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GOVERNANCE

FirstEnergy shareholders reject 3 proposals, ratify compensation

FirstEnergy Corp. shareholders rejected climate change disclosure, lobbying disclosure and proxy access proposals at the company’s annual meeting Wednesday, despite support for the proposals from several large pension funds.

According to preliminary results from FirstEnergy, 42% of shareholders voted in favor of the climate change disclosure proposal, which called for the energy company to report on its strategy to align business operations with the 2015 Paris Agreement’s goal of limiting the average global temperature increase to 2 degrees Celsius. The lobbying disclosure proposal, which called for a yearly report on the company’s direct and indirect lobbying activities and payments, was supported by 41% of shareholders. The proxy access proposal was supported by 70% of shareholders, but required 80% or more to pass.

On the flip side, a proposal to ratify the compensation of president and CEO Charles E. Jones and four other key executives passed with a vote of 71%, despite opposition from several of the large pension funds.

The total realized compensation for Mr. Jones in 2016 was $4.8 million, up from $4.2 million in 2015. The total realized compensation for the other named executives ranged from $1.4 million to $3.4 million in 2016.

According to their proxy-voting disclosures, the $320.7 billion California Public Employees’ Retirement System, Sacramento; $202.8 billion California State Employees’ Retirement System, West Sacramento; C$175.6 billion ($128 billion) Ontario Teachers' Pension Plan; C$287.3 billion Canada Pension Plan Investment Board, Toronto; $189.4 billion Florida State Board of Administration, Tallahassee; and the $133.2 billion Texas Teacher Retirement System, Austin, voted in favor of the climate change, lobbying and proxy access proposals.

CalPERS, CalSTRS, CPPIB, Texas Teachers and the Florida State Board of Administration all voted against ratifying the executives’ compensation, while Ontario Teachers voted in favor.

The climate change disclosure proposal was filed by As You Sow, an organization that promotes corporate environmental and social responsibility through shareholder advocacy. The lobbying disclosure proposal was filed by the Nathan Cummings Foundation. The proxy access proposal was put forward by FirstEnergy management.

In its proxy statement, FirstEnergy’s board recommended that shareholders vote against the climate change disclosure proposal, arguing the company already provides comprehensive disclosures of its sustainability initiatives and that requiring a report on its business strategy under the 2-degrees scenario would put the company at a competitive disadvantage. FirstEnergy also recommended shareholders vote against the lobbying disclosure proposal, arguing the company’s existing disclosures address the concerns in the foundation’s proposal.