Elliott urges new CEO, strategic review at NRG Energy

Elliott Investment Management, which manages funds that have an investment of approximately $1B representing a more than 13% economic interest in NRG Energy, released a public letter calling for a process to select a new CEO and to make enhancements to the Board of Directors at NRG. In the letter, Elliott said NRG’s recent half-measures, including the Investor Day, were “wholly insufficient to remedy a deeply flawed strategy overseen by a leadership team unfit to execute.” Elliott noted that NRG agreeing “to reduce growth investments to no more than 20% of NRG’s excess free cash flow and to limit additional investment in Vivint” constituted “guardrails” for the CEO, a concession, “which never would have been made if Elliott had not published materials questioning the Company’s direction.” Elliott stated that these guardrails “limited continued investment in a bad strategy” but clearly do not solve the fundamental issue around leadership of the Company. Given “NRG’s failure to uphold its promises to responsibly allocate capital in the past,” Elliott wrote, investors do not find the company’s “latest capital allocation commitments to be credible or the new capital allocation framework to be durable without management change and enhanced Board oversight.”