Corporate greed at Aqua America – one of the largest for-profit water utilities in the U.S. – has come under increasing scrutiny by the UWUA, especially concerning special retirement benefits bestowed on top executives even while management has slashed pension benefits for hourly workers.
The UWUA called out management’s hypocrisy on the issue at Aqua’s annual meeting on May 8 near Philadelphia. UWUA Senior National Representative Bernie LaBelle and Mark Brooks, special counsel to the UWUA National President, attended the meeting to urge shareholders to vote in favor of a shareholder reform proposal sponsored by the UWUA.
The UWUA proposal urged the company’s Board of Directors to submit any future grant of extraordinary retirement benefits for top executives to a vote of the shareholders. The UWUA sharply criticized the directors from the floor of the meeting for opposing the Union’s common sense proposal.
“What could be more fair than asking the shareholders – the company’s owners – if we think that special, lucrative retirement packages for top executives, is a wise use of shareholder resources?” Brooks argued.
UWUA reform proposal wins strong vote
The UWUA’s proposal won 37% of shareholders’ votes – a strong showing for any shareholder proposal submitted for the first year. The UWUA filed the proposal under a U.S. Securities and Exchange Commission rule allowing any shareholder owning at least $2,000 in a company’s shares to submit a proposal for a vote by shareholders in management’s proxy statement.
In the weeks leading up to Aqua’s annual meeting, the UWUA issued a series of communications urging shareholders to vote in favor of the proposal. In a letter to major institutional investors, UWUA pointed out that Aqua maintains two different supplemental plans providing extraordinary retirement benefits for top executives that are not generally available to all employees.
One of those plans provides special retirement benefits only for Aqua CEO Nicholas DeBenedictis. The value of DeBenedictis’ total retirement benefits as of the end of 2014 was more than $7.5 million, including $4.7 million from the two supplemental executive plans.
Aqua hypocrisy under fire
Ironically, Aqua notified all hourly employees represented by UWUA last year that it was freezing workers’ benefits under the company’s defined benefit pension plan, substituting instead an inferior defined contribution 401K plan. Aqua also froze executives’ benefits under the defined benefit plan but – in a stunning act of corporate arrogance – immediately restored those same benefits for top executives by adding them into one of the special supplemental plans.
“Aqua’s misguided priorities are hard to understand,” observed LaBelle. “The corporate directors have rewarded top management with even more cushy pension deals, while these same executives are destroying any retirement security for hourly utility workers and their families.”
Two weeks before the annual meeting, influential proxy voting advisory firm Institutional Shareholder Services issued a report recommending that Aqua shareholders vote in favor of the UWUA proposal. The ISS noted in its report that Aqua’s supplemental executive retirement benefits “are not linked to company or executive performance and… increasingly stand out as a substantial non-performance-based pay element for executives who receive them.” The UWUA expects to build on the strong showing from Aqua’s annual meeting this year by submitting its reform proposal for future shareholder meetings.
Meanwhile, labor relations at Aqua have also taken a turn for the worse in recent months, with the company escalating its use of contractors to perform bargaining unit work. In one case in Shamokin, PA., Aqua laid off UWUA members after shifting their work to outside contractors. The UWUA is challenging the arbitrary action before the National Labor Relations Board.