"New York -- Even as he was leading one of the most troubled utility companies in the United States, William J. Catacosinos was working on another task: laying the foundation for a lucrative departure from the utility, Long Island Lighting Co.
"The fruits of that labor emerged last week, when it was disclosed that Catacosinos, 68, had received a $42 million payment as a result of New York state's partial takeover of the utility. Gov. George Pataki called the payments to Catacosinos and other top LILCO executives 'disgraceful,' 'outrageous' and, above all, 'secret,' and ordered an investigation.
"In fact, many provisions leading to the payments were included in public filings by LILCO with the Securities and Exchange Commission over the years. But those documents included no specific amounts that foreshadowed the $42 million payment, and the provisions were so complicated and subject to interpretation that state officials and others professed astonishment at learning the figure.
"While $42 million may appear staggeringly high, experts on executive compensation said packages in the tens of millions of dollars are by no means unheard of these days for top executives. Lucrative stock options, big bonuses and carefully crafted 'golden parachutes' have become standard for the leaders of many large companies.
"And by far the biggest chunk of Catacosinos' package, $37 million, represents a lump-sum payment of pension benefits that under other circumstances might have been spread out over many years.
"But Catacosinos' deal was unusual in some important ways, several experts said. His pay was above average for an executive in the utility industry, and it rose sharply even as LILCO's shareholders saw only modest long-term returns and as ratepayers were saddled with huge bills. His contract language was written to peg his pension to his most lucrative single year with the company, rather than the average of pay over several years that other companies often use.
"'It's hard for me to recall ever seeing a set of contractual pay arrangements that were so stacked in favor of the executive and against shareholders,' said Graef Crystal, editor of the Crystal Report, a newsletter on executive compensation. 'Everything has been set up to favor him.'
"Critics of Catacosinos even question whether the state takeover of LILCO should be considered a 'change of control' that would trigger any special payments to him. After all, they say, he continues to work as chief executive at Marketspan, the company created by a partial takeover of LILCO's electrical service by the state through the Long Island Power Authority and merging LILCO's remaining divisions with the Brooklyn Union Gas holding company. "
By the way, 25 of Catacosinos fellow LILCO executives -- bold visionaries all, meriting due reward, I'm sure -- shared a "special payment" pot totaling $25 million due to this "change of control."
> ----------
> From: Jordan Hayes[SMTP:jmhayes at j-o-r-d-a-n.com]
> Sent: Wednesday, June 10, 1998 6:24 PM
> To: lbo-talk at lists.panix.com
> Subject: Re: US energy bills (was Re: Nader)
>
> Doug Henwood wrote:
>
> > U.S. energy bills aren't "high" by any stretch of the imagination.
>
> Well, they are higher than they should be, for all the normal
> reasons (plus the bungled attempt to build safe, efficient, cheap
> nuclear plants :-), so they seem to be a decent anti-monopoly
> target (moreso, I think, than Microsoft or Intel); but in California,
> we're seeing what deregulation of the energy industry really means:
> you get a shell game about who is ripping you off, instead of a
> single target like PG&E that the SF Guardian can keep tabs on.
>
> /jordan
>