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The Serkes deal: Over the top

| Tuesday, June 27, 2006

Chief Financial Officer Jeffrey D. Serkes joined Allegheny Energy in July 2003. He leaves on July 7 because he wishes to return to his family in Connecticut.

Mr. Serkes was part of the team that, by our reckoning, saved the company from bankruptcy. When he came on board, the stock was trading under $10. Today a share fetches around $35.

In 2005, Mr. Serkes' compensation included a salary of $500,000 and a bonus of $730,000. In 2004, $500,000 and $775,000. In 2003, $230,769 and $625,000.

There is little doubt he took a risk by joining the company. What if it failed?

But it also is true that he was not poorly paid and received performance bonuses.

Serkes, 47, leaves with a package of stock options and stock units offered to entice him to join the company. They are now worth $34 million.

This is a lot of money for three years' work.

It's doubtful stockholders will complain very much considering the remarkable turnaround. But they should. After all, who is the owner here and who is the employee?

As Allegheny Energy is a public utility, the ratepayers might wonder if the next rate hike could have been less had the board not been so effusively generous with Serkes and other occupants of the executive suite.

There is a difference between just compensation and highwaymannery.

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