In recent weeks, I've talked a lot about the importance of solid leadership -- a team that is honest, trustworthy and focused on the task at hand. Individuals who treat the company's money like their own and treat shareholders as their bosses.
In short, as leadership guru Warren Bennis would say, those who not only do things right, but do the right thing.
this week, I was reminded just how important that was.
This once-troubled Topeka, Kan., utility was the subject of much scrutiny and ridicule under a former management team led by investment banker-turned-CEO -- some would say czar -- David Wittig. As
chronicled here on a number of occasions, Wittig flaunted his power to shareholders, ratepayers, regulators and even the citizens of his own community. According to a report of a special investigator hired by new management, Wittig used corporate assets, like aircraft, for personal gain.
More importantly, he lost track of what was important: preserving the company's value for shareholders. From its high in the mid-$40s, Wittig saw the company's stock drop to single-digits before being forced to resign amid corporate investigations and a personal indictment for bank fraud.
In this case, the implosion of Westar had little to do with fundamentals. The core utility was doing just fine. Rather, it had everything to do with a leader who took his eye off the ball and became more enamored with his power than the power his company produced.
The Haines Way
Enter Jim Haines, Westar's new president and CEO. Haines, an attorney and former member of the Kansas Gas & Electric (now owned by Westar) management team, is largely credited for the turnaround at
El Paso Electric
, a once bankrupt utility. Haines was called back from retirement -- he was teaching ethics at a university in the Southwest -- to turn Westar around.
What's most interesting is that he won't tell you what he's doing is magic. In fact, its not. But, what he is doing is common sense and, more importantly, is the essence of corporate leadership. He's rebuilding trust with the utility's stakeholders -- shareholders, customers regulators and communities, among them -- by listening to their concerns and responding to their requests. He is refocusing the company on its core competency: generating electricity in Kansas. And he's repairing damaged morale among the company's employees by meeting with each employee -- from accountants to linemen -- to explain the company vision and solicit their input.
What a difference leadership can make. During my visit, someone asked about staff morale. The answer, given what I know about Jim Haines, wasn't surprising. "Now everyone knows exactly where we are going," said Westar Treasurer Greg Greenwood. "That makes everyone much more productive."
When I met with members of the Kansas Corporation Commission, I got the same message. "Jim Haines brought great credibility to the company in the minds of the commission and others," said one KCC member.
In short, Jim Haines' leadership has turned Westar around in the minds of employees and regulators, something many people thought would take years to do, if possible at all. Westar is now on track to be free of overbearing regulatory intervention once the restructuring plan is complete.
Perhaps the best measure of his success is the recovery of Westar's stock: In single-digits when Haines took over in late 2002, the stock now boasts a price of $16, doubling in just six months.
However, Haines will tell you the hard work is yet to come: the sale of Westar's stake in
and continued work with regulators as the company approaches its first "normal" rate case in a number of years in 2005.
Next time you question the importance -- or effect on shareholder value -- of leadership at the corporate level, remember the story of Westar Energy. And hope you find a leader like Jim Haines at the helm.
Christopher S. Edmonds is vice president and director of research at Pritchard Capital Partners, a New Orleans energy investment firm. He is based in Atlanta. At time of publication, neither Edmonds nor his firm held positions in any securities mentioned in this column, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. While Edmonds cannot provide investment advice or recommendations, he welcomes your feedback and invites you to send it to