CalPERS to Pull Votes at Upcoming PG&E Shareholder Meeting; Diablo Safety Also on Agenda

Citing issues of corporate governance, the California Public Employees? Retirement System (CalPERS) said it would withhold its votes at PG&E Corp.?s annual shareholder meeting April 21. The state employees? retirement organization owns 1.6 million shares of PG&E Corp. stock?just a mere fraction of the company?s 416 million outstanding shares?but insists that certain of the utility parent?s actions should be opposed. ?What we?re trying to do is send a message to this company: they need to be responsive to their shareholders, even in light of the difficult times they?ve been through,? said CalPERS spokesperson Brad Pacheco. ?And the board needs to be accountable for their actions.? Specifically, CalPERS claims that PG&E Corp. management has failed to stand by shareholder-approved proposals in the areas of stock-option accounting and potential corporate takeover?the latter related to ?poison pill? provisions enacted by the company. The organization also objects to auditing services contracted by PG&E Corp., saying that some of that work has fallen outside the scope of a proper audit. This week, PG&E Corp.?s shareholder rights plan, designed to protect the company from hostile takeovers during the financial tremors of the energy crisis, expired as utility affiliate Pacific Gas & Electric emerged from bankruptcy. PG&E Corp. put the plan in place in December 2000, and the decision to end it came at the behest of shareholders during the company?s 2003 annual meeting, according to the utility parent. Regarding option accounting, PG&E Corp. spokesperson Renee Parnell said that company shareholders voted last year against treating stock options as expenses. In addition, nonaudit services performed by PG&E Corp.?s auditing contractor, Deloitte & Touche, are limited to tasks such as tax services, Parnell said. She added that PG&E Corp. initiated this policy in June 2002, in advance of a ruling by the U.S. Securities and Exchange Commission in support of similar procedures. ?Our company?s practices are even more strict than that,? Parnell said. In response to PG&E Corp.?s claim that all its positions are laid out carefully in the company?s proxy statement, and that PG&E Corp.?s nonaudit work is within the scope of SEC rules, CalPERS?s Pacheco agreed the company is working within the law. CalPERS?s more ?stringent? standards, however, demand otherwise, he said. Pacheco also said that CalPERS has no plans to sell its 1.6 million shares in PG&E Corp. and would instead prefer to alter the way the company manages itself. PG&E Corp. would not comment on the possibility of such a stock sale. Also before PG&E Corp. shareholders this month will be a proposed resolution by nonprofit activist group Mothers for Peace, which is calling for new company policy regarding the safety of the Diablo Canyon nuclear plant. Mothers for Peace says PG&E Corp. must address the plant?s exposure to potential terrorist attacks, which would include limitations on the amount of spent fuel rods that could be stored on-site (see Circuit, March 19, 2004). PG&E Corp.?s Parnell held that Diablo already is in compliance with U.S. Nuclear Regulatory Commission (NRC) regulations regarding plant security and environmental safeguards. Further, she said, the PG&E utility?s application to build new spent-fuel containers provides that the new storage boxes will be able to withstand ?earthquakes and other natural disasters.? Possible transportation of the high-level waste would be covered by the NRC?s guidelines for protecting spent-fuel containers under potential ?attack as well as accident,? Parnell added. PG&E Corp.?s annual shareholder meeting will be held in San Francisco?s Masonic Auditorium at 10 a.m. on April 21.

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CalPERS to Pull Votes at Upcoming PG&E Shareholder Meeting; Diablo Safety Also on Agenda

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