Sierra Pacific holders to vote on annual-election proposal
A family of shareholder activists from northern California thinks Reno-based Sierra Pacific Resources should begin electing all of its directors annually.
The company, however, urges its shareholders to reject the proposal on the agenda for Sierra Pacific’s May 7 annual meeting.
The proposal from Chris Rossi of Boonville, Calif., calls for the utility holding company to move away from staggered election of directors to three-year terms.
In arguments presented in a Sierra Pacific proxy statement that began arriving in shareholders’ mailboxes in recent days, Rossi said members of the board would be more accountable if they faced an annual vote.
And Rossi said he has other concerns about the board as well.
For one, he said, Walt Higgins, the chairman of the board, also serves as chairman and chief executive officer. That raises issues about the ability of the board to exercise judgment that’s independent of the wishes of top management.
Another concern, he said, is the long tenure of Sierra Pacific board members as four of them have served anywhere from 17 to 26 years. Again, Rossi said, that raises questions about their ability to act independently.
The company’s board, however, said it would be weakened if shareholders adopt the plan for annual elections.
Three-year terms, the board said in its proxy materials, allow directors to become more familiar with the company. Staggered terms ensure that a majority of the board has at least a couple of years of experience.
And the board said there’s no reason to believe that directors elected each year would be more accountable.
“The fiduciary duties of directors elected to three-year terms are identical to those of directors elected annually,” the board said in its proxy statement.
The board said staggered elections prevent the organizer of a takeover bid from winning all the seats in a single election and taking control of the company.
This isn’t the first time the Rossi family has brought proposals to shareholders of Sierra Pacific Resources or other companies, for that matter.
A couple of years ago, the family fought a losing effort to require Sierra Pacific’s board to ask the approval of shareholders before adopting so-called “poison pill” plans to discourage a takeover.
“It’s a lot of work,” said Nick Rossi, the owner of a Boonville hardware store who works with noted shareholder activist John Chevedden of Redondo Beach, Calif.
And even if the Rossi family wins the support of a majority of Sierra Pacific shareholders, the vote isn’t binding on the board.
“That’s the main problem with corporate governance today,” Nick Rossi said. “They can ignore you as long as they want.”
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