Opinion ID: 1297749
Heading Depth: 1
Heading Rank: 17

Heading: Supervisory Salaries.

Text: [39] The commission disallowed as test-period expense $2,150,000 of supervisory salaries actually paid by Pacific. Pacific asserts without citation of authority that Wage and salary payments are presumed to be reasonable, and must be recognized as such, until the contrary is shown, and proceeds to charge that nothing in the record shows the contrary. Pacific mentions no affirmative showing that the disallowed salary expense was reasonable or prudent, and has failed to sustain its burden of establishing commission error. Further, it is noted that the decision of the commission points out testimony of a witness from GSA, to which Pacific made no rebuttal, showing among other things that in 1956 to conduct operations in Washington, Oregon and Idaho, as well as in California, Pacific had 285 executives at division level and higher and a total employee force of 89,685; that in a six-year period from 1956 to 1962 for Pacific's California operations alone the number of executives at division level and higher increased from 201 in 1956 to 334 in 1962 (a 66 per cent increase) and they were paid aggregate salaries applicable to California of $3,125,967 in 1956 and $7,217,687 in 1962 (a 131 per cent increase); that in the same period Pacific's California employee force declined from 71,926 to 67,522 (a 6 per cent decrease). Further, although Pacific attacked this testimony as being only theoretical calculations of an unqualified witness, Pacific declined to furnish GSA with more specific information, claiming excess work effort to supply it. The commission's decision understandably declares that The record discloses no reason for the substantial increase in compensation for and number of supervisory personnel at division level and higher in light of the [1961] splitoff of the Oregon, Washington and Idaho properties and operations and the reduction in personnel revealed by the evidence. We find that the amount charged for such salaries in the test year operating expenses for rate-making purposes is excessive and should be reduced by ... $2,150,000 applicable to intrastate operations. No violation of the rule of reasonableness is shown.