Repercussions of FirstEnergy bribery scandal continue with board overhaul
Shareholders have voted to replace six members on FirstEnergy’s board of directors which signals the continued aftermath of the company’s nuclear bailout bribery scandal.
The move was part of a settlement in a lawsuit between FirstEnergy shareholders and FirstEnergy executives.
That agreement concluded that the six board members who served for at least five years would not put themselves up for re-election during Tuesday’s shareholders meeting.
Don Misheff, who was among the outgoing board members, thanked the company for his time in leadership and commended the new directors.
“I’m confident FirstEnergy will continue to move forward as a stronger, customer-focused organization, centered in integrity,” said Misheff.
Last year, the utility company admitted in a deferred prosecution agreement that it bribed public officials in order to pass a nuclear power plant bailout and other policy priorities. Those public officials, according to the deferred prosecution, included former Ohio House Speaker Larry Householder and former Public Utilities Commission of Ohio Chair Sam Randazzo. Householder, who has been charged with racketeering in federal court, has pleaded not guilty. Randazzo has said he did not do anything wrong and has not faced any formal charges.
In 2019, the Ohio Legislature passed HB6 which created more than $1 billion in subsidies to two nuclear power plants formerly owned by a FirstEnergy subsidiary. The bill also locked-in subsidies for two coal plants, rolled back renewable energy standards, and eliminated energy efficiency standards.
In July 2020, Householder and other players involved with HB6 were arrested and accused of playing a role in a bribery scheme to pass the bill.
The lawsuit from stockholders said directors and executives at FirstEnergy during the bribery scheme "breached their fiduciary duties to the company, were unjustly enriched, wasted corporate assets," and violated other sections of the Securities Exchange Act.
The details of the preliminary settlement also state that a special committee will be formed with at least three independent directors to “initiate a review process of the current executive team” in the next 30 days.
Steve Strah, FirstEnergy president and CEO, said the accountability and ethical measures put in place when he took over continue to be in effect. Strah took over after former CEO Chuck Jones was fired along with other top executives in the wake of the bribery scandal.
Strah added in his comments to the shareholders that the company is starting a long-term review of its electric distribution utilities to consider combining its Ohio entities; The Illuminating Company, Toledo Edison, and Ohio Edison.
“From a legal and financial perspective, this effort also presents an opportunity for us to look at how we brand our utility companies with our customers,” Strah said, noting the same review is under way for the company’s Pennsylvania entities.
Strah did not provide further details during his comments to shareholders.
The bribery scandal will continue in federal court as Householder awaits his trial, which is set to begin January 2023.