Strah's sudden departure as FirstEnergy CEO appears to be voluntary, report indicates

FirstEnergy Corp. isn't saying why Steven Strah resigned as its president and chief executive officer on Thursday, with board chairman John Somerhalder II named as interim CEO.

But at least one industry analyst's report indicates that Strah's resignation, announced as a retirement, was voluntary.

FirstEnergy disclosed after the stock market closed Thursday that Strah, 58, who had been with the Akron utility for 38 years, was retiring from the company immediately, including as a board member. Somerhalder, 66, brought into the board of directors in 2021 and who has experience as CEO at other companies, was named acting CEO until a permanent replacement is hired from outside the company.

Steven Strah:'There were fundamental things that had to be corrected' after scandal

The company has been making major executive leadership and board changes in the years-long aftermath of the $61 million Larry Householder/House Bill 6 bribery scandal in which the utility admitted to playing a major role in order to receive taxpayer subsidies for two former FirstEnergy-owned nuclear plants.

Investigations into the scandal are ongoing, with FirstEnergy having to pay a $230 million federal fine and sign what is called a deferred prosecution agreement with the Department of Justice.

Strah's resignation followed a management team review required in a settlement to a major shareholder lawsuit tied to the scandal. A federal regulatory filing noted that Strah will not receive severance pay or benefits. That's because Strah voluntarily retired and he instead is eligible for certain retirement benefits, a FirstEnergy spokeswoman said.

Stock market reacts to FirstEnergy change

FirstEnergy shares on Friday rose even as major stock market indices were down, in some cases sharply. FirstEnergy shares were up 67 cents, or 1.7%, to $41.08 as of 2:45 p.m. Over the past 52 weeks shares have ranged from a low of $35.32 to a high of $48.85.

Industry analysts took part in a conference call with FirstEnergy executives on Thursday over the abrupt departure of Strah and to discuss what that might mean for the utility.

"Somerhalder indicated that Strah's resignation was voluntary, with the board accepting his resignation," Morningstar utility analyst Andrew Bischof said in a note to clients. "Strah had been CEO for less than two years and has not been accused of any wrongdoing."

FirstEnergy's board of directors supported Strah's decision to retire, FirstEnergy spokeswoman Jennifer Young said Friday.

Strah's departure followed management review

FirstEnergy will not publicly discuss the management review, Young said.

"The company does not have any new information on the issues described in the deferred prosecution agreement," she said.

Morningstar's Bischof referred to the management review in his note.

"While the company is not required to disclose the report's findings, Strah was (chief financial officer) when FirstEnergy admitted it paid bribes to key legislators to pass HB 6 legislation," he wrote.

FirstEnergy's announcement that it will fill the CEO position with someone from outside the utility "is a smart decision and should help the company mend key regulatory relationships in Ohio," Bischof wrote. "We had previously thought an external candidate was needed after the termination (in October 2020) of previous CEO Chuck Jones. We think the board will act quickly to name a permanent successor."

FirstEnergy scandal:How the FBI claims Larry Householder corruptly parlayed $60M into a $1.3B energy bailout, personal gain

Strah succeeded Jones as CEO, initially on an interim basis.

The Ohio Consumers' Counsel issued a statement following the Strah announcement, noting it has been trying to work with the Public Utilities Commission of Ohio to depose Strah as part of its own investigation into FirstEnergy's activities.

“On August 4th, OCC asked the PUCO to sign a subpoena so we can take the deposition testimony of Mr. Strah," Consumers' Counsel spokesman J.P. Blackwood said. "It’s part of our investigating of FirstEnergy and its Ohio scandals. We have yet to receive the signed subpoena we still need from the PUCO. And recently the PUCO granted a request by the U.S. Attorney to place the PUCO’s  FirstEnergy investigations on hold. A legislative change is needed to give OCC its own subpoena power for investigating utilities.”

This article originally appeared on Akron Beacon Journal: FirstEnergy CEO Steven Strah's departure appears voluntary