He’s Got the Power: As Stock is Near All-Time High, FirstEnergy CEO Alexander Says Focus is on Customer Service
By Betty Lin-Fisher, The Akron Beacon Journal, Ohio
Jan. 7–In 1972, Tony Alexander attended a campus job fair at the University of Akron.
The recent UA graduate, who had finished his accounting degree in 2 ½ years, was looking for something to do while he pursued a law degree.
He accepted a position in the tax department at Ohio Edison.
“I was 21. I didn’t know that much about the company. I knew it was a good, solid company. My dad told me it was a good company,” Alexander said, referring to his father, Victor, who recently died.
Little did Alexander know that Ohio Edison would be a company he’d stay with for his career — now going on 34 years — or that he would be coming up on his third anniversary this month as chief executive officer of the utility that had $12 billion in revenue in 2005.
“I don’t know that anyone starts at a company and says, ‘I’m going to work for a company for 30 to 34 years.’ It happens naturally. I always had increasing responsibility, and my days were always new,” said Alexander, 55.
Indeed, Alexander worked his way up as a lawyer (the first hired at Ohio Edison straight out of law school), then became vice president, general counsel, senior vice president, executive vice president, president and chief operating officer.
Along the way, FirstEnergy changed, too, especially in 1997 after Ohio Edison’s merger with Centerior Energy of Cleveland. The company doubled its size again when it merged with New Jersey-based GPU Inc. in 2001.
FirstEnergy, with its seven electric companies in three states, is now the nation’s fifth-largest investor-owned electric system, serving 4.5 million cus = [100.0]tomers.
In December 2003, Alexander was named FirstEnergy’s interim chief executive officer when his friend and mentor, fellow Akronite Pete Burg, took a leave of absence as chairman and CEO while battling leukemia.
When Burg died a month later, in January 2004, at 57, the board of directors named Alexander, who was the company’s president and chief operating officer, as CEO.
Alexander was the logical replacement for Burg, who had put together a succession plan several years before his death, said George M. Smart, a director at Ohio Edison since 1988 who was named FirstEnergy’s chairman in 2004. The board separated the roles of chairman and CEO in 2004 when it named Alexander because it felt it was good corporate governance, said Smart.
It was a difficult time for Alexander to take over.
“Pete was a very strong, capable leader. When you lose someone like that under those circumstances, it wasn’t a smooth transition.It was more of a shock. We had to deal with it emotionally and move on as a company,” Alexander said.
Alexander had plenty to deal with, in addition to the loss of Burg.
In 2003, FirstEnergy had to restate its earnings going back to 2002, and it took a lot of criticism for an August 2003 blackout across its service areas.
In 2002, workers at the utility’s Davis-Besse nuclear plant found a corrosion hole in the top of the reactor. The company was unable to restart the reactor for two years.
“As a company, we had issues to deal with,” Alexander said. “The most important thing was to get the company focused on the future, and our employees understood what they had to accomplish and went about the business in a professional way.”
But Alexander said no amount of training or mentoring could prepare him for the job as CEO.
“This job is different than almost anything else,” he said. “While you have lots of experience and can appreciate the role of CEO, until you’re there and have to make the day-to-day decisions and interact with the board on a different level, nothing fully prepares you.”
Alexander said there are pros and cons about leading a company where you’ve worked your way up through the ranks. “I’ve found it to be easier to deal with the transition we had to make because I was here for as many years as I have been,” he said.
Four goals
When he took over as CEO in January 2004, Alexander said he had four goals:
–Get the troubled Davis-Besse nuclear plant safely operating.
–Reduce FirstEnergy’s debt.
–Enhance customer service.
–Increase shareholder value.
Alexander said he’s proud that the company has accomplished those goals as well as four or five major objectives each year beyond them.
FirstEnergy’s stock is trading at all-time highs, reaching a high of $61.31 on Dec. 19, after breaking a $60 closing on Dec. 1. The stock closed Friday at $59.11.
The company’s market capitalization, or its value calculated by the number of shares times the share price, has increased $7 billion in the past two years to $19 billion. Three years ago when Alexander took over as CEO, the market cap was $12.1 billion.
Many credit Alexander for the company’s strong performance, though he is quick to praise employees for working hard to achieve FirstEnergy goals, too.
The company has met or beaten analysts’ earnings estimates for 11 financial quarters in a row.
And the company has said that because of strong performance, it revised its earnings forecast for this year to the range of $3.75 to $3.85 a share from $3.65 to $3.85 a share. The earnings-per-share guidance in 2004 was $2.91 a share.
Smart said Alexander has played an important role in resolving the difficulties the company faced three years ago.
“Tony is a very intelligent individual. He’s an excellent strategist. He’s also a very good communicator who builds a strategic consensus with his management team and delegates the implementation of that strategy,” Smart said. “The board is very, very pleased with his performance.”
Alexander also has admirers on Wall Street. Paul Fremont, an analyst with Jefferies in New York, said, “When he took over, they were very much a troubled company. Now he’s really focusing on how to grow earnings and how to grow cash flow, which is what management should be focused on.
“I think they’ve come away on all fronts a much stronger company and vastly improved operationally.”
Among Alexander’s goals for the new year:
–Meet hiring goals of adding 1,000 employees a year for five years — including 200 to 300 in the Akron area, in part to account for an aging work force and the company’s growth.
–Continue a strong focus on safety.
–Ensure generating capacity is fully used.
–Continue to improve service reliability.
–Deliver consistent financial results.
Starting in 2004, Alexander began taking about 70 trips a year around the company’s territories in Ohio, Pennsylvania and New Jersey to meet with employees. He estimates he’s met about half of the company’s staff of 13,800.
“It hasn’t always been easy to talk to employees,” he said. “We’ve had some tough times and some difficult decisions. But once they’re made, I feel it was important I got out to talk to as many employees to explain why and how I saw those decisions could make the company better.”
No subject has been off limits. “We’ve talked about all issues on their minds. We’ve talked about flashlights in their trucks. I’ve got a better sense of what employees are concerned about.”
Akron roots
Born and raised in what he called a “good, middle-class, solid family” in Firestone Park, Alexander is the middle of three children. Both sets of grandparents had immigrated to the Akron area from Italy.
Alexander graduated from Garfield High School, where he played basketball and tennis.
He met his wife, Becky, at Garfield when she was a sophomore and he was a senior. They married in 1972. She completed an education degree at UA while Alexander worked at Ohio Edison during the day and went to law school at night.
Alexander balances time between community and FirstEnergy roles, said Dan Colantone, president of the Greater Akron Chamber.
He focuses on FirstEnergy’s “growth and success, but also doesn’t forget his roots and the commitment to the community,” said Colantone.
Tom Waltermire, CEO of Team NEO, a regional economic growth organization, said Alexander is “very direct. He’s action-oriented. He is creative, and he is just a get-it-done-now, no-nonsense guy.”
Alexander joined the board of Team NEO, which Burg had helped form and served as its first chairman, after Burg’s death.
Waltermire said FirstEnergy has been a tremendous supporter of Team NEO.
“Even in the era of deregulation, a lot of utilities have cut back resources in economic development. FirstEnergy has remained tremendously active. I give them credit for being more visionary on that,” said Waltermire.
University of Akron President Luis Proenza, who has interacted with Alexander both as a business colleague and an alumnus of the university, said: “He’s a soft-spoken person, but with great energy — no pun intended.
“He doesn’t need a lot of words; he gets to the point. He’s deeply interested in people and eager to help,” said Proenza.
Ohio Consumers’ Counsel Janine Migden-Ostrander, whose job is to represent residential utility customers in state and federal proceedings and courts, said there’s a “healthy tension that exists between the goals that I want and the goals that he’s working toward.”
Migden-Ostrander said Alexander is more engaged than many other utility CEOs in regulatory issues.
“For sure, he is very, very smart. He has a good, strong sense of what he wants for the company, and he’s a strong advocate for the company and the shareholders,” Migden-Ostrander said. “I’d like to see a little bit more sensitivity to customer concerns and customer issues.”
During a visit to Ohio Edison’s regional dispatch office in Fairlawn, which monitors outages and system operations, Alexander said: “We spend a lot of our time and effort focusing on customer service. Our ability to respond and reinvesting in our infrastructure is all focused on providing customer service.
“Do we have to strike a balance? Absolutely. But I don’t think there’s any question this company is focused on its customers,” he said.
What’s ahead for FirstEnergy in five to 10 years?
Alexander said: “I still see a company that is fundamentally focused on our customer service and investing in its core assets. I would expect we’d have more generation, primarily improved efficiencies and reinvestments in our power plants.”
Asked the same question about the company and Alexander, company Chairman Smart said: “I think Tony has positioned the company well for the deregulated environmentthat we’re in. I see continued growth for the company in the next five years and Tony is still a young man. I see him continuing in that CEO role.”
Betty Lin-Fisher can be reached at 330-996-3724 or blinfisher@thebeaconjournal.com.
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Copyright (c) 2007, The Akron Beacon Journal, Ohio
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