Attorney General Martha Coakley on Tuesday formally requested that Northeast Utilities publicly detail its executives’ pay for the past two years, including whatever bonuses, incentives, or other compensation chief executive Thomas J. May received for overseeing the company’s April merger with Boston utility NStar.
Northeast Utilities, which has refused to disclose May’s full 2012 compensation, now has 30 days to respond to the request. If Northeast Utilities does not comply, Coakley can seek action from the state Department of Public Utilities. Under state law, the department has the authority to compel utilities to disclose pay information.
“NStar has to reveal this information so that we can ensure that ratepayers are not bearing the undue cost of executive compensation packages,” Coakley said in a statement.
A Northeast Utilities spokesman, Michael Durand, said the company would respond to Coakley after reviewing the request.
May headed NStar until the $17.5 billion merger closed in April, then became chief executive of Northeast Utilities, now the 15th-largest utility in the nation. When the combined company filed its annual financial report with the Securities and Exchange Commission late last month, it disclosed May’s pay for only the nine months following the merger.
Northeast Utilities cited a technicality: Since NStar is no longer a separate public company, SEC rules do not require it to report May’s NStar earnings in the first three months of 2012 — including any bonuses or the millions in accelerated stock awards he was expected to receive.
One pre-merger document estimated the value of May’s accelerated stock awards at $9.3 million.
Northeast Utilities says it has met all SEC requirements by reporting the $4.2 million May earned in the nine months following the merger — less than half the $9.2 million he earned from NStar in 2011 — and has no obligation to disclose his additional compensation.
But Coakley, the state’s ratepayer advocate, has the authority to seek the information under the Green Communities Act, a comprehensive energy bill passed in 2008. She said obtaining the missing pay details is critical to ensuring that any merger-related compensation doesn’t come from the pockets of ratepayers, including the utility’s approximately 1.3 million Massachusetts electric customers.
Coakley has used this authority successfully before. When National Grid failed to disclose its executives’ salaries during a 2009 review of its rates, Coakley made a similar request to get the utility to publicly reveal the details of its executive compensation. Regulators at the Department of Public Utilities recently sided with Coakley in the matter, ruling that executive “salary information is not confidential.”
Coakley said she believes that order, issued in December, should serve as a precedent in gaining a complete report of May’s earnings last year. A Department of Public Utilities spokeswoman said the two cases are not comparable because the decision to compel disclosure of pay information was made while National Grid was seeking rate increases.
But Northeast Utilities rates have been frozen until Jan. 1, 2016, as a condition of the merger approval.
So far, DPU regulators have been reluctant to order Northeast Utilities to disclose all of May’s 2012 compensation, saying they will wait until 2015 to examine such details, when the company must submit a report on the merger’s outcome.
Coakley has also called on the SEC to change rules that allow merged companies to report only partial compensation for some executives. She was joined Tuesday by US Representative Edward Markey, of Malden, who urged regulators to eliminate the technicality and Northeast Utilities to disclose the details voluntarily.
“While this merged company may be following the letter of the law right now, this is a loophole at the SEC that should be closed,” Markey said in a statement. “I believe in transparency, that shareholders and the public have a right to know what kind of compensation deals were made in the final months of this merger.”
US Senator Elizabeth Warren — who campaigned last year as an outspoken consumer advocate, and has said she is against the use of loopholes to protect corporations — also joined the call for action.
“The intent of the SEC rules is to expand transparency, not limit it. If there is a loophole it should be closed,” Warren said in a statement. “Ratepayers have the right to know this information.”
US representatives Michael Capuano of Somerville and Stephen Lynch of South Boston, who both serve on the Financial Services Committee, were not available for comment Tuesday.
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