Westar CEO seeks shareholder faith

Annual meeting's attendees question company's board of directors

? Westar Energy Inc.’s new top executive sought to reassure stockholders Monday that the company’s management and board of directors have made important changes from the previous management.

During an annual shareholders’ meeting, several questioned whether directors were vigilant enough during the tenure of former CEO David Wittig.

But current Chief Executive Officer Jim Haines portrayed the electric utility as breaking from Wittig’s management. Wittig resigned in November while facing a federal indictment on charges unrelated to Westar business.

Haines took questions from shareholders for more than an hour, with most saying they were glad that Haines is running the company and not Wittig.

“I’m hopeful next year we will be more focused on the future than the past,” Haines said.

Wittig and former chief strategic officer Douglas Lake also have been accused of misusing corporate aircraft, misleading directors and squashing dissent among employees.

Since November, besides hiring a new president, Westar has taken steps to make its board of directors more independent, drafted a plan for reducing its $3.2 billion debt and returned to its utility roots.

Last month, the company released a 376-page report documenting abuses by Wittig and the former management. Haines said he was confident that no more revelations would come to light.

Haines greeted the more than 300 shareholders as they entered the meeting, just as he greeted employees on his first day on the job in December.

Several shareholders suggested that the company’s board of directors had not been independent enough from senior management.

Topeka attorney Dan Lykins, who made Westar management an issue while running for Congress last year, said the board needs to have fresh faces and at least one representative looking out for consumers.

“I hope there’s some way to get a new team in there to help you,” Lykins told Haines. “We need to get new faces, fresh faces.”

His remarks received loud applause.

Another shareholder, Donald O. Nelson from Mission Hills, a retired health care executive, expressed confidence in the new management but said, “I think our board just kind of doggone went to sleep.”

Nelson said he inherited his stock from his father, who bought it because he wanted “widows and orphans quality stuff,” using an investors’ phrase for companies that provide steady dividends.

“I’d have gotten out if I could have,” he said, saying he couldn’t sell the stock while its price was dropping from a high of $44.19 a share in March 1998 to its lowest point last year, $8.51.

Haines noted that none of the current board members have served more than three years, and that Chairman Charles Chandler is not a company executive. Wittig previously had served as both board chairman and CEO.

William Perich, a retired teacher from Atchison, said he and his wife hold between 500 and 600 shares of Westar. He suggested that shareholders nominate a director to serve for a single year.

“My idea is to make it more democratic,” he said after the meeting.

He said he believes “John Doe or Jane Doe” shareholders can handle serving on the board of directors, noting that ordinary citizens are sometimes called upon to sit as jurors in complicated criminal and civil cases, with little or no prior knowledge.

Haines also said management will eventually have only one of seven seats on the board of directors and the company’s chief internal auditor will report to the board, rather than to Haines.

Under Haines’ leadership, Westar has decided to abandon its nonelectric utility operations, which include the Protection One security alarm firm. Haines told shareholders Westar expects to sell Protection One by early next year.

He said the company also simplified its compensation for executives.

“We are steadily regaining the confidence of our customers and regulators,” Haines told shareholders.

He also noted that the stock price has rebounded from $8.51 a share last Nov. 7. In trading Monday, shares of Westar closed at $16.70, up 69 cents — a 52-week high.

Some shareholders are suing Westar, charging the company and its top executives with knowingly issuing false and misleading statements about the company’s finances. The suit contends hundreds of thousands of people lost money because Westar securities sold at artificially high prices.

Choosing Topeka — Westar’s hometown — for the annual meeting was significant to shareholders. One jokingly told Haines he was glad it was “not held in Luxemburg.”

In 2001, the meeting was held at a Westar power plant near Joplin, Mo. Few board members and shareholders were present. Wittig conducted the meeting in 15 minutes in a dusty tent in sweltering July heat. He took no questions.

Evabelle Gerstenberger, a retired farmer from Eudora, attended the Joplin meeting, calling it “a joke.”

She said the current management has a lot of work to do to restore the company’s finances.

“I wouldn’t want to be in those shoes,” she said.