Seth A. Shapiro won final approval Tuesday as the next chief executive officer of Philadelphia Gas Works, despite a last-minute effort by critics to derail the appointment after Mayor James Kenney chose Shapiro without conducting a formal executive search.
The Philadelphia Gas Commission voted 3-1 on Tuesday to approve the appointment of Shapiro, 49, a real estate development executive who has spent much of the last 16 years on PGW’s board of directors, including the last five as chairman.
“The decision is being made without an executive search, with no real process, and a stark lack of transparency into the decision making,” said City Controller Rebecca Rhynhart who cast the lone dissenting vote. A formal search would give the public confidence that Shapiro was the right choice to run PGW, she said.
Shapiro, currently chief operating officer of Blue Bell development company the Goldenberg Group, is set to step into the role of chief operating officer of PGW on Jan. 4, at a salary of $375,000.
After less than a year as chief operating officer, Shapiro would take over from Craig E. White, who is retiring as CEO on Dec. 1, 2021. Shapiro would be paid $450,000 a year as CEO, plus an incentive bonus of up to 10% at the discretion of PGW’s board of directors. His contract runs through the end of 2025.
PGW, the nation’s largest municipal gas utility with 500,000 customers, had $685 million in revenue last year and about 1,600 employees. It is perennially challenged by aging infrastructure issues and a large number of low-income customers who struggle to pay their bills.
Kenney on Sunday wrote to the gas commission, which is chaired by Councilmember Derek S. Green, and called Shapiro the “ideal candidate” for the post.
Addressing criticism that the city did not conduct a formal search for the post, Kenney said that past PGW executive searches generated private-sector candidates whose salary demands were too high, and that their understanding of PGW’s public ownership complications were too low.
“Historically, PGW has not fared well when recruiting leadership from the outside,” Kenney wrote. “In addition to having unmeetable salary demands, these candidates have not had an appreciation for the unique nature of PGW’s governance structure, and the needs of city residents.”
Shapiro was a member of PGW’s board of directors, the Philadelphia Facilities Management Corporation (PFMC), the nonprofit that oversees the utility and whose unpaid board members are appointed by the mayor. He resigned several months ago as chairman, and the board then nominated Shapiro to the CEO’s position.
Four members of the public spoke Tuesday during the gas commission’s meeting, conducted on a teleconference. All expressed opposition to the appointment, based upon the search process and concerns that Shapiro lacks utility operating experience.
“He may be the best person,” said Steven Hershey, a retired PGW vice president for regulatory and external affairs who said the city should have conducted a search for candidates experienced in utility operations. ”Let’s find out.”
Hershey, former CEO Thomas Knudsen, and a coalition of environmental and social advocates on Monday pressed the commission to delay the appointment of Shapiro. The coalition of 19 advocacy groups, in a letter to the commission, expressed concern that the appointment was conducted without transparency and “reinforces institutional racism by failing to seriously consider the diversity of potential leadership.”
Three of the gas commission’s five members endorsed the Shapiro nomination.
Councilmen Curtis Jones and Green, who occupy City Council’s two seats on the commission, said they supported Shapiro because of his experience on the PGW’s board of directors and his understanding of the utility’s competing constituencies: customers, gas-workers union, City Council, the mayor, and state regulators.
Royal E. Brown, a retired Independence Blue Cross executive and mayoral appointee, also voted for Shapiro. The commission’s fifth member, mayoral appointee Jocelyn G. Hill, the general counsel of Conrail, was not present.