Peterson's passion

CH2M Hill makes billion-dollar strides under eye of a modest leader

Roger Fillion, Rocky Mountain News

Published December 10, 2005 at midnight

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Meet Mr. Enthusiasm.

As a graduate engineering student 35 years ago, Ralph Peterson liked to raise his hand and ask his Stanford University professor questions.

"He was always asking questions. Good, deep, penetrating questions," recalled Perry McCarty, now a professor emeritus at Stanford.

And the questions didn't stop when students were dismissed. Peterson tagged along with McCarty back to the professor's office. Walking down the hall, the eager grad student peppered McCarty with new questions.

"I never had a student do that," said McCarty. "He just wanted to know everything - in depth."

Today, the 61-year-old Peterson is using that enthusiasm to run CH2M Hill, a global engineering and construction firm. It's Colorado's biggest private company that hardly anyone knows about. It ranks No. 8 among engineering and construction concerns on Fortune's list of the 1,000 biggest American companies.

As CEO, Peterson has earned kudos for his company's role in promoting the environment through its cleanup work and other environment-related projects.

The company is coming off an exceptionally notable year while avoiding the kind of negative publicity dogging other contractors such as Halliburton.

In Denver's backyard, CH2M Hill's Kaiser-Hill joint venture recently finished cleanup of the Rocky Flats nuclear weapons factory. Kaiser-Hill turned what the Department of Energy once reckoned to be a $36 billion, 70-year cleanup into a $7 billion, decade-long project.

The company also has secured big Hurricane Katrina-related contracts, as well as other deals for nuclear weapons cleanup and widening Interstate 25 through Colorado Springs.

CH2M Hill's track record under Peterson prompted the Rocky Mountain News business staff to vote him the 2005 Businessperson of the Year.

Peterson's zeal remains particularly notable, despite his recent battle with an especially nasty form of cancer. Peterson emits "tireless enthusiasm," said Denver Mayor John Hickenlooper, who enlisted his help when transitioning into office in 2003.

Hickenlooper, the 2003 Businessperson of the Year, also points to Peterson's management of employee-owned CH2M Hill as a model for running Denver.

"It's transparent. It's open," Hickenlooper said. "He consistently looks beyond his own self-interest."

Those who know Peterson call him humble. He doesn't have his own parking space. His office is modest by CEO standards, not occupying a corner spot. He's worked at the company for four decades.

The son of a Missouri railroad conductor, Peterson became CEO of CH2M Hill in 1991. Under him, the Douglas County company has become a juggernaut. It ranks No. 607 among the Fortune 1,000, having shot up 67 spots since 2004.

Revenue last year surged 26 percent, to $2.7 billion. Profits jumped 36 percent, to $32 million.

CH2M Hill's 15,000-plus employees perform hydroelectric dam repairs in Iraq. They're in line to manage trash removal, street repairs and other city services for a Georgia city nearly the size of Boulder.

In Mississippi, CH2M Hill is teamed with the Army Corps of Engineers, doing post-hurricane construction work.

The company's recent successes have come at a difficult time for Peterson. He's fighting stomach cancer after undergoing major surgery a year ago. Doctors cut out a tumor and more than two-thirds of his stomach.

But Peterson has rebounded, showing the same gusto he did as a grad student.

"I believe in optimism in the face of adversity," he told the News. "Plus, nobody likes to hear a whiner."

After a six-month medical leave, Peterson promptly jetted last spring to Ukraine, London and Washington state on business. He resumed his CEO job full time in August.

Peterson penned a memo that month to let employees know he had "zero" plans to step down anytime soon. That came as a relief to CH2M Hill co- founder Burke Hayes.

"He's going to be real hard to replace," said the 93-year-old Hayes, who hired Peterson.

The company was formed in 1946 in Corvallis, Ore., and moved its headquarters to Colorado in 1983.

Hayes hired Peterson 40 years ago after a brief interview before he'd graduated from Oregon State.

"After talking with him just a few minutes, I could understand this was a guy we were looking for," Hayes said.

At that time, the company was starting to gain attention in the engineering world for its work on the Lake Tahoe Advanced Wastewater Treatment Facility. The project drew national acclaim for preventing the degradation of Lake Tahoe by achieving a wastewater discharge of near-drinking water quality.

When Peterson came aboard, Hayes had a job in mind for the young man: to help develop a novel method for pricing water that would be used for industrial purposes. The customer was a top exec at Portland-based Pacific Power & Light Co. who was building an industrial park.

After Hayes and Peterson completed their initial work, they climbed into the CH2M car, a white Chevy station wagon, and made the 90-minute drive north to Portland. There, they met with the Pacific Power & Light exec and his team in the offices of a Portland law firm.

Hayes had decided to make the introductory remarks. Peterson would handle the details. Despite some initial trepidation, the young man performed well.

"He managed that meeting like an old-timer," Hayes said.

Since then, Peterson has spent the rest of his career at the company, taking time off to get his master's degree at Stanford in 1970. The company offered to loan him money to pay for school, without any requirement that he return to work there. Peterson said no thanks.

But shortly after heading south to Stanford's Palo Alto, Calif., campus, Peterson developed appendicitis. Surgeons removed his appendix. Peterson couldn't work. And the medical bills were piling up.

"He needed some money. We were delighted to loan it to him," said CH2M Hill co-founder James Howland, 89.

Peterson did return, taking various posts in Corvallis, the Washington, D.C., area, Idaho and Colorado. Before getting tapped as CEO 14 years ago, he was CH2M Hill's technology director - the No. 2 job at the company.

In 2004, Peterson earned a salary of $768,670. A $580,000 bonus and other forms of compensation brought his total pay to $2.1 million.

As CEO, Peterson has a night-owl reputation. He's known to fire off e-mails from his fifth-floor office at 2 a.m. He's an avid coffee drinker.

Peterson also has a reputation as a man who likes to mingle with everyone, regardless of their position in the company. Striding down the halls with visitors, he greets employees by name.

Andre Armstrong, a 25-year veteran who manages the company's internal communications, recalled a night in September 2004 when he brought a couple of engineering students to headquarters to meet Peterson.

The CEO was making coffee for himself and the cleaning staff. Armstrong and two students arrived as Peterson was greeting one of the cleaning women in Spanish.

"She responded as if it was a common occurrence," Armstrong said.

The students, he added, were bowled over by the encounter.

Among Peterson's proudest achievements: the deployment of an unusual employee stock-ownership plan that extended to all CH2M Hill employees the right to own company stock. Previously, a select group of about 10 percent of employees held the stock. They were unable to sell shares until they retired or left the company.

"It came into focus that what we needed was a different kind of program that had broader employee participation," Peterson said.

That program - which Peterson first envisioned while seated on a favorite park bench in Vienna, Austria - was launched in 2000. Once a quarter, employees can trade the stock among themselves over an electronic system. The board of directors sets the price.

Under Peterson, to be sure, CH2M Hill hasn't escaped controversy completely.

In 2004, congressional Democrats argued in a report that the company had a conflict of interest in Iraq, where it was managing contractors while doing business with the same firms in the U.S.

The report questioned the ability of CH2M Hill and California-based Parsons Corp. to detect fraud, waste and abuse in noncompetitive rebuilding contracts that had no cost limits.

"My advice to taxpayers is, 'Hold on to your wallet,' " Rep. John Dingell, D- Mich., told a news conference at the time.

The company dismissed the allegations, saying in a statement there was "absolutely no conflict of interest."

More recently, CH2M Hill was one of four big companies that won no-bid contracts to provide emergency housing after Hurricane Katrina. The $100 million contracts upset some lawmakers and business groups who charged the Bush administration hadn't done enough to ensure Katrina contracts were spread around, particularly to small and minority-owned Gulf Coast companies.

Peterson himself has been outspoken against corruption. In a recent speech before the American Society of Civil Engineers, he urged the engineering and construction community "to root out and eliminate for good the corruption that blemishes our . . . industry."

A registered Republican, Peterson contributes money to both major political parties. During federal elections from 1998 to the current 2006 cycle, he contributed more than $25,000 to Republicans and Democrats, as well as to CH2M Hill's political action committee.

"It means he donates fairly consistently," said Doug Weber, a researcher at the Center for Responsive Politics, a nonpartisan watchdog that compiled the data. "Of course, he's nowhere near the biggest guys."

CH2M Hill's PAC favors Republicans. During the 2004 election, it gave $343,726 to federal candidates; 67 percent of donations went to GOP candidates, according to the Center for Responsive Politics.

Peterson developed an interest in environmentalism as a child in Missouri. His parents didn't want the family to eat fish from the nearby Mississippi River, citing concerns about chemicals in the water.

"He's an environmentalist. But he's practical about it," said Eileen Claussen, an assistant secretary of state in the Clinton administration and now president of the nonpartisan Pew Center on Global Climate Change.

"He wants to run his business in a way that preserves the environment but also grows the business."

Claussen herself called Peterson "humble" and "not a typical CEO."

She recalled sitting with him at a 2004 awards dinner in Washington, D.C., sponsored by the Keystone Center for Science & Public Policy. The Colorado nonprofit was honoring Peterson for his business leadership.

According to Claussen, his comments, in effect, were: "It's great that you've given me this award. I'm trying to do the best I can."

Meet Ralph Peterson

• Born: Oct. 12, 1944, in Hayti, Mo. One of 11 children. Father a railroad conductor and mother a homemaker.

• Early career: Joined what was then Corvallis, Ore.-based CH2M in 1965 as a project engineer while a student at Oregon State University.

• Education: Graduated in 1969 from Oregon State with bachelor's degree in civil engineering. Received master's degree in environmental engineering from Stanford University in 1970.

• Career: Moved to Denver area with CH2M Hill in 1988 from northern Virginia. Became CEO in 1991.

• Family: Married 41 years to Betty D. Peterson. Two grown children and four grandchildren.

• Odd jobs: Worked in a hardware store in high school.

• Person he particularly admires: Leonardo da Vinci.

• Interests: Reading, snow skiing, fishing, and the performing and fine arts.

Construction giant

• Who are they? CH2M Hill, a global engineering and construction firm. It's Colorado's biggest private company. It ranks No. 8 among engineering and construction concerns on Fortune's list of the 1,000 biggest American companies. It has 15,000 employees working around the world.

• When was it founded? 1946 in Corvallis, Ore.

• What's with the name? The name CH2M Hill is derived from the names of the founders of the company. In 1946, Fred Merryfield (an Oregon State College civil engineering professor) and Holly Cornell, James Howland and T. Burke Hayes (former students of Merryfield's) formed CH2M using their initials to create the company name. In 1971, it merged with Clair A. Hill & Associates to become CH2M Hill.

Past winners

• 2004: Leo Kiely, president and CEO of Adolph Coors Co.

• 2003: Denver Mayor John Hickenlooper

• 2002: Greg Stevinson, president of Denver West Realty Inc.

• 2001, 1996: Charlie Ergen, CEO of EchoStar Communications

• 2000: Sam Addoms, former CEO of Frontier Airlines

• 1999: Joe Nacchio, former CEO of Qwest Communications

• 1998: Phil Anschutz, founder and former chairman of Qwest Communications

• 1997: John Malone, former CEO of TCI

2005 runners-up

• Steve Ells, Chipotle founder, taking the company public

• Wayne Murdy, Newmont Mining exec; having waded through all kinds of accusations, the gold company is now in the relative clear.

• Adam Aron, Vail Resorts' CEO, shook the ski company out of the doldrums, stock is up and SEC has canceled its investigation.

• Bill Owens, Governor of our state who has been running on a strong business platform

• Larry Mizel, MDC, year after year, Mizel continues to turn a profit for himself and his shareholders.

• Bill Barrett: Oil and gas magnate who has made a living starting companies and then selling them

Selection method

• The Rocky Mountain News' Businessperson of the Year is selected through a simple process: Business editors and reporters make nominations.

• Each staff member gets one ballot of all names and makes five selections. The list is then narrowed to the top five. For this list, voting is weighted, meaning that the person you like the most gets a 5, the person you like the least gets a 1. The results are tabulated, and the winner is announced.

- Rob Reuteman, business editor

Billions in business deals

Significant contracts for CH2M Hill in 2005:

NOVEMBER

• CH2M Hill is part of joint venture with Idaho-based Washington Group International, which wins $1.2 billion contract to manage a 250-mile highway-improvement program for Idaho.

SEPTEMBER

• CH2M Hill is one of four large companies to win no-bid contracts worth $100 million each to provide emergency housing after Hurricane Katrina. The Federal Emergency Management Agency awarded the deals. CH2M Hill's award was later boosted to a potential $500 million.

• CH2M Hill wins contract worth up to $200 million from the Army Corps of Engineers for construction work in Mississippi after Hurricane Katrina.

MAY

• CH2M Hill team wins $185 million contract from Washington state to design and build high-occupancy-vehicle lanes for a stretch of Interstate 5 in Snohomish County.

MARCH

• CH2M Hill and joint-venture partner Washington Group International win $2.9 billion federal contract to continue cleaning up the Idaho National Laboratory's former nuclear weapons site in eastern Idaho.

• CH2M Hill is part of team awarded $1.9 billion contract to manage the cleanup of the Columbia River Corridor along the outer edge of the U.S. Department of Energy's Hanford Reservation. The site, in Washington state, was a nuclear weapons factory.

FEBRUARY

• CH2M Hill and joint-venture partner SEMA Construction of Centennial win $130 million contract to widen Interstate 25 through the heart of Colorado Springs.

fillionr@RockyMountainNews.com or 303-892-2467

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