8-KLeadership ChangesMaterial AgreementsRegulation FD+1

FIRSTENERGY CORP 8-K Report, Material Agreement (Mar 16, 2021)

Filed March 16, 2021For Securities:FE

Summary

FirstEnergy Corp. (FE) announced on March 16, 2021, a material definitive agreement with the Icahn Group, which significantly impacts its Board of Directors. Under this agreement, FirstEnergy is expanding its Board from 12 to 14 directors and appointing two individuals designated by the Icahn Group, Andrew Teno and Jesse Lynn, as independent directors. These appointments are effective March 18, 2021, and their terms will expire at the 2021 Annual Meeting of Shareholders. Mr. Teno will join the Audit Committee and a sub-committee overseeing compliance program assessment, while Mr. Lynn will serve on the Independent Review Committee and the Demand Review Committee. This agreement also outlines specific governance commitments, including nominating the Icahn Designees for election at the upcoming annual meeting and using best efforts to ensure their election. The company and the Icahn Group will work to secure necessary regulatory approvals for the Icahn Designees to remain directors. The agreement also includes provisions for director resignation based on the Icahn Group's shareholding percentage, voting commitments from the Icahn Group, standstill and non-disparagement clauses, and restrictions on the company's ability to adopt certain shareholder rights plans. Furthermore, FirstEnergy has agreed to negotiate in good faith to enter into a registration rights agreement for the Icahn Group's shares by July 1, 2021.

Key Highlights

  • 1FirstEnergy entered into a Director Appointment and Nomination Agreement with the Icahn Group on March 16, 2021.
  • 2The Board size will increase from 12 to 14 directors.
  • 3Andrew Teno and Jesse Lynn (Icahn Designees) will be appointed as independent directors to the Board, effective March 18, 2021.
  • 4Mr. Teno will serve on the Audit Committee and a compliance program sub-committee; Mr. Lynn will serve on the Independent Review Committee and Demand Review Committee.
  • 5FirstEnergy commits to nominating and using best efforts to elect both Icahn Designees at the 2021 Annual Meeting.
  • 6The agreement includes provisions for director resignation based on the Icahn Group's shareholding levels.
  • 7The Icahn Group has agreed to certain voting, standstill, and non-disparagement obligations.
  • 8A registration rights agreement for Icahn Group's shares is to be negotiated by July 1, 2021.

Frequently Asked Questions

The main purpose of the agreement is to settle a dispute by appointing two directors nominated by the Icahn Group to FirstEnergy's Board. This is intended to improve governance and provide the Icahn Group with representation, while also securing certain voting and standstill commitments from them.

Andrew Teno and Jesse Lynn are the 'Icahn Designees' appointed by the Icahn Group. They are considered independent directors. Mr. Teno will join the Audit Committee and a sub-committee overseeing the compliance program. Mr. Lynn will join the Independent Review Committee and the Demand Review Committee.

The Icahn Designees may be required to resign if the Icahn Group's 'net long' position in FirstEnergy's common shares falls below certain thresholds: one Icahn Designee must resign if the net long position is less than 3% of outstanding shares, and both must resign if it falls below 1.5%.

The Icahn Group has agreed to vote its shares in favor of directors nominated by the Board (subject to exceptions), adhere to customary standstill and mutual non-disparagement restrictions during a specified period, and has restrictions placed on the company's ability to adopt certain shareholder rights plans that do not exempt them.