KANSAS CITY, KAN. — Executive compensation at Westar Energy Inc. was no secret, a former employee said Friday during the federal fraud trial of two former executives.
Richard Terrill, who was a former general counsel for the Topeka-based utility, testified that details about the pay and other benefits received by former chief executive officer David Wittig and former executive vice president Douglas Lake were available in company documents and filings with the U.S. Securities and Exchange Commission.
As part of their federal fraud trial, Wittig and Lake are charged with falsifying corporate documents to hide portions of their compensation from shareholders, regulators and Westar officials and directors.
Some of those allegedly hidden benefits included a split-dollar life insurance policy that allowed Wittig to sell death benefits back to the company for $2 million, an accelerated bonus plan for Wittig that netted him $5.37 million, personal use of corporate aircraft and moving expenses meant to cover the sale of both men's homes in New York when they joined the company, even though neither man immediately sold their home.
Wittig and Lake are accused of looting Westar, the state's largest electric utility. They face 40 counts each and at least 10 years in prison, if convicted. Both men deny wrongdoing and say their actions were legal and approved by the company's board of directors.
Terrill testified Friday that the insurance policies, moving expenses and Wittig's accelerated bonus were disclosed in the records.
Terrill said he questioned Lake's use of Westar's corporate aircraft, saying he was unhappy with the amount of time Lake was spending in New York.
"It was not clear to what extent he was traveling on business or not," Terrill said. "The number of trips were frequent."
Terrill said he also used the plane for personal reasons, but amended his taxes to reflect those trips as income.
Under questioning by Wittig's attorney, Terrill contradicted government claims that Wittig and Lake wanted to split Westar into a regulated utility and an unregulated company, saddling the utility with all the debt. Terrill testified that Westar would not have been able to shift debt obligations without the consent of bankers.
The government also claims that Wittig and Lake would have taken a substantial ownership stake in the unregulated company, Westar Industries. But Terrill testified that 86 percent of Westar Industries would have been spun off to Westar shareholders and that shareholders would also have had the opportunity to buy more of the spin-off depending on how much Westar stock they owned.
Terrill was the second defense witness in the trial, which began Oct. 19 after four days of jury selection. Prosecutors ended their case Thursday.
Defense attorneys filed a motion late Thursday for acquittal, arguing that Assistant U.S. Atty. Richard Hathaway hadn't proven the government's case. Such motions are common in trials but are rarely approved by judges.
U.S. District Judge Julie Robinson did not rule on the motion Friday.
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