After signing on as CFO and executive vice president of New Jersey-based power company Public Service Enterprise Group (PSEG) in 2009, Caroline Dorsa moved quickly to strengthen the company’s balance sheet and streamline costs.
Dorsa says the cost-cutting was done via a “detailed focus on every line item in the budget.” PSEG also adopted “a more structured approach to procurement” and recruited a new procurement head, she says.
And as the financial markets began to stabilize late in 2009, Dorsa and her finance team went to work replacing a series of outstanding debt securities through exchange offers. The effort lengthened the duration of PSEG’s outstanding debt and gave the company fresh access to longer-term financing, while cutting the costs of its debt portfolio at a time when the economic outlook remained uncertain.
“Our team looked at the long-term history of the capital markets and the long-term viability of the creditworthy borrowers,” Dorsa says. “We used a strategy to recapitalize that we thought would over time take advantage of more hard capital markets.”
She notes that although more than a quarter of PSEG’s outstanding debt matures in 20 years or longer, the company’s weighted average cost of debt is less than 5.6%.
Dorsa brought an extensive finance background to her position at PSEG, along with experience in aligning a company’s financial structure with its strategic planning.
“Financial strategy must support the corporate strategy, i.e., provide the company with the financial platform to accomplish its goals,” she says.
At PSEG, that has involved ensuring a stable credit rating while unloading international assets to contain risks and fund the company’s investment growth strategy, Dorsa says. “By conservative financial management, which used proceeds of international divestitures to pay down debt, and disciplined investment to ensure that we invest only at our weighted average cost of capital or better, we ensure that the balance sheet is strong, and equity is not needed to execute our plan.”
Earlier in her career, Dorsa served as treasurer of Merck for more than 12 years and was secretary of the finance committee of Merck’s board of directors.
She left Merck to become CFO of Avaya and Gilead Sciences then returned to Merck, where she held a series of roles, including senior vice president of global human health, strategy and integration. It was during her most recent stint at Merck in 2003 that Dorsa became a director of PSEG and a member of the company’s audit, corporate governance and finance committees.
“I’ve had outstanding opportunities,” she says. “I see lots of opportunity for women in finance.”
Looking ahead, Dorsa says the challenge for PSEG is the commodity cycle, “which has put downward pressure on power prices. We have to stay disciplined to ensure that we have the financial flexibility to succeed in a low-power-price environment,” she says.
See the complete coverage of Treasury & Risk’s 2011 Women in Finance list here.