Elliott Seeks Ouster of NRG Energy CEO
Activist is in talks with CEO, other executive replacement candidates
Elliott Investment Management is ratcheting up the pressure on NRG Energy NRG 1.07%increase; green up pointing triangle and is now seeking to oust its chief executive, according to people familiar with the matter.
The activist investor is in talks with potential candidates to replace Chief Executive Mauricio Gutierrez as well as other top executives, the people said.
Elliott disclosed in mid-May that it had taken a $1 billion stake in the power company, or about a 13% economic interest.
Elliott said in a public letter last month that it aimed to refresh NRG’s board, cut costs and implement a strategic review of the company’s home-services unit, Vivint. It called the acquisition of Vivint “the single worst deal in the power and utilities sector during the past decade.”
NRG shares closed Wednesday at $33.88, having risen about 6% so far this year, giving the company a market capitalization of roughly $7.8 billion.
A spokeswoman for NRG said in an emailed statement that the company “looks forward to discussing NRG’s strategic plan” with shareholders at an investor day scheduled for Thursday morning.
“The board fully supports NRG’s CEO Mauricio Gutierrez and management team and the strategy they are executing to drive substantial shareholder value,” the spokeswoman said.
In early May, NRG reported a net loss of $1.3 billion for the first quarter, compared with net income of $1.7 billion in the prior-year period. Revenue fell slightly to $7.7 billion from $7.9 billion.
The company said its losses were primarily related to large declines in natural-gas and power prices.
Elliott previously disclosed a large investment in NRG in 2017. It was successful then in helping appoint two new board members and helping push NRG to revise its business plans and to consider selling assets and slashing debt.
Since then, however, Elliott has said that NRG has become unfocused on its turnaround plans, including with the Vivint deal.
NRG’s $2.8 billion purchase of Vivint was completed in March, a bet that the company made in part to offer customers simpler options to service their homes.
NRG said earlier this month that Bruce Chung would succeed Alberto Fornaro as chief financial officer, effective June 1. Chung had served as head of strategy and M&A at NRG since 2016.
NRG also said earlier this month that Constellation Energy would buy out its 44% stake in the South Texas Project Electric Generating Station, in a deal valued at $1.75 billion. NRG said the move was part of its broader portfolio-optimization strategy.
Gutierrez became CEO of NRG in 2015, having previously held the role of chief operating officer. He joined the company in 2004.
In its May letter, Elliott said NRG “must restore the credibility of the management team” and the board, without specifying further.
Elliott is known for taking on tech companies and others and forcing changes that include sales and executive shake-ups. Its targets have included Salesforce, PayPal, Twitter, Duke Energy and U.S. utility Evergy.