Fermi Fires CEO Toby Neugebauer After Failing to Sign Data Center Clients

Fermi Inc. has fired its chief executive Toby Neugebauer after the company failed to sign any clients for its planned data center power project near Amarillo, Texas. The startup, which went public in October with a market value exceeding $19 billion despite reporting no revenue or signed customers, had leased more than 5,000 acres to build power plants capable of generating 17 gigawatts of electricity.

That output is three times the amount typically consumed by New York City. The project, known as Project Matador or the President Donald J. Trump Advanced Energy and Intelligence Campus, proposed supplying power first from natural gas turbines and later from nuclear reactors directly to data centers built on the site.

Fermi leased the land from the Texas Tech University System at a location near several natural gas pipelines and close to the nation's largest nuclear weapons production facility. The company had an agreement to tap one pipeline sufficient for an initial 2 gigawatts of generation and held a 0.2-gigawatt connection to the local grid.

The board terminated Neugebauer and Chief Financial Officer Miles Everson after months of negotiations failed to produce a single client. In a regulatory filing on Thursday, Fermi said Neugebauer was fired for conduct that violated his employment agreement as well as the company's policies.

The company initially reported that he would remain on the board but later stated that he had been removed from it. Neugebauer, who co-founded the company with former Texas governor Rick Perry, responded that he was removed without cause. He called the board's actions "completely misguided" and said he would continue working to maximize value for shareholders.

On Friday he sued the company and three of its directors alleging wrongful termination. "As a co-founder and the largest shareholder who has yet to sell a single share, no one believes more in the future of what we built at Fermi than I," Neugebauer said in a statement to Bloomberg.

Fermi is not actively pursuing a sale. The board had considered removing Neugebauer for some time, and his departure has prompted positive feedback from investors, potential tenants, vendors and other partners, according to a company statement. The statement added that recent leadership changes position the company for its next chapter of growth as it evolves from a startup to a scaled enterprise.

The 17-gigawatt target represents a substantial amount of power. A single gigawatt roughly equals the output of a large nuclear reactor and can supply electricity to about 750,000 average homes. In Texas, peak electricity demand from data centers is projected to rise by 282 gigawatts over the next six years as hyperscalers seek to build energy-intensive facilities to support artificial intelligence.

The company's stock has fallen 84 percent from its peak following the announcement. In November, Fermi reached a $150 million agreement with a potential tenant, but the deal collapsed the following month, triggering a 46 percent drop in the stock at that time.

The more than 5,000-acre site in the Texas panhandle remains mostly unfinished.

Neugebauer previously co-founded Quantum Energy Partners in 1998, a Houston-based private equity firm focused on oil and gas. He left after the firm profited from an early investment in the Barnett Shale natural gas field. He maintained involvement in politics, including fundraising for Senator Ted Cruz, and developed a relationship with Perry, who served as governor of Texas and later as secretary of energy during President Donald Trump's first term.

In 2022 Neugebauer raised $50 million to launch GloriFi, an "anti-woke" banking startup that filed for Chapter 7 bankruptcy the following year. He is currently involved in litigation with the bankruptcy trustee over allegations that include securities fraud and misrepresentations to investors.

Neugebauer has stated that an independent investigation found no wrongdoing on his part. Former U.S. Department of Energy official Jigar Shah, who ran the department's Loan Programs Office during the Biden administration, described Fermi as a failure of monumental proportions.

He said banks are reluctant to finance dedicated off-grid power plants for data centers because the broader electric grid, drawing from multiple sources, offers greater reliability.