Coakley presses utility to reveal chief’s pay
Attorney General Martha Coakley on Friday said she will use her statutory authority to begin the process of compelling Northeast Utilities to release a full accounting of chief executive Thomas J. May’s 2012 compensation.
The public company, which merged with NStar last April, has refused to disclose what May earned in the first three months of 2012, when he was still head of the Boston utility, citing a technicality in the reporting requirements of the Securities and Exchange Commission. Because NStar no longer exists as its own public company, SEC rules say it need not report what May earned during the quarter before the merger closed, including any bonuses or the millions in accelerated stock awards he was expected to get.
Coakley said disclosure of those pay details is necessary to make sure that ratepayers’ money isn’t being used to reward May for the merger.
“Our agreement [with Northeast Utilities] prohibits merger-related compensation from being passed on to ratepayers,” Coakley said in a statement to the Globe. “To ensure that ratepayers are protected from those added costs, we will be seeking the full compensation figures from NStar.”
She said her authority to seek the disclosures comes from the state’s Green Communities Act, a comprehensive energy and environmental law enacted in 2008. Under the law, Coakley, the state’s advocate for ratepayers, has the power to request financial and other information related to rates. If utilities refuse, she can take steps to compel them to comply.
The attorney general’s decision is in contrast to the state Department of Public Utilities, which under state law can compel Northeast Utilities to disclose details of May’s compensation. Instead, officials said they will wait until 2015, when Northeast Utilities is being required to file a report on the merger’s outcome.
“We don’t have any plans to ask for additional information at this time,” said Mary-Leah Assad, a spokeswoman at the state Office of Energy and Environmental Affairs, which oversees the DPU. “Our responsibility is to protect the ratepayers, and we feel we have done that.”
Governor Deval Patrick, who appoints DPU commissioners, said Friday that he will not pressure Northeast Utilities to reveal the missing details about May’s 2012 pay, although he said the SEC should eliminate the technicality that allowed the situation.
After dismissing three questions on the subject with the same answer — “I don’t have an opinion on that” — Patrick made clear he does not consider May’s salary a concern for state regulators.
“Well, I understand there are some federal rules about what he is supposed to do, and whether he is compliant with those rules is up to him and the federal government,” Patrick said before ducking into an elevator Friday.
Northeast Utilities, meanwhile, continued to defend its reporting of only the nine months of 2012 pay that May earned after he became chief executive of the combined company, which is headquartered in Boston and Hartford. According to a recent SEC filing, May earned $4.2 million in that timespan, less than half what he earned in 2011 at NStar, when his compensation totaled nearly $9.2 million.
A 2011 SEC filing from NStar indicates that May likely garnered more from the merger than Northeast Utilities recently disclosed. Estimates in that document show he was expected to receive $9.3 million in accelerated stock rewards when the $17.5 billion deal closed.
“We’ve already provided you with all the information we can on this subject,” Northeast Utilities spokesman Michael Durand said, adding that the company has been “upfront and open by clearly providing all reportable information from last year in our [SEC] filing.”
Responding to a request to interview May, Durand said, “Unfortunately, Tom is not available to speak with you.”
Barney Frank, a former US Representative for Massachusetts and author of the Dodd-Frank financial overhaul law, said Northeast Utilities’ resistance to disclosing May’s final NStar compensation is an “excellent example” of why financial reporting obligations need to be more detailed.
“This is a clear violation of the principle’’ of SEC regulations, Frank said. “They used this technical, specific interpretation of the rules to compromise compliance.”
Senator Richard Blumenthal, Democrat of Connecticut, who has fought to strengthen financial disclosure laws, also said the situation was a cause for concern.
“To me the question is what are they hiding and why?” Blumenthal said. “This concealment says to me that the company must be pretty worried about what consumers . . . will think of the compensation.”
Charles Harak, an attorney who represented utility workers during the state’s year-and-a-half long review of the Northeast Utilities-NStar merger, said he believes the combined company is hiding May’s final NStar pay for a reason.
“They don’t want anyone to realize that they’re spending huge amounts on executive salaries.”