As someone who has worked in New York City for more than two decades, I’ve seen more than my share of street-wise con men and their ongoing hustles on tourists.
My personal favorite is the Three-Card Monte game, where an unsuspecting couple watches a game in which a lucky player is on an incredible roll, pocketing stacks upon stacks of dollar bills.
When it’s their turn, somehow Lady Luck goes MIA and they find their wallets and purses a bit lighter upon their return to the hotel.
As insensitive as it sounds, I don’t have the heart to warn them that the winning player is most likely the dealer’s relative.
Unfortunately, a much larger con has been perpetrated on the residents of the Big Apple and neighboring suburbs, courtesy of its utility provider, Con Edison.
For years, this conglomerate has been a living testament to the fact that poor service quality and rate increases could actually travel in opposite directions. Previously, that honor in my humble opinion had gone to Cablevision, owners of Madison Square Garden as well as its namesake cable television service.
But back to the subject at hand.
Recently, I saw where the utility has come under fire for an exorbitant executive compensation package awarded to its chairman, a subject I’m sure has struck a nerve with many of you.
So I decided to try and shed a bit of light on the subject – pun intended.
According to filings, Con Ed chairman and chief executive Kevin Burke earned a compensation package of just over $5.5 million in FY 2007, a figure that included a seven-figure bonus.
Okay, to be fair, it’s not in the same stratosphere as probably 90 percent of hedge fund managers and other Wall Street execs, but there’s more.
Like many bonus programs, Burke’s package was designed to be performance-based. Fair enough, but it’s at this point that Con Ed customers should begin screaming.
First off, Con Edison’s stock price is trawling anywhere from 20 percent to 25 percent below where it was last year.
Again to be fair, one could point to the fact that a lot of blue chips and utilities current trail in year-over-year comparisons, especially given current market conditions.
But wait, there’s more!
For those in parts of the country not blessed with Con Ed as your utility provider, let me take you back to the year 2006, when the borough of Queens was hit with a 10-day power outage in the midst of a heat wave. The loss of power affected nearly 200,000 residents and ultimately resulted in the loss of millions of dollars for many of the area’s small businesses – particularly restaurants and grocery stores which lost all their perishable inventories — not to mention public transit mayhem in the manner of massive delays and cancellations.
After a lot of finger pointing and stalling, it was determined the root cause of the problem was the company’s decision to continue supplying power through a maze of 22 feeder cables, even after 10 of them had already failed, thus prompting an overload of the remaining 12.
For Burke’s and his company’s “performance,” during the Queens fiasco, Con Ed was fined $18 million by the Public Service Commission.
And Con Ed’s recompense to those affected? Credits of several hundred dollars.
The kicker came last summer when a massive steam pipe explosion in midtown resulted in one death and millions in damages to surrounding buildings. Again it was determined that the utility should have been aware of the condition/age of the pipes.
And if that weren’t enough, Con Ed recently instituted a recent rate hike of nearly 5 percent, claiming it needed the increase to maintain its service levels.
Trust me, I can’t make this stuff up.
To be clear, I’m not against a performance-based compensation/bonus system, provided that each supports the other. Unfortunately, too often, as in this case, it couldn’t hail a cab to get there.
That’s when the rank and file have to force companies to shed a lot more light on the their executive pay packages.
Once again, pun intended.
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