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NU-NStar Executives Make Massive Money, Layoff Employees

UPDATE at 1:39 pm: I emailed a copy of this column to Al Lara, the NU Spokesman shortly after publishing it. He sent me an email back stating “Ken’s a listed columnist and I don’t think the CAPITOL REPORT 2012® will resist using it.” My hunch that this was not for my eyes was confirmed when Mr. Lara wrote me again asking “Hi Ken.  I don’t suppose you can spare me the embarassment of this observation?

Sorry Al, I’d love to help you here, but there are hundreds of people in serious pain today because of layoff notices, and since NU had no quarter on them or their families, we shall treat the corporation with the same respect (or lack thereof).

When the American proletariat finally revolts over the growing wealth inequality, it won’t be with just pitchforks.

And when poor Americans do take to the streets looking for bread, those eating cake can look to data points like the Northeast Utilities-NStar merger as another inexorable step towards the destruction of the middle class, discontent and revolution.

After the merger, NU President Charles Shivery retired with more than $31 million in compensation. This is confirmed in federal filings, and in November 2011, NU told the Hartford Courant it was industry standard. NU-NStar spokesman Al Lara says $32 million is incorrect. And NU-NStar is quoted in the Courant in May 2012 as wanting to layoff no one, and that any job cuts cuts would come from attrition.

Well, Shivery is fat with fabulous payouts, and the layoffs have begun. Dan Haar’s column in the Courant on Tuesday, September 10, 2012 quoted anonymous, crying employees of NU who feared the scope of the layoffs.

Haar did not cite the no-layoff promise, and instead noted the company’s pre-merger April 2012 suggestions that layoffs would be “fair and equitable.”  It’s cute, but non-existent, particularly when the President is walking away with at least 100 well-paying jobs in bonus money.

I commented on the bottom of Haar’s story: “If the state rejected this merger, it would have saved these jobs. Way to protect the people over corporate for profit interests…” Yes, Gov. Malloy and his pro-business idiots bear responsibility for these layoffs.

Late Tuesday night, I received an anonymous email from an NU worker, which is printed below. I sent an email to Northeast Utilities’ spokesman Al Lara at 8:09 am Wednesday, September 12, 2012 seeking verification of various facts contained therein.

I told Lara I had a 1 p.m. deadline, and he promised to do his best to meet it.  I am inclined to believe much of what the anonymous NU employee wrote, given that certain facts, like Shivery’s $32 million golden parachute, are verifiable. I did not correct this email for grammar or spelling.

“I am a current employee at NU. Thank you for your comment in the Hartford Courant today.  Many of us are very frightened to write anything.  I am writing to you under an alias because I am afraid to loose my job.  I tried to comment anonymously on the Hartford Courant site, but it wanted to authenticate  Facebook. I am sure there are many of us who are afraid to comment in fear of retaliation.  I would like to share my perspective as an employee (and I speak for the majority).”

“Like many employees, I have worked at NU for 20+ years.  It is (was) a good company who cared about  customers.  We worked hard last October – many of us 60-80 hours a week without having power ourselves while watching the Governor stand on stage bashing our company wondering where our CEO Chuck Shivery was – we didn’t hear a peep. We all conjected that Chuck didn’t want to risk his $32 million merger walk away package, so Jeff Butler took the hit.”

“Employees were told to work hard to make the merger happen – to make the company bigger, stronger and better for everyone – employees and customers!  Capitalize on the synergies!!  It was going to be a ‘Merger of Equals’.  Many of us happily and quickly supplied all the information needed to make it happen.”

“For a year we were told, over and over there would not be any layoffs because we would reach the right numbers – over five years – from natural attrition….”

“‘NU and NSTAR expect to make all job reductions through attrition and not layoffs, according to the agreement, which was detailed Tuesday afternoon at a news conference called by Malloy, Jepsen and Consumer Counsel Elin Swanson Katz.’”

“Customer’s are were suppose to realize a savings of $16:  ‘Under the terms of the merger, Connecticut will receive a $25 million rate credit, which will work out to about $16 per customer.’”

“The merger went through in April with top Executive VPs receiving millions from this merger. Chuck Shivery made $32 million, and Tom May a mere $9 million and more to come as the new CEO.”

“A month or two after the merger happened, there were rumors that there might be layoffs.  I can’t find one person who is clear exactly when or why this happened.  There was never an internal formal (global) announcement.  We just heard about it via the rumor mill until Q&As started appearing in our ‘Integration Update’ internal communication.  And throughout the entire integration there were only a few of them – all communications were taken over (and limited) once we merged.”

“It use to be a collaborative, transparent company. But since NSTAR has taken us over, it has become a command & control hierarchy with no communication.  We still don’t have an internal structure, and continuing layoffs are imminent – although they can’t quite seem to keep dates.”

“Unlike what was reported in the HC article today, most people are not given options for other jobs.”

“Meanwhile, back at 56P (56 Prospect where the Execs live), we understand from several reliable sources that Chuck Shivery has spent close to a quarter million dollars updating three conference rooms into his new office area where he spends one day a week until he retires in less than a year – while people are being layed off.  The one’s who helped make the merger happen.  Seriously?”

“I am hoping you can get this (or some parts of it) published or to someone who can see the injustice.  I know most people love to hate the utilities, but it’s not about that. It’s about the corporate executive greed, lack of communications, and lying. Employees understand businesses have to make concessions, but not when someone walks away with 32 Million dollars and we have to hear how millionaire Tom May ‘grew up a poor kid on the streets of Hartford’ while many of us grew up poor as well, but now will end up scraping by in our old age.”

I asked Al Lara of NU to confirm specifics of the email above, like $250,000 for a conference room, for copies of the “Integration Updates” and to describe what NU was doing to protect the free speech rights of its employees.  His response did not answer these questions, and denied Shivery and May’s pay specifically.

Here is Lara’s response, in unedited corporate speak:

“Based on your questions, we are a bit concerned that you may not have the full picture of the merger process, employee and public communications, or the 18-month regulatory review that took place.   We’ve been clear with our employees, regulators and the media from the start that the merger of our two previously stand-alone companies would create redundancies in corporate processes that support our primary service delivery functions.”

“We are in the process of designing the most optimal organization to serve our customers. As we do that, we are identifying opportunities to streamline our company and achieve the savings anticipated from our merger.  This is an on-going process, which will include the elimination of redundant positions.”

“In April of 2011, we conducted a merger integration net benefits analysis which showed that approximately 350 redundant corporate positions would be eliminated through reorganization (under four percent of our 9-thousand employees).   We issued a press release about this analysis and referred to it frequently throughout the merger process.  The merger agreements with regulators are based on the net benefits analysis, which was reviewed and accepted by both Connecticut and Massachusetts.  Merger savings were distributed to customers now and in the future on the basis of the savings shown in the net benefit analysis.”

“We value our more than 9,000 employees and their contribution to building our combined company.  In recent years of economic difficulties in our region, we have prided ourselves as consistent employers and contributors to our communities.  We consistently communicate with our employees about the merger process as well as the integration.  These communications have repeatedly included updates about how the new organization will be designed and run.  From the first update to the one issued most recently, we have stated that as we work to streamline our company, we will be eliminating redundant positions and duplicative operations.”

“We owe it to our customers to be the most efficient company we can and address redundancies resulting from the merger.  It has always been our intent to minimize the impact for our hardworking employees.  We remain committed to achieving these staffing changes without broad terminations of whole departments or large groups of employees. And in addition to savings on the labor side, we are maintaining only one Board of Trustees, one auditing firm and fewer insurance carriers; we are also streamlining our vendors, printing and other business expenses and seeking technology savings.”

“As for questions about executive compensation, all of our executive compensation is reported in our filings with the SEC, but I can tell you that the numbers you have shared are incorrect.”

“Mr. Shivery received no payout as a result of the merger. Upon the completion of the merger, Mr. Shivery retired as an active employee of the company and assumed the role of non-executive Chairman of the Board of Trustees. As a result of his retirement, and not as a result of the merger, Mr. Shivery is entitled to receive compensation that he already had earned during his tenure as CEO and which he is entitled to receive upon retirement, including his pension, deferred compensation and other compensation that he is entitled to receive.  Mr. Shivery received no change in control payments whatsoever.”

“As a result of the merger, Mr. May became entitled to receive $3.2M of value in NU common shares, representing those NSTAR common shares that had been granted to Mr. May prior to the announcement of the NU/NSTAR merger. Mr. May did not receive any retention grants or any other compensation resulting from the merger.”

Hey Al, since the revolution will not be televised, I’ll just see you there.

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