BANGOR – Bangor Hydro-Electric Co. is undergoing a management shake-up that today seems like a surprise but in actuality was part of the plan when the utility was purchased by Emera Inc. of Nova Scotia last October.

Despite pre-merger documents that say employees were to be “largely unaffected” by the deal, two of five managers are on their way out and the company is cutting its 425-person work force by up to half.

The executives are not being fired but are leaving with incentives of hundreds of thousands of dollars in buyout and retirement packages that were outlined in a September 2000 proxy statement to shareholders.

The employees, however, were assured before the merger that their jobs were not in danger and that staff levels were expected to grow once the deal was done. Many received an e-mail late last week stating that they will receive two weeks of pay for every year of employment.

“Although I expect Bangor Hydro’s utility operations to become more efficient as a result of the merger, the prospect of the growth of the business should offer new employment opportunities for Bangor Hydro people,” said Carroll Lee, then vice president and chief operating officer, on Aug. 4, 2000.

“This, as well as the fact that Bangor Hydro becomes part of a much larger organization as a result of the merger, suggests that employees will have opportunities for growth and advancement in the future,” he added.

Besides the workers, regulators and shareholders were told that job cuts would be minimal if they happened at all. In September 2000, Bangor Hydro sent stockholders a copy of the merger agreement and asked them to approve it. The proxy read, “operations and employment … are expected to be largely unaffected by the merger.”

The shareholders approved the merger in October 2000.

Lee, now the utility’s outgoing president, said he stands behind his statements. There was no way to predict two years ago what today’s regulatory and energy environments would be like, he said.

“Sometimes it’s hard to predict the future I think,” Lee said.

Lee is one of two top executives who have given notice in the last couple of weeks. Three more officers should be giving notice in the next few weeks, he said.

According to the proxy statement, Lee and the other four officers knew their jobs were temporary after the merger. For almost two years, since the merger was announced in June 2000, the executives have been holding the title of “initial officers.”

“All [initial] officers will hold their positions until their respective successors are duly elected or appointed and qualified,” according to the proxy statement.

Lee became president once the merger was completed last October, replacing Robert S. Briggs, who now serves on Emera’s board of directors. Two weeks ago, Lee announced he would be retiring by the beginning of the summer.

On Friday, Frederick Samp, vice president of finance and law, said he would be leaving effective April 20. Samp, a 17-year company veteran, said it was his choice to leave.

“The biggest reason, really, is the reorganization that’s going on,” Samp said Monday, adding that it’s not unusual for financial services to be taken over by a parent company after a merger.

The executives’ departures come as Emera undertakes a major restructuring of the utility’s operations and determines how many people are going to staff each division.

On March 25, Emera distributed early retirement packages to 71 people and told the employees they have until the end of April to decide whether to accept them. Two days later, Emera released organizational charts that outlined Bangor Hydro’s new departments and the number of employees that will be staffing each one. Excluding the business services division, the company expects to have 210 positions. The new business services division includes customer service, but the number of customer services jobs is included in the 210 positions.

The business services division will include human resources, billing, information technology and legal departments. They currently employ between 60 and 70 people, Lee said.

Seventy-nine union workers, including 39 linemen, were notified that they would be laid off by June 1. Up to 40 of the union employees, though, will be offered jobs in a new subsidiary being set up by Emera. Bangor Line will be under contract with Bangor Hydro to restore electricity service after storms but will seek other work from businesses, such as pole placement and line connections.

According to Lee, the severance package offered employees includes two weeks of pay for every year of employment, a continuation of health care benefits for a period of time, plus job retraining and other unemployment benefits.

The 2000 proxy statement, which outlined severance packages for the executive officers, offered a payment of twice the average of their annual salary and bonuses for the last three years, plus retirement, health insurance and other benefits. Last year’s salary includes bonuses paid to the executives for completing the merger with Emera.

The executive compensation records, which list salaries and bonuses for the last three years, were filed with the federal Securities and Exchange Commission on March 20 as part of a regular annual filing.

Lee last year made $190,131 in salary, $101,760 in bonuses and $3,400 in other compensation. For the last three years, his average payment was $228,775. His severance payment will be at least $457,550.

Samp last year made $138,624 in salary, $61,283 in bonuses and $3,400 in other compensation. For the last three years, his average payment was $159,260. His severance payment will be at least $318,520.

Briggs last year made $186,753 in salary and $140,000 in bonuses. For the last three years, his average payment was $283,356. His severance payment was at least $566,711.

The major job cuts announced at Bangor Hydro last month surprised some electric industry experts who took part in the merger negotiations. But they said their primary concerns at the time of the talks were assurances that transmission rates would not go up any more than they are now and that Emera would maintain high levels of quality service.

Stephen Ward, the state’s public advocate, said Lee’s August 2000 statement about possible employee growth at Bangor Hydro “didn’t jump out at me.”

Bangor Hydro, he said, has a history of poor management practices and some change was inevitable. Emera, he said, needs time to prove that the job cuts and the restructuring of the company will benefit ratepayers.

Anthony Buxton, an attorney for the Industrial Energy Consumers Group, said his organization supported the merger because Bangor Hydro needed some outside management help. He said IECG is disappointed that Lee and Samp are leaving, but noted that Emera could bring strong leadership into the utility.

“This is a chance to have a competent, nonadversarial company takeover,” Buxton said.