NextEra Energy Shares Drop After Florida Executive Resigns Amid Campaign-Donation Investigation

NextEra Energy Inc. shares fell sharply after the company announced that the head of its Florida utility was retiring. The company also rebutted allegations that it violated campaign finance laws in the state.

Shares of the company fell by 9.5% after it was revealed that the company's fourth-quarter earnings had missed analysts' estimates. This is the biggest drop that the company's shares have seen since April 1, 2020. The stock was trading at $78.07 as of 12:10 p.m., its lowest value since November 9.

"The stock action today is driven substantially by the unexpected management change and the update they gave on their review into their political activity," analyst Paul Patterson of Glenrock Associates LLC said. "This is a significant development that investors are closely watching."

Utilities in the United States have been touting their environmental, social and governance credentials, and NextEra is in a good position to benefit from the influx of money into the clean-energy industry from the Inflation Reduction Act. However, a series of utility scandals have shaken investor confidence, including FirstEnergy Corp.'s $230 million settlement with federal prosecutors in 2021 over corruption charges and Commonwealth Edison Co.'s $200 million settlement to resolve a probe into a bribery scheme in 2020.

After media reports in 2021 and 2022 alleged that the company's Florida Power & Light unit was linked to election scandals, NextEra said in a Wednesday filing that it had finished a review of campaign activities. In a separate statement, NextEra said that the unit's chief executive officer, Eric Silagy, who was named in some of the media reports, is retiring.

"The second senior-level departure since the investigations began creates some uncertainty for investors," said Andy DeVries, a utility analyst at CreditSights. "With no line-of-sight to any clarity, it becomes a 'sell now, ask questions later' scenario."

When asked by analysts whether Silagy's retirement was connected to the campaign finance allegations, NextEra CEO John Ketchum said that there was no connection.

National Public Radio, the Guardian and the Orlando Sentinel have all published investigative stories suggesting that NextEra's campaign donations may have hindered state legislative efforts to boost rooftop solar power in Florida.

"We do not believe that FPL would be found liable for any of the Florida campaign finance law violations as alleged in the media articles," Ketchum said on the call.

The company plans to submit a response in the next few weeks to the Federal Election Commission in order to have the complaint against them dismissed.

The CEO said that they do not expect the allegations of federal campaign finance law violations to be material to them.