Gabelli wins some, loses some at SW Gas meeting

Kevin Rademacher

Friday, May 7, 2004 | 11:21 a.m.

Aside from the tense moments following the collapse of company Chairman Thomas Hartley, it was business as usual Thursday at Southwest Gas Corp.'s annual shareholders meeting.

About 100 shareholders were on hand as the company's 11 recommended directors were elected to the board, including Michael Melarkey, who was nominated by New York investor and frequent critic of Southwest Gas management Mario Gabelli.

Still, Gabelli clamored for more representation on the natural gas distribution company's board. A second Gabelli nominee, Joseph Brown, did not receive a company recommendation. Additionally, Michael Smith, a representative of GAMCO, a Gabelli-owned investment firm, was on hand at The Rio hotel-casino's convention center to make a nomination from the floor of Salvatore Zizza.

Southwest Gas directors accepted the nomination but Zizza, who is a director of Hollis-Eden Pharmaceuticals and eight Gabelli investment funds, failed to win a seat.

Gabelli controls about 9.8 percent of the company's stock.

"We are not either for or against management," Smith said at a break in the meeting. "We are for shareholders ... We feel the board is going in the right direction. We just feel like progress could be made a little faster."

Smith would not elaborate on what type of progress the company should be making and he affirmed that the Gabelli companies have indicated that the company has more value than the stock price reflects.

"All we want to do is maximize shareholder value," Smith said, also affirming criticism that Gabelli has directed at Southwest Gas Chief Executive Michael Maffie.

"But Mr. Maffie is retiring," Smith said.

As anticipated, Maffie made a formal announcement to shareholders at the meeting that he will step down on June 1. Jeffrey Shaw, currently president of the company, will succeed Maffie as chief executive after receiving an affirmative vote from the company's directors this week.

Jim Kane, currently executive vice president for operations, will assume the role of president.

Shareholders also voted to retain PricewaterhouseCoopers LLP as the company's auditor. The auditing firm replaced Arthur Andersen LLP in 2002.

The company also received permission from shareholders to continue its management incentive plan. The plan, originally adopted in 1993, sets standards for cash and stock bonuses for key executives and managers.

Questions from shareholders indicated a desire to see the stock price rise, but the tone of the meeting was amiable.

Maffie pointed out that Southwest Gas stock is well in a line with other distribution companies. Outside of a merger, he said, the best opportunity for higher share prices would come in the form of cooler weather and for higher rates.

Southwest Gas has two rate cases pending with state Public Utilities Commission.

Shaw also fielded questions about the possibility of Southwest Gas entering into other business lines, like acquiring gas reserves or drilling operations.

"It would be a whole different business and a whole different set of risks to take on," Shaw said.

The collapse of Hartley happened about 20 minutes into the meeting after his speech slowed during a presentation on corporate governance. He slumped behind a podium and was assisted by company executives and directors in the minutes before emergency personnel arrived. Company spokesman Roger Buehrer said Hartley was awake and alert prior to being transported to Sunrise Hospital.

Buehrer said in a conversation later in the day that Hartley indicated the episode was likely a reaction to a change in his blood pressure medication. Speaking from his hospital room this morning, Hartley said he expected to be released today.