THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Thursday, March 2, 1995 TAG: 9503020477
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY TOM SHEAN, STAFF WRITER
LENGTH: Medium: 91 lines
After a raucous, yearlong feud between their chief executive officers, Virginia Power and its parent, Dominion Resources Inc., said Wednesday that the two CEOs will retire at the end of July 1996.
Dominion and Virginia Power also said that their boards have expanded the powers of a special joint committee that has sought to end the widely publicized dispute between Dominion Chairman Thomas E. Capps and Virginia Power President James T. Rhodes.
Rhodes had complained to Virginia Power directors last spring that he had difficulty working with Capps and that pressure from Capps to cut costs more aggressively threatened the utility's reliability.
When Dominion's board could not resolve the executives' differences, the State Corporation Commission intervened and ordered an investigation into the governance of Virginia Power.
Virginia Power, which provides electricity to 1.9 million customers in Virginia and northeastern North Carolina, is Virginia's largest utility.
As part of the announcement Wednesday, Dominion and Virginia Power said that four directors who had been on opposing sides of the management battle had resigned. John W. Snow, chairman and CEO of CSX Corp., and Bruce C. Gottwald, chairman and CEO ofEthyl Corp., stepped down from the Dominion board, they said.
In addition, William W. Berry, a retired CEO of Dominion, and Frank S. Royal, a Richmond physician, resigned from Virginia Power's board.
Snow and Royal had been allies of Capps. Berry and Gottwald had sided with Rhodes in the dispute.
Mark G. Lazenby, a Dominion spokesman, said that Capps and Rhodes jointly briefed the SCC about the planned resignations and the actions of the Dominion and Virginia Power boards. Lazenby declined to say whether any of the actions taken by the two boards at a meeting Tuesday will have to be approved by the SCC.
Last week, Dominion signed an agreement with state regulators requiring SCC approval before the parent company makes any changes to Virginia Power's board or its bylaws.
In January, the SCC asked the General Assembly for legislation providing greater regulatory power over actions by public utility holding companies in Virginia. The bill, which Dominion opposed, was withdrawn after Dominion signed its agreement with the SCC.
When announcing its investigation into the affairs of Virginia Power last June, the SCC expressed concern that managerial turmoil would threaten the utility's ability to meet its public-service obligations. Under pressure from regulators, Dominion and Virginia Power restructured their boards last August and devised a truce between Capps and Rhodes.
But news reports in recent weeks described continued strains between the CEOs and a proposal by some Dominion and Virginia Power directors to oust the two.
In a Feb. 21 letter to Virginia Power board Chairman John B. Adams Jr., 20 of the utility's senior managers said that Rhodes's continued presence at the company was crucial to strategic planning efforts.
``To deprive Virginia Power of Jim's leadership at any time would be a mistake, but to do so at this moment could put the company at a serious competitive disadvantage,'' the letter said.
If Rhodes were forced out of his post, ``the corporate disruption would be severe and the disheartening effect on Virginia Power's 10,000-plus employees would be inestimable,'' the letter added.
Virginia Power has been working for more than a year on a plan for streamlining its operations and preparing for greater competition in the electric power industry.
William Byrd, a Virginia Power spokesman, said that the utility's operations have been functioning normally and have not suffered from the management dispute.
But the battle between factions on the Dominion and Virginia Power boards apparently has cast a cloud over both companies in the eyes of securities analysts.
The impact on Dominion's stock price has been difficult to quantify, said Thomas E. Hamlin, a utility analyst with Wheat First Butcher Singer, a Richmond-based securities firm. ``The concern is out there, but could you measure it? No,'' he said.
On Wednesday, Dominion's shares closed at 37 3/8, down 5/8 for the day and off 5 1/8 from their 52-week high of 42 1/2 last April. ILLUSTRATION: James T. Rhoders
CEO
Virginia Power
Thomas E. Capps
CEO
Dominion Resources
by CNB