When NStar, one of the state’s biggest utilities, wanted to merge with Northeast Utilities in 2010, the two companies filed thousands of pages of documents with various government agencies detailing their makeup, their financials, and the expected consumer benefits of the consolidation.
But in the months since the deal closed, the combined company has not produced a single page that fully discloses how much compensation its chief executive, Thomas J. May, received in 2012.
Relying on a technicality, Northeast Utilities has refused to detail what May earned during his last three months as the head of NStar before assuming the CEO post at the combined company, including any bonuses or the millions in accelerated stock awards he was expected to get as a result of the merger.
Northeast Utilities said it is not required by the Securities and Exchange Commission to report that compensation, since NStar no longer exists as a separate public company. The result is an unfinished picture of NStar’s final months, including what top executives were paid for engineering a merger that created the 15th largest utility in the nation.
Secretary of State William Galvin, Massachusetts’ top securities regulator, declined to comment on May’s undisclosed pay, as did Attorney General Martha Coakley.
But consumer advocates sharply criticized Northeast Utilities’ failure to fully report the compensation of May and other top executives.
“Whether it’s the letter of the law or not, the bottom line is that shareholders and the public should have information for a whole 12-month period,” said Deirdre Cummings, the legislative director of the Massachusetts Public Interest Research Group.
Added John Howat, a senior analyst at the National Consumer Law Center in Boston: “Some loophole in the rule shouldn’t result in a gap in transparency.”
David Cash, a commissioner at the Department of Public Utilities, said Northeast Utilities is required to file a report on the outcome of the merger in April 2015, and he expects to see all of May’s compensation and merger-related earnings disclosed then.
“We’ve been demanding transparency and we’ve been getting it and we’re going to continue demanding transparency,” Cash said. He added commissioners would scrutinize executive pay in the 2015 report and determine whether it is just and reasonable.
For the nine months of earnings that are disclosed in the SEC filing, Northeast Utilities reported that May earned $4.2 million — less than half of the $9.2 million he earned from NStar in 2011.
When asked if the unreported three months of pay from NStar would boost May’s compensation above the $9.2 million he collected in 2011, company spokesman Michael Durand said the utility would not provide any additional details.
“The information in the filing is all that is publicly available for 2012,” Durand said.
Some financial documents suggest that May was well compensated for completing the merger. A 2011 SEC filing estimated that based on NStar’s share price at the time, May would garner roughly $9.3 million in accelerated stock awards when the merger was finalized.
But the value of those awards is probably higher, since NStar’s share price increased by several dollars by the time the merger closed. Northeast Utilities would not disclose how much the stock awards may have appreciated prior to the merger.
The questions about May’s compensation come after both NStar in Massachusetts and Northeast Utilities in Connecticut faced criticism for inadequate responses to major storms in recent years. In addition, the merger has resulted in an undisclosed number of layoffs, despite assurances by the companies that most job losses from the merger would come through attrition.
Northeast Utilities and NStar have come under intense scrutiny since the companies first unveiled plans to merge into a $17.5 billion energy company in October 2010.
It took regulators a year and a half to review the merger, which was ultimately approved with stipulations, including a four-year rate freeze, a $21 million credit to customers, and a guarantee that ratepayers would not foot the bill for executive compensation related to the merger.
Coakley, in a statement Tuesday, reiterated that merger approval protects ratepayers from bearing “the majority of the cost for executive compensation packages.”
Figuring out what May actually earned as a result of NStar’s merger with Northeast Utilities will be difficult, said Fred Whittlesey, who analyzes executive pay through his Seattle-area consulting firm Compensation Venture Group Inc.
“The company is fully complying with SEC requirements,” he said via e-mail, “but their disclosure is murkier than what we see as the current norm.”