David Harris, CEO of AltaGas Ltd., has agreed to resign as the company’s board reviews an unspecified complaint, which it says is not related to financial reporting, strategy or operations.
The Calgary-based company declined to provide additional information beyond a press release in which the founder and chairman spoke in general about AltaGas’s “core values.” The energy infrastructure company, with a focus on natural gas, power and regulated utilities, did not address the scope or length of the board’s continuing review of the complaint.
“AltaGas has always stayed true to its core values and they are at the heart of everything we do,” said chairman and founder David Cornhill in a statement. “In order for AltaGas to remain focused on its business priorities, the board and David Harris have agreed that his resignation is the appropriate course of action for the company.”
Mr. Cornhill, through a spokesperson, declined an interview request.
Mr. Harris, a one-time commander in the United States Navy, joined AltaGas in 2010 and became CEO in 2016. He was only the second person to lead the company after Mr. Cornhill, who founded AltaGas in 1994 and stepped back from the top job two years ago. Thereafter, Mr. Harris led the company’s biggest move to date, the US$4.5-billion acquisition of WGL Holdings Inc., a gas utility in the Washington, D.C. region. It was announced in early 2017 and closed earlier this month on schedule.
AltaGas is looking for a new CEO. In the meantime, Mr. Cornhill will serve as a co-CEO in charge of strategy and asset sales to help pay for the WGL acquisition. Phillip Knoll, another director, will be the other co-CEO, overseeing company operations.
Analysts said the surprise resignation comes at a challenging time, as AltaGas works to integrate a major acquisition. Shares of AltaGas fell on Wednesday by 42 cents or 2 per cent to $26.66 on the Toronto Stock Exchange.
During Mr. Harris’s tenure of about two years and three months as CEO, the stock fell about 15 per cent.
“Without specifics and due to the sudden and immediate nature of the resignation, we believe the announcement may negatively impact the share price in the near term,” wrote analyst Robert Kwan of RBC Capital Markets in a report to clients on Wednesday.
Analyst Ian Gillies of GMP FirstEnergy said in a report to clients that “the company is going through a transformation period with the integration of WGL and [this] provides uncertainty to AltaGas shareholders over long-term leadership.”
BMO Capital Markets analyst Ben Pham said in a report that while there was near-term uncertainty in the stock, the resignation is “a neutral event and possibly a longer-term positive depending on Mr. Harris’s replacement.” The key factor, he said, is that the company strategy is unchanged and it is in “very capable hands.”
Because Mr. Harris resigned, according to the company’s proxy circular he will forfeit 42,084 performance units that have not vested. They were valued at $1.2-million in the 2018 circular. Mr. Harris’s total compensation was $4.6-million in 2017. He has 371,250 unexercised stock options. The exercise price of most of them is higher than AltaGas shares on the TSX. Mr. Harris also has a pension valued at $4.5-million, which would have paid annual benefits of about $180,000 as of the end of last year.
Despite the resignation, AltaGas’s press release featured Mr. Harris prominently in the second and third paragraphs. He praised the company, and its prospects. “My tenure at AltaGas has been a privilege,” he said in a statement.
Mr. Cornhill thanked Mr. Harris for the “progress and results AltaGas achieved under his leadership.”