Charles W. Shivery retires a very wealthy man after a decade of running Northeast Utilities and Connecticut Light & Power. Shivery will take $34.6 million in deferred compensation, stock awards and pension benefits out the door -- considerably more than the $25 million in extra money that CL&P spent under public pressure in 2012 to catch up on vital tree-pruning that records show it had long neglected. Sluggish tree-trimming was the top reason Shiverys utility was unprepared for the outages caused by Tropical Storm Irene and the freak October snowstorm in 2011, state investigators found. Clearing vegetation from power lines is especially important in Connecticut, which has one of the nations most densely forested suburban and rural landscapes. CL&P had to be pushed by public outrage to spend more money on preventing outages, said U.S. Sen. Richard Blumenthal. The case reflects a massive nationwide culture change after electric utility deregulation. It has produced huge pay raises for top executives at investor-owned utilities coast to coast, even as the utilities reliability faltered, a Hearst Newspapers investigation found. And Shiverys not the only Connecticut energy company executive to earn millions. James P. Torgerson, chief executive of UIL Holdings, the parent company of United Illuminating, earned $2.5 million last year, up from $1.3 million in 2006 when he got the job. Thats a 47.8 percent raise. Between 2000 and 2011, CEO pay packages at the largest privately owned utilities have increased by 150 percent on average, according to a survey conducted for Hearst Newspapers by Longnecker & Associates, a Houston compensation consulting firm. That brought the average to more than $6 million a year. Over much of the last decade, executive pay soared in many industries, from banking and financial services to academia. CEO pay in America did plunge about 37 percent in 2011 compared to 2000, largely due to the 2008 recession, an Economic Policy Institute analysis shows. But it is recovering, and has increased by 20 percent since 2009. What dominates -- and escalates -- executive pay isnt the base salaries of the last century, but the incentives based on stock and dividend performance, according to a 2005 study by accounting professors Steven Lilien of City University of New Yorks Baruch College and Stephen Bryan of Wake Forest University. Burch Kealey, an accounting professor at University of Nebraska, found the same trend in 2011. They are only accountable to shareholders, Kealey said. As long as there are increasing returns, there is not much that is going to hold them back in terms of salary. Merger millions Shiverys handsome compensation was an inside job, the result of annual decisions made over the years by Northeast Utilities compensation committee, records show. NU is CL&Ps parent company. The reasons for his pay increases were financial, not operational, and his focus during at least the last two years was on a pending merger and construction of long-distance transmission lines -- not on the utilitys reliability. But Shiverys pay package increased more than 500 percent in just seven years, putting him well above the national average for both rate of increase and pay amount, the survey shows. In 2000, Shiverys predecessor, Michael G. Morris, received $3.5 million as chairman of the board, CEO and president of Northeast Utilities, according to the Longnecker survey. Shivery overlapped with Morris in 2003, but in his first full year in the same position in 2004 he received direct compensation of $1.9 million. Last year, his pay package amounted to nearly $9.7 million. Shivery vacated his chief executive post at Northeast Utilities, the holding company that owns CL&P, in April because of a merger he helped arrange with a Massachusetts utility.
Posted on: Mon, 17 Nov 2014 18:30:00 +0000
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