$8.9M Nstar golden parachutes ‘obscene,’ says union lawyer
By Brendan Lynch
Thursday, July 7, 2011
State regulatory hearings into the proposed merger of Nstar and Northeast Utilities kicked off yesterday with a union lawyer ripping $8.9 million in golden parachutes that would be handed out to three departing Nstar executives.
“It’s obscene that anyone would get that much money, particularly for the period after they’ve already left the company and aren’t providing services,” said Charlie Harak, a lawyer with the National Consumer Law Center representing the Utility Workers of America Local 369. “It’s an insult to working people.”
The $8.9 million “change in control” payments would kick in if and when the merger closes and the executives resign. All three are expected to leave the company if the merger goes through, according to Nstar chief financial officer Jim Judge’s testimony.
Doug Horan, Nstar’s senior vice president, secretary and general counsel, leads the pack with a $5.3 million payment. Bob Weafer, vice president, controller and chief accounting officer, would pocket $1.9 million. And Geoff Lubbock, vice president of financial strategic planning and policy, would take $1.7 million with him when he resigns.
An Nstar spokesperson said the payments are standard practice, intended to encourage mergers that benefit shareholders, and benefit customers through reduced operating costs.
The merger could trigger even more “change in control” payments at Northeast Utilities, where executives have golden parachute clauses totaling $24 million, but it’s unclear how many, if any, of those top brass would be leaving.
John Core, professor of accounting at MIT’s Sloan School of Management, added that such golden parachutes — which usually equal about three times the executive’s salary — are somewhat controversial because the companies are awarding them while laying off rank-and-file workers.
“Nstar shareholders might be happy these managers are being paid to give up their jobs and go away,” he said.
-— brendan.lynch@bostonherald.com