I don’t know whether to call it communism or crony capitalism . . .

by Andrew Gelman on April 26, 2013 · 15 comments

in Interest Groups

prisoner

. . . but either way it’s pretty ugly:

Last year was undoubtedly a challenging one for Consolidated Edison. There were heat waves and storms, a monthlong lockout of its unionized workers and the devastating effects of Hurricane Sandy. The response to the hurricane from Con Edison and other utilities led Gov. Andrew M. Cuomo to appoint a commission to investigate “the failure of utility performance” last year and to threaten to revoke their franchises.

But the utility’s directors had a much different appraisal: They gave Con Ed’s top executives more than $600,000 in extra bonuses for “exemplary” performance in 2012. . . . The discretionary payouts came on top of the annual bonuses the executives received. Kevin M. Burke, the company’s chairman and chief executive, got an additional $315,000, taking his total pay for the year to $7.4 million . . .

What gets me is this bit:

“In our judgment, the company performed in exemplary fashion,” the committee chairman, George Campbell Jr., said.

These executives are already being paid the big bucks. They’re supposed to behave in exemplary fashion, that’s what they’re being paid to do already.

Also, I hate when people tell untruths:

Mr. Campbell . . . declined to discuss how the directors arrived at their decision to give an additional 20 percent in bonus money to the senior executives. He said the reasoning was “spelled out in great detail” in the proxy statement.

But the 93-page document includes just two brief mentions of the extra payouts for “guiding Con Edison of New York through significant challenges” last year.

“These challenges included a series of extreme weather events including heat waves, a nor’easter and Superstorm Sandy, the most destructive storm in the history of the company’s service area, and a monthlong work stoppage,” it says.

I can’t say for sure that Campbell was lying. To lie is to knowingly tell an untruth. It’s possible that he didn’t actually read the proxy statement. Maybe, for example, he told whoever was writing that statement to “spell out in great detail” the reasoning behind the bonuses, but then the proxy-statement-writer didn’t do the job. No bonus for that guy, I’m sure!

And some background:

Con Edison’s executive-pay practices had already earned the company low marks from monitors of corporate boards. GMI Ratings gave the company a grade of “D,” citing it for, among other flaws, having over half of its directors on the board for more than 10 years and three of them for two decades.

{ 15 comments }

Comments on this entry are closed.

Previous post:

Next post: