NRG Energy (NYSE:NRG) has announced a range of measures to create more value for its shareholders, strengthen its board and refocus its business, including plans to repurchase up to $2.7 billion of its own shares over the next two years.
Its shares rose 3.3% to $35 in early Thursday trade.
In a statement ahead of a virtual Investors Day, NRG committed to returning 80% of excess cash to shareholders, with $6.9 billion expected to be returned through 2027 and announced $150 million of additional cost savings through new efficiency initiatives.
A board refreshment process was also underway to introduce additional expertise, with a focus on diverse skills and experiences to align with its strategy, the company added.
“We have strengthened our core energy business with a leading smart home technology platform, positioning NRG to capitalize on the convergence of electricity and smart technologies inside the home,” president and CEO Mauricio Gutierrez said.
“In the next five years, our plan will generate excess cash that will exceed our current market capitalization and deliver tremendous value for our shareholders.”
The moves follow pressure from activist investor Elliot Investment for a strategic overhaul, according to a report on Reuters.
Last month, Elliott disclosed a more than 13% economic interest in the integrated power company and called for strategic changes at the company including $500 million in cost cuts and a refocus on its core business of supplying power.
While a report in the Wall Street Journal said Elliot was also seeking to remove Gutierrez and other top executives, Lawrence Coben, chair of the NRG board stated: “We fully support Mauricio and the management team and are confident in our strategy and ability to deliver superior, sustainable shareholder value.”
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