8-KLeadership ChangesAcquisitions & DispositionsShareholder Matters+3

FIRSTENERGY CORP 8-K Report, Acquisition Completed (Feb 25, 2011)

Filed February 25, 2011For Securities:FE

Summary

This Form 8-K filing from FirstEnergy Corp. (FE) on February 25, 2011, primarily announces the completion of its previously announced merger with Allegheny Energy, Inc. The transaction was structured as a stock-for-stock exchange, where Allegheny Energy stockholders received 0.667 shares of FirstEnergy common stock for each share of Allegheny Energy common stock they held. As a result of the merger, Allegheny Energy has become a wholly-owned subsidiary of FirstEnergy, and Allegheny Energy’s stock has ceased trading on the New York Stock Exchange. The filing also details several corporate governance and compensation-related changes resulting from the merger. This includes the expansion of FirstEnergy's Board of Directors to include two former directors from Allegheny Energy, Julia L. Johnson and Ted J. Kleisner. Additionally, FirstEnergy has revised its "change in control" definition across several executive compensation plans to better align with market practices and made changes to its severance plan to provide for certain executives in the event of an involuntary termination following a change in control. The company also filed an amendment to its Articles of Incorporation to increase the authorized number of common stock shares to accommodate the merger.

Key Highlights

  • 1Completion of the merger between FirstEnergy Corp. and Allegheny Energy, Inc. on February 25, 2011.
  • 2Allegheny Energy stockholders received 0.667 shares of FirstEnergy common stock for each share of Allegheny Energy stock.
  • 3Allegheny Energy is now a wholly-owned subsidiary of FirstEnergy, and its stock has been delisted from the NYSE.
  • 4FirstEnergy's Board of Directors has been expanded from 11 to 13 members with the addition of two former Allegheny Energy directors.
  • 5Revisions made to the 'change in control' definition in various FirstEnergy compensation plans to align with market standards.
  • 6Approval of a new Change in Control Severance Plan (CIC Severance Plan) for eligible executives.
  • 7Amendment to FirstEnergy's Articles of Incorporation to increase authorized common stock shares from 375 million to 490 million.

Frequently Asked Questions

The primary purpose of this filing is to officially announce the completion of the merger between FirstEnergy Corp. and Allegheny Energy, Inc. It also details consequential corporate governance and compensation adjustments.

FirstEnergy acquired Allegheny Energy through a stock-for-stock merger. Each share of Allegheny Energy common stock was exchanged for 0.667 shares of FirstEnergy common stock.

In connection with the merger, FirstEnergy's Board of Directors was expanded from 11 to 13 members. Two former directors of Allegheny Energy, Julia L. Johnson and Ted J. Kleisner, were appointed as new board members.

The revised 'change in control' definition in FirstEnergy's executive compensation plans lowers the threshold for triggering certain benefits. For example, acquiring 25% or more of voting securities now constitutes a change in control, down from 50%. This change better aligns the company's plans with market practices and could affect executive compensation and severance in future change-in-control scenarios.