Constellation board reduced CEO's 2001 pay by 37 percent

Corporate performance of executives found to be `below threshold'

April 19, 2002|By Dan Thanh Dang | Dan Thanh Dang,SUN STAFF

Constellation Energy Group Inc.'s board sliced its chief executive's pay last year by 37 percent after the energy company abandoned an ambitious plan to split in two and paid Goldman Sachs Group Inc. $355 million to end a business partnership.

Christian H. Poindexter, who was CEO until November, earned a little more than $1 million last year, compared with $1.7 million in 2000. Poindexter still is board chairman.

Mayo A. Shattuck III, who replaced Poindexter as CEO on Nov. 1, earned $150,000 for the last two months of last year. His salary this year will be $900,000.

To bring Shattuck's compensation into alignment with other executives, the board also awarded him 34,153 shares of stock based on performance. It could be worth more than $1 million at yesterday's closing price of $31.11 a share.

Constellation's share price has been slowly climbing after a tumultuous year in which it called off in October a plan to split into a regional delivery business and an unregulated power generation business that would sell electricity nationwide; saw its stock price plunge in 2001 by more than 50 percent; and announced plans to trim its work force by 900 through early-retirement buyouts and layoffs.

Several executives received no long-term bonuses last year because the board's Committee on Management "evaluated the 2001 corporate financial performance and determined that performance was below threshold," said a proxy statement filed yesterday with the Securities and Exchange Commission. The statement will be mailed to shareholders today.

"A key corporate business plan objective was to complete business separation during 2001," the statement said.

In addition to his $900,000 base salary, which rose 22 percent from the year before, Poindexter received a $199,100 bonus for the performance reported by Constellation's subsidiary, Baltimore Gas and Electric Co. That figure dropped 80 percent from 2000, when Poindexter received $1,012,500 in bonus pay.

Poindexter's other compensation included $37,132 for personal tax and financial planning services, $11,287 for car and parking, $7,764 for spousal travel, $3,850 for club membership and $998 for home security.

In addition to pension benefits, Poindexter will get a $3,297,000 lump sum payment when he retires "in recognition of all he's done and the fact that he was eligible for early retirement, but stayed on at the request of the board to help the new CEO through the transition period on nuclear and regulatory issues," said Constellation spokeswoman Nancy H. Caplan.

Constellation's two top leaders also received time-restricted stock in January, with a market value of $1.5 million for Poindexter's shares and $2.2 million for Shattuck's shares.

The company paid Eric P. Grubman, a former Goldman Sachs executive who was co-president of Constellation for a year, a $2 million lump sum when he resigned in December. Constellation also reimbursed him $510,557 for his apartment and furniture lease, moving and storage expenses to vacate his apartment and office, a commission expense on the sale of his residence, corporate club memberships for 2002 and up to 18 months of health coverage.

Two other executives received long-term incentive bonuses last year. BGE President Frank O. Heintz, was awarded a $52,000 bonus in addition to his $317,500 base salary, and Edward A. Crooke, who was to become the spinoff regional company's CEO and chairman, was paid $81,300 on top of a $540,000 salary.

The proxy statement said BGE executives were recognized for reporting the best year for system reliability and locking-in wholesale power supply contracts. Caplan said this year will have brighter prospects.

"We're well-positioned to emerge from this period of uncertainty ... with solid building blocks of growth," Caplan said. "Our core strength will be high quality assets with the right people to operate them, and a strong balance sheet will be the platform for that growth."

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