Opinion » Viewpoint

The Search for MLGW President

Herenton says it's "wide open"; meanwhile, can MLGW play the market with your money?



Despite clear indications that Joseph Lee is the favorite, Mayor Willie Herenton and a field of 14 other applicants appear to be serious about the search process for a new president for Memphis Light, Gas & Water.

The phrase in the job posting that may have done the most to juice interest is "salary negotiable."

Herenton said he was surprised that there were more than 60 applicants, including five current MLGW officials.

"There's not a lot of cohesiveness within the management ranks if all of them would throw their hats in the ring," Herenton noted.

He said the current salary of $184,000 is "inadequate" and that is why the application says the pay is negotiable. The City Council, however, will have something to say about that as well as the suitability of the eventual nominee.

Herenton said he is using the same search process that produced former police director Walter Crews, a popular former Memphis cop. The mayor said comparing local and out-of-town applicants often makes the local candidates look good, and he acknowledged a bias for a local candidate. Still, he insisted the search is a "wide-open process" even though Lee, the mayor's previous nominee and the current director of finance and administration, is one of the 15 contenders.

A seven-member screening committee will narrow the field to five to seven candidates in April. One member of the committee, union leader Rick Thompson, has publicly supported Lee. Thompson is business manager for the International Brotherhood of Electrical Workers.

"I want to be fair to all of them," Thompson said Tuesday when asked about his previous support for Lee.

The only City Council member of the screening committee is Edmund Ford, who pleaded for reconciliation with the mayor and gave Herenton a televised hug a few weeks ago. City councilman Brent Taylor, who opposed Lee before Lee decided to withdraw his name from consideration in the first go-round, said he still has concerns about Lee's lack of industry experience.

Herenton wants MLGW to be treated as a division of city government rather than an "island unto itself." Speaking on condition of anonymity, one MLGW official who is an applicant said Herenton is getting the benefit of the doubt for the time being when he says the search will be fair and not a sham.

The reinvention of MLGW's corporate culture following the departure of President Herman Morris is just one of the major issues facing the mayor and City Council. The board must also be replaced, and it isn't clear how much input the mayor, council, and new president will have.

Two current board members are on the search committee even though their terms have expired. One is chairman and acting president James Netters, who has said he does not want to be reappointed. The other is L.R. Jalenak, a retired corporate executive who is a possible reappointment.

The other search committee members are Patricia Mosby, a personnel officer for the Memphis Board of Education; Marc Jordan, president and CEO of the Memphis Regional Chamber of Commerce; and Linda Kerley, the mayor of Collierville. Suburban mayors have asked for more input on MLGW matters although the utility is owned by the city of Memphis.

A potential bombshell has been pointed out by one of the unsuccessful applicants, who sometimes point out issues nobody else will touch. Although he did not make the Final 15, Henry Nickell had 20 years experience with MLGW and has been a public critic of certain utility practices in newspaper stories and opinion columns. Nickell notes that MLGW has been playing the stock market with utility operating funds -- a questionable practice in light of language quoted in the 2002 MLGW annual report.

"Policy provides for investment of excess cash balances in short-term instruments and the investment of debt-service funds in instruments maturing as the related debt matures," the report says.

Short-term instruments include government bonds which are considered the safest investments. But MLGW's electric and water divisions both invested in mutual funds containing common stocks. So did the utility's so-called common fund. The total in 2002 (buried in the notes to the financial statement) was more than $63 million. In 2001, the total was approximately $72 million. It isn't possible to tell from the annual report if MLGW lost money in the market or reduced the size of its mutual fund investments.

Shelby County trustee Bob Patterson said utilities "as a rule cannot" invest operating funds in the stock market. Patterson was traveling this week and did not have immediate access to the MLGW charter but said if the charter was amended there could still be an issue of whether the City Council approved it and whether state and federal law allows it.

E-mail: branston@memphisflyer.com

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