Jeffry E. Sterba

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Jeffry E. Sterba was hired by American Water in August 2010 as president, CEO and board member, and received a $675,000 salary, a $200,000 signing bonus, and options to purchase 25,000 shares of the company. [1] Over the past three years he has received $8,311,925 in compensation, including $3,787,715 in 2012. [2]

Previously, Sterba worked in senior executive positions at PNM Resources (March 2000-March 2010), [3] an energy holding company based in Albuquerque, New Mexico. Sterba’s career at the company spanned over 30 years, with him beginning as an intern in 1997. [4]

While Sterba was chairman, president and CEO of PNM, the company was involved in litigation concerning the manipulation of energy prices during the 2001 energy crisis in California. California attorney general Bill Lockyer filed suit in 2005 against PNM and a Canadian company for alleged price fixing that cost Californians over $1 billion. [5] Lockyer alleged that “Enron-devised trading schemes used to inflate prices” constituted collusion. [6]

The case never went to trial in California courts because in 2006 Federal courts ruled that the Federal Energy Regulatory Commission held jurisdiction over electricity prices. [7] In 2005, PNM agreed to pay $1 million to end a federal investigation of its practices during the California energy crisis. [8]

In June 2006, Sterba was elected first vice chairman of the Edison Electric Institute, the energy industry’s largest trade group. [9] Sterba also chaired EEI’s CEO Climate Change Task Force. [9] The following year, EEI, set up a website [10] for the “Water Advocacy Coalition” to oppose the Clean Water Restoration Act in 2007, which was introduced by Sen. Russ Feingold to clarify which bodies of water are subject to federal regulation. In 2007, while Sterba was at the organization, EEI spent $10,200,000 in federal lobbying, [11]. and opposed even the Bush administration’s hesitant efforts to improve air quality standards.[12]

In April 2011, when the West Virginia Public Service Commission refused to permit ratepayers to pay for any portion of incentive bonuses and stock awards for American Water executives, holding that “current economic conditions do not justify ratepayers bearing this expense,” Sterba attacked the PSC’s decision at American Water’s annual meeting the following month, declaring that it was inappropriate for “shareholders to subsidize customers” and threatening to leave the state. [13]

Two weeks after the annual meeting, American Water announced it was laying off nearly 10% of the company’s workforce in West Virginia. This prompted a change.org petition campaign by the Utility Workers Union of America Local 537 demanding that Sterba stop the “union busting.” [14] After a protest to the PSC, the commission blocked the layoffs in December. [15] That year (2011) Sterba pulled down $3,111,138 in compensation from American Water, more than doubling his compensation from the previous year. [16]

Under Sterba’s leadership, American Water’s labor relations have sharply deteriorated. In January 2012, the NLRB issued a complaint accusing American Water of illegally cutting healthcare, retiree health and disability benefits for 3,500 workers in fifteen states across the U.S. [17] In October 2012, an administrative law judge issued a decision holding American Water responsible for the cutbacks and ordering the company to pay back pay. [18] In June 2013, the NLRB found that Pennsylvania American Water, a subsidiary of American Water, violated the National Labor Relations Act by threatening employees in two bargaining units for their legitimate refusal to cross union picket lines at its facilities. [19]


References

  1. American Water Works Company, SEC Form 8-K filing, , Exhibit 99.1 , August 17, 2010.
  2. American Water Works, Proxy Statements SEC filings, accessed October 24, 2013.
  3. Drug Week, "American Water Works Company, Inc. Names Jeff Sterba as President and Chief Executive Officer," , September 3, 2010. Accessed October 21, 2013 (sub required); Marquis Who’s Who, "Profile Detail—Jeffry E. Sterba," accessed October 21, 2013 (Sub required).
  4. Prospectus, "Subject Company, Western Resources, Inc," Public Service Company of New Mexico, (Rule 425 filing to SEC), March 2, 2001; also available at SEC accessed October 24, 2013.
  5. Los Angeles Times, "State Accuses PNM, Powerex of Collusion," May 19, 2005. Accessed October 21, 2013.
  6. Yuba.net, "Lockyer Files Lawsuit That Puts State's Fight Against Enron Games on New Path," May 19, 2005. Accessed October 21, 2013.
  7. Los Angeles Times, "Judge Tosses Out State Suit Over Power Crisis," April 28, 2006. Accessed October 21, 2013.
  8. Los Angeles Times, "PNM Agrees to Pay $1 Million to Settle Power-Trading Probe, July 8, 2005.
  9. 9.0 9.1 Edison Electric Institute press release June 21, 2006, linked on Duke Energy website. "Jim Rogers Elected EEI Chairman; Jeff Sterba and David Ratcliffe to Serve as Vice-Chairmen," Accessed October 21, 2013.
  10. WhoIs information found October 24, 2013.
  11. Center for Responsive Politics, “Edison Electric Institute," accessed October 24, 2013
  12. Juliet Eilperin, "EPA Cuts Soot Level Allowable Daily in Air: Industry and Activists Criticize New Rules," The Washington Post, September 22, 2006. Accessed October 24, 2013.
  13. "The Utility Worker", "UWUA Wins Protections in American Water Rate Cases," April/May/June 2011, pp. 9, 20. Accessed October 24, 2013.
  14. Jeff Sterba: Stop Your Attacks on Working Families!," Change.org, accessed October 24, 2013.
  15. The Utility Worker, "West Virginia PSC Blocks American Water Cutbacks," October/November/December 2011. Accessed October 24, 2013.
  16. American Water Works, 2012 Proxy Statement, p. 45. Accessed October 24, 2013.
  17. "American Water Labor Relations in the Tank," accessed October 24, 2013.
  18. AmericanWaterAlert.net, "National Labor Relations Board ALJ Holds American Water Illegally Cut Employee Benefits," accessed October 24, 2013.
  19. UWUA News Alert!"Summary of NLRB Decisions for Week of June 24-28, 2013," July 3, 2013. Accessed October 24, 2013; NLRB decision June 28, 2013.