BRISTOL, VA (WJHL) – As Bristol Virginia Utilities’ cable, phone and internet division continues to lose money, Optinet’s sales team continues to bring in large commissions on top of their base salaries, according to public records.
BVU employee compensation breakdowns show the public utility’s sales manager and sales representative each made $600,000 in commissions alone over the last six years
The Virginia Auditor of Public Accounts recently raised concerns about commissions after a review of the public utility’s books. State auditors urged BVU to come up with a fair compensation plan for all employees.
“This would include payment of commissions that are reasonable, not excessive, and balances the commission with the salary paid so that the entire compensation package for sales representatives is fair and reasonable given their knowledge, skills, abilities, and expertise,” an audit recommendation said.
BVU CEO Don Bowman says the former management team of Wes Rosenbalm and Stacey Pomrenke created the longstanding compensation plan more than a decade ago as an incentive to grow sales. The employees who receive commission almost exclusively sell Optinet’s cable, television and phone services to business customers, Bowman said.
Public records show the sales representative made six-figure commissions four out of the last six years on top of his base pay. In fact, in 2015 he made $188,000 in total compensation, which included $141,000 in commissions, according to BVU documents.
Records show the sales manager also routinely took home commissions near or above $100,000 on top of her base salary. She made $131,000 in commissions in 2015, resulting in total pay of $211,000 that year. According to Bowman, Optinet took a loss of $637,000 in net income that year.
In 2016, as cable rates increased and Bowman anticipated a $2 million Optinet loss in net income, the sales representative’s commission stood at $114,000, while the sales manager’s commission came in at $80,000.
At one time, Optinet did make money. Bowman says the division of BVU had net incomes exceeding $1 million from 2010 through 2013 and up to $2.39 million in 2014.
“We did see revenue growth,” Bowman said. “The question is how much was driven by commission. Was this a fair and equitable method to pay our people and did it result in benefits to BVU commensurate with our expense?”
In addition to raising questions about commissions, auditors made recommendations about more than 50 other issues. Management and board members are working to come with plans to address all of those concerns.
“We’re 100% committed to turning this thing around,” BVU Board Chairman Saul Hernandez said Friday after a BVU meeting. “There’s no way to get around it other than just to keep at it. There’s a lot of work to do. What’s most important is that throughout the whole process we remain completely transparent to all of our stakeholders and all of our ratepayers that we’re making progress and that we’re taking all of these findings serious.”
While officials work on a plan of correction for the other issues, Bowman says the utility is in talks with Sunset Digital Communications about the commission audit finding. BVU is in the process of selling its Optinet division to Sunset. Bowman says if the sale closes by the end of the year Sunset will have full say of the sales force’s compensation. However, just in case the deal doesn’t close by them, Bowman says he is working on a compensation plan for next year for BVU that would take auditors’ concerns into account. Bowman says BVU previously alerted Sunset about the commission structure.
“We are working with Sunset in reviewing that finding,” Bowman said. “We will address the audit finding in the new calendar year.”
Bowman doesn’t think the practice is illegal, since the commission requirements are clearly outlined in BVU’s approved compensation plan.
Auditors also raised concerns about BVU employees who were not on the sales team who made roughly a quarter million dollars in commissions. The chief technology officer, who retired earlier this year, made $127,000 in commissions alone over five years on top of his more than $100,000 annual base salary, according to BVU records.
“We also noted that the BVU Authority paid $283,837 in commissions to employees who were not sales employees,” the auditor’s report said. “This would typically happen when one of the salespeople would inform Stacey Pomrenke (or other BVU Authority management) that another employee assisted on a sales call and should receive commission. Stacey Pomrenke and the salesperson would determine the amount given to the employee. The BVU Authority could not provide official documentation showing adequate justification or approval of commission pay to non-sales employees.”
Auditors also told the utility it needs to review all of its business customers to see if some are receiving discounts.
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