Are we rubes?

Does Golden State Water think we are rubes? Their mailer this week(one of a flurry) warns us that, if Claremont buys GSW’s water distribution system, we will become the prisoners of Wall Street’s and its rapacious band of robber barons. And yet this same company carries enough Wall Street debt in bonds to finance a fleet of aircraft carriers(see the balance sheet of Golden State’s mother ship, American Water, traded as AWK on the NYSE and headquartered in placid New Jersey.)

Now, how is it okay for AWK to use the debt markets, but not Claremont? Or maybe it’s this: a last minute ad blitz rigged for rubes who cannot read a balance sheet?

The classrooms where Claremont students learn has air conditioning purchased through the bond market. It’s pretty clear how bond markets work, just as it is clear that last-minute campaigns can be artful in deceit. I asked myself if GWS/AWK did not mistake us for Fresno, but then I read how those good folks own their water distribution system. 

Of greater concern than bond markets is the use by GSW/AWK of management stock options. The execs at American Water, like most, get rich by keeping up the price of their stock and then cashing out. Case in point, “Jeffrey Sterba was president and CEO of American Water Works Company, Inc. from August 2010 to May 2014. In 2012, Sterba’s annual salary was $732,695. He also received $1,874,990 in stock awards and options, as well as $1,180,030 in other compensation, resulting in total compensation of $3,787,715.”(sourcewatch.org)

Sourcewatch also notes that AWK is facing a prairie fire of lawsuits and rebelling municipalities. What will this company do if it gets judgments against it and has to scramble to keep up the price of management stock options? They have only one source of cash, we ratepayers, us.

So you gotta ask yourself a question. Before they give up their shot at personal wealth, will the management squeeze the ratepayers or not?

Richard O'Neill