonuses, perks, above-market returns on deferred compensation and the estimated value of stock options and awards granted during the year. The calculations don’t include changes in the present value of pension benefits, making the AP total different in most cases than the total reported by companies to the Securities and Exchange Commission.