PG&E to Restructure Board In Settlement With Activist -- WSJ

By 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 (April 23, 2019).

PG&E Corp. on Monday settled a dispute with an activist investor by restructuring its board to include another director with utility experience, and adding a safety specialist to advise its chief executive.

The company said former utilities executive Fred Buckman will replace former chairman Richard Kelly, who has resigned from the board. Chris Hart, former chairman of the National Transportation Safety Board, will serve as a special adviser to incoming chief executive Bill Johnson.

The appointments end an activist campaign by BlueMountain Capital Management, which owns 2.5% of PG&E shares. The hedge fund last month nominated 13 candidates to PG&E's board, including Messrs. Hart and Buckman.

PG&E earlier this month appointed its own slate of directors after working with three hedge funds that together own 10% of the company's shares. They included former Federal Energy Regulatory Commissioner Nora Mead Brownell, who is now chairman of the board. It also appointed several restructuring experts and financiers.

The appointments received pushback from California Gov. Gavin Newsom, who criticized the board for its "large representation of Wall Street interests." Michael Picker, president of the California Public Utilities Commission, expressed similar concerns at a meeting last week.

As part of the settlement, BlueMountain agreed to vote all of its shares in favor of each of PG&E's nominees at the annual meeting this year. PG&E announced last week that it would reschedule the meeting from May 21 to sometime in June to allow additional time to restructure the board.

"We believe the changes and other undertakings announced today reflect the Boards' commitment to improving their governance and oversight," BlueMountain co-founder and chief investment officers Andrew Feldstein said in a statement.

The new board faces steep challenges. PG&E sought bankruptcy protection earlier this year following a series of deadly wildfires in its service territory, many tied by state investigators to its equipment, that it estimates have triggered more than $30 billion in potential liability claims against the company. PG&E has pledged to spend billions of dollars to improve the safety of its electric equipment before the next fire season.

Mr. Hart was involved in an assessment of the natural gas distribution system in Massachusetts following a series of pipeline explosions north of Boston last year. He is the founder of Hart Solutions LLC, a consulting firm focused on safety and reliability.

"As we enter another fire season, we can't overemphasize the importance of safety," PG&E interim CEO John Simon said in a statement. "Retaining a former industry regulator with Mr. Hart's expertise reflects that commitment to strengthening our safety culture."

Mr. Buckman previously served as chief executive of Consumers Energy. He also has served as chief executive of PacifiCorp, a utility owned by Warren Buffett's Berkshire Hathaway Inc. that operates in Northern California and five other states.

PG&E said it will hold a vote at the annual meeting to expand its board to include 15 members. It plans to appoint another independent director with clean-tech expertise in the future.

Write to Katherine Blunt at [e-mail]

(END) Dow Jones Newswires

April 23, 2019 02:47 ET (06:47 GMT)

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