Utility sale clearly not a done deal

Ah, to own so much stock that the mailbox overflows with proxy statements, so much so that a chance to vote on Hawaii’s biggest corporate deal of the year gets overlooked. That’s the implausible scenario the head of Hawaiian Electric Industries Inc. offered as one reason the utility failed to get enough votes at its shareholders’ meeting to approve its planned $4.3 billion sale to Florida-based NextEra Energy Inc.

HEI needs the owners of 75 percent of all outstanding shares to approve the deal. Ninety percent of the shareholders who had voted as of Tuesday’s meeting voted for the sale, but they represent 70 percent of all shares — 5 percent short of the super- majority required under state law.

Shareholders allowed HEI to extend the voting deadline by a month, and the company could do so again if enough proxies don’t come through by June 10.

"Now it’s the busiest proxy season time and graduation. So we thought we would give ourselves another month to solicit more votes," said Connie Lau, HEI’s president and chief executive officer. "Even me, during this proxy season my mailbox is getting stuffed with annual reports and proxies."

Lau is among the highest-paid executives in Hawaii, earning $5.6 million in total compensation last year. It’s no surprise that she must keep track of multiple proxy statements. It is doubtful, though, that the owners of all 22 percent of HEI shares still outstanding are in the same boat.

Some local shareholders may have grave doubts about the proposed takeover of a Hawaii institution by a Florida-based conglomerate that has no history of doing business in the islands. Small investors may worry that dividends they rely on for predictable income will decrease if the deal goes through. Their absent proxies may serve as passive opposition, not disinterest or lack of awareness.

Uncast shares count as "no" votes against the sale, just like the 8 percent of shares that have been voted outright against the sale so far. During the voting extension, shareholders who have already cast their proxies can revoke them, an option that one shareholder has publicly promoted, on the grounds that HEI needs to be more open with information about the sale’s potential effects on shareholders, and because it is premature to decide while the Public Utilities Commission is in a relatively early stage of its own review.

The PUC’s review includes input from 29 intervenors, all highly engaged in Hawaii’s evolving energy landscape and representing diverse interests, including the natural gas and solar energy industries and environmental and consumer groups.

The PUC, which does not expect to issue a decision this year, could OK the proposed sale, seek to change aspects of the deal and then approve it, or reject it as contrary to the best interests of Hawaii electricity customers.

Until now, it is those consumer interests, as well as corporate ones, that have dominated the discussion about HEI’s proposed sale to NextEra Energy.

The outcome at the special shareholders’ meeting, which came despite strong corporate outreach urging "yes" votes, puts shareholders squarely in the spotlight, reminding all involved that this sale is far from a done deal. Once again, we see that every vote counts.

It will take more than additional time for HEI to round up the proxies it needs. It must clear an exceptionally high hurdle for approval, and would do well to openly and fully address all shareholders’ concerns without delay.