FirstEnergy Corp. has fired its CEO amid multiple federal investigations related to an Ohio nuclear bailout law passed year.
The Akron-based utility company announced in a Thursday evening news release it had terminated CEO Chuck Jones, effective immediately. The company promoted its president, Steven Strah, to acting CEO, while board member Christopher D. Pappas was named executive director.
The company also fired two others: Senior Vice President of Product Development, Marketing, and Branding Dennis Chack, and Senior Vice President of External Affairs Mike Dowling.
The company said the three executives were fired after an internal review committee determined they “violated certain FirstEnergy policies and its code of conduct.” The company didn’t offer additional details in its press release, and a company spokeswoman declined to elaborate.
Jones, a longtime FirstEnergy executive, has been the company’s CEO since 2015.
Donald T. Misheff, FirstEnergy Non-Executive Chairman, said in a statement: “We as a Board have strong confidence that this leadership transition and Steve’s appointment as Acting CEO will position FirstEnergy to move forward with positive momentum and drive long-term shareholder value creation.”
The moves come amid a federal investigation into House Bill 6, signed by Gov. Mike DeWine last year, which will send more than $1 billion to two Ohio nuclear plants owned by a previous FirstEnergy subsidiary starting in January.
Prosecutors have alleged FirstEnergy and its affiliates gave $61 million in bribes to former House Speaker Larry Householder, money that was used to fund political spending to help Householder get his legislative leadership position, then to pressure state lawmakers to pass the bill and to defend it against a repeal effort.
Householder and four others were arrested in July and charged with racketeering. He has pleaded not guilty, as have two other lobbyists arrested with him, Neil Clark and Matt Borges. But two associates, Jeff Longstreth, a top Householder political aide, and Juan Cespedes, a former lobbyist for the former FirstEnergy subsidiary, pleaded guilty to federal charges on Thursday.
FirstEnergy officials have not been charged or officially named in the probe, but charging documents make clear the company is central to the alleged bribery scheme. Southern District of Ohio U.S. Attorney David David DeVillers said Thursday the investigation is ongoing.
The federal HB6 probe also has spawned reviews by the Ohio Elections Commission, the Public Utilities Commission of Ohio and the U.S. Securities and Exchange Commission. Ohio Attorney General Dave Yost has sued FirstEnergy over the allegations detailed in federal criminal charges, as have city officials in Columbus and Cincinnati. FirstEnergy customers and shareholders also have sued. Energy Harbor, the former FirstEnergy subsidiary that now owns the two nuclear plants HB 6 funded, has received FBI subpoenas connected to the probe, according to the Wall Street Journal.
Documents filed earlier this month involving a shareholder’s lawsuit in U.S. District Court in Akron show that Jones and other top executives at FirstEnergy sold off millions of dollars of company stock from March 1, 2017, to March 1, 2020.
The records allege that Jones “sold or otherwise disposed of over 788,000 shares” of FirstEnergy stock for $31 million during that time.
He sold off the most shares – 148,302 and earned $6 million – on March 1, 2019, months before the passage of House Bill 6 on May 29, according to the filings.
The filings said the executives “engaged in insider trades, which rendered them unable to exercise the independent judgment required of them to investigate the allegations relating to FirstEnergy’s participation in the illegal scheme involving passage of Ohio’s House Bill 6.”
The documents were filed in a derivative lawsuit filed against the company’s board of directors by Jennifer Miller, a shareholder from Alameda, California.
FirstEnergy plans to release its 3rd quarter financial results before markets open on Monday. The company will hold its quarterly conference call with analysts at 9 a.m. that day.
As of 7:36 p.m., FirstEnergy’s stock price had dropped by 7.31% in Thursday after-hours trading to $29.30 a share.