When Bill Gipson assumed the role of CEO at Empire District Electric Co. (NYSE: EDE) on May 1, 2002, there was a book waiting for him in the top drawer of his new desk.
Inside the cover of "The Five Temptations of a CEO" was a personal note from his predecessor, Myron McKinney. Though Gipson keeps the message to himself, he admits that its part of a tradition among CEOs at Empire - one that he intends to continue when Brad Beecher takes over as CEO on June 1.
Gipson, 54, officially announced his retirement at a board of directors meeting Feb. 3. His retirement will be effective May 31. The board promoted Beecher, 45, to executive vice president and chief operating officer and was elected to succeed Gipson. To hear the two of them tell it, however, the transition is one for which Gipson has been preparing Beecher for many years.
"May 1, 2002, is when I started thinking about it," Gipson said of his transition preparations. "I believe the primary job of a manager is to prepare people to replace you. From the very beginning, I had Brad go to some executive leadership training, and I wanted him to be exposed to all areas of the business."
Beecher's perspective: "Bill was taking steps to prepare more than just me," he said, pointing to other management changes that will coincide with Gipson's retirement. "What we tried to do was bring people with individual strengths to the job, not just try to force-fit someone into something they may not be good at. Some of them are new (to the company), and some are old. But even when I came back to the company in 2001, Bill told me, 'You need to figure out who's going to replace you.'
"Probably the best advice he's given me is that Empire is not about a particular person, it's about all of our employees and the role we play in our community. The true measure of our success is how well we meet our customers' needs."
Gipson said he measures some of the success of the company during his nine-year tenure by the amount of construction projects completed. Gipson will leave with the company's assets at nearly $1.5 billion - about double that of $860 million in 2004. Gipson said much of that is attributed to building new generating capacity at local plants, as well as at power plants in the Kansas City area and in Arkansas.
"We had a purchase power contract in place that, when it expired, was 15 years," Gipson said. "We've replaced that with facilities that we own, and that gives our customers decades of security. Financially, that has been a top priority. We've spent a lot of time doing that - (equivalent to) $1.2 billion in financing or refinancing."
Beecher said he feels the pressure of pleasing shareholders - the company has more than 41 million shares outstanding - but the challenges he will face in the future differ from those construction and funding challenges undertaken by Gipson.
"That's in our rearview mirror," Beecher said. "We're still responsible to provide our customers with cost-effective power. We're going to have to look at how we can fund the retrofit of our coal plants, or spend hundreds of millions to replace them. That's the next set of decisions we have to make, and they're queued up to be made pretty quick. There are regulations on the horizon that are making it harder and harder to burn coal."
Gipson said Beecher's specialty is with environmental control, and that the changes Empire will need to make in the coming years are "kind of in Brad's wheelhouse."
"His knowledge and experience is top of the industry in that regard," Gipson said. "We've also spent a lot of time together going over the role of a CEO. I've had him interact with the financial community, introduced him to all of our major shareholders and analysts, and we've worked at length on how to interact with the board of directors, our customers and community leaders."
When Gipson leaves in June, he will have been with the company for 30 years. He said he's not yet ready to "sit on the porch" full-time, but that he is looking forward to fishing and traveling.
Gipson has been nominated by the board of directors to stand for re-election to the board at the annual shareholders meeting set for April 28. Beecher also has been nominated for election to the board.
As of Dec. 31, 2009, Gipson earned $641,000 a year in the top spot, and Beecher was compensated $407,000 as executive vice president, according to Securities and Exchange Commission filings. In Empire District's annual report filed Feb. 17, officials said new executive compensations would be available in proxy statements for the annual shareholders meeting April 28.
Empire has about 215,000 customers in Missouri, Kansas, Oklahoma and Arkansas. A subsidiary of the company also provides fiber-optic services.
Empire District Electric Co. shares were trading at $21.39 as of 12 p.m., compared to a 52-week range of $17.57 to $22.50.[[In-content Ad]]
