FirstEnergy caps LTIP EPS payouts, shifts to Core EPS metric

FirstEnergy Corp. (NYSE: FE) filed an 8-K announcing revisions to its Long-Term Incentive Program (LTIP) covering the 2023-2025 and 2024-2026 award cycles.

Rhea-AI Filing Summary

FirstEnergy Corp. (NYSE: FE) filed an 8-K announcing revisions to its Long-Term Incentive Program (LTIP) covering the 2023-2025 and 2024-2026 award cycles. The Board, on Compensation Committee recommendation, has replaced the Operating EPS key performance indicator (KPI) with a Core EPS KPI for performance periods that have not yet closed. Core EPS, first disclosed with FY-2024 results, excludes special items, legacy coal-mine earnings and pension/OPEB credits, providing a metric focused on the four regulated operating segments (Distribution, Integrated, Stand-Alone Transmission and Corporate).

The change affects: (i) January 1-Dec 31 2025 of the 2023-2025 awards and (ii) January 1 2025-Dec 31 2026 of the 2024-2026 awards. There is no modification to the Relative Total Shareholder Return (35% weight). To temper upside risk, the payout on the EPS component is now capped at 100 % of target. Threshold and target dollar levels are unchanged, remaining at $7.32 / $7.76 for the 2023-2025 cycle and $7.44 / $7.88 for the 2024-2026 cycle.

Management (including the Chair/CEO, CFO and other NEOs) will have their incentive earnings potential aligned with the company’s external guidance framework, which since Q1-2025 no longer references Operating EPS. The move is framed as part of a broader strategy to give investors clearer insight into regulated-business performance and to harmonise internal pay metrics with external reporting.

Positive

• Alignment of incentives: Replacing Operating EPS with Core EPS synchronizes executive pay metrics with externally reported guidance.
• Payout discipline: Capping the EPS KPI at 100 % of target limits the risk of outsized compensation and potential dilution.

Negative

• None.

Insights

Corporate Governance Expert

TL;DR: Governance-friendly tweak aligns pay metric with new disclosure, caps upside; limited immediate financial impact.

Switching the primary earnings KPI from Operating EPS to Core EPS reduces the mismatch between disclosed guidance and compensation tests, improving transparency and signalling a focus on regulated earnings quality. The 100 % cap further mitigates excessive payouts—important after prior scrutiny of FE’s governance practices. Because thresholds and targets stay the same and TSR weighting is intact, investors should not expect meaningful cost changes. Overall, this is a process improvement rather than a material valuation driver.

Sell-Side Utility Analyst

TL;DR: Metric realignment is operationally sensible but financially immaterial; neutral to earnings outlook.

The update simply mirrors FE’s switch to Core EPS reporting that began with FY-24 results. Since Operating EPS guidance was discontinued, failing to adjust LTIP metrics could have produced noise. Importantly, the relative TSR portion—most correlated with shareholder value—remains untouched. The hard cap at target may slightly reduce potential dilution from share-settled awards, but any EPS accretion is de minimis. I view the 8-K as housekeeping with no effect on our estimates or target price.

8-K Event Classification

Item 5.02 — Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers

1 item

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers Governance

Key personnel changes including departures, elections, or appointments of directors and executive officers.

FAQ

Why did FirstEnergy (FE) change its LTIP earnings metric?

The company stopped reporting Operating EPS and now bases guidance on Core EPS; LTIP metrics were revised to match the new disclosure.

Which LTIP cycles are affected by the Core EPS KPI change?

The 2023-2025 cycle for 2025 performance and the 2024-2026 cycle for 2025-2026 performance.

Does the Relative TSR weighting change in the revised LTIP?

No. The Relative TSR KPI remains at 35 % of the award formula.

What are the updated threshold and target EPS levels for the LTIP?

They remain at $7.32/$7.76 for 2023-2025 and $7.44/$7.88 for 2024-2026.

Is the payout potential on the EPS component uncapped?

No. The company has limited the maximum payout to 100 % of target for the EPS KPI.

AI-generated analysis. How Rhea-AI works. Not financial advice.

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Accepted by SEC EDGAR 06/20/2025 - 04:23 PM Learn about SEC filing dates

0001031296false00010312962025-06-172025-06-17

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): June 17, 2025

FIRSTENERGY CORP

Exact name of Registrant as specified in its charter

Ohio

333-21011

34-1843785

State or other jurisdiction of incorporation

Commission File Number

I.R.S. Employer Identification No.

341 White Pond Drive

Akron

OH

44320

Address of Principal Executive Offices and Zip Code

(800)

736-3402

Registrant’s telephone number, including area code:

Not Applicable

Former name or former address, if changed since last report:

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.10 par value per share

FE

New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On June 17, 2025, the Board of Directors (the “Board”) of FirstEnergy Corp. (the “Company”), upon recommendation by the Compensation Committee of the Board, approved a modification to one of the key performance indicators (“KPI”) applicable to financial performance in calendar years 2025 and 2026, as applicable, with regard to certain outstanding awards under the Company’s Long-term Incentive Compensation Program (the “LTIP”) for the following performance periods: (i) January 1, 2023 through December 31, 2025 (the “2023 LTIP Awards”) and (ii) January 1, 2024 through December 31, 2026 (the “2024 LTIP Awards”). The 2023 LTIP Awards and the 2024 LTIP Awards (collectively, the "Revised LTIP Awards") have been amended to replace the operating (non-GAAP) earnings per share (“Operating EPS”) KPI with the Core EPS (as defined below) KPI for portions of the applicable performance periods that have not yet been completed. Such changes apply to all eligible recipients of the 2023 LTIP Awards and 2024 LTIP Awards, including the Company’s Board Chair, President and Chief Executive Officer, Chief Financial Officer, and the other named executive officers.

Prior to the amendment, the Revised LTIP Awards were based upon the achievement of two financial KPIs measured over the applicable performance periods: (i) an Operating EPS KPI, weighted at 65%, which measured the financial performance of the Company’s business units’ contribution to operating earnings growth on a cumulative basis, and (ii) relative total shareholder return, weighted at 35%, which measured the total return of Company common stock against the S&P Utility index (the “Relative TSR KPI”). There has been no change with respect to Relative TSR KPI component of the Revised LTIP Awards.

In early 2025, the Company made a strategic decision to transition away from Operating EPS to provide investors with more information about the performance of our regulated operations. Commencing with its earnings release for the year ended December 31, 2024, the Company reported its annual growth rate based on core earnings per share, a non-GAAP metric that includes the Company’s four business segments: Distribution, Integrated, Stand-Alone Transmission and Corporate, and excludes special items and income from the Company’s non-core, legacy investment in the Signal Peak coal mine and net periodic pension and Other Post-Employment Benefits credits (“Core EPS”). Effective as of the quarter ended March 31, 2025, the Company no longer reports or provides guidance based on Operating EPS and has transitioned to reporting and providing guidance based on Core EPS.

Consistent with the change in the Company’s reporting to its shareholders on the basis of Core EPS, to align the incentive compensation payable to management based on earnings performance after 2024 with the Company’s key business objectives, the Revised LTIP Awards have been amended to replace the Operating EPS KPI with the Core EPS KPI for portions of the applicable performance periods that have not yet been completed. Specifically, these changes:

•Apply only to the fiscal periods within the Revised LTIP Awards performance periods commencing after December 31, 2024, as follows: (i) with respect to the 2023 LTIP Awards, the Core EPS KPI will be used to measure performance from January 1, 2025 through December 31, 2025 and (ii) with respect to the 2024 LTIP Awards, the Core EPS KPI will be used to measure performance from January 1, 2025 through December 31, 2026. Accordingly, this change does not impact the measurement of performance under the Revised LTIP Awards with respect to any completed fiscal year; and

•Limits the maximum payout in respect of the EPS KPI at 100% of target.

This change to apply a Core EPS KPI in lieu of an Operating EPS KPI to the Revised LTIP Award with respect to performance in 2025 and 2026 is consistent with the decision previously made to use Core EPS instead of Operating EPS with regard to the portion of the long-term incentive awards based on an earnings per share performance measure granted earlier this year for performance over the three year period 2025-2027.

The below table summarizes how KPI performance will be measured for each of the Revised LTIP Awards:

2023-2025 LTIP Financial KPI			Threshold (3-year performance period)			Target   (3-year performance period)
Mixed Operating EPS / Core EPS			$7.32			$7.76
Payout			25%			100%
2024-2026 LTIP Financial KPI			Threshold (3-year performance period)			Target   (3-year performance period)
Mixed Operating EPS / Core EPS			$7.44			$7.88
Payout			25%			100%

For further information regarding the LTIP, please refer to the Compensation Discussion and Analysis section of the Company’s 2025 definitive proxy statement, filed with the Securities and Exchange Commission on April 3, 2025.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

June 20, 2025

			FIRSTENERGY CORP.
			Registrant
By:			/s/ Jason J. Lisowski
			Jason J. Lisowski Vice President, Controller and Chief Accounting Officer