SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
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Check the appropriate box:
[ ] Preliminary Proxy Statement
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[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11c or Section 240.14a-12
FIRSTENERGY CORP.
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[X] No fee required.
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(1) Title of each class of securities to which transaction applies:
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[FirstEnergy(R) LOGO]
NOTICE OF
ANNUAL MEETING
OF SHAREHOLDERS
AND
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
MAY 21, 2002
76 South Main St.
FirstEnergy(R) Akron, Ohio 44308
--------------------------------------------------------------------------------
NANCY C. ASHCOM
Corporate Secretary
April 1, 2002
Dear Shareholder:
You are invited to attend FirstEnergy's 2002 Annual Meeting of Shareholders
at 10 a.m. on Tuesday, May 21, at the John S. Knight Center in Akron, Ohio.
As part of the agenda, business to be voted on includes four items which
are explained in this proxy statement. The first two items are the election of
five members to your Board of Directors and the approval of an amendment to the
Executive and Director Incentive Compensation Plan. YOUR BOARD OF DIRECTORS
RECOMMENDS THAT YOU VOTE FOR ITEMS 1 AND 2. In addition, there are two
shareholder proposals. YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE AGAINST
THESE SHAREHOLDER PROPOSALS, WHICH ARE ITEMS 3 AND 4.
Please take time to review the notice of meeting and proxy statement. Then,
to ensure that your shares are represented at the Annual Meeting, appoint your
proxy and vote your shares. Voting instructions are provided in the proxy
statement and on your proxy card. You are encouraged to take advantage of the
telephone or Internet voting options, which make voting quick and easy.
As you vote, you may choose, if you have not done so already, to stop
future mailings of paper copies of the annual report and proxy statement and
view these materials through an Internet site. If you make this choice, we would
send you a proxy card along with instructions on how to access the annual report
and proxy statement at a specific Internet site.
Your participation and support are important to us. If you are planning to
attend the Annual Meeting, directions to the John S. Knight Center are on the
back of your proxy card. We hope you can join us.
Sincerely,
/s/ Nancy C. Ashcom
TABLE OF CONTENTS
PAGE
----
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS.................... 1
PROXY STATEMENT............................................. 2
ANNUAL MEETING AND VOTING INFORMATION....................... 2
BOARD OF DIRECTORS INFORMATION.............................. 4
ITEMS TO BE VOTED ON........................................ 6
SELECTION OF INDEPENDENT AUDITOR............................ 12
BUSINESS RELATIONSHIPS AND TRANSACTIONS..................... 12
BIOGRAPHICAL INFORMATION ON NOMINEES AND DIRECTORS.......... 13
SECURITY OWNERSHIP OF MANAGEMENT............................ 17
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS............. 17
SUMMARY EXECUTIVE COMPENSATION TABLE........................ 18
LONG-TERM INCENTIVE PLAN TABLE -- AWARDS IN 2001............ 19
STOCK OPTIONS GRANTED IN 2001............................... 19
AGGREGATED STOCK OPTIONS EXERCISED IN 2001 AND STOCK OPTION
VALUES AT DECEMBER 31, 2001............................... 20
SEVERANCE AGREEMENTS AND OTHER CONTRACTS.................... 20
EXECUTIVE RETIREMENT PLAN................................... 20
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE
COMPENSATION.............................................. 21
BOARD AUDIT COMMITTEE REPORT................................ 22
SHAREHOLDER RETURN -- PERFORMANCE COMPARISON GRAPHS......... 24
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO THE HOLDERS OF SHARES OF COMMON STOCK:
The 2002 FirstEnergy Corp. Annual Meeting of Shareholders will be held at
10 a.m. Eastern Time on May 21, 2002, at the John S. Knight Center, 77 E. Mill
Street, Akron, Ohio. The purpose of the Annual Meeting will be to:
-- Elect five members to the Board of Directors for a term of three
years;
-- Approve an amendment to the Executive and Director Incentive
Compensation Plan;
-- Vote on two shareholder proposals, if properly presented at the Annual
Meeting; and
-- Take action on other business that properly may come before the
meeting.
Please read the accompanying proxy statement. Then vote your shares by
following the instructions on your proxy card to ensure your representation at
our Annual Meeting.
On behalf of the Board of Directors,
NANCY C. ASHCOM
Corporate Secretary
April 1, 2002
April 1, 2002
PROXY STATEMENT
ANNUAL MEETING AND VOTING INFORMATION
WHY AM I RECEIVING THIS PROXY STATEMENT AND PROXY CARD?
You are receiving this proxy statement and a proxy card, which are being
mailed beginning on or about April 8, 2002, because you were the owner of shares
of common stock of FirstEnergy Corp. (later referred to as the Company) at the
close of business on March 25, 2002 (later referred to as the record date). The
record date was set by the Board of Directors (later referred to as the Board)
to determine which shareholders are entitled to vote at the Annual Meeting
(later referred to as the Meeting). This proxy statement describes issues
expected to be voted upon and gives you information about the Meeting and the
Company. The address of the Company is 76 South Main Street, Akron, Ohio
44308-1890.
HOW DO I VOTE?
If your shares are held in "Street Name" by a broker or bank, you will
receive specific voting instructions for voting those shares.
If you are a registered shareholder, you may vote your shares through a
proxy appointed by telephone, Internet, or mail, or you may vote your shares in
person at the Meeting. To appoint a proxy and vote:
1. BY TELEPHONE (do not return your proxy card)
a. Call the toll-free number indicated on your proxy card using a
touch-tone telephone. Telephone voting is available 24 hours a
day, 7 days a week, until 10 a.m. Eastern time on May 21, 2002.
b. Enter your Control Number indicated on your proxy card.
c. Follow the simple recorded instructions.
2. BY INTERNET (do not return your proxy card)
a. Go to the Web site indicated on your proxy card. Internet voting
is available 24 hours a day, 7 days a week, until 10 a.m. Eastern
time on May 21, 2002.
b. Enter your Control Number indicated on your proxy card.
c. Follow the simple instructions.
3. BY MAIL
a. Mark your choices on your proxy card. If you properly execute your
proxy card but do not specify your choices, your shares will be
voted as recommended by your Board of Directors.
b. Date and sign your proxy card.
c. Mail your proxy card in the enclosed postage-paid envelope. If
your envelope is misplaced, send your proxy card to FirstEnergy
Corp., c/o IVS Associates, 111 Continental Drive, Suite 305,
Newark, Delaware 19713.
4. AT THE MEETING
a. You may vote in person at the Meeting, even if you previously
appointed a proxy by telephone, Internet, or mail.
You may revoke your appointment of a proxy or change your voting
instructions before the Meeting commences by sending a proxy card that revises
your previous appointment and voting instructions; by appointing a proxy and
voting by telephone or Internet after the date of your previous appointment; by
voting in person at the Meeting; or by notifying the Corporate Secretary of the
Company in writing prior to the Meeting. If a proxy card is received by the
proxy tabulator after the date that a telephone or Internet appointment is made,
the tabulator will treat the proxy card as your final instruction. For that
reason, it is important to allow sufficient time for your voting instructions on
a mailed proxy card to reach the tabulator before changing them by telephone or
Internet.
2
HOW DOES THE BOARD OF DIRECTORS RECOMMEND THAT I VOTE?
Your Board recommends that you vote as follows:
"FOR" the five nominees to the Board who are listed in this proxy statement
(Item 1);
"FOR" the approval of an amendment to Executive and Director Incentive
Compensation Plan (Item 2); and
"AGAINST" both shareholder proposals (Items 3 and 4).
WHAT IS A QUORUM AND WHAT OTHER VOTING INFORMATION SHOULD I BE AWARE OF?
As of the record date, 297,636,276 shares of common stock were outstanding.
A majority of these shares, represented at the Meeting either in person or by
proxy, constitutes a quorum. A quorum is required to conduct business at the
Meeting. All shares represented at the Meeting are counted for the purpose of
determining a quorum, without regard to abstentions or broker non-votes. You are
entitled to one vote for each share that you owned on the record date.
If your shares are held by a broker or bank in "Street Name," we encourage
you to provide instructions to your broker or bank by executing the voting form
supplied to you. Your broker is permitted to vote your shares on Items 1 and 2
without your instructions. However, your broker cannot vote your shares on Items
3 and 4 unless you provide instructions; therefore, your failure to give voting
instructions means that your shares will not be voted on these items, and your
unvoted shares will be referred to as broker non-votes.
An item to be voted on may require a percent of votes cast, rather than a
percent of shares outstanding, to determine passage or failure. Votes cast is
defined to include both for and against votes, and excludes abstentions and
broker non-votes. Abstentions and broker non-votes are the equivalent of
negative votes when passage or failure is measured by a percent of shares
outstanding. If your proxy card is not voted properly, such as marking more than
one box for an item, your vote for that particular item will be treated as an
abstention.
You do not have rights of appraisal in regard to any item presented if you
are a dissenting shareholder.
HOW ARE PROXY CARDS BEING SOLICITED, AND WHAT IS THE COST?
The Board is soliciting your vote. We have arranged for the services of
Innisfree M&A Incorporated to solicit votes personally or by telephone, mail, or
other electronic means for a fee not to exceed $12,500 plus reimbursement of
expenses. Votes also may be solicited in a similar manner, without additional
compensation, by officers and employees of the Company. The Company will pay all
solicitation costs and will reimburse brokers and banks for postage and expenses
incurred by them for sending proxy material to beneficial owners.
WILL ANY OTHER MATTERS BE VOTED ON OTHER THAN THOSE DESCRIBED IN THIS PROXY
STATEMENT?
We do not know of any business that will be considered other than the
matters described in this proxy statement. However, if any other matters are
presented properly, your executed appointment of a proxy as outlined above will
give authority to the appointed proxies to vote on those matters at their
discretion, unless you indicate otherwise in writing.
DO I NEED AN ADMISSION TICKET TO ATTEND THE ANNUAL MEETING?
An admission ticket is not necessary, but you will be asked to register
upon arrival at the Meeting. If your shares are held in "Street Name" by a
broker or bank, upon arrival at the Meeting, you will need to present a letter
or statement from a broker or bank indicating your ownership of FirstEnergy
common stock on the record date of March 25, 2002.
WHERE CAN I FIND THE VOTING RESULTS OF THE MEETING?
We will announce the preliminary voting results at the Meeting. Final
voting results will be posted on our Internet site at www.firstenergycorp.com
and also will be published in our second quarter Form 10-Q report which will be
filed with the Securities and Exchange Commission.
3
CAN I VIEW THE COMPANY'S PROXY STATEMENT AND ANNUAL REPORT ON THE INTERNET
INSTEAD OF RECEIVING PAPER COPIES?
Yes. If you are a registered shareholder, you can elect to view future
proxy statements and annual reports on the Internet by marking the appropriate
box on your proxy card or by following the provided instructions when voting by
Internet or by telephone. If you choose this option, you will receive by mail a
proxy card along with instructions on how to access the proxy statement and
annual report at a specific Internet site, and your choice will remain in effect
until you notify the Company that you wish to resume mail delivery of these
documents. If you hold your stock through a broker or bank, refer to the
information provided by that entity for instructions on how to elect this
option.
WHY DID WE RECEIVE JUST ONE COPY OF THE PROXY STATEMENT AND ANNUAL REPORT WHEN
WE HAVE MORE THAN ONE STOCK ACCOUNT IN OUR HOUSEHOLD?
To provide cost savings for the Company and reduce the volume of paper that
shareholders receive, the Company is following a Securities and Exchange
Commission rule that permits us to send a single copy of the proxy statement and
annual report to a household if the shareholders provide written or implied
consent. The Company mailed a notice to eligible registered shareholders stating
our intent to utilize this rule unless the shareholder provided an objection.
Shareholders continue to receive a separate proxy card for each stock account.
If you are a registered shareholder and received only one copy of the proxy
statement and annual report in your household, and you desire to receive
multiple copies for all accounts, we will deliver a separate copy of the proxy
statement and annual report upon written or oral request. You may call
FirstEnergy Investor Services at 1-800-736-3402. If you are not a registered
shareholder and your shares are held by a broker or bank, you will need to call
that entity to revoke your election and receive multiple copies of these
documents.
WHEN ARE SHAREHOLDER PROPOSALS FOR THE YEAR 2003 ANNUAL MEETING DUE?
A shareholder who wishes to offer a proposal for inclusion in the Company's
proxy statement and proxy card for the year 2003 Annual Meeting must submit the
proposal and any supporting statement to the Corporate Secretary at the
Company's principal office by December 9, 2002. Any proposal received after that
date will not be eligible for inclusion in the year 2003 proxy statement and
proxy card.
A shareholder who wishes to offer a proposal for consideration at the year
2003 Annual Meeting after December 9, 2002, and who wants the proposal
referenced in the Company's proxy statement, must submit the proposal to the
Corporate Secretary at the Company's principal office by February 22, 2003.
However, in order to raise the matter at the meeting, the shareholder also will
need to comply with the notice provisions contained in the Company's Code of
Regulations.
HOW CAN I LEARN MORE ABOUT THE OPERATIONS OF THE COMPANY?
You can learn more about the operations of the Company by reviewing the
annual report to shareholders for the year ended December 31, 2001, which is
included with the mailing of this proxy statement. You also can view the annual
report and other information by visiting the Company's Internet site at
www.firstenergycorp.com.
A COPY OF OUR LATEST FORM 10-K ANNUAL REPORT FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION WILL BE SENT TO YOU, WITHOUT CHARGE, UPON WRITTEN REQUEST TO
NANCY C. ASHCOM, CORPORATE SECRETARY, FIRSTENERGY CORP., 76 SOUTH MAIN STREET,
AKRON, OHIO 44308-1890.
BOARD OF DIRECTORS INFORMATION
WHAT FUNCTION DOES YOUR BOARD OF DIRECTORS PERFORM?
Your Board of Directors has the responsibility for establishing broad
corporate policies and for the overall performance of your Company. However, the
Board is not involved in day-to-day operations. The directors are kept informed
of the Company's business by various reports and documents sent to them each
month, as well as by operating and financial presentations made at Board and
committee meetings by Company management. The Board has established the
committees described below to assist in performing its responsibilities.
4
HOW MANY MEETINGS DID THE BOARD HOLD IN 2001?
Your Board held 15 meetings during 2001. With one exception, all directors
attended 75 percent or more of those meetings and of the committees on which
they serve held after they became directors. Ms. Catherine A. Rein, who joined
the Board in November at the effective time of the Company's merger with GPU,
Inc., missed three meetings of the Board held on consecutive days shortly after
the merger became effective because of business commitments. The Board held five
meetings after Ms. Rein became a director.
WHAT COMMITTEES HAS THE BOARD OF DIRECTORS ESTABLISHED?
The Board has established the committees listed below. All committees are
comprised of non-employee directors. The Biographical Information On Nominees
And Directors section includes committee memberships.
Audit Committee
This six-member committee, whose members are independent as defined by New
York Stock Exchange listing standards, meets with management, financial
personnel, internal auditors and the independent auditor to review the adequacy
of the internal controls of the Company and the objectivity of financial
reporting. The Audit Committee acts under a written charter adopted by the
Board. This committee recommends to the Board the appointment of the Company's
independent auditor and is charged with reviewing all services performed for the
Company by the independent auditor and the related fees. The committee also
reviews management's programs to monitor compliance with the Company's policies
on business ethics and risk management. Both the internal auditors and the
independent auditor periodically meet alone with the Audit Committee and always
have unrestricted access to the committee. The Audit Committee Report can be
found on page 22 of this proxy statement. The Audit Committee met four times in
2001.
Compensation Committee
This six-member committee's primary duties are to recommend to the Board
the salaries of the chief executive officer and president, to discuss salary
levels for all other senior officers with the chief executive officer, and to
maintain an orderly relationship of compensation for officers which is
compatible with industry standards for comparable companies. The members of the
committee are all independent directors based on the same criteria that is used
to establish the independence of the members of the Audit Committee. The
Compensation Committee met four times in 2001.
Finance Committee
This five-member committee's primary duties are to oversee and ensure that
the Company's financial resources are managed prudently and cost effectively, to
make recommendations to the Board as to dividend policy, capital structure
policies, the issuance of securities, and other appropriate financial matters,
and to approve terms of sales of Company securities when the Board does not
exercise such powers. The Finance Committee met five times in 2001.
Nominating Committee
This five-member committee evaluates and makes recommendations to the Board
concerning possible candidates to fill vacancies on the Board. The committee
will consider nominees recommended by shareholders. These recommendations must
be submitted in writing to the committee, in care of the Corporate Secretary of
the Company, at least six months prior to the date of the Annual Meeting.
Shareholder recommendations should be accompanied by a description of the
proposed nominee's qualifications and other relevant biographical information,
together with the written consent of the proposed nominee to be named in the
proxy statement and to serve on the Board. This committee also evaluates,
monitors, and administers the Company's Corporate Governance Guidelines. The
Nominating Committee met twice in 2001.
Nuclear Committee
This six-member committee is authorized and directed to monitor and make
recommendations to both management and the Board regarding nuclear matters,
including the operation of all nuclear units in which any subsidiary of the
Company has an ownership interest. The Nuclear Committee met four times in 2001.
5
WHAT IS THE CURRENT COMPENSATION OF DIRECTORS?
A director who is an employee of the Company receives no compensation for
serving as a director. Directors who are not employees receive an annual
retainer consisting of $30,000 in cash (which a director may elect to receive in
FirstEnergy common stock) and $37,000 in equity in the form of common stock,
deferred common stock, or stock options; $1,200 for each Board and committee
meeting which they attend; and reimbursement for expenses related to attending
meetings. In addition, the chair of each committee receives an additional annual
retainer of $3,500.
Directors can elect to allocate all or a portion of their cash retainers,
meeting fees and chair fees to deferred stock or deferred cash. At the time of
deferral, 20% is added to the funds allocated to deferred stock. Funds deferred
into the stock account are used to purchase FirstEnergy common stock, and
dividends on shares in this account are reinvested. Payouts are in FirstEnergy
common stock. The 20 percent incentive amount and any appreciation on it are
forfeited if the director leaves the Board within three years from the date of
deferral for any reason other than retirement, disability, or death. Directors
do not receive a 20 percent increase on the portion of their equity retainers
allocated to deferred stock. Directors also may elect to defer all of their cash
retainer, meeting fees, and chair fees into an estate enhancement program, which
would pay out to their estate upon death.
Directors may elect to receive all or a portion of their retainers in stock
options, which are granted as of January 1 in the year following the directors
election, are earned over a ten-month period in the year of the grant, and vest
four years from the date of grant. The funds allocated to stock options are
increased by 20 percent at the time of deferral. This 20 percent vests over a
four-year period and is subject to forfeiture upon termination from the Board
for any reason other than retirement, disability, or death during the vesting
period. Directors do not receive a 20 percent increase on the portion of their
equity retainers allocated to stock options.
ITEMS TO BE VOTED ON
ITEM 1--ELECTION OF DIRECTORS
You are being asked to vote for ANTHONY J. ALEXANDER, H. PETER BURG,
RUSSELL W. MAIER, ROBERT N. POKELWALDT, AND JESSE T. WILLIAMS, SR. to serve on
the Board of Directors for a three-year term.
The Board of Directors currently consists of 16 members divided into three
groups. Five nominees will be elected at this Annual Meeting to serve for a
three-year term. The remaining directors will continue to serve as indicated in
the Biographical Information on Nominees and Directors section, with six
directors having terms expiring in 2003 and five directors having terms expiring
in 2004. Mr. Fred Hafer, the current Chairman of the Board whose term as
director expires at the 2002 Annual Meeting of Shareholders, has elected to
retire from the Board and not stand for reelection. The Board has nominated Mr.
Alexander, who served as a director of FirstEnergy prior to the Company's merger
with GPU Inc., to replace Mr. Hafer as a director of the Company. In addition,
the Board has elected Mr. Burg to be Chairman of the Board, as well as Chief
Executive Officer, effective at the Annual Meeting.
Under the Company's Code of Regulations, at any election of directors, the
persons receiving the greatest number of votes are elected to the vacancies to
be filled. Your Board has no reason to believe that the persons nominated will
not be available to serve after being elected. If any of these nominees would
not be available to serve for any reason after being elected, shares represented
by the appointed proxies will be voted either for a lesser number of directors
or for another person selected by the Board. However, if the inability to serve
is believed to be temporary in nature, the shares represented by the appointed
proxies will be voted for that person who, if elected, will serve when able to
do so.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" ITEM 1.
6
ITEM 2--APPROVAL OF AMENDMENT TO THE EXECUTIVE AND DIRECTOR INCENTIVE
COMPENSATION PLAN
You are being asked to approve an amendment to the FirstEnergy Corp.
Executive and Director Incentive Compensation Plan (later referred to as the
Plan) that would increase the number of shares that may be issued under the
Plan. The purpose of the Plan is to link the personal interests of key employees
and directors to the long-term financial success of the Company and the growth
of shareholder value. The Plan gives the Company the ability to attract and
retain the people upon whose judgment and special skills the success of the
Company is largely dependent and to use stock-based incentive compensation to
align the interests of key employees and directors to those of the Company and
its shareholders. Because the Company is a much larger company after its merger
with GPU, Inc. and has many more employees, the present limit on the number of
shares that may be issued under the Plan is restrictive and will inhibit the
Plan from serving the function for which it was designed. The Plan is
administered by the Compensation Committee of the Board of Directors, which
designates persons as key employees. Any employee of the Company and its
subsidiaries could be designated as a key employee. The Plan permits awards to
be made to key employees in the form of stock options, stock appreciation
rights, restricted stock, performance shares, and cash, and to be made to
non-employee directors in the form of stock options and restricted stock. The
adoption of this amendment requires the favorable vote of a majority of the
votes cast. YOUR BOARD RECOMMENDS THAT YOU VOTE FOR THIS PROPOSAL.
The Plan currently limits the aggregate number of shares of common stock
that may be issued under the Plan to 15,000,000, of which 8,540,876 shares have
been issued as of February 28, 2002. If the proposed amendment is approved, the
aggregate number will be increased to 22,500,000. Shares purchased by the
Company on the open market for issuance under the Plan are included in these
totals. No more than 75 percent of the aggregate number of shares available
under the Plan may be issued in the form of either restricted stock or
performance shares. If an award lapses or is forfeited, the shares that would
have been issued in connection with that award become available to be used for
other awards. The limitation on the number of shares issuable under the Plan and
the number of shares issuable in connection with awards not yet exercised is
subject to adjustment to prevent dilution. Each grant of stock options, stock
appreciation rights, and restricted stock is evidenced by an award agreement in
which the Compensation Committee sets the specific terms and conditions
governing the award. As stated above, the Board believes that stock-based
incentive compensation is a useful tool to align the interests of key employees
and directors to those of the Company and its shareholders.
The Plan provides for the grant of awards in the form of stock options. No
more than 500,000 stock options may be granted to any participant in any
calendar year, and the amendment does not change this. The Plan provides for the
grant of both incentive stock options intended to qualify under Section 422 of
the Internal Revenue Code and nonqualified options. The exercise price of each
type of option cannot be less than the fair market value of the Company's common
stock on the date of the grant based upon the average of the high and low prices
of the stock on that date. The fair market value of a share of the Company's
common stock as of February 28, 2002, was $36.79. No option awarded may expire
any later than ten years from the date of grant. Directors may convert all or
any portion of their retainer and meeting fees into stock options as described
under "Board of Directors Information -- What is the current compensation of
directors?" on page 6 of this proxy statement.
As a general matter, under current federal income tax laws relating to
grants of stock options, the grant of either an incentive stock option or a
nonqualified option under the Plan will not result in taxable income to the
participant, nor will the Company be entitled to a deduction for federal income
tax purposes at the time of the option grant. In the case of a nonqualified
stock option, under federal tax law, the participant may realize taxable income
based on the difference between the exercise price and the fair market value of
the shares received at the time the option is exercised, and the Company would
be entitled to a corresponding deduction for federal income tax purposes. In the
case of an incentive stock option, under federal tax law, the participant may be
able to defer the realization of taxable income until the acquired shares are
sold. In this case, the amount of taxable income will be based on the difference
between the exercise price and the amount received in the sale, but certain
conditions, including minimum holding periods, apply. If those conditions are
satisfied, the Company is not entitled to any corresponding deduction for
federal income tax purposes.
Under the Plan, stock appreciation rights may be granted in lieu of, or in
addition to, the grant of options or may be granted independently. Like options,
the term of stock appreciation rights cannot exceed ten years. Stock
7
appreciation rights allow the recipient of the rights to realize the value of
the difference between the market price of the common stock at the time that the
rights are granted and the market value of that stock when the rights are
exercised. To the extent that the value of the stock has not increased during
that time, the rights will have no value. The Plan provides that the maximum
number of shares subject to stock appreciation rights granted to any individual
in any calendar year is 500,000, and the amendment does not change this. The
exercise of stock appreciation rights, whether paid in cash or stock, is
considered to be an issuance of shares for purposes of these limits.
Shares of restricted stock may also be awarded under the Plan. Restricted
stock will be valued at its fair market value as of the date of the grant. The
maximum number of shares of restricted stock that may be granted to any
participant in any calendar year is 250,000 shares, and the amendment does not
change this. Any shares of restricted stock awarded will be subject to
restrictions on transferability, and any other restrictions that the
Compensation Committee may impose, until the date on which the restrictions
expire. During the period of restriction, the holder of restricted stock will be
entitled to receive dividends on the restricted stock that generally are
reinvested to purchase additional shares, which also are restricted, and will be
entitled to exercise full voting rights with respect to the restricted stock.
Awards under the Plan also may be given in the form of performance shares.
The maximum number of shares of common stock that may be awarded as performance
shares to any participant in any calendar year is 250,000, and the maximum
amount payable in cash to any participant in any calendar year pursuant to any
performance share award is $2,000,000, and the proposed amendment does not
change these amounts. Under the Plan, the Compensation Committee sets
performance goals over periods that it selects in advance. The performance goals
are based on the attainment by the Company or its subsidiaries of specified
levels of various measures, which may include total shareholder return, return
on equity, return on capital, earnings per share, market share, stock price,
sales, costs, net income, cash flow, retained earnings, customer satisfaction,
product price measures, safety record, service reliability, operating and
maintenance cost management, and energy production availability, among others.
The Plan also provides for cash awards that may be made to participants as
determined by the Compensation Committee. The amount payable in cash in a
calendar year to any participant with respect to any performance period pursuant
to any performance cash award may not exceed $2,000,000, and the amendment does
not change this. All cash awards are subject to pre-established, objective,
business-related performance measures selected by the Compensation Committee.
The performance goals may include attainment of merger milestones, specified
levels of customer satisfaction, service reliability, safety, tactical
objectives, shareholder return, expense control, revenue, margins, shareholder
value, and individual performance, among others. These performance goals are
measured over periods consisting of one to five years. Depending on the extent
that the goals are achieved, cash awards may range from 0 percent to 200 percent
of the target award. As an incentive to increase his or her ownership in the
Company, a participant, with the approval of the Compensation Committee, may
convert a cash award to restricted stock. Cash awards converted into restricted
stock may be increased by up to 20 percent.
Generally, upon a change of control of the Company, all stock options,
stock appreciation rights, and restricted stock immediately vest, and all
performance shares and performance cash awards are paid out in cash. Generally,
a "change of control" includes the acquisition of the beneficial ownership of 50
percent of the outstanding shares of common stock or other voting stock of the
Company, a change in the majority of the members of the Board of Directors, or a
reorganization, merger, or dissolution of the Company.
The Plan may be terminated, amended, or modified at any time by the Board
of Directors. However, any amendment that would increase the number of shares of
the common stock that can be issued under the Plan, change the designation of
the employees who can participate in the Plan, materially increase either the
cost of the Plan or the benefits to participants, or extend the period after the
date of a grant during which stock options or stock appreciation rights may be
exercised to more than ten years must be approved by shareholders.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" ITEM 2.
8
ITEM 3--SHAREHOLDER PROPOSAL
For the fifth year in a row, a shareholder has indicated that a proposal
will be presented at the Annual Meeting which seeks to change the way your Board
of Directors is elected. Your Board of Directors is divided into three classes.
Each class serves for a term of three years, with one class, constituting
approximately one-third of the Board, being elected each year at the Company's
Annual Meeting of Shareholders. The shareholder proposal is designed to change
this structure and require that all directors be elected annually. Adoption of
the proposal requires the affirmative vote of 80 percent of the shares entitled
to vote at the Meeting. YOUR BOARD RECOMMENDS THAT YOU VOTE AGAINST THIS
PROPOSAL.
As we have stated in the past, your Board of Directors believes that the
present classified board structure has significant advantages over a system in
which all directors are elected annually. For example, under the shareholder
proposal, the whole Board could be replaced at the time of any takeover of the
Company. This could place the Company at a distinct disadvantage as a classified
board structure provides any potential acquirer with an incentive to negotiate
with the Board as opposed to a few large shareholders. This allows the Board to
negotiate terms or consider alternatives that maximize value for all
shareholders, both large and small. In a situation in which someone is seeking
to acquire the Company, because of our Board structure, holders of large blocks
of Company stock will be less able to negotiate special concessions or terms at
the expense of smaller shareholders. Another advantage is that a classified
board structure ensures continuity since there always will be directors in
office who are familiar with the business and affairs of the Company.
The Company's Code of Regulations requires that in order for this proposal
to be adopted, it must receive the affirmative vote of 80 percent of the shares
entitled to vote at the meeting. Your Board of Directors cannot change this
requirement. Only the shareholders, by the same 80 percent majority, can do
that. This proposal has been submitted previously and, on some occasions, has
received a plurality of the votes cast. This has given your Board the
opportunity to seriously deliberate the merits of this issue before forming its
position. Your Board continues to believe that the current Board structure is in
the best interest of all shareholders. When voting, you also should take into
account what you believe to be in the best interests of all shareholders of the
Company, both large and small. THE BOARD ENCOURAGES YOU TO VOTE AGAINST THIS
PROPOSAL.
The following is the complete text of the proposal as submitted. The
proponent's name, address, and number of shares held will be furnished upon
written or oral request to the Company.
-------------BEGINNING OF SHAREHOLDER PROPOSAL-------------
3 - ELECT EACH DIRECTOR ANNUALLY
ADOPT TOPIC THAT WON 53% OF YES-NO VOTE
FirstEnergy shareholders request that our board adopt the rules necessary to
Elect Each Director Annually as a sustained policy. (Unexpired terms of
directors not affected.)
DIRECTOR RESPONSIBILITY IS CLOSELY RELATED TO FINANCIAL PERFORMANCE
We believe the level of responsibility that company rules encourage is closely
related to financial performance. Independent analysts believe that when
directors are responsible for their actions yearly, they and the company perform
better.
THREE-YEARS WITHOUT ELECTION COULD INSULATE DIRECTORS FROM IMMEDIATE
CHALLENGE
We believe that annual election of each director is one of the best ways to hold
the board and individual directors responsible and motivated.
ALLOW OPPORTUNITIES FOR PROFITABLE OFFERS FOR OUR STOCK
Three-years between election for individual directors, added to FirstEnergy's
poison pill, combine to create a oversight void that can allow management
resistance to profitable offers for our stock.
THIS ONE CHANGE WILL IMPROVE OUR GOVERNANCE PROFILE
Our company governance profile has rules and practices that are not
shareholder-friendly according to many institutional investors:
- No confidential voting.
9
- No cumulative voting.
- 3-year director terms.
- Poison pill.
- Management does not act on majority yes-no shareholder votes at our company
which is 60%-owned by institutional shareholders.
- An 80% super-majority vote is required to remove a director with cause.
Removal could be virtually impossible since less than 80% of stock typically
votes.
THIS TOPIC ALSO WON 52% OF YES-NO VOTES IN 1999
We believe that this proposal topic could have won a higher vote in recent
elections if management used these shareholder-friendly practices in its proxy
statement:
1) Included meaningful titles for all items on our company ballot. Three items
on our 2001 ballot had an identical nondescript title.
2) Observed the usual practice of placing each proposal first followed by any
response.
3) Refrained from the past practice of spending our shareholder money for a
vote-no campaign on shareholder proposals. Our management spent this extra
money even though there was no vote-yes campaign.
4) Published the names of all proponents for equal credibility.
OUR MANAGEMENT'S UNFOUNDED OBJECTION
We believe our management is unfounded in claiming that annual election of each
director could leave us without experienced directors. In the unlikely event
that all directors are replaced, this would express dissatisfaction with the
incumbents and reflect the need for change.
Our management's response to this topic in 2001 relied on a company rule that
could potentially allow 1% of shareholders to block the will of 99% of
shareholders: An excessive super-majority vote requirement of all shares in
existence.
In the interest of shareholder value vote yes:
ELECT EACH DIRECTOR ANNUALLY
YES ON 3
-------------END OF SHAREHOLDER PROPOSAL-------------
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "AGAINST" ITEM 3.
ITEM 4--SHAREHOLDER PROPOSAL
A shareholder has indicated that a proposal will be presented at the Annual
Meeting proposing to change the voting requirements contained in the Company's
governing documents. Proposals with the same purpose were defeated by
shareholders at the last two Annual Meetings. Adoption of the proposal requires
the affirmative vote of 80 percent of the shares entitled to vote at the
Meeting. YOUR BOARD RECOMMENDS THAT YOU VOTE AGAINST THIS PROPOSAL.
Certain changes in the Company's governance provisions require the approval
of 80 percent of the shares entitled to vote. Your Board of Directors believes
that this requirement, contained in our governing documents, ensures that
decisions affecting only the most important aspects of the existence of the
Company and how it operates are fair to all of our shareholders, large and
small. It only applies to provisions that are extremely significant to the
Company and, therefore, should be important to you.
The 80 percent voting requirement does not preclude changes in our
corporate governance provisions. It merely ensures that fundamental changes can
be made only when a broad consensus of shareholders agree that such changes are
prudent. This is especially important if the Company is subjected to an
unsolicited takeover proposal. As was pointed out in Item 3, having a classified
board could cause potential acquirers to negotiate seriously with your Board of
Directors, thereby enhancing the Board's ability to maximize value for all
shareholders, large and small. Similarly, subjecting changes in fundamental
corporate governance provisions to
10
an 80 percent voting requirement also encourages potential acquirers to
negotiate the terms of an acquisition with your Board.
It is important to keep in mind that these provisions do not preclude
unsolicited takeover offers. They only make it more likely that all shareholders
will be treated fairly in the takeover process. Adoption of this proposal would
lead to this protection being stripped from shareholders.
Your Board of Directors believes adoption of this proposal will have a
detrimental effect on the interests of shareholders. We continue to believe
that, for all shareholders to be treated fairly under all circumstances, the
current voting requirements must be retained. THE BOARD ENCOURAGES YOU TO VOTE
AGAINST THIS PROPOSAL.
The following is the complete text of the proposal as submitted. The
proponent's name, address, and number of shares held will be furnished upon
written or oral request to the Company.
-------------BEGINNING OF SHAREHOLDER PROPOSAL-------------
4 - ADOPT SIMPLE-MAJORITY VOTE
TOPIC THAT WON 56% OF YES-NO VOTE
RESOLVED:
ADOPT SIMPLE-MAJORITY VOTE
FirstEnergy shareholders request that our company take the steps necessary to
adopt a policy of simple-majority vote. This unified policy includes all issues
submitted to shareholder vote to the fullest extent possible. This also requests
that any future simple/super-majority proposal be put to shareholder vote - as a
separate item for vote. And requests that our directors commit to make their
best effort to implement this policy within 90-days of the annual meeting, with
the resources available to our directors, and then meet this commitment.
This proposal recommends a policy of the greatest flexibility to implement
the spirit and the letter of this topic to the fullest extent possible and as
soon as possible. This policy includes that the company make its best effort to
obtain the high number of votes, from all the shares in existence, that the
company requires for implementation of this topic.
The impressive vote result of this topic at FirstEnergy in 2001 was
independently reported as well as its sponsorship (sponsor's name will be
furnished upon oral or written request to the Company).
SIMPLE-MAJORITY REQUIREMENTS ARE WIDELY SUPPORTED
Proponents of simple-majority vote said that super-majority vote requirements
may stifle bidder interest in the company and therefore devaluate the stock.
THE GOVERNANCE PROFILE OF OUR COMPANY IS IMPORTANT
In evaluating the need for the one change proposed here, I believe that it is
useful to evaluate the company governance profile. I believe that our company's
governance profile has a number of governance provisions that are un-friendly to
shareholders. These un-friendly provisions increase the need for a single change
such as the one topic proposed here.
TO RESPOND TO THE CHALLENGES OF THE FUTURE
It is not possible to predict each challenge that our company will face in the
year ahead. However, I believe that changing one item for the better in our
company's governance profile will enhance our company's ability to meet some of
the challenges.
MANAGEMENT COMMITMENT TO SHAREHOLDERS
By making its best effort to implement a policy to implement simple majority
vote, our board could demonstrate a commitment to the greatest management
concern for shareholders and shareholder value.
11
In recent years, various companies have been willing to implement proposal
topics that have won a majority of yes-no shareholder votes. I believe that our
company should do so as well.
In the interest of sustained shareholder value vote yes:
ADOPT SIMPLE-MAJORITY VOTE
TOPIC THAT WON 56% OF YES-NO VOTE
YES ON 4
-------------END OF SHAREHOLDER PROPOSAL-------------
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "AGAINST" ITEM 4.
SELECTION OF INDEPENDENT AUDITOR
Arthur Andersen LLP, independent public accountants, performed the annual
audit for this Company for 2001 and for each year since it became a holding
company in 1997; and performed the annual audits of its then utility operating
companies for many years prior to that time. Its representative is expected to
attend the Meeting and will have an opportunity to make a statement and respond
to appropriate questions. Refer to the Audit Committee Report on page 22 for
information regarding services performed by, and fees paid to, Arthur Andersen
LLP during the year 2001.
At the time of the printing of this proxy statement, in view of the recent
events involving Arthur Andersen LLP, the Audit Committee is evaluating its
options and has not yet selected a firm to be the Company's independent auditor
for the year 2002. This process does not reflect any criticism of Andersen's
services rendered to the Company. The Audit Committee and the Board will
exercise their best judgment in determining which firm will audit the Company's
books and records for 2002 but, at the time of the printing of this proxy
statement, no decision has been made. This being the case, unlike our usual
practice, you are not being asked to ratify the Board's decision in this regard.
If a different independent auditor is selected prior to the Meeting, it is
expected that its representative will also attend the Meeting and will have an
opportunity to make a statement and respond to appropriate questions.
BUSINESS RELATIONSHIPS AND TRANSACTIONS
FirstEnergy Solutions Corp., a subsidiary of the Company, has a contract
with Duck Creek Energy, Inc., under which it purchases variable amounts of gas
at a fixed negotiated price. This contract expires in April of 2002. During
2001, FirstEnergy Solutions paid Duck Creek approximately $766,000 for gas
delivered under this contract. Some of this gas came from wells in which Mr.
Russell W. Maier, a director, has a 10-15 percent ownership interest. As a
result, Mr. Maier received approximately $20,800.
12
BIOGRAPHICAL INFORMATION ON NOMINEES AND DIRECTORS
NOMINEES FOR ELECTION AS DIRECTORS
Terms expiring in the Year 2005:
[ANTHONY J. ALEXANDER PHOTO]
ANTHONY J. ALEXANDER -- President and Chief Operating Officer of the Company
since November 2001. He also is President of various subsidiaries of the
Company. President of the Company from 2000-2001. Executive Vice President and
General Counsel of the Company, The Illuminating Company, Ohio Edison, and
Toledo Edison from 1997-2000, and of Pennsylvania Power from 1999-2000. Age 50.
He is also a Director of Ohio Edison, Pennsylvania Power, The Illuminating
Company, Toledo Edison, Metropolitan Edison, Pennsylvania Electric, and many
other subsidiaries of the Company. Director of the Company from 2000-2001.
[H. PETER BURG PHOTO]
H. PETER BURG -- Vice Chairman of the Board and Chief Executive Officer of the
Company since the FirstEnergy Corp./GPU, Inc. merger in November 2001. He also
is Chairman of the Board of Pennsylvania Power, and President of Ohio Edison,
The Illuminating Company, Toledo Edison, Metropolitan Edison, Pennsylvania
Electric, and many other subsidiaries of the Company. Chairman of the Board and
Chief Executive Officer from 2000-2001, President and Chief Executive Officer
from 1999-2000, President and Chief Operating Officer from 1998-1999, and
President and Chief Financial Officer from 1997-1998 of the Company. President,
Chief Operating Officer and Chief Financial Officer from 1996-1997 of Ohio
Edison. Age 55. He is also a Director of Ohio Edison, Pennsylvania Power, The
Illuminating Company, Toledo Edison, Metropolitan Edison, Pennsylvania Electric,
and many other subsidiaries of the Company. Director of the Company since 1997
and Director of Ohio Edison since 1989.
[RUSSELL W. MAIER PHOTO]
RUSSELL W. MAIER -- Retired in 1998 as Chairman of the Board and Chief Executive
Officer (a position held since 1989) of Republic Engineered Steels, Inc., a
specialty bar producer. Age 65. Director of the Company since 1997 and Director
of Ohio Edison from 1995-1997.
Committees: Audit, Nuclear
[ROBERT N. POKELWALDT PHOTO]
ROBERT N. POKELWALDT -- Retired in 1999 as Chairman of the Board and Chief
Executive Officer (a position held since 1993) of YORK International
Corporation, a supplier of heating, ventilating, air conditioning, and
refrigeration equipment. Age 65. He is also a Director of Carpenter Technology
Corporation, Intersil Corporation, and Mohawk Industries, Inc. Director of the
Company since 2001 and Director of GPU from 2000-2001.
Committees: Audit, Finance
13
[JESSE T. WILLIAMS, SR. PHOTO]
JESSE T. WILLIAMS, SR. -- Retired in 1998 as Vice President of Human Resources
Policy, Employment Practices and Systems (a position held since 1996) of The
Goodyear Tire & Rubber Company, a manufacturer of tires and rubber-related
products. Age 62. Director of the Company since 1997 and Director of Ohio Edison
from 1992-1997.
Committees: Nominating, Nuclear
OTHER MEMBERS OF THE BOARD
Terms expiring in the Year 2003:
[DR. CAROL A. CARTWRIGHT PHOTO]
DR. CAROL A. CARTWRIGHT -- President since 1991 of Kent State University. Age
60. She is also a Director of PolyOne Corporation and KeyCorp. Director of the
Company since 1997 and Director of Ohio Edison from 1992-1997.
Committees: Compensation, Nominating
[WILLIAM F. CONWAY PHOTO]
WILLIAM F. CONWAY -- President since 1994 of William F. Conway & Associates,
Inc., a management consulting firm. Age 71. Director of the Company since 1997
and Director of Centerior Energy from 1994-1997.
Committees: Audit, Nuclear
[PAUL J. POWERS PHOTO]
PAUL J. POWERS -- Retired in 2000 as Chairman of the Board and Chief Executive
Officer (a position held since 1987) of Commercial Intertech Corp., a hydraulic
components and metal components manufacturer. Age 67. He is also a Director of
GlobalSantaFe Corp., Twin Disc, Incorporated, and YORK International
Corporation. Director of the Company since 1997 and Director of Ohio Edison from
1992-1997.
Committees: Compensation, Finance
14
[GEORGE M. SMART PHOTO]
GEORGE M. SMART -- President since 2001 of Sonoco-Phoenix, Inc., a manufacturer
of easy-opening lids. Chairman of the Board and President of Phoenix Packaging
Corporation from 1993-2001. Age 56. He is also a Director of UNB Corp. Director
of the Company since 1997 and Director of Ohio Edison from 1988-1997.
Committees: Audit, Finance
[CARLISLE A. H. TROST PHOTO]
CARLISLE A. H. TROST -- Admiral, United States Navy (Retired in 1990). Former
Chief of Naval Operations. Age 71. He is also a Director of General Dynamics
Corporation. Director of the Company since 2001 and Director of GPU from
1990-2001.
Committees: Nominating, Nuclear
[Dr. PATRICIA K. WOOLF PHOTO]
DR. PATRICIA K. WOOLF -- Consultant, author, and lecturer in the Department of
Molecular Biology at Princeton University. Age 67. She is also a Director of
Crompton Corporation. Director of the Company since 2001 and Director of GPU
from 1983-2001.
Committees: Nominating, Nuclear
Terms expiring in the Year 2004:
[ROBERT B. HEISLER, JR. PHOTO]
ROBERT B. HEISLER, JR. -- Chairman of the Board and Chief Executive Officer
since 2001 of KeyBank and Executive Vice President since 1997 of KeyCorp, a
financial services company which provides investment management, retail and
commercial banking, consumer finance, and investment banking products and
services. President of Key Capital Partners from 1997-2000. Age 53. He is also a
Director of Key Trust Company of Ohio, National Association. Director of the
Company since 1998.
Committees: Compensation, Nominating
15
[ROBERT L. LOUGHHEAD PHOTO]
ROBERT L. LOUGHHEAD -- Retired in 1987 as Chairman of the Board, President and
Chief Executive Officer of Weirton Steel Corporation, a manufacturer of steel
products. Age 72. Director of the Company since 1997 and Director of Ohio Edison
from 1980-1997.
Committees: Audit, Compensation
[JOHN M. PIETRUSKI PHOTO]
JOHN M. PIETRUSKI -- Chairman of the Board since 1990 of Texas Biotechnology
Corporation, a pharmaceutical research and development company. He also serves
as President of Dansara Company, a management consulting firm. Age 69. He is
also a Director of Hershey Foods Corporation, Lincoln National Corporation and
PDI, Inc. Director of the Company since 2001 and Director of GPU from 1989-2001.
Committees: Compensation, Finance
[CATHERINE A. REIN PHOTO]
CATHERINE A. REIN -- President and Chief Executive Officer since 1999 of
Metropolitan Property and Casualty Insurance Company, and Senior Executive Vice
President since 1997 of Metropolitan Life Insurance Company. Age 59. She is also
a Director of The Bank of New York, Inc. and Corning Inc. Director of the
Company since 2001 and Director of GPU from 1989-2001.
Committees: Audit, Compensation
[ROBERT C. SAVAGE PHOTO]
ROBERT C. SAVAGE -- President and Chief Executive Officer since 1973 of Savage &
Associates, Inc., an insurance, financial planning and estate planning firm. Age
64. Director of the Company since 1997 and Director of Centerior Energy from
1990-1997.
Committees: Finance, Nuclear
16
SECURITY OWNERSHIP OF MANAGEMENT
The following table shows shares of stock beneficially owned as of February
28, 2002, by each director and nominee; the executive officers named in the
Summary Executive Compensation Table; and all directors and executive officers
as a group. Also listed, as of February 28, are shares deferred by executive
officers under the Executive Deferred Compensation Plan and common stock
equivalents credited to executive officers as a result of participation in
incentive compensation plans.
DEFERRED SHARES AND
SHARES BENEFICIALLY COMMON STOCK
NAME CLASS OF STOCK OWNED(1) EQUIVALENTS(2)
---- -------------- ------------------- -------------------
Anthony J. Alexander Common 117,721 11,875
H. Peter Burg Common 195,158 18,734
Dr. Carol A. Cartwright Common 10,571
William F. Conway Common 5,808
Arthur R. Garfield Common 18,191 8,402
John A. Gill Common 36,055 7,767(3)
Fred D. Hafer Common 306,551
Robert B. Heisler, Jr. Common 7,578
Robert L. Loughhead Common 7,165
Russell W. Maier Common 6,635
Richard H. Marsh Common 24,830 2,525
John M. Pietruski Common 11,714
Robert N. Pokelwaldt Common 807
Paul J. Powers Common 16,019
Catherine A. Rein Common 10,195
Robert C. Savage Common 5,708
George M. Smart Common 7,138
Carlisle A.H. Trost Common 409
Jesse T. Williams, Sr. Common 6,638
Dr. Patricia K. Woolf Common 10,195
All Directors & Executive Officers as a
Group Common 1,021,933 105,085
(1) Shares beneficially owned include (a) any shares with respect to which the
person has a direct or indirect pecuniary interest and (b) shares that the
person has the right to acquire beneficial ownership within 60 days of
February 28, 2002 (Alexander - 10,000 shares; Burg - 60,000 shares; Garfield
- 10,000 shares; Gill - 20,000 shares; Hafer - 259,663 shares; Marsh -
20,000 shares; and all directors and executive officers as a group - 530,303
shares). The percentage of shares beneficially owned by any director or
nominee, or by all directors and executive officers as a group, does not
exceed one percent of the class owned.
(2) Common stock equivalents represent the cumulative number of performance and
phantom shares credited to each executive officer. The value of these
equivalents is measured in part by the market price of the Company's common
stock. Because final payments may vary due to performance factors (see the
narrative under the Long-Term Incentive Plan Table), the value of an
executive's common stock equivalents may not correlate directly with the
stock's market price. Performance, phantom, and deferred shares do not have
voting rights or other rights associated with ownership of common stock.
(3) Mr. Gill has retired and the final value of his Common Stock Equivalents
under the Executive Incentive Compensation Plan was determined and is
included in the Long-Term Incentive Plan Payout column of the Summary
Executive Compensation Table.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table shows all persons known to be the beneficial owner of
more than five percent of common shares of the Company as of December 31, 2001.
VOTING POWER INVESTMENT POWER
SHARES PERCENT OF NUMBER OF SHARES NUMBER OF SHARES
BENEFICIALLY COMMON SHARES ----------------------- -------------------
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED OUTSTANDING SOLE SHARED SOLE SHARED
------------------------------------ ------------ ------------- ---------- ---------- ---------- ------
State Street Bank and Trust Company 20,569,136 6.9% 6,025,168 13,716,975 20,549,299 19,837
225 Franklin Street, Boston, MA 02110
Barclays Global Investors, N.A. (and
affiliates) 16,552,900 5.6% 15,963,247 0 16,552,900 0
45 Fremont Street, San Francisco, CA
94105
17
SUMMARY EXECUTIVE COMPENSATION TABLE
LONG-TERM COMPENSATION
------------------------------------
AWARDS PAYOUTS
----------------------- ----------
ANNUAL COMPENSATION SECURITIES LONG-TERM
NAME AND ------------------------------ RESTRICTED UNDERLYING INCENTIVE ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS(4) OTHER(1) STOCK(2) OPTIONS PLAN(3)(4) COMPENSATION(5)
------------------ ---- -------- -------- -------- ---------- ---------- ---------- ---------------
H. Peter Burg 2001 $821,176 $631,719 $16,580 $ 0 200,000 $496,162 $ 52,461
Vice Chairman and Chief 2000 $765,616 $383,546 $ 8,540 $2,775,000 200,000 $458,198 $ 40,488
Executive Officer 1999 $663,011 $319,292 $ 3,805 $ 0 87,703 $ 80,621 $ 51,350
Anthony J. Alexander 2001 $544,537 $372,652 $19,688 $ 0 120,000 $249,092 $ 31,610
President and 2000 $505,687 $420,190 $ 7,511 $1,665,000 120,000 $277,117 $ 23,331
Chief Operating Officer 1999 $406,100 $295,142 $ 2,680 $ 0 56,367 $ 68,804 $ 29,931
Richard H. Marsh 2001 $315,708 $176,128 $ 9,031 $ 0 40,000 $152,759 $ 27,787
Senior Vice President and 2000 $295,198 $ 81,881 $ 4,354 $ 0 40,000 $ 64,084 $ 15,087
Chief Financial Officer 1999 $272,523 $103,407 $ 1,420 $ 0 27,603 $ 12,757 $ 17,397
John A. Gill(6) 2001 $329,553 $119,617 $20,094 $ 0 40,000 $441,071 $273,114
Senior Vice President 2000 $317,098 $ 87,282 $ 7,516 $ 0 40,000 $144,394 $ 40,167
1999 $299,110 $105,862 $ 3,260 $ 0 27,603 $ 45,635 $ 46,552
Arthur R. Garfield 2001 $335,390 $79,060 $ 8,106 $ 0 40,000 $ 65,076 $ 45,102
President, FirstEnergy 2000 $305,429 $44,265 $ 4,518 $ 0 40,000 $ 84,357 $ 28,153
Solutions 1999 $215,400 $56,068 $ 2,625 $ 0 14,233 $ 29,260 $ 4,059
(1) Reimbursement for income tax obligations on Executive Indemnity Program
premium and on perquisites.
(2) Reflects the dollar value of any restricted common stock award on the date
of the award, determined by multiplying the number of shares awarded by the
closing market price of the Company's common stock on the award date. At
December 31, 2001, the total number of all restricted stock holdings and
values determined by multiplying the total number of restricted shares by
the closing market price of the Company's common stock on December 31, 2001,
were as follows: Burg -- 104,892 shares ($3,669,122); and
Alexander -- 82,935 shares ($2,901,066). Dividends on restricted shares are
reinvested into additional shares which also are restricted. Restricted
shares cannot be sold by the executive during the restricted period, and
these shares can be forfeited if the executive leaves the Company prior to
the end of the restricted period.
(3) Represent payouts of long-term incentive opportunities under the Executive
Incentive Compensation Plan.
(4) Under the terms of the Executive Deferred Compensation Plan (EDCP), an
executive may defer all or a portion of his bonus and/or long-term incentive
payment into common stock equivalents in a Stock Account at the then current
FirstEnergy stock price. As an incentive to executives to increase their
stake in the Company, any amounts deferred into the Stock Account are
increased by 20 percent. During the three-year period following deferral,
dividend equivalents are credited to the Stock Account and are converted to
additional common stock equivalents. At the end of the three-year period,
the common stock equivalents are valued based on the then current
FirstEnergy common stock price, and the Stock Account is paid out as stock
unless the executive has elected to defer the proceeds further into a
Retirement Stock Account within the EDCP. If the executive resigns or is
terminated for cause during the three-year period following deferral, the 20
percent incentive amount and any appreciation on it are forfeited.
The 20 percent incentive amounts for reported 2001 Bonus or Long-Term
Incentive Plan Payout deferred into Stock Accounts in 2002 were as follows:
Burg-$47,904; Alexander-$-0; Gill-$-0; Marsh-$16,012; and Garfield-$27,366.
The 20 percent incentive amounts for reported 1998, 1999, and 2000 Bonus or
Long-Term Incentive Plan Payout deferred into Stock Accounts were as
follows: Burg-1998-$27,614, 1999-$7,784, 2000-$44,239; Alexander-1998-$0,
1999-$0, 2000-$53,260; Gill-1998-$32,864, 1999-$0, 2000-$0; Marsh-1998-$0,
1999-$2,305, 2000-$8,127; and Garfield-1998-$13,901, 1999-$5,287,
2000-$15,757.
(5) For 2001, amount is comprised of (1) matching Company common stock
contributions under the tax-qualified Savings Plan: Burg-$6,633;
Alexander-$6,630; Gill-$4,881; Marsh-$4,258; Garfield-$4,234; (2) the
current dollar value of the Company's portion of the premiums paid in 2001
for insurance policies under the Executive Supplemental Life Plan:
Burg-$12,066; Alexander-$6,073; Gill-$5,404; Marsh-$2,337; Garfield-
$11,607; (3) above market interest earned under the Executive Deferred
Compensation Plan: Burg-$33,762; Alexander-$18,907; Gill-$57,883;
Marsh-$21,192; Garfield-$29,261; and (4) banked vacation paid at retirement:
Gill-$204,946.
(6) Mr. Gill retired from the Company on December 31, 2001. His Long-Term
Incentive Plan payout includes prorated 2000 and 2001 long-term incentive
opportunities under the Executive Incentive Compensation Plan.
18
LONG-TERM INCENTIVE PLAN TABLE -- AWARDS IN 2001
ESTIMATED FUTURE PAYOUTS UNDER
2001 TARGET PERFORMANCE OR NON-STOCK PRICE BASED PLAN
LONG-TERM OTHER PERIOD ----------------------------------------------
INCENTIVE UNTIL MATURATION BELOW
NAME OPPORTUNITY OR PAYOUT THRESHOLD THRESHOLD TARGET MAXIMUM
---- ----------- ---------------- --------- --------- -------- --------
H. P. Burg $564,200 3 years $0 $282,100 $564,200 $846,300
A. J. Alexander $270,400 3 years $0 $135,200 $270,400 $405,600
J. A. Gill $128,768 3 years $0 $ 64,384 $128,768 $193,152
R. H. Marsh $128,768 3 years $0 $ 64,384 $128,768 $193,152
A. R. Garfield $128,768 3 years $0 $ 64,384 $128,768 $193,152
Each executive's target long-term award was converted into a number of
performance shares calculated using the average of the high and low stock prices
of the common stock on the last trading day in 2000. These shares were placed
into an account in the executive's name for a three-year period that will end on
December 31, 2003. During this three-year performance period, an amount equal to
the dividend for a share of common stock will be credited to this account for
each performance share in the account on the date that the common stock
dividends are paid. These dividend equivalents will be converted into additional
performance shares based on the closing price of FirstEnergy common stock on
that day. At the end of the three-year performance period, the executive's
account will be valued based on the average of the high and low prices on the
last trading day in 2003.
The final account value may be adjusted upward or downward based upon the
total shareholder return of FirstEnergy common stock relative to an energy
services company index during this three-year period. If the total shareholder
return ranking is at or below the 40th percentile, no long-term award will be
paid. If the total shareholder return ranking is at or above the 86th
percentile, the award payout will be 150 percent of the account value. Award
payouts for a ranking between the 40th and 86th percentile will be interpolated
between 50 and 150 percent.
The final value of an executive's account, if any, will be paid to the
executive in cash early in the year 2004. Executives also may elect to defer the
receipt of any Long-Term Incentive Program award per the provisions of the
Executive Deferred Compensation Plan. If an executive retires, dies, separates
due to disability, or separates for a reason that the executive qualifies for
and elects severance prior to the end of the three-year period, the value of the
account will be decreased based on the number of months worked during the
period. However, an executive must work at least twelve months during the
three-year period to be eligible for an award payout.
STOCK OPTIONS GRANTED IN 2001
INDIVIDUAL GRANTS
----------------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS GRANT
UNDERLYING GRANTED TO EXERCISE DATE
OPTIONS EMPLOYEES IN OR BASE EXPIRATION DATE PRESENT
NAME GRANTED FISCAL YEAR PRICE DATE EXERCISABLE VALUE(1)
---- ---------- ------------ -------- ---------- ------------ --------
H. P. Burg 200,000 6.86% $29.50 5/16/11 5/16/05 $992,940
A. J. Alexander 120,000 4.11% $29.50 5/16/11 5/16/05 $595,764
J. A. Gill 40,000 1.37% $29.50 5/16/11 5/16/05 $198,588
R. H. Marsh 40,000 1.37% $29.50 5/16/11 5/16/05 $198,588
A. R. Garfield 40,000 1.37% $29.50 5/16/11 5/16/05 $198,588
ANNUAL OPTION BLACK-
DIVIDEND RISK-FREE TURNOVER ANNUAL TERM SCHOLES
GRANT DATE YIELD RATE RATE VOLATILITY (IN YEARS) VALUE
(1) ---------- -------- --------- -------- ---------- ---------- -------
5/16/01 5.00 4.670 0.18 23.453547 8.32 $4.96
19
AGGREGATED STOCK OPTIONS EXERCISED IN 2001
AND STOCK OPTION VALUES AT DECEMBER 31, 2001
VALUE OF
NUMBER OF SECURITIES UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT OPTIONS AT
ACQUIRED VALUE DECEMBER 31, 2001 DECEMBER 31, 2001
NAME ON EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ----------- -------- ------------------------- -------------------------
H. P. Burg 0 $0 45,000/519,715 $481,500/$3,997,144
A. J. Alexander 0 $0 30,000/315,292 $321,000/$2,472,088
J. A. Gill 0 $0 15,000/116,399 $160,500/$975,439
R. H. Marsh 0 $0 15,000/116,399 $160,500/$975,439
A. R. Garfield 0 $0 7,500/ 99,134 $ 80,250/$831,120
SEVERANCE AGREEMENTS AND OTHER CONTRACTS
For the executives listed in the Summary Executive Compensation Table,
separate severance agreements are currently in effect with H. Peter Burg,
Anthony J. Alexander, and Richard H. Marsh. These agreements provide for the
payment of severance benefits if the individual's employment with FirstEnergy or
its subsidiaries is terminated under specified circumstances within three years
after a change in control of FirstEnergy. A change in control includes the
acquisition of the beneficial ownership of 50 percent of the outstanding shares
of common stock or other voting stock of the Company, a change in the majority
of the members of the Board of Directors, or a reorganization, merger, or
dissolution of the Company. The agreements are intended to ensure that the
individuals are free from personal distractions in order to put in place the
best plan for shareholders when a change of control is occurring or perceived as
imminent. The principal severance benefits under each agreement include payment
of the following when the individual is terminated or resigns for good reason,
which generally is defined as a material change, following a change of control,
inconsistent with the individual's previous job duties or compensation:
- the individual's base salary and accrued benefits through the date of
termination, including a pro-rata portion of the annual and all
deferred long-term incentive awards earned;
- 2.99 times the sum of the individual's base salary plus the average of
his annual incentive compensation awards over the past three years;
- Supplemental Executive Retirement Plan (SERP) benefits as follows: if
the individual is less than age 55 at termination, the benefit is
calculated as if he were age 55, offset by compensation earned from
subsequent employers until age 55, at which time it then will be
offset by pension benefits and, at age 62, further offset by Social
Security payments; if the individual is between age 55 and 62 at
termination, the benefit is calculated in accordance with the SERP and
will be offset by Social Security payments beginning at age 62; if the
individual is age 62 or more at termination, the benefit is calculated
in accordance with the SERP;
- continuation of group health and life insurance, as if the individual
had retired at the greater of his current age or age 55, and the
greater of his current years of service or actual years of service at
age 55; and
- payment of legal fees and expenses as well as any excise taxes
resulting from the agreement.
The severance pay agreements have initial three-year terms and are renewed
automatically each year for an additional year unless expressly discontinued by
the Board. After a change in control, if the individual resigns, he is
prohibited for two years from working for or with competing entities.
EXECUTIVE RETIREMENT PLAN
The FirstEnergy System Supplemental Executive Retirement Plan is limited to
eligible executives. At normal retirement, eligible senior executives, including
all of the officers listed in the Summary Executive Compensation Table, who have
five or more years of service with the Company or its subsidiaries are provided
a retirement benefit. This benefit is equal to the greater of 65 percent of the
executive's highest annual salary, or 55 percent of the average of the
executive's highest three consecutive years of salary plus annual incentive
awards paid after January 1, 1996, and paid prior to retirement. The benefit is
reduced by the executive's pensions under tax-qualified pension plans of the
Company or other employers, any supplemental pension under the Company's
Executive
20
Deferred Compensation Plan, and Social Security benefits. Subject to exceptions
that might be made in specific cases, senior executives retiring prior to age
65, or with less than five years of service, or both, may receive a similar but
reduced benefit. This Plan also provides for disability and surviving spouse
benefits. As of the end of 2001, the estimated annual retirement benefits of the
executive officers listed in the Summary Executive Compensation Table at age 65
from these sources were: Burg-$565,000; Alexander-$354,000; Marsh-$211,000; and
Garfield-$218,000. Mr. Gill retired on December 31, 2001, with an annual
retirement benefit from all of the above sources of $229,098.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
FirstEnergy's executive compensation program is administered by the
Compensation Committee of the Board of Directors (later referred to as the
Committee) which has responsibility for the compensation program for the
executive officers of the Company. The Committee is comprised of six directors
listed at the end of this report, none of whom is an employee of the Company,
and each of whom qualifies as a non-employee director for the purpose of Rule
16b-3 under the Securities Exchange Act of 1934 and an outside director for the
purposes of Section 162(m) of the Internal Revenue Code. Each member of the
Committee is also an independent director based on the same criteria that is
used to establish the independence of the members of the audit committee.
The Committee's primary objective is to establish and administer programs
to attract, retain, and motivate skilled and talented executives, and to align
their compensation incentives with Company and business unit performance,
business strategies, and growth in shareholder value. The Committee, with the
assistance of an outside consultant, has established, and the Board of Directors
has endorsed, an executive compensation philosophy for the Company which
includes the following elements:
- A "pay-for-performance" orientation under which a significant portion of
total compensation reflects corporate, business unit and individual
performance;
- An emphasis on stock incentives to align the interests of executives
closely with the long-term interests of shareholders;
- An emphasis on total compensation under which base salaries and cash
incentives are generally targeted at or near median competitive levels in
the energy services industry, but which provides opportunities, including
stock incentives, to achieve total compensation at the 75(th) percentile
of energy services industry levels if both corporate and individual
performance are superior;
- An appropriate balance of annual and long-term compensation to facilitate
retention of talented executives, reward long-term strategic results, and
encourage FirstEnergy stock ownership; and
- An emphasis on increasing the proportion of an executive's total
compensation at risk through the use of stock and other performance
incentives, and decreasing the proportion of compensation based on salary
and benefits, as an executive's level of responsibility increases.
Recognizing that competitive compensation levels for senior executive
officers at a corporation the size of FirstEnergy may exceed the $1,000,000
deduction limit of Section 162(m) of the Internal Revenue Code, it is the
Company's policy to structure executive compensation plans to maximize the
deductibility of executive compensation by minimizing the compensation subject
to this limit. As part of this policy, the FirstEnergy Corp. Executive and
Director Incentive Compensation Plan was presented to, and has received the
approval of, shareholders.
The salary column in the Summary Executive Compensation Table (later
referred to as the Table) lists the 2001 base salaries of Mr. Burg and the other
named executive officers, including salary deferred into the FirstEnergy Corp.
Executive Deferred Compensation Plan and/or the FirstEnergy Savings Plan. In
accordance with the Company's 2001 pay philosophy, executives received base
salary increases in 2001 intended to place their salaries in a salary range
determined by the median of salaries of comparable positions in similar-sized
energy services companies.
Under the Executive Incentive Compensation Plan (later referred to as the
Incentive Plan), a target total incentive opportunity was established for an
executive at the beginning of the year which then was allocated into a target
annual incentive opportunity and a target long-term incentive opportunity. As
the level of an executive's responsibility increased, both the portion of
his/her total pay opportunity that was put at risk and the portion that was tied
to the long-term return of the Company's common stock increased. For 2001, 59
percent of Mr. Burg's
21
total target cash compensation was put at risk in the form of incentive
compensation. This amounted to a target total incentive opportunity of
$1,168,700 divided between annual and long-term incentive opportunities.
At the beginning of 2001, the Committee reviewed and approved a list of
measurable corporate financial and strategic goals to be used to establish
annual objectives for executives participating in the Incentive Plan. Each
executive had a portion of his/her incentive award based on the achievement of
certain specific corporate financial goals of direct benefit to the
shareholders. Additional objectives were other financial or strategic goals from
a list that the executive directly affects or other specific objectives that
were expected to contribute directly to the achievement of all goals. No awards
are given for performance that is below threshold. Awards for operational
performance range from 50 percent of target for performance at threshold to 150
percent of target for outstanding performance. Awards for performance that
directly enhance shareholder value range from 50 percent of target for
performance at threshold to 200 percent of target for outstanding performance.
The Committee approved five annual 2001 financial and strategic objectives
for Mr. Burg. These objectives related to the achievement of confidential target
levels regarding earnings per share, profit, customer service excellence, the
performance of the Company's nuclear facilities as measured by an industry
index, and employee safety. These objectives were weighted at 40, 40, 10, 5, and
5 percent, respectively, of Mr. Burg's target annual incentive opportunity.
Based on the level of 2001 achievement of each of these objectives, Mr. Burg
received an annual incentive award of $331,719. The annual incentive award paid
to each of the other named executive officers in accordance with the Incentive
Plan is included in the Bonus column of the Table. The awards include amounts
deferred into the FirstEnergy Corp. Executive Deferred Compensation Plan.
The Committee also approved a special award for Mr. Burg due to his
contributions in the successful completion of the merger with GPU, Inc. Mr. Burg
received an award of $300,000.
The Committee approved a long-term incentive opportunity with the payout
based on the performance of the Company's common stock, both on an absolute
basis and as compared to an index of peer companies, between January 1, 2001,
and December 31, 2003. This award will be paid out in early 2004. The long-term
program is described in the narrative under the Long-Term Incentive Plan Table.
The Committee approved grants of non-qualified stock options to key
executives in May of 2001. The details of the grants for Mr. Burg and the other
named executive officers are listed in the Stock Options Granted in 2001 Table.
In accordance with the Incentive Plan in effect in 1999, Messrs. Burg,
Alexander, Gill, Marsh and Garfield received incentive opportunities with a term
of three years from 1999 through 2001. The terms and conditions of this
long-term grant were reported in the FirstEnergy Corp. Proxy Statement for that
year. Based on the level of achievement for each of the long-term objectives,
Mr. Burg's payout under the 1999 long-term incentive program was $496,162.
Compensation Committee: Robert L. Loughhead (Chair), Dr. Carol A. Cartwright,
Robert B. Heisler, Jr., John M. Pietruski, Paul J. Powers,
Catherine A. Rein
BOARD AUDIT COMMITTEE REPORT
The Audit Committee oversees the Company's financial reporting process on
behalf of the Board of Directors. In fulfilling its oversight responsibilities,
the committee reviewed and discussed with management the audited financial
statements to be included in the Company's Annual Report on Form 10-K for the
year ended December 31, 2001. In performing its review, the committee discussed
the propriety of the application of accounting principles by the Company, the
reasonableness of significant judgments and estimates used in the preparation of
the financial statements, and the clarity of disclosures in the financial
statements.
The committee reviewed and discussed with the independent auditor, Arthur
Andersen LLP, its opinion on the conformity of the audited financial statements
with accounting principles generally accepted in the United States. Included in
this discussion were the matters required by Statement on Auditing Standards No.
61, "Communication With Audit Committees," as amended by the Auditing Standards
Board of the American Institute of Certified Public Accountants, which requires
discussion regarding the quality of the Company's financial reporting.
22
The committee received the written communications from the independent
auditor regarding its independence with respect to the Company as required by
the Independence Standards Board's Standard No. 1, "Independence Discussions
With Audit Committees," and discussed that matter with the independent auditor.
The committee discussed with the Company's internal and independent
auditors the overall scope, plans, and results of their respective audits. The
committee met with the internal and independent auditors, with and without
management present, to discuss the results of the examinations, their
evaluations of the Company's internal controls, and the overall quality of the
Company's financial reporting process.
Based on the above reviews and discussions, the committee recommended to
the Board of Directors that the audited financial statements be included in the
Company's Annual Report on Form 10-K for the year ended December 31, 2001, for
filing with the Securities and Exchange Commission.
The following is a summary of the fees paid by the Company to its
independent auditor, Arthur Andersen LLP, for services provided during the year
2001:
AUDIT FEES
Arthur Andersen LLP billed the Company an aggregate of $2,535,910 in fees
for professional services rendered in connection with the audit of the
Company's financial statements and the reviews of the financial statements
included in each of the Company's Quarterly Reports on Form 10-Q.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
Arthur Andersen LLP billed the Company an aggregate of $1,557,308 in fees
for professional services rendered to the Company and its affiliates in
connection with the design and implementation of financial information
systems.
ALL OTHER FEES
Arthur Andersen LLP billed the Company an aggregate of $9,822,075 in fees
for other services rendered to the Company and its affiliates, primarily
related to the following:
Audit-Related Fees $ 474,750
Other Assurance and Tax Services $ 936,888
Gas Business Processes Project $4,928,262
Ohio Customer Choice Transition Project $2,652,160
Other $ 830,015
The Audit Committee of the Board of Directors has considered whether the
non-audit services rendered by the independent auditor are compatible with the
auditor maintaining its independence. While it believes that the non-audit
services rendered by the independent auditor during the year 2001 are compatible
with the auditor maintaining its independence, the Audit Committee nevertheless
has recommended to the Board, and the Board has adopted, a policy under which
the independent auditor can no longer be engaged to perform any new non-
audit-related services, other than services that require an expertise that is
exclusive to that firm. The policy further states that any engagement of the
independent auditor to perform audit-related services in excess of specified
limits must be approved in advance by the Audit Committee, and that all other
audit-related services must be approved in advance by the Vice President and
Controller. Any engagement of the independent auditor for non-audit-related
services that is based on an expertise that is exclusive to them must also be
specifically approved in advance by the Audit Committee.
Audit Committee: George M. Smart (Chair), William F. Conway, Robert L. Loughhead,
Russell W. Maier, Robert N. Pokelwaldt, Catherine A. Rein
23
SHAREHOLDER RETURN -- PERFORMANCE COMPARISON GRAPHS
The following graphs show the total annual return from an investment in the
Company's common stock (Ohio Edison common stock prior to the merger on November
8, 1997) compared with the total annual returns in the Edison Electric
Institute's Index of Investor-Owned Electric Utility Companies (referred to
below as the EEI Index) and the Standard & Poor's 500 Index of widely held
common stocks (referred to below as the S&P 500 Index). The top graph shows the
total annual returns by year. The bottom graph provides the cumulative value of
a $100 investment on December 31, 1996. Total return represents stock price
changes plus the reinvestment of dividends in the stock.
TOTAL ANNUAL RETURNS
FIRST ENERGY EEI ELECTRIC S&P 500
------------ ------------ -------
1997 35.85 27.37 33.36
1998 17.75 13.89 28.58
1999 -26.28 -18.6 21.04
2000 47.66 47.97 -9.11
2001 16.04 -8.8 -11.88
TOTAL RETURN CUMULATIVE VALUES
($100 INVESTMENT ON DECEMBER 31, 1996)
FIRST ENERGY EEI ELECTRIC S&P 500
------------ ------------ -------
1996 100 100 100
1997 135.85 127.37 133.36
1998 159.96 145.06 171.47
1999 117.93 118.08 207.55
2000 174.13 174.72 188.64
2001 202.06 159.35 166.23
1996 1997 1998 1999 2000 2001
FirstEnergy $100.00 $135.85 $159.96 $117.93 $174.13 $202.06
EEI Electric Index $100.00 $127.37 $145.06 $118.08 $174.72 $159.35
S&P 500 Index $100.00 $133.36 $171.47 $207.55 $188.64 $166.23
24
76 South Main St.
FirstEnergy Akron, Ohio 44308
--------------------------------------------------------------------------------
NANCY C. ASHCOM
Corporate Secretary
April 1, 2002
Dear Shareholder:
You are invited to attend FirstEnergy's 2002 Annual Meeting of Shareholders
at 10 a.m. on Tuesday, May 21, at the John S. Knight Center in Akron, Ohio.
As you may recall, you previously consented to accessing annual reports and
proxy statements on the Internet instead of receiving paper copies. We
appreciate your help in saving the Company money. TO ACCESS AND VIEW THE PROXY
STATEMENT AND ANNUAL REPORT, PLEASE GO TO THE INTERNET ADDRESS LISTED ON YOUR
PROXY CARD UNDER VOTING OPTION "2 -- VOTE BY INTERNET."
The Notice of Annual Meeting of Shareholders is printed on the back of this
letter. As part of the agenda, business to be voted on includes four items which
are explained in the proxy statement. The first two items are the election of
five members to your Board of Directors and the approval of an amendment to the
Executive and Director Incentive Compensation Plan. YOUR BOARD OF DIRECTORS
RECOMMENDS THAT YOU VOTE FOR ITEMS 1
AND 2. In addition, there are two shareholder proposals. YOUR BOARD OF DIRECTORS
RECOMMENDS THAT YOU VOTE AGAINST THESE SHAREHOLDER PROPOSALS, WHICH ARE ITEMS 3
AND 4.
Enclosed is your proxy card which provides instructions to appoint your
proxy and vote your shares. You are encouraged to take advantage of the
telephone or Internet voting options, which make voting convenient, quick, and
easy. ALSO, PLEASE NOTE THAT SINCE YOU ALREADY HAVE CONSENTED TO ACCESSING
ANNUAL REPORTS AND PROXY STATEMENTS ON THE INTERNET, IT IS NOT NECESSARY TO
AGAIN CHECK THE BOX ON THE PROXY CARD THAT PROVIDES CONSENT IN THE FUTURE.
If, in the future, you wish to receive paper copies of annual reports and
proxy statements with proxy cards mailed to you, or if you would like a paper
copy of these documents sent to you now, please call FirstEnergy Investor
Services at (800)736-3402.
Your participation and support are important to us. If you are planning to
attend the Annual Meeting, directions to the John S. Knight Center are on the
back of your proxy card. We hope you can join us.
Sincerely,
/s/ Nancy C. Ashcom
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO THE HOLDERS OF SHARES OF COMMON STOCK:
The 2002 FirstEnergy Corp. Annual Meeting of Shareholders will be held at
10 a.m. Eastern Time on May 21, 2002, at the John S. Knight Center, 77 E. Mill
Street, Akron, Ohio. The purpose of the Annual Meeting will be to:
-- Elect five members to the Board of Directors for a term of three
years;
-- Approve an amendment to the Executive and Director Incentive
Compensation Plan;
-- Vote on two shareholder proposals, if properly presented at the Annual
Meeting; and
-- Take action on other business that properly may come before the
meeting.
Please read the accompanying proxy statement. Then vote your shares by
following the instructions on your proxy card to ensure your representation at
the Annual Meeting.
On behalf of the Board of Directors,
NANCY C. ASHCOM
Corporate Secretary
April 1, 2002
[FIRSTENERGY LOGO]
Thank you for investing in FirstEnergy. Please take a moment now to vote your
shares of common stock for the upcoming Annual Meeting of Shareholders.
YOUR VOTE IS IMPORTANT!
YOU CAN VOTE IN ONE OF THREE WAYS:
1. VOTE BY TELEPHONE -- THIS IS THE PREFERRED OPTION BECAUSE IT IS THE
EASIEST AND MOST COST EFFECTIVE WAY TO VOTE YOUR SHARES. You will be asked
to enter the Control Number below. Then, if you wish to vote as
recommended by the Board of Directors, simply press 1. If you do not wish
to vote as the Board recommends, just respond to a few simple prompts.
-----------------------------------
YOUR CONTROL NUMBER IS:
1-888-457-2961 [picture of [picture of
phone] computer]
FOR TELEPHONE OR INTERNET VOTING
-----------------------------------
CALL ON A TOUCH-TONE TELEPHONE
ANYTIME. THERE IS NO CHARGE
FOR THIS CALL.
Your telephone or Internet vote authorizes the named Proxies to vote your
shares in the same manner as if you had marked, signed, and returned your
proxy card.
OR
2. VOTE BY INTERNET -- Access http://www.proxyvoting.com/fe and respond to a
few simple prompts after entering the Control Number above.
OR
3. VOTE BY MAIL -- If you do not have access to a touch-tone telephone or the
Internet, complete and return the proxy card below in the envelope
provided.
TEAR HERE
Vote by marking an (X) in the appropriate boxes. WHEN PROPERLY EXECUTED, YOUR
PROXY CARD WILL BE VOTED IN THE MANNER YOU DIRECT; AND, IF YOU DO NOT SPECIFY
YOUR CHOICES, YOUR PROXY CARD WILL BE VOTED FOR ITEMS 1 AND 2 AND AGAINST
ITEMS 3 AND 4.
------------------------------------------------------------------------ ------------------------------------
Your Board of Directors recommends a vote FOR items 1 and 2. Your Board of Directors recommends
------------------------------------------------------------------------ a vote AGAINST Items 3 and 4.
1. Election of 5 Directors for 3-Year Term FOR [ ] WITHHOLD [ ] ------------------------------------
01 - A.J. Alexander, 02 - H.P. Burg, 03 - R.W. Maier, 3. Shareholder Proposal
04 - R.N. Pokelwaldt, 05 - J.T. Williams, Sr. FOR [ ] AGAINST [ ] ABSTAIN [ ]
FOR, except withhold vote from
following nominees:
-------------------------------------------------- 4. Shareholder Proposal
FOR [ ] AGAINST [ ] ABSTAIN [ ]
2. Approval of Incentive Compensation FOR [ ] AGAINST [ ] ABSTAIN [ ]
Plan Amendment
------------------------------------------------------------------------ ------------------------------------
[ ] Check this box if you consent to accessing, in the future, the annual
report and proxy statement on the Internet (no paper copies).
X
-------------------------------------------------- ------------------
SIGNATURE DATE
SIGN ABOVE AS NAME(S) APPEAR ON THIS PROXY CARD. If signing for a
corporation or partnership or as an agent, attorney or fiduciary,
indicate the capacity in which you are signing.
[MAP - DIRECTIONS TO ANNUAL MEETING]
JOHN S. KNIGHT CENTER
77 E. Mill St.
Akron, Ohio
P Main parking for the John S. Knight Center
Entrances located on Mill St. and Broadway
--------------------------------------------------------------------------------
[FirstEnergy logo] THIS PROXY CARD IS SOLICITED BY THE BOARD OF DIRECTORS FOR
THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD AT THE JOHN
S. KNIGHT CENTER, 77 E. MILL STREET, AKRON, OHIO, ON
TUESDAY, MAY 21, 2002, AT 10 A.M., EASTERN TIME.
P
The undersigned appoints Nancy C. Ashcom and Edward J. Udovich as Proxies
with the power to appoint their substitute; authorizes them to represent R
and to vote, as directed on the reverse side, all the shares of common
stock of FirstEnergy Corp. which the undersigned would be entitled to vote O
if personally present at the Annual Meeting of Shareholders to be held on
May 21, 2002, or at any adjournment; and authorizes them to vote, at their X
discretion, on other business that properly may come before the meeting.
Y
You are urged to specify your choices by marking the appropriate boxes on
the REVERSE SIDE, but you do not need to mark any boxes if you wish to vote
as the Board of Directors recommends.
SIGN THIS CARD ON THE REVERSE SIDE.
Please sign and mail promptly if you are not voting by telephone or Internet.
FIRSTENERGY CORP. SAVINGS PLAN
VOTING DIRECTION FORM
YOU MAY VOTE BY TELEPHONE TOLL-FREE
OR BY COMPLETING AND MAILING THIS VOTING DIRECTION FORM
-------------------------------------------
------------------------------------------- ALLOCATED SHARES:
Voting by phone is easy, and you can vote 24 hours a day and 7 days a
week. Just call the toll-free number, enter your control number, and follow the
simple prompts. If you prefer to vote by mail, complete, sign, and date this
form, and return it in its entirety to the Trustee in the postage-paid envelope
provided. ALL VOTES MUST BE RECEIVED BY THE TRUSTEE NO LATER THAN 5:00 P.M.
EASTERN TIME ON MAY 17, 2002, TO BE INCLUDED IN THE VOTING RESULTS.
Call Toll-Free
on a Touch-Tone Phone:
1-866-564-2324
Enter the following Control Number:
---------------------
---------------------
FIRSTENERGY CORP. SAVINGS PLAN
Voting Direction Form
FirstEnergy Annual Meeting of Shareholders - May 21, 2002
TO: STATE STREET BANK AND TRUST COMPANY, TRUSTEE OF THE FIRSTENERGY CORP.
SAVINGS PLAN
As a participant and a "named fiduciary" in the FirstEnergy Savings Plan, I
direct State Street Bank and Trust Company, Trustee, to vote, as directed
below, shares of FirstEnergy common stock which are allocated to my account,
AND ALSO my proportionate number of shares which have not been allocated to
participants or for which no direction forms are received, at the Annual
Meeting of Shareholders on May 21, 2002, or at any adjournment, and in its
discretion it is authorized to vote upon any other business that properly
may come before the meeting.
TO BE COMPLETED, SIGNED, AND DATED ON REVERSE SIDE.
DO NOT RETURN THIS FORM IF YOU VOTE BY TELEPHONE.
INDICATE YOUR DIRECTION BY MARKING AN (X) IN THE APPROPRIATE BOXES BELOW. IF NO
DIRECTIONS ARE INDICATED, THE SHARES REPRESENTED BY THIS SIGNED DIRECTION FORM
WILL BE VOTED AS YOUR BOARD OF DIRECTORS RECOMMENDS, WHICH IS FOR ITEMS 1 AND 2
AND AGAINST ITEMS 3 AND 4.
ALLOCATED SHARES (SEE REVERSE SIDE FOR NUMBER OF SHARES.) UNALLOCATED SHARES (Proportion to be determined.)
------------------------------------------------------ --------------------------------------------------
YOUR BOARD RECOMMENDS A VOTE FOR ITEMS 1 AND 2. YOUR BOARD RECOMMENDS A VOTE FOR ITEMS 1 AND 2.
------------------------------------------------------ --------------------------------------------------
Item 1. Election of 5 Directors for 3-Year Term: Item 1. Election of 5 Directors for 3-Year Term:
FOR [ ] [ ] WITHHOLD FOR [ ] [ ] WITHHOLD
all nominees listed authority to vote all nominees listed authority to vote
below (except as for all nominees below (except as for all nominees
printed to the listed below printed to the listed below
contrary below) contrary below)
Nominees: A.J. Alexander, H.P. Burg, R.W. Maier, Nominees: A.J. Alexander, H.P. Burg, R.W. Maier,
R.N. Pokelwaldt, J.T. Williams, Sr. R.N. Pokelwaldt, J.T. Williams, Sr.
INSTRUCTION: To withhold authority to vote for INSTRUCTION: To withhold authority to vote for
any individual nominee, print that nominee's any individual nominee, print that nominee's
name on the following line. name on the following line.
------------------------------------------------- -------------------------------------------------
Item 2. Approval of Incentive Compensation Plan Amendment. Item 2. Approval of Incentive Compensation Plan Amendment.
[ ] FOR [ ] AGAINST [ ] ABSTAIN [ ] FOR [ ] AGAINST [ ] ABSTAIN
------------------------------------------------- -------------------------------------------------
YOUR BOARD RECOMMENDS A VOTE YOUR BOARD RECOMMENDS A VOTE
AGAINST ITEMS 3 AND 4. AGAINST ITEMS 3 AND 4.
------------------------------------------------- -------------------------------------------------
Item 3. Shareholder Proposal. Item 3. Shareholder Proposal.
[ ] FOR [ ] AGAINST [ ] ABSTAIN [ ] FOR [ ] AGAINST [ ] ABSTAIN
Item 4. Shareholder Proposal. Item 4. Shareholder Proposal.
[ ] FOR [ ] AGAINST [ ] ABSTAIN [ ] FOR [ ] AGAINST [ ] ABSTAIN
------------------------------------------------------- Date , 2002
SIGNATURE. Sign as name appears on reverse side. --------------------------------------------
To assure your representation at the meeting, please vote by phone
or sign and mail this form promptly in the enclosed, postage-paid envelope to
State Street Bank and Trust Company, Box 1997 G.P.O., New York, N.Y. 10117-0024
GPU COMPANIES EMPLOYEE SAVINGS PLAN
VOTING DIRECTION FORM
YOU MAY VOTE BY TELEPHONE TOLL-FREE
OR BY COMPLETING AND MAILING THIS VOTING DIRECTION FORM
-------------------------------------------
------------------------------------------- ALLOCATED SHARES:
Voting by phone is easy, and you can vote 24 hours a day and 7 days a week.
Just call the toll-free number, enter your control number, and follow the simple
prompts. If you prefer to vote by mail, complete, sign, and date this form, and
return it in its entirety to the Trustee in the postage-paid envelope provided.
ALL VOTES MUST BE RECEIVED BY THE TRUSTEE NO LATER THAN 5:00 P.M. EASTERN TIME
ON MAY 17, 2002, TO BE INCLUDED IN THE VOTING RESULTS.
Call Toll-Free
on a Touch-Tone Phone:
1-866-874-4876
Enter the following Control Number:
-----------------------------------
-----------------------------------
GPU COMPANIES EMPLOYEE SAVINGS PLAN
Voting Direction Form
FirstEnergy Annual Meeting of Shareholders - May 21, 2002
TO: STATE STREET BANK AND TRUST COMPANY,
TRUSTEE OF THE GPU COMPANIES EMPLOYEE SAVINGS PLAN
As a participant and a "named fiduciary" in the GPU Companies Employee
Savings Plan, I direct State Street Bank and Trust Company, Trustee, to vote, as
directed below, shares of FirstEnergy common stock which are allocated to my
account, at the Annual Meeting of Shareholders on May 21, 2002, or at any
adjournment, and in its discretion it is authorized to vote upon any other
business that properly may come before the meeting. The Trustee will vote
allocated shares for which it receives no written instructions in the same
proportion as the allocated shares for which voting instructions have been
received.
TO BE COMPLETED, SIGNED, AND DATED ON REVERSE SIDE.
DO NOT RETURN THIS FORM IF YOU VOTE BY TELEPHONE.
INDICATE YOUR DIRECTION BY MARKING AN (X) IN THE APPROPRIATE BOXES BELOW. IF NO
DIRECTIONS ARE INDICATED, THE SHARES REPRESENTED BY THIS SIGNED DIRECTION FORM
WILL BE VOTED AS YOUR BOARD OF DIRECTORS RECOMMENDS, WHICH IS FOR ITEMS 1 AND 2
AND AGAINST ITEMS 3 AND 4.
ALLOCATED SHARES (SEE REVERSE SIDE FOR NUMBER OF SHARES.)
------------------------------------------------------
YOUR BOARD RECOMMENDS A VOTE FOR ITEMS 1 AND 2.
------------------------------------------------------
Item 1. Election of 5 Directors for 3-Year Term:
FOR [ ] [ ] WITHHOLD
all nominees listed authority to vote
below (except as for all nominees
printed to the listed below
contrary below)
Nominees: A.J. Alexander, H.P. Burg, R.W. Maier,
R.N. Pokelwaldt, J.T. Williams, Sr.
INSTRUCTION: To withhold authority to vote for
any individual nominee, print that nominee's name
on the following line.
-------------------------------------------------
Item 2. Approval of Incentive Compensation Plan Amendment.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
-------------------------------------------------
YOUR BOARD RECOMMENDS A VOTE
AGAINST ITEMS 3 AND 4.
-------------------------------------------------
Item 3. Shareholder Proposal.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Item 4. Shareholder Proposal.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
------------------------------------------------- Date 2002
SIGNATURE. Sign as name appears on reverse side. -----------------,
To assure your representation at the meeting, please vote by phone
or sign and mail this form promptly in the enclosed, postage-paid envelope to
State Street Bank and Trust Company, Box 1997, G.P.O., New York, N.Y. 10117-0024
FIRSTENERGY CORP. 401(k) RETIREMENT SAVINGS PLAN
FOR IBEW REPRESENTED EMPLOYEES
AT THE BEAVER VALLEY NUCLEAR POWER PLANT
VOTING DIRECTION FORM
FIRSTENERGY ANNUAL MEETING OF SHAREHOLDERS - MAY 21, 2002
-------------------------------------------
------------------------------------------- ALLOCATED SHARES:
YOU MAY VOTE BY TELEPHONE TOLL-FREE
OR BY COMPLETING AND MAILING THIS VOTING DIRECTION FORM
Voting by phone is easy, and you can vote 24 hours a day and 7 days a week.
Just call the toll-free number, enter your control number, and follow the simple
prompts. If you prefer to vote by mail, complete, sign, and date this form, and
return it in its entirety to the Trustee in the postage-paid envelope provided.
ALL VOTES MUST BE RECEIVED BY THE TRUSTEE NO LATER THAN 5:00 P.M. EASTERN TIME
ON MAY 17, 2002 TO BE INCLUDED IN THE VOTING RESULTS.
Call Toll-Free
on a Touch-Tone Phone:
1-866-564-2324
Enter the following Control Number:
-----------------------------------
-----------------------------------
FIRSTENERGY CORP. 401(k) RETIREMENT SAVINGS PLAN
Voting Direction Form
FirstEnergy Annual Meeting of Shareholders - May 21, 2002
TO: STATE STREET BANK AND TRUST COMPANY, TRUSTEE
As a participant in the FirstEnergy Corp. 401(k) Retirement Savings Plan
for IBEW Represented Employees at the Beaver Valley Nuclear Power Plant, I
direct State Street Bank and Trust Company, Trustee, to vote, as directed
below, shares of FirstEnergy common stock which are allocated to my account,
AND ALSO my proportionate number of shares which have not been allocated to
participants or for which no direction forms are received, at the Annual
Meeting of Shareholders on May 21, 2002, or at any adjournment, and in its
discretion it is authorized to vote upon any other business that properly may
come before the meeting.
TO BE COMPLETED, SIGNED, AND DATED ON REVERSE SIDE.
DO NOT RETURN THIS FORM IF YOU VOTE BY TELEPHONE.
INDICATE YOUR DIRECTION BY MARKING AN (X) IN THE APPROPRIATE BOXES BELOW. IF NO
DIRECTIONS ARE INDICATED, THE SHARES REPRESENTED BY THIS SIGNED DIRECTION FORM
WILL BE VOTED AS YOUR BOARD OF DIRECTORS RECOMMENDS, WHICH IS FOR ITEMS 1 AND 2
AND AGAINST ITEMS 3 AND 4.
ALLOCATED SHARES (SEE REVERSE SIDE FOR NUMBER OF SHARES.) UNALLOCATED SHARES (Proportion to be determined.)
------------------------------------------------------ --------------------------------------------------
YOUR BOARD RECOMMENDS A VOTE FOR ITEMS 1 AND 2. YOUR BOARD RECOMMENDS A VOTE FOR ITEMS 1 AND 2.
------------------------------------------------------ --------------------------------------------------
Item 1. Election of 5 Directors for 3-Year Term: Item 1. Election of 5 Directors for 3-Year Term:
FOR [ ] [ ] WITHHOLD FOR [ ] [ ] WITHHOLD
all nominees listed authority to vote all nominees listed authority to vote
below (except as for all nominees below (except as for all nominees
printed to the listed below printed to the listed below
contrary below) contrary below)
Nominees: A.J. Alexander, H.P. Burg, R.W. Maier, Nominees: A.J. Alexander, H.P. Burg, R.W. Maier,
R.N. Pokelwaldt, J.T. Williams, Sr. R.N. Pokelwaldt, J.T. Williams, Sr.
INSTRUCTION: To withhold authority to vote for INSTRUCTION: To withhold authority to vote for
any individual nominee, print that nominee's name any individual nominee, print that nominee's name
on the following line. on the following line.
------------------------------------------------- -------------------------------------------------
Item 2. Approval of Incentive Compensation Plan Amendment. Item 2. Approval of Incentive Compensation Plan Amendment.
[ ] FOR [ ] AGAINST [ ] ABSTAIN [ ] FOR [ ] AGAINST [ ] ABSTAIN
------------------------------------------------- -------------------------------------------------
YOUR BOARD RECOMMENDS A VOTE YOUR BOARD RECOMMENDS A VOTE
AGAINST ITEMS 3 AND 4. AGAINST ITEMS 3 AND 4.
------------------------------------------------- -------------------------------------------------
Item 3. Shareholder Proposal. Item 3. Shareholder Proposal.
[ ] FOR [ ] AGAINST [ ] ABSTAIN [ ] FOR [ ] AGAINST [ ] ABSTAIN
Item 4. Shareholder Proposal. Item 4. Shareholder Proposal.
[ ] FOR [ ] AGAINST [ ] ABSTAIN [ ] FOR [ ] AGAINST [ ] ABSTAIN
------------------------------------------------------- Date 2002
SIGNATURE. Sign as name appears on the reverse side. --------------------------------------------,
To assure your representation at the meeting, please vote by phone
or sign and mail this form promptly in the enclosed, postage-paid envelope to
State Street Bank and Trust Company, Box 1997 G.P.O., New York, N.Y. 10117-0024
FIRSTENERGY CORP. 401(k) RETIREMENT SAVINGS PLAN
FOR IBEW REPRESENTED EMPLOYEES
AT THE BEAVER VALLEY NUCLEAR POWER PLANT
VOTING DIRECTION FORM
FIRSTENERGY ANNUAL MEETING OF SHAREHOLDERS - MAY 21, 2002
-------------------------------------------
------------------------------------------- ALLOCATED SHARES:
COMPLETE, SIGN, AND DATE THIS FORM AND RETURN IT IN ITS ENTIRETY
TO THE TRUSTEE IN THE POSTAGE-PAID ENVELOPE PROVIDED.
ALL VOTES MUST BE RECEIVED BY THE TRUSTEE NO LATER THAN 5:00 P.M.
EASTERN TIME ON MAY 17, 2002 TO BE INCLUDED IN THE VOTING RESULTS.
FIRSTENERGY CORP. 401(k) RETIREMENT SAVINGS PLAN
Voting Direction Form
FirstEnergy Annual Meeting of Shareholders - May 21, 2002
TO: THE NORTHERN TRUST COMPANY, TRUSTEE
As a participant in the FirstEnergy Corp. 401(k) Retirement Savings Plan
for IBEW Represented Employees at the Beaver Valley Nuclear Power Plant, I
direct The Northern Trust Company, Trustee, to vote, as directed below, shares
of FirstEnergy common stock which are allocated to my account at the Annual
Meeting of Shareholders on May 21, 2002, or at any adjournment, and in its
discretion it is authorized to vote upon any other business that properly may
come before the meeting.
TO BE COMPLETED, SIGNED, AND DATED ON REVERSE SIDE.
INDICATE YOUR DIRECTION BY MARKING AN (X) IN THE APPROPRIATE BOXES BELOW. IF NO
DIRECTIONS ARE INDICATED, THE SHARES REPRESENTED BY THIS SIGNED DIRECTION FORM
WILL BE VOTED AS YOUR BOARD OF DIRECTORS RECOMMENDS, WHICH IS FOR ITEMS 1 AND 2
AND AGAINST ITEMS 3 AND 4.
ALLOCATED SHARES (SEE REVERSE SIDE FOR NUMBER OF SHARES.)
------------------------------------------------------
YOUR BOARD RECOMMENDS A VOTE FOR ITEMS 1 AND 2.
------------------------------------------------------
Item 1. Election of 5 Directors for 3-Year Term:
FOR [ ] [ ] WITHHOLD
all nominees listed authority to vote
below (except as for all nominees
printed to the listed below
contrary below)
Nominees: A.J. Alexander, H.P. Burg, R.W. Maier,
R.N. Pokelwaldt, J.T. Williams, Sr.
INSTRUCTION: To withhold authority to vote for
any individual nominee, print that nominee's name
on the following line.
-------------------------------------------------
Item 2. Approval of Incentive Compensation Plan Amendment.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
-------------------------------------------------
YOUR BOARD RECOMMENDS A VOTE
AGAINST ITEMS 3 AND 4.
-------------------------------------------------
Item 3. Shareholder Proposal.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Item 4. Shareholder Proposal.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
------------------------------------------------- Date 2002
SIGNATURE. Sign as name appears on reverse side. --------------------,
To assure your representation at the meeting,
please sign and mail promptly in the enclosed, postage-paid envelope to
The Northern Trust Company, Box 1997, G.P.O., New York, N.Y. 10117-0024
[FirstEnergy Letterhead]
April 1, 2002
Dear Savings Plan Participant:
Our Annual Meeting of Shareholders will be held on Tuesday, May 21.
Please exercise your right to vote your FirstEnergy shares in the Savings Plan
on the business items that will be presented at the meeting.
We encourage you to vote your shares easily and quickly by using a
touch-tone telephone. SIMPLY CALL TOLL-FREE 1-866-564-2324. If you do not vote
by telephone, please complete, sign, date, and return your voting form in the
postage-paid envelope provided.
There are four items to vote on at this year's meeting, including two
shareholder proposals. Your Board of Directors recommends that you vote:
FOR ITEM 1, the election of five directors;
FOR ITEM 2, the approval of an incentive compensation plan amendment;
and
AGAINST BOTH SHAREHOLDER PROPOSALS, WHICH ARE ITEMS 3 AND 4 on your
voting form. The reasons for voting against these proposals are
discussed in the enclosed proxy statement.
Your vote on these business items is very important to the Company, and
we encourage you to vote as soon as possible. If you have any questions, please
call Investor Services at 1-800-736-3402. Thanks for your continued support.
Sincerely,
/s/ Nancy C. Ashcom
[FirstEnergy Letterhead]
April 1, 2002
Dear GPU Savings Plan Participant:
Our Annual Meeting of Shareholders will be held on Tuesday, May 21.
Please exercise your right to vote your FirstEnergy shares in the Savings Plan
on the business items that will be presented at the meeting.
We encourage you to vote your shares easily and quickly by using a
touch-tone telephone. SIMPLY CALL TOLL-FREE 1-866-874-4876. If you do not vote
by telephone, please complete, sign, date, and return your voting form in the
postage-paid envelope provided.
There are four items to vote on at this year's meeting, including two
shareholder proposals. Your Board of Directors recommends that you vote:
FOR ITEM 1, the election of five directors;
FOR ITEM 2, the approval of an incentive compensation plan amendment;
and
AGAINST BOTH SHAREHOLDER PROPOSALS, WHICH ARE ITEMS 3 AND 4 on your
voting form. The reasons for voting against these proposals are
discussed in the enclosed proxy statement.
Your vote on these business items is very important to the Company, and
we encourage you to vote as soon as possible. If you have any questions, please
call Investor Services at 1-800-736-3402. Thanks for your continued support.
Sincerely,
/s/ Nancy C. Ashcom
[FirstEnergy Letterhead]
April 1, 2002
Dear Savings Plan Participant:
Our Annual Meeting of Shareholders will be held on Tuesday, May 21.
Please exercise your right to vote your FirstEnergy shares in the Savings Plan
on the business items that will be presented at the meeting.
There are four items to vote on at this year's meeting, including two
shareholder proposals. Your Board of Directors recommends that you vote:
FOR ITEM 1, the election of five directors;
FOR ITEM 2, the approval of an incentive compensation plan amendment;
and
AGAINST BOTH SHAREHOLDER PROPOSALS, WHICH ARE ITEMS 3 AND 4 on your
voting form. The reasons for voting against these proposals are
discussed in the enclosed proxy statement.
Please vote your Plan shares by completing, signing, dating, and
returning your voting form in the postage-paid envelope provided.
Your vote on these business items is very important to the Company, and
we encourage you to vote as soon as possible. If you have any questions, please
call Investor Services at 1-800-736-3402. Thanks for your continued support.
Sincerely,
/s/ Nancy C. Ashcom