In earlier case, DPU had executives’ pay divulged
Northeast head’s salary still secret
By Erin Ailworth | GLOBE STAFF MARCH 12, 2013
The state Department of Public Utilities, which has balked at demanding disclosure of Northeast Utilities chief executive Thomas J. May’s full 2012 earnings, recently ordered another major utility to completely report the details of its top executives’ salaries, bonuses, and other compensation.
The DPU order, issued less than four months ago, came after a lengthy review of rates for National Grid. The utility at first didn’t report the salaries of its top executives and then, when Attorney General Martha Coakley sought more information, tried to disclose only total earnings while keeping the names of executives secret.
Regulators determined both names and earnings had to be reported. “Executive salary information is not confidential,” the DPU ruled.
Thomas J. May of Westwood, chief executive of Northeast Utilities.
That decision, consumer advocates said, raises the question now of why regulators are not seeking a full accounting of May’s pay, especially since they have questioned the utility on layoffs and other matters related to last year’s merger with Boston’s NStar.
“The department has clearly addressed the question of whether high-ranking executives’ salaries can be made public and separately should be made public,” said Charles Harak, an attorney with the National Consumer Law Center in Boston. “The answer to both was yes.”
Northeast has reported only nine months of May’s 2012 earnings, relying on a technicality to avoid disclosing his pay for the first three months of the year, when May was still NStar’s chief executive. He became head of the combined public company when the merger was finalized in April.
On Monday, the DPU reiterated that its main interest is protecting customers but said again it will wait until 2015 — when Northeast files a report on the merger’s outcome — to review May’s earnings and any merger-related compensation he may have received.
But by 2015, though, when Governor Deval Patrick’s second term is over, it might be too late, Harak said. “It should be out there now,” he said. “In three year’s time, when Tom May has [hypothetically] collected $30 million, it’s going to be hard to claw that back.”
Patrick, who appoints the DPU commissioners, did not respond to requests for comment Monday.
The controversy over May’s compensation was sparked when Northeast Utilities last month reported that May earned $4.2 million in the nine months following the merger — less than half of his 2011 compensation of $9.2 million. Since NStar no longer exists as a separate public company, Securities and Exchange Commission rules say Northeast need not report what May earned in the three months before the merger closed, including any bonuses or the millions — at least $9.3 million, according to one premerger document — in accelerated stock awards he was expected to get.
Northeast Utilities, which is headquartered in Boston and Hartford, said it won’t report May’s NStar pay from early last year.
“As we’ve previously stated, we clearly and openly disclosed all necessary financial information,” Northeast spokesman Michael Durand said Monday.
Meanwhile, Coakley last week took the first steps to compel Northeast to report the missing pay information, citing her statutory authority as the state’s ratepayers’ advocate. She said the ruling in the National Grid case should bolster her efforts. “We have said we will seek full compensation figures from NStar,” Coakley said in a Monday statement. “This DPU ruling gives even more precedent for the information to be disclosed in order to ensure that ratepayers are not bearing the cost of merger-related compensation.”
The DPU has kept tabs on Northeast following its merger with NStar, and has sought other information from the utility — before the scheduled 2015 report. The commission, for example, pressed Northeast to reveal that 173 employees, identified as doing redundant jobs, were laid off the first several months following the merger.
But a DPU spokeswoman said May’s pay issue is different. The department used its statutory authority to make National Grid’s executive pay information public, but it did so because it was reviewing a proposed rate increase by that utility. Northeast Utilities’ rates, frozen for four years under the merger approval, are not under review now.
“There are no implications for ratepayers as the merger [approval] agreement included a rate freeze,” Mary-Leah Assad, a spokeswoman for the state Office of Energy and Environmental Affairs, which oversees the DPU, said in an e-mail. “When rates are subject to change we will review the costs associated with any proposed rate increase and determine what is fair and reasonable for ratepayers and that is consistent with the merger agreement.”
Connecticut utility regulators and Connecticut Attorney General George Jepsen have declined to comment.
Erin Ailworth can be reached at firstname.lastname@example.org. Follow her on Twitter @ailworth.