Thomas J. May, in a letter to state Attorney General Martha Coakley, disclosed Wednesday that he earned nearly $3.8 million in his last three months as chief executive of NStar, before the Boston utility merged with Northeast Utilities last year and May assumed leadership of the combined company.
Those earnings, combined with the $4.2 million May earned at Northeast Utilities after the April 2012 merger, would bring May’s compensation last year to about $8 million — more than $1 million less than he earned in 2011 running the smaller NStar. Northeast Utilities had earlier refused to disclose May’s NStar earnings because the utility no longer exists as a separate public company and the Securities and Exchange Commission does not require such reporting.
The earnings of $3.76 million, in compliance with SEC rules, do not include any gains May realized from stock awards he was able to cash in as a result of the merger. In the letter to Coakley, May noted that the merger allowed him to realize $3.1 million from stock options. But he said that should not be considered 2012 earnings since the options were reported as compensation when they were awarded in 2010.
That $3.1 million payout shows how complex SEC reporting rules are and how difficult it can be to track an executive’s actual take-home pay from year to year, said Fred Whittlesey, who analyzes executive compensation through his Seattle-area consulting firm Compensation Venture Group. The way the SEC defines pay, he said, makes it hard to account for the value of stock options and awards granted in one year — when it is typically reported as compensation — but cashed out during another year.
While the compensation table included in May’s letter to Coakley “is a correct representation of ‘pay’ as defined by the SEC,” Whittlesey said in an e-mail, it excludes any payouts that May might have realized because he was able to exercise certain options or awards, whether as a result of the merger or for any other reason.
May’s 2012 compensation became an issue after Northeast Utilities filed its annual report with the SEC recently and included only nine months of his 2012 earnings. The missing three months of information left an incomplete picture of the $17.5 billion merger that created the nation’s 15th largest utility, jointly based in Boston and Hartford.
Concerned customers could end up footing the bill for executive compensation related to the merger, Coakley, the state’s ratepayer advocate, took steps to compel Northeast Utilities to disclose the information. May’s letter was in response to a formal request by Coakley seeking the information.
In the letter, May said he did not receive any “special bonus payments in cash, deferred income, or stock in relation to the merger.” Northeast Utilities officials said May appears to have earned less in 2012, despite running a much larger company, because values of stock and pensions can fluctuate from year to year.
Northeast Utilities characterized May’s letter as an interim response to Coakley’s request, and said it would report the compensation of other top executives and other information within the 30-day period laid out by state law.
“We are pleased that NStar responded promptly to our request, and are reviewing these figures to ensure that costs are not unduly passed on to ratepayers,” Coakley said in a statement. “We also expect NStar’s full response to our request in the next 30 days
Meanwhile, local legislators continued to call for the SEC to eliminate the reporting technicality that led to this situation.
“I support efforts to require disclosure when it comes to compensation. Shareholders, and the public, should certainly have access to this information,” US Representative Michael Capuano, who sits on the Financial Services Committee, said in a statement. “In fact, I have long supported measures that would give shareholders a say on pay for executives.”
Senator Richard Blumenthal of Connecticut also reiterated his support for an SEC rule change.
“This technicality should be reversed or eliminated, and the SEC should do it administratively if possible,” Blumenthal said.
John Nester, a spokesman for the SEC, said the financial oversight agency has not received a formal request to amend the rule. “We would be happy to hear the Attorney General’s views,” Nester said in an e-mail.