Posted on Thu, Apr. 21, 2005
PG&E shareholders hear optimistic outlook
By Rick Jurgens CONTRA COSTA TIMES
SAN RAMON - PG&E Corp.'s new chief executive spoke optimistically Wednesday about the company's financial health and prospects, but also sparred with dissident shareholders during a two-hour annual meeting attended by about 200 people at a company conference center here.
"PG&E's position is stronger now than at any point in the past decade," said Peter Darbee, who stepped up to the top job at the San Francisco-based utility Jan. 1 after a five-year tenure as chief financial officer
Darbee remained cheerful despite the efforts of several corporate gadflies and at least one disgruntled employee who sought to throw cold water on the festivities.
Exhibit one in Darbee's case for optimism was the April 15 award of a 30 cents a share quarterly dividend after a four-year hiatus that saw both the company's utility and merchant energy units descend into bankruptcy. "We believe that the dividend is very secure," Darbee said in answer to a question as to how certain he was that the payouts would continue. "It's likely to grow."
New Chief Financial Officer Christopher Johns said PG&E expects profits to grow at a 4 percent to 6 percent annual rate during the next five years.
Utility Chief Executive Gordon Smith said that the utility expects to have "healthy reserves" of power to keep the lights on this summer, but would need to add 2,200 megawatts of new power capacity -- enough for about 2 million homes -- by 2010. He said the company plans to ask state regulators for permission to invest $1 billion to install advanced meters for 9 million gas and electric customers, which would create the capability to raise prices or cut use when demand peaks.
Former Chief Executive Robert Glynn, who continues to serve as chairman of PG&E's board, played a limited role in this year's meeting. Instead, Darbee ran the show and, in a departure from Glynn's approach, called on other executives and even one board member to respond to shareholder questions.
Darbee said in response to a question that Wednesday's event would be Glynn's "last meeting." Earlier, Darbee credited his predecessor with leading the company back to firm financial ground after the energy crisis financial disaster. Darbee said it is now clear that the energy crisis was caused by a shortage of power, market manipulation and flaws in the regulatory structure that California set up to introduce competition into its electricity industry.
But shareholder Nick Rossi of Boonville didn't buy Darbee's portrayal of PG&E as a victim of a flawed plan imposed upon it by others. "You endorsed it," Rossi said of the complex transition plan. "You shouldn't have endorsed it from the very beginning. Some blame belongs to management."
Rossi wrote a nonbinding shareholders resolution that criticized an $84.5 million retention bonus paid out to 17 PG&E executives after the bankruptcy and recommended a limit on compensation to PG&E executives who leave the company. That resolution gained 55.3 percent of the vote in a preliminary tally.
Other shareholder resolutions that garnered strong support despite opposition by PG&E's board included a call for the company to book as expenses stock options awarded to employees, with 44.5 percent, and a proposal to tie the value of options to competitive benchmarks, with 38.6 percent. A proposal to move up the deadline for a shareholder vote on any poison pill, or anti-takeover rule, approved by the board got 28.4 percent of the vote.
The nine members of PG&E's board were all re-elected, all with at least 96 percent of the votes except David Coulter, vice chairman of JPMorgan Chase & Co., who was backed by only 75 percent of the voters.
Darbee talked about his desire to change PG&E's culture to emphasize safety, customer service, diversity, the environment, community involvement and integrity.
Jim Findley, a 32-year PG&E employee and an officer of International Brotherhood of Electrical Workers Local 1245, responded with a lengthy warning about problems with the company's "overlooked, under-appreciated and disregarded" natural gas distribution network. "We're managing leaks, we're not fixing them" because of budget pressures, he said.
Darbee thanked Findley for his comments and said he should meet with the manager of those operations when the meeting concluded.
Later, Perry Zimmerman, the top elected officer of that local, took the floor to say that he was "impressed with the team you have put together" and would support efforts to make PG&E the nation's top utility. Representatives of several other nonprofit groups attended to thank PG&E for its support.
Rick Jurgens covers real estate and energy. Reach him at 925-943-8088 or at rjurgens@cctimes.com.
© 2005 ContraCostaTimes.com and wire service sources. All Rights Reserved.
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