AKRON, Ohio, Feb. 10, 2022 /PRNewswire/ -- FirstEnergy
Corp. (NYSE: FE) today announced that, acting through the Special
Litigation Committee of its Board of Directors, it has agreed to a
settlement term sheet to resolve derivative claims asserted on the
company's behalf and for the company's benefit in multiple
shareholder derivative lawsuits filed in the U.S. District Court
for the Southern District of Ohio,
the U.S. District Court for the Northern District of Ohio, and the Ohio Court of Common Pleas, Summit County. The measures outlined in the
settlement complement the substantial enhancements and actions that
FirstEnergy and its Board of Directors have implemented to
strengthen FirstEnergy's governance and compliance program.
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"The corporate governance provisions included in the settlement
are aligned with the actions we have taken to move forward as a
stronger organization," said Donald T.
Misheff, FirstEnergy non-executive chairman. "FirstEnergy
achieved significant accomplishments in 2021, including two
transformative transactions raising $3.4
billion, increasing our planned capital investments,
continued operational excellence, and, importantly, prioritizing a
culture of compliance and integrity."
The settlement, which is subject to court approval, will fully
resolve the derivative actions and stipulates a series of corporate
governance enhancements, including:
- Six members of the Board of Directors who have served on the
Board for a minimum of five years will not stand for re-election at
the company's 2022 annual shareholder meeting.
- A special committee will be formed at the direction of the
Board of at least three recently appointed independent directors to
initiate a review process of the current executive team, to begin
within 30 days of the 2022 annual shareholder meeting.
- The Board will oversee the company's lobbying and political
activities, including periodically reviewing and approving
political and lobbying action plans prepared by management.
- The Board will form a committee of recently appointed
independent directors to oversee the implementation and third-party
audits of the Board-approved action plans.
- The company will implement enhanced disclosure to shareholders
of political and lobbying activities.
- The company will further align financial incentives of senior
executives with proactive compliance with legal and ethical
obligations.
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.
John W. Somerhalder II,
FirstEnergy vice chair and executive director, added, "We are
grateful to the outgoing Board members for their dedication and
years of service. They began the hard work of instituting changes
that form the foundation on which we are continuing to bring the
company forward. With a refreshed and rightsized Board, we will
continue to build on these important efforts to enable a brighter
future for the organization."
FirstEnergy is dedicated to integrity, safety, reliability and
operational excellence. Its ten electric distribution companies
form one of the nation's largest investor-owned electric systems,
serving customers in Ohio,
Pennsylvania, New Jersey, West
Virginia, Maryland and
New York. The company's
transmission subsidiaries operate more than 24,000 miles of
transmission lines that connect the Midwest and Mid-Atlantic
regions. Follow FirstEnergy on Twitter @FirstEnergyCorp or online
at www.firstenergycorp.com.
Forward-Looking Statements: This news release
includes forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995 based on
information currently available to management. Such statements are
subject to certain risks and uncertainties and readers are
cautioned not to place undue reliance on these forward-looking
statements. These statements include declarations regarding
management's intents, beliefs and current expectations. These
statements typically contain, but are not limited to, the terms
"anticipate," "potential," "expect," "forecast," "target," "will,"
"intend," "believe," "project," "estimate," "plan," and similar
words. Forward-looking statements involve estimates, assumptions,
known and unknown risks, uncertainties and other factors that may
cause actual results, performance or achievements to be materially
different from any future results, performance or achievements
expressed or implied by such forward-looking statements, which may
include the following: risks associated with obtaining court
approval of the definitive settlement agreement in the derivative
cases, the potential liabilities, increased costs and unanticipated
developments resulting from governmental investigations and
agreements, including those associated with compliance with or
failure to comply with the Deferred Prosecution Agreement with the
U.S. Attorney's Office for the S.D. Ohio; the risks and uncertainties associated
with government investigations regarding Ohio House Bill 6 and
related matters including potential adverse impacts on federal or
state regulatory matters including, but not limited to, matters
relating to rates; the potential of non-compliance with debt
covenants in our credit facilities; the risks and uncertainties
associated with litigation, arbitration, mediation and similar
proceedings; legislative and regulatory developments, including,
but not limited to, matters related to rates, compliance and
enforcement activity; the ability to accomplish or realize
anticipated benefits from our FE Forward initiative and our other
strategic and financial goals, including, but not limited to,
maintaining financial flexibility, overcoming current uncertainties
and challenges associated with the ongoing government
investigations, executing our transmission and distribution
investment plans, greenhouse gas reduction goals, controlling
costs, improving our credit metrics, growing earnings, and
strengthening our balance sheet through a sale of a minority
interest in certain of our transmission assets and/or issuance of
additional equity; economic and weather conditions affecting future
operating results, such as a recession, significant weather events
and other natural disasters, and associated regulatory events or
actions in response to such conditions; mitigating exposure for
remedial activities associated with retired and formerly owned
electric generation assets; the ability to access the public
securities and other capital and credit markets in accordance with
our financial plans, the cost of such capital and overall condition
of the capital and credit markets affecting us, including the
increasing number of financial institutions evaluating the impact
of climate change on their investment decisions; the extent and
duration of COVID-19 and the impacts to our business, operations
and financial condition resulting from the outbreak of COVID-19
including, but not limited to, disruption of businesses in our
territories and governmental and regulatory responses to the
pandemic; the effectiveness of our pandemic and business continuity
plans, the precautionary measures we are taking on behalf of our
customers, contractors and employees, our customers' ability to
make their utility payment and the potential for supply-chain
disruptions; actions that may be taken by credit rating agencies
that could negatively affect either our access to or terms of
financing or our financial condition and liquidity; changes in
assumptions regarding economic conditions within our territories,
the reliability of our transmission and distribution system, or the
availability of capital or other resources supporting identified
transmission and distribution investment opportunities; changes in
customers' demand for power, including, but not limited to, the
impact of climate change or energy efficiency and peak demand
reduction mandates; changes in national and regional economic
conditions, including inflationary pressure, affecting us and/or
our customers and those vendors with which we do business; the
risks associated with cyber-attacks and other disruptions to our,
or our vendors', information technology system, which may
compromise our operations, and data security breaches of sensitive
data, intellectual property and proprietary or personally
identifiable information; the ability to comply with applicable
reliability standards and energy efficiency and peak demand
reduction mandates; changes to environmental laws and regulations,
including, but not limited to, those related to climate change;
changing market conditions affecting the measurement of certain
liabilities and the value of assets held in our pension trusts, or
causing us to make contributions sooner, or in amounts that are
larger, than currently anticipated; labor disruptions by our
unionized workforce; changes to significant accounting policies;
any changes in tax laws or regulations, or adverse tax audit
results or rulings; and the risks and other factors discussed from
time to time in our SEC filings. Dividends declared from time to
time on FirstEnergy Corp.'s common stock during any period may in
the aggregate vary from prior periods due to circumstances
considered by FirstEnergy Corp.'s Board of Directors at the time of
the actual declarations. A security rating is not a recommendation
to buy or hold securities and is subject to revision or withdrawal
at any time by the assigning rating agency. Each rating should be
evaluated independently of any other rating. These forward-looking
statements are also qualified by, and should be read together with,
the risk factors included in FirstEnergy Corp.'s filings with the
SEC, including, but not limited to, the most recent Annual Report
on Form 10-K and any subsequent Quarterly Reports on Form 10-Q and
Current Reports on Form 8-K. The foregoing review of factors also
should not be construed as exhaustive. New factors emerge from time
to time, and it is not possible for management to predict all such
factors, nor assess the impact of any such factor on FirstEnergy
Corp.'s business or the extent to which any factor, or combination
of factors, may cause results to differ materially from those
contained in any forward-looking statements. FirstEnergy Corp.
expressly disclaims any obligation to update or revise, except as
required by law, any forward-looking statements contained herein or
in the information incorporated by reference as a result of new
information, future events or otherwise.
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SOURCE FirstEnergy Corp.