The merger of Northeast Utilities, based in Hartford, and Boston's NStar has been good for shareholders, helping to boost the combined utility's stock price by roughly 17 percent. Perhaps no one knows that better than Thomas J. May, the NStar chief executive who engineered the deal.
Now chief executive of the combined company, May has seen the value of stock-based compensation awarded to him over the years appreciate by millions of dollars since the merger closed in April 2012. The total value of May's stock holdings plus accrued pension benefits exceeded $80 million as of March.
This estimate, prepared by compensation specialists hired by the Globe and generally confirmed by Northeast Utilities, excludes stock and options that May has sold over the years. Last year, for example, May realized about $10 million by selling stock options.
May's wealth, accumulated over nearly two decades leading a regulated public utility, was financed in part by rates paid by electric and natural gas customers, said John Howat, a senior energy analyst at the nonprofit National Consumer Law Center, a Boston advocacy group.
At investor-owned utilities, the profits that drive stock values are all but guaranteed because regulators set a rate of return for the companies and build those returns into the charges that customers pay.
More than $80 million "is a tremendous amount of money, and so we have a right to know where it came from," Howat said of May's holdings. "We know that it ultimately came from us and our rates."
The average NStar monthly electric bill — the utility has several subsidiaries —
Sunday's power outage in the Back Bay — the second widespread blackout in the Boston neighborhood caused by problems in a substation over the past two years —
Northeast Utilities, however, says May's wealth is deserved.
Spokeswoman Caroline Pretyman said May increased the value of NStar stock more than ninefold since becoming CEO of NStar's predecessor company, Boston Edison Co., in 1994. A $100 investment made then is now worth over $925.
"In his 20-year tenure as CEO," Pretyman said, "Tom May has led our company's success in delivering shareholder returns that have consistently outperformed the S&P 500 [index while] . . . holding the line on costs for our customers."
The Globe hired two executive compensation experts, Fred Whittlesey of Compensation Venture Group, near Seattle, and Thomas B. Wilson of Wilson Group in Concord, following the controversy over the reporting of May's earnings in his last months as CEO at NStar before the merger's completion.
Initially, Northeast Utilities refused to disclose compensation, arguing NStar no longer existed as a separate public company and was under no legal obligation to report the pay of top executives to the Securities and Exchange Commission.
The company later revealed May's 2012 NStar earnings following a request by Attorney General Martha Coakley, exercising her authority as the state's ratepayer advocate. She cited concerns that Northeast Utilities' 1.6 million Massachusetts customers could be paying for merger-related executive bonuses, which would violate conditions set by state regulators for approving the merger.
The Globe's analysis found that May did not receive any bonuses or other incentives tied directly to the deal.
Like all other NStar stockholders, May received about 1.3 Northeast Utilities shares for each NStar share, reflecting the higher stock price of the Boston utility at the time of the merger.
With the conversion of his NStar stock, May became the biggest stockholder among Northeast Utilities' executives, with more than 2 million shares, stock options, and unvested or deferred stock awards, according to the company's latest annual report.
May held $39.3 million worth of shares, nearly $14 million in options, and $7.3 million in unvested shares, and his pension totaled $23.1 million, according to Whittlesey's analysis, based on NStar's share price on March 28.
Like others, May has benefited from rising share prices, part of which is a result of the bull market. Northeast Utilities shares closed at $42.07 Monday, up from $35.91 when the merger was finalized.
Whittlesey said May's holdings don't appear outsized for longtime chief executives, who receive significant portions of their compensation as stock-based awards and subsequently oversee rising share prices. But, he added, regulated utilities are different in that their executives work for two constituencies: the shareholders and the ratepayers, or customers.
"Did shareholders do well at the expense of ratepayers?" said Whittlesey. "When you see big numbers, it warrants more explanation."
May earned about $8 million last year, $1 million less than in 2011, according to records. Under pressure from Coakley, Northeast Utilities reported May earned $3.76 million as NStar chief executive in the first three months of 2012. He earned $4.2 million the rest of the year after assuming the top post at Northeast Utilities.
But, Whittlesey said, the compensation figures public companies must report don't provide an accurate accounting of income, since they include pension contributions and stock awards that are realized as income in future years, while excluding gains when those stock awards are cashed in.
In 2012, for example, May's total reported compensation included a $1.1 million salary, $3.4 million in stock awards, $2.1 million in cash bonuses, and a $1.2 million increase in pension value.
But he also cashed in $9.9 million in stocks, including $3.1 million he was able to realize from stock options that vested earlier because of the merger. Those gains are not reported as part of May's 2012 compensation. The figure reported to the SEC is "not a real number," Whittlesey said. He estimated May's taxable income for 2012 at $16.5 million, excluding unvested options or stock awards.
Erin Ailworth can be reached at email@example.com.