At Pedernales Electric’s July 14 special Board meeting, held at its Johnson City aq headquarters, the PEC Board swore in its newly elected members and chose new officers to lead the Cooperative. The seven voting directors of Pedernales Electric’s Board elected District 5 Director R.B. Felps as President on a 4-3 vote and District 2 Director James E. Williams as Vice President by a 5-2 margin. District 4 Director O.C. Harmon faced no opposition and was unanimously elected Secretary-Treasurer.

In his parting remarks, former Board President E.B. Price thanked the new Board members for their service and stressed two priorities: the long-term power contract currently being negotiated with the Lower Colorado River Authority and the need for Board members to make decisions in the best interest of the Cooperative. Resigning Board member Libby Linebarger mentioned that her initial plan had been to retire at the same time as her husband; she decided to stay on the Board out of a “sense of obligation to see things through.” Her contribution to the Compensation Committee was her last official act as an Advisory Director-at-Large.

New Board members then had an opportunity to introduce themselves and make comments. District 6 Advisory Director Charles Tesar was the first to speak, noting that his first priority is to represent the PEC members. Tesar questioned a number of the past Board’s decisions, including PEC’s investment in Envision Utility Software Corporation and the civil lawsuit settlement. He stated, however, “I’m anxious to work with the incumbents, but we have a huge amount of work to do.”

District 7 Director Patrick Cox recognized Pedernales Electric’s strong history, while also noting that this is the beginning of a new era. “We need to be positive in our actions,” Cox said. “We can all work together on behalf of PEC members.”

District 2 Director James E. Williams noted that in his conversations with new and incumbent Board members, a common theme has been doing what is best for the Pedernales Electric membership. “My intent,” Williams said, “is restoring PEC’s good name, both with our members and the press.”

In her comments, District 3 Director Kathryn Scanlon expressed her desire to work on behalf of the membership and her commitment to the principles of conservation, openness and ethics.

Compensation Committee Report

Outgoing Advisory Director-at-Large Libby Linebarger, who chaired the Board’s Compensation Committee, presented the committee’s findings. Linebarger reviewed the committee’s objectives and approach, including the previously released initial compensation report conducted by Chicago-based Navigant Consulting, Inc., and then presented the following committee recommendations:

• Leaving the per-meeting fee at $750 and compensating Board members in committee meetings at that rate.

• Leaving the fixed monthly fee at $2,000 per month.

• Eliminating PEC payment of health, dental and life insurance premiums for Board members and their spouses. The committee recommended that the Cooperative continue to offer Board members, on a voluntary basis, access to Pedernales Electric’s group health and dental coverage. Each Board member would pay their own premiums for the plans.

• The committee also recommended that PEC continue to provide group Medicare supplement insurance to Board members 65 or older, elected or appointed prior to June 21, 2008, if they leave the Board with at least 10 years of service.

• For Board members elected or appointed after June 21, 2008, the committee recommended providing access to the Cooperative’s group Medicare supplement insurance, if they leave the Board with at least 10 years of service. These Board members pay their own premiums for the coverage.

In explaining the basis for the committee’s recommendations, Linebarger stated that eliminating Board member benefits would reduce average compensation by 22 percent, cutting the average Board member’s compensation to $39,000 annually. This would effectively bring Pedernales Electric’s Board compensation to 2002-2004 levels. Linebarger also noted that industry trends show a move away from providing Board compensation in the form of benefits, and eliminating benefits would result in more equitable compensation among Board members. Linebarger said the change would put PEC Board compensation at or significantly below the median and average when compared on a normalized per-dollar-of-revenue, asset- or number-of-members basis.

While the committee was primarily charged with studying Board compensation, Linebarger presented three additional recommendations for consideration:

• Establish a committee to evaluate the current number of Directors and Advisory Directors, and their relative responsibilities as voting and non-voting Board members.

• Prepare written charters for each Board committee that include a defined number of meetings expected from each committee per year.

• Clearly define the duties and responsibilities of Directors and Advisory Directors in relation to the fixed monthly fee.

After the presentation, Linebarger fielded questions from Board members on Navigant Consulting’s initial survey methodology. Action on the committee’s recommendations will be taken at a later date, and the complete document is available for review on the PEC web site, http://www.pec.coop.

With the committee presentation concluded, the Board voted to table the remaining agenda items and proceed to the orientation workshop for new members. Texas Electric Cooperatives President and Chief Executive Officer Mike Williams led the workshop session with a detailed presentation of an electric cooperative board member’s responsibilities.

After Williams concluded his remarks and answered questions, PEC General Counsel Kimberly Paffe informed the Board about key legal issues such as conflicts of interest, the Cooperative’s articles of incorporation and bylaws, while Chief Financial Officer Mike Vollmer presented an overview of key financial documents. General Manager Juan Garza concluded the workshop with a list of items for Board consideration, such as training issues, rotating meeting locations and strategic planning.