The share price of utility Hydro One Ltd. declined on Thursday after the Ontario government announced the retirement of the electrical utility's chief executive officer and the replacement of its entire board of directors.
After sagging by almost 8% in early trading on the Toronto Stock Exchange, shares of Hydro One closed down 3.2%, or 65 cents, at $19.52. After stock markets closed Wednesday, newly elected Ontario Premier Doug Ford announced the immediate retirement of Hydro One CEO Mayo Schmidt. He leaves with a $400,000 payout in lieu of post-retirement benefits and allowances, Hydro One said in a written statement.
During the recent provincial election campaign, Mr. Ford vowed to fire Mr. Schmidt, who earned $6.2 million last year. Paul Dobson, Hydro One's Chief Financial Officer, will serve as acting CEO until a new top executive is chosen.
Ford also said that the entire board of directors of the publicly owned utility would resign. Hydro One said a new board — four members of which will be nominated by the province — will select the company's next CEO, and the province will be consulted on the next leader's compensation. A new board is expected to be formed by mid-August.
The provincial government is the largest single investor in Hydro One, holding a 47% stake. The company was partly privatized by the former Liberal government in 2015. In response to the government's move to supplant the utility's board and CEO, some analysts cautioned investors on raised political or regulatory risks. CIBC has reduced its price target on Hydro One's shares to $20.50 from its previous target of $24.
