FirstEnergy Corporation | Report on feasibility of intergrating climate-related measures into the company's compensation plans at FirstEnergy Corporation

Status
22.27% votes in favour
AGM date
Previous AGM date
Proposal number
4
Resolution details
Company ticker
FE
Lead filer
State of New york - Office of the State Comptroller
Resolution ask
Report on or disclose
ESG theme
  • Governance
ESG sub-theme
  • Climate change
  • Remuneration or pay
Type of vote
Shareholder proposal
Filer type
Shareholder
Company sector
Utilities
Company HQ country
United States
Resolved clause
RESOLVED: Shareholders request the Compensation Committee of FirstEnergy’s Board of Directors prepare a report assessing the feasibility of integrating the Company’s committed GHG emissions targets, goals, and other climate-related measures (as determined by the Board), into the performance goals, metrics, and vesting conditions applicable to senior executives under the Company’s compensation incentive plans.
Whereas clause
WHEREAS: FirstEnergy Corp. (the “Company”) has announced targets to reduce its operational (scope 1) greenhouse gas emissions by 30% by 2030 from a 2019 base and be carbon neutral by 2050. However, the Company has not set targets for scope 3 emissions, which are the largest contributor to its total emissions profile.
Supporting statement
SUPPORTING STATEMENT: We believe that alignment of a corporate climate transition strategy with executive compensation metrics and incentives can increase the likelihood of the Company achieving a timely climate transition. Compensation packages are designed to reward executives for achieving companies’ strategic objectives. Variable pay – such as annual bonuses and long-term incentive plans – makes up around 71 % of total compensation for companies in North America, so targets can have a significant influence on management priorities. Achievement of a climate strategy that supports FirstEnergy Corp.’s overall corporate strategy helps to protect and enhance long-term shareholder value.

The Company’s compensation structure for senior executives does not explicitly include meaningful linkages between reducing GHG emissions and executive compensation. For example, the Company has once again this year failed to meet the CA 100+ Net Zero Benchmark indicators for climate-related executive compensation metrics.1 Another example: the Company also received an “F” grade on a recent report assessing Company Chief Executive Officer (CEO) compensation linkage to climate performance. 2

This stands in contrast to most peer utility companies, which have in recent years begun tying executive compensation to climate-related metrics. American Electric Power Company, Inc., Dominion Energy, Inc., and Xcel Energy, Inc., are among the peer companies that have not only tied executive compensation to climate-related metrics but specifically incorporated quantitative climate-related metrics with measurable payout and long-term incentive components.

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