Shareholders at FirstEnergy’s (NYSE:FE) virtual annual meeting Tuesday approved a smaller board of directors, as agreed to by the company earlier this year to resolve shareholder lawsuits stemming from the company’s bribery of a top Ohio lawmaker for a financial bailout for two nuclear power plants.
Six long-time directors agreed not to stand for re-election, according to the agreement in the court stipulation. All had been named as defendants in the lawsuits.
At 12 directors, the board returns to its traditional size. Among the 12 are two directors first appointed in 2021 who are employees of Icahn Enterprises. (See FERC Authorizes Icahn Employees for FE Board.) Icahn owned 3.32% of the company’s outstanding shares as of March 3, FirstEnergy institutional investment records show.
A third new director is connected with Blackstone, which invested $1 billion in FirstEnergy stock at the end of last year and asked for a seat on the board. Blackstone owned 5.05% of outstanding shares as of Dec. 31, 2021, according to FirstEnergy.
John W. Somerhalder II, vice chairman and executive director of the board since last year, was elected chair of the board. He previously served as interim director and CEO of CenterPoint Energy.
Shareholders also rejected two proposals by activist shareholders. One from California-based John Chevedden would have amended the company’s shareholder rights policy to give shareholders with a combined 10% of outstanding shares the right to call special shareholder meetings.
The board recommended shareholders reject the proposal — which has appeared periodically in annual meetings since 2011 — and added that it plans to set the combined ownership threshold for such special meetings at 20% in 2023.
A second proposal, offered by Steven J. Milloy of Potomac, Md., would have required the company to investigate whether child workers were involved in mining cobalt in the Congo before creating electric vehicle charging stations.
Shareholders rejected both proposals, according to unofficial results, which the company must still file with the Securities and Exchange Commission.
Following the vote, Donald Misheff, outgoing chairman and one of the six veteran board members who did not seek re-election, said it had been “a great privilege to serve on your board. Under the leadership and guidance of our 2022 director nominees and our management team, I’m confident FirstEnergy will continue to move forward as a stronger, customer-focused organization.”
In brief, previously recorded remarks following Misheff, CEO Steven Strah said the changes enacted by the board and his management team over the last two years have put the company in a position to recover its reputation as well as its profitability.
“In 2021, we embraced pivotal changes — changes which advanced a culture that prioritizes integrity and accountability. We also embraced transformation and innovation to reimagine our company and reshape it into a more forward-thinking, premier utility.
“In the last year, we’ve implemented substantial actions to resolve the challenges we’ve been working through since 2020. These actions include strengthening the leadership team, building a best-in-class compliance program and substantially modifying our approach to political engagement,” Strah said.
The proxy statement outlining the issues taken up at the annual meeting can be found here.