In a surprising turn of events, Julie Sloat, CEO of American Electric Power Co. (AEP), was dismissed from her position. This move came hot on the heels of billionaire activist investor Carl Icahn securing two seats on the AEP board. Sloat, who had been in office for less than 14 months, was one of the few women at the helm of a major US utility.
Interim Leadership and Future Plans
Following Sloat’s departure, Benjamin G.S. Fowke III, a board member and former chairman and CEO of Xcel Energy Inc., will step in as interim CEO. According to AEP’s recent statement, the board is set to conduct an external search for a permanent CEO, emphasizing that it’s time to identify a new leader for the company’s upcoming chapter.
This decision has left some industry observers puzzled. “It looks like the board was impatient for changes,” remarked Paul Patterson, a utility analyst for Glenrock Associates LLC. “They wanted a change and this is part of it.” Patterson admitted that the reasons for Sloat’s dismissal were unclear to him, as he saw no significant missteps on her part.
AEP’s Performance and Icahn’s Influence
Following the announcement, AEP’s shares rose by nearly 3% in after-hours trading in New York. The company also reported earnings after the market closed on Monday, revealing revenue that fell short of analyst estimates. A call with analysts is scheduled for Tuesday to discuss the quarterly results.
The shake-up at the top comes after AEP announced that Hunter Gary, a senior managing director at Icahn Enterprises, and Henry Linginfelter, a former executive at Southern Company Gas, are set to join the board. With Icahn’s involvement in AEP, analysts had speculated a possible leadership change.
“We expect Icahn to look for ways to generate multiple accretion, spanning partial asset sales, potential management changes, to perhaps even a sale of the company in its entirety,” Guggenheim Securities analysts wrote in a research note.
Challenges Faced by AEP
AEP, headquartered in Ohio, serves approximately 5.6 million customers across 11 states. During Sloat’s tenure, the company faced several regulatory hurdles, including the rejection of a $1.5 billion sale of its Kentucky operations and a Texas rejection of its plan to invest $2.2 billion in green energy assets.
When asked if the CEO change was related to the Icahn agreement on the board, AEP responded: “The full board made the determination that now is the right time to identify a new CEO to lead the company.”
In a related story, Icahn’s previous ventures into American utilities include his association with FirstEnergy Corp., which found itself in the midst of a federal corruption case involving nuclear subsidies. Southwest Gas Holdings Inc. agreed in 2022 to sell a pipeline business for $1.5 billion, including debt, and spin off its construction business after a heated dispute with Icahn. For more information on Icahn’s involvement in the utilities sector, visit Bloomberg.
As the dust settles on this dramatic leadership change, the industry awaits the next steps for AEP. The search for a new CEO is on, and it remains to be seen how the company will manage this transition and future regulatory challenges.
