FirstEnergy (FE) Agrees on Settlement Terms for Shareholder Derivative Litigation

FirstEnergy Corp. (NYSE: FE) today announced that, acting through the Special Litigation Committee of its Board of Directors, it has agreed to a settlement term sheet to resolve derivative claims asserted on the company's behalf and for the company's benefit in multiple shareholder derivative lawsuits filed in the U.S. District Court for the Southern District of Ohio, the U.S. District Court for the Northern District of Ohio, and the Ohio Court of Common Pleas, Summit County. The measures outlined in the settlement complement the substantial enhancements and actions that FirstEnergy and its Board of Directors have implemented to strengthen FirstEnergy's governance and compliance program.

"The corporate governance provisions included in the settlement are aligned with the actions we have taken to move forward as a stronger organization," said Donald T. Misheff, FirstEnergy non-executive chairman. "FirstEnergy achieved significant accomplishments in 2021, including two transformative transactions raising $3.4 billion, increasing our planned capital investments, continued operational excellence, and, importantly, prioritizing a culture of compliance and integrity."

The settlement, which is subject to court approval, will fully resolve the derivative actions and stipulates a series of corporate governance enhancements, including:

• Six members of the Board of Directors who have served on the Board for a minimum of five years will not stand for re-election at the company's 2022 annual shareholder meeting.
• A special committee will be formed at the direction of the Board of at least three recently appointed independent directors to initiate a review process of the current executive team, to begin within 30 days of the 2022 annual shareholder meeting.
• The Board will oversee the company's lobbying and political activities, including periodically reviewing and approving political and lobbying action plans prepared by management.
• The Board will form a committee of recently appointed independent directors to oversee the implementation and third-party audits of the Board-approved action plans.
• The company will implement enhanced disclosure to shareholders of political and lobbying activities.
• The company will further align financial incentives of senior executives with proactive compliance with legal and ethical obligations.

The settlement also includes a payment to FirstEnergy of $180 million, to be paid by insurance after court approval, less any court-ordered attorney's fees awarded to plaintiffs.

John W. Somerhalder II, FirstEnergy vice chair and executive director, added, "We are grateful to the outgoing Board members for their dedication and years of service. They began the hard work of instituting changes that form the foundation on which we are continuing to bring the company forward. With a refreshed and rightsized Board, we will continue to build on these important efforts to enable a brighter future for the organization."

FirstEnergy is dedicated to integrity, safety, reliability and operational excellence. Its ten electric distribution companies form one of the nation's largest investor-owned electric systems, serving customers in Ohio, Pennsylvania, New Jersey, West Virginia, Maryland and New York. The company's transmission subsidiaries operate more than 24,000 miles of transmission lines that connect the Midwest and Mid-Atlantic regions. Follow FirstEnergy on Twitter @FirstEnergyCorp or online at www.firstenergycorp.com.

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