NStar’s top five executives, including former chief Thomas J. May, earned a total of nearly $15 million in 2012 — about $4 million less than in 2011, despite helping to engineer a merger with Northeast Utilities of Hartford.
The figures include three months of pay for each executive that NStar had not disclosed to the US Securities and Exchange Commission, citing a technicality that allowed the Boston firm to stop reporting financial information once it became part of Northeast Utilities last April. The combined company released the missing compensation details this week, as part of its response to a request from Attorney General Martha Coakley, the state’s ratepayer advocate.
Coakley last month asked for a breakdown of the company’s executive pay to ensure that no merger-related costs are charged back to ratepayers, which was a condition of the merger approval. Utility customers normally foot the bill for at least a portion of what executives earn.
The attorney general’s office said Friday that it is still reviewing the details. Northeast Utilities, meanwhile, said in its letter that it “is in compliance” with the stipulation that no merger-related costs be billed to ratepayers, and “will remain so.”
The company’s 11-page response to Coakley shows that in 2012, the top five executives at NStar earned a combined $14.7 million in compensation. May is now the chief executive of Northeast Utilities, and all but one of the other top five NStar executives hold posts at the combined company.
The same executives — May; chief financial officer James J. Judge; senior vice president of strategy, law, and policy Douglas S. Horan; electric distribution president Werner J. Schweiger; and Joseph R. Nolan, senior vice president of corporate relations — earned nearly $19 million combined in 2011.
In a statement, Northeast Utilities said the decrease in compensation can be attributed to a change in the estimated present value of pension payments that executives will receive at a later date — a number that fluctuates based on interest rates and market conditions.
For instance, the value of May’s pension and deferred compensation decreased $1.2 million from 2011 to 2012.
Horan, who was terminated as the merged company eliminated duplicate positions, also accounts for much of the drop, earning nearly $885,000 in 2012 compared with his 2011 compensation of $2.7 million. He did, however, receive a severance payment worth $5.3 million that was not included in the summary of his 2012 compensation. That payment was disclosed elsewhere in the letter to Coakley.
As for the other executives, in total, May’s 2012 compensation amounted to nearly $8 million, compared with $9.2 million the year before. Judge earned $3.1 million in 2012, but $3.3 million in 2011; Schweiger earned $1.7 million in 2012, but about $2.4 million in 2011; and Nolan earned $1.1 million in 2012, but $1.5 million in 2011.
While the company’s letter to Coakley sheds additional light on how NStar’s top employees and other executives were compensated last year, it does not make clear how much of that pay has been or will be recovered through rates charged to customers. That, the company said, is because of the complicated formulas used to determine what should be born by ratepayers.
“There’s no way to specifically detail how much of each of the executive’s compensation is recovered through rates,” the company said in a statement. “It’s much less than 100 percent [of the pay reported] no matter what.”