has hired a new leader to guide its challenging drive toward recovery.
The Maryland-based utility announced Monday that it has selected Paul Evanson, president of the Florida Power and Light unit of
, to serve as its next chairman, president and CEO. For now, Allegheny has no plans to follow other companies in separating the chairman and CEO roles -- a fact that may chafe corporate governance watchers who have been critical of the practices at both companies.
Evanson takes over for Alan Noia, a 34-year Allegheny veteran who stepped down three months ago after leading the company through a harrowing dive that pushed it dangerously close to bankruptcy.
Noia retired from the big utility just days after pounding out a difficult, $2.4 billion financing deal last February. Jay Pifer, who stepped in as interim president and CEO, will assist Evanson through a transition period when he arrives to take over the reins next week.
"Paul brings a keen understanding of our industry and a proven track record in addressing critical issues that are facing energy companies today," said James Hoecker, an Allegheny director and former chairman of the Federal Energy Regulatory Commission. "Paul's experience, combined with his operational and financial skills and strategic vision, should enable Allegheny Energy to overcome its challenges, restore shareholder value and continue to supply reliable energy services to consumers in our five jurisdictions."
Evanson has scored high marks for his leadership of Florida Power and Light, a strong performer that pushed FPL Group to an 11% gain during last year's utility meltdown. But Evanson's role as a director at FPL, blasted by shareholders for poor corporate governance, could prove troubling to some.
In April, Corporate Library -- a big firm that evaluates corporate governance -- told the
Palm Beach Post
that FPL's board "has been a bad board forever." Evanson has sat on FPL's board since 1995. During that time, FPL paid former CEO James Broadhead a total of $60 million for his last three years at the helm -- when the company's stock actually underperformed the general utility index.
"Jim Broadhead retired with entrepreneurial wealth," Paul Hodgson, an analyst at Corporate Library, told the
Palm Beach Post
. But "he
just managed a regulated monopoly."
More than one-third of Broadhead's three-year pay package stemmed from a controversial "change of control" payout delivered after FPL shareholders approved a $15 billion merger with
that later fell through. Broadhead, who refused to return the money despite shareholder outrage, went on to leave the company with millions of dollars' worth of lucrative contracts approved by the FPL board. Evenson himself collected a $10.4 million bonus after the failed buyout deal.
More recently, FPL's board has come under additional fire for refusing to support a plan to expense stock options that was pushed by some big company shareholders. The utility defended its stance by saying that such a move would put it at a competitive disadvantage to its peers, who generally don't expense options, while keeping the door open to a possible change of policy down the road. The company has also pointed to strong or above-average scores, issued by firms other than Corporate Library for its written board policies, as evidence of solid corporate governance.
But during Broadhead's reign -- and Evanson's time on the board -- FPL became well-known for its huge paychecks to executives. Allegheny, where Evanson will soon take over, hasn't been stingy either. Before exiting from Allegheny under a cloud in February, Noia ranked as one of the highest-paid executives in the Maryland region. He collected a seven-figure salary, including a $562,500 bonus, last year despite the company's miserable performance.
Like many utilities, Allegheny has seen its fortunes darken with the energy trading sector. The company aggressively followed
into the doomed trading business after buying Merrill Lynch's energy trading unit in 2001. Originally, Allegheny had planned to spin off that unregulated division -- and Noia with it -- but the Enron-led meltdown prevented the company from following through. Instead, the company has joined the industrywide rush to return to its core roots as a regulated utility.
For now, Allegheny has some time -- and money -- to work with. As one of his final acts as CEO, Noia hammered out a multibillion-dollar financing deal by pledging virtually all of the company's assets as collateral. But Allegheny still faces stiff challenges. The company is working to revise 2002 financial statements that were, last summer, originally blessed as accurate by the company's top executives. In the meantime, the last financial statements available -- dating back nearly a year -- show the company as a money-loser.
When accepting the top post at Allegheny, Evanson acknowledged Monday that big hurdles still lie ahead.
"I join Allegheny with a firm belief in its future," Evanson said. "There is, however, much work to be done, and there are many challenges to be met ... By working together and leveraging our strengths, I believe we can make Allegheny Energy one of the premier companies in the industry."
Allegheny's stock barely budged on the management change, slipping a penny to $8.94 in late-morning trading.