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To achieve a wider frequency range where the device has a larger capture width ratio, the performance of a heaving coaxial-cylinder wave energy converter is optimized through actively controlled generator damping and stiffness using a linear frequency domain model. The generator power take-off system is modeled as a damping-spring system, and the numerical model is validated against published results. The coupled dynamics of a two-body model is analyzed to search for the optimal generator damping and stiffness leading to maximal capture width ratio. The optimization process, which can be decoupled into two independent steps, leads to an improved performance of the device, with increased frequency bandwidth and better capture width ratio. The effects of water depth, mooring stiffness, and the dimensions of the WEC on the capture width ratio are also studied, and parameter values are identified which correspond to optimal performance of the device.