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Pepco OKs big lawyer pay raise, severance

Legal shake-up amid rate pleas

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Amid a looming labor crisis and push for rate increases, the utility serving the nation's capital has given a big pay raise to the newly hired top lawyer and a $700,000 severance deal that will keep the company's longtime general counsel around for years in a newly created consultant's job, regulatory filings show.

The legal shake-up came just weeks ago as Pepco sought to convince regulators that it needs more money from D.C. ratepayers. The utility was widely criticized after many residents went without electricity for the better part of a week after severe storms this summer.

The D.C. Public Service Commission last month granted more than half of the increase sought, citing in part a $14 million "income deficiency." Days earlier, the company filed forms with the Securities and Exchange Commission detailing generous executive compensation arrangements for its incoming and outgoing top legal officers.

Pepco general counsel Kirk Emge is retiring, but not until April 1. That is when he will receive a severance payment of more than $700,000.

Mr. Emge will remain with the company after his retirement for up to three years — until the spring of 2016 — working as a consultant and earning $200 per hour, according to regulatory filings.

While Mr. Emge earned a base salary of $400,000, his replacement, Kevin C. Fitzgerald, will receive $550,000 per year — a nearly 40 percent increase compared with his predecessor.

In addition, Mr. Fitzgerald is eligible for additional compensation under an executive incentive compensation plan that could be worth up to 60 percent of his base salary, and a separate long-term incentive plan award worth up to 125 percent of his base pay.

According to the company, Mr. Fitzgerald, who had been a partner at the Troutman Sanders law firm, where he led the energy practice, became general counsel on Sept. 17, while Mr. Emge remains at the company transitioning to the role of senior vice president and special counsel to the chief executive officer.

Pepco critics say such generous pay arrangements don't square with the company's push for rate hikes and its performance during widespread power outages.

"I'm opposed to it, no doubt about it," said Gerald Thompson, a ratepayer who lives in Northwest. "Their performance just doesn't justify it."

James Adams, communications director for Our DC, an advocacy group that has protested the company, said the arrangement also means that Mr. Fitzgerald and Mr. Emge will continue working together, earning full-time pay, until April 2013, with the company spending well over $200,000.

"That could be four jobs with a good stable income," he said. "They're lavishing money on executives and then they cry poor when it comes to creating service improvements. They can't have it both ways."

Top attorneys aren't the only ones benefiting. This summer, The Washington Times reported that while Pepco said the company's chief executive officer, Joseph Rigby, wasn't getting a salary increase because of "customer reliability issues," he still managed to double his overall compensation as a result of a special supplemental executive retirement plan and other perks.

In an SEC filing, the company said it was freezing Mr. Rigby's salary at $880,000 because of customer reliability issues, but regulatory forms also showed his overall compensation for 2011 came to $7.16 million compared with less than $4 million in 2010 and 2009.

In addition, he signed an employment deal for three years in December, increasing his base salary by nearly 12 percent.

Pepco's board members, who approved the executive pay deal, received more than $100,000 in compensation in 2011 along with corporate perks such as free downtown parking and tickets to sporting events, according to SEC filings.

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