Nevada Power chief’s resignation blamed on plunge in stock price

Monday, July 24, 2000 | 11:31 a.m.

Negative implications

Standard & Poors said its ratings on the debt of Sierra Pacific Resources remain on CreditWatch with negative implications.

S&P's announcement was made after Sierra Pacific subsidiary Nevada Power received approval from the state Thursday for a $48 million rate hike, but before Friday's announcement that Sierra Pacific's chairman and chief executive had resigned.

The rate hike provides some stability to the company's credit quality and limits further financial deterioration, the rating agency said.

Standard & Poor's said the ratings remain on CreditWatch because of the significant debt requirements that Sierra Pacific will incur to fund its acquisition of Portland General Electric Co.

When the chief executive of Nevada Power Co.'s parent company resigned last week, he became eligible for a severance package worth more than $3 million.

Michael Niggli resigned as chairman and chief executive officer of Sierra Pacific Resources Inc., the parent company to Nevada Power Co., on Friday, company officials announced.

James Donnelley, vice chairman of the Sierra Pacific Resources board of directors, was named chairman while Steve Rigazio, president of Nevada Power, will continue in that capacity in addition to taking over as chief operating officer of Sierra Pacific.

Rigazio said Friday that the board has begun a nationwide search for a new chief executive officer.

Donnelley is vice chairman of R.R. Donnelley & Sons Co., a Chicago-based printing and publishing operation with 55 manufacturing plants, including one in Reno.

Rigazio said Niggli resigned to pursue other business opportunities. The announcement followed Thursday's approval of a settlement increasing rates for Nevada Power and an agreement clearing the way for deregulation of the Nevada electricity industry.

Niggli today said he was proud of his 2 1/2-year stint with the state's primary electric utility. He would not discuss the circumstances of his resignation, referring questions to members of the board of directors.

Donnelley could not be reached for comment this morning.

"We made a lot of progress in the last couple of years," Niggli said. "We completed the merger (between Nevada Power and Sierra Pacific) and we have a pending merger (with Portland General Electric Co.).

Niggli also said he was happy with the rate and deregulation settlement.

"It's a very good settlement for customers of the state and the company," Niggli said.

Niggli said he has no definitive employment plans and will look nationwide for possibilities.

Nevada Power executives did not discuss Niggli's severance package at Friday's announcement, but a spokeswoman clarified today that Niggli would collect all stock options granted as a bonus last year in addition to three times his annual salary.

According to documents filed with the Securities and Exchange Commission, Niggli's severance agreement makes him eligible for three times his annual salary and target bonus after leaving the company.

A proxy statement filed earlier this year by Sierra Pacific with the SEC says Niggli receives an annual salary of $500,000 and was granted 117,200 stock options vested 33.3 percent over a three-year period beginning Jan. 1.

Based on today's stock price of $14.12, the options are worth about $1.65 million.

Analyst Ron Tanner, managing director of utilities research for Legg Mason Wood Walker, Baltimore, believes the resignation was forced and said Niggli is being blamed for the plunge in the company's stock price.

"When the stock of a company falls as much as it has, and theirs is down from $27 to around $14, you've got to blame somebody," Tanner said.

Sierra Pacific's stock was down 44 cents today from Friday's close to $14.12. Tanner said he thinks investors are reacting to the news of Niggli's resignation cautiously.

"It's an uncertainty they didn't need on top of everything else," Tanner said.

Niggli is the second high-level executive to leave the company in four months. In April, the No. 2 executive with the company, Malyn Malquist, president and chief operating officer of Sierra Pacific, resigned to pursue other business interests.