Burg, H. Peter 1946–2004
H. Peter Burg
Chairman and chief executive officer, FirstEnergy Corporation
Born: April 9, 1946.
Died: January 13, 2004.
Education: University of Akron, BS, MBA.
Family: Married, Eileen (maiden name unknown); children: three.
Career: Ohio Edison, 1968–1973, financial analyst trainee, associate financial analyst, economic analyst, and director of financial studies; 1974–1985, treasurer; 1985–1989, vice president; 1989–1996, senior vice president; 1994–1995, Pennsylvania Power (Ohio Edison subsidiary), interim president; 1996–1999, Ohio Edison, president; 1997, CEO and CFO; FirstEnergy Corporation; 1999–2000, president and CEO; chairman and CEO, 2000–2004.
Awards: University of Akron Alumni Honor Award; University of Akron, Dr. Frank L. Simonetti Distinguished Business Alumni Award, 1992; University of Akron Sports Hall of Fame, 1995; American Red Cross National Volunteer Fundraiser of the Year Award, 2003.
■ Over the three-and-a-half decades of his career, H. Peter Burg rose from being a financial analyst trainee with an Ohio-based electric power company to chairman and CEO of the fifth-largest power system in the nation. While he was highly regarded among industry and community leaders alike, several difficult situations during the final two years of his career drew both governmental and public criticism. Before Burg had an opportunity to see his company through troubled times, he died at age 57 of complications from treatment for leukemia.
SMALL TOWN BOY MAKES THE BIG TIME
Burg grew up in the working-class neighborhood of Goodyear Heights in Akron, Ohio, and attended Saint Vincent High School, where he starred in football and basketball. He earned a BA and MBA from the University of Akron. In 1968, while he was still in college, he began his career with Ohio Edison electric power company in Akron. Working his way through the company's ranks, he became CEO and CFO in 1997. Under his direction, Ohio Edison merged with Cleveland-based Centerior Energy in 1997. Thus, FirstEnergy Corporation was born, and Burg was named president and CEO in 1999. When handing over the reins, Burg's predecessor, Willard Holland, said: "I leave FirstEnergy with the utmost confidence in Pete Burg and his outstanding management team" (Business Wire, November 16, 1999). Nine months later the position of chairman was added to Burg's responsibilities.
In August 2000, in an $11 million deal, FirstEnergy bought GPU, a New Jersey-based public utility holding company. The merger doubled FirstEnergy's size. After a brief period as vice chairman, Burg again took the helm as chairman and CEO. FirstEnergy was the fifth-largest investor-owned electric services provider in the United States and the parent company to seven electric utility companies serving 4.3 million customers in Ohio, New Jersey, and Pennsylvania. The company provided natural gas to more than 150,000 customers in the Midwest, conducted natural gas and oil exploration, and was involved in marketing and conveyance of natural gas.
ELECTED TO PRESTIGIOUS PRESIDENCY
On October 18, 2003, as evidence of the respect he had gained in his leadership role at the energy giant, Burg was elected president of the Association of Edison Illuminating Companies (AEIC) by the association's membership. AEIC, established in 1885, was the longest-running association of its kind in the world. Its membership comprised investor-owned electric power corporations in the United States and their international affiliates and included independent power producers, electric utilities, international electric corporations, and companies that generate, transmit, and distribute electric energy.
In 2002 and 2003 Burg and FirstEnergy came under heavy scrutiny. In March 2002 just after the company's stocks hit an all-time closing high, Burg had to shut down the Davis-Besse nuclear power plant near Toledo, Ohio, following the shocking discovery of a boric acid leak that ate almost entirely through a six-inch-thick reactor cap. It was to date the worst such episode at a U.S. nuclear reactor, and the plant's temporary shutdown cost FirstEnergy more than $500 million. Tom Breckenridge, a Plain Dealer reporter, wrote that after the incident "FirstEnergy has not been the same" (September 14, 2003). Adding to the company's financial difficulties, a deal to sell four power plants in Ohio for $1.5 billion collapsed.
August 2003 proved to be a particularly difficult month for Burg. First, investors were jolted when earnings were restated back to 2002 and the 2003 earnings forecast also was restated. Second, after having spent millions of dollars between 1984 and 1998 updating a coal-fired power plant in Jefferson County, Ohio, FirstEnergy was cited by a federal judge for failing to install the latest pollution-control equipment, thus violating the federal Clean Air Act. Third, several mishaps that apparently triggered the gigantic power blackout of August 14 were traced to FirstEnergy's Ohio facility. Spanning eight states from New York to Michigan and into Canada and affecting 50 million people, the blackout was to date the worst in North American history, at a cost of more than $7 billion. Fourth, later that month, the company experienced its biggest one-day stock drop—9.3 percent—since its formation in 1997. Then in October, FirstEnergy found itself facing a class action suit from the U.S. District Court of Akron, which charged the company and upper management with violating federal security laws. In November, 100,000 members of the Ohio Citizen Action ecology group demanded Burg's resignation.
FALLOUT FROM THE BLACKOUT
The August 14 blackout brought Burg under attack from many quarters and raised serious questions about his—and his company's—competence. Until his broadcast testimony before the U.S. House Committee on September 4, Burg refused to hold interviews or publicly address questions, giving the company's public relations department that responsibility. Breckenridge noted that Jeffrey Christian, CEO of the executive search firm Christian and Timbers in Cleveland, Ohio, believed that Burg would have done better to have appeared publicly and addressed people's concerns as soon as the lights were back on. As an example, Christian referred to the immediate public appearances of former New York mayor Rudolph Guiliani following the September 11 terrorist attacks on the World Trade Center. Christian noted that Guiliani's high public profile helped calm fears and rebuild confidence. Christian did note, however, that, unlike politicians, company executives are not trained for such events: "[Burg] has to spend more time with government and regulators than with his customers" (Breckenridge, September 14, 2003).
On September 4, 2003, following three weeks of investigation into causes of the power outage, a grim Burg appeared before the Full Committee on Energy and Commerce of the U.S. House of Representatives. In defense of his company, he said: #x201c;Clearly, and as we have said from the outset, events on our system, in and of themselves, could not account for the widespread nature of the outage. After much more evaluation, we continue to believe this is true" ("Blackout 2003"). After responding to a barrage of questions with what Breckenridge, in the Plain Dealer, called "cordial, cautious answers," Burg was severely berated by Ed Markey, Democratic representative from Massachusetts, who accused Burg of refusing to take responsibility. Breckenridge noted that Markey clearly blamed Burg's company for the mishap: "FirstEnergy should not have a license to drive a car, much less operate nuclear power plants and transmission systems." Before Burg had a chance to respond, the hearing ended. According to Breckenridge, University of Akron president Luis Proenza said: "It was a low blow, political grandstanding." Holland reiterated his initial confidence in Burg, saying that he believed that Burg and his management team were doing a good job.
In December 2003 Burg temporarily stepped down from his leadership role with FirstEnergy to undergo treatment for recently diagnosed leukemia. On January 12, 2004, just one day before Burg's death of complications relating to that treatment, a BusinessWeek article declared Burg one of "the worst managers" in 2003, citing FirstEnergy's predicaments that year but focusing particularly on the August 14 outage. The author noted the fact that a joint report by U.S. and Canadian authorities blamed the blackout on FirstEnergy's failure to trim trees under high-tension power lines, maintain a functional computerized warning system, and adequately train its staff. The author accused Burg of failing to respond when the first signs of trouble appeared: "Not only did FirstEnergy bumble its way to a history-making outage on his watch, but Burg has seemingly written the book on how not to respond in a crisis."
Burg's untimely death meant that he had no opportunity to respond to the criticism. However, a FirstEnergy board member, George M. Smart, did so. In the February 2, 2004, issue of BusinessWeek, Smart said that the company's board always had complete confidence in Burg's leadership and that Burg was undeserving of the harsh press he received in the article. "Pete Burg was an excellent manager and helped build First-Energy into one of the five largest investor-owned utilities in the U.S. He provided strong leadership during the past troublesome year and was a man of the highest integrity and honesty."
INDUSTRY AND COMMUNITY PILLAR
Regardless of the difficulties Burg encountered during his final two years with FirstEnergy, he remained highly regarded among his peers, community leaders, friends, and family. In a professional capacity, he served on the boards of the Edison Electric Institute, Energy Insurance Mutual, KeyBank, Nuclear Electric Insurance Limited, the Nuclear Energy Institute, and the Institute of Nuclear Power Operators. His community involvement included serving as steering committee chairman of Team NEO, an organization that helped existing companies expand and attracted new ones to Northeast Ohio, and board member at Akron Children's Hospital, Akron Tomorrow, Catholic Diocese of Cleveland Foundation, Cleveland Tomorrow, Musical Arts Association, Ohio Business Roundtable, Ohio Foundation of Independent Colleges, United Way of Summit County, and the Summit County Chapter of the American Red Cross.
Tom Breckenridge, writing in the Plain Dealer, noted that colleagues described Burg as "unflappable, a leader who sees himself as part of a team rather than an autocrat … a quick study with numbers and with people … a behind-the-scenes civic powerhouse" (September 14, 2003). William Considine, president of Akron Children's Hospital, said of Burg in the Breckenridge article: "Being a leader, being a cool head in a frenzy, that's Pete." M. R. Kropko of the Sacramento Bee quoted Anthony J. Alexander, who stepped into Burg's position, as saying: "Pete was a great leader, a man of integrity and ethics, and an outstanding person who dedicated his life to his family, his company, and his community."
See also entry on Ohio Edison Company in International Directory of Company Histories.
sources for further information
"The Best & Worst Managers of 2003—The Worst Managers," BusinessWeek Online, January 12, 2004, http://www.businessweek.com/magazine/content/04_02/b3865726.htm.
"Blackout 2003: How Did It Happen and Why?" Full Committee on Energy and Commerce, September 4, 2003, http://energycommerce.house.gov/108/Hearings/09042003hearing1062/Burg1681.htm.
Breckenridge, Tom, "First Energy's CEO Generates Praise for Work under Pressure," Plain Dealer, September 14, 2003.
Kropko, M. R., "FirstEnergy Chairman, CEO H. Peter Burg Dies at 57," Sacramento Bee, January 13, 2004.
Smart, George M., "In Defense of Peter Burg's Record," BusinessWeek Online, February 2, 2004. http://www.businessweek.com/magazine/content/04_05/c3868022_mz004.htm.
"Willard R. Holland to Retire as Chairman of FirstEnergy Corp." Business Wire, November 16, 1999. http://www.findarticles.com/cf_dls/m0EIN/1999_Nov_16/57601072/p1/article.jhtml.
—Marie L. Thompson