UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
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On the Cover: As partFirstEnergy continues its sponsorship in 2022 of the Akron Marathon, a world-class race known for its 26.2-mile blue line threading through Akron, Ohio – our commitmentcorporate headquarters city. The marathon attracts more than 10,000 runners annually and has an $8 million economic impact to making the environment better, we’re promoting biodiverse, pollinator-friendly habitatsCity of Akron. Since its inception in the transmission rights-of-way across our service area.
Location: Centre County, Pennsylvania (service territory of Penelec, an electric utility operating subsidiary of FirstEnergy)
Our Vegetation Management group participates in ongoing collaborative research with The Pennsylvania State University to monitor plants and pollinators in our transmission corridors. This and other similar research projects help FirstEnergy develop best practices2003, more than $6 million has been raised for creating sustainable habitats in our rights-of-way, while also supporting the safe and reliable delivery of electricity to our customers.local charities.
Letter from |
March 23, 2022
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| Donald T. Misheff Chair of the Board | |||||||||
Dear FirstEnergy Shareholders:
Thank you for your continued confidence in FirstEnergy. On behalf of your Board of Directors, and management, I cordially invite you to attend our 20212022 Annual Meeting of Shareholders on May 18, 2021.17, 2022. The attached Notice of the 20212022 Annual Meeting of Shareholders (the “Meeting”) and Proxy Statement contain information about the business to be conducted at the Meeting. We also encourage you to read about your Board, our environmental, social and governance practices, and our executive compensation programs in the accompanying Proxy Statement.
Taking Decisive ActionsWe will conduct the Meeting online for the health and safety of our shareholders, employees and the broader community. See the “Attending the Virtual Annual Meeting” section of “Questions and Answers about the Annual Meeting” in the accompanying Proxy Statement for instructions on how to Position FirstEnergyregister to participate in the virtual annual meeting.
A Culture of Doing the Right Thing
The events since mid-2020 have been deeply humbling for Long-Term Success. Let me begin by underscoringFirstEnergy’s Board and leadership. We are working tirelessly to move forward as a stronger, integrity-bound organization that staying true to our Core Values and Behaviors – and acting at all times and at all levels ofputs doing the Company with the highest ethical standards – remainsright thing at the heart of whoour business as we seek to be as a companyserve our customers and starts at the top. As summarized on pages 1-3 of this proxy statement, your Board hastheir evolving energy needs. We have taken decisive actions including announcing significant leadership changes as a result of a Board-led, independent, thoroughover the past two years and robust internal investigation related to the ongoing government investigations beginning last July. Your Board and executive management team are working diligently to enhance our corporate compliance program and processes to fosterfocused on building a culture of uncompromising compliance, ethics, integrity and accountability at every level of the organization and rebuild trust with our stakeholders.accountability. At the same time, we have remained focusedare strengthening our business and putting customers at the heart of all we do. We remain committed to working cooperatively with stakeholders and demonstrating FirstEnergy’s core values to rebuild trust and confidence in the Company while delivering safe, reliable and affordable electric service.
Executing Our Strategy
FirstEnergy’s strategy is to become a premier electric utility built on executinga strong foundation, with an unrelenting customer focus, that leads and enables the energy transition. Highlights of our progress include:
◾ | We are building a stronger, diverse and inclusive culture to better serve customers, improve operational performance, spark innovation, and provide a more rewarding and equitable work experience for all employees. Diversity, Equity and Inclusion, much like Safety, is a core value that is foundational to everything we do. Recognizing, developing and leveraging the unique strengths of our employees helps make FirstEnergy a more innovative and resilient company, and motivates employees to build their careers with us. |
◾ | We are unlocking opportunities to enhance our business, including through FE Forward, our customer-focused effort to modernize our Company, unlock our potential and deliver sustainable value to all stakeholders. |
◾ | We announced $3.4 billion of equity financings with two premier global infrastructure funds. These transformative financings are expected to strengthen FirstEnergy’s financial position, capitalize on incremental investment opportunities and address all non-SIP/DRIP equity plans. Blackstone Infrastructure Partners invested $1 billion in FirstEnergy common equity and Brookfield Super-Core Infrastructure Partners is acquiring a 19.9% minority interest in FirstEnergy Transmission, LLC for $2.4 billion. These transactions allow us to strengthen our business and fund strategic capital expenditures that will help us support our climate strategy and enable a sustainable energy transition. |
FIRSTENERGY CORP. |
Letter from |
“We remain committed to working cooperatively with stakeholders and demonstrating FirstEnergy’s core values to rebuild trust and confidence in the Company while delivering safe, reliable and affordable electric service.”
An Engaged Board Dedicated to Strong Corporate Governance
Your Company is dedicated to strong corporate governance, which we view as foundational to our business and important to advancing the interests of our shareholders. Your Board oversees and guides FirstEnergy’s business strategy, including your Company’s efforts to drive integrity and accountability and make progress on environmental, social and governance matters.
Our stakeholder engagement efforts are also vital to FirstEnergy’s success. In 2021 and early 2022, consistent with prior years’ practices, we held numerous conversations with shareholders. With support from your Board, the Company’s strategyChief Executive Officer and implementing initiativesthe management team, our integrated shareholder outreach team, consisting of members of Corporate Responsibility, Corporate Secretary department, Legal, Finance, Human Resources and Investor Relations, engages with a broad base of investors throughout the year. Feedback and suggestions gathered from these engagements have helped the Board shape our policies, practices and disclosures.
Since the beginning of 2021, your Board has expanded with seven new directors, five of whom are independent. Your new directors bring strong backgrounds and experience with publicly traded companies and add unique insights to transform FirstEnergyour Board, which have been particularly valuable during this period of change and renewal at your Company. To further refresh the Board, Jana T. Croom and Sean T. Klimczak have been nominated for election at the 2022 Annual Meeting of Shareholders, and six long-term Board members will not stand for reelection: Michael J. Anderson, Thomas N. Mitchell, Christopher D. Pappas, Luis A. Reyes, Julia L. Johnson and myself. On behalf of this group, it has been our privilege to serve on your Board, and I am confident your Company will continue to grow stronger under the leadership and guidance of our 2022 director nominees.
We also recognize the importance of diversity in a way that provides near-term value while opening new opportunities for longer-term growth. We believe that these actions, together withour business and leadership, including on our Board. Our Board nominees demonstrate diversity in the strengthform of the Company’s strategy, missiongender, ethnicity, age, tenure, thought, background and 12,000 employees, will position FirstEnergy for long-term success.experiences. Of note, women and ethnic minorities currently represent 33% of our Board nominees.
A Resilient and Committed Team. Our Bright Future
On behalf of your Board,board, I want to express my appreciation for the dedicated efforts of FirstEnergy employees. Their performance is helping our gratitude toCompany achieve positive, sustainable momentum, while making customers’ lives brighter, the employees across FirstEnergy who help makeenvironment better and our communities stronger while delivering results for the business. In 2020, the FirstEnergy team came together to work smarter, more creatively and more efficiently. These efforts resulted in solid underlying performance in 2020, even in the context of the disruption and uncertainty caused by the COVID-19 pandemic.stronger.
A New Chief Executive Officer with Significant Operational Experience and a Deep Knowledge of the Business. Steven E. Strah, our new CEO of FirstEnergy, is a highly respected executive with a deep understanding of FirstEnergy’s business and significant operational experience, having served in various leadership roles at the Company during his 36-year career. He was appointed President in May 2020 and acting CEO in October 2020. Over the past several months, he has taken meaningful steps to put FirstEnergy on the right path forward, including ensuring a renewed emphasis on compliance and transparency throughout the organization; laying out his strategy, through FE Forward, to transform the Company; and working to reduce regulatory uncertainty affecting the Company’s Ohio utilities. Your Board is confident that his appointment to CEO and a member of the Board in March 2021 was the right step for FirstEnergy.
As CEO, your Board believes Steve will position FirstEnergy to move forward with positive momentum and execute FirstEnergy’s strategic priorities for the benefit of all stakeholders and drive enhanced value for shareholders. We look forward to continuing to work alongside Steve and the rest of the management team to build on the Company’s strong performance.
A Strong Highly Independent Board with the Right Skillset and Enhanced Oversight to Drive Value for Shareholders. Your Board is comprised of highly-qualified individuals who have a diverse set of skills, experiences, backgrounds and perspectives. We have periodically refreshed our Board with new Board members whom we believe bring new ideas and fresh perspectives into the boardroom – nine of the fourteen nominees will be new Board members added since 2016 (including our new director nominee – Melvin Williams). We have also entered into an agreement with Carl C. Icahn to appoint Andrew Teno and Jesse A. Lynn – both of whom are employees of Icahn entities – to your Board as independent directors. We are pleased to have reached this agreement with Mr. Icahn and we welcome the insights and experiences Mr. Teno and Mr. Lynn bring to your Board.
Your Board has also enhanced its oversight, including the formation of a Compliance Oversight Sub-Committee of the Audit Committee – comprised entirely of independent directors – tasked with overseeing the assessment of the Company’s corporate compliance program and governance practices. This sub-committee, supported by independent counsel and compliance advisors, assists in making recommendations, and overseeing the implementation of and enhancements to the Company’s corporate compliance program, structure and governance
practices, with the goal of building a best-in-class culture of compliance. Additionally, your Board has appointed John Somerhalder, a 40-year energy industry executive, as Vice Chairperson to help lead efforts to rebuild trust with FirstEnergy’s external stakeholders. He also joined the management team as Executive Director in a transitional capacity to support efforts to achieve FirstEnergy’s priorities and strengthen the Company’s governance and compliance functions. Your Board is focused on holding management accountable for implementing our strategy consistent with our risk management framework and fulfilling our regulatory obligations. For more information relating to your Board’s enhanced oversight, please refer to the “Board Oversight – Board Response to Government Investigations” section on page 1.
Our Bright Future. Your Board and management team are deeply committed to creating value for you. We are continuing to work quickly, decisively and with a strong sense of urgency to address current challenges, and executewhile executing key initiatives to enhance shareholder value and reshape FirstEnergy into a more resilient, industry-leading organization of the future.
We remain focused on our mission to be a forward-thinking electric utility powered by a diverse team of employees committed to making customers’ lives brighter, the environment better and our communities stronger. As part of that mission, we have introduced an ambitious new carbon neutrality goal and comprehensive climate strategy that are fully aligned with our regulated business strategy and support our commitments to our customers, communities and investors, as well as environmental stewardship.
As always, weyour Board and management team will continue to regularly engage with you regularly toand keep you updated on ouryour Company’s progress. We encourage you toPlease read more about your Board, ourits environmental, social and governance practices, and our executive compensation programs in the accompanying proxy statement.Proxy Statement. We’re grateful for your support and thank you in advance for voting promptly.
Sincerely, | ||
Donald T. Misheff
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2022 PROXY STATEMENT |
Notice of Annual Meeting of Shareholders |
Notice of Annual Meeting of Shareholders
Please carefully review this Notice, the Company’s Annual Report to Shareholders for the year ended December 31, 20202021 (the “2020“2021 Annual Report”), and the accompanying proxy statementProxy Statement and vote your shares by following the instructions on your proxy card/voting instruction form or Notice of Internet Availability of Proxy Materials to ensure your representationvote is cast at the 2022 Annual Meeting.Meeting of Shareholders (the “Annual Meeting”).
Tuesday, May 17, 2022 8:00 a.m. EDT RECORD DATE March 18, 2022 | ||
| To protect the health and safety of
If you plan to attend the virtual Annual Meeting, you must register in advance. See the “Attending the Virtual Annual Meeting” section of the “Questions and Answers about the Annual Meeting” in the accompanying | |
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Only shareholders of record as of the close of business on March |
AGENDA
On behalf of the Board of Directors,
This Notice and accompanying Proxy Statement are being mailed or made available to shareholders on or about March
MISSION STATEMENT We are a forward-thinking electric utility centered on integrity, powered by a diverse team of employees committed to making customers’ lives brighter, the environment better and our communities stronger. OUR CORE VALUES FirstEnergy’s core values encompass what matters most to us. They guide the decisions we make and the actions we take. Our core values should inspire our actions today and shine a light on who we aspire to be in the future.
CODE OF CONDUCT FirstEnergy’s Code of Conduct, The Power of Integrity, lays the foundation for what we expect from all employees. It reflects our collective commitment to keep integrity at the forefront of everything we do — a pledge underscored by the inclusion of integrity in our mission, core values and company strategy. COMPANY STRATEGY Our refined company strategy is built on three pillars: A Strong Foundation, An Unrelenting Customer Focus and Leading and Enabling the Energy Transition. We have defined what each of these pillars means to FirstEnergy in terms of where we will focus our efforts and investments. We believe that focusing on these core pillars will enable FirstEnergy to become a premier electric utility.
ESG FOCUS The pillars of our company strategy are supported by our environmental, social and governance (ESG) priorities and aligned with our commitment to corporate responsibility. Because of this strategic integration, improving our ESG performance advances our strategy and helps us become a more innovative, diverse, sustainable and industry-leading company.
FE FORWARD Our FE Forward improvement initiatives are designed to enhance the organization, focus on performance excellence, and refocus the investment strategy through a range of opportunities. The organizational changes, simplification and centralization of our processes and practices, and the implementation of more modern tools through FE Forward are helping to create a more efficient FirstEnergy. For example, our transition from 10 separately managed distribution companies to our new five-state operating model and the corresponding changes to our organizational structure are designed to centralize decision-making and the development and implementation of business solutions, leading to greater consistency across the company. In addition, our new centralized and strategic Customer Experience function is helping drive improvements essential to our customer-focused strategic objectives: deliver a modern digital customer experience, accelerate widespread electrification, provide sustainable products and solutions, and focus on customer affordability. CLIMATE STRATEGY Enabling the energy transition Our commitment to climate is a significant component of our company’s overarching strategy, especially our desire to enable the transition to a clean energy future. Executing our climate strategy and advancing the transition to clean energy requires addressing, among other things: emerging federal and state decarbonization goals; physical risks of climate change; industry trends and technology advancements; and customer expectations for cleaner energy, increased usage control, and more sustainable alternatives in transportation, manufacturing and industrial processes. Through our investment plan, we aim to enhance the resiliency, reliability and security of the electric system and support the integration of renewables, electric vehicles, grid modernization improvements and other emerging technologies. Reducing GHG Emissions As part of our climate strategy, we are also committed to reducing greenhouse gas (GHG) emissions. We’ve pledged to achieve carbon neutrality by 2050, with an interim 30% reduction in greenhouse gases within our direct operational control by 2030, based on 2019 levels. Our GHG goal encompasses companywide emissions across our transmission, distribution and regulated generation operations.
Key steps in further reducing our emissions and improving the sustainability of our operations include:
COMPANY CULTURE Transforming our company culture is foundational to achieving our company’s strategy. Our core values are the foundation of our transformation, our strategy and ultimately FirstEnergy’s long-term success. Integrity, Safety, Performance Excellence, Diversity, Equity and Inclusion (“DEI”), and Stewardship are the bedrock from which we operate, behave and interact every day. It is critical to our long-term growth and endurance to have a strong cultural foundation of ethics and integrity where employees feel psychologically safe to be themselves, speak up and bring their best to work every day. Creating a work environment that allows for greater diversity, equity and inclusion and prioritizes employees’ safety, health and well-being is also key to that cultural transformation. As part of our transformation we strive to prioritize, operationalize and live these values in everything we do, internally and externally. They guide our behavior, our decisions and ultimately the actions that create our performance and success.
HUMAN CAPITAL MANAGEMENT FirstEnergy’s workforce is essential in our ability to continue moving our company forward by keeping each other safe, delivering value to our stakeholders, and transforming our culture in alignment with our core values. While 2021 continued to present unprecedented challenges, our commitment to our employees and their health and safety has not wavered. Integrity is critical to our path to a stronger, more sustainable FirstEnergy, and reflects our collective commitment to ensuring that we conduct business ethically, help all employees do the right thing and treat our coworkers and communities with the respect we all deserve. Further details on FirstEnergy’s COVID-19 response, our focus on keeping our core values and behaviors at the center of everything we do, and our desire to help our employees to do their best each day is included in the “Our Commitment to Employees” section of this Proxy Statement.
2022 Annual Meeting of Shareholders
Your vote is important! Even if you plan to attend our Annual Meeting virtually, please cast your vote as soon as possible by:
Please follow the instructions provided on your proxy card/voting instruction form (the “proxy card”), Notice of Internet Availability of Proxy Materials, or electronic or other communications included with your proxy materials. Shareholders as of the March You may have multiple accounts and therefore receive more than one proxy card or voting instruction form and related materials. Please vote each proxy card and voting instruction form that you receive.
Your Board Nominees The following Your Board nominees are highly qualified individuals that represent a diversity of gender, ethnicity, age, tenure, thought, background and experiences. Your Board is periodically refreshed with the addition of candidates whom we believe bring new ideas and fresh perspectives into the boardroom. Your Board has nominated Ms. Jana T. Croom and Mr. Sean T. Klimczak for election to your Board at the Annual Meeting. In addition, Messrs. Michael Anderson, Chris Pappas, Don Misheff, Tom Mitchell, Luis Reyes and Ms. Julia Johnson are not standing for re-election at the Annual Meeting.
Key Board Corporate Governance Features Your
Our corporate governance practices are described in greater detail in the “Corporate Governance and Board of Directors Information” section beginning on page
Executive Compensation Highlights Under our compensation design, the percentage of pay that is based on performance increases as the responsibilities of a Named Executive Officer (“NEO”) increase. The charts below illustrate the mix of annual base salary rate
We believe
Our executive compensation practices are described in greater detail in the “Executive Compensation” section beginning on page
Corporate Governance and Board of Directors Information Board Leadership Structure The three positions of CEO,
leadership structure is appropriate if changing circumstances dictate. Your Board schedules regular executive sessions for your independent directors to meet without management participation. Because an independent director is required to preside over each such executive session of independent directors, we believe it is efficient and appropriate to have your independent Board Composition and Refreshment Your Board is comprised of individuals who are The Corporate Governance and Corporate Responsibility Committee The Corporate Governance and Corporate Responsibility Committee has sole authority to retain and engage a third-party search firm to identify a candidate or candidates. In 2022, Ms. Croom was identified by a third-party search firm and, in 2021, Ms. Hicks and Messrs. Williams and Kaleta were each identified by a third-party search firm. Board Oversight Board Response to Government Investigations Your Company has been cooperating fully with requests related to Your Board has formed various special Board oversight committees
Legal Proceedings Beginning in July 2020, stockholders of the Company filed shareholder derivative lawsuits in the federal courts for the Northern and Southern Districts of Ohio and in the Court of Common Pleas of Summit County, Ohio, asserting claims on behalf of the Company against various former and current officers and directors of the Company arising out of the circumstances at issue in the investigations and proceedings relating to HB 6. The lawsuits, Gendrich v. Anderson, et al. and Sloan v. Anderson, et al. (Common Pleas Court, Summit County, OH, all actions have been consolidated) and Miller v. Anderson, et al. (Federal District Court, N.D. Ohio); Bloom, et al. v. Anderson, et al.; Employees Retirement System of the City of St. Louis v. Jones, et al.;Electrical Workers Pension Fund, Local 103, I.B.E.W. v. Anderson et al.;Massachusetts Laborers Pension Fund v. Anderson et al.;The City of Philadelphia Board of Pensions and Retirement v. Anderson et al.;Atherton v. Dowling et al.; Behar v. Anderson, et al. (Federal District Court, S.D. Ohio, all actions have been consolidated), assert claims for breach of fiduciary duty and for violation of Section 14(a) of the Securities Exchange Act of 1934, among other claims. On March 11, 2022, the plaintiffs and defendants in the lawsuits, and the Special Litigation Committee acting on behalf of the Company, entered into a settlement agreement to resolve all of the shareholder derivative lawsuits. The settlement is subject to court approval.The settlement includes a series of corporate governance enhancements, that will result in the following:
The settlement also includes a payment to FirstEnergy of $180 million, to be paid by insurance after court approval, less any court-ordered attorney’s fees awarded to plaintiffs. While your Board cannot predict the outcome of the
Risk Management The Company recognizes that
provided as appropriate to employees, management, senior executive officers, respective Board committees, and the full Board. The Your Board administers its risk oversight function through the full Board, as well as through the various Board
management the steps taken to monitor, control, and mitigate such exposures. Through this oversight process, your Board obtains an understanding of significant risk issues on a timely basis, including the risks inherent in the Company’s strategy. In addition, while the Company’s In addition to the Audit Committee’s role in risk oversight, our other Board committees also play a role in risk oversight within each of their areas of responsibility. Specifically, the Compensation Committee reviews, discusses, and assesses risks related to executive compensation programs, including incentive compensation and equity-based plans, as well as human capital and the relationship between our risk management policies and practices and compensation. See also, “Risk Assessment of Compensation Programs” found in the CD&A section in this
Evaluating Board Effectiveness Your Board is committed to a rigorous evaluation process as further described below. Annually, Board, committee and individual director evaluations are performed and coordinated by the Corporate Governance and Corporate Responsibility Committee. 2021 Board Evaluations: A Multi-Step Process
Shareholder Outreach and Engagement Program
In connection with our shareholder outreach
In 2021 and early 2022, members of our Board
As part of our commitment to Other Governance Practices and Policies
Corporate Governance Your Board believes that the Company’s policies and practices should enhance your Board’s ability to represent your interests as shareholders. Your Board established Corporate Governance Policies which, together with Board committee charters, serve as a framework for meeting your Board’s duties and responsibilities with respect to the governance of the Company. Our Corporate Governance Policies and Board committee charters can be viewed by visiting our website at www.firstenergycorp.com/charters. Any amendments to these documents will promptly be made available on our website. Director Orientation and Continuing Education Your Board recognizes the importance of its members to keep current on Company, industry and governance issues and their responsibilities as directors. All new directors participate in orientation soon after being elected to your Board. Also, your Board makes available and encourages continuing education programs for Board members, which include internal strategy meetings
Attendance at Board Meetings, Committee Meetings and the Annual Meeting of Shareholders Our Corporate Governance Policies provide that directors are expected to attend all scheduled Board and applicable committee meetings and the Company’s annual meetings of shareholders. Your Board held 20 meetings during 2021. During their tenure in 2021, all directors attended at least 75% of the meetings of your Board and of the committees on which they served during 2021. Also, all of our directors who were members of the Board at the time of the 2021 annual meeting attended the 2021 annual meeting. Non-management directors, who are all independent directors, met, as annually required, as a group in executive session without the CEO or any other non-independent director or member of management at each of the seven regularly scheduled 2021 Board meetings. Our independent Chair of the Board presided over all executive sessions. Other Public Company Board Membership and Related Time Commitments Our Corporate Governance Policies provide that directors will not, without your Board’s approval, serve on a total of more than four public company board of In addition to being a director of the Company, Mr. Demetriou, chief executive officer and director of Jacobs Engineering Group Inc., also serves as a director and non-executive board chair of C5 Acquisition Corp, a special acquisition company. The Board has evaluated Mr. Demetriou’s current responsibilities and future commitment expectations and has approved Mr. Demetriou’s various directorships. Communications with your Board of Directors Your Board provides a process for shareholders and interested parties to send communications to your Board and non-management directors, including our Chair of the Board. As set forth in the Company’s Corporate Governance Policies, shareholders and interested parties may send written communications to your Board or a specified individual director, including our Chair of the Board, by mailing any such communications to the FirstEnergy Board of Directors at the Company’s principal executive office, c/o Corporate Secretary, FirstEnergy Corp., 76 South Main Street, Akron, OH 44308-1890. Our Corporate Governance Policies can be viewed by visiting our website at www.firstenergycorp.com/charters. The Corporate Secretary or a member of her staff shall review all such communications promptly and relay them directly to a member of your Board; provided that such communications (i) bear relevance to the Company and the interests of the shareholder, (ii) are capable of being implemented by your Board, (iii) do not contain any obscene or offensive remarks, (iv) are of a reasonable length, and (v) are not from a shareholder who has already sent two such communications to your Board in the last year. Your Board may modify procedures for sorting shareholders communications or adopt any additional procedures provided that they are approved by a majority of independent Directors. Your Audit Committee also receives, reviews, and acts on complaints and concerns regarding accounting, internal accounting controls or auditing matters, including complaints regarding material ethical or criminal misconduct on the part of the Board of Directors, the Chief Executive Officer, any officer reporting directly to the Chief Executive Officer, the Controller & Chief Accounting Officer or the chief audit officer, and complaints regarding matters that could lead to significant reputational damage to the Company. Complaints or concerns specifically related to such matters may be made directly to your Audit Committee. Correspondence to the Audit Committee should be addressed to the attention of the Audit Committee Chair (c/o Corporate Secretary), FirstEnergy Corp., 76 South Main Street, Akron, Ohio 44308-1890.
The Corporate Governance and Corporate Responsibility Committee recommends Board candidates by identifying qualified individuals in a manner that is consistent with criteria approved by your Board. In consultation with the CEO, the
The Corporate Governance and Corporate Responsibility Committee considers suggestions for candidates for membership on your Board, including candidates recommended by shareholders for your Board. Provided that shareholders suggesting director candidates have complied with the procedural requirements set forth in the Corporate Governance and Corporate Responsibility Committee Charter and Amended and Restated Code of Regulations, the Corporate Governance and Corporate Responsibility Committee applies the same criteria and employs substantially similar procedures for evaluating candidates suggested by shareholders for your Board as it would for evaluating any other Board candidate. The Corporate Governance and Corporate Responsibility Committee will also give due consideration to all recommended candidates that are submitted in writing to the Corporate Governance and Corporate Responsibility Committee, in care of the Corporate Secretary, FirstEnergy Corp., 76 South Main Street, Akron, Ohio 44308-1890, received at least 120 days before the publication of the Company’s annual Also refer to the “Proposals and Business by Shareholders” section of the “Questions and Answers about the Annual Meeting” below for information regarding nominations under the Company’s Amended and Restated Code of Regulations. Director Nomination On March 16, 2021, your Company entered into a Director Appointment and Nomination Agreement (the “Director Nomination Agreement”) with Carl C. Icahn, Andrew Teno, Jesse A. Lynn, Icahn Partners LP, Icahn Partners Master Fund LP, Icahn Enterprises G.P. Inc., Icahn Enterprises Holdings L.P., IPH GP LLC, Icahn Capital LP, Icahn Onshore LP, Icahn Offshore LP and Beckton Corp. (collectively, the “Icahn Group”). Pursuant to the Director Nomination Agreement, effective as of March 18, 2021, your Board, among other matters agreed to: (i) increase the size of the Board from 12 to 14 directors, resulting in a total of two vacancies; and (ii) appoint Andrew Teno and Jesse A. Lynn (the “Icahn Designees”) to serve as directors of the Company to fill such vacancies, each with a term expiring at the 2021 Annual Meeting. On November 6, 2021, your Company entered into a Common Stock Purchase Agreement (the “Blackstone SPA”) with BIP Securities II-B L.P., an affiliate of Blackstone Infrastructure Partners L.P. (“Blackstone”), for the private placement of 25,588,535 shares of the Company’s common stock. Pursuant to the Blackstone SPA, your Board, among other matters, agreed to appoint an individual designated by Blackstone to stand for election as a director at the 2023 Annual Meeting. Summaries of the terms of the Director Nomination Agreement Attributes, Experience, Qualifications and Skills of your Board In recruiting and selecting Board candidates, the Corporate Governance and Corporate Responsibility Committee takes into account the size of your Board and considers a “skills matrix” to determine whether those skills and/or other attributes qualify candidates for service on your Board. The attributes, experiences, qualifications and skills considered in accordance with Corporate Governance Policies and the Corporate Governance and Corporate Responsibility Committee charter for each director nominee led your Board to conclude that the nominee is qualified to serve on your Board.
The high-level overview below depicts some of the attributes, experiences, qualifications and skills of our director nominees the committee takes into account. It is not intended to be an exhaustive list of each director nominee’s skills or contributions to your Board. Also, additional biographical information and qualifications for each nominee is provided in the “Biographical Information and Qualifications of Nominees for Election as Directors” section below and contains information regarding the person’s service as a director, principal occupation, business experience along with key attributes, experience and skills. Each of the nominees brings a strong and unique background and skill set to your Board, giving your Board, as a whole, competence and experience in a wide variety of areas necessary to oversee the operations of the Company.
Board Nominees Skills, Diversity & Committee Memberships
The above takes into account a level of knowledge that could include direct experience, subject matter expertise, directly managing one or more members of management engaged in such activities or exposure as a board or board committee member, including on your Board and Board committees. Board’s Focus on Diversity The Company and your Board is committed to a policy of inclusiveness and believes that well assembled boards consist of a diverse group of individuals who possess a variety of complementary skills and experiences. Accordingly, your Board has set a goal that, for the foreseeable future, at least 30% of your Board will be composed of diverse (by race, ethnicity, and gender combined) individuals. The Corporate Governance and Corporate Responsibility Committee regularly assesses the size and composition of your Board in light of the current operating requirements of the Company and the current needs of your Board, and is also committed to actively seeking out highly qualified
Director Independence Your Board annually reviews the independence of each of its members to make the affirmative determination of independence that is called for by our Corporate Governance Policies and required by the Your Board adheres to the definition of an “independent” director as established by the NYSE and the SEC. The definition used by your Board to determine independence is included in our Corporate Governance Policies and can be viewed by visiting our website at Each year, our directors complete a questionnaire to assist your Board in assessing whether each director meets the applicable independence standards and the related provisions in the Company’s Corporate Governance Policies. The Company facilitates this review by examining its financial records to determine if Your Board recognizes that in the ordinary course of business, relationships and transactions may occur between the Company and its subsidiaries and entities with which some of our directors are or have been affiliated. Our Corporate Governance Policies provide categorical standards to assist your Board in determining what does not constitute a material relationship for purposes of determining a director’s independence. Accordingly, the following commercial and charitable relationships will not be considered to be a material relationship that would impair a
charitable contributions made by the Company to an organization with which a Based on the March
Company and none of the Company’s directors are related to any executive officer of the Company. Messrs. Somerhalder and Strah are not considered independent directors because of their The Corporate Governance and Corporate Responsibility Committee also determined that none of the relationships described above constituted a related person transaction requiring disclosure under the heading “Certain Relationships and Related Person Transactions” in this
Qualifications of Nominees for Election as Directors The following provides information about each director
POSITION, PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE: Chair, chief executive officer and director of Jacobs Engineering Group Inc., a provider of technical professional services, including consulting, technical, scientific and project delivery for the government and private sector since August 2015. He serves as a director (non-executive board chair) of one other public company: C5 Acquisition Corp, a special purpose acquisition company since January 2022, which at this time is not an active business with significant operations. He previously served as chairman and chief executive officer (from 2004 to 2015) of Aleris Corporation, a manufacturer of aluminum rolled products and as a director of Kraton Corporation (from 2009 to 2017). KEY ATTRIBUTES, EXPERIENCE AND SKILLS: Mr. Demetriou received his Bachelor of Science degree in chemical engineering from Tufts University. He has extensive experience in leadership and senior management roles, including the role of chief executive officer. In addition, he brings experience in a variety of industries, including engineering, construction and oil and gas. His extensive executive and board experience has equipped him with leadership skills and the knowledge of board processes and functions. This experience qualifies him to serve as a member of your Board. OTHER INFORMATION: In assessing whether directors and director nominees, including Mr. Demetriou, have sufficient time to devote to board duties and responsibilities, the Corporate Governance and Corporate Responsibility Committee and your Board consider, among other things, the commitments of each director on the boards of other public companies. Your Board believes that each of our director nominees has demonstrated the ability to devote sufficient time and attention to Board and Committee duties, and otherwise fulfill the responsibilities required of directors. However, we understand that certain stakeholders may be concerned with Mr. Demetriou’s public company commitments, given his recent appointment as non-executive board chair for C5 Acquisition Corp. (“C5”), which is a special purpose acquisition company (“SPAC”) that issued its initial public offering in January 2022, in addition to serving as a director of the Company and as a chief executive officer and director of Jacobs Engineering Group Inc. The Board has evaluated Mr. Demetriou’s current responsibilities and future commitment expectations, and is comfortable with his current public company commitments, as discussed further below. However, the Board intends to regularly evaluate Mr. Demetriou’s roles and responsibilities with respect to your Board to ensure that he continues to be able to dedicate the time necessary to fulfill his responsibilities. In addition, your Board is committed to ensuring that, by or before the filing of the 2023 proxy statement, Mr. Demetriou’s public company commitments will have been addressed in consideration of shareholder expectations. In its assessment, the Board considered that Mr. Demetriou’s participation as the non-executive Chair of C5 is not expected to be a substantial time commitment, particularly due to the fact that C5 does not have significant operations and the limited operating nature of SPACs in general. In addition, Mr. Demetriou effectively manages the demands on his time in many ways:
POSITION, PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE: Chairman, MV Transportation, Inc., a privately owned passenger transportation contracting firm and provider of paratransit services, in the United States, since October 2014. She served as executive vice president, general counsel and corporate secretary for MV Transportation from 2012 until 2018. Ms. Hicks also serves as a director for Robotic Research, a provider of autonomy and robotic technology. KEY ATTRIBUTES, EXPERIENCE AND SKILLS: Ms. Hicks received a Bachelor of Arts in Political Science from Stanford University and a Juris Doctorate from Harvard Law School. As executive vice president and general counsel of MV Transportation, Hicks directed all company legal affairs including its acquisition of businesses, defense and resolution of litigation, as well as corporate compliance and governance. From 2004 until 2008, Hicks was senior vice president and associate general counsel for TXU Corp., a Dallas based energy holding company. Following the acquisition of TXU Corp by private investors and its name change to Energy Future Holdings, Hicks became its corporate secretary and continued in the role of senior vice president and associate counsel managing legal and board functions including corporate governance, compliance and security programs, employee benefits and executive compensation, litigation risk and strategy. Earlier in her career she worked as a litigator in private law practice and served in various roles at the U.S. Department of Justice and in the White House where she was Associate Counsel to the President. Ms. Hicks’ legal, regulatory, compliance and energy-sector experience qualifies her to serve as a member of your Board.
POSITION, PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE: Retired executive vice president, general counsel, federal affairs, chief compliance officer, and corporate secretary of First Solar, Inc., a global solar company, from 2014 to 2020. Managing director of SERC Consulting LLC, an energy policy and strategy firm, since 2020. Previously served as executive vice president, general counsel, shared services, chief compliance officer, and corporate secretary of NV Energy, Inc., an electric and gas utility, from 2006 to 2013. KEY ATTRIBUTES, EXPERIENCE AND SKILLS: Mr. Kaleta received his law degree from Georgetown University Law Center and his undergraduate degree from Hamilton College. He has more than 30 years of leadership and business experience as a senior executive and general counsel for companies across the energy industry, including both regulated utility and clean energy technology companies. He also has served on energy advisory and industry boards, was a partner in a Washington, D.C. law firm, and was an adjunct professor teaching energy law and business ethics. Mr. Kaleta’s varied and comprehensive utility, regulatory, energy transition, clean energy, energy sustainability and resiliency, governmental affairs, legal, and corporate governance and compliance experience qualifies him to serve as a member of your Board.
POSITION, PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE: Senior managing director and global head of infrastructure of Blackstone Inc., a global investment firm since August 2005. He serves as a director of the following other public company: Cheniere Energy Inc., an energy infrastructure company. Mr. Klimczak was previously a director of the General Partner of Cheniere Partners (from September 2012 to August 2017). KEY ATTRIBUTES, EXPERIENCE AND SKILLS: Mr. Klimczak received a Bachelor of Business Administration in Finance and Business Economics from the University of Notre Dame and a Master of Business Administration from Harvard Business School. Prior to his position at Blackstone, Mr. Klimczak was an Associate at Madison Dearborn Partners. Prior to that, he worked in the Mergers & Acquisitions department of Morgan Stanley & Company’s Investment Banking Division. Mr. Klimczak’s nomination to the Board of FirstEnergy was made pursuant to a Common Stock Purchase Agreement that was entered into by the Company and with BIP Securities II-B L.P., an affiliate of Blackstone Infrastructure Partners L.P., in connection with Blackstone’s purchase of FirstEnergy common stock. Mr. Klimczak’s energy infrastructure industry expertise and financial and investment experience qualifies him to serve as a member of your Board.
POSITION, PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE: General Counsel of Icahn Enterprises L.P., a diversified holding company engaged in a variety of businesses, including investment, energy, automotive, food packaging, real estate, home fashion and pharma, since 2014. Mr. Lynn also served as Chief Operating Officer of Icahn Capital LP, the entity through which Carl C. Icahn manages investment funds, since April 2021. Mr. Lynn also serves as a director of the following two other public companies: Xerox Holdings Corporation, a provider of print and digital document products and services, since November 2021 and Conduent Incorporated, a provider of business process outsourcing services, since April 2019. Mr. Lynn was previously a director of Cloudera, Inc., a provider of enterprise data cloud services, from August 2019 through its sale in October 2021; Herbalife Nutrition Ltd., a nutrition company, from April 2014 to January 2021; and The Manitowoc Company, Inc., a capital goods manufacturer, from April 2015 to February 2018. KEY ATTRIBUTES, EXPERIENCE AND SKILLS: Mr. Lynn received a Bachelor of Arts from the University of Michigan and a Juris Doctor from the Boston University School of Law. He has extensive experience in a variety of businesses, including investment, energy, automotive, food packaging, metals, real estate, home fashion and pharma. Prior to his current position, Mr. Lynn was Assistant General Counsel of Icahn Enterprises L.P. (from 2004 to 2014). Prior to joining Icahn Enterprises L.P., Mr. Lynn worked as an associate in the New York office of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. in its business and finance department and as an associate in the corporate group at Gordon Altman Butowsky Weitzen Shalov & Wein. Mr. Lynn’s legal experience and his experience in a variety of industries along with his broad business skills make him a valuable member of your Board.
POSITION, PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE:
Chief executive officer and vice chairman of Orbital Energy Group (formerly known as CUI Global Inc.), a company focused on acquisition and development of innovative companies to create a diversified energy services platform since 2019. Principal owner of Forefront Solutions, LLC, which provides consulting services primarily to the energy infrastructure industry, since October 2017. Former president, chief executive officer and director of Quanta Services, Inc., a provider of specialty contracting services to the electric power and oil and gas industries (from 2011 to 2016). He served as a director of Hennessy Capital Acquisition Corp IV (2019 to 2020), NRC Group Holdings (from 2017 to 2019) and Spark Power Group Inc. (from 2018 to 2019). KEY ATTRIBUTES, EXPERIENCE AND SKILLS: Mr. O’Neil received his Bachelor of Science degree in civil engineering from Tulane University. He has extensive leadership and senior management experience, including the role of chief executive officer, chief operating officer and senior vice president of operations integration and audit. His extensive executive and board experience have equipped him with leadership skills and the knowledge of board processes and functions. Additionally, Mr. O’Neil’s audit, general corporate decision-making and engineering experience makes him a valuable member to your Board.
POSITION, PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE: Vice Chair and Executive Director of your Board and a member of management since March 2021. Mr. Somerhalder recently served as interim president and chief executive officer of CenterPoint Energy, Inc., an electric and natural gas utility serving several U.S. markets (from February 2020 to July 2020), and served as a member of the CenterPoint Energy’s board of directors (from 2016 through July 2020). He also served as a director of Gulfport Energy Corp (from July 2020 to May 2021), as a director and board chairman of Enable Midstream Partners, LP (from February 2020 to July 2020), as a Director of SunCoke Energy Partners GP LLC (from August 2017 to July 2019), and as director at Crestwood Equity GP LLC, the general partner of Crestwood Equity Partners LP (from October 2013 to February 2020).
Mr. Somerhalder holds a Bachelor of Science degree in chemical engineering from the University of Arizona. He served as Interim President and Chief Executive Officer of Colonial Pipeline Company, a U.S. refined products pipeline company (from February 2017 to October 2017). Prior to that, he was president and chief executive officer of AGL Resources Inc., a former publicly traded energy services holding company (from March 2006 to his retirement in December 2015), and chairman of AGL Resources board of directors (from November 2007 to December 2015). Prior to joining AGL Resources, Mr. Somerhalder served in a number of roles with El Paso Corporation, a publicly traded natural gas and related energy products provider, where he spent almost 30 years, starting his career as an engineer and progressing through leadership roles before being named president of El Paso Pipeline Group and executive vice president of El Paso Corporation. He has extensive leadership and senior management experience, including the roles of chief executive officer and board chairman. His extensive energy industry, executive and board experience have equipped him with leadership skills and knowledge of the industry, and board processes and functions. Mr. Somerhalder’s extensive experience qualifies him to serve on your Board, lead efforts to rebuild trust with our external stakeholders, support our senior leadership team’s efforts to achieve its priorities, and strengthen your Company’s governance and compliance functions.
POSITION, PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE: President, CEO and director of your Company since March 2021. He was President and Acting CEO (from October 2020 to March 2021), and President (since May 2020). He also served as Senior Vice President and Chief Financial Officer of your Company (from 2018 to 2020), and Senior Vice President and President of FirstEnergy Utilities (from 2015 to 2018). He also serves as a director of many other subsidiaries of the Company. KEY ATTRIBUTES, EXPERIENCE AND SKILLS: Mr. Strah received his Bachelor of Science degree in business administration from Baldwin Wallace University. His extensive career began in 1984 at The Illuminating Company, now a subsidiary of your Company, and continued at FirstEnergy Corp. He has held numerous executive leadership positions at your Company including President at various FirstEnergy subsidiaries. Mr. Strah’s vast experience brings to your Board an extraordinary understanding of the inner workings of the public utilities industry and FirstEnergy.
POSITION, PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE: Portfolio manager of Icahn Capital LP., a diversified holding company engaged in a variety of businesses including investment, energy, automotive, food packaging, metals, real estate, home fashion and pharma, since October 2020. Prior to his position at Icahn Capital, Mr. Teno worked at Fir Tree Partners (from 2011 to 2020), a NY based private investment firm that invests worldwide in public and private companies, real estate and sovereign debt. Mr. Teno serves as a director of the following two public companies: Herc Holdings Inc. (an equipment rental supplier) and Cheniere Energy, Inc. (an energy infrastructure company). He served as a director of Eco-Stim Energy Solutions (from March 2017 to December 2018). KEY ATTRIBUTES, EXPERIENCE AND SKILLS: Mr. Teno received an undergraduate business degree from the Wharton School at the University of Pennsylvania. Prior to his current position at Icahn Capital, Mr. Teno worked at Fir Tree Partners, a NY based private investment firm. Prior to Fir Tree, he worked at Crestview Partners as an associate in their private equity business and at Gleacher Partners, a boutique mergers and acquisitions firm. Mr. Teno’s investment expertise and experience in a variety of industries, along with his business skills, make him a valuable member of your Board.
POSITION, PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE: Retired in March 2018 as senior vice president, general counsel and corporate secretary (positions held since 2012) of The Hershey Company, a global confectionery company. KEY ATTRIBUTES, EXPERIENCE AND SKILLS: Ms. Turner received her law degree from the Georgetown University Law Center after graduating from the New York University with a Bachelor of Science degree. She also received a Master of Laws in Law and Government from the American University, Washington College of Law. Ms. Turner has extensive and wide-ranging leadership, legal, governance and corporate strategy skills through her former roles with The Hershey Company and The Coca-Cola Company. Ms. Turner served as senior vice president, general counsel, and corporate secretary of The Hershey Company from 2012 until her retirement in March 2018. In this role, Ms. Turner was the leader of Hershey’s legal, government relations, corporate secretary, and corporate security functions. She also advised Hershey on M&A opportunities and other stakeholder considerations facing publicly traded companies. Prior to joining Hershey, Ms. Turner’s career included progressively more responsible leadership roles at Coca-Cola North America, Akin Gump Hauer & Feld, LLP and the senior executive service level of the federal government. Ms. Turner’s legal experience and additional regulatory experience qualify her to serve as a member of your Board.
POSITION, PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE: Retired in 2020 as president of Nicor Gas, a natural gas distribution company and subsidiary of the Southern Company, and senior vice president of Southern Company Gas (positions held since 2015).
Mr. Williams received his Bachelor of Science degree from the Savannah State University. Prior to his most recent positions, he held progressively more responsible leadership roles including senior vice president, planning and business services at Nicor Gas and vice president and general manager at Atlanta Gas Light Company and Florida City Gas Company. Over 32 years of utility experience that includes sales, marketing, regulatory, and utility operations enables Mr. Williams to provide valuable insight and qualifies him to serve as a member of your Board.
Your Board has established five standing committees
Your Board appoints at least one member of the Audit Committee who, in your Board’s business judgment, is an “Audit Committee Financial Expert,” as such term is defined by the SEC. Your Board determined that Messrs. Anderson
Effective May 18, 2021, Mr. Demetriou and Ms. Johnson were appointed to the Compensation Committee. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Corporate Governance and Corporate Responsibility Committee |
Julia L. Johnson (Chair) Luis A. Reyes Melvin D. Williams | The Corporate Governance and Corporate Responsibility Committee is primarily responsible for:
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◾ oversight of the Company’s policies and practices relating to corporate responsibility. The Committee is also directly responsible for oversight of our (i) political activities and practices and (ii) our Company’s corporate citizenship practices Effective May 18, 2021, Mr. Williams was appointed to, and Messrs. Misheff and Mitchell transitioned off, the Corporate Governance and Corporate Responsibility Committee. | ||||||||
32 | 2022 PROXY STATEMENT |
Mr. Lynn and Mr. Pappas were appointed to the Corporate Governance and Corporate Responsibility Committee effective March 23, 2021 and April 1, 2021, respectively.
20 | FirstEnergy Corp. 2021 Proxy Statement
Proxy | Corporate | Items to Be | Commitments to Employees & ESG | Executive & Director Compensation | Other Important Matters / Q&A |
Finance Committee |
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Steven J. Demetriou (Chair) Michael J. Anderson Christopher D. Pappas Andrew Teno | The Finance Committee is primarily responsible for monitoring and overseeing the Company’s financial resources and strategies, with emphasis on those issues that are long-term in nature. For a complete list of responsibilities and other information, refer to the Finance Committee Charter available on website at
Effective May 18, 2021, Mr. | |
Operations and Safety Oversight Committee |
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Thomas N. Mitchell (Chair)
James F. O’Neil III Luis A. Reyes Melvin D. Williams | The Operations and Safety Oversight Committee is primarily responsible for monitoring and overseeing the Company’s significant operating matters relating to the Company’s electric power generation and distribution and transmission Effective May 18, 2021, Mr. Williams was appointed to, and Mr. Demetriou transitioned off, the Operations and Safety Oversight Committee. | |
21 | FirstEnergy Corp. 2021 Proxy Statement
FIRSTENERGY CORP. | 33 |
Proxy | Corporate | Items to Be | Commitments to Employees & ESG | Executive & Director Compensation | Other Important Matters / Q&A |
Special Board Oversight Committees | ||
Leslie M. Turner (Chair) | Compliance Oversight
2021 | |
Paul Kaleta (Chair) |
◾ 37 meetings in fiscal year
In addition and as described in greater detail in the “Board Oversight – Board Response to Government Investigations” section above, on February 9, 2022 the Special Litigation Committee agreed to a settlement term sheet to resolve multiple shareholder derivative lawsuits that included, among other things, an agreement that your Board will (1) form a special Board committee to initiate a review process of the current senior executive team, to begin within 30 days of the 2022 Annual Meeting of Shareholders; and (2) and cause the reconstituted Corporate Governance and Corporate Responsibility Committee to oversee the implementation and third-party audits of Board-approved action plans with respect to political and lobbying activities. | |
34 | 2022 PROXY STATEMENT |
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Items to Be | Commitments to Employees & ESG | Executive & Director Compensation | Other Important Matters / Q&A |
22 | FirstEnergy Corp. 2021 Proxy Statement
Item 1 | Election of Directors | |
✓Your Board recommends that you vote FOR |
You are being asked to vote for the following 1412 nominees (13(10 current directors and onetwo new director nominee)nominees (Ms. Jana T. Croom and Mr. Sean T. Klimczak) to serve on your Board for a term expiring at the annual meeting of shareholders in 20222023 and until their successors shall have been elected: Michael J. Anderson,Jana T. Croom, Steven J. Demetriou, Julia L. Johnson,Lisa Winston Hicks, Paul Kaleta, Sean T. Klimczak, Jesse A. Lynn, Donald T. Misheff, Thomas N. Mitchell, James F. O’Neil III, Christopher D. Pappas, Luis A. Reyes, John W. Somerhalder II, Steven E. Strah, Andrew Teno, Leslie M. Turner and Melvin WilliamsWilliams. . Messrs. Somerhalderand Strahwere electedMr. Klimczak’s nomination to yourthe Board effective March 1, 2021 and March 8, 2021, respectively, and are nominees for election by shareholders at the Annual Meeting. Messrs. Lynnand Tenowere appointed to your Board effective March 18, 2021,of FirstEnergy was made pursuant to the Director Nominationa Common Stock Purchase Agreement and are nominees for election by shareholders at the Annual Meeting. Mr. Somerhalderand Mr. Williams were identified by a third-party search firm as potential candidates and recommended as directorsthat was entered into by the membersCompany and BIP Securities II-B L.P., an affiliate of our Corporate Governance and Corporate Responsibility Committee. In addition, Sandra Pianalto hasBlackstone Infrastructure Partners L.P., in connection with Blackstone’s purchase of FirstEnergy common stock in 2021. Michael J. Anderson, Julia L. Johnson, Donald T. Misheff, Thomas N. Mitchell, Christopher D. Pappas, Luis A. Reyes,are not been nominatedstanding for re-election at the Annual Meeting, and his/her term on your Board will expire at the conclusion of the Annual Meeting.
The “Biographical Information and Qualifications of Nominees for Election as Directors” section of this proxy statementProxy Statement provides information for all nominees for election at the Annual Meeting. The “Board Qualifications” section of this proxy statementProxy Statement provides information relating to your Board’s and Corporate Governance and Corporate Responsibility Committee’s review of nominees. Your Board has no reason to believe that the persons nominated will not be available to serve after being elected. If any of these nominees would not be available to serve for any reason, shares represented by the appointed proxies will be voted either for a lesser number of directors or for another person selected by your Board. However, if the inability to serve is believed to be temporary in nature, the shares represented by the appointed proxies will be voted for that person who, if elected, will serve when able to do so.
Pursuant to the Company’s Amended and Restated Code of Regulations, at any election of directors, a nominee shall be elected to your Board only if the vote “For” the candidate exceed the votes “Against” the nominee; abstentions and broker non-votes will have no effect. Our Corporate Governance Policies also provide that in an uncontested election of directors (i.e., an election where the only nominees are those recommended by your Board), any nominee for director who receives a greater number of votes “Against” his or her election than votes “For” his or her election will promptly tender his or her resignation to the Corporate Governance and Corporate Responsibility Committee following certification of the shareholder vote. The Corporate Governance and Corporate Responsibility Committee will promptly consider the tendered resignation and will recommend to your Board whether to accept or reject the tendered resignation no later than 60 days following the date of the shareholders’ meeting at which the election occurred. In considering whether to recommend acceptance or rejection of the tendered resignation, the Corporate Governance and Corporate Responsibility Committee will consider factors deemed relevant by the committee members, including the director’s length of service, the director’s particular qualifications and contributions to the Company, the reasons underlying the majority withheld vote, if known, and whether these reasons can be cured, and compliance with stock exchange listing standards and the Corporate Governance Policies. In considering the Corporate Governance and Corporate Responsibility Committee’s recommendation, your Board will consider the factors considered by the Corporate Governance and Corporate Responsibility Committee and any such additional information and factors your Board believes to be relevant. Your Board will act on the Corporate Governance and Corporate Responsibility Committee’s recommendation no later than at its next regularly scheduled Board meeting.
Your Board Recommends That You Vote “For” All Nominees in Item 1. ✓ |
23 | FirstEnergy Corp. 2021 Proxy Statement
FIRSTENERGY CORP. | 35 |
Proxy | Corporate | Items to Be | Commitments to Employees & ESG | Executive & Director Compensation | Other Important Matters / Q&A |
Item 2 | Ratification of the Appointment of the Independent Registered Public Accounting Firm For 2021 | |
✓Your Board recommends that you vote FOR Item |
You are being asked to ratify the Audit Committee’s appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm to examine the books and accounts of the Company for the fiscal year ending December 31, 2021.2022. While our Amended and Restated Code of Regulations does not require shareholders to ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm, we are submitting the proposal for ratification as a matter of good corporate governance. However, if shareholders do not ratify the appointment, the Audit Committee will reconsider retaining PricewaterhouseCoopers LLP.LLP in future years. Even if the appointment is ratified, the Audit Committee, at its discretion, may change the appointment at any time during the year if it determines that such a change would be in the best interests of the Company and its shareholders. A representative of PricewaterhouseCoopers LLP is expected to attend the Annual Meeting and will be available to respond to appropriate questions and have an opportunity to make a statement if he or she wishes to do so. We refer you to the “Matters Relating to the Independent Registered Public Accounting Firm” section of this proxy statementProxy Statement for information regarding services performed by, and fees paid to, PricewaterhouseCoopers LLP during the years 20192020 and 2020.2021. Item 2 requires the affirmative vote of a majority of the votes cast and abstentions will have no effect. There can be no broker non-votes on Item 2 as it is considered a “routine” matter under applicable NYSE rules.
Your Board Recommends That You Vote “For” Item 2. ✓ |
24 | FirstEnergy Corp. 2021 Proxy Statement
36 | 2022 PROXY STATEMENT |
Proxy | Corporate | Items to Be | Commitments to Employees & ESG | Executive & Director Compensation | Other Important Matters / Q&A |
Item 3 | Approve, on an Advisory Basis, Named Executive Officer Compensation | |
✓Your Board recommends that you vote FOR Item |
The following proposal provides shareholders the opportunity to cast an advisory, non-binding vote to approve the compensation of the NEOs (a “Say-on-Pay”“Say-on-Pay” vote) as further described in the Compensation Discussion and Analysis (“CD&A&A”) and the related compensation tables and narrative disclosure. This resolution is required pursuant to Section 14A of the Securities Exchange Act of 1934. Currently, the advisory vote is held annually. The next advisory vote on NEO compensation is scheduled to occur at the Company’s 20222023 Annual Meeting of Shareholders. Your Board strongly supports the Company’s executive pay practices and asks shareholders to support its executive compensation program by adopting the following resolution:
“RESOLVED, that the shareholders approve, on an advisory basis, the compensation of the FirstEnergy Corp. Named Executive Officers, as such compensation is disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the compensation tables, and the other related narrative executive compensation disclosure contained in the proxy statement.”
The primary objectives of the Company’s executive compensation program are to attract, motivate, retain, and reward the talented executives, including the NEOs, who we believe can provide the performance and leadership to achieve success in the highly complex energy industry. Our executive compensation program is centered on a pay-for-performance philosophy. After robust benchmarking and shareholder outreach, the Compensation Committee and your Board approved a number of key changes effective in 2018 and have generally maintained the same structure and design for the executive compensation program, for 2019 and 2020, to better align executive pay with shareholder interests.
In deciding how to vote on this proposal, we encourage you to read the CD&A for a more detailed discussion of our executive compensation programs and practices applicable to the NEOs, beginning on page 26.54.
Your Board strongly believes that our compensation philosophy, in conjunction with continued shareholder outreach, is in the best interests of shareholders. We will continue to annually review and evaluate all compensation plans and programs with the goal of aligning such plans and programs with market practice where appropriate and with the best interests of our shareholders. Item 3 is an advisory proposal that requires the affirmative vote of a majority of the votes cast; abstentions and broker non-votes will have no effect.
Although this advisory vote is non-binding, your Board and the Compensation Committee value the views of our shareholders and expect to consider the voting results when considering future executive compensation practices for the NEOs.
Your Board Recommends That You Vote “For” Item 3. ✓ |
25 | FirstEnergy Corp. 2021 Proxy Statement
FIRSTENERGY CORP. | 37 |
Proxy | Corporate | Items to Be | Commitments to Employees & ESG | Executive & Director Compensation | Other Important Matters / Q&A |
Item 4 | Shareholder Proposal Requesting a Report Relating to Electric Vehicles and Charging Stations with Regards to Child Labor Outside of the United States | |
X Your Board recommends that you vote AGAINST Item 4. |
Steven J. Milloy, 12309 Briarbush Lane, Potomac, MD 20854, plans to introduce the following resolution at the Annual Meeting. We have been notified that Mr. Milloy is the beneficial owner of no less than 81 shares of your Company’s common stock.
Child Labor Audit
Resolved:
Shareholders request that, beginning in 2022, First Energy report to shareholders on the extent to which its business plans with respect to electric vehicles and their charging stations may involve, rely or depend on child labor outside the United States.
Supporting Statement:
First Energy’s business plans involve the promotion of electric vehicles. First Energy hopes to profit from the charging of such vehicles.
But according to Amnesty International and media reports:
— Cobalt is an expensive metal used in electric car batteries.
— 59% of the global cobalt supply comes from the Democratic Republic of the Congo
— Cobalt mining in the Congo is often done by children — as many as 40,000 — working in brutal and unsafe conditions. A euphemism for these children is “informal” workers.
— Many of these children are injured and killed in these conditions.
— Such child labor is a gross violation of human rights.
In addition, the global cobalt supply change is now controlled by Communist China, which is a known and egregious violator of human rights.
More information on these human rights violations may be found at https://junkscience.com/2020/10/mean-and-unclean-electric-cars-powered-by-child-labor-in-africa/.
Shareholders have the right to know the extent to which, if any and intentionally or not, First Energy’s business plans rely on or involve the direct or indirect exploitation of child labor and/or the violation of the human rights of child workers outside the United States.
Your Company’s Response — Item 4
Your Board has carefully considered the foregoing shareholder proposal and unanimously recommends a vote AGAINST it for the following reasons:
With respect to material and equipment purchases and related services, your Company’s suppliers are required to comply with FirstEnergy’s Code of Conduct and Supplier Code of Conduct, and we work directly with suppliers and through industry coalitions to address supply chain social and environmental issues.
38 | 2022 PROXY STATEMENT |
Proxy | Corporate | Items to Be | Commitments to Employees & ESG | Executive & Director Compensation | Other Important Matters / Q&A |
Your Company believes in the importance of ethical sourcing in its supply chain and is committed to responsible business practices. In accordance with our Standard Terms and Conditions for material and equipment purchases and related services, your Company’s business partners, including our suppliers, are required to comply with FirstEnergy’s Code of Conduct (the “Code”). In addition, pursuant to the Code, our business partners such as suppliers, consultants, representatives and agents are also required to follow FirstEnergy’s Supplier Code of Conduct (the “Supplier Code”). All suppliers must meet FirstEnergy’s standards, including fair employment practice; compliance with laws, including labor and human rights laws, regulations, and rules; and environmental protection and sustainability. More specifically, suppliers must ensure that child labor is not used in the performance of the work with FirstEnergy or any company. The Code and the Supplier Code can be found at: www.firstenergycorp.com/responsibility.
Regarding electric vehicles purchased for our own operations, FirstEnergy currently works with two major manufacturers of vehicles based in the United States both of which have robust supply chain programs specifically addressing cobalt sourcing issues, including their participation in the Responsible Cobalt Initiative. Your Company also participates in the Electric Utility Industry Sustainable Supply Chain Alliance, a coalition of utilities and suppliers working together to advance sustainability best practices in utility supply chain activities and supplier networks.
As an electric service provider, your Company is responding to the needs and desires of its customers and policymakers relating to the adoption of electric vehicles and access to charging infrastructure.
FirstEnergy does not manufacture electric vehicles or electric vehicle charging stations. FirstEnergy also cannot control or project the types of vehicles that consumers or businesses may purchase or use within our service area, or control the battery technologies that such vehicles may utilize. Similarly, FirstEnergy cannot control or project how electric vehicle manufacturers might work with their battery suppliers to possibly transition to technologies that are not reliant on cobalt, or address issues related to the sourcing of cobalt as a raw material.
Issues relating to child labor and human rights associated with cobalt production are likely best addressed through existing manufacturing supply chain initiatives and industry trade groups that have a direct influence on such practices.
Your Company’s business strategy appropriately recognizes and seeks to respond to near- and long-terms trend towards transportation electrification.
Increased deployment of electric vehicles is occurring as part of a broader evolution of transportation – one driven by consumers, policymakers, and other stakeholders seeking to address a range of issues, including the reduction of carbon emissions. FirstEnergy’s business strategy is designed to plan for and respond to these trends, and it is incumbent on your Company to plan for how the electric delivery systems will need to respond to these trends to ensure continued reliability and performance.
Although FirstEnergy is expanding the use of electric vehicles in its fleets and is promoting the use of electric vehicles to mitigate climate change, as discussed above, the issues associated with the sourcing of cobalt are far beyond the scope of FirstEnergy’s supply chain or business plans. FirstEnergy acknowledges that there have been supply chain issues involving human rights identified with the sourcing of cobalt, which is used as a key element for the production of rechargeable batteries, including those used with electric vehicles. However, FirstEnergy believes that the Company’s supply chain policies and partnerships with other companies and trade groups discussed above mitigate these concerns as they relate to FirstEnergy.
Summary
Your Company’s suppliers are required to comply with FirstEnergy’s Code of Conduct and Supplier Code of Conduct. Accordingly, all of our suppliers must meet FirstEnergy’s standards, including a requirement that suppliers must ensure that child labor is not used in the performance of the work with FirstEnergy or any company. Based on the above, your Board recommends that you vote AGAINST this shareholder proposal because your Board believes it is not in the best interests of our shareholders and the Company.
X Your Board Recommends That You Vote “Against” Item 4. |
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Item 5 | Shareholder Proposal Regarding Special Shareholder Meetings | |
X Your Board recommends that you vote AGAINST Item 5. |
John Chevedden, 2215 Nelson Avenue, No. 205, Redondo Beach, California 90278, plans to introduce the following resolution at the Annual Meeting. We have been notified that Mr. Chevedden is the beneficial owner of no less than 90 shares of your Company’s common stock.
NOTE: The graphic below was submitted as part of the shareholder’s proposal.
Proposal 5 — Special Shareholder Meeting Improvement
Shareholders ask our board to take the steps necessary to amend the appropriate company governing documents to give the owners of a combined 10% of our outstanding common stock the power to call a special shareholder meeting.
One of the main purposes of this proposal is to give shareholders the right to formally participate in calling for a special shareholder meeting regardless of their length of stock ownership to the fullest extent possible.
It is important to adopt this proposal to make up for our lack of a shareholder right to act by written consent by a majority of shares outstanding. Many companies provide for both a shareholder right to call a special shareholder meeting and a shareholder right to act by written consent.
Southwest Airlines and Target are companies that do not provide for shareholder written consent and yet provide for 10% of shares to call for a special shareholder meeting.
FirstEnergy shareholders gave 45%-support to a shareholder proposal for the shareholder right to act by written consent. This 45%-support likely represented 51%-support from the shares that have access to independent proxy voting advice and are not forced to rely on the biased voting advice of FE management.
FirstEnergy management should support a proposal topic that earns majority shareholder support—especially at a company like FE where the stock price performs so poorly and was fined $230 million in the Ohio nuclear bribery scandal. To partially compensate for not having a right to written consent by a majority we need a right for 10% of shares to call a special shareholder meeting.
A more reasonable right to call a special meeting might make for more of an incentive for our directors to perform better since a special meeting can elect a new director. For instance Mr. Donald Misheff, FirstEnergy Chairman, received 56 million negative votes at the 2021 annual meeting. This was up to 15-times the negative votes of other FE directors.
And FirstEnergy stock was at $82 in 2008.
It is important to adopt this proposal to make up for our lack of a shareholder right to act by written consent.
Please vote yes:
Special Shareholder Meeting Improvement – Proposal 5
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Your Company’s Response — Item 5
Your Board has carefully considered the foregoing shareholder proposal and unanimously recommends a vote AGAINST it for the following reasons:
FirstEnergy Shareholders Already Have the Ability to Call Special Shareholder Meetings
Your Board believes that shareholders should have the ability to call special meetings and has continued to give serious consideration to the issue. In 2011, after careful consideration and consultation with numerous shareholders, your Board presented, and our shareholders approved by over 97% of the votes cast (85% of shares then outstanding), the right of holders of 25% or more of the outstanding shares of FirstEnergy to call a special meeting of shareholders. Since then, we have regularly engaged with shareholders on a wide range of governance topics, and shareholders, on the whole, have not identified this threshold percentage as a concern to your Board or to management. However, based on your Board’s ongoing review of this topic, as further discussed below we anticipate seeking shareholder approval in 2023 to further reduce this threshold to allow for the right of holders of FirstEnergy to call a special meeting of shareholders to 20% or more of the outstanding shares from the existing 25%.
Anticipated 20% Ownership Threshold Strikes a Reasonable and Appropriate Balance
Your Board continues to support a reasonable and appropriate ownership threshold to call a special meeting for the following reasons:
◾ | Your Board believes that a 20% ownership threshold for the right to call a special meeting strikes a reasonable and appropriate balance between empowering shareholders with an important right and protecting against the risk that a small minority of shareholders with potentially narrow, short-term interests would call a special meeting. |
◾ | Shareholder meetings are significant events that require a substantial monetary commitment on the part of your Company and attention of your Board, officers and employees, thus diverting attention away from their focus on meeting our business objectives and enhancing shareholder value. |
◾ | Allowing a small minority of shareholders to call a special meeting for any reason would permit such minority to pursue self-interested goals, which could be detrimental to the interest of a majority of our shareholders and other stakeholders. |
Your Board also considered the composition of the Company’s shareholder base, which currently includes several shareholders that individually hold greater than 5% of our common stock.
Company to Propose Reducing Special Meeting Threshold to 20% (from the existing 25%)
This non-binding shareholder proposal requests that your Board “take the steps necessary to amend the appropriate company governing documents to give the owners of a combined 10% of our outstanding common stock the power to call a special shareholder meeting.” In 2011, your Board successfully obtained shareholder approval to provide the existing right of holders of 25% or more of the outstanding shares of FirstEnergy to call a special meeting of shareholders.
Based on your Board’s ongoing review of this topic, we anticipate seeking shareholder approval at the Company’s 2023 annual meeting of shareholders to further reduce this threshold to allow for the right of holders of 20% or more of the outstanding shares of FirstEnergy to call a special meeting of shareholders. Due to the requirement to file a preliminary proxy statement and the required timing of such filing, this management proposal is to be presented at next year’s annual meeting of shareholders. Your Board cannot unilaterally adopt the proposed amendment because a shareholder vote is necessary under our governing documents and Ohio Law. Your Board believes reducing the threshold to 20% more appropriately and effectively implements the policy at issue and serves the best interests of our shareholders.
FirstEnergy’s Robust Shareholder Outreach and Engagement and Practices Provide Shareholders Opportunities to Express Opinions on Topics of Interest
Your Board and management continue to view our commitment to ongoing dialogue with our shareholders as key to the Company’s success. To that end, and as discussed in detail earlier in this Proxy Statement in the “Shareholder Outreach and Engagement Program” section, your Company’s leaders meet regularly with shareholders to discuss key developments, our strategy and operational performance. We also meet with shareholders throughout the year to discuss perspectives on corporate governance, executive compensation matters and related disclosures.
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Moreover, our governance policies promote open communication between shareholders and the Board. The Company encourages shareholders to communicate directly as described in the “Communications with your Board of Directors” section above. Our shareholders also are empowered in other important rights that make the proponent’s request unnecessary. Specifically:
◾ | Proxy Access: A group of up to 20 shareholders, representing at least 3% of outstanding shares held for at least three years, can nominate up to two director nominees or 20% of the Board – these nominees, if qualified, would be included in the Company’s proxy materials. |
◾ | Annual Election of All Directors: Each director nominee stands for election each year, making them subject to shareholder review at each Annual Meeting of Shareholders. |
Summary
Your Board believes that 20% of our shareholders should agree that a matter requires shareholder action before a special meeting is called. Based on your Board’s ongoing review of this topic and as further discussed above, we anticipate seeking shareholder approval in 2023 to further reduce this threshold to allow for the right of holders of 20% (from the existing 25%) or more of the outstanding shares of FirstEnergy to call a special meeting of shareholders.
If the proponent’s request was implemented, a relatively small minority of shareholders – potentially with narrow, short-term interests – could possibly call an unlimited number of special meetings, without regard to how costs and other burdens might impact the Company’s future success or to pursue goals at odds with the interests of the vast majority of shareholders. Your Board believes reducing the threshold to 20% more appropriately and effectively implements the policy at issue and serves the best interests of our shareholders. Therefore, your Board recommends that you vote AGAINST this shareholder proposal because your Board believes it is not in the best interests of our shareholders and the Company.
X Your Board Recommends That You Vote “Against” Item 5. |
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Our commitment to employees is an essential part of our ESG priorities. Our people are the force that move our company forward – that advance our business strategy and ESG performance and turn our vision and goals into a reality. We have chosen to highlight the human capital management topics that comprise our commitment to employees separately here in the Proxy Statement. Additional ESG topics will be discussed in the following sections. As the topics below illustrate, we are dedicated to developing an inclusive, equitable, rewarding and safe work atmosphere and empowering a diverse and innovative team to make our customers’ lives brighter and our communities stronger.
Human Capital Management
FirstEnergy strives to be the employer of choice in our operating areas, known for our diverse team, our culture of equity and inclusion and our dedication to helping our approximately 12,400 employees reach their full potential. We want our culture to empower employees to support our mission, build satisfying and engaging careers at FirstEnergy and drive our success.
Our core values – Integrity, Safety, DEI, Performance Excellence, and Stewardship are the foundation for how FirstEnergy operates, behaves and interacts every day. Our core values encompass what matters most at FirstEnergy. They identify the beliefs or ideals expected by everyone in the organization and guide the decisions made and actions taken. Built upon our core values, our talent management and total rewards processes are designed to attract, retain, focus, reward and develop a diverse and skilled workforce of high-performing employees and teams.
FirstEnergy’s financial and operational performance is the result of our employees’ efforts and behaviors. We aim to foster an environment where integrity and ethical behaviors are expected from all levels within the organization. By focusing not only on what we achieve but, how we achieve it, we build upon and support the Company’s mission to be a forward-thinking electric utility that is powered by a diverse team of employees committed to ethics and integrity and doing the right thing every time. Behaviors such as courage, accountability, customer focus, collaboration and trust are encouraged, and employees are accountable for making the right decisions and speaking up when something does not seem consistent with our core values or violates the FirstEnergy Code of Conduct.
Driving a Culture of Compliance and Integrity
Your Board has enhanced its oversight, including the formation of a Compliance Oversight Sub-committee of the Audit Committee – comprised entirely of independent directors – tasked with overseeing the assessment of the Company’s corporate compliance program and governance practices. This sub-committee, supported by independent counsel and compliance advisors, assists in making recommendations, and overseeing the implementation of and enhancements to the Company’s corporate compliance program, structure and governance practices, with the goal of building a best-in-class culture of compliance. Key initial actions are designed to enhance our compliance program and include:
People: centralizing the compliance function with dedicated personnel
◾ | Hiring Antonio Fernández as Chief Ethics and Compliance Officer, reporting administratively to the Chief Legal Officer, and reporting to the Audit Committee and its Compliance Oversight Sub-committee |
◾ | Implementing a dedicated corporate ethics and compliance office, with appropriate resources |
◾ | Establishing an ethics and compliance steering committee |
Processes: enhance compliance standards, policies, and procedures, focusing on
◾ | Remediating tone at the top material weakness |
◾ | Political and charitable donations |
◾ | Interactions with government officials |
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◾ | Third-party management |
◾ | Financial controls and approval authorities |
Reporting: augment reporting mechanisms from employees to the Board and back
◾ | Multiple channels of reporting and transparency in process |
◾ | Communicate compliance updates through regular cadence of newsletters, updates on the Company Intranet, townhalls, etc. |
◾ | Concern Management training for leaders and employees |
Benchmarking: metrics to measure program
◾ | Data analytics and trend or issue spotting |
◾ | Continuous improvement and sustainability through regular assessments |
◾ | Department of Justice elements for an effective compliance program |
Safety
Safety is a business and cultural imperative embedded in every aspect of operations. It is making sure we are doing the right thing at the right time, every time, so everyone returns home safely every day. Having the power to keep each other safe means accepting the responsibility to look out for ourselves and each other. There is consistent reinforcement of the shared and personal accountability for controlling exposure to hazards, and continuously improving safety behaviors, systems and controls. Zero life-changing events (“LCEs”) is our shared mission. With emphasis on “Leading with Safety,” leaders and employees receive safety training and reinforcement of exposure control concepts to improve job site exposure identification, communication and mitigation to prevent LCEs. FirstEnergy continues to enhance and reinforce leader and employee safety training and exposure control concepts to improve job site exposure identification, communication and mitigation to prevent life changing events. Further, FirstEnergy continues to expand its “Leading with Safety” experiences with its employees to achieve excellence in personal, contractor and public safety.
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COVID-19 Response
As the company continues to navigate the impact of COVID-19, employees’ overall health and wellness remains a primary focus. Throughout the pandemic, we have sought opportunities for growth, flexibility, innovation and continuous improvement – key tenets of our commitment to performance excellence.
Below are some measures taken for the safety and well-being of our employees:
1 | Enhanced safety protocols are in place to protect employees reporting to company facilities. Safety procedures include increased cleaning, masking and social distancing. Field employees are assigned to smaller work groups known as pods, and HVAC systems in company-owned buildings have been upgraded to ensure the offices are safe for the employees who need to be on site. | |||
2 | Approximately half of our workforce continues to work remotely to mitigate the risk of exposure for office-based employees. Our workplace return strategy is being developed to continue to accommodate a more flexible, mobile way of working, while still meeting the needs of the business. | |||
3 | As part of our Total Rewards program, company-paid time off was provided to employees who contractedCOVID-19, were required to be under quarantine,and/or neededto care for family members impacted by the virus. This additional time did not require the use of personal sick time or vacation. We also provided employees with up to four hours of paid time off to receive any form of COVID-19 vaccination, allowed employees to carry over unused 2020 and 2021 paid time off and vacation hours to be used in subsequent years through 2024, and enhanced in-network medical coverage for treatment of COVID-19 and access to telehealth providers, with zero cost share for employees. Lastly, FirstEnergy modified our 401(k) Savings Plan program to align with the federal CARES Act provisions to provide more options and flexibility to plan participants. | |||
4 | We developed COVID-19 protocols that became FirstEnergy’s COVID-19 Medical Screening Process or Hotline. A medical staff consisting of 14+ nurses and doctors and many non-medical intake teams were assembled to manage questions and support processes for COVID-19 related illnesses, perform contact tracing and safely return employees to work. | |||
5 | We temporarily implemented a COVID-19 medical illness and return-from-travel intake application as part of our “Safe Workplace” initiative. We formed a Chronic Condition Return Team, to develop protocols for employees who were considered high-risk if exposed to COVID-19 due to a pre-existing chronic medical condition, evaluate and manage their safe return to the workplace, or use paid time off hours during the health emergency. | |||
6 | We created a Workplace Return Team that is responsible for monitoring COVID-19-related factors across our five-state service territory to determine the best course of action to keep employees safe and heathy. Like many other businesses, we’re assessing the lessons we’ve learned from operating through a pandemic to determine our workplace of the future. | |||
7 | Employees returning from certain storm activities were offered free COVID-19 testing and company sponsored onsite clinics to provide vaccination opportunities for employees. | |||
8 | To continue protecting employees’ health and safety and to align with Centers for Disease Control and Prevention (CDC) guidance, which FirstEnergy has followed since the beginning of the pandemic, we will continue to follow CDC guidance regarding masks and other safety protocols and update employees accordingly. |
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Additionally, we strengthened our commitment to helping people in need throughout our communities that were hit hard by COVID-19 both in monetary or food donations to food banks and pantries, or safely volunteering at local nonprofit organizations; our employees showed eagerness to help others affected by the global pandemic. We believe by taking extra measures to care for our employees during these unprecedented times, we allow our employees to better serve our communities and customers who rely on us to continually provide their energy needs.
Diversity, Equity and Inclusion
Diversity, Equity and Inclusion is a core value, as well as a corporate objective because a diverse, equitable and inclusive work environment delivers better service to customers, strong operational performance, innovation and a safe and rewarding work experience for employees. FirstEnergy is focused on hiring and developing the best talent to build a diverse workforce for the future, advancing a culture of equity, inclusion and belonging and enhancing our diversity focus with customers, communities and suppliers.
FirstEnergy has increased our focus to advance racial equality and social justice in our communities and in our workplace. Here are some of the highlights:
We expanded our DEI Council membership to diversify representation by race/ethnicity, geography and leader level. Currently, we have a 17-member Executive DEI Council – sponsored by our President & CEO – that aims to enhance workforce diversity, create an inclusive work environment, and provide oversight and guidance for FirstEnergy’s integrated DEI strategy. The actions taken in 2021 will continue to expand and evolve to better serve our employees and drive our DEI initiatives.
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With a commitment from top leadership over the last several years, we moved our DEI efforts forward by building within our culture:
1 | A cross-functional DEI Working Group to develop action plans and oversee DEI activities across the organization | 2 | DEI Implementation Teams, consisting of over 200 employees, in each business unit to effectively implement actions tailored to each group’s unique needs | |||||||
3 | Employee Business Resource Groups (“EBRGs”) consisting of more than 2,600 members to help celebrate our differences and support our recruiting, retention, community and employee development efforts | 4 | An annual employee survey to understand their perceptions about diversity, equity and inclusion, soliciting their ideas and engaging them in actions to improve | |||||||
5 | Ongoing training, education and dialogue forums on a variety of DEI topics for employees and leaders | 6 | Continuing to enhance transparency of DEI data, talent processes and measurement of progress in an annual publication to all employees | |||||||
7 | A recruiting strategy that leverages an FE Ambassador Network of 400 employees to help build a diverse talent pipeline and attract top talent | |||||||||
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Through our core values of DEI and stewardship, we believe we can positively impact our customers, communities and other stakeholders, and strive to protect the environment. Stewardship is about putting the needs of our customers, communities and each other first so we are good corporate citizens and environmentally responsible. By doing this, we seek and listen to feedback and focus on understanding the needs of our internal and external customer. We also actively support development initiatives that enrich and strive to create equity in our communities.
Workforce Pay Equity and Compensation
As part of our commitment to DEI, we employed an independent third party to provide an analysis of our employees’ pay and our pay practices in 2019. Our goal was to ensure there were no pay gaps for female or racially or ethnically diverse employees when compared to all employees. The results validated that goal and confirmed that our internal policies and processes support pay equity and are applied consistently. We take pride in the fact that our employees are treated equitably and provided with wages that are competitive and consistent with positions, skill levels, experience and knowledge.
Employee Growth and Development
We believe understanding our rapidly changing industry and our Company strategy is key to our employees’ abilities to support our mission and meet our customers’ evolving needs. We are committed to preparing our high-performing workforce for the future and
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helping employees reach their full potential. We provide employees with opportunities to develop their skills and competencies and prepare our emerging leaders for expanded responsibilities. Our career management process requires that employees put an intentional focus on their development and identify development plans that support their ability to learn and grow in their current roles and to help prepare for future opportunities. We provide tools, programs and resources to support employees in owning their careers and development.
Toward that end, we are actively engaged in the following initiatives:
Talent Management | We have robust processes to support recruiting, career management, succession planning, and employee and leadership development. In 2021, we strengthened our recruiting processes to ensure transparency, consistency and inclusivity and better ensure unbiased selection of the best candidates. We enhanced our diversity recruiting practices, requiring expanded racial/ethnic diversity on the candidate slates for a broader range of positions and increasing our investment by $200,000 for additional outreach and support to programs and organizations that support racially/ethnically diverse talent. ◾ We have now trained over 300 hiring champions and experts across FirstEnergy to participate in diverse interviewing panels and continue to provide greater transparency into our talent management processes. ◾ This transparency fosters a more robust exchange of information and feedback between employees and leaders and promotes a clearer understanding of career management and development opportunities. Meaningful conversations between leaders and their employees empower employees to take ownership of their careers, build trust, and lead to a more inclusive workplace. ◾ We demonstrated continued agility by successfully facilitating all our leadership training programs, talent reviews, recruiting, co-op/intern program and onboarding processes to virtual formats. | |||
Mentoring Program | We expanded our mentoring program, which is available to all non-physical workers, by encouraging all high performing, high potential racially/ethnically diverse talent to participate in support of their ongoing development. ◾ This program provides the ability for employees to select a mentor from across the organization. It enhances learning, teamwork and collaboration throughout FirstEnergy, cultivates an environment for professional growth and encourages leaders to guide and prepare colleagues. ◾ Our mentoring program supports the development and retention of employees, increases job satisfaction for mentees and mentors, and facilitates skill and knowledge-sharing across the Company. Since its inception, over 500 people have participated in the formal program, and it continues to grow. | |||
Employee & Leadership Development | We offer multiple leadership and employee development experiences aligned to our core values to build a highly qualified, engaged and diverse leadership pipeline. ◾ Our New Supervisor and Manager Program (“NSM”), designed to provide consistent training and development to new FirstEnergy leaders, graduated 143 participants in 2021. The NSM program has now graduated over 2,300 leaders since its inception in 2008. ◾ The Experienced Leader Program (“ELP”) bridges the development between new supervisors and managers and senior executives by providing a development path for experienced manager and director-level employees. Through this program, we equip our leadership with the right tools to coach and support their teams and ultimately drive FirstEnergy’s long-term success. After successfully completing the pilot ELP in 2020, we completed two additional rounds of the Experienced Leader Program in 2021 with more than 45 manager and director-level employees. ◾ The Discover FE program is a development opportunity to educate employees about FirstEnergy and the utility industry and provide transparency into the innerworkings of all business units. The Distribution Line curriculum was piloted in 2020 and a Day in the Life experience is under development to provide a hands-on component available to learners after completing the self-paced training. A three-year roadmap has been developed to build out curricula to span every business unit in the company. ◾ The Educate to Elevate program, which creates a pathway to secondary education for employees seeking a 2- or 4-year college degree is now operational in four geographic territories in the FirstEnergy footprint. For the Fall 2021 semester, 49 employees are enrolled to pursue an associate and/or bachelor’s degree. | |||
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Power Systems Institute | We are focused on increasing the number of candidates in our Power Systems Institute (“PSI”), an award-winning program for recruiting and developing the next generation of highly trained, dedicated and motivated line and substation workers. ◾ Upon completion of the 21-month program, students receive an associate degree and are eligible to be hired by FirstEnergy. Since the PSI program’s inception, we have hired more than 2,000 graduates across our service territory. ◾ Over the next five years, we plan to enhance our PSI recruitment efforts by building and expanding partnerships with community organizations in each of our service areas. These community organizations will enable us to identify and engage individuals and populations that have been traditionally under-represented in the PSI program. ◾ As these partnerships mature both the organizations and FirstEnergy will be able to meet mutually beneficial objectives that serve the greater community. ◾ In addition, FirstEnergy has initiated an Equal Access scholarship for the PSI program. The objective of this scholarship is to mitigate some of the financial barriers currently associated with the program. The scholarship is designed to assist students with living expenses during the program and is another resource to strengthen our recruiting efforts. |
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We believe our success requires strong management and oversight of ESG matters, as well as transparency and accountability regarding where we need to improve and how we’re going to succeed. We also believe staying true to our mission and core values means executing our corporate responsibility approach to pursue objectives and initiatives that positively impact our stakeholders.
The ESG priorities that are discussed in the introduction comprise our corporate responsibility approach and also support the three pillars of our company strategy. In those core ESG areas, we strive to provide transparency, identify risks and opportunities, improve our performance and drive accountability.
In addition to the content below, please see “Our Commitment to Employees” above in this section of the Proxy Statement and our Corporate Responsibility website for additional information on the company’s approach and management of ESG topics important to FirstEnergy. Additionally, this Proxy Statement contains important content on Board, corporate governance and executive compensation topics relevant to the governance component in ESG and essential to our strong governance foundation at FirstEnergy
Climate Strategy and Oversight
Our Climate Strategy, in alignment with our overall strategy is a major catalyst to modernize our transmission and distribution systems, support widespread electrification and increased renewables, and incorporate emerging smart technologies. It also includes our efforts to reduce greenhouse gas emissions across our company and achieve carbon neutrality by 2050. The key components of our Strategy include:
◾ | Protecting and enhancing our transmission system to enable a clean-energy and reduced carbon future. |
◾ | Building a technologically advanced distribution platform that improves grid reliability and resiliency, while also enabling our company and customers to support a low carbon economy through efforts such as electrification. |
◾ | Committing to a thoughtful and just transition of our regulated coal generation fleet, while being innovative and forward-thinking as we explore near-term opportunities to reduce emissions, incorporate renewable resources and implement emerging technologies that support our company’s mission. This includes a goal to own at least 50 MW of solar generation in West Virginia by 2025. |
◾ | Integrating carbon pricing into our financial forecasting, advocating for regulatory and legislative policies that support our efforts toward a carbon-neutral future and driving innovative cross-functional initiatives that modify our business practices and asset replacement strategies to be more environmentally responsible. |
We have a responsibility to our stakeholders to proactively mitigate the company’s climate change risks and capitalize on emerging opportunities in a decarbonized economy – all while meeting the changing energy needs of our diverse customer base. Oversight, accountability and risk mitigation of our Climate Strategy and greenhouse gas reduction goals occur at the highest levels of our company, where our Board of Directors, Corporate Governance and Corporate Responsibility Board Committee, executive-level steering committee and business unit leadership guide our efforts.
Political and Public Policy Engagement
We are making significant changes in our approach to political and public policy engagement. Our participation in the public policy process will be more focused than it was in the past, with additional oversight and significant disclosure around lobbying activities. Our recently revised Political and Public Engagement Policy, available on our website, describes the criteria for certain political contributions and ballot initiative expenditures and the process for approving such contributions and expenditures. Also, your Board’s Corporate Governance and Corporate Responsibility Committee periodically reviews this policy and related practices as well as dues and/or contributions to industry groups and trade associations.
Based on feedback from our shareholder engagement and outreach, we expanded our website disclosure to include reports on federal and state level lobbying, as well as the lobbying portion of certain trade association dues.
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Physical Security and Cybersecurity
FirstEnergy is committed to protecting its employees, customers, facilities, and the ongoing reliability of its electric system. We work closely with state and federal agencies and our peers in the electric utility industry to identify physical and cyber security risks, exchange information, and put safeguards in place to comply with strict reliability and security standards. From a security standpoint, the electric utility sector is one of the most regulated industries. We have comprehensive cyber and physical security plans in place, but we don’t publicly disclose details about these measures that could aid those who want to harm our customers, our employees and our assets.
Your Board has identified cybersecurity as a key enterprise risk and prioritizes the mitigation of this risk. Your Board receives cybersecurity updates at each of its regularly scheduled meetings. The Audit Committee reviews our cybersecurity risk management practices and performance, primarily through reports provided by management. The Audit Committee also reviews and discusses with management the steps taken to monitor, control, and mitigate such exposure. Among other things, these reports have focused on incident response management and recent cyber risk and cybersecurity developments.
Security enhancements are also a key component of FirstEnergy’s Energizing the Future transmission investment program. The Company invests heavily in sophisticated and layered security measures that use both technology and hard defenses to protect critical transmission facilities and our digital communications networks.
Unrelenting Customer Focus
We recognize that our more than 6 million utility customers depend on us to provide the reliable energy they need every day of the year. One of the ways we hold ourselves accountable for service reliability is by including metrics – distribution System Average Interruption Duration Index (SAIDI) and Transmission Outage Frequency (TOF) – in our KPIs. We also set longer-term goals to drive improvement. We’re targeting a 20% reduction in transmission outage frequency on 100 kV-and-above lines by 2025, compared to our 2019 baseline. On the distribution side, we’re targeting a 5%, or nine-minute, reduction in the duration of service interruptions by 2025, compared to our 2019 baseline.
We are building a culture with FE Forward that helps us to maintain a strategic and unrelenting focus on our customers. Through FE Forward, we are putting the customer experience at the center of all we do and developing and implementing improvements designed to create a more modernized and effortless customer experience. This includes delivering a superior customer experience today, anticipating customer expectations, and getting ahead of market demands in the future.
Community Vitality
The FirstEnergy Foundation invests in nonprofit organizations to enable positive, sustainable changes that strengthen the communities we serve. The Foundation’s priorities range from supporting key safety initiatives and promoting workforce and economic development to improving social and cultural aspects of our region. As an overarching priority in line with our companywide focus on DEI, the Foundation also supports organizations and initiatives that serve diverse populations and enhance inclusion.
Our corporate giving strategy also focuses on initiatives that parallel our business interests, while helping our communities and the people who live in them achieve greater success. Whether directed to the United Way or local foodbanks, our corporate contributions and philanthropic outreach support organizations and projects dedicated to improving the environmental, economic, social, educational and cultural aspects of our communities.
We are also committed to supporting employee volunteerism through a robust Employee Volunteer Program and the long-term economic health of the communities we serve through development initiatives that create jobs, support local suppliers and attract new businesses throughout our service area.
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Proxy | Corporate | Items to Be | Commitments to Employees & ESG | Executive & Director Compensation | Other Important Matters / Q&A |
ESG Oversight and Management
Board and executive-level oversight of these ESG topics and other governance topics discussed throughout this Proxy Statement is vital to our commitment to corporate responsibility and our company’s success.
FirstEnergy’s Board committees each provide oversight and guidance on distinct environmental, social and governance related topics. For a breakdown of their ESG oversight responsibilities, please review the committee charters (www.firstenergycorp.com/charters) and visit the Board Governance page of our Corporate Responsibility website (www.fecorporateresponsibility.com). In addition to these ESG oversight roles and responsibilities, our Corporate Responsibility Department, Corporate Responsibility Executive-Level Steering Committee, and Corporate Governance and Corporate Responsibility Board Committee work to ensure the transparency and accountability of FirstEnergy’s ESG efforts and continuously strive to improve our ESG performance across the company.
ESG Accountability and Transparency
FirstEnergy is committed to providing stakeholders with information about our corporate responsibility approach and ESG initiatives and performance. As part of our commitment to transparency and accountability, we have a dedicated Corporate Responsibility website, which details FirstEnergy’s progress on ESG-related topics. We also are working toward disclosing ESG information in alignment with leading sustainability reporting frameworks, including the Sustainability Accounting Standards Board, Taskforce on Climate-Related Financial Disclosures, Global Reporting Initiative and Edison Electric Institute ESG/Sustainability Template.
Setting goals and disclosing our progress are also critical parts of demonstrating transparency and accountability on ESG matters. Our companywide goals, available on our Corporate Responsibility website, are designed to prepare us to meet our customers’ future energy needs and move us closer to our vision for a more resilient, innovative, diverse and sustainable FirstEnergy.
In addition, our annual key performance indicators (KPIs) that make up our Short-Term Incentive Program for employees also have strong ties to ESG. Our KPIs measure performance and improvement in areas that are high priorities for the company and critical to our continued success. Among others, those areas include customer reliability, customer service, environmental protections, safety and diversity, equity and inclusion. These incentive-based KPIs support our commitment to strong ESG performance.
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The Compensation Committee reviewed and discussed the Compensation Discussion and Analysis (“CD&A”) with management and based on such review and discussions, the Compensation Committee recommended to your Board that the CD&A be included (or incorporated by reference, as applicable) in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020,2021, and this 20212022 Proxy Statement.
Compensation Committee: James F. O’Neil III (Chair), Sandra Pianalto,Steven Demetriou, Julia L. Johnson, and Leslie M. Turner.
Compensation Discussion and Analysis
Introduction
This CD&A provides an overview of the Company’s strategy and performance, shareholder engagement process, 20202021 executive compensation programs and decisions, and initial plans for the 20212022 executive compensation programs. This CD&A focuses on the compensation of our NEOs, who are as follows, for fiscal year 2020:2021:
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Steven E. Strah | President and Chief Executive Officer (“CEO”) | |
K. Jon Taylor | Senior Vice President, Chief Financial Officer (“CFO”) and Strategy | |
Hyun Park | Senior Vice President and Chief | |
John W. Somerhalder II | Vice Chair and Executive Director | |
Samuel L. Belcher | Senior Vice President, | |
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Key Executive Officer Transitions and Appointments
On March 7, 2021, the Board appointed Mr. Strah to the position of CEO, effective as of March 8, 2021. The Board also elected Mr. Strah as a Director of the Company, effective as of March 8, 2021. Mr. Strah had previously served as Acting CEO since October 29, 2020, Mr. Strah became Acting CEO in addition to serving as the President of the Company, a position to which he was promoted in May 2020 after previously serving as Senior Vice President and CFO of the Company since March 2018. Mr. Strah’s appointment to Acting CEO followed the determination by the Independent Review Committee of
On December 22, 2020, the Board of Directors (“Independent Review Committee”) to terminateappointed Mr. Jones as the Company’s Chief Executive Officer effective October 29, 2020. These actions by the Independent Review Committee follow the Company’s internal review relatedPark to the ongoing government investigations, the existenceposition of which was previously disclosed in the Company’s Form 10-Q for the period ended June 30, 2020. As a resultSenior Vice President and CLO, effective as of Mr. Jones’ termination, and due to the determination that Mr. Jones violated certain Company policies and its code of conduct, all grants, awards and compensation under the Company’s short-term incentive compensation program and long-term incentive compensation program with respect to Mr. Jones that were outstanding on the date of termination have been forfeited.January 11, 2021. On March 7,February 17, 2021, the Board appointed Mr. StrahSomerhalder to the positionpositions of CEO of FirstEnergy,Vice Chair and Executive Director, each effective as of March 8,1, 2021. The Board also elected Mr. StrahSomerhalder serves as a Directormember of FirstEnergy’s executive leadership team in a transitional capacity while the Company effectivefocuses on advancing its immediate strategic priorities. Due to the transitional nature of his role, Mr. Somerhalder did not participate in the same compensation programs as of March 8, 2021.the other NEOs. We have outlined where there are material differences in the compensation programs for Mr. Somerhalder within this proxy statement.
In May 2020, Mr. Taylor became Senior Vice President and CFO after previously serving as Vice President, Utility Operations since April 2019. Mr. Reffner was appointed to the position of Senior Vice President, CFO and Chief Legal Officer in May 2020Strategy effective August 1, 2021, after serving as Senior Vice President and General CounselCFO since SeptemberMay 2020. Mr. Belcher was appointed to the position of Senior Vice President, Operations, effective August 1, 2021, after serving as Senior Vice President and President, FirstEnergy Utilities since 2018. On November 8, 2020, Mr. Reffner was separated from the Company.
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Additional Information
This CD&A uses certain capitalized terms, which are defined in the Glossary of Terms, beginning on page 53.78. In general, we use the term “CEO” in this CD&A to refer generally speaking, to the individual serving as our Chief Executive Officer from time to time, includingOfficer. For 2021, that included Mr. Strah in his role as Acting CEO beginning October 29, 2020.2020, through March 7, 2021. In addition, certain of the performance incentive metrics discussed and utilized in
26 | FirstEnergy Corp. 2021 Proxy Statement
measuring pay-for-performance are based on non-GAAP figures, and the definitions for those metrics in the Glossary of Terms explain the calculation methodology to the closest GAAP measure. The Compensation Committee believes that using such non-GAAP metrics best aligns NEO incentive opportunity with Company performance, which directly supports long-term shareholder value. Use of such non-GAAP metrics are helpful to understand and evaluate performance trends when assessing pay-for-performance and are aligned with key aspects of the Company’s financial performance disclosures.
CD&A Quick Reference Guide
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Moving Forward
Your BoardOver the past year, we have made many changes to resolve legacy issues, strengthen our financial position and the management team have acted with a sense of urgencycapitalize on long-term strategic investments designed to move your Company forward by taking the steps necessary to address current challenges, improveserve our compliance culture, and position FirstEnergy for long-term stability and success. As part of this, we are committed to strengthening every part of FirstEnergy’s business and taking the necessary steps to enhance credibilitycustomers’ evolving energy needs. With our progress in these areas, together with our shareholdersstrong business model and other stakeholders,operational momentum, we believe FirstEnergy is well positioned for the future.
At the heart of our transformation is our commitment to embed a culture of uncompromising integrity throughout the Company, drive accountability, demonstrate our core values, and increase transparency. We have added additional independent board members and strengthened our leadership team with key hires, including our regulators and the ratings agencies.
When inappropriate conduct was discovered during the course of the internal investigation, which was led by the Independent Review Committee of the Board and outside counsel, your Board took swift and deliberate action by terminating certain members of senior management, including the chief executive officer, and, shortly thereafter, separating with thea chief legal and chief ethics officers. To improve the tone at the top, the Board appointed a new acting chief executive officer, named an independent Board member as executive director and enhanced the role of Board Chair. Furthermore, in 2021, your Company externally hired an SVP and chief legal officer, a vice chairperson and executive director, and recently announced that a chief ethics and compliance officer, will join your Company ina chief information officer, a chief risk officer and new vice presidents of internal audit, and rates and regulatory affairs. We have enhanced our governance policies, procedures and disclosures, and established effective controls as we build a mid-April.best-in-class These hires will help embedcompliance program. We remain committed to fostering a strongerdiverse, equitable and inclusive work environment, which supports a culture of compliance,integrity by delivering better service to customers, stronger operational performance, innovation and a safe and rewarding work experience for employees. We will continue working every day to drive these cultural changes and keep ethics, integrity and accountability at FirstEnergy.the center of everything we do.
In addition to strengtheningOver the past year FirstEnergy’s leadership team has consistently demonstrated a new Compliance Oversight Sub-Committeecommitment to making positive changes that will transform our company into a forward-thinking leader in our industry. We will continue working to complete this transformation and deliver long-term value for all of our Audit Committee was formed to spearhead the Board’s assessment of FirstEnergy’s compliance program and oversee implementation of potential changes, as appropriate. This effort, led by independent director Leslie Turner, engages with outside expertise for help and best practices. To support engagement with all employees, new compliance ambassadors will be designated throughout the Company, and all non-bargaining employees have been assigned a cascading priority from President and CEO Steven E. Strah that supports our objectives around a culture of integrity, accountability, ethics and compliance. Additionally, in March 2021, the Board approved an ethics and compliance component to the 2021 FE STIP which will serve as a negative modifier at the individual level, with downward adjustment only, to reinforce that acting with ethics and integrity is at the core of how your Company operates. This addition to the incentive compensation program supports the desire for a meaningful culture change and a focus on continuing to evolve our ethics and compliance program.stakeholders.
With the Board’s oversight, senior management has made significant changes to your Company’s approach to governmental affairs engagement and is limiting participation in the political process. This also includes ensuring that the disclosures around your Company’s political advocacy are more robust going forward so that it is clear what efforts your Company supports and why they are supported. In March 2021, your Board voted to suspend employee contributions to the FirstEnergy Political Action Committee (FEPAC) made through automatic payroll deduction while the next steps for the FEPAC are evaluated.
We have also taken proactive steps to resolve a range of regulatory proceedings affecting our Ohio utilities. We believe resolving these matters in a comprehensive manner is a critical step to demonstrate our commitment to transparency and integrity in every aspect of our business, while also enabling FirstEnergy to remove uncertainty relating to current Ohio regulatory matters.
Continued Execution on the Business Plan
In 2020, FirstEnergy displayed strong operational performance, and we successfully executed our regulated growth strategies. Key achievements during the year include:
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We continue to strengthen our transmission and distribution systems through significant investments designed to improve reliability and support our customers’ evolving energy needs. We remain excited about the significant investment opportunities that will help us drive solid earnings and growth in the years ahead.
Looking to the Future
FE Forward
Your Board and executive management team are also implementing key initiatives to enhance shareholder value and reshape FirstEnergy into a more resilient, industry-leading organization of the future. This includes the company-wide FE Forward program that is expected to transform FirstEnergy in a way that provides near-term value while opening new opportunities for longer-term growth.
FE Forward was launched in the fourth quarter of 2020, to support your Company’s future growth trajectory for the benefit of shareholders and all stakeholders. In partnership with McKinsey & Company, employees across our organization are challenging organization traditions, conventional wisdom, and cultural norms. At the same time, we are focused on modernizing our business policies, management practices, processes and technology platforms. This project is expected to deliver substantial operating and capital efficiencies and improve our credit profile, while enabling your Company to reinvest in a truly modern and distinctive experience that improves customer service and satisfaction.
Key opportunities of FE Forward include:
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By 2024, FE Forward is projected to generate approximately $300 million in annualized capital expenditure efficiencies while continuing to hold operating expenses flat by absorbing approximately $100 million in projected increases. In addition, your Company expects to generate approximately $250 million in working capital improvements by 2022. This program includes an estimated $150 million of costs to achieve through 2023, which are expected to be self-funded through these efficiencies.
FE Forward is not a downsizing effort and there will not be any involuntary employee reductions in connection with this program. It is expected to be a significant catalyst to augment your Company’s growth potential by taking a more strategic approach to operating expenditures and reinvesting in a more diversified capital program that over the long term continues to support a smarter and cleaner electric grid.
Strategic Goals
We have established new goals for key areas of our business that support our mission to be a forward-thinking electric utility powered by a diverse team of employees committed to making customers’ lives brighter, the environment better and our communities stronger.
29 | FirstEnergy Corp. 2021 Proxy Statement
For example, in November 2020, we published our Climate Strategy, which includes a new comprehensive and ambitious greenhouse gas emission goal. We pledged to achieve carbon neutrality by 2050 and set an interim goal for a 30% reduction in greenhouse gases within your Company’s direct operational control by 2030, based on 2019 levels. In addition, we set a fleet electrification goal beginning in 2021 as we plan 100% of new purchases for our light duty and aerial truck fleet to be electric or hybrid vehicles, creating a path to electrify 30% of a 3,500-vehicle fleet by 2030 with a goal of complete electrification of the vehicle fleet by 2050. Also, the Company’s West Virginia utility, Monongahela Power, will seek approval to construct at least 50 MWs) of solar generation.
To offer additional clarity into our future opportunities and strategies in a rapidly changing industry, we updated our Strategic Plan in January 2021. The plan reinforces our Core Values and Behaviors, which serve as the foundation for how we strive to do business. The Strategic Plan, available online at www.firstenergycorp.com/FEstrategicplan, articulates numerous goals that support our objectives and values, including our carbon neutrality pledge and specific targets related to:
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Shareholder Engagement and Say-on-Pay Results
Our Board and Compensation Committee recognize the seriousness of the events that occurred in 2020 and have taken actions in our 2020 incentive pay programs for members of our senior leadership team, including the continuing NEOs, as further described in the CD&A. Our Board and Compensation Committee are continuing to review the incentive programs in 2021 to appropriately reflect the Company’s needs and continue to drive shareholder value as a result of the experiences in 2020.
Our Board and management are committed to engaging our shareholders and soliciting their perspectives on key performance, compensation and governance issues. Consistent with prior years, select board members and management representatives conducted extensive outreach during 2020.2021.
Our 20202021 Say-On-Pay vote successfully passed with about 98%over 96% support, which is consistent with the vote in 2019 and an increase over the 2018 Say-On-Pay votewe consider to be a strong endorsement of 95%. Accordingly, in 2020,our pay practices. In 2021, we continued with thea similar design and structure of our incentive compensation plans and programs, and did not make any substantial changes following the 2020 Say-On-Pay voting results.making only a few modifications. In an effort to align our compensation programs with the interests of shareholders, improve the relationship between pay and performance, better tie our executive compensation programs to our business strategies, and drive the right executive behaviors, the following summary ofwe proactively made incentive design changes were proactively made to FirstEnergy’s incentive programs beginning with awards granted in 2018 and continuing for awards in 2019 and 2020.through 2021.
30 | FirstEnergy Corp. 2021 Proxy Statement
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Our Responses to Shareholder Feedback
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Shareholders want pay-for-performance alignment; metrics should drive Company strategy and long-term shareholder value |
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◾ Generally maintained LTIP:
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◾ Maintained the stretch (maximum) payout opportunity level
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Shareholders prefer performance-based vs. time-based awards |
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Shareholders prefer 3-year cumulative vs. successive annual performance periods for the long-term incentive plans |
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Goals need to be set rigorously and the process needs to be transparent |
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31 | FirstEnergy Corp. 2021 Proxy Statement
Governance of our Executive Compensation Programs
Compensation Philosophy
The primary objectives of our executive compensation programs are to:
Attract, retain, focus and reward talented executives who drive our success in the highly complex utility industry by offering competitive total compensation for our executives overall;
Promote the long-term financial health of the business, and the creation of value for the sustained benefit of shareholders, by emphasizing long-term incentives in the pay mix;
◾ | Attract, retain, focus and reward our talented and diverse executive team who drive our success in the highly complex utility industry by offering competitive total compensation for our executives overall; |
◾ | Reflect our collective commitment to ensuring that we conduct business with integrity, help all employees do the right thing and treat our coworkers and communities with the respect we all deserve; |
◾ | Promote the long-term financial health of the business, and the creation of value for the sustained benefit of shareholders, by emphasizing long-term incentives in the pay mix; |
◾ | Seek to calibrate pay for performance to help ensure the interests of our executives and shareholders are aligned, such that 50th percentile compensation is realized for strong corporate performance, above 50th percentile compensation is realized for exceptional performance, and below 50th percentile compensation is realized for below expected performance; |
Tie executive awards to corporate results as well as to overall business unit performance to hold executives accountable for their areas of responsibility;
◾ | Tie executive awards to corporate results as well as to overall business unit performance to hold executives accountable for their areas of responsibility; |
Recognize individual contributions, including individual performance, experience, and future potential in determining actual pay levels to ensure that the Company retains our most critical talent; and
◾ | Recognize individual contributions, including individual performance, experience, and future potential in determining actual pay levels to help ensure that the Company retains our most critical talent; and |
Conduct ourselves in a way that comports with standards of good governance, consistent with creating long-term value for shareholders.
◾ | Conduct ourselves in a way that comports with standards of good governance, consistent with creating long-term value for shareholders, and encourages a culture of diversity, equity and inclusion. |
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What We Do and Don’t Do
We continually strive to make improvements to our executive compensation plans and programs. Below is a summary consistent with previous disclosures of what we do and don’t do with respect to executive compensation, the totality of which we believe aligns with the long-term interests of our shareholders and with commonly viewed best practices in the market:
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Role of our Compensation Committee, Management and Compensation Consultant
The Compensation Committee is responsible for overseeing executive compensation and making recommendations to the Board for establishing appropriate salary and incentive compensation for our NEOs,executive officers, which includes our NEOs. The Compensation Committee oversees executive compensation in accordance with our compensation philosophy, which incorporates a consistent and uncompromising commitment to ethical conduct in all that we do, while also aligning our executives’ interests with Company and business unit performance, business strategies and corporate objectives, including ESG-related goals, and drivers for growth in shareholder value. The Compensation Committee is further responsible for administering our compensation plans in a manner consistent with these objectives. In this process, the Compensation Committee evaluates information provided by its independent compensation consultant and our CEO, as discussed below. Since December 2017, the Compensation Committee has engaged the services of Farient Advisors (“Farient”) as the Compensation Committee’s independent compensation consultant. The Compensation Committee reviews the mix and level of compensation by each component individually and in the aggregate. The Compensation Committee, using tally sheets and accumulated wealth summaries, also reviews current and previously awarded but unvested compensation.
33 | FirstEnergy Corp. 2021 Proxy Statement
Management identifies high-potential executive successors, including a focuscontinually works to identifyensure that high-performing, diverse leaders.leaders within the Company are appropriately recognized and considered during succession planning discussions. The Company’s talent philosophy is that all leaders, regardless of level, must demonstrate the ability to motivate future performance, be accountable for their behaviors and results, deliver results and enable employees to do their best every day. Executive succession is reviewed periodically by the CEO, the Senior Vice President and Chief Human Resources Officer and Corporate Services, and the Compensation Committee. Executive succession plans are previewed by the Compensation Committee, as applicable, and with the full Board at its annual strategy retreat.
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With respect to our CEO’s compensation, the Compensation Committee also annually:
◾ | Reviews, determines, and recommends to the Board the Company’s goals and objectives; and |
◾ | Makes compensation recommendations to the Board for its approval or ratification based upon the CEO’s performance, competitive compensation benchmarking survey data and the utility peer group proxy data. |
The Compensation Committee and Board are responsible for establishing the compensation of the NEOs.Company’s Section 16 Officers, including the NEOs, as well as the remaining most senior leaders. Neither the CEO nor any other NEO makes recommendations for setting his or hertheir own compensation. The recommendation of the CEO’s compensation is determined in Compensation Committee meetings during an executive session and is presented to the independent members of your Board for review and approval. Annually, the Compensation Committee also reviews the goals and targets of the incentive compensation programs with a focus on setting challenging, but realistic, targets to drive performance and to improve shareholder value over the long term.
The CEO, with guidanceinput from Human Resources and Mr. Somerhalder, typically makes recommendations to the Compensation Committee with respect to the compensation of the other NEOs.NEOs (excluding Mr. Somerhalder due to the transitional nature of his role). The CEO possesses insight regarding individual performance, experience, future promotion potential, and intentions in retaining particular senior executives. The CEO presents his recommendations to the Compensation Committee for review. However, the Compensation Committee may modify or disregard the CEO’s recommendations. Farient, as discussed below, regularly provides market-level commentary and observations regarding compensation adjustments to the Compensation Committee.
The Compensation Committee also engagesengaged Farient to provide independent advice with respect to executive and director compensation and corporate governance matters related to executive compensation. The Compensation Committee relies on Farient’s expertise in benchmarking and familiarity with competitive compensation practices in the utility and general industry sectors. In addition, the Compensation Committee regularly requests advice from Farient concerning the design, communication, and implementation of our incentive compensation plans and other programs.
The services provided by Farient to the Compensation Committee in 20202021 included:
◾ | Review of our compensation philosophy, including the alignment of our executive compensation practices with our compensation philosophy and assessing potential changes to address trends in market practice and shareholder expectations; |
◾ | Review of our peer groups used for compensation benchmarking purposes for executives and directors; |
◾ | Independent review and assessment of the rigor of incentive compensation performance goals and the goal setting process, including: |
Evaluating historical and projected performance; |
Reviewing analyst estimates to understand external expectations; |
Analyzing historical and projected peer data; and |
Calculating the probability of achievement of targets to assess the competitiveness of |
◾ | Analysis of competitive compensation practices for executives and directors within our peer groups; |
◾ | Review of the description of our executive compensation practices in our annual proxy statement and apprising the Compensation Committee of Farient’s recommendations and |
◾ | Review of share ownership guidelines; |
34 | FirstEnergy Corp. 2021 Proxy Statement
◾ | Review of all aspects of |
◾ | Review of our current clawback policy and alignment with competitive practice; |
◾ | Review of CIC benefits to help ensure alignment with our compensation philosophy and competitive practice; |
◾ | Regularly informing the Compensation Committee of legislative and regulatory changes, market trends and current issues with respect to executive compensation, and educating members on our processes, plans and programs; |
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◾ | Preparation for and attendance at all Compensation Committee meetings, including executive sessions, if applicable and as needed; and |
◾ | Ad hoc analysis and research for the Compensation Committee as requested and when necessary. |
Also, in November 2020, the Compensation Committee, in conjunction with Farient, reviewed Mr. Strah’s compensation and recommended to the Board for its approval a base salary increase and increase in the FE STIP award opportunity for Mr. Strah in his role as then Acting CEO.
The Compensation Committee considered representations from Farient that they were an independent consultant and that there were no conflicts of interest. The Compensation Committee assessed the independence of Farient, as required by SEC and NYSE rules and requirements. The Compensation Committee also considered and assessed relevant factors that could give rise to a potential conflict of interest with respect to Farient and their work. Based on this review, the Compensation Committee is not aware of any conflict of interest that has been raised by the work performed by Farient.
Benchmarking
The Compensation Committee uses competitive benchmarking data to evaluate compensation practices and develop compensation recommendations for each of the NEOs. The Company uses a combination of a utility peer group and a general industry peer group to determine an overall competitive total rewards package. Employee and executive compensation, executive benefits and perquisites, broad-based benefits (retirement benefits, death benefits, long-term disability and health care) and director compensation are all benchmarked against the same peer groups. The Compensation Committee uses competitive “blended” market data (in other words, the average of the revenue-regressed 50th50th percentile of our utility peer group and general industry peer group, referred to as the “Blended Median”) to set compensation levels, to determineassist in determining any adjustmentadjustments and to assess the competitiveness of the base salary, short- and long-term target incentive opportunities and total target compensation. The Compensation Committee considers a range of 80% to 120% of the Blended Median for each component of pay to be competitive.competitive for any covered individual.
In 2019, the Compensation Committee, in consultation with Farient, performed a comprehensive peer group review after which the peer groups for 2020 were selected. The 2020 peer groups were comprised of a utility peer group of 23 companies and a general industry peer group of 32 companies. Compared to the 2019 peer groups, WEC Energy Group was added to the utility peer group, andFor 2021, the general industry peer group was reviewedis comprised of companies that are both larger and reduced from 44 peers including industries whose compensation and/or business models are relatively similar tosmaller than FirstEnergy by revenue size. The median revenue of the utility companies. With respect to theand general industry peer group, we removed 29 peers (3M Company; Baxter International; Bristol Myers Squibb; Colgate-Palmolive; Cummins; CSX Corp.; Ecolab; Eli Lilly & Co.; Emerson Electric; General Mills; Genuine Parts; Halliburton; Illinois Tool Works; International Paper; Jabril Circuit; Kimberly Clark; Navistar International; Norfolk Southern; Northrop Grumman; Owens Corning; Paccar; Qualcomm; Raytheon; Stryker;groups are aligned with FirstEnergy’s revenue of approximately $11 billion in 2021. The Mosaic Company; Union Pacific; Waste Management; Whirlpool and Xerox) and added 17 peers (Arconic; Ball Corporation; Borgwarner; Campbell Soup Company; Eastman Chemical; Fortune Brands Home Security; Hanesbrands; Harley-Davidson; Hormel Foods; Masco; PVH; Rockwell Automation; Stanley Black & Decker; Clorox; Estee Lauder; Hershey and V.F. Corporation). In addition, due2021 peer groups were based on the following criteria:
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Due to merger and acquisition activity, Arconic Inc. was removed from the general industry peer group in 2020 and replaced with Howmet Aerospace, Inc.
35 | FirstEnergy Corp. for 2021 Proxy Statement
For 2020, the general industry peer group is comprised of companies that are both larger and smaller than FirstEnergy by revenue size. The median revenue of the utility and general industry peer groups are aligned with FirstEnergy’s revenue of approximately $11 billion in 2020. The 2020 peer groups were based on the following criteria:
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benchmarking. As a result, the peer groups for 20202021 included the following 23 utility peer companies and 32 general industry peer companies:
AES CORPORATION AMEREN CORPORATION AMERICAN ELECTRIC POWER CO INC CENTERPOINT ENERGY INC CMS ENERGY CONSOLIDATED EDISON, INC DOMINION RESOURCES, INC DTE ENERGY COMPANY | DUKE ENERGY CORPORATION EDISON INTERNATIONAL ENTERGY CORPORATION EVERSOURCE ENERGY EXELON CORPORATION NEXTERA ENERGY, INC NISOURCE INC NRG ENERGY, | PG&E CORPORATION PPL CORPORATION PUBLIC SERVICE ENTERPRISE GROUP SEMPRA ENERGY SOUTHERN COMPANY WEC ENERGY GROUP XCEL ENERGY INC |
AIR PRODUCTS & CHEMICALS INC ALCOA CORPORATION AUTOMATIC DATA PROCESSING INC BALL CORPORATION BORGWARNER CAMPBELL SOUP COMPANY CONAGRA BRANDS, INC EASTMAN CHEMICAL COMPANY EATON CORPORATION FORTUNE BRANDS HOME & SECURITY, HANESBRANDS, | HARLEY-DAVIDSON, HONEYWELL INTERNATIONAL INC HORMEL FOODS CORPORATION HOWMET AEROSPACE, KELLOGG COMPANY L 3 HARRIS TECHNOLOGIES, INC MASCO CORPORATION ONEOK INC PARKER HANNIFIN CORP PPG INDUSTRIES INC PVH CORP | ROCKWELL AUTOMATION, STANLEY BLACK & DECKER, TEXTRON INC THE CLOROX COMPANY THE ESTEE LAUDER COMPANIES THE GOODYEAR TIRE & RUBBER CO THE HERSHEY COMPANY THE PROGRESSIVE CORPORATION THE SHERWIN WILLIAMS COMPANY V.F.CORPORATION |
In FebruaryDecember 2020, at the Compensation Committee’s request, Farient collected benchmark compensation data for our peer companies based on Willis Towers Watson executive surveys and AonHewitt’s Total Compensation Measurement database, and determined that our executives’ total direct compensation, in the aggregate, continues to be positioned at approximately the 50th percentile of the market. The total compensation for our NEOs (excluding Mr. Strah since he was promoted into an Actingthe CEO role in October 2020)March 2021 and Mr. Somerhalder due to the transitional nature of his role), in the aggregate, was 96%approximately 99% of the Blended Median, which is within the established competitive range of 80% to 120%.
36 | FirstEnergy Corp. 2021 Proxy Statement
62 | 2022 PROXY STATEMENT |
Proxy | Corporate | Items to Be | Commitments to Employees & ESG | Executive & Director Compensation | Other Important Matters / Q&A |
Components of Total Direct Compensation Programs
Key Elements of 20202021 NEO Compensation
The key elements of our NEO compensation program to attract, retain and motivate key executive leaders are described below:
Element | Description |
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| Key Characteristics and Considerations | ||||
Base Salary |
FIXED CASH Bi-weekly, fixed cash compensation designed to reward past performance and motivate strong performance in the future | |||||||
◾ The Compensation Committee uses the Blended Median to set base salary levels and
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Incentive Program (STIP) | VARIABLE CASH COMPENSATION Designed to the near-term corporate and business and D&I performance measures, including ESG-related goals |
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–
–
◾ A threshold financial performance hurdle must be reached based on Operating Earnings
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Long-Term Incentive Program
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VARIABLE EQUITY COMPENSATION | ◾ The Compensation Committee uses the Blended Median to set target opportunity levels
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(1) Mr. Somerhalder does not participate in the LTIP. For more details see the next page as well as the “Performance-based and Time-based Equity Award for Mr. Somerhalder” section.
FIRSTENERGY CORP. | 63 |
Proxy | Corporate | Items to Be | Commitments to Employees & ESG | Executive & Director Compensation | Other Important Matters / Q&A |
37 | FirstEnergy Corp. 2021 Proxy Statement
Compensation Mix
We review our compensation philosophy, pay mix and pay vehicles for our NEOs annually to help ensure that they support our strategy and align with shareholder interests. The Compensation Committee sets NEO overall compensation levels consistent with the Blended Median but provides a greater portion of target pay in the form of performance-based FE LTIP awards compared to our peer groups. Under our compensation design, the percentage of pay that is based on performance increases as a NEO’s responsibilities increase. The charts below illustrate the annual base salary rate, FE STIP and FE LTIP, of which approximately 87% ofpay mix as well as the Former CEO’s total targetvariable pay 79% of the then Acting CEO’s total target pay and 72% of our other NEOs’ average target pay was performance-based, and approximately 72% of the Former CEO’s total target pay, 58% of the then Acting CEO’s total target pay and 53% of our other NEOs’ average target pay was predicated on long-term performance,mix based on each NEO’s final 20202021 total target pay levels as described in the “2020“2021 Target Compensation (Base Salary + Target Incentive Compensation)” section below. For the continuing NEOs, the values shown are effective as of December 31, 2020 (“FYE”).2021. Mr. Somerhalder’s pay mix for 2021 is made up of approximately 19% for his base salary, 19% for his target STIP award, 31% for his performance-based RSUs and 31% for his time-based restricted stock. The charts below do not include Mr. Somerhalder due to the transitional nature of his role.
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Determination of Compensation for 20202021
Target Compensation (Base Salary + Target Incentive Compensation)
In December 2019,2020, the Compensation Committee reviewed a competitive benchmarking analysis prepared by Farient. This report assessed each then-serving NEO’s compensation levels and mix against the Blended Median. In February 2020,2021, the Committee decided, with input from management,the CEO and Farient, to approve increases in compensation for certain NEOs and other executive officers to continue to align with the Blended Median, in the aggregate (within the 80% to 120% competitive range).aggregate.
For 2020,2021, target opportunities continued to be set at or near the Blended Median of our peer groups. As of December 31, 2020,2021, target compensation levels for the continuing NEOs were as follows:
Executive | 2020 Base Salary | 2020 Target Opportunity FE STIP (% of Salary) | 2020 Target Opportunity FE LTIP Awards (% of Salary)(6) | 2020 Target Total Compensation | 2021 Base Salary | 2021 Target Opportunity STIP (% of Base Salary) | 2021 Target Opportunity LTIP Awards (% of Base Salary)(4) | 2021 Other Equity Opportunity (% of Base Salary)(4) | 2021 Target Total Compensation | ||||||||||||||||||||||||
Steven E. Strah(1) | $950,000 | 100% | 275% | $4,512,500 | $ | 1,100,000 |
| 115 | % |
| 450 | % | | N/ | $ | 7,315,000 | |||||||||||||||||
K. Jon Taylor(2) | $600,000 | 75% | 225% | $2,400,000 | $ | 725,000 |
| 85 | % |
| 250 | % | | N/ | $ | 3,153,750 | |||||||||||||||||
Hyun Park | $ | 650,000 |
| 75 | % |
| 225 | % | | N/ | $ | 2,600,000 | |||||||||||||||||||||
John W. Somerhalder II | $ | 750,000 |
| 100 | % |
| N/A |
| 334 | % | $ | 4,005,000 | |||||||||||||||||||||
Samuel L. Belcher(3) | $650,000 | 75% | 235% | $2,665,000 | $ | 700,000 |
| 75 | % |
| 250 | % | | N/ | $ | 2,975,000 | |||||||||||||||||
Gary D. Benz(3) | $410,000 | 65% | 165% | $1,353,000 | |||||||||||||||||||||||||||||
Christine L. Walker(3) | $410,000 | 60% | 130% | $1,189,000 | |||||||||||||||||||||||||||||
Charles E. Jones (4) | — | — | — | — | |||||||||||||||||||||||||||||
Robert P. Reffner(5) | — | — | — | — |