Utility executives make good money. But spread over countless kilowatthours of electricity, cubic feet of gas, gallons of water and minutes of telephone time, those dollars make little difference in our bills. So in utility rate cases, we rarely address executive pay.
This is a mistake. We should care about executive compensation—not about its size, but its shape. "The pay of many C.E.O.s is tied to factors like short-term earnings, rather than longer-term metrics, which naturally fosters myopia." In the utility sector too, compensation design can affect executive decisions, in ways that undermine a commission's goals.