FirstEnergy Names Steven E. Strah Chief Executive Officer
Strah also appointed to FirstEnergy Board of Directors; continues to drive key initiatives to address current challenges, enhance shareholder value, and support the company’s future growth trajectory
Akron, Ohio – FirstEnergy Corp. (NYSE: FE) today announced that Steven E. Strah has been named the company’s chief executive officer and a member of the Board of Directors, effective immediately. Strah has served as acting chief executive officer since October 2020, and as president, a position he continues to hold, since May 2020.
“Steve has consistently demonstrated the leadership skills, strategic acumen, and deep knowledge of our business needed to position FirstEnergy for long-term stability and success,” said Donald T. Misheff, non-executive chairman. “Since his appointment as acting CEO, he has taken meaningful steps to put FirstEnergy on the right path forward, including ensuring a renewed emphasis on compliance and transparency throughout the company; laying out his strategy, including through FE Forward, to transform the company; and working to reduce regulatory uncertainty affecting the company’s Ohio utilities. The Board has full confidence in Steve and believes this is the right time for him to take the CEO role as we execute on the company’s strategic priorities for the benefit of all stakeholders and drive enhanced value for shareholders.”
Strah said, “During my time leading the company as acting CEO, I have worked alongside
the Board and the rest of the management team to address the challenges facing the company and ensure FirstEnergy stands on solid financial, operational, and regulatory footing. Moving forward, we remain focused on driving strong performance, engaging constructively with regulators and our other stakeholders, and fostering a culture of uncompromising integrity and ethical behavior, starting from the top. I appreciate the Board’s confidence in me and in our management team as we continue to implement the company’s strategy and deliver the safe and reliable electric service FirstEnergy’s customers depend on every day.”
Implementing Key Initiatives to Strengthen FirstEnergy’s Future
The Board of Directors and the executive management team under Strah’s leadership have acted with a sense of urgency to address current challenges and are implementing key initiatives to enhance shareholder value and reshape FirstEnergy into a more resilient, industry-leading organization of the future. Since being appointed acting CEO, Strah has spearheaded the company-wide FE Forward program that is expected to transform FirstEnergy in a way that provides near-term value while opening new opportunities for longer-term growth. The proactive steps being taken will support the company’s future growth trajectory for the benefit of shareholders and all stakeholders.
Strah said, “We are confident that these initiatives, which we have developed over the last several months, will strengthen our business and build on the substantial progress we have already made toward our objectives with FE Forward. We are undertaking a transformation that is intended to enhance value for our shareholders and improve our credit profile while reinvesting in a truly modern and distinctive experience that improves customer service and satisfaction – all of which will put FirstEnergy on the right path forward.”
As shared in the company’s most recent quarterly earnings, the management team has
set a path with FE Forward to build upon the company’s strong operations and business fundamentals and deliver immediate value and resilience, with substantial operating and capital efficiencies ramping up through 2024.
By 2024, FE Forward is projected to generate approximately $300 million in annualized capital expenditure efficiencies while continuing to hold operating expenses flat by absorbing approximately $100 million in projected increases. In addition, the company expects to generate approximately $250 million in working capital improvements by 2022. This program includes an estimated $150 million of costs to achieve through 2023, which are expected to be self-funded through these efficiencies.
FE Forward is not a downsizing effort and there will not be any involuntary employee reductions in connection with this program. FE Forward will optimize processes and procedures through a range of opportunities, including:
Optimizing operations by expanding capabilities in areas such as strategic sourcing, inventory optimization, and commercial contract terms, and by standardizing best-in-class work management policies across the enterprise;
Accelerating the company’s digital transformation by revamping customers’ online experience, automating sourcing data collection and management, and deploying advanced analytics in asset health decisions as well as vegetation management programs; and
Productivity improvements through system integration that puts advanced technology tools, such as mobile dashboards and remote access to asset management information, in the hands of frontline employees.
FE Forward is expected to be a significant catalyst to augment the company’s growth potential by taking a more strategic approach to operating expenditures and reinvesting in a more diversified capital program that over the long term continues to support a smarter and cleaner electric grid. As part of these efforts, the company will evaluate the appropriate cadence to initiate rate cases on a state-by-state basis to best support the company’s customer-focused strategic priorities.
With respect to FirstEnergy’s overall financing plan, equity remains an important part of the company’s plan with $600 million expected to be issued annually in 2022 and 2023, as reaffirmed in its most recent quarterly earnings, with flexibility to adjust the equity plan as necessary. The company will also explore various alternatives to raise capital to strengthen its core business and support enhanced credit metrics as well as its long-term regulated transmission and distribution growth objectives. While the 2021 debt financing plan remains unchanged, through FE Forward the company expects to reduce its debt financing plan by up to $1 billion through 2023, mainly at the FirstEnergy and FirstEnergy Transmission holding companies. These actions, coupled with the company’s 60%-plus formula rate capital investment program, are expected to enable FirstEnergy to achieve its targeted funds-from-operations to debt ratio of 12-13% in 2024.
The company is reaffirming its 2021 guidance as disclosed in its most recent quarterly earnings. The company also expects to maintain its quarterly dividend in 2021, holding flat to the 2020 level as previously stated, subject to ongoing Board review and approval.
About Steve Strah
Strah is a highly respected energy executive, with 36 years of industry experience and a deep understanding of the FirstEnergy business. He was appointed president in May 2020, a
position he continues to hold, overseeing FirstEnergy Utilities; Corporate Services and
Information Technology; Finance; Product Development, Marketing and Branding; External Affairs; Rates and Regulatory Affairs; and Strategy. He began his career with The Illuminating
Company in 1984 and served in a variety of utility leadership roles including regional president
of Ohio Edison; vice president, Distribution Support; and senior vice president, FirstEnergy
Utilities. He was elected senior vice president and chief financial officer in 2018.
FirstEnergy is dedicated to integrity, safety, reliability and operational excellence. Its 10
electric distribution companies form one of the nation's largest investor-owned electric
systems, serving customers in Ohio, Pennsylvania, New Jersey, West Virginia, Maryland and
New York. The company's transmission subsidiaries operate approximately 24,500 miles of
transmission lines that connect the Midwest and Mid-Atlantic regions. Follow FirstEnergy on
Twitter @FirstEnergyCorp or online at www.firstenergycorp.com.
Non-GAAP financial measures: This news release contains a reference to expected funds-from-operations (FFO), a non-GAAP financial measure. Generally, a non-GAAP financial measure is a numerical measure of a company’s historical or future financial performance, financial position, or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with accounting principles generally accepted in the United States (GAAP). Management uses FFO to evaluate the Company’s performance and manage its operations and frequently references this non-GAAP financial measure in its decision-making, using it to facilitate historical and ongoing performance comparisons. Non-GAAP financial measures are intended to complement, and are not considered as alternatives to, the most directly comparable GAAP financial measures. Also, the non-GAAP financial measures may not be comparable to similarly titled measures used by other entities. Quantitative reconciliation of expected FFO, as used herein, would not be possible without unreasonable effort, as such none is provided.