8-KLeadership Changes

FIRSTENERGY CORP 8-K Report, Executive Changes (Sep 27, 2010)

Filed September 27, 2010For Securities:FE

Summary

This Form 8-K filing by FirstEnergy Corp. (FE) on September 27, 2010, details significant changes to its executive and director deferred compensation plans. Specifically, the company's Board of Directors approved amendments to the Executive Deferred Compensation Plan (EDCP) and the Deferred Compensation Plan for Outside Directors (DDCP). These amendments will eliminate the 20 percent "Stock Premium" and "Bonus Credit," respectively, that were previously applied to compensation deferred by participants into FirstEnergy stock. These changes, effective January 1, 2011, will impact how executives and directors can defer compensation, particularly incentive awards, into company stock. Investors should note that this move effectively reduces the incentives for both executives and directors to hold deferred compensation in FirstEnergy stock by removing the added premium. The filing indicates that the full details of the amended plans will be provided in FirstEnergy's subsequent Form 10-Q filing.

Key Highlights

  • 1FirstEnergy Corp. amended its Executive Deferred Compensation Plan (EDCP) and Deferred Compensation Plan for Outside Directors (DDCP).
  • 2The amendments eliminate the 20 percent "Stock Premium" for executive deferrals into FirstEnergy stock.
  • 3The amendments eliminate the 20 percent "Bonus Credit" for outside director deferrals into FirstEnergy stock.
  • 4These changes affect the deferral of various incentive awards for management employees.
  • 5The amendments will become effective on January 1, 2011.
  • 6This move could potentially reduce the incentive for executives and directors to hold deferred compensation in the form of company stock.

Frequently Asked Questions

FirstEnergy Corp. is eliminating the 20 percent "Stock Premium" for compensation deferred into FirstEnergy stock by executives under the EDCP, and the 20 percent "Bonus Credit" for compensation deferred into FirstEnergy stock by outside directors under the DDCP. These changes are effective January 1, 2011.

These amendments will reduce the additional value received when executives and directors choose to defer their compensation into FirstEnergy stock. Previously, a 20% premium was added; this will no longer be the case. This might lessen the incentive to hold deferred compensation in the form of company stock.

The amendments to both the Executive Deferred Compensation Plan (EDCP) and the Deferred Compensation Plan for Outside Directors (DDCP) will become effective on January 1, 2011.

The filing states that detailed descriptions of the amended plans will be provided as exhibits to FirstEnergy's Form 10-Q for the quarter ended September 30, 2010.