Bid to change Westar board fails

Shareholders reject attorney's effort

? A long-shot bid from a Topeka attorney to join the board of Westar Energy Inc. failed Tuesday, as shareholders also rejected a proposal to allow board nominations from the floor at the company’s annual meetings.

Dan Lykins, a Topeka attorney who owns about 3,000 shares in the utility, said in the wake of Westar’s struggles under former chairman and chief executive David Wittig, the board needs an independent voice for shareholders.

“We need a clean sweep,” Lykins said of board members who served during Wittig’s tenure. “They’re all very good people. But they were asleep at the wheel.”

But in voting at the company’s annual meeting in Topeka, shareholders turned back Lykins’ bid, instead re-electing three current board members — Anthony Isaac, Michael Morrissey, and John C. Nettels Jr. — who had been nominated by the company to serve additional three-year terms. Of the nearly 62 million shares voted, Lykins received support of those holding just 48,300 shares.

Nettels, Lykins had noted, served on the board during Wittig’s tenure and also was his college roommate.

Lykins campaigned before the meeting began but stood almost no chance of winning election. About 55 percent of Westar stock is held by some 150 institutional investors, such as pension funds and insurance companies, who were unlikely to cast their shares for an unknown.

Shareholders also rejected a proposal from stockholder William Perich, of Atchison, that would have allowed nominations to the eight-member board from the floor at annual meetings, with those nominated appearing on the ballot at the next year’s meeting.

“The board of directors has so much power, they’re shielded and they’re insulated,” said Perich, who had nominated Lykins for a seat on the board.

The company opposed Perich’s proposal, saying it would have given a disproportionate amount of influence to investors holding relatively few shares. The proposal did much better than Lykins, garnering support of 3.9 million voted shares, but lost as 43.8 million shares were voted against it.

Lykins made corporate misconduct an issue when he ran for Congress as a Democrat in 2002. He lost to Republican Rep. Jim Ryun, 60 percent to 38 percent.

Still, Perich promised after the meeting to keep pushing to allow shareholders to nominate their own candidates for the board.

“We’re being bypassed,” he said.

Current Westar CEO Jim Haines said he was willing to consider ideas for giving shareholders more input into the selection of directors, but added, “I’m not ready to say what those might be.”

With about 654,000 customers including Lawrence, Westar is Kansas’ largest electric company. Its debt ballooned during the 1990s under Wittig’s management as he diversified the company, an effort that included buying a 88 percent stake in the Protection One monitored security alarm business.

Wittig resigned in November 2002, and was later accused by federal prosecutors of looting the company. He, along with former Westar executive vice president Douglas T. Lake, faces a September trial on 40 counts of conspiracy, unlawful transactions, making false claims, wire fraud and falsifying books and records.

Westar ended 2002 with more than $3.6 billion in debt. Under orders from state regulators to reduce that debt, it has since sold its stake in Protection One along with other non-utility assets, and expects to reduced its debt to $1.75 billion by the end of this year.

In another case, Wittig was convicted in July of conspiracy, money laundering and making false bank entries after hiding a $1.5 million loan from federal regulators. He is appealing his conviction and sentence of four years and three months in prison.

In trading Tuesday on the New York Stock Exchange, shares of Westar finished up 15 cents, at $18.65.