8-KLeadership ChangesExhibits & Filings

FIRSTENERGY CORP 8-K Report, Executive Changes (Sep 18, 2015)

Filed September 18, 2015For Securities:FE

Summary

FirstEnergy Corp. (FE) filed an 8-K on September 18, 2015, to announce a change in its executive compensation plans related to change in control events. The company's Board of Directors voted not to extend the existing Change in Control Severance Plan, which was set to expire on December 31, 2016. Concurrently, a new plan, the FirstEnergy Corp. 2017 Change in Control Severance Plan, was adopted, effective January 1, 2017. The new plan introduces a standardized severance package for eligible executives, differing from the previous tiered system. Key changes include a reduced severance multiple (2.00 times base salary and target bonus, down from up to 2.99 times), elimination of additional years for age and service benefits, and the removal of legal fee payments. New provisions include a 24-month severance period, up to $30,000 in outplacement services, and a 24-month non-competition period. Notably, CEO Charles E. Jones has waived participation in both the existing and new plans, instead entering into a separate non-competition and non-disparagement agreement.

Key Highlights

  • 1FirstEnergy Corp. is not renewing its existing Change in Control Severance Plan, which expires December 31, 2016.
  • 2A new Change in Control Severance Plan will be effective January 1, 2017, with updated terms for eligible executives.
  • 3The new plan standardizes severance benefits, moving away from a tiered system, with a severance multiple of 2.00 times base salary and target bonus.
  • 4Key changes in the new plan include the elimination of additional years for age and service benefits and the removal of legal fee payments upon a qualifying termination.
  • 5New benefits in the 2017 plan include outplacement services (up to $30,000) and a 24-month non-competition period.
  • 6CEO Charles E. Jones has opted out of both the existing and new severance plans, agreeing to separate non-competition and non-disparagement terms.
  • 7The new plan's initial term is from January 1, 2017, to December 31, 2018, with annual Board review for renewal.

Frequently Asked Questions

The primary purpose of this 8-K filing is to inform investors about changes to FirstEnergy Corp.'s executive severance plans in the event of a change in control. The company is replacing its existing plan with a new one that has different terms and benefits.

The new plan, effective January 1, 2017, standardizes severance benefits to a 2.00 times multiple of base salary and target bonus, whereas the old plan had a tiered system with a higher multiple (up to 2.99 times) for some executives. The new plan also eliminates additional years of age and service benefits and legal fee payments, while adding outplacement services and a 24-month non-competition period.

CEO Charles E. Jones has waived his right to participate in both the existing and the new change in control severance plans. Instead, he has entered into a separate Non-Competition and Non-Disparagement Agreement with the company.

The existing plan expires on December 31, 2016. The new plan becomes effective on January 1, 2017. The initial term of the new plan runs from January 1, 2017, to December 31, 2018, and it will be subject to annual review by the Board for renewal.