Connecticut Attorney General's Office

Press Release

Attorney General To CNG/SCG: Justify 70 Layoffs To Save $5 Million After Spending More Than $21 Million On One Executive

December 3, 2009

Attorney General Richard Blumenthal, at a public hearing today, questioned how Connecticut Natural Gas (CNG) and Southern Connecticut Gas (SCG) could justify 67 layoffs to save $5 million -- jeopardizing public safety -- after providing more than $21 million to one retired executive.

"Corporate greed is way too common -- but here it sacrifices safe and reliable service in conflict with a clear legal obligation," Blumenthal said. "This $21.8 million paid to a single top executive -- for leaving -- is four times the amount necessary to keep all 67 employees essential to safe and reliable service."

Iberdrola of Spain, the parent company of CNG and SCG, late last year provided a $21.8 million severance package to Wesley W. von Schack who headed Energy East before Iberdrola acquired the company.

According to published reports, this huge severance, after only 10 years with the company, is in addition to $48.5 million that von Schack collected after the buyout, and another $5.9 million collected for his unvested stock options.

Blumenthal said, "Even after Iberdrola provided this super extravagant golden parachute, its subsidiaries -- CNG and SCG -- are jettisoning workers and consumers into thin air to save barely $5 million. These essential service providers are the first responders who repair dangerous gas leaks in homes, and restore heat in the coldest months.

"This bloated platinum-plated parachute makes the CNG and SCG layoffs officially indefensible and reprehensible -- blowing apart any justification for jeopardizing public safety by firing first responders," Blumenthal said. "At a public hearing today, I asked CNG and SCG the rhetorical question: Explain this huge severance payment when you're pushing first responders out the door.

"This giant golden parachute showers one executive with a windfall, while shoving 67 people out the door. CNG and SCG cannot fatten profits by sacrificing service and safety. These companies have a clear legal public service responsibility, and must be held accountable.

"The DPUC has heeded our call, upholding its order to block layoffs at CNG and SCG while it investigates the serious public safety ramifications of layoffs. This golden parachute should be revolting as it is revealing that layoffs are not only perilous, but pointless as the CNG and SCG parent company pays tens of millions to a single executive."