Big payday for power players
By Brian McGrory | GLOBE STAFF NOVEMBER 04, 2011
There are many people out there who are undoubtedly worried about how hard-working NStar executives will fare in the proposed merger with Northeast Utilities, targeted for completion by next year.
I have good news for you, my friends. These public utility servants who bravely oversee a regulated industry with customers who have no other options will do just fine. They have you, the ratepayers, to thank.
First off, the executives will see an accelerated payout of their stock options, deferred stock awards, and performance-based stock shares. For Thomas May, the chairman, chief executive officer, and president of NStar, it means an estimated $9.3 million when the merger is finalized, according to a January filing with the federal Securities and Exchange Commission. And that figure will probably be higher, as the stock price gradually rises.
I will remind you that Tom May also had a pay package totaling $7.9 million last year, and is guaranteed the job of CEO in the new company.
May is not the only one to vest quickly. Chief financial officer James Judge is good for a $2.1 million payout. For the general counsel, Doug Horan, and the chief operating officer, Werner Schweiger, it’s $1.9 million. Maybe the senior VP, Joseph Nolan, feels irked about getting only $1 million.
Then there’s the guaranteed severance, should any of these good souls be forced out or leave for “good reason.’’ For May, the severance package totals $10.2 million; Judge, $7.1 million; Horan, $3.3 million; Schweiger, $6.8; and Nolan, $4.1 million.
Finally there’s the NStar Retention Plan, targeted at executives “to ensure their continued dedication to the company’’ before and after the merge, as if their phones have been ringing nonstop with offers to lure them away, they’re all such a bargain. It ranges from $1.3 million in stock for Nolan to $2.2 million for Schweiger, to $2.4 million for Judge.
By the way, the top five NStar officials made a combined $21 million last year.
When I asked an NStar spokeswoman, Caroline Allen, about all this, I got the usual: Retention is “standard practice.’’ Executive pay is set by - wink, wink - an “independent board’’ and “is in line with that of similar companies in our industry.’’ Maybe it shouldn’t be so standard, and maybe they shouldn’t fall in line.
Credit Martha Coakley for fighting back, arguing that NStar shouldn’t be allowed to pass along these costs to ratepayers.
NStar executives are always saying that bigger is better as they push for the merger with Connecticut-based Northeast Utilities, but is it? I called Dave Wood, the light plant director in Concord, one of a few dozen Massachusetts communities with a municipal power plant - meaning, no NStar or National Grid. He estimated that 20 to 25 percent of the system lost power in the Saturday night storm. “By Sunday, 9:30 p.m., we had everyone restored,’’ he said.
Wellesley, which has a municipal plant, saw outage in about 10 percent of the town, with everyone back within 24 hours.
With this record of success, why doesn’t every town open its own light authority? Because the utilities don’t want them to. Basically, the firms won’t sell their equipment, the poles, wires, and transformers.
So every legislative session on Beacon Hill, state Representative Jay Kaufman files legislation that would allow the state to set a fair sale price on the equipment. Every session, the utilities hire lobbyists and feather the campaign accounts of key members, and the bill dies a quiet death.
“Proponents of the revision to the law want to take away a utility’s right to set the purchase price for its equipment,’’ said NStar’s Allen, who gets an A for effort here.
But said Kaufman: “The good news about this storm is that it has brought the issue into clear focus.’’
If you’re NStar, bigger certainly is better - bigger company, bigger prices, bigger pay. Let’s hope someone on Beacon Hill injects a big dose of sanity.
Brian McGrory is a Globe columnist. He can be reached at mcgrory@globe.com.