Vistra CEO Burke to receive $340 million in compensation amid revival of fossil fuels and nuclear energy
Vistra CEO James Burke will receive approximately $340 million in compensation for his role in bringing the Texas-based utility out of bankruptcy and into the spotlight as the most important power producer in America.
Vistra shares are up about 450% from January 1, 2024. This is ten times more than the S&P500's gain of 42%.
According to an analysis of restricted shares and stock options granted since 2016, the value of Burke’s stock-based compensation has increased from $43 to $340 million.
Burke's company disclosed that Burke exercised some options this month and realized more than 35 million dollars in gross proceeds.
Vistra has not responded to messages requesting comment.
Burke is in charge of a fleet that includes coal, nuclear and gas power plants. These plants are dominant on the U.S. market during peak hours when electricity demand is highest.
After two decades in which electricity demand stagnated, it is now surging in Texas, and in the PJM Interconnection, which covers the densely populated mid Atlantic region. This surge in demand has been fueled in part by a boom in artificial intelligence-driven data center construction.
Tim Winter, portfolio manager at The Gabelli Utilities Fund, says that the U.S. President Donald Trump’s withdrawal from renewables has boosted Vistra’s advantage in the unregulated market for power.
The Trump administration launched a new initiative on Thursday.
speed development
It also orders that fossil fuel plants, which are set to close permanently, continue to operate.
Burke and Vistra increased their bet on fossil fuels in May by agreeing to purchase seven gas-fired plants from Lotus Infrastructure Partners. This agreement will further its position in the PJM Market, where the electric grid struggles to keep up with AI-driven demand for electricity.
Tanner James is a stock analyst with Jefferies. He estimates Vistra's operating profit will be $7.4 billion in 2019. This represents a 31% improvement over the results of 2024.
Vistra's profit forecast is boosted by PJM’s energy auction in July to cover electricity requirements on days of peak demand. Vistra and the other power producers will be able to earn $329 per megawatt-day, an increase of about 1,000% from two years ago.
Vistra's predecessor, TCEH Corp., filed for bankruptcy under Chapter 11 in 2014 with a debt of about $42 billion. The collapse of TCEH Corp was a sign of the high-risk mentality of independent power producers who chased energy boom cycles.
Vistra emerged almost debt-free from bankruptcy in 2016. Burke, a senior executive with the company and a veteran of many years, worked alongside Curt Morgan at the time to ensure the company didn't waste its new start.
According to the U.S. Securities and Exchange Commission, Burke received restricted stock and stock options in 2016, with an estimated value $4 million.
According to an analysis, the stock-based compensation alone is worth $108 million today, with Vistra shares currently trading at around $210 per share.
Burke took over as CEO of Vistra in 2022. He succeeded Morgan, who had helped Vistra transform from a coal-dependent single state power company into a national supplier with 40 GW (gigawatts) of generation. One gigawatt of power is equivalent to about 1 million U.S. households.
Travis Miller, an analyst at Morningstar who specializes in utility stocks, said: "They expanded to the eastern part, but there was no indication that there would be much of a growth there." It's turned out to have been a great move, even though it did not look like that at the time.
Vistra acquired Energy Harbor Corp. in a $6.8-billion deal last year. This added 4 GW nuclear capacity to the company and approximately 1 million retail clients.
Winter, a Gabelli researcher, explained in a research note published in July that the majority of the nearly 100 nuclear reactors across the country are owned by utilities. Vistra, which is not regulated, could be in a good position to sell its nuclear power from Comanche Peak in Texas to hyperscalers of data centers.
Tanner James, an analyst at Jefferies, said that Google is the most likely to partner with the company due to its existing limited data center footprint in Texas. (Reporting from Tim McLaughlin, Boston; Editing done by Marguerita Choy)
(source: Reuters)
