NRG Energy CEO David Crane Resigns
NRG Energy Inc.’s high-profile chief executive stepped down on Thursday in the face of investor unhappiness over his investments in renewable energy and this year’s 59% drop in the power-generation company’s share price.
CEO David Crane, a Harvard-trained lawyer and onetime investment banker who led NRG for a dozen years, resigned effective immediately and was succeeded by the company’s chief operating officer, Mauricio Gutierrez.
“My sense is that over the course of my business life I probably have talked too much and this might be a good time to err on the side of speaking too little,” Mr. Crane wrote in an email, declining to comment further on his departure.
The Princeton, N.J.-based company is one of a dwindling number of merchant power companies that sell electricity to utilities.
Mr. Crane, 56 years old, was the architect of its bold strategy to greatly expand NRG’s fleet of gas- and coal-burning power plants and build a presence in solar and wind power.
AdvertisementBut a billion-dollar investment in renewable energy failed to generate the profits that Mr. Crane had anticipated and became a drag on earnings and the company’s stock, which ended 2014 at $26.95. It closed at $10.97 a share in 4 p.m. composite trading on the New York Stock Exchange on Thursday.
In September, Mr. Crane announced a new strategy to split off NRG’s renewable-energy enterprises, including a residential rooftop solar business, and find investors willing to sustain them until they become profitable. In an interview that month with The Wall Street Journal, he said he expected the unit, which he called GreenCo, to be created and capitalized by the middle of 2016.
His abrupt departure raises questions about whether that split will occur. An NRG spokeswoman said the company would have no comment beyond its disclosure of the management change.
Mr. Crane has agreed to assist in the transition through month’s end, NRG said.
Analysts have said NRG should have moved earlier to hive off its money-losing enterprises and focus its attention on wholesale power and on selling electricity through a retail arm. Its consumer business has about three million retail customers.
“It has been a tough time for merchant power in general and NRG got pushback on the new strategy,” said Ali Agha, a SunTrust Banks Inc. analyst. But, he said, what likely drove Mr. Crane’s departure was “the hit to the stock price.”
In an interview two months ago with the Journal, Mr. Crane said the company’s directors hadn’t talked to him about leaving. “The board has been very supportive,” he said. “They want to see the plan implemented and they believe I’m the best one to implement it.”
But he also acknowledged “there are at least two sets of people above my pay grade—shareholders and the board of directors,” who would decide who was most capable of leading the company.
Like many other companies, NRG failed to predict the price of natural gas would tumble to about $2 a million British Thermal Units this year, a collapse that reduced wholesale power prices and cut NRG’s revenues. The company lost roughly $78 million on revenue of $11.6 billion in its first three quarters this year.
This week, NRG said it would sell two plants—a coal-fired plant in Pennsylvania and a natural-gas plant in Illinois—for $138 million combined, a fraction of what it would cost to build them.
NRG said the cost of maintaining the plants would outweigh their contributions to earnings.
Mr. Crane had told the Journal earlier that investors made clear they would rather have had profits from the power-generation business returned to them through dividends and stock buybacks and not poured into the fledgling clean-energy enterprises.
“We’ve been willing to try new things and have an appetite for risk,” said Mr. Crane in October. But, he added, “We have to be mindful that industry logic and investor logic do not always coincide.”
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