Unassociated Document
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
SCHEDULE 14A INFORMATION
 
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.     )
 
 
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o   Preliminary Proxy Statement
o   Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
þ   Definitive Proxy Statement
o   Definitive Additional Materials
o   Soliciting Material Pursuant to §240.14a-12
 
IDACORP, Inc.

(Name of Registrant as Specified In Its Charter)
 
 
 

 (Name of Person(s) Filing Proxy Statement, if other than the Registrant)
 
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
     
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
 May 15, 2008, AT BOISE, IDAHO
 

 
Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to Be Held on May 15, 2008.
 
The proxy statement and annual report to shareholders are available at www.idacorpinc.com/financials/annlreps.cfm.
April 7, 2008

TO THE SHAREHOLDERS OF IDACORP, INC.:
 
Notice is hereby given that the Annual Meeting of Shareholders of IDACORP, Inc. will be held on May 15, 2008 at 10:00 a.m. local time at the Idaho Power Company corporate headquarters building, 1221 West Idaho Street, Boise, Idaho, for the following purposes:
 
1.  
to elect three directors of IDACORP for three-year terms;

2.  
to ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2008;
 
3.  
to act upon a shareholder proposal requesting that IDACORP amend its equal employment opportunity policy to explicitly prohibit discrimination based upon sexual orientation and gender identity and expression; and

4.  
to transact such other business that may properly come before the meeting and any adjournment or adjournments thereof.

Common shareholders of record of IDACORP at the close of business on March 27, 2008, are entitled to notice of and to vote at the meeting.
 
You are cordially invited to attend the meeting in person. Shareholders interested in attending in person must make a reservation and may obtain directions to the meeting by calling (800) 635-5406. Whether or not you plan to attend, please vote your proxy promptly. It is important that your shares be represented at the meeting. Please vote your proxy, regardless of the size of your holdings, as promptly as possible. Any shareholder voting a proxy who attends the meeting may vote in person by revoking that proxy before or at the meeting.
 
By Order of the Board of Directors
 
Patrick A. Harrington
Corporate Secretary
 

 
To shareholders who receive multiple proxies
If you own IDACORP common stock other than the shares shown on the enclosed proxy,
you will receive a proxy in a separate envelope for each such holding. Please vote each proxy
received.
 
 

 
TABLE OF CONTENTS
 
  Page 
Notice of Annual Meeting of Shareholders
 
Proxy Statement
  General Information
  Cost and Method of Solicitation
  Matters to be Voted Upon
  Record Date
  Outstanding Voting Securities
  Voting
  Proposal No. 1: Election of Directors
    Nominees for Election – Terms Expire 2011
    Continuing Directors – Terms Expire 2010
    Continuing Directors – Terms Expire 2009
  Corporate Governance
    Report of the Audit Committee of the Board of Directors
  Related Person Transaction Disclosure
14 
  Proposal No. 2: Ratification of Appointment of Independent
 
    Registered Public Accounting Firm
15 
    Independent Accountant Billings
16 
Proposal No. 3: Shareholder Proposal
17 
Other Business
19 
Security Ownership of Directors, Executive Officers and Five Percent Shareholders
20 
Section 16(a) Beneficial Ownership Reporting Compliance
22 
Executive Compensation
22 
  Compensation Discussion and Analysis
22 
  Compensation Committee Report
53 
  Summary Compensation Table for 2007
54 
  Grants of Plan-Based Awards in 2007
56 
  Narrative Discussion for Summary Compensation Table and Grants of Plan-Based Awards Table
57 
  Outstanding Equity Awards at Fiscal Year-End 2007
60 
  Option Exercises and Stock Vested During 2007
63 
  Pension Benefits for 2007
64 
  Nonqualified Deferred Compensation for 2007
69 
  Potential Payments Upon Termination or Change in Control
72 
  Director Compensation for 2007
88 
Annual Report
90 
Shared Address Shareholders
91 
2009 Annual Meeting of Shareholders
91 
Exhibit A    Independence Standards - Excerpt from Corporate Governance Guidelines A-1 
Exhibit B    Audit Committee Policy For Pre-Approval of Independent Auditor Services B-1 

 
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PROXY STATEMENT
IDACORP, Inc.
1221 West Idaho Street
P. O. Box 70
Boise, Idaho 83707


GENERAL INFORMATION
 
We are mailing you this proxy statement and the accompanying form of proxy beginning April 7, 2008 to solicit your proxy on behalf of our board of directors for use at our annual meeting of shareholders. The meeting will be held on May 15, 2008 at 10:00 a.m., local time, at the Idaho Power Company corporate headquarters building, 1221 West Idaho Street, Boise, Idaho.
 
The Securities and Exchange Commission recently adopted new e-proxy rules that require companies to post their proxy materials on the internet and permit them to provide only a Notice of Internet Availability of Proxy Materials to shareholders.  For 2008, we have decided to follow the Securities and Exchange Commission’s full set delivery option, which means that while we are posting our proxy materials online, we are also mailing a full set of our proxy materials to our shareholders.  We believe that mailing a full set of proxy materials will help ensure that a majority of our outstanding common stock is present in person or represented by proxy at our meeting.  We also hope to help maximize shareholder participation.
 
COST AND METHOD OF SOLICITATION
 
We will pay the cost of soliciting your proxy. Our officers and employees may solicit proxies, personally or by telephone, telegraph, fax, mail or other electronic means, without extra compensation. In addition, Laurel Hill Advisory Group will solicit proxies from brokers, banks, nominees and institutional investors at a cost of approximately $5,000 plus out-of-pocket expenses. We will reimburse banks, brokerage firms and other custodians, nominees and fiduciaries for their expenses in sending our proxy materials to beneficial owners.
 
MATTERS TO BE VOTED UPON
 
As of April 7, 2008, the only business we expect to be presented at the annual meeting is:
 
·
the election of three directors
 
·  
the ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for 2008 and
 
·  
a shareholder proposal requesting that IDACORP amend its equal employment opportunity policy.
 
RECORD DATE
 
You are entitled to notice of, and to vote at, the annual meeting if you owned shares of our common stock at the close of business on March 27, 2008.
 
 

 
OUTSTANDING VOTING SECURITIES
 
As of March 27, 2008, we had 45,234,424 outstanding shares of common stock entitled to one vote per share.
 
VOTING
 
How to Vote
 
You may vote your proxy by telephone, through the internet or by marking, signing, dating and returning the proxy card in the enclosed postage-prepaid envelope.
 
If a bank or broker holds your shares, you may be able to vote by telephone or through the internet. Follow the instructions you receive from your bank or broker.
 
In addition, if you hold shares through an account with a bank or broker, your shares may be voted even if you do not provide voting instructions. Brokerage firms have the authority under the New York Stock Exchange rules to vote shares for which their customers do not provide voting instructions on routine matters. The election of directors and the ratification of Deloitte & Touche LLP as our independent registered public accounting firm for 2008 are considered routine matters.  The shareholder proposal is not considered routine.  When a proposal is not routine and the brokerage firm has not received voting instructions from its customers, the brokerage firm cannot vote the shares on that proposal.  Those shares are considered “broker non-votes.”
 
Quorum
 
Under the Idaho Business Corporation Act, a majority of our outstanding common stock must be present in person or represented by proxy in order to hold the annual meeting.
 
Votes Needed to Approve Proposals
 
The following votes are required for approval of each proposal at the annual meeting:
 
Proposal No. 1 –
our directors are elected by a plurality of the votes cast by the shares entitled to vote in the election of directors. Votes may be cast in favor or withheld; withheld votes have no effect on the results.
     
 
Proposal No. 2 –
the ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for 2008 is approved if the votes cast in favor exceed the votes cast against ratification.
     
 
Proposal No. 3 –
the shareholder proposal requesting that IDACORP amend its equal employment opportunity policy to explicitly prohibit discrimination based upon sexual orientation and gender identity and expression is approved if the votes cast in favor exceed the votes cast against the proposal. Abstentions and broker non-votes have no effect on the results.

 
 
 
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If we do not receive any direction from you, properly executed proxies that we receive will be voted FOR Proposal No. 1, election of our nominees for director, FOR Proposal No. 2, ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for 2008, and AGAINST Proposal No. 3, to amend IDACORP, Inc.’s equal employment opportunity policy.
 
How to Revoke Your Proxy
 
You may revoke your proxy at any time before it is voted at the meeting. If you attend the meeting and wish to vote in person, you may revoke your proxy by oral notice at that time. Otherwise, you must send in a later dated proxy or you must mail your written revocation to the corporate secretary of IDACORP at 1221 West Idaho Street, Boise, Idaho 83702-5610, and we must receive it before the meeting.
 
Secret Ballot
 
It is our policy that all proxies for the annual meeting that identify shareholders, including employees, are to be kept secret. Proxies will be forwarded to the independent tabulator who receives, inspects and tabulates the proxies. No proxies are available for examination and the identity and vote of any shareholder are not disclosed to our representatives or to any third party except:
 
 
·
as required by law
 
 
·
to allow the independent election inspectors to certify the results of the shareholder vote
 
 
·
in the event of a matter of significance where there is a proxy solicitation in opposition to the board of directors, based upon an opposition proxy statement filed with the Securities and Exchange Commission or
 
 
·
to respond to shareholders who have written comments on their proxies.
 
 
PROPOSAL NO. 1: ELECTION OF DIRECTORS
 
Our board of directors consists of 11 members.  Our articles of incorporation, as amended, provide that directors are elected for three-year terms, with approximately one-third of the board of directors elected at each annual meeting of shareholders.
 
The three directors standing for election to our board of directors are nominees for election with terms to expire in the year 2011.  All nominees are incumbent directors of IDACORP and nominated for reelection.
 
Unless you otherwise indicate, proxies that we receive will be voted in favor of the election of the director nominees. While we expect that all of the nominees will be able to qualify for and accept office, if for any reason one or more should be unable to do so, the proxies will be voted for nominees selected by the board of directors.
 
 
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Our directors are elected by a plurality of the votes cast by the shares entitled to vote in the election of directors.  Votes may be cast in favor or withheld; withheld votes have no effect on the results.
 
The board of directors unanimously recommends a vote “FOR” the nominees listed below.
 
NOMINEES FOR ELECTION - TERMS EXPIRE 2011
 
RICHARD G. REITEN              
Chairman of the Board of Northwest Natural Gas Company, provider of natural gas in Oregon and southwest Washington, since 2006 and from 2000-2005, President and Chief Executive Officer, 1997-2003, President and Chief Operating Officer, 1995-1997; former President and Chief Operating Officer of Portland General Electric, electric public utility, 1992-1995; former President of Portland General Corp., 1989-1992; director of U.S. Bancorp, banking services, since 1998; Building Materials Holding Corporation, provider of construction services, manufactured building components and materials to professional residential builders and contractors, since 2001; and National Fuel Gas Company, diversified energy company providing interstate natural gas transmission and storage, since 2004; director of the following IDACORP subsidiary: Idaho Power Company since 2004; director of IDACORP since 2004. Age 68
   
JOAN H. SMITH
Self-employed consultant, consulting on regulatory strategy and telecommunications, since 2003; former Oregon Public Utility Commissioner, 1990-2003; affiliate director with Wilk & Associates/ LECG LLP, public consulting organization, since 2003; director of the following IDACORP subsidiary: Idaho Power Company since 2004; director of IDACORP since 2004. Age 65
   
THOMAS J. WILFORD
President and Director of Alscott, Inc., real estate development and other investments, since 1993; Chief Executive Officer of J.A. and Kathryn Albertson Foundation, Inc., family foundation committed and striving to be a catalyst for positive educational change, since 2003, former President, 1995-2003; director of K12, Inc., an organization that provides individualized, one-to-one learning solutions for students from kindergarten through high school, since 2002; director of the following IDACORP subsidiary: Idaho Power Company since 2004; director of IDACORP since 2004. Age 65

 
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CONTINUING DIRECTORS – TERMS EXPIRE 2010
 
JUDITH A. JOHANSEN          
Former President and Chief Executive Officer, 2001-2006, and Executive Vice President, 2000-2001, of PacifiCorp, electrical utility serving six western states; former CEO and Administrator, 1998-2000, Director and Vice President, 1992-1996, Bonneville Power Administration, a federal power marketing agency in the Pacific Northwest; former Vice President, 1996-1998, Avista Energy, electric and natural gas utility; director of Cascade BanCorp, a financial holding company, since 2006; Schnitzer Steel, a metals recycling company, since 2006; director of the following IDACORP subsidiary: Idaho Power Company since 2007; director of IDACORP since 2007. Age 49
   
J. LaMONT KEEN
President and Chief Executive Officer of IDACORP since July 1, 2006 and President and Chief Executive Officer of Idaho Power Company since 2005; Executive Vice President of IDACORP, 2002-2006; President and Chief Operating Officer, Idaho Power Company, 2002-2005; Senior Vice President-Administration and Chief Financial Officer, IDACORP and Idaho Power Company, 1999-2002; Senior Vice President-Administration, Chief Financial Officer and Treasurer, IDACORP and Idaho Power, 1999; Vice President, Chief Financial Officer and Treasurer, Idaho Power Company 1996-1999; Vice President and Chief Financial Officer, Idaho Power Company 1991-1996; and Controller, Idaho Power Company, 1988-1991; director of the following IDACORP subsidiaries: Idaho Power Company since 2004 and Idaho Energy Resources Company since 1991; director of IDACORP since 2004.  J. LaMont Keen and Steven R. Keen, Vice President and Treasurer of IDACORP, Inc. and Idaho Power Company, are brothers. Age 55
   
JON H. MILLER
Chairman of the Board of IDACORP since 1999; Private Investor; formerly President and Chief Operating Officer, 1978-1990, and a director, 1977-1990, of Boise Cascade Corporation, distributor of office products and building materials and an integrated manufacturer and distributor of paper, packaging and wood products; director of the following IDACORP subsidiary: Idaho Power Company since 1988; director of IDACORP since 1998.  Age 70
 
 
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ROBERT A. TINSTMAN       
Former Executive Chairman of James Construction Group, a construction services company, 2002-2007; former President and Chief Executive Officer, 1995-1999, and director, 1995-1999, of Morrison Knudsen Corporation, a general contractor providing global mining, engineering and construction services; former Chairman of Contractorhub.com, an e-marketplace for contractors, subcontractors and suppliers, 2000-2001; director of the Home Federal Bancorp, Inc., banking services, since 1999; CNA Surety Corporation, surety company offering contract and commercial surety bonds, since 2004; director of the following IDACORP subsidiary: Idaho Power Company since 1999; director of IDACORP since 1999. Age 61

CONTINUING DIRECTORS - TERMS EXPIRE 2009
 
CHRISTINE KING                    
Chief Executive Officer and Director of AMI Semiconductor, designer and manufacturer of semiconductor products from 2001 to March 2008; Director of ON Semiconductor Corp., designer and manufacturer of semiconductor products, since 2008; director of the following IDACORP subsidiary: Idaho Power Company since 2006; director of IDACORP since 2006.  Age 58
   
GARY G. MICHAEL
Former Chairman of the Board and Chief Executive Officer, 1991-2001, of Albertson’s, Inc., food-drug retailer; director of The Clorox Company, manufacturer and marketer of household products, since 2001; Office Max, distributor of business and retail office products, including office supplies, paper, technology products and services, and furniture, since 2004; Questar Corporation, integrated natural gas company, since 1994; Questar Gas, provider of retail natural gas-distribution services, since 1994; Questar Pipeline, interstate gas transportation and storage, since 1994; Graham Packaging Company, designer and manufacturer of customized plastic containers, Advisory Board, since 2002; director of the following IDACORP subsidiary: Idaho Power Company since 2001; director of IDACORP since 2001. Age 67
   
PETER S. O’NEILL
Former Chairman of O’Neill Enterprises L.L.C., developer of planned communities, 1990-2004; director of Building Materials Holding Corporation, provider of construction services, manufactured building components and materials to professional residential builders and contractors, since 1993; director of the following IDACORP subsidiaries: Idaho Power Company since 1995 and IDACORP Financial Services, Inc. since 1999; director of IDACORP since 1998. Age 71
 
 
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JAN B. PACKWOOD              
Former President and Chief Executive Officer of IDACORP, from 1999 to July 1, 2006; Chief Executive Officer of Idaho Power Company, 2002-2005; President and Chief Executive Officer, Idaho Power Company, 1999-2002; President and Chief Operating Officer, Idaho Power Company, 1997-1999; Executive Vice President, 1996-1997, and Vice President - Bulk Power, 1989-1996; director of the following IDACORP subsidiaries: Idaho Power Company since 1997, IDACORP Financial Services, Inc. since 1997 and Ida-West Energy Company since 1999; director of IDACORP since 1998. Age 65

 
CORPORATE GOVERNANCE
 
Director Independence
 
Our board of directors has adopted a policy on director independence that includes categorical standards for director independence. This policy is contained in our corporate governance guidelines, which we have posted on our website at www.idacorpinc.com/corpgov/default.cfm and attached to this proxy statement as exhibit “A.”
 
All of our board members are non-employees, except for J. LaMont Keen, our president and chief executive officer. The board of directors has determined that the following members are or were during the term of their service as directors in 2007 “independent” based on all relevant facts and circumstances and under the New York Stock Exchange listing standards and our corporate governance guidelines:  Rotchford L. Barker, who retired from the board of directors effective May 17, 2007, Judith A. Johansen, Christine King, Gary G. Michael, Jon H. Miller, Peter S. O’Neill, Joan H. Smith, Robert A. Tinstman and Thomas J. Wilford.  J. LaMont Keen, Jan B. Packwood and Richard G. Reiten are not independent.  Mr. Keen is our president and chief executive officer.  Jan B. Packwood retired as president and chief executive officer of IDACORP on July 1, 2006 and remained on the board of directors as a non-employee director.  Mr. Packwood does not meet the director independence criteria set forth in the New York Stock Exchange listing standards and our corporate governance guidelines due to his prior service as our president and chief executive officer.  In September 2006, the board of directors, acting upon a recommendation of the corporate governance committee, determined that director Richard G. Reiten had a material relationship with Idaho Power Company and no longer met the director independence criteria set forth in the New York Stock Exchange listing standards and our corporate governance guidelines.  Mr. Reiten’s son was selected as president of Pacific Power which, with Idaho Power Company, owns the Jim Bridger power plant and coal mine located near Rock Springs, Wyoming.  See also Related Person Transaction Disclosure.
 
The office of the chairman of the board and the chief executive officer have been separated since June 1999. The non-employee directors have held meetings separate from management since 1998. Mr. Miller, the independent chairman of the board, presides at board meetings and regularly-scheduled executive sessions of non-employee directors.
 
Code of Ethics
 
For many years, our principal subsidiary, Idaho Power Company, had a code of business conduct and ethics, which applied to all of its directors, officers and employees. We adopted a new code of business conduct and ethics in July 2003, which applied to all of our directors, officers and employees. In September 2005, we revised the code of business conduct and ethics and adopted a separate code of business conduct and ethics for directors. These codes of business conduct and ethics are posted at www.idacorpinc.com/corpgov/conduct_ethics.cfm. You may obtain printed copies without charge by writing to the corporate secretary of IDACORP at 1221 West Idaho Street, Boise, Idaho 83702-5610.
 
 
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We will also post on our website any amendments to or waivers of our codes of business conduct and ethics, as required by Regulation S-K, Item 406 or the New York Stock Exchange listing standards at www.idacorpinc.com/corpgov/conduct_ethics.cfm
 
Board Meetings and Committees; Attendance at Annual Meeting
 
The board of directors held six meetings in 2007. Each director attended at least 75% of his or her board and committee meetings except for Ms. King who attended 73% of the meetings.
 
Our corporate governance guidelines provide that all directors are expected to attend our annual meeting of shareholders and be available, when requested by the chairman of the board, to answer any questions shareholders may have.  All members of the board of directors attended our 2007 annual meeting, except for Ms. King.
 
Our standing committees are the executive committee, the audit committee, the compensation committee and the corporate governance committee. We describe our committees, their membership during 2007 and their principal responsibilities below.
 
We have
 
 
·
written charters for the audit committee, corporate governance committee and compensation committee and
 
 
·
corporate governance guidelines, which address issues including the responsibilities, qualifications and compensation of the board of directors, as well as board leadership, board committees and self-evaluation.
 
Our written committee charters and the corporate governance guidelines are available on our website and may be accessed at www.idacorpinc.com/corpgov/default.cfm.  You may obtain printed copies without charge by writing to the corporate secretary of IDACORP at 1221 West Idaho Street, Boise, Idaho 83702-5610.
 
Executive Committee
 
The executive committee acts on behalf of the board of directors when the board is not in session, except on those matters that require action of the full board. Members of the executive committee are J. LaMont Keen, chairman, Gary G. Michael, Jon H. Miller, Peter S. O’Neill and Robert A. Tinstman.  During 2007, the executive committee met two times.
 
Audit Committee
 
The audit committee is a separately-designated standing committee established in accordance with section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended.  All members are independent, as that term is defined in the listing standards of the New York Stock Exchange. Members of the audit committee are Gary G. Michael, chairman, Judith A. Johansen, Joan H. Smith and Thomas J. Wilford.  Rotchford L. Barker served as a member of the audit committee until his retirement from the board on May 17, 2007.  The board of directors has determined that Messrs. Michael and Wilford are “audit committee financial experts.”
 
 
 
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The audit committee
 
·
assists the board of directors in the oversight of
 
 
-
the integrity of our financial statements
 
 
-
our compliance with legal and regulatory requirements
 
 
-
the qualifications, independence and performance of our independent registered public accounting firm and
 
 
-
the performance of our internal audit department
 
 
·
monitors compliance under the code of business conduct and ethics for our officers and employees and the code of business conduct and ethics for our directors, considers and grants waivers for directors and executive officers from the codes and informs the general counsel immediately of any violation or waiver
 
 
·
prepares the audit committee report required to be included in the proxy statement for our annual meeting of shareholders.
 
During 2007, the audit committee met ten times.
 
 
REPORT OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
 
The audit committee has reviewed and discussed the audited consolidated financial statements of IDACORP, Inc. with management and the independent auditors. The audit committee has discussed with the independent auditors the matters required to be discussed by the Statement on Auditing Standards No. 61, as amended, AICPA, Professional Standards, Vol. 1. AU Section 380, as adopted by the Public Company Accounting Oversight Board in Rule 3200T.
 
The audit committee has received the written disclosures and the letter from the independent auditors required by Independence Standards Board Standard No. 1 regarding independence discussions with audit committees as adopted by the Public Company Accounting Oversight Board in Rule 3600T. The audit committee has discussed with the independent auditors the independent auditors’ independence.
 
Based on the audit committee’s review and discussions referred to above, the audit committee recommended to the board of directors that the IDACORP audited consolidated financial statements be included in our Annual Report on Form 10-K for the year ended December 31, 2007 for filing with the Securities and Exchange Commission.
 
 
Gary G. Michael, Chairman
Judith A. Johansen
Joan H. Smith
Thomas J. Wilford
 

 
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Compensation Committee
 
Members of the compensation committee are Robert A. Tinstman, chairman, Christine King, and Peter S. O’Neill.  Each member is independent as that term is defined in the applicable New York Stock Exchange listing standards.
 
The compensation committee has direct responsibility to
 
 
·
review and approve corporate goals and objectives relevant to our chief executive officer’s compensation
 
 
·
evaluate our chief executive officer’s performance in light of those goals and objectives
 
 
·
either as a committee or together with the other independent directors, as directed by the board, determine and approve our chief executive officer’s compensation level based on this evaluation
 
 
·
make recommendations to the board with respect to executive officer compensation, incentive compensation plans and equity-based plans that are subject to board approval
 
 
·
review and discuss with management the compensation discussion and analysis and based upon such review and discussion determine whether to recommend to the board that the compensation discussion and analysis be included in our proxy statement for the annual meeting of shareholders
 
 
·
produce the compensation committee report as required by the Securities and Exchange Commission to be included in our proxy statement for the annual meeting of shareholders and
 
 
·
oversee our compensation and employee benefit plans and practices.
 
The compensation committee and the board of directors have sole responsibility to determine executive officer compensation, which may not be delegated.  Total compensation for each executive officer is determined by the compensation committee, which then submits its recommendations to the other independent directors on the board for approval.  Our chief executive officer, chief financial officer, vice president-human resources and corporate secretary attend compensation committee meetings.  For additional information on the role of our executive officers in the compensation-setting process, please refer to the Compensation Discussion and Analysis.  The compensation committee chair works with our management to establish an agenda for the compensation committee meetings.  The committee meets in executive session, without management, as it deems necessary.
 
 
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The compensation committee generally begins a review of compensation data at its September meeting, determines the performance goals and range of target awards of performance shares and restricted stock awards under the IDACORP Restricted Stock Plan, the 2000 Long-Term Incentive and Compensation Plan and the IDACORP Executive Incentive Plan at the November or January meeting and determines new awards and determines payouts with respect to completed performance periods at its February or March meeting.  The February meeting occurs after the release of earnings for the prior year.  The compensation committee may also hold special meetings as necessary and may determine additional performance awards at other times in its discretion, including for promotions or new hires.  However, all awards under the plans are approved by the board of directors.
 
Please refer to the Compensation Discussion and Analysis for a discussion of our policies and procedures for determining and establishing executive compensation.
 
The compensation committee has sole authority to retain and terminate consulting firms to assist the committee in carrying out its responsibilities, including sole authority to approve the consulting firm’s fees and other retention terms.  In addition to services provided to the compensation committee, the consulting firm provides management with employee compensation and benefits survey data, which management and the compensation committee review in evaluating our employee compensation and benefit plans.  Although management may request human resources-related services, the compensation committee must pre-approve the engagement of the consulting firm for any services which are outside the compensation committee’s scope of responsibility.  In November 2007, the compensation committee charter and executive compensation policy were amended to reflect this pre-approval requirement.  These services may not interfere with the consulting firm’s advice to the compensation committee.  The chairperson may pre-approve services between regularly-scheduled meetings of the compensation committee.
 
In addition, the compensation committee has responsibility for reviewing and making recommendations with respect to director compensation to the board.  In November 2006, the compensation committee reviewed the competitiveness of our non-employee director compensation program.  The committee asked Towers Perrin, a nationally recognized consulting firm with extensive experience in the area of executive compensation, to conduct an analysis of competitive marketplace data on director compensation.  Towers Perrin reviewed proxy statements from the same two peer groups utilized in our executive compensation analysis, which we discuss in the Compensation Discussion and Analysis.  Towers Perrin evaluated each component of non-employee director compensation and summarized the marketplace data collected on the basis of total cash compensation and total direct compensation, which is total cash compensation plus the expected value of any stock-based compensation and annual stock-based awards.  The compensation committee reviewed the competitive market data and the Towers Perrin analysis of this data and made a recommendation for increases to non-employee director compensation for 2007.  Compensation for directors also increased for 2008.  See Director Compensation for 2007 and 2008.
 
During 2007, the compensation committee met five times.
 
 
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Corporate Governance Committee
 
The corporate governance committee is also our nominating committee.  Members of the corporate governance committee are Peter S. O’Neill, chairman, Jon H. Miller and Joan H. Smith. Each member is independent as that term is defined in the applicable New York Stock Exchange listing standards.
 
The corporate governance committee’s responsibilities include
 
 
·
identifying individuals qualified to become directors, consistent with criteria approved by the board
 
 
·
selecting, or recommending that the board select, the candidates for all directorships to be filled by the board or by the shareholders
 
 
·
developing and recommending to the board our corporate governance guidelines
 
 
·
overseeing the evaluation of the board and management and
 
 
·
taking a leadership role in shaping our corporate governance.
 
During 2007, the corporate governance committee met four times.
 
Process for Shareholders to Recommend Nominees for Directors
 
We have processes in our bylaws and corporate governance guidelines for you to follow if you wish to recommend nominees for director to our corporate governance committee. You must submit your written recommendations to our corporate secretary no later than 120 days prior to the first anniversary of the mail date of last year’s proxy statement. In the event of a special meeting of shareholders to elect one or more directors, you must submit a recommendation in writing no later than the close of business on the tenth day after the day we make a public announcement of the meeting and the nominees our board of directors is proposing. Your written recommendation must include all information with respect to the candidate required under the Securities Exchange Act of 1934, including the candidate’s written consent. If you recommend a nominee for director, you must also provide the following information:
 
 
·
your name and address as they appear on our books
 
 
·
the class and number of shares of voting stock you own beneficially and of record and
 
 
·
a statement as to how long you have held the stock.
 
Our corporate secretary will review all written recommendations and send those conforming to these requirements to the corporate governance committee.
 
 
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Board Membership Criteria
 
Directors should possess the highest personal and professional ethics, integrity and values and be committed to representing the long-term interests of our shareholders. Directors must also have an inquisitive and objective perspective, practical wisdom and mature judgment. We endeavor to have a board of directors representing diverse experience at policy-making levels in business, finance and accounting and in areas that are relevant to our business activities. At least one director shall be an “audit committee financial expert.”  Directors are automatically retired immediately prior to the first annual meeting after reaching age 72.
 
Non-employee directors should be independent under the New York Stock Exchange listing standards.
 
Process for Determining Director Nominees
 
Our corporate governance committee is responsible for selecting and recommending to the board candidates for election as directors. Our corporate governance guidelines contain procedures for the committee to identify and evaluate new director nominees, including nominees our shareholders recommend in compliance with our bylaws and policies.
 
The chairman of the corporate governance committee begins the process of identifying and evaluating nominees for director and keeps the full board informed of the nominating process. The chairman reviews candidates recommended by shareholders and may hire a search firm to identify other candidates. The chairman then presents an initial group of candidates to the corporate governance committee.
 
The committee gathers additional information on the candidates to determine if they qualify to be members of our board.  The committee examines whether the candidates are independent and whether their election would violate any federal or state laws, rules or regulations that apply to us. The committee also considers whether the nominees will have potential conflicts of interest and whether they will represent a single or special interest before finalizing a list of candidates for the full board to approve.
 
Since our 2007 annual meeting, we have elected no new board members.  The chairman of the corporate governance committee did not retain a search firm to identify or evaluate any nominees, and no fees were paid.
 
Communications with the Board of Directors and Audit Committee
 
Shareholders and other interested parties may communicate with members of the board of directors by
 
 
·
calling 1-866-384-4277 if you have a concern to bring to the attention of the board of directors, our independent chairman of the board or non-employee directors as a group or
 
 
·
logging on to www.ethicspoint.com and following the instructions to file a report if your concern is of an ethical nature.
 
 
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Our general counsel receives all reports and forwards them to the chairman of the board. If your report concerns questionable accounting practices, internal accounting controls or auditing matters, our general counsel will also forward your report to the chairman of the audit committee.
 
 
RELATED PERSON TRANSACTION DISCLOSURE
 
Related Person Transactions Policy
 
On March 15, 2007 our board adopted a written related person transactions policy.
 
The policy defines a related person transaction as one in which the amount exceeds $100,000 and excludes:
 
 
·
transactions available to all employees
 
 
·
the purchase or sale of electric energy at rates authorized by law or governmental authority or
 
 
·
transactions between or among companies within the IDACORP family.
 
The policy defines a related person as any:
 
 
·
officer, director or director nominee of IDACORP or any subsidiary
 
 
·
person known to be a greater than 5% beneficial owner of IDACORP voting securities
 
 
·
immediate family member of the foregoing persons or
 
 
·
firm or corporation in which any of the foregoing persons is employed, a partner or greater than a 5% owner.
 
The corporate governance committee administers the policy, which includes procedures to review related person transactions, approve related person transactions and ratify unapproved transactions.  The policy requires prior (i) corporate governance committee approval of charitable contributions in excess of $100,000 in any calendar year to charities identified as related persons, except those non-discretionary contributions made pursuant to our matching contribution program and (ii) board approval of the  hiring of immediate family members of directors and officers.  In the case of an immediate family member, the policy also requires approval of any material change in the terms of employment including compensation.  The board of directors may approve a proposed related person transaction after reviewing the information considered by the corporate governance committee and any additional information it deems necessary or desirable:
 
 
·
if it determines in good faith that the transaction is, or is not inconsistent with, the best interests of the company and our shareholders and
 
 
·
if the transaction is on terms comparable to those that could be obtained in arm’s length dealing with an unrelated third party.
 
 
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Related Person Transactions in 2007
 
Steven R. Keen has been vice president and treasurer of IDACORP and Idaho Power Company since June 1, 2006.  Previously, Steven R. Keen was president and chief executive officer of IDACORP Financial Services, an IDACORP subsidiary.  Steven R. Keen is the brother of J. LaMont Keen, president and chief executive officer and a director of IDACORP and Idaho Power Company.  For 2007, Steven R. Keen had a base salary of $210,000, received an incentive payment under our short-term incentive plan of $54,545, paid in 2008 for 2007, a bonus payment of $14,000 in connection with the successful closing of the IDACOMM sale in February 2007 and received an award of (i) 895 time vesting restricted shares with a three year restricted period through December 31, 2009 and (ii) 1,791 performance shares at target with a three year performance period through December 31, 2009.  The board of directors approved all elements of Steven R. Keen’s 2007 compensation.
 
In September 2006, the board of directors, acting upon a recommendation of the corporate governance committee, determined that director Richard G. Reiten had a material relationship with Idaho Power Company and no longer met the director independence criteria set forth in the New York Stock Exchange listing standards and our corporate governance guidelines.  In September 2006, Mr. Reiten’s son assumed the position of president of Pacific Power, a division of PacifiCorp, which, with Idaho Power Company, owns the Jim Bridger power plant and coal mine located near Rock Springs, Wyoming.  Idaho Power Company owns one-third of the power plant and mine, and PacifiCorp owns the other two-thirds.  Mr. Reiten’s son was not affiliated with PacifiCorp prior to his selection as president of Pacific Power.
 
Idaho Power Company pays PacifiCorp its one-third share of the annual budgets for the plant and mine covering operating expenses and capital improvements.  In addition, Idaho Power Company purchases its share of the coal for the plant and as needed purchases energy from PacifiCorp to meet load as well as transmission.  In 2007, these payments totaled approximately $144 million.  PacifiCorp also purchases energy and transmission from Idaho Power Company.  In 2007, these payments totaled approximately $21.2 million.  The coal company pays monthly cash distributions to Idaho Power Company, which totaled approximately $38.2 million in 2007.

 
PROPOSAL NO. 2: RATIFICATION OF APPOINTMENT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
At the annual meeting, we will ask you to ratify the audit committee’s appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year 2008. This firm has conducted our consolidated annual audits since 1998 and is one of the world’s largest firms of independent certified public accountants. We expect a representative of Deloitte & Touche LLP to be present at the meeting. He or she will have an opportunity to make a statement and to respond to appropriate questions.
 
In connection with the audit of our financial statements for 2008, we expect the engagement letter with Deloitte & Touche LLP to contain provisions similar to those in our 2007 engagement letter for alternative dispute resolution and for the exclusion of punitive damages.  The 2007 letter provides that disputes arising out of our engagement of Deloitte & Touche LLP will be resolved through mediation or arbitration, commonly referred to as alternative dispute resolution procedures, and that Deloitte & Touche LLP’s and our rights to punitive damages or other forms of relief not based upon actual damages are waived.
 
 
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Your vote will not affect our appointment or retention of Deloitte & Touche LLP as our independent registered public accounting firm for fiscal year 2008. However, the audit committee will consider your vote as a factor in selecting our independent registered public accounting firm for 2009. The audit committee reserves the right, in its sole discretion, to change the appointment of the independent registered public accounting firm at any time during a fiscal year if it determines that such a change would be in the best interests of the company and our shareholders.
 
The ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for 2008 is approved if the votes cast in favor exceed the votes cast against ratification.
 
The board of directors unanimously recommends a vote “FOR” ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for 2008.
 
 
INDEPENDENT ACCOUNTANT BILLINGS
 
The aggregate fees our principal independent accountants, Deloitte & Touche LLP, billed or are expected to bill us for the fiscal years ended December 31, 2007 and 2006 are:
 
Fees Billed
 
2007
   
2006
 
Audit Fees
  $ 1,148,354     $ 1,061,328  
Audit-Related Fees (1)
    62,520       47,500  
Tax Fees (2)
    114,486       426,365  
All Other Fees
    -0-       -0-  
Total Fees
  $ 1,325,360     $ 1,535,193  

(1)         Includes fees for audits of our benefit plans and agreed upon procedures at a subsidiary.

(2)         Includes fees for tax compliance and tax consulting in connection with  the application of Internal Revenue Code §263A simplified service cost method settlement guidelines and the development of a uniform capitalization method.
 
Policy on Audit Committee Pre-Approval.  We and our audit committee are committed to ensuring the independence of the accountants, both in fact and in appearance. The audit committee has established a pre-approval policy, which is included as exhibit “B” to this proxy statement. The audit committee pre-approved all fees in 2007 and 2006.
 
 
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PROPOSAL NO. 3:  SHAREHOLDER PROPOSAL
 
A shareholder who owns 150 shares of IDACORP common stock has notified IDACORP in writing that it intends to present a resolution for action by the shareholders at the annual meeting.  We will provide the name and address of the proponent to shareholders promptly after receiving an oral or written request.  The text of the resolution and the supporting statement submitted by the proponent are as follows:
 
Shareholder Proposal
 
IDACORP SEXUAL ORIENTATION NONDISCRIMINATION POLICY
 
WHEREAS:  IDACORP does not explicitly prohibit discrimination based on sexual orientation or gender identity/expression in its written employment policy;
 
The Human Rights Campaign Foundation (HRCF) defines sexual orientation as: An enduring emotional, romantic, sexual and relational attraction to another person; may be a same-sex orientation, opposite-sex orientation or bisexual orientation.  Gender identity is described as: The gender role that a person claims for his or her self – which may or may not align with his or her physical gender. Gender expression is defined as: How a person behaves, appears or presents him- or herself with regard to societal expectations of gender.
 
National polls consistently find more than three-quarters of Americans support equal rights in the workplace for gay men, lesbians and bisexuals.  In a Gallup poll conducted in May 2007, approximately 89 percent of respondents favored equal opportunity in employment for gays and lesbians;
 
According to a June, 2007, survey conducted by Harris Interactive, twenty-eight percent of gay and lesbian employees believe they have experienced discrimination or unfair treatment in the workplace, and forty percent of employees are uncomfortable being open about their sexual orientation with their colleagues;
 
A 2005 survey by Harris Interactive and Witeck-Combs, showed that 88 percent of gay and lesbian adults considered it extremely or very important that a company have a written non-discrimination policy that includes sexual orientation;
 
Nineteen states, and the District of Columbia, have laws prohibiting employment discrimination based on sexual orientation; By January 2008, 13 states will have laws in place prohibiting discrimination on the basis of gender identity/expression.
 
IDACORP is increasingly an outlier given its lack of an inclusive policy.  As tracked by HRCF’s Corporate Equality Index, many companies in the Fortune 500 Index have implemented best practices and policies to support discrimination free workplaces, including:
 
 
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87% have Equal Employment Opportunity policies that include sexual orientation,
30% have Equal Employment Opportunity policies that include gender identity and/or expression,
53% provide domestic partner health insurance,
49% have diversity training programs,
28% have Employee Resource or Affinity groups for employees.
 
Utilities and energy companies, such as Consolidated Edison, Dominion Resources, Entergy, Exelon, Keyspan, National Grid, Nicor, PG&E, PNM Resources, Severn Trent Services, and Southern California Edison explicitly prohibit gender identity/expression and sexual orientation discrimination in their written policies;
 
RESOLVED:  The Shareholders request that IDACORP amend its written equal employment opportunity policy to explicitly prohibit discrimination based on sexual orientation and gender identity and expression.  Programs and policies developed to implement this policy should be based on identified best practices.
 
STATEMENT:  Employment discrimination diminishes employee morale and productivity.  Because state and local laws differ with respect to employment discrimination, our company would benefit from a consistent, corporate-wide policy to enhance efforts to prevent discrimination, resolve complaints internally to avoid costly litigation or damage to its reputation, access employees from the broadest possible talent pool, and ensure a respectful and supportive atmosphere for all employees.
 
_________________________

 
The board has considered this proposal and recommends that shareholders vote “AGAINST” it for the following reasons:

In February 2008, continuing with our commitment to a discrimination-free workplace, we amended our equal employment opportunity policy and our Code of Business Conduct and Ethics to prohibit discrimination based on sexual orientation.  These written policies require fair treatment of all employees under applicable federal, state and local law.  Our equal employment opportunity policy, as stated in our Employment Handbook, prohibits discrimination in “recruitment, hiring, compensation, promotion, transfer, training, downgrading, termination, layoff, recall, or any other personnel action because of race, color, religion, sex, sexual orientation, national origin, age, marital status, veteran status, or the presence of non-job-related disabilities.”  Our Code of Business Conduct and Ethics states that “we will not tolerate discrimination against any person on the basis of race, religion, color, gender, sexual orientation, age, marital status, national origin, veteran status or the presence of disabilities, or any other basis prohibited by law in recruiting, hiring, placement, promotion or any other personnel action.”
 
 
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We also prohibit sexual and other forms of harassment.  As stated in our Code, we believe that harassment has no place at IDACORP and we “will not tolerate verbal or physical conduct that degrades or shows hostility toward an individual because of race, color, national origin, religion, marital status, sexual orientation, age, mental or non-job-related disability, veteran status or any other characteristic protected by law.”  Violations of our policy will result in disciplinary action up to and including termination of employment.

We believe that our current policy as amended represents a fair response to this proposal. IDACORP is an equal opportunity employer and has a long-standing commitment to preventing unlawful discrimination.

Therefore, our board of directors unanimously recommends a vote “AGAINST” this shareholder proposal.
 
This shareholder proposal is approved if the votes cast in favor exceed the votes cast against the proposal.  Abstentions and broker non-votes will have no effect on the results.
 
 
OTHER BUSINESS
 
Neither the board of directors nor management intends to bring before the meeting any business other than the matters referred to in the notice of annual meeting and this proxy statement. In addition, other than as described below, we have not been informed that any other matter will be presented to the meeting by others. Two shareholder proposals were submitted for inclusion in the proxy statement, which we have omitted pursuant to Rule 14a-8 of the Securities and Exchange Commission’s proxy rules.  If these shareholders comply with the advance notice bylaw provisions and properly present these proposals at the annual meeting, it is the intention of the persons named in the proxy to vote against these proposals.  If any other business should properly come before the meeting, or any adjournment thereof, the persons named in the proxy will vote on such matters according to their best judgment.
 
 
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SECURITY OWNERSHIP OF DIRECTORS, EXECUTIVE OFFICERS
 AND FIVE PERCENT SHAREHOLDERS
 
The following table sets forth the number of shares of our common stock beneficially owned on February 29, 2008, by our directors and nominees, by our named executive officers and by our directors and executive officers as a group:
 
       
Amount and
             
       
Nature of
             
       
Beneficial
   
Stock
   
Percent
 
Title of Class
 
Name of Beneficial Owner
 
Ownership(1)
   
Options(2)
   
of Class
 
                       
Common Stock
 
Rotchford L. Barker (3)
    23,462       6,600       *  
Common Stock
 
Judith A. Johansen
    923       0       *  
Common Stock
 
J. LaMont Keen (4)
    262,622       175,633       *  
Common Stock
 
Christine King
    1,082       0       *  
Common Stock
 
Gary G. Michael
    17,103       7,650       *  
Common Stock
 
Jon H. Miller
    15,012       7,650       *  
Common Stock
 
Peter S. O’Neill
    17,021       7,650       *  
Common Stock
 
Jan B. Packwood
    142,962       132,800       *  
Common Stock
 
Richard G. Reiten
    7,681       2,400       *  
Common Stock
 
Joan H. Smith
    5,631       1,800       *  
Common Stock
 
Robert A. Tinstman
    16,012       7,650       *  
Common Stock
 
Thomas J. Wilford
    7,381       2,400       *  
Common Stock
 
Darrel T. Anderson
    77,488       48,528       *  
Common Stock
 
James C. Miller (5)
    112,558       91,384       *  
Common Stock
 
Daniel B. Minor
    26,892       8,064       *  
Common Stock
 
Thomas R. Saldin (6)
    24,343       4,800       *  
Common Stock
 
All directors and executive
                       
   
 officers of IDACORP as a
    867,455       547,091       1.9 %
   
 group (22 persons) (7)
                       

*
Less than 1 percent.
 
(1)
Includes shares of common stock subject to forfeiture and restrictions on transfer granted pursuant to the IDACORP Restricted Stock Plan or the 2000 Long-Term Incentive and Compensation Plan. Also includes shares of common stock that the beneficial owner has the right to acquire within 60 days upon exercise of stock options.
   
(2)
Exercisable within 60 days and included in the amount of beneficial ownership column.
  
(3)
Mr. Barker, who retired from the board on May 17, 2007, maintains margin securities accounts at brokerage firms, and the positions held in such margin accounts, which may from time to time include shares of common stock, are pledged as collateral security for the repayment of debit balances, if any, in the accounts.  At February 29, 2008, Mr. Barker held 10,000 shares of common stock in these accounts.
 
 
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(4)
Mr. Keen disclaims all beneficial ownership of the 217 shares owned by his wife. These shares are not included in the table.  Mr. Keen maintains margin securities accounts at brokerage firms, and the positions held in such margin accounts, which may from time to time include shares of common stock, are pledged as collateral security for the repayment of debit balances, if any, in the accounts.  At February 29, 2008, Mr. Keen held 815 shares of common stock in these accounts.

(5)
Mr. Miller disclaims all beneficial ownership of the 6 shares owned by his wife through the Employee Savings Plan. These shares are not included in the table.

(6)
Includes 100 shares owned jointly with his spouse.
 
(7)
Includes 3,683 shares owned by the spouse of an executive officer.

Except as indicated above, all directors and executive officers have sole voting and investment power for the shares held by them including shares they own through our Employee Savings Plan and our Dividend Reinvestment and Stock Purchase Plan.
 
The following table sets forth certain information with respect to each person we know to be the beneficial owner of more than five percent of our common stock as of February 29, 2008.
 
Title of Class
 
Name and Address
of Beneficial Owner
 
Amount and Nature of
Beneficial Ownership
   
Percent of
Class
 
                 
Common Stock
 
Arnhold and S. Bleichroeder Advisers, LLC
   
5,002,280(1)
     
11.12%
 
   
1345 Avenue of the Americas
New York, NY 10105
               
                     
Common Stock
 
Tradewinds Global Investors, LLC
   
4,885,714(2)
     
10.86%
 
   
2049 Century Park East, 20th Floor
Los Angeles, CA  90067
               
                     
Common Stock
 
Lord, Abbett & Co. LLC
   
2,967,084(3)
     
6.59%
 
   
90 Hudson Street
Jersey City, NJ 07302
               

(1)
Based on a Schedule 13G, dated January 7, 2008, filed by Arnhold and S. Bleichroeder Advisers, LLC, Arnhold and S. Bleichroeder Advisers, LLC reported sole voting and dispositive power with respect to 5,002,280 shares.

(2)
Based on a Schedule 13G/A, Amendment No. 1, dated February 14, 2008, filed by Tradewinds Global Investors, LLC, Tradewinds Global Investors, LLC reported sole voting power with respect to 3,589,372 shares and sole dispositive power with respect to 4,885,714 shares.

(3)
Based on a Schedule 13G, dated February 14, 2008, filed by Lord, Abbett & Co. LLC, Lord, Abbett & Co. LLC reported sole voting power with respect to 2,756,798 shares and sole dispositive power with respect to 2,967,084 shares.

 
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
 
Our directors and executive officers are required to file initial reports of ownership and to report changes of ownership of our common stock with the Securities and Exchange Commission. Based solely upon a review of these filings furnished to us for 2007 or written representations from our directors and executive officers that no Form 5 was required, we believe that all required filings were timely made in 2007.
 
 
EXECUTIVE COMPENSATION
 
COMPENSATION DISCUSSION AND ANALYSIS
 
The following Compensation Discussion and Analysis contains statements regarding future corporate performance targets and goals.  These targets and goals are disclosed in the limited context of our compensation programs and should not be understood to be statements of management’s expectations or estimates of results or other guidance.  We specifically caution investors not to apply these statements to other contexts.
 
           Our review of executive compensation begins with a description of our overall executive compensation philosophy and policy.  These are the general principles that guide our executive compensation decisions.  We then describe the process that our compensation committee uses to set executive compensation. Finally, and most importantly, we explain how the compensation committee applied its compensation process to establish each named executive officer’s level of compensation for 2007.

OUR COMPENSATION PHILOSOPHY AND POLICY
 
Compensation Philosophy
 
Our executive compensation philosophy is to provide balanced and competitive compensation to our executive officers to:
 
 
·
assure that we are able to attract and retain high-quality executive officers and
 
 
·
motivate our executive officers to achieve performance goals that will benefit our shareholders and customers.
 
Compensation Policy
 
Our board of directors adopted a formal executive compensation policy on January 18, 2007, upon the recommendation of the compensation committee.  The policy was updated by the board on November 15, 2007 and includes the following compensation-related objectives:
 
 
·
manage officer compensation as an investment with the expectation that officers will contribute to our overall success
 
 
·
recognize officers for their demonstrated ability to perform their responsibilities and create long-term shareholder value
 
 
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·
be competitive with respect to those companies in the markets in which we compete to attract and retain the qualified executives necessary for long-term success
 
 
·
be fair from an internal pay equity perspective
 
 
·
ensure effective utilization and development of talent by working in concert with other management processes, such as performance appraisal, succession planning and management development and
 
 
·
balance total compensation with our ability to pay.
 
The policy also prohibits executive officers from hedging their ownership of company common stock.  Executives may not enter into transactions that allow the executive to benefit from devaluation of our stock or otherwise own stock technically but without the full benefits and risks of such ownership.

Components of Executive Compensation
 
Total compensation for our named executive officers has the following components:
 
 
·
Base salary – Base salary is the foundational component of executive officer compensation and consists of fixed cash salary.  We pay base salaries in order to provide our executive officers with sufficient regularly paid income and to secure officers with the knowledge, skills and abilities necessary to successfully execute their job duties and responsibilities.  Base salary is not based upon or adjusted pursuant to corporate performance goals but rather is based or adjusted upon a series of factors related to the officer’s position, experience and individual performance.  Executive officers may defer all or a portion of their base salary pursuant to the Idaho Power Company Executive Deferred Compensation Plan.
 
 
·
Bonus – We may grant bonuses to recognize executive officers for special achievements.
 
 
·
Incentive compensation – We pay incentive compensation to motivate executive officers to achieve performance goals that will benefit our shareholders and customers.
 
 
-
Short-term incentive compensation – Short-term incentive compensation is intended to encourage and reward short-term performance and is based upon performance goals achievable annually.  We award executive officers the opportunity to earn short-term incentives in order to be competitive from a total compensation standpoint and to ensure focus on annual financial, operational and/or customer service goals.  The award opportunities vary by position based upon a percentage of base salary with awards paid in cash.  Executive officers may defer all or a portion of their short-term incentive awards pursuant to the Idaho Power Company Executive Deferred Compensation Plan.
 
 
 
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-
Long-term incentive compensation – Long-term incentive compensation is intended to encourage and reward long-term performance and promote retention and is based upon performance goals achievable over a period of years.  We grant executive officers the opportunity to earn long-term compensation in order to be competitive from a total compensation standpoint, to ensure focus on long-term financial goals, to develop and retain a strong management team through share ownership, to recognize future performance and to maximize shareholder value by aligning executive interests with shareholder interests.  The award opportunities vary by position based upon a percentage of base salary with awards paid in common stock.  We grant long-term incentives under the IDACORP Restricted Stock Plan and the 2000 Long-Term Incentive and Compensation Plan.  The IDACORP Restricted Stock Plan provides for awards of restricted stock, which may be time vesting or performance vesting.  The 2000 Long-Term Incentive and Compensation Plan provides for many types of awards, including restricted stock, performance shares and stock options.
 
 
·
Retirement benefit plans  – We provide executive officers with income for their retirement through qualified and non-qualified defined benefit pension plans. We believe these retirement benefits encourage our employees to make long-term commitments to our company and serve as an important retention tool because benefits under our pension plan increase with an employee’s period of service and earnings.
 
 
·
Other benefits – Other benefits include our 401(k) match and perquisites.  Perquisites may include club memberships, officer physicals, guaranteed relocation assistance and family travel with an officer who is traveling for business purposes.  We believe these other benefits are important in recruiting and retaining executive talent.
 
Impact of Tax and Accounting Treatment

The compensation committee may consider the impact of tax and/or accounting treatment in determining compensation, but we may pay compensation to our officers that is not deductible.  Section 162(m) of the Internal Revenue Code places a limit of $1,000,000 on the amount of compensation paid to certain officers that we may deduct as a business expense in any tax year unless, among other things, the compensation qualifies as performance-based compensation, as that term is used in section 162(m).  Generally, stock options and performance shares are structured to be deductible for purposes of section 162(m) of the Internal Revenue Code; short-term incentive awards and time vesting restricted stock are not.

 
ROLE OF OUR COMPENSATION COMMITTEE,
 COMPENSATION CONSULTANT AND MANAGEMENT

Our compensation committee, the compensation consultant and our management all participate in the process of setting executive compensation.

Compensation Committee
 
The compensation committee of the board of directors has primary responsibility for determining the compensation provided to our executive officers.  The compensation committee receives information and advice from its compensation consultant and from management and makes a determination of executive officer compensation, which the committee then recommends to the board of directors for approval.
 
 
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Compensation Consultant
 
The committee has retained Towers Perrin for advice regarding compensation matters.  Towers Perrin is a nationally recognized consulting firm with extensive experience in the area of executive compensation.  The consulting firm closely monitors executive compensation practices and trends and maintains an extensive executive compensation private survey database covering general industry and the energy industry in particular.
 
Company Management
 
Our executive officers are also involved in the process of reviewing executive compensation, and our president and chief executive officer, our senior vice president-administrative services and chief financial officer and our vice president – human resources regularly attend compensation committee meetings. The president and chief executive officer and the senior vice presidents review and comment on the market compensation data provided by the consulting firm, including the makeup of market comparison groups and the description of comparable officer positions.  The president and chief executive officer and the senior vice presidents utilize the competitive market data, along with other factors related to an officer’s position, experience and individual performance, to develop proposed compensation levels for those senior vice presidents or vice presidents that report to them.  Our executive officers also review and recommend performance goals, goal weightings and types of long-term incentive awards. Our senior vice president-administrative services and chief financial officer presents these compensation proposals to the compensation committee, which reviews and may modify the proposals before approving them.
 
OUR PROCESS FOR SETTING EXECUTIVE COMPENSATION
 
The key steps our compensation committee follows in setting executive compensation are to:

 
·
review the components of executive compensation, including base salary, bonus, short-term incentive compensation, long-term incentive compensation, retirement benefits and other benefits
 
 
·
analyze executive compensation market data to ensure competitive compensation
 
 
·
review total compensation structure and allocation of compensation and
 
 
·
review executive officer performance and experience to determine individual compensation levels.
 
Market Compensation Analysis
 
Each year our consulting firm performs an extensive market compensation analysis to determine levels of compensation that comparable companies pay for executive officer positions.  This information is important because it indicates what levels of compensation are needed to allow us to remain competitive with other companies in attracting and retaining executive officers.  The market analysis also identifies emerging trends in executive compensation that our compensation consultant reviews with the committee.
 
 
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The market compensation analysis focuses on base salary, short-term incentive and long-term incentive, which we refer to as direct compensation.  The analysis includes an extensive review of market compensation data.  The consulting firm then analyzes the market data to provide a competitive market compensation range for base salary, short-term incentive and long-term incentive, and combinations of these elements, for each of our executive officer positions.
 
The consulting firm draws the market data for its market compensation analysis from two sources:
 
 
·
its own annual private survey of corporate executive compensation and
 
 
·
public proxy statement data from designated peer group companies.
 
·      Private Survey Compensation Information
 
Towers Perrin conducts a private, nationwide survey each year of corporate executive compensation.  The consulting firm reviews data from two of its survey groups that are most comparable to us.
 
Survey*
 
Annual Revenues Less Than $1 Billion
 
Annual Revenues Between
$1 Billion and $3 Billion
   
Number of Companies Participating
 
Average Market Capitalization
 
Number of Publicly- Traded Companies
 
Number of Companies Participating
 
Average Market Capitalization
 
Number of Publicly- Traded Companies
   
(#)
 
($)
 
(#)
 
(#)
 
($)
 
(#)
Towers Perrin 2006 Executive Compensation Database
 
39
 
1.2 billion
 
33
 
113
 
2.56 billion
 
88
Towers Perrin 2006 Energy Services Industry Executive Compensation Database
 
22
 
988 million
 
10
 
31
 
2.01 billion
 
24

 
Our annual revenues were approximately $920 million for 2006 and approximately $880 million for 2007, which places us near the division point of these survey groups.  As we discuss later, we believe that our revenues tend to be lower as compared with other companies of similar size and complexity, due to our low electricity prices.
 
 

* The information in the table is based solely upon information provided by the publishers of the surveys and is not deemed filed or a part of this compensation discussion and analysis for certification purposes.
 
 
26

 
 
The consulting firm then identifies those executive officer positions within the private survey comparison groups that are most similar to our executive officer positions, subject to review by management and approval by the compensation committee.  Once the comparable executive officer positions are established, the consulting firm reviews the survey data for those positions and develops compensation tables showing the levels of base salary, short-term incentive and long-term incentive that are provided to the comparison group executive officers.  The compensation tables show the 25th, 50th and 75th percentiles of base salary, short-term incentive and long-term incentive that are paid to the comparison group executive officers.  The consulting firm provides separate percentile breakdowns for executive officers from three comparison groups - energy industry comparison group, general industry comparison group and a blended comparison group consisting of 80% energy industry data and 20% general industry data.  The consulting firm blends the data for our chief executive officer, chief financial officer and general counsel positions on an 80% energy company and 20% general industry company basis to reflect our primary business as an electric utility.  Because our senior vice president-power supply and senior vice president-delivery positions are unique to the energy industry, Towers Perrin uses only the energy industry data to determine comparable market compensation for these positions.
 
The consulting firm then compares the comparison group executive officer compensation with our current executive officer compensation.  The consulting firm uses a range of 85% to 115% of comparison group mid-point compensation to represent the typical range of market compensation for each executive officer position.  The mid-point is the 50th percentile of the comparison group data.  Our executive officer compensation typically will fall within the 85%-115% of mid-point range, but we may set compensation levels above or below this range depending on the experience and performance of the particular executive officer.
 
·      Public Proxy Compensation Data
 
In addition to its private survey data discussed above, the consulting firm reviews public proxy compensation data from the proxy statements that are filed with the Securities and Exchange Commission each year.  In the past, this proxy data has not been nearly as broad or detailed as the consulting firm’s private survey data.  As a result, the consulting firm has focused primarily on its private survey data for our market compensation analysis and has utilized the public proxy data as a secondary data source to provide general confirmation for our executive officer compensation levels.
 
The consulting firm draws its proxy compensation data from two peer groups of companies that are comparable to us in terms of annual sales, market capitalization, number of employees and total assets.  Our management and the compensation committee have worked extensively with the consulting firm in developing and approving these peer groups.  The two peer groups as of November 2006 consisted of a regional general industry peer group of 16 companies and a national energy industry peer group of 11 companies.
 
 
 
27

 
The regional general industry peer group companies were:
 
AMIS Holdings, Inc.
Nu Skin Enterprises Inc.
Avista Corp.
Oregon Steel Mills Inc.
Coldwater Creek Inc.
Plum Creek Timber Co. Inc.
Columbia Sportswear Co.
Puget Energy Inc.
Getty Images Inc.
Questar Corp.
Micron Technology Inc.
Schnitzer Steel Industries Inc.
Nautilus Inc.
SkyWest Inc.
Northwest Natural Gas Co.
Washington Group International

The national energy industry companies were:
 
Avista Corp.
PNM Resources Inc.
Cleco Corp.
Puget Energy Inc.
DPL Inc.
Sierra Pacific Resources
El Paso Electric Co.
UniSource Energy Corp.
Empire District Electric Co.
Westar Energy Inc.
Great Plains Energy Inc.
 

The peer group companies were selected based on revenues, market capitalization, number of employees and total assets.   While we have lower revenues than a number of the peer group companies, this reflects our electricity prices, which are among the lowest in the nation.  The compensation committee believes that our low electricity prices do not reduce the size or complexity of our business and that our peer groups are appropriate for executive officer compensation comparison purposes.  Our assets are above the average of the two peer groups, and our market capitalization is similar in size to the peer group averages.
 
For our performance graph peer group, we use the Edison Electric Institute 100 Electric Utilities Index.  While the peer groups above are different from the Edison Electric Institute 100 Electric Utilities Index used in the performance graph, the committee believes this smaller, more focused group is representative of our size, complexity and diversity and is appropriate for compensation purposes.

As with the private survey data, the consulting firm then identifies comparable executive officer positions within the public proxy peer group companies and develops compensation tables showing what the comparable executive officers receive for base salary, short-term incentive and long-term incentive and combinations of these elements.  The consulting firm then compares our current executive officer compensation with the mid-point executive officer compensation from the public proxy peer groups.
 
Total Compensation Structure

The committee reviews the total compensation structure for each executive officer.
 
 
28

 
This review includes all elements of named executive officer compensation from “tally sheets” prepared by Towers Perrin.  The tally sheets provide a more complete picture of the executive’s current compensation and allow the committee to better evaluate the base salary, annual incentive and long-term incentive to be provided to the executive for the upcoming year.

This review also includes the key provisions of, and each executive officer’s benefits under, our post-termination compensation programs, which are:

 
·
the Idaho Power Retirement Plan
 
 
·
the Idaho Power Security Plan for Senior Management Employees I and II
 
 
·
the Executive Deferred Compensation Plan
 
 
·
the executive change in control agreements and
 
 
·
executive severance policies.
 
The executive’s stock ownership is reviewed separately by the committee and provides a breakdown of the shares of stock already accumulated by the executive.  This information allows the committee to assess the executive’s existing stock holdings when evaluating stock grants under the company’s long-term incentive plan.

The committee also reviews an internal pay equity analysis prepared by Towers Perrin, which compares our chief executive officer's total compensation with the average total compensation levels for (i) our senior vice presidents and (ii) our senior managers and business unit leaders.  When the committee reviewed internal pay equity in February 2007, the ratios were as follows:

 
·
chief executive officer to senior vice presidents: 2.46 x
 
 
·
chief executive officer to senior managers: 6.96 x
 
The committee determined that our executives’ termination and retirement benefits, levels of past compensation and IDACORP stock ownership levels are reasonable, and accordingly made no adjustments to 2007 compensation for any of these items.

Executive Stock Ownership Guidelines

Our board has adopted minimum stock ownership guidelines for our executive officers to further align our executives’ interests with shareholder interests.  The guidelines require ownership of IDACORP common stock valued at a multiple of the executive’s annual base salary, as follows:

 
·
president and chief executive officer – three times annual base salary
 
·
senior vice presidents – two times annual base salary
 
·
vice presidents – one times annual base salary
 
Executives are allowed five years to meet the guidelines, beginning on the later of April 1, 2008 or the effective date of appointment as a vice president, senior vice president or president.  In circumstances where the stock ownership guidelines would result in a severe financial hardship, the executive may request an extension of time from the corporate governance committee to meet the guidelines.
 
 
29

 
Allocation of Compensation

In order to remain competitive and encourage and reward short-term performance and long-term growth, we use short-term and long-term incentive compensation.  The short-term incentive compensation target varies by position but ranges from 15% to 25% of total target compensation.  Long-term incentive compensation at target for the executive officers ranges from 20% to 50% of total target compensation.  The higher the executive officer’s position, the greater the emphasis on long-term results.
 
The compensation committee believes incentive compensation comprising 35% to 75% of total target compensation is appropriate because:
 
 
·
our named executive officers are in positions to drive, and therefore bear high levels of responsibility for, our corporate performance
 
 
·
incentive compensation is at risk and dependent upon our performance and
 
 
·
making a significant amount of our named executive officers’ target compensation contingent upon results that are beneficial to shareholders helps ensure focus on the goals that are aligned with our overall strategy.
 
Cash compensation includes base salary and short-term incentive payments.  Cash compensation at target for the executive officers ranges from 55% to 80% of total target compensation.  As discussed above, non-cash or long-term incentive compensation at target for the executive officers ranges from 20% to 50% of total target compensation with higher non-cash compensation for our higher level executive officers.
 
Non-cash compensation consists of two-thirds performance shares and one-third time-vesting restricted stock.  We believe this structure provides the appropriate balance between at risk compensation tied to executive performance and guaranteed  compensation that promotes executive retention.
 
The following table shows the allocation of total 2007 direct target compensation for our named executive officers among the individual components of base salary, short-term incentive and long-term incentive:
 
Executive
 
Base Salary as a % of Total Target Compensation
   
Short-Term Incentive as a % of Total Target Compensation
   
Long-Term Incentive as a % of Total Target Compensation
 
J. LaMont Keen
   
36
     
21
     
43
 
Darrel T. Anderson
   
46
     
19
     
35
 
Thomas R. Saldin
   
51
     
18
     
31
 
James C. Miller
   
51
     
18
     
31
 
Daniel B. Minor
   
51
     
18
     
31
 
 
 
30

 
The compensation committee believes that our executive compensation structure is well-balanced in addressing our compensation objectives.  In particular, base salary and severance/retirement benefits provide competitive income security for our executives, and short-term and long-term incentive awards provide additional compensation opportunities for outstanding performance.  Our short-term and long-term incentive awards also provide motivation to our executive officers to achieve our operational and financial goals.
 
The compensation committee also believes that our executive compensation structure is meeting our fundamental compensation objectives of attracting and retaining qualified executives and motivating those executives to achieve key performance goals for the benefit of our customers and shareholders.  We have been able to secure qualified executive officers from both within our organization, in the case of Mr. Keen, Mr. Miller and Mr. Minor, and from outside of our company, in the case of Mr. Anderson and Mr. Saldin.  We have further been able to retain these executive officers to establish a cohesive executive team.
 
Executive Officer Evaluation
 
After the compensation committee reviews the market compensation data, it reviews each executive officer’s level of experience and performance to determine what the executive officer’s compensation should be relative to the market range.
 
For the chief executive officer review, each of our directors completes an annual written evaluation, which addresses positive and negative aspects of the chief executive officer’s performance.  This evaluation covers fourteen executive attributes categorized under three headings: strategic capability, leadership and performance.
 
Strategic Capability
 
·
vision – builds and articulates a shared vision
 
·
strategy – develops a sound, long-term strategy
 
·
implementation – ensures successful implementation; makes timely adjustments when external conditions change

Leadership
 
·
character – committed to personal and business values and serves as a trusted example
 
·
problem-solving capability – possesses sound judgment and the necessary intellectual strength
 
·
temperament – emotionally stable and mature in the use of power
 
·
interpersonal skills – communicates effectively and manages a variety of internal and external constituencies
 
·
insight – understands own strengths and weaknesses and is sensitive to the needs of others
 
·
courage – handles adversity and makes the tough calls when necessary
 
·
charisma – paints an exciting picture of change; sets the pace of change and orchestrates it well
 
 
31

 
Performance
 
·
financial – financial performance meets or exceeds plan and is competitive relative to industry peers
 
·
operational – establishes performance standards and clearly defines expectations
 
·
succession – develops and enables a talented team
 
·
compliance – establishes strong auditing and internal controls, and fosters a culture of ethical behavior

For other executive officer reviews, the chief executive officer provides a thorough evaluation of each executive officer’s accomplishments during the year and overall performance under the categories of operational excellence, financial/customer performance, customer/operational excellence, employee/operational excellence and financial/operational excellence.  In addition, each executive officer is evaluated against eight competencies:

 
·
establishing strategic direction
 
·
customer orientation
 
·
business acumen
 
·
developing strategic relationships
 
·
building organizational talent
 
·
operational decision making
 
·
leadership and
 
·
driving for results.

2007 NAMED EXECUTIVE OFFICER COMPENSATION
 
2007 Incentive Awards

The committee’s first step in setting 2007 compensation for our named executive officers was to establish the performance goals for the short-term and long-term incentive awards.
 
2007 Short-Term Incentive Performance Goals
 
The 2007 short-term incentive goals were designed to motivate our executives to achieve certain key corporate operational and net income goals for the benefit of our customers and shareholders.  The goals and weightings established by our committee were as follows:
 
Goal
 
Weighting
Customer satisfaction
 
15%
O&M expense
 
15%
Network reliability
 
10%
IDACORP 2007 net income
 
30%
Idaho Power 2007 net income
 
30%

The goals and weightings were the same as those for 2006.

 
·
The customer satisfaction goal focuses us on our relationship with our customers and on serving our small and large general service customers.    We measure customer satisfaction by quarterly surveys by an independent survey firm. The customer relationship index details our performance through the eyes of a customer and was based on a rolling 4-quarter average for the period beginning January 1, 2007 through December 31, 2007.  The survey data covered five specific performance qualities: overall satisfaction, quality, value, advocacy and loyalty.
 
 
32

 
 
·
The O&M expense goal focuses on the effective use of assets and capital. We measure O&M expense through audited O&M expenditures for the year.  The operational target was to manage to budgeted levels of forecasted amounts.  For 2007, we defined O&M expense as non-fuel O&M less pension expense, third party transmission expense and incentive expense.

 
·
The network reliability goal is also intended to focus executives on our relationships with our customers.  We measure this goal by the number of interruptions greater than five minutes in duration.  The goal also includes a cap of no more than 10 percent of small and large general service customers subjected to more than six interruptions during the 2007 calendar year.  If the cap is exceeded, no payout will be made.

 
·
IDACORP consolidated net income and Idaho Power net income goals provide the most important overall measure of our company’s financial performance.  The net income goals align management and shareholder interests by motivating our executive officers to increase company earnings for the benefit of shareholders.  . These goals are measured through our audited financial results but are reduced by all applicable incentive amounts.

           The table below shows the performance goals and results for the 2007 short-term incentive awards.

2007 Short-Term Incentive Performance Goals
Performance Goals
 
Performance Levels
 
Qualifying Multiplier
 
2007 Results
Customer Satisfaction –
Customer Relations Index Score
 
Threshold
Target
Maximum 
80.5%
81.5%
83.0%
 
7.5%
15%
30%
 
 
83.3%
(above maximum)
Audited O&M Expense
 
Threshold
Target
Maximum
$261.0M
$257.8M
$250.0M
 
7.5%
15%
30%
 
 
$260.2M
(above threshold)
Network Reliability –
Number of
Outage Incidents
 
Threshold
Target
Maximum
< 2.5
< 2.1
< 1.7
 
5%
10%
20%
 
 
2.03
(above target)
IDACORP 2007 Audited Net Income
 
Threshold
Target
Maximum
$76.0M
$82.0M
$93.0M
 
15%
30%
60%
 
 
$76.6M
(above threshold)
Idaho Power Audited Consolidated Net Income
 
Threshold
Target
Maximum
$81.0M
$87.0M
$98.0M
 
15%
30%
60%
 
 
$82.3M
(above threshold)
 
 
 
33

 
2007 Short-Term Incentive Award Opportunities and Results

Award opportunities under the IDACORP Executive Incentive Plan were established at threshold, target and maximum, based on a percentage of each named executive officer’s 2007 base salary.  The table below shows the award opportunities and the actual amounts earned for each named executive officer, based on the 2007 actual short-term incentive performance results of 86.58% of target level performance. We discuss the reasons for each named executive officer’s award opportunities in the sections relating to each officer below.
 
2007 Short-Term Incentive Awards
Executive
 
2007 Base Salary
($)
 
Threshold
 
Target
 
Maximum
 
Market (Target)
 
2007 Award Earned (% of Base Salary)
 
2007 Award Earned
($)
Mr. Keen
 
500,000
 
30%
($150,000)
 
60%
($300,000)
 
120%
($600,000)
 
78%
($480,480)
 
52
 
260,000
Mr. Anderson
 
310,000
 
20%
($62,000)
 
40%
($124,000)
 
80%
($248,000)
 
47%
($154,630)
 
35
 
108,500
Mr. Saldin
 
285,000
 
17.5%
($49,875)
 
35%
($99,750)
 
70%
($199,500)
 
41%
($106,600)
 
30
 
85,500
Mr. Miller
 
295,000
 
17.5%
($51,625)
 
35%
($103,250)
 
70%
($206,500)
 
45%
($125,100)
 
30
 
88,500
Mr. Minor
 
270,000
 
17.5%
($47,250)
 
35%
($94,500)
 
70%
($189,000)
 
40%
($98,000)
 
30
 
81,000
 
The short-term executive incentive plan does not permit the payment of awards if there is no payment of awards under the employee incentive plan or if IDACORP does not have net income sufficient to pay dividends on its common stock.

            2007 Long-Term Incentive Awards

            Our 2007 long-term incentive awards cover a three-year period.  The 2007-2009 awards included:

 
·
time-vesting restricted stock, representing one-third of the 2007-2009 awards and
 
 
·
performance shares, representing two-thirds of the 2007-2009 awards.
 
The compensation committee recommended, and the board approved, awards of time-vesting restricted stock and  performance shares at their February 2007 meetings, which occurred after we released our 2006 earnings.

Prior to 2006, the long-term incentive awards were comprised of stock options, time-vesting restricted stock and performance shares with a single goal of cumulative earnings per share.  With assistance from Towers Perrin, the compensation committee reviewed the components of long-term incentive compensation during 2005.  The committee determined to eliminate stock options and to use only restricted stock and performance shares in 2006.  In addition, with respect to the performance shares, the compensation committee decided to use two goals weighted equally, cumulative earnings per share and relative total shareholder return, rather than a single goal of cumulative earnings per share.  The committee believes that these goals are more effective incentives for our executive officers and will align our executive officers’ management efforts with our shareholders’ performance objectives.
 
 
34

 
            Time-Vesting Restricted Stock

The time-vesting restricted stock awards vest on January 1, 2010, as long as the executive officer remains employed by us throughout the restricted period.  The restricted stock provides a strong incentive for the executive to continue working for us for the entire three-year restricted period.  Because the restricted stock is intended to serve as a retention tool, the committee decided to use cliff vesting, rather than pro rata vesting, during the restricted period.  If the executive officer’s employment terminates before the vesting date, subject to board approval, the executive officer may receive a pro-rated payout, depending on the reason for the termination.
 
            Performance Shares

Two-thirds of the target long-term incentive award is comprised of performance shares.  These shares are completely at risk and may not be earned at any level at the end of the performance period.  For example, performance shares with a three-year cumulative earnings per share goal awarded for the performance periods ending in the years 2003, 2004 and 2005 were forfeited.  The performance shares may be earned by the executive officers based on two equally weighted financial goals over the 2007-2009 performance period: IDACORP cumulative earnings per share and relative IDACORP total shareholder return.
 
The cumulative earnings per share levels are tied to management performance as this goal relates to revenue enhancement and cost containment.  The cumulative earnings per share goals for the 2007-2009 period are as follows:
 
 
·
Threshold    
$5.80
 
·
Target
$6.20
 
·
Maximum    
$6.70
 
Total shareholder return is determined by our common stock price change and dividends paid over the 2007-2009 performance period.  We then compare our 2007-2009 total shareholder return with the total shareholder returns achieved by a comparison group of companies over the same three-year period.  The comparison group consists of the utility companies in the S&P MidCap 400 Index at the end of the performance period.
 
We compare our total shareholder return with these companies’ total shareholder returns on a percentile basis.  For example, if our total shareholder return falls exactly in the middle of the total shareholder returns of the comparison companies, we would rank in the 50th percentile of the comparison group.  The total shareholder return performance levels for the 2007-2009 performance period are:
 
 
·
Threshold    
40th percentile of companies
 
·
Target
55th percentile of companies
 
·
Maximum    
75th percentile of companies
 
35

 
The compensation committee approved these percentile levels to provide a range of goals that are challenging yet potentially achievable by our company.
 
As with base salary and 2007 short-term incentive opportunities, in establishing the named executive officers’ long-term incentive awards, the compensation committee reviewed  the competitive compensation analysis.  The long-term incentive opportunities for Mr. Keen and Mr. Anderson remain below the market levels for their respective positions.  The committee plans to increase the compensation levels for Mr. Keen and Mr. Anderson toward the market mid-point as they continue to gain experience and perform effectively in their current positions.  The long-term incentive opportunity for Mr. Miller is slightly under market mid-point and the long-term incentive opportunities for Mr. Saldin and Mr. Minor are above market mid-point.  Mr. Saldin’s long-term incentive opportunity reflects his extensive experience and expertise as senior vice president and general counsel, and Mr. Minor’s long-term incentive opportunity reflects his critical role in overseeing the development and implementation of our transmission and distribution expansion project.
 
The compensation committee believes that the 2007 long-term incentive awards will be very effective in aligning our executive officers’ management efforts with our shareholders’ performance objectives.  Earnings per share and total shareholder return represent key measures of performance for the benefit of our shareholders.  The compensation committee believes that the 2007 long-term incentive awards provide significant incentive to our executive officers to achieve those goals.
 
The table below shows the long-term incentive award opportunities for each named executive officer.
 
2007-2009 Long-Term Incentive Award Opportunities
Executive
 
Time-Vesting Restricted Stock
(Percent of Base Salary)
 (%) 
 
Performance Shares (CEPS and TSR)
(Percent of Base Salary)
(%)
 
Total Long-Term Incentive Award (Percent of Base Salary)
(%)
 
Total Long-Term Incentive (Dollar Value based on 2007 Base Salary)
($)
 
2007 Market Target
($)
 
Mr. Keen
 
 
40
 
Threshold
Target
Maximum
- 40
- 80
- 120
 
Threshold
Target
Maximum
- 80
- 120
- 160
 
Threshold
Target
Maximum
-400,000
-600,000
-800,000
 
 
1,062,000
 
Mr. Anderson
 
 
25
 
Threshold
Target
Maximum
- 25
- 50
- 75
 
Threshold
Target
Maximum
- 50
- 75
- 100
 
Threshold
Target
Maximum
-155,000
-232,500
-310,000
 
 
337,000
 
Mr. Saldin
 
 
20
 
Threshold
Target
Maximum
- 20
- 40
- 60
 
Threshold
Target
Maximum
- 40
- 60
- 80
 
Threshold
Target
Maximum
-114,000
-171,000
-228,000
 
 
157,000
 
Mr. Miller
 
 
20
 
Threshold
Target
Maximum
- 20
- 40
- 60
 
Threshold
Target
Maximum
- 40
- 60
- 80
 
Threshold
Target
Maximum
-118,000
-177,000
-236,000
 
 
183,000
 
Mr. Minor
 
 
20
 
Threshold
Target
Maximum
- 20
- 40
- 60   
 
Threshold
Target
Maximum
- 40
- 60
- 80
 
Threshold
Target
Maximum
-108,000
-162,000
-216,000
 
 
130,000
 
The named executive officers receive dividends on the time-vesting restricted stock during the vesting period.  This reflects the fact that the IDACORP stock is assured of being paid to the named executive officer over the 2007-2009 vesting period as long as the named executive officer remains employed by the company.  However, dividends on the performance shares are not paid to our named executive officers during the 2007-2009 performance period.  Instead, they are paid at the end of the performance period only on performance shares that are actually earned.
 
 
36

 
            Vesting of Long-Term Incentive Awards in 2007
 
The 2004-2006 long-term incentive awards under the IDACORP 2000 Long-Term Incentive and Compensation Plan vested on February 22, 2007.  The 2004-2006 long-term incentive awards reached a payout level slightly below target performance based on IDACORP’s cumulative earnings per share of $5.92 for the 2004-2006 period.  The table below lists the shares awarded on January 15, 2004, the shares paid on February 22, 2007 based on the payout percentage and the dividend equivalents earned.
 
Name
 
Shares Awarded
on January 15, 2004
(#)
 
Shares Paid on
February 22, 2007
(#)
 
Dividend Equivalents
($)
Mr. Keen
    4,281       3,837       15,412  
Mr. Anderson
    2,570       2,309       9,252  
Mr. Saldin
    -       -       -  
Mr. Miller
    1,671       1,476       6,016  
Mr. Minor
    852       746       3,067  

___________________

2007 Target Direct Compensation
 
The table below sets forth the total 2007 target direct compensation package that the compensation committee established for each named executive officer.
 
           
2007
Long-Term Incentive
(Target - % of Base Salary) 
       
Executive
   
2007 Base Salary
 ($)
   
2007 Short-Term Incentive
(Target - % of Base Salary)
 (%)
 
Time-Vesting
Restricted
Stock
(%) 
 
Performance
Shares
 (%) 
   
Total Estimated
2007 Cash Compensation
(Base Salary plus Short-Term Incentive at Target)
($)
 
Total Estimated 2007 Direct Compensation (Base Salary plus Short-Term Incentive and Long-Term Incentive at Target)
 ($)
Mr. Keen
    500,000       60     40     80       800,000       1,400,000  
Mr. Anderson
    310,000       40     25     50       434,000       666,500  
Mr. Saldin
    285,000       35     20     40       384,750       555,750  
Mr. Miller
    295,000       35     20     40       398,250       575,250  
Mr. Minor
    270,000       35     20     40       364,500       526,500  
 
In the following sections we describe how we determined 2007 direct compensation for each of our named executive officers.
 
 
37

 
J. LaMont Keen 2007 Compensation

Background
 
Mr. Keen, who joined Idaho Power in 1975, assumed the responsibilities of president and chief executive officer of IDACORP on July 1, 2006. He had been president and chief operating officer of Idaho Power since January 2002 and was appointed chief executive officer of Idaho Power in November 2005.  Mr. Keen also has served on the IDACORP and Idaho Power boards of directors since July 15, 2004.   

Market Compensation Analysis

The compensation committee reviewed the market compensation analysis for Mr. Keen’s position as president and chief executive officer.  The market compensation analysis compared Mr. Keen’s 2006 compensation with projected 2007 market compensation, based on target incentive plan performance.  The market figures were based on the blended compensation mid-point discussed in Our Process for Setting Executive Compensation – Market Compensation Analysis above.

J. LaMont Keen Market Compensation Analysis
Direct
Compensation
 
2007 Market Target
Compensation1
 
2006 Keen Target
Compensation
 
2006 Keen Target Compensation as % of 2007 Market Target Compensation
Base Salary
 
$616,000
 
$450,000
 
73%
Short-Term Incentive
(% of Base Salary)
 
 
78% ($480,480)
 
 
50% ($225,000)
 
 
47%
Long-Term Incentive
(% of Base Salary)
 
 
172% ($1,062,000)
 
 
110% ($495,000)
 
 
47%
Cash Total = Base Salary + Short-Term Incentive
 
 
$1,100,000
 
 
$675,000
 
 
61%
Total = Base Salary + Short-Term Incentive + Long-Term Incentive
 
 
 
$2,163,000
 
 
 
$1,170,000
 
 
 
54%

1 Market compensation figures do not add precisely due to market data calculation process.

Allocation of Compensation

The committee determined that a larger percentage of Mr. Keen’s total compensation for 2007 should be allocated to “at risk” compensation under the short-term incentive plan and long-term incentive plan.  The committee determined that 64% of Mr. Keen’s 2007 target direct compensation should be in the form of incentive compensation in comparison to 62% for 2006.  The committee also weighted the target long-term incentive compensation for 2007 more heavily than for 2006 to emphasize the company’s focus on long-term growth.  The committee believes that this allocation is appropriate for Mr. Keen because he has the authority and responsibility as president and chief executive officer of our company  to establish and execute our long-term strategic plan.
 
 
38

 
2007 Allocation of Compensation for Mr. Keen
Year
 
 % of Total Target Compensation Allocated to Short-term Incentive
  % of Total Target Compensation Allocated to Long-term Incentive
2007
 
21
 
43
2006
 
20
 
42
 
Executive Officer Performance

Mr. Keen received favorable performance reviews from our board of directors for 2006, and the committee noted that Mr. Keen’s strong performance as president and chief executive officer in 2006 supports his 2007 compensation levels.  Our board of directors reviewed Mr. Keen’s 2006 performance under the extensive performance  criteria set forth in Executive Officer Evaluation above.  The board also addressed Mr. Keen’s accomplishments during his service as president and chief executive officer since July 1, 2006.  These accomplishments included the following:
 
 
·
development of Idaho Power “Growth Through Investment” strategic plan
 
 
·
successful oversight and direction regarding Idaho Power water rights issues
 
 
·
development of ratemaking strategy to increase return on equity
 
 
·
positive oversight and management of senior executive staff and
 
 
·
support for successful sale of IDACORP Technologies, Inc.


Setting Mr. Keen’s 2007 Compensation
 
The committee reviewed Mr. Keen’s 2006 base salary of $450,000, which was substantially lower than the 2007 market mid-point of $616,000.  The committee discussed its plan to raise Mr. Keen’s direct compensation closer to the market mid-point level over the three years following his appointment as president and chief executive officer, assuming his continued positive performance in the position.  Based on this plan, and Mr. Keen’s strong performance in 2006, the committee set Mr. Keen’s 2007 base salary at $500,000, an 11% increase.  This was still considerably below market, but consistent with the committee’s plan to gradually increase his direct compensation.
 
The committee also increased Mr. Keen’s 2007 short-term and long-term incentive awards to bring his compensation closer to the market mid-point and to reflect his high level of performance in 2006.  The committee increased Mr. Keen’s short-term incentive target award from 50% to 60% of base salary at target and increased his 2007-2009 long-term target incentive award from 110% to 120% of base salary at target.  Mr. Keen’s total direct compensation at target for 2007 was $1,400,000, of which $900,000 represented at risk incentive pay.  This compared with the market mid-point target compensation of $2,163,000.
 
 
39

 
J. LaMont Keen 2007 Direct Compensation
 
Direct
Compensation
 
2007 Keen Target Compensation
 
2007 Market Target Compensation1
 
2007 Keen Target Compensation as % of 2007 Market Target Compensation
 
2006 Keen Target Compensation
 
% Increase from 2006 Keen Target Compensation
 
Base Salary
 
 
$500,000
 
 
$616,000
 
 
81%
 
 
$450,000
 
 
+11%
Short-Term Incentive
(% of Base Salary)
 
60%
($300,000)
 
78%
($480,480)
 
62%
 
50%
($225,000)
 
+33%
Long-Term Incentive – Time Vesting Restricted Stock
(% of Base Salary)
 
 
40%
($200,000)
 
172%
($1,062,000)
 
56%
 
 
37%
($166,500)
 
 
+20%
Long-Term Incentive –  Performance Shares
(% of Base Salary)
 
 
80%
($400,000)
     
 
73%
($328,500)
 
 
+22%
Cash Total = Base Salary + Short-Term Incentive
 
 
$800,000
 
 
$1,100,000
 
 
73%
 
 
$675,000
 
 
+19%
Total = Base Salary + Short-Term Incentive + Long-Term Incentive
 
 
$1,400,000
 
 
$2,163,000
 
 
65%
 
 
$1,170,000
 
 
+20%
 
1 Market compensation figures do not add precisely due to market data calculation process.

 
Darrel T. Anderson 2007 Compensation
 
Background
 
Mr. Anderson was appointed senior vice president - administrative services and chief financial officer in July 2004.  Prior to this appointment, Mr. Anderson served as vice president, chief financial officer and treasurer. He was named to this position in March 2002. From April 1999 to March 2002, he was the vice president of finance and treasurer.  Before joining our company in 1996, Mr. Anderson was senior manager of audit services for a big five professional services firm.

Market Compensation Analysis

The compensation committee reviewed the market compensation analysis for Mr. Anderson’s position as senior vice president – administrative services and chief financial officer.  The market compensation analysis compared Mr. Anderson’s 2006 compensation with projected 2007 market compensation, based on target incentive plan performance.  The market figures were based on the blended compensation mid-point discussed in Our Process for Setting Executive Compensation – Market Compensation Analysis above.

 
40

 
Darrel T. Anderson Market Compensation Analysis
 
Direct
Compensation
 
2007 Market Target
Compensation1
 
2006 Anderson Target
Compensation
 
2006 Anderson Target Compensation as % of 2007 Market Target Compensation
 
Base Salary
 
 
$344,000
 
 
$280,000
 
 
81%
Short-Term Incentive
(% of Base Salary)
 
 
48% ($165,120)
 
 
35% ($98,000)
 
 
59%
Long-Term Incentive
(% of Base Salary)
 
 
98% ($337,000)
 
 
60% ($168,000)
 
 
50%
Cash Total = Base Salary +
Short-Term Incentive
 
 
$509,120
 
 
$378,000
 
 
74%
Total = Base Salary +
Short-Term Incentive + Long-Term Incentive
 
 
$849,000
 
 
$546,000
 
 
64%

1 Market compensation figures do not add precisely due to market data calculation process.

Allocation of Compensation

The committee determined that a larger percentage of Mr. Anderson’s total compensation for 2007 should be allocated to “at risk” compensation under our executive incentive plans.  The committee determined that 54% of Mr. Anderson’s 2007 target direct compensation should be in the form of incentive compensation, in comparison to 49% for 2006.  The committee also weighted the target long-term incentive compensation for 2007 more heavily than for 2006 to emphasize the company’s focus on long-term growth.  The committee believes that this allocation is appropriate for Mr. Anderson since he plays an important role in the long-term strategic planning for our company in his position of  senior vice president-administrative services and chief financial officer.
 
 
2007 Allocation of Compensation for Mr. Anderson
Year
   % of Total Target Compensation Allocated to Short-term Incentive   % of Total Target Compensation Allocated to Long-term Incentive
2007
 
19
 
35
2006
 
19
 
30
 
 
41

 
Executive Officer Performance

Mr. Anderson received favorable performance reviews for 2006.  The committee noted Mr. Anderson’s performance excelled in 2006 and his leadership skills are outstanding.  The committee noted these major accomplishments by Mr. Anderson in 2006:

 
·
completing the sale of IdaTech
 
 
·
arranging for the sale of IDACOMM
 
 
·
maintaining the financial strength of IDACORP as shown by our balanced capital structure, investment grade credit ratings and financial community presence
 
 
·
facilitating the move of our communications department to administrative services
 
 
·
overseeing the change of leadership for the information technology department and
 
 
·
improving the integration and operation of Idaho Power Company’s supply chain management.
 
Setting Mr. Anderson’s 2007 Compensation
 
The committee reviewed Mr. Anderson’s 2006 base salary of $280,000, which was low when compared with the 2007 market mid-point of $344,000.  The committee discussed its intention to raise Mr. Anderson’s compensation closer to the market as he continues to gain experience as senior vice president – administration and chief financial officer.  Based on this plan, and Mr. Anderson’s performance in 2006, the committee set Mr. Anderson’s 2007 base salary at $310,000, a 10.7% increase.
 
The committee also increased Mr. Anderson’s 2007 short-term incentive award and long-term incentive awards to bring his compensation closer to the market mid-point and to reflect his high level of performance in 2006.  The committee increased Mr. Anderson’s short-term incentive target award from 35% to 40% of base salary at target and increased his 2007-2009 long-term target incentive award from 60% to 75% of base salary at target.  Mr. Anderson’s total direct compensation at target for 2007 was $666,500, of which $356,500 represented at risk incentive pay.  This compared with the market mid-point target compensation of $849,000.
 
 
42

Darrel T. Anderson 2007 Direct Compensation
 
Direct
Compensation
 
2007 Anderson Target Compensation
 
2007 Market Target Compensation1
 
2007 Anderson Target Compensation as % of 2007 Market Target Compensation
 
2006 Anderson Target Compensation
 
% Increase from 2006 Anderson Target Compensation
 
Base Salary
 
 
$310,000
 
 
$344,000
 
 
90%
 
 
$280,000
 
 
+11%
Short-Term Incentive
(% of Base Salary)
 
40%
($124,000)
 
48%
($165,120)
 
75%
 
35%
($98,000)
 
 
+27%
Long-Term Incentive – Time Vesting Restricted Stock
(% of Base Salary)
 
 
25%
($77,500)
 
98% ($337,000)
 
69%
 
 
20%
($56,000)
 
 
+38%
Long-Term Incentive – 
Performance Shares
(% of Base Salary)
 
 
50%
($155,000)
     
 
40%
($112,000)
 
 
+38%
Cash Total = Base Salary +
Short-Term Incentive
 
 
$434,000
 
 
$509,120
 
 
85%
 
 
$378,000
 
 
+15%
Total = Base Salary + Short-Term Incentive + Long-Term Incentive
 
 
$666,500
 
 
$849,000
 
 
79%
 
 
$546,000
 
 
+22%
 
1 Market compensation figures do not add precisely due to market data calculation process.

Thomas R. Saldin 2007 Compensation

Background
 
Mr. Saldin assumed the position of senior vice president, general counsel and secretary on October 1, 2004.  On March 15, 2007, his title was changed to senior vice president and general counsel.  Mr. Saldin worked for Albertson’s Inc. from 1978 until retiring in 2001. During that time he served as assistant general counsel (1978-1981), vice president and general counsel (1981-1983), senior vice president and general counsel (1983-1991), executive vice president, Administration and general counsel (1991-1999), and executive vice president and general counsel (1999-2001).

Market Compensation Analysis

The compensation committee reviewed the market compensation analysis for Mr. Saldin’s position as senior vice president and general counsel.  The market compensation analysis compared Mr. Saldin’s 2006 compensation with projected 2007 market compensation, based on target incentive plan performance.  The market figures were based on the blended compensation mid-point we discussed in Our Process for Setting Executive Compensation – Market Compensation Analysis above.
 
 
43


 
Thomas R. Saldin Market Compensation Analysis
 
Direct
Compensation
 
2007 Market Target
Compensation1
 
2006 Saldin Target
Compensation
 
2006 Saldin Target Compensation as % of 2007 Market Target Compensation
 
Base Salary
 
 
$260,000
 
 
$265,000
 
 
102%
Short-Term Incentive
(% of Base Salary)
 
 
41% ($106,600)
 
 
35% ($92,750)
 
 
87%
Long-Term Incentive
(% of Base Salary)
 
 
60% ($157,000)
 
 
60% ($159,000)
 
 
101%
Cash Total = Base Salary +
Short-Term Incentive
 
 
$367,000
 
 
$357,750
 
 
97%
Total = Base Salary +
Short-Term Incentive + Long-Term Incentive
 
 
$524,000
 
 
$516,750
 
 
99%

1 Market compensation figures do not add precisely due to market data calculation process.

Allocation of Compensation

The committee also reviewed the allocation of Mr. Saldin’s compensation.  The committee determined that Mr. Saldin’s direct compensation should include a substantial component of incentive compensation since he plays a key role in our executive decision making process as senior vice president and general counsel.  Forty-nine percent of Mr. Saldin’s 2007 target direct compensation was in the form of incentive compensation, representing the same percentage as 2006.

Executive Officer Performance

Mr. Saldin received favorable performance reviews for 2006.  The committee noted that Mr. Saldin has provided excellent legal counsel and strategic guidance in his general counsel position and also had the following major accomplishments in 2006:

 
·
leading our overall compliance efforts
 
 
·
providing legal support for our hydro relicensing and water rights preservation efforts
 
 
·
providing legal expertise and strategic guidance in the sale of IdaTech and IDACOMM
 
 
·
developing legal department succession plans and
 
 
·
managing ongoing subsidiary litigation and class action lawsuits.
 
 
44

 
Setting Mr. Saldin’s 2007 Compensation
 
The committee reviewed Mr. Saldin’s 2006 base salary of $265,000, as compared with the 2007 market mid-point of $260,000 for his position as senior vice president and general counsel.  The committee discussed its plan to maintain Mr. Saldin’s direct compensation at or above the market median to reflect his extensive experience and expertise in his position.  Based on this, and Mr. Saldin’s continued strong performance in 2006, the committee set Mr. Saldin’s 2007 base salary at $285,000, a 7.5% increase.
 
The committee retained Mr. Saldin’s 2006 target opportunities for short-term incentive award and long-term incentive award at 35% and 60%, respectively, of base salary at target performance.  Mr. Saldin’s total direct compensation at target for 2007 was $555,750, of which $270,750 represented at risk incentive pay.  This compared with the total direct compensation market mid-point target compensation of $524,000.
 
Thomas R. Saldin 2007 Direct Compensation
 
Direct
Compensation
 
2007
Saldin Target Compensation
 
2007 Market Target Compensation1
 
2007 Saldin
Target Compensation as % of 2007 Market Target Compensation
 
2006
Saldin
Target Compensation
 
% Increase from 2006 Saldin Target Compensation
 
Base Salary
 
 
$285,000
 
 
$260,000
 
 
110%
 
 
$265,000
 
 
+8%
Short-Term Incentive
(% of Base Salary)
 
 
35%
($99,750)
 
 
41%
($106,600)
 
 
94%
 
 
35%
($92,750)
 
 
+8%
Long-Term Incentive – Time Vesting Restricted Stock
(% of Base Salary)
 
 
20%
($57,000)
 
60%
($157,000)
 
109%
 
 
20%
($53,000)
 
 
+8%
Long-Term Incentive Performance Shares
(% of Base Salary)
 
 
40%
($114,000)
     
 
40%
($106,000)
 
 
+8%
Cash Total = Base Salary + Short-Term Incentive
 
 
$384,750
 
 
$367,000
 
 
105%
 
 
$357,750
 
 
+8%
Total = Base Salary + Short-Term Incentive + Long-Term Incentive
 
 
$555,750
 
 
$524,000
 
 
106%
 
 
 
$516,750
 
 
 
+8%
 

1 Market compensation figures do not add precisely due to market data calculation process.
 
 
45

James C. Miller 2007 Compensation

Background
 
Mr. Miller, who has 30 years of experience with the company, became Idaho Power senior vice president - power supply on July 1, 2004. In this role, Mr. Miller is responsible for our company’s production and supply of electricity including the operation of 17 hydroelectric projects, overseeing the company's relicensing efforts, managing the company's interest in four thermal generation plants in Idaho, Wyoming, Nevada and Oregon and marketing and contract activities related to power supply.  Prior to this appointment, Mr. Miller served as senior vice president - delivery. He was named to this position in September 1999.
 
Market Compensation Analysis
 
The compensation committee reviewed the market compensation analysis for Mr. Miller’s position as senior vice president - power supply.  For Mr. Miller’s position, the Towers Perrin 2006 Energy Services Industry survey for companies with annual revenues between $1 billion and $3 billion was the only private survey used because there was insufficient data for his position in the Towers Perrin 2006 Energy Services Industry survey for companies with annual revenues less than $1 billion.  The market compensation analysis compared Mr. Miller’s 2006 compensation with projected 2007 market compensation, based on target incentive plan performance.  The market figures were based on the energy industry compensation mid-point we discussed in Our Process for Setting Executive Compensation – Market Compensation Analysis above.

James C. Miller Market Compensation Analysis
Direct
Compensation
 
2007 Market Target
Compensation1
 
2006 Miller Target
Compensation
 
2006 Miller Target Compensation as % of 2007 Market Target Compensation
 
Base Salary
 
 
$278,000
 
 
$280,000
 
 
102%
Short-Term Incentive
(% of Base Salary)
 
 
45% ($125,100)
 
 
35% ($98,000)
 
 
78%
Long-Term Incentive
(% of Base Salary)
 
 
66% ($183,000)
 
 
60% ($168,000)
 
 
92%
Cash Total = Base Salary + Short-Term Incentive
 
 
 
$403,000
 
 
 
$378,000
 
 
 
94%
Total = Base Salary +
Short-Term Incentive + Long-Term Incentive
 
 
 
$585,000
 
 
 
$546,000
 
 
 
93%

1 Market compensation figures do not add precisely due to market data calculation process.
 
 
46

Allocation of Compensation

The committee also reviewed the allocation of Mr. Miller’s compensation. The committee believes that Mr. Miller’s direct compensation should include a substantial component of incentive compensation since he has significant control over our operational performance as senior vice president - power supply, which includes the company’s entire generation function.   The committee determined that 49% of Mr. Miller’s 2007 target direct compensation should be in the form of incentive compensation, representing the same percentage as 2006.

Executive Officer Performance

Mr. Miller received favorable performance reviews for 2006.  The committee noted Mr. Miller’s extensive experience and strong performance in the power supply area and the results associated with these major accomplishments in 2006:

 
·
successful completion of the 2006 Integrated Resource Plan
 
 
·
continued progress on Hells Canyon relicensing
 
 
·
successful siting of a new gas turbine facility in Elmore County
 
 
·
testimony and assistance with water rights legislation in Idaho and
 
 
·
continued development efforts for new base load resources.
 
Setting Mr. Miller’s 2007 Compensation
 
The committee reviewed Mr. Miller’s 2006 base salary of $280,000, which was in line with the 2007 market mid-point of $278,000 for his position.  The committee discussed its plan to maintain Mr. Miller’s direct compensation at or above the market mid-point to reflect his extensive experience and expertise in his position and his continued strong performance.  Based on this plan, and Mr. Miller’s positive performance in 2006, the committee set Mr. Miller’s 2007 base salary at $295,000, a 5.4% increase.
 
The committee retained Mr. Miller’s 2006 target opportunities for short-term incentive award and long-term incentive award at 35% and 60%, respectively, of base salary at target for 2007.  Mr. Miller’s total direct compensation at target for 2007 was $575,250, of which $280,250 represented at risk incentive pay.  This compared to the market mid-point target compensation of $585,000.
 
47

 
James C. Miller 2007 Direct Compensation
 
Direct
Compensation
 
2007
Miller Target Compensation
 
2007 Market Target Compensation1
 
2007 Miller
Target Compensation as % of 2007 Market Target Compensation
 
2006
Miller
Target Compensation
 
% Increase from 2006 Miller Target Compensation
 
Base Salary
 
 
$295,000
 
 
$278,000
 
 
106%
 
 
$280,000
 
 
+5%
Short-Term Incentive
(% of Base Salary)
 
 
35%
($103,250)
 
 
45%
($125,100)
 
 
83%
 
 
35%
($98,000)
 
 
+5%
Long-Term Incentive – Time Vesting Restricted Stock
(% of Base Salary)
 
 
20%
($59,000)
 
66%
($183,000)
 
97%
 
 
20%
($56,000)
 
 
+5%
Long-Term Incentive Performance Shares
(% of Base Salary)
 
 
40%
($118,000)
     
 
40%
($112,000)
 
 
+5%
Cash Total = Base Salary + Short-Term Incentive
 
 
$398,250
 
 
$403,000
 
 
99%
 
 
$378,000
 
 
+5%
Total = Base Salary + Short-Term Incentive + Long-Term Incentive
 
 
$575,250
 
 
$585,000
 
 
98%
 
 
$546,000
 
 
+5%

1 Market compensation figures do not add precisely due to market data calculation process.

Daniel B. Minor 2007 Compensation

Background
 
Mr. Minor, who has 22 years of service with the company, became Idaho Power senior vice president - delivery on July 1, 2004. He is responsible for the company's electric transmission and distribution systems and retail customer care, including metering and billing. Delivery is Idaho Power's largest single business unit with approximately 1,100 employees across the company's 20,000 square-mile service area serving more than 430,000 customers.  Prior to this, Mr. Minor served as vice president - administrative services and human resources. He was elected to this position in November 2003.
 
Market Compensation Analysis
 
The compensation committee reviewed the market compensation analysis for Mr. Minor’s position as senior vice president - delivery.  The market compensation analysis compared Mr. Minor’s 2006 compensation with projected 2007 market compensation, based on target incentive plan performance.  The market figures were based on the energy industry mid-point we discussed in Our Process for Setting Executive Compensation – Market Compensation Analysis above.
 
 
48

Daniel B. Minor Market Compensation Analysis
Direct
Compensation
 
2007 Market Target
Compensation1
 
2006 Minor Target
Compensation
 
2006 Minor Target Compensation as % of 2007 Market Target Compensation
 
Base Salary
 
 
$245,000
 
 
$250,000
 
 
102%
Short-Term Incentive
(% of Base Salary)
 
 
40% ($98,000)
 
 
35% ($87,500)
 
 
89%
Long-Term Incentive
(% of Base Salary)
 
 
53% ($130,000)
 
 
60% ($150,000)
 
 
116%
Cash Total = Base Salary + Short-Term Incentive
 
 
 
$343,000
 
 
 
$337,500
 
 
 
98%
Total = Base Salary +
Short-Term Incentive + Long-Term Incentive
 
 
 
$472,000
 
 
 
$487,500
 
 
 
103%

1 Market compensation figures do not add precisely due to market data calculation process.

The committee determined that Mr. Minor’s 2007 direct compensation was in line with the market mid-point for his position.  This is consistent with Mr. Minor’s extensive experience and expertise and continued strong performance as senior vice president-delivery.
 
Allocation of Compensation

The committee also reviewed the allocation of Mr. Minor’s compensation.  The committee believes that Mr. Minor’s direct compensation should include a substantial component of incentive compensation since he has significant control over our operational performance as senior vice president-delivery, which includes the company’s transmission and distribution functions.   The committee determined that 49% of Mr. Minor’s 2007 target direct compensation should be in the form of incentive compensation, representing the same percentage as 2006.

Executive Officer Performance

Mr. Minor received favorable performance reviews for 2006.  The committee noted Mr. Minor’s positive performance as the leader of delivery and these major accomplishments in 2006:
 
 
49


 
 
·
leading our new safety mission in delivery
 
 
·
leading delivery’s efforts to maintain a productive workforce
 
 
·
overseeing the delivery business unit’s addition of 15,000 new customers
 
 
·
improving delivery efficiency and organizational structure and
 
 
·
managing delivery’s workforce issues.
 
Setting Mr. Minor’s 2007 Compensation
 
The committee reviewed Mr. Minor’s 2006 base salary of $250,000, as compared with the 2007 market mid-point of $245,000.  Based on Mr. Minor’s positive performance in 2006, the committee set Mr. Minor’s 2007 base salary at $270,000, an 8.0% increase.  This placed Mr. Minor’s base salary 10% above the market target base salary for his position, which is within the general 85%-115% executive compensation range identified by Towers Perrin.  The committee set Mr. Minor’s direct compensation above the market target level to reflect Mr. Minor’s responsibility for overseeing the development and implementation of our aggressive transmission and distribution system expansion plans.
 
The committee retained Mr. Minor’s 2006 target opportunities for short-term incentive award and long-term incentive award at 35% and 60%, respectively, of base salary at target for 2007.  Mr. Minor’s total direct compensation at target for 2007 was $526,500, with $256,500 of that amount representing at-risk incentive pay.  This compares with the market mid-point target compensation $472,000.
 
 
50

 
Daniel B. Minor 2007 Direct Compensation
 
Direct
Compensation
 
2007
Minor Target Compensation
 
2007 Market Target Compensation1
 
2007 Minor
Target Compensation as % of 2007 Market Target Compensation
 
2006
Minor
Target Compensation
 
% Increase from 2006 Minor Target Compensation
 
Base Salary
 
 
$270,000
 
 
$245,000
 
 
110%
 
 
$250,000
 
 
+8%
Short-Term Incentive
(% of Base Salary)
 
 
35%
($94,500)
 
 
40%
($98,000)
 
 
96%
 
35%
($87,500)
 
 
+8%
Long-Term Incentive – Time Vesting Restricted Stock
(% of Base Salary)
 
20%
($54,000)
 
53%
($130,000)
 
125%
 
20%
($50,000)
 
 
+8%
Long-Term Incentive Performance Shares
(% of Base Salary)
 
40%
($108,000)
     
40%
($100,000)
 
+8%
Cash Total = Base Salary + Short-Term Incentive
 
$364,500
 
$343,000
 
106%
 
$337,500
 
 
+8%
 
Total = Base Salary + Short-Term Incentive + Long-Term Incentive
 
$526,500
 
 
$472,000
 
 
111%
 
 
$487,500
 
 
+8%
 

1 Market compensation figures do not add precisely due to market data calculation process.



POST-TERMINATION COMPENSATION PROGRAMS
 
Idaho Power Company Retirement Plan
 
Our retirement plan is available to all our employees.  Under the terms of the retirement plan, normal retirement is at age 65; however, an employee may retire at age 62 without a reduction in pension benefits.  Employees are eligible for early retirement when
 
 
·
they have reached the age of 55 and have 10 years of credited service or
 
·
they have 30 years of credited service.

Plan benefits for employees age 62 or older at the time of retirement are calculated based upon 1.5% of their final average earnings multiplied by their years of credited service.  Final average earnings is the average total wages  –  base pay plus short-term incentive plus overtime  –  during the highest 60 consecutive months in the final 120 months of service.
 
We discuss the other material terms of our retirement plan later in this proxy statement in the narrative following the Pension Benefits for 2007 table.  Because benefits under our retirement plan increase with an employee’s period of service and earnings, the compensation committee believes that providing a pension serves as an important retention tool by encouraging our employees to make long-term commitments to the company.
 
 
51

 
Idaho Power Company Security Plan For Senior Management Employees
 
The security plan provides supplemental retirement benefits for certain key employees beyond our retirement plan benefits.  The compensation committee views these supplemental retirement benefits as a key component in attracting and retaining qualified executives.
 
Benefits under the security plan continue to accrue for up to 25 years of continuous service at a senior management level.  Because benefits under this plan increase with period of service and earnings, the compensation committee believes that providing a supplemental pension serves as an important retention tool by encouraging our key employees to make long-term commitments to the company.  This plan also enables us to attract and retain mid-career hires.  The security plan provides income security for our key employees and is balanced with the at-risk compensation represented by our incentive plans.
 
We discuss the other material terms of the security plan later in this proxy statement in the narrative following the Pension Benefits for 2007 table.
 
Change in Control Agreements
 
We have change in control agreements with all our executive officers.  The compensation committee believes that change in control agreements are an important benefit to promote executive retention during periods of uncertainty preceding mergers and motivate executives to weigh merger proposals in a balanced manner for the benefit of shareholders, rather than resisting such proposals for the purpose of job preservation.
 
Our agreements are “double trigger” agreements.  This means that two events must occur in order for payments to be made – a change in control and a termination of employment, including constructive discharge, in connection with the change in control.
 
If a change in control occurs and the executive is not terminated, the agreements permit the executive to terminate employment for any reason during the first month following the one year anniversary of the change in control.  We refer to this as the “13th month trigger.”  In this event, the executive would receive the same severance benefits except that the lump sum payments equal to two and one-half times annual compensation would be reduced by one-third and the welfare benefits would continue for 18 months, not 24 months.  The first year after a change in control is a critical transition period, and the 13th month trigger serves as an important tool to encourage our named executive officers to remain with the company or our successor.
 
We discuss the other material terms of our change in control agreements later in this proxy statement.
 
The compensation committee undertook a thorough review of our change in control agreements in 2006 and asked Towers Perrin to review the terms of our change in control agreements for our top 14 executive officers, as compared with current market practice and trends.  The review covered competitive market practice for the common elements of change in control agreements – executive eligibility, protection period, payout trigger, severance pay, vesting of equity awards, health and welfare benefits, supplemental early retirement plan benefits, interrupted annual bonus and excise tax gross-ups.
 
 
52

 
Following the review, the compensation committee recommended changes to the board of directors, which the board approved at its July 20, 2006 meeting.  The compensation committee’s review determined that our change in control provisions were consistent with market practice, with two primary exceptions – most comparable companies do not cap change in control benefits at the section 280G excise tax limit, and most companies provide greater severance benefits to senior executives than other executives.  The analysis addressed alternatives for addressing section 280G taxation on severance benefits.  The analysis also addressed typical market level breakdowns for change in control severance payments to senior executives and other executives.
 
The compensation committee concluded that the best alternative to address the section 280G excise tax on severance benefits would be to provide conditional gross-up treatment for the chief executive officer and senior vice presidents and best net treatment for the other officers.  Under the conditional gross-up approach, the executive receives a full gross-up payment unless a 15% or less reduction in payments or benefits would bring the payments and benefits below the section 280G excise tax limit.  Under the best net approach, the executive receives the greater net benefit of
 
 
·
full payments or benefits with the executive paying any section 280G excise tax or
 
·
payments and benefits capped at the section 280G excise tax limit.

The compensation committee also made other changes to the change in control agreements.  The compensation used to calculate change in control severance payments was changed from the executive’s highest combined annual salary and bonus received in any one year over the prior five years to the executive’s annual base salary and target short-term bonus in the year of termination.  Bonus for purposes of our change in control agreements means short-term incentive.  Also, the termination of employment by an executive due to retirement after a change in control would not result in payment of the change in control severance benefits.  The compensation committee recommended these additional changes to the board of directors, which approved the changes at its July 20, 2006 meeting.
 
 
COMPENSATION COMMITTEE REPORT
 
The compensation committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management. Based on the review and discussions referred to in the preceding sentence, the compensation committee recommended to the board of directors that the Compensation Discussion and Analysis be included in this proxy statement on Schedule 14A.
 
Robert A. Tinstman, Chairman
Christine King
Peter S. O’Neill
 
 
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Summary Compensation Table for 2007

Name and Principal Position
 
(a)
 
Year
 
(b)
 
Salary ($)
 
(c)
 
Bonus ($)
 
(d)
 
Stock Awards ($)
 
(e)1
 
Option Awards ($)
 
(f) 1
 
Non-Equity Incentive Plan Compensation ($)
 
(g)
 
Change in Pension Value and Nonqualified Deferred Compensation Earnings
($)
 
(h)2
 
All Other Compensation
($)
 
(i) 3
 
Total
($)
 
(j)
J. LaMont Keen
President and CEO, IDACORP and Idaho Power
 
2007
 
498,077
 
-
 
361,565
 
  42,627
 
259,740
 
251,502
 
10,224
 
1,423,735
 
2006
 
436,538
 
-
 
291,968
 
95,739
 
331,726
 
255,884
 
8,800
 
1,420,655
Darrel T. Anderson
Senior Vice President – Administrative Services and CFO, IDACORP and Idaho Power
 
2007
 
308,846
 
-
 
 142,759
 
  19,629
 
107,359
 
  86,908
 
9,694
 
675,195
 
2006
 
278,462
 
40,000
 
136,082
 
39,138
 
153,860
 
131,146
 
8,657
 
787,345
Thomas R. Saldin
Senior Vice President and General Counsel, IDACORP and Idaho Power
 
2007
 
284,231
 
-
 
103,829
 
7,457
 
86,364
 
  307,180
 
 9,612
 
798,673
 
2006
 
264,423
 
-
 
59,939
 
12,217
 
145,618
 
244,690
 
8,800
 
735,687
James C. Miller
Senior Vice President – Power Supply, Idaho Power
 
2007
 
294,423
 
-
 
122,027
 
15,781
 
89,394
 
_4
 
9,612
 
531,237
 
2006
 
279,615
 
-
 
110,190
 
41,288
 
153,860
 
107,892
 
4,935
 
697,780
Daniel B. Minor
Senior Vice President – Delivery, Idaho Power
 
2007
 
269,231
 
-
 
103,249
 
9,971
 
81,818
 
216,286
 
9,592
 
690,147
 
2006
 
248,269
 
-
 
77,421
 
17,656
 
137,375
 
152,834
 
8,765
 
642,320

Values shown represent the accounting expense in 2007 and 2006 for restricted stock, performance shares and stock options awarded in 2007 and in prior years.  These amounts do not necessarily correspond to the actual value that will be recognized by the named executive officers.  The assumptions used to determine the values are the same as those used in the valuation of compensation expense for our audited financial statements, except for the effect of estimated forfeitures.  Statement of Financial Accounting Standards No. 123 (revised 2004), which we refer to as SFAS 123R, requires us to estimate forfeitures when awards are granted and reduce the estimated compensation expense accordingly.  However, pursuant to SEC rules, the amounts shown were determined by assuming none of the awards would be forfeited.
   
 
Stock option awards are awarded with exercise prices equal to the market value of the stock on the date of award.  The options have a term of 10 years from the award date and vest over a five-year period.  Upon adoption of SFAS 123R on January 1, 2006, the fair value of each option is amortized into compensation expense using graded-vesting.  Beginning in 2006, stock options are not a significant component of share-based compensation awards under the IDACORP 2000 Long-Term Incentive and Compensation Plan.
   
 
The fair values of all stock option awards have been estimated as of the date of the award by applying a binomial option pricing model.  The application of this model involves assumptions that are judgmental and sensitive in the determination of compensation expense.  The following key assumptions were used in determining the fair value of options awarded:
 
 
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2004
   
2003
   
2002
   
2001
 
Dividend yield, based on current dividend and stock price on award date
   
3.9%
      8.1%       4.7%