By Russell Gold, Juliet Chung and Katherine Blunt
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (March 18, 2019).
PG&E Corp. is likely to name Bill Johnson, retiring head of
the Tennessee Valley Authority, as its new chief executive as early
as next week and to announce an overhaul of its board backed by
some of its largest investors, according to people familiar with
the matter.
Mr. Johnson would take the reins of the troubled California
utility, operating under federal bankruptcy protection as it faces
a fight to survive billions of dollars in potential liability costs
from deadly wildfires. While he is the front-runner for the job,
his new role hasn't been finalized and other candidates were still
being interviewed to ensure he was the best choice, one person
said.
PG&E has made offers to 10 new independent board candidates
and is expected to unveil the slate as soon as next week, saying it
has significant shareholder support, people familiar with the
matter said. The company vowed to remake its board after criticism
of its safety practices in the wake of the wildfires.
A trio of activist investors has been working with PG&E to
change its management, according to regulatory filings made Friday
and to people familiar with the matter. Three hedge funds -- Abrams
Capital Management LP, Knighthead Capital Management LLC and
Redwood Capital Management LLC -- together own 9.8% of the
company's stock, the filings said.
The board slate they have helped PG&E assemble is expected
to include experts on cybersecurity, nuclear security and
restructurings, people familiar with the matter said. The
turnaround experts would be expected to cycle off the board as the
company exits bankruptcy. Abrams, Knighthead and Redwood are
represented by Jones Day, which represents company shareholders
holding another 30% of the company's stock, said people familiar
with the matter.
The efforts are separate from those of hedge fund BlueMountain
Capital Management, which has put forward a different board slate
including former utility executives, a former California state
treasurer and activist investor Jeffrey Ubben of ValueAct Capital
Management LP. PG&E's annual meeting is set to take place in
May.
California's largest utility sought chapter 11 bankruptcy
protection in January, citing potential liability costs topping $30
billion. State fire investigators have found the company's
equipment sparked more than a dozen wildfires in recent years.
PG&E now confronts a complex financial restructuring process
expected to take years.
Mr. Johnson, 65, has been set to step down from the TVA in
April. He is perhaps best known for serving as CEO of Duke Energy
Corp. for a single day in 2012, after the utility he was then
heading, Progress Energy Inc., merged with Duke. Hours after he
assumed the job, he was abruptly ousted by the combined company's
board.
Bloomberg reported earlier this week that Mr. Johnson had
emerged as PG&E's top choice. The 10 board candidates PG&E
has selected have accepted but are still being vetted, people
familiar with the matter said.
Mr. Johnson didn't respond to requests for comment. PG&E
declined to comment.
PG&E has been searching for a new chief executive since
Geisha Williams stepped down in January. John Simon, PG&E's
general counsel, is serving as CEO in the interim. In a letter to
employees last week, Mr. Simon wrote that "no decision has been
made."
The company approached longtime executives at other utilities
about the vacant CEO job, according to people familiar with the
matter. They included John Young, who held several leadership
positions within Exelon Corp. before becoming chief executive of
Energy Future Holdings Corp. in 2008.
Mr. Young, who retired in 2016 and now serves on Exelon's board,
declined to comment.
Earlier this week, Michael Picker, chairman of the California
Public Utilities Commission, told Mr. Simon that a board without
sufficient safety experience was "simply unacceptable," according
to a regulatory filing disclosing the conversation. Mr. Simon said
the board should have a "broad mix of skills, including significant
safety experience and a commitment to implementing California
energy policy."
Mr. Johnson is a veteran utility executive. Since 2013, he has
led the Tennessee Valley Authority, a public power company that
provides electricity to about nine million customers in parts of
seven southern states. He announced last year he was retiring from
the TVA in 2019.
Richard Howorth, chairman of the TVA board, praised him for
taking the federally chartered power company to its lowest debt
level in a quarter-century, fixing its pension program and reducing
operating and maintenance costs by $800 million. "A great
performance, and he'd be the first to credit everyone else, but
I've seen great leadership," Mr. Howorth said.
Mr. Johnson's tenure at the TVA began after he lost the struggle
to run Duke after it and Progress completed their $26 billion
merger in 2012.
He had risen through the ranks of Progress, and was set to be
the CEO of the combined North Carolina utilities, with Duke head
Jim Rogers becoming the nonexecutive chairman. But a few hours
after he assumed the post, the company's board informed him it had
changed its mind and reinstated Mr. Rogers as head of the combined
company. Mr. Rogers, who retired in 2013, died last year.
At Progress and TVA, Mr. Johnson was known for his focus on
operations. At TVA, he oversaw the opening of a new unit of the
Watts Bar nuclear power plant. Construction of the unit had begun
in the 1970s and then stalled for more than two decades.
He would face a steep challenge at PG&E. The company's role
in sparking wildfires has battered its standing with the public as
well as with state lawmakers and regulators, who now are debating
whether to break up the company, as well as proposals aimed at
improving its safety and operations.
Write to Russell Gold at russell.gold@wsj.com, Juliet Chung at
juliet.chung@wsj.com and Katherine Blunt at
Katherine.Blunt@wsj.com
(END) Dow Jones Newswires
March 18, 2019 02:47 ET (06:47 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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