LIPA mulls boosting CEO pay up to 5% plus the rate of inflation
LIPA CEO Thomas Falcone on Aug. 3, 2021. Credit: Chris Ware
LIPA's chief executive, its employees and new recruits would receive new pay perks under programs expected to be rolled out this year and next.
A consulting group has outlined a new chief executive compensation plan that provides for a pay boost of up to 5% plus the rate of inflation, depending on performance and an analysis of his pay compared with industry peers.
In 2021, LIPA chief Tom Falcone received $335,732 in total compensation, according to an analysis provided by state Comptroller Thomas DiNapoli, with base salary of $311,121. The 2021 pay broke down to $308,260 in actual salary and $27,472 in other compensation, which included a payout of vacation time.
If LIPA's new CEO pay plan is approved by the board in coming months, LIPA will annually compare the CEO's pay package to that of other CEOs for similarly sized public power entities. If Falcone meets expectations and his pay is 10% below his peers, his pay would be increased by 3%, plus the rate of inflation. If his pay is found to be 15% below the peer group, he would get a bump of 5% plus the rate of inflation, according to the plan.
Meanwhile, LIPA already has approved a deferred-compensation plan for employees, executives and new recruits. That plan will set aside an amount equal to a percentage of their annual pay into a pretax fund accessible after three years. LIPA says the so-called 457(f) plan makes pay more at risk for performance and will help recruit and retain new talent. At present LIPA doesn't offer performance bonuses.
LIPA said it will pay $6,000 to set up the plan and $10,000 to administer it annually, but no cost estimate was given for funding the annual compensation awards.
"The competitive job market makes finding and retaining employees more challenging," said Barbara Ann Dillon, LIPA’s director of human resources. Without a deferred-compensation plan "our tools are limited …"
Arthur Abbate, a recently retired director of labor relations, personnel and safety for the Town of Islip, and a former LILCO and KeySpan director, called LIPA's plan for a deferred-compensation plan a "fantastic idea."
"It's good for recruitment," said Abbate. "The better a benefit package, the more apt you are to get people to come to work for you. You need talent."
As for the proposed CEO pay plan, Abbate said it only makes sense if it aligns with goals that address key customer issues, notably rate affordability.
"I think it’s fair provided there are some very clear goals up front that he needs to achieve and how he performed against those goals," Abbate said.
As Newsday has reported, three other LIPA executives had more in base salary than Falcone did last year. One of them, chief financial officer Tamela Monroe, who made $332,350, departed this summer.
Figures supplied by the comptroller show 52 of 72 LIPA employees in 2021 had annualized salary levels over $100,000. Six, including Falcone, made over $300,000 and 11 made between $200,000 and $300,000. Some of the top and mid-level employees have since departed, and LIPA's head count is now fewer than 70.
PSEG’s top officials, after years of refusing to release executive pay figures, this year relinquished the numbers following passage of a state law. They revealed that top executive pay ranged from $336,000 to just over $899,000. PSEG executives are eligible for bonuses.
In April, LIPA's board approved an 8% increase for Falcone for 2022 pay based on a review of his "outstanding" performance, with 6% tied to inflation and 2% to performance, LIPA said.
A survey conducted for LIPA's board found the average salary for chief executives of similarly sized public power utilities in 2021 was approximately $525,000. LIPA's CEO pay ranked 26th out of 27 in the survey, according to LIPA.
Falcone's total pay is around a third of that of former PSEG Long Island chief operating officer Daniel Eichhorn, who last year took home nearly $900,000 in pay and other compensation. PSEG operates the system under contract to LIPA.
Eichhorn retired earlier this year, following criticism of PSEG's performance during Tropical Storm Isaias, and the State Legislature recently formed a commission to study making LIPA a fully public power utility. PSEG's contract expires in 2025.
LIPA's chief executive, its employees and new recruits would receive new pay perks under programs expected to be rolled out this year and next.
A consulting group has outlined a new chief executive compensation plan that provides for a pay boost of up to 5% plus the rate of inflation, depending on performance and an analysis of his pay compared with industry peers.
In 2021, LIPA chief Tom Falcone received $335,732 in total compensation, according to an analysis provided by state Comptroller Thomas DiNapoli, with base salary of $311,121. The 2021 pay broke down to $308,260 in actual salary and $27,472 in other compensation, which included a payout of vacation time.
If LIPA's new CEO pay plan is approved by the board in coming months, LIPA will annually compare the CEO's pay package to that of other CEOs for similarly sized public power entities. If Falcone meets expectations and his pay is 10% below his peers, his pay would be increased by 3%, plus the rate of inflation. If his pay is found to be 15% below the peer group, he would get a bump of 5% plus the rate of inflation, according to the plan.
Meanwhile, LIPA already has approved a deferred-compensation plan for employees, executives and new recruits. That plan will set aside an amount equal to a percentage of their annual pay into a pretax fund accessible after three years. LIPA says the so-called 457(f) plan makes pay more at risk for performance and will help recruit and retain new talent. At present LIPA doesn't offer performance bonuses.
LIPA said it will pay $6,000 to set up the plan and $10,000 to administer it annually, but no cost estimate was given for funding the annual compensation awards.
"The competitive job market makes finding and retaining employees more challenging," said Barbara Ann Dillon, LIPA’s director of human resources. Without a deferred-compensation plan "our tools are limited …"
Arthur Abbate, a recently retired director of labor relations, personnel and safety for the Town of Islip, and a former LILCO and KeySpan director, called LIPA's plan for a deferred-compensation plan a "fantastic idea."
"It's good for recruitment," said Abbate. "The better a benefit package, the more apt you are to get people to come to work for you. You need talent."
As for the proposed CEO pay plan, Abbate said it only makes sense if it aligns with goals that address key customer issues, notably rate affordability.
"I think it’s fair provided there are some very clear goals up front that he needs to achieve and how he performed against those goals," Abbate said.
As Newsday has reported, three other LIPA executives had more in base salary than Falcone did last year. One of them, chief financial officer Tamela Monroe, who made $332,350, departed this summer.
Figures supplied by the comptroller show 52 of 72 LIPA employees in 2021 had annualized salary levels over $100,000. Six, including Falcone, made over $300,000 and 11 made between $200,000 and $300,000. Some of the top and mid-level employees have since departed, and LIPA's head count is now fewer than 70.
PSEG’s top officials, after years of refusing to release executive pay figures, this year relinquished the numbers following passage of a state law. They revealed that top executive pay ranged from $336,000 to just over $899,000. PSEG executives are eligible for bonuses.
In April, LIPA's board approved an 8% increase for Falcone for 2022 pay based on a review of his "outstanding" performance, with 6% tied to inflation and 2% to performance, LIPA said.
A survey conducted for LIPA's board found the average salary for chief executives of similarly sized public power utilities in 2021 was approximately $525,000. LIPA's CEO pay ranked 26th out of 27 in the survey, according to LIPA.
Falcone's total pay is around a third of that of former PSEG Long Island chief operating officer Daniel Eichhorn, who last year took home nearly $900,000 in pay and other compensation. PSEG operates the system under contract to LIPA.
Eichhorn retired earlier this year, following criticism of PSEG's performance during Tropical Storm Isaias, and the State Legislature recently formed a commission to study making LIPA a fully public power utility. PSEG's contract expires in 2025.
Mark Harrington, a Newsday reporter since 1999, covers energy, wineries, Indian affairs and fisheries.
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