Glynn, Robert D. Jr. 1942–
Robert D. Glynn Jr.
Chairman, chief executive officer, and president, PG&E Corporation
Born: 1942, in Orange, New Jersey.
Education: Manhattan College, BS, 1964; Long Island University, MS, 1967.
Family: Married; children.
Career: Long Island Lighting Company, 1964–1972; Woodward-Clyde Consultants, 1972–1984, rose to executive vice president; Pacific Gas and Electric Company, 1984– (position unknown); 1988–1991, vice president of power generation; 1991–1994, senior vice president and general manager of electric supply and then general manager of customer energy services; 1994, executive vice president; 1995–1997, president and chief operating officer; PG&E Corporation, 1997–, chief operating officer; 1997–, president and chief executive officer; 1998–, chairman of the board.
■ Robert D. Glynn Jr. took over as president and CEO of PG&E Corporation in 1997 and became chairman the following year. His reign over the energy-based holding company, which owned Pacific Gas and Electric Company, one of the largest combination natural gas and electric utilities in the United States, was stormy. Although the corporation had initially prospered under Glynn, deregulation and the bankruptcy of the core utility company soon had stockholders questioning his management and calling for his ouster. Glynn insisted, however, that the company was on its way back to financial health. Known among industry analysts for his hands-off management style, Glynn stated that his job as chairman and CEO was to look at the larger picture.
A native of Orange, New Jersey, Glynn received a degree in mechanical engineering from Manhattan College and a master of nuclear engineering degree from Long Island University. He also graduated from a program for public utility executives at the University of Michigan and an advanced management program at the Harvard Business School. Glynn's career included eight years at a public utility, Long Is land Lighting Company, followed by 12 years with the firm of Woodward-Clyde Consultants, an engineering firm that specialized in environmental management, waste management, pollution control, and occupational health. Glynn eventually rose to the position of executive vice president at Woodward-Clyde.
In 1984 Glynn joined the California-based Pacific Gas and Electric Company, where he went on to hold several managerial positions, including president of power generation, senior vice president and general manager of electric supply, and general manager of customer energy services. He was elected vice president of the company in 1994 and president in 1995.
THE DEREGULATION CRISIS
Glynn became president and chief operating officer of the utility's parent holding company in January 1997, chief executive officer in June 1997, and chairman of the board in January 1998. Glenn took over the helm of the PG&E Corporation as the energy deregulation boom of the late 1990s got under way. The holding company had four open-market subsidiaries in addition to Pacific Gas & Electric: PG&E Energy Services; PG&E Gas Transmission; PG&E Energy Trading Company, an electric commodity trader; and U.S. Generating Company, an independent power producer.
Many analysts saw Glynn as a leader who could take PG&E from a slow-paced monopoly to one of the largest and most efficient energy companies in the nation. Glynn's objective was to make PG&E a premier company capable of providing optimum benefits for its shareholders, customers, and employees. Glynn also recognized, however, that he was competing in a frenetic market. In an interview with Kristin Bole of the San Francisco Business Times, Glynn noted, "The speed with which [the market] is moving both for our customers and our employees is something that definitely keeps us on our toes" (March 27, 1998).
FULL SPEED AHEAD
Pacific Gas and Electric had been a stable investment when it was a regulated utility. Glynn was now intent, however, on transforming the company and its parent corporation into major players in a much less regulated and much more competitive marketplace. Over the year and a half since Glynn had first assumed the presidency of PG&E, the corporation's institutional investor base had risen from 30 percent to 45 percent, an increase of 50 percent. One of Glynn's primary moves was to reinvest in operations to be more competitive. To do so, he kept a lid on the growth of dividend payouts. He told Mark Calvey of the San Francisco Business Times, "Energy utilities as a whole—and our company as an example—provide a lower dividend yield than we used to and provide a greater opportunity for stock price appreciation" (March 27, 1998).
Initially, Glynn sent out salespeople to call on other utilities' customers in the San Francisco area and bought other power plants far from home, even paying $1.6 billion for plants in New England. In addition, he negotiated what many industry analysts considered sweetheart deals, including selling three PG&E plants to Duke Energy for $501 million and negotiating a ten-year bond issue to cover the costs of old power plants (not only operating costs but government-mandated renovations). These deals, analysts said, would help ease the company's transition into a deregulated market.
Glynn did not hide the fact that he saw PG&E as a national powerhouse in the energy business. He was optimistic about the future, as the company's stock had risen 44 percent during 1997. Glynn was confident that the company's exclusive focus on the large domestic market would enable it to garner much of the business. In an interview given to Kristin Bole, Glynn stated, "Five years from now, we'll have a huge number of customers buying commodities and services from us. We'll have without a doubt the best local distributing company and utility in the country" (San Francisco Business Times, March 27, 1998).
A WRONG TURN
Despite Glynn's optimism, Standard & Poor's downgraded the ratings of Pacific Gas and Electric and its parent corporation to "low junk" in January 2001. The company had run up billions of dollars in debt largely because it could not pass on soaring wholesale power costs to its customers. This problem had arisen because the state of California had frozen retail prices. Although Glynn had hoped that the state government would step in and allow rate increases, Pacific Gas and Electric filed for Chapter 11 bankruptcy in April 2001. Glynn called the decision an "affirmative" one and chided the California state government, noting, "We heard a lot of the words … but have not seen actions" (Sacramento Business Journal, April 13, 2001).
Many analysts, however, blamed Glynn for PG&E's slide, since the company had reported a net loss of $3.4 billion, or $9.29 per share, in 2000. Analysts noted that Glynn had paid exorbitant prices for old power plants, intending to create a company to rival Enron, even though none of these investments were paying off. Instead of reporting record profits, Glynn found himself trying to guide the utility through a crucial phase of its bankruptcy proceedings. Glynn planned to separate Pacific Gas & Electric from its parent corporation and move its power generation, gas transmission, and electric transmission assets to the parent company as separate entities under PG&E. The reorganization moved those assets from state regulation to federal control and helped raise the financing for the utility to pay off its $13.1 billion in debts without raising rates to customers.
Glynn then faced an irate and outspoken group of investors in the May 2001 shareholders meeting. Several shareholders were ejected from the meeting. One shareholder later noted that dissent was quashed by the corporation when she sought to introduce a resolution calling for Glynn's dismissal. Glynn soon confronted further turmoil when an attorney for the city of San Francisco filed suit against the corporation, charging it with unfair and illegal business practices that had driven its subsidiary utility into bankruptcy. The attorney asked for a $5 billion return to ratepayers, including $4.6 billion in illegally paid dividends and stock purchases as well as $633 million in inflated tax payments made by the utility to its parent corporation.
SEEKING FINANCIAL HEALTH
Glynn's plans to diversify the business ultimately failed, and he put Pacific Gas & Electric in bankruptcy. Nevertheless, PG&E Corporation reported a fourth-quarter profit of $37 million in 2003, contrasting dramatically with a $2.19 billion quarterly loss a year earlier. Glynn then declared that the corporation was back on its feet.
Despite the fact that Pacific Gas & Electric had emerged from three years in bankruptcy, Glynn faced angry shareholders once again in April 2004. The shareholders complained during the meeting about Glynn's 2003 compensation package of more than $17 million. They were particularly indignant that such a sum was paid to someone who had been named by Business Week as one of the worst executives of 2003. As reported on Forbes.com, one shareholder told Glynn, "You folks are the people who put the company into bankruptcy and yet you didn't suffer. You, Mr. Glynn, made $17 million…. How can you justify that?" (April 21, 2004)
Glynn's response to criticism was that he and the management had restored $7 billion to PG&E's overall value and that the company's stock had risen to $28.28 per share from its low of $6.50 per share after its utility company had filed for bankruptcy in April 2001. Glynn also painted a rosy picture of the corporation's future and said that its subsidiary utility would be able to pay dividends again by the second half of 2005. According to a Forbes.com article, Glynn also said that the compensation packages were "designed to [give an incentive to] this team to deliver the restoration of this company's health" (April 21, 2004).
Industry analysts noted that Glynn's training in mechanical engineering was reflected in his emphasis on order and building a team environment. When he took over at PG&E, he immediately set out to recruit seasoned staff from a wide variety of backgrounds, from energy generation and marketing to sales and customer service.
Glynn also used a hands-off management style that staffers initially found unsettling. As one employee told Kristin Bole of the San Francisco Business Times, "Some of them expected to be able to go to the CEO with problems and have him fix them. He would listen to them and say, 'How are you going to solve that?'" (March 27, 1998). Despite the company's setbacks, Glynn maintained a positive outlook. He once noted that his job was to have the vision to make the company the best and to inspire top staff under him to pass on that vision throughout the company.
In defense of Glynn's management of PG&E, company spokespeople pointed out that PG&E stocks outperformed the average utility during Glynn's tenure. Some analysts thought Glynn had learned a lesson from his two trips to bankruptcy court and come to realize that one should hedge one's bets in commodity markets. Glynn himself noted in a company news release, "With a new period of regulatory and financial stability, and a healthy utility as our core business, PG&E Corporation is strongly positioned to provide value to customers and shareholders" ("PG&E Corporation Announces First Quarter Earnings," May 4, 2004).
In addition to his duties at PG&E, Glynn was also active in other organizations, including the Business Council, the California Business Roundtable, and the Board of Governors of the San Francisco Symphony.
See also entries on Pacific Gas and Electric Company and PG&E Corporation in International Directory of Company Histories.
sources for further information
Bole, Kristin, "Glynn Whipping Behemoth PG&E into Fighting Shape," San Francisco Business Times, March 27, 1998.
Calvey, Mark, "Stability Is out, Risk Is in for Investors in the New PG&E," San Francisco Business Times, March 27, 1998.
PG&E Corporation, "PG&E Corporation Announces First Quarter Earnings," May 4, 2004, http://www.pgecorp.com/news/releases/040504r.html.
"PG&E Files Chapter 11," Sacramento Business Journal, April 13, 2001.
Tanner, Adam, "Shareholders Grill PG&E Executives on Pay Packages," Forbes.com, April 21, 2004, http://www.forbes.com/reuters/newswire/2004/04/21/rtr1341462.html.