Power Engineering - Shareholders grill PG&E executives on pay packages

22 April 2004 - A traditionally utility annual meeting erupted in anger on Wednesday as irate shareholders demanded to know why PG&E Corp. executives earned millions when the company's main subsidiary was in bankruptcy and dividends had been suspended.

At the first annual shareholder meeting since the company's utility unit Pacific Gas & Electric emerged from three years in bankruptcy, shareholders repeatedly complained about Chief Executive Bob Glynn's 2003 package of more than $17m.

Several remembered that BusinessWeek magazine recently named him one of the worst executives of 2003.

One shareholder from Fresno, California, said he had suffered financially since the utility subsidiary went into bankruptcy in 2001 and the parent company suspended its dividend. Utilities often attract more conservative investors who rely heavily on steady income from dividends.

"You folks are the people who put the company into bankruptcy and yet you didn't suffer," he said. "You, Mr. Glynn, made $17m.How can you justify that?"

Glynn said the firm's management had restored $7bn to the overall value of PG&E. The company's stock closed at $28.18 on the New York Stock Exchange on Wednesday after sinking as low as $6.50 after the bankruptcy filing in April 2001.

He also gave an upbeat forecast for the firm and said he anticipated 2004 operating earnings of $2.00 to $2.10 a share, reiterating a forecast issued a couple of months ago.

Ray Chevedden, who owns 3000 shares of PG&E stock, chastised the compensation board for allowing generous executive payouts. "Sixteen-million-dollar pay package for last year; that's a red flag," he said.

After the meeting, PG&E director David Coulter, a member of the compensation committee, defended the salaries.

Preliminary results of proxy votes indicated a certain level of shareholder dissatisfaction with board policies.

For the third year running, shareholders backed a measure urging the board to put any takeover bids to a shareholder vote before implementing a poison pill to quash the deal.

A proposal to limit "golden parachute" severance packages for executives failed but garnered 43.6 per cent support. Another item separating the roles of chairman and CEO won 34.05 per cent backing.

Pacific Gas & Electric filed for Chapter 11 bankruptcy protection on April 6, 2001, a casualty of California's flawed attempt to deregulate its power market.

The utility ran out of cash and credit buying electricity supplies at high wholesale prices while barred from passing on the purchase costs to its customers.

It emerged from bankruptcy last week and Glynn said on Wednesday the parent company hopes to resume paying a dividend by the second half of 2005.

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