Aqua America director resigns, citing concerns about board control
A director of Aqua America Corp. has resigned after questioning whether his fellow board members at the Bryn Mawr-based for-profit water company are truly independent and capable of criticizing the company's chairman, Nicholas DeBenedictis, who has held the top board post since 1993.
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A director of Aqua America Corp. has resigned after questioning whether his fellow board members at the Bryn Mawr-based for-profit water company are truly independent and capable of criticizing the company's chairman, Nicholas DeBenedictis, who has held the top board post since 1993.
The dissident, Michael L. Browne, goes way back with the chairman: Browne and DeBenedictis served together in Republican Pennsylvania Gov. Dick Thornburgh's cabinet in the 1980s.
DeBenedictis later served on Browne's board when Browne ran Harleysville Mutual Insurance Co. And Browne joined DeBenedictis' board at Aqua America in 2013 after he sold Harleysville to Nationwide Mutual Insurance Co.
Their reciprocal relationship was upended on March 10 when another Aqua director, Ellen Ruff, told Browne he "will not be renominated to the board of directors of Aqua America" because of "my lack of public utility experience," Browne wrote in a letter that Aqua made public in an SEC filing.
But Aqua's explanation was "disingenuous," wrote Browne, a decorated Marine combat veteran who was Pennsylvania's top insurance regulator under Thornburgh: "In reality, the reason for this action is to ensure that there can be no effective criticism of the non-executive chairman of the board nor any truly independent voice on the board as regards corporate governance matters."
Browne called the board's lack of independence "contrary to the best interests of America's shareholders." And he resigned, "effective immediately."
"The board did not agree with the concerns expressed by Mr. Browne in his resignation correspondence," and voted to let him go, Aqua said in a statement to the Securities and Exchange Commission. Calls to Browne's Montgomery County home and to Aqua were not immediately returned.
Aqua serves three million water and sewer customers in Pennsylvania, New Jersey, and six other states. Revenues totaled $814 million last year, up from $780 million the year before.
Besides chairman DeBenedictis, Aqua directors include some with utility experience: Ruff, a North Carolina utilities lawyer; Wendell Holland, a former chairman of the Pennsylvania Public Utility Commission; and Lon Greenberg, a former head of AmeriGas LP; along with prominent Philadelphians Richard Glanton, a lawyer, and William Hankowsky, boss at Liberty Property Trust, the Philadelphia-based high-rise office developer and warehouse landlord.
The other director is Christopher Franklin, DeBenedictis' protege, who took over as Aqua CEO last year after a nationwide search. DeBenedictis, 70, stayed on as non-executive chairman.
Since Franklin replaced DeBenedictis as day-to-day boss last year, Aqua shares have risen to an all-time high, in the low $30s a share, as dividend-paying utility shares have attracted investors worried about falling industrial share prices.
In a report sent to clients before Browne resigned, the West Conshohocken investment bank Boenning & Scattergood called Franklin's new management style "a breath of fresh air" at Aqua America, and predicted that the firm will soon be buying up municipal water systems across the state.
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