FirstEnergy settles lawsuits seeking corporate reform
CLEVELAND (AP) — Akron-based First Energy announced it has settled a series of shareholder lawsuits seeking corporate reforms in the wake of a bribery and corruption scandal.
FirstEnergy in a statement on Thursday said provisions of the settlement include an agreement that six longtime board members will not stand for election at the company’s May shareholder meeting. The board of directors will now be responsible for overseeing FirstEnergy’s lobbying and political activities while a committee of board members will conduct a review the current executive team.
The deal awaits U.S. District Judge Algenon Marbley’s approval.
FirstEnergy’s insurer will pay the company $180 million less fees owed to attorneys representing shareholders in the complaints called derivative lawsuits. FirstEnergy spokeswoman Jennifer Young told the Akron Beacon Journal the company is awarded money because the lawsuits were filed on behalf of the company against board members and former executives.
“The shareholders are basically saying the company has been harmed,” Young said.
The lawsuits were filed in the months following U.S. Attorney David DeVillers’ announcement in July 2020 that FirstEnergy had secretly funded a $60 million bribery scheme to win legislative approval of a $1 billion bailout of two Ohio nuclear power plants operated at the time by a FirstEnergy subsidiary.
FirstEnergy signed a deferred prosecution agreement with the U.S. Department of Justice in July 2021 that detailed how its executives carried out the bribery scheme in concert with former Ohio House Speaker Larry Householder and others. FirstEnergy also agreed to pay a $230 million fine.
A federal charge of conspiracy to commit honest services fraud will be dismissed against FirstEnergy in 2024 if the company abides by a long list of reforms listed in the agreement.
Householder, who was indicted in July 2020 on a federal conspiracy charge along with four associates, has pleaded not guilty and awaits trial.
FirstEnergy still faces shareholder lawsuits alleging the company committed securities violations. Defendants include current CEO and President Steven Strah along with former CEO Chuck Jones, who was fired by the company in October 2020 for violating company policies and its code of conduct.