Connecticut Attorney General's Office
Press Release
Attorney General Says Exec Compensation From Consumer Pockets Should Be Capped
February 3, 2009
If approved, this legislation could protect Connecticut utility ratepayers from paying tens of millions of dollars in excessive executive compensation every year.
Chief executive officers alone earn millions of dollars. For example, in the fiscal year that ended December 2007, Energy East (parent company of Connecticut Natural Gas and Southern Connecticut Gas Company) CEO Wesley von Shack received $10.24 million in total compensation; Northeast Utilities CEO Charles W. Shivery received $7.19 million; and United Illuminating CEO James Torgerson received $1.78 million.
Dozens more executives earn far more -- collectively tens of millions -- than ratepayers should have to pay.
The legislation sets the maximum compensation of any employee, officer or director of a water, natural gas, electricity and other utility paid by ratepayers as twice the governor's salary, which is declared by statute.
Currently, the Governor is paid $150,000, so the maximum individual compensation out of ratepayers' pockets would be $300,000 -- far less than what consumers now pay for many executives.
Blumenthal said the salaries paid to utility company executives are extraordinary. Excessive executive compensation beyond the set limit, while permissible, should be paid by shareholders and not ratepayers.
"A culture of excess executive compensation -- if not ended -- should at least be barred as a burden on ratepayers," Blumenthal said. "If utilities wish to pay their executives extraordinary and excessive amounts, shareholders should foot the bill. I fought hard for the DPUC to require that utility companies disclose, clearly and conspicuously, all compensation paid to their executives. This hard-fought transparency has revealed slates of highly paid officers -- compensation that continues to grow, despite an economy forcing ratepayers out of homes and jobs.
"I have consistently and strenuously opposed imposing on ratepayers the high cost of executive salaries. Unfortunately, the DPUC has failed to heed my pleas. Currently, executives at some of the utilities are paid in the multi-millions of dollars."
Utilities could pay a higher amount, but any amount over $300,000 would be paid by shareholders. The legislation would include all compensation, not simply salaries, and potentially spare utility consumers millions of dollars.