It’s no secret that Superstorm Sandy created a giant mess. We experienced the damage first-hand when a very large tree fell on footnoted world-headquarters shortly after the storm began. Like many people in Westchester, it took Consolidated Edison days to restore power and we had to camp out with friends to stay warm. When the power finally came back on, the stench from the rotten food in our basement freezer was beyond words.
But life moves on and compared to many others, we were fortunate. In fact, we pretty much forgot about Superstorm Sandy until we read the proxy statement that Con Ed filed last week. There on pg. 48, in a description about the bonuses that Con Ed’s top executives received in 2012 was this:
After its assessment, the Committee exercised its discretion to increase the calculated award for the officers of Con Edison of New York, including the chief executive officer, the chief financial officer, the president of Con Edison of New York and the general counsel in recognition of their efforts in guiding Con Edison of New York though significant challenges encountered in 2012. 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 month-long work stoppage.
Now clearly Sandy was a big challenge for Con Ed. The company even documents some of this in this photo set on Flickr. But here’s where things start to get a bit weird. While the company provides details on why the bonuses — $1.8 million for CEO Kevin Burke, between $420K and $876K for the other four executives — were necessary, it fails to mention that under the “annual incentive plan” Burke and the others received essentially the same bonus in 2011 and 2010, years when things were a bit more normal. Indeed, a quick check of the prior two proxies doesn’t provide any additional reasoning behind those bonuses. In both of those years, Burke received $1.8 million.
But, wait, it gets even more confusing. If you turn to the summary compensation chart on pg. 55 of the filing, it says that Burke’s bonus in 2012 was mere $315,400. The footnote attached to that disclosure is essentially a carbon copy of the footnote we excerpted above. What we can’t figure out is whether Burke received $1.8 million plus an additional $315K for his work in navigating Sandy. Of course, if that was the case, why wouldn’t the number in the bonus column be $2.1 million instead? Perhaps, more importantly, if Con Ed felt the need to justify the “annual incentive” with its list of unusual events, why has it handed out the same $1.8 million to Burke for each of the past three years when things were more typical?
We were only without power for three days, but we know a few folks in Chappaqua, Bedford and North Salem who were out for a week or more. We’d love to know what they think about whether the annual incentives handed out to Burke et, al this year were actually earned, or just handed out as they have been the past few years.