Shareholders Mostly Lose in Quest for PG&E Brass to Share the Pain

Despite promises of dividend payouts for the first time in years, Pacific Gas & Electric faced a largely hostile audience at its annual shareholders? meeting April 21. One shareholder proposal?to increase shareholder rights in ?poison pill? takeovers?appears to have actually succeeded. But others, including separation of the positions of chief executive officer and chair, golden parachutes, limiting executive compensation, and shutting down Diablo Canyon, followed management?s recommendations and were turned down in preliminary vote counts. PG&E Corp. chair and chief executive officer Bob Glynn stressed that the parent company?s utility emerged from bankruptcy, has investment-grade ratings, and intends to pay a common stock dividend by the second half of 2005. That did not stop shareholders from protesting what they saw as overpayments to management, in both salaries and bonuses, pointing out that even the largest institutional investors want the utility to tone down its spending on executive perks. They also criticized PG&E for starting its charitable contributions long before it planned to pay dividends. There were also a few kudos?from the recipients of some of those charitable donations, and from the Chamber of Commerce of San Francisco, the city in which PG&E is headquartered. The poison-pill resolution was pitched as a way to protect shareholders from self-interested management. ?Suppose another company comes along and offers $10 more per share for us?? explained Nick Rossi, the backer of the successful poison-pill measure. ?Management says, ?What?s in it for us?? and makes it impossible for a takeover. We should be able to take the offer,? he continued. Pointing to Glynn, Rossi continued, ?All these people should be in the pokey.? The poison-pill resolution had 61 percent of the shareholder vote at press time. However, it is only advisory. A resolution curbing executive compensation lost, although the issue drew the most ire from shareholders. ?You haven?t missed one huge, obscene bonus,? Lewis Taich said to Glynn. Glynn stopped responding to similar diatribes after a while, but said, ?I don?t expect everyone to agree with or feel comfortable about it.? The proposal to limit salaries to $1 million a year and define parameters for bonuses apparently failed on an early vote tally of 8 percent. Shareholders followed management?s recommendations on other votes, according to preliminary tallies. A proposal that would limit golden-parachute payments for departing executives was getting a 43 percent vote at press time. One that would require board members to sever links to management of other corporations got a 13 percent early vote. A plan to keep the jobs of chief executive officer and chair of the board separate was tallied at 34 percent. In addition, for the third year in a row, a proposal to shut down the Diablo Canyon nuclear plant was losing on early counts, with about 8 percent of shareholders in favor of termination.

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Shareholders Mostly Lose in Quest for PG&E Brass to Share the Pain

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