Shattuck paid $1.8 million in salary and bonus

First full year as boss of Constellation Energy

April 08, 2003|By Eileen Ambrose | Eileen Ambrose,SUN STAFF

Constellation Energy Group Inc.'s chairman and chief executive, Mayo A. Shattuck III, earned $1.8 million in salary and bonus in his first full year on the job.

Shattuck, hired in November 2001 to turn the troubled utility around, last year earned a salary of $900,000 plus a $900,900 bonus, according to Baltimore-based Constellation's proxy statement.

Shattuck also was given 83,333 shares of Constellation stock in January 2002, with restrictions on when the shares can be sold. Based on yesterday's closing stock price of $28.03, the shares were worth $2.3 million.

Two months ago, Shattuck received another 52,285 of time-restricted shares, worth $1.46 million as of yesterday.

Shattuck, 48, was named chairman in July. He earned $150,000 for the two months he was Constellation's CEO in 2001.

Constellation's former chairman, Christian H. Poindexter, remains an employee and provides consulting services to the company. He stepped down as a director last month, and is scheduled to retire in October.

Poindexter's salary last year was $900,000, the same as in 2001. He received a $910,700 bonus last year, up from $199,100 the year before. He was given 58,333 in time-restricted shares in January last year, which as of yesterday were worth $1.6 million.

The biggest bonus last year went to Thomas V. Brooks, president of Constellation Power Source Inc. In addition to receiving his $250,008 salary, Brooks got $1.88 million in a short-term incentive bonus.

The company said that when determining executive bonuses, the committee on management looked at individual performance as well as business plan performance, including the strengthening of the company's balance sheet and the reduction and restructuring of debt.

"The company met its earnings goals in a very difficult year for our industry," Charles Welsh, Constellation's director of corporate communications, said yesterday.

"The stock has performed fairly well compared to the industry," and appears more likely to go higher than lower, said Joan T. Goodman, an analyst with Pershing LLC in Chicago. "There are many other companies that have done much worse than this one."

Electric utilities on average have seen their stock prices fall 21 percent for the year that ended Feb. 28, compared with the S&P 500 index , which slid 24 percent, she said. Constellation's stock price fell 9.2 percent during the same time period.

As long-term incentive compensation, Shattuck also received options last year to buy 1.375 million shares of stock, estimated to be worth $9.8 million on the day granted, using a model for valuing stock options. A stock option is the right to buy shares for a specific price within a certain period of time. In this case, Shattuck can exercise his options in installments at $27.93 a share, up until 2012.

Two shareholders' resolutions that will be voted on at Constellation's annual meeting this month involve stock options.

The United Brotherhood of Carpenters Pension Fund in Washington proposes that future stock options to senior executives be performance-based, with the exercise price linked to an index of the company's peers.

Constellation's management recommends a vote against the proposal, saying it would restrict the company from offering incentives to keep executive talent.

The International Brotherhood of Electrical Workers' Pension Benefit Fund in Washington proposes that Constellation expense stock options in its annual income statement rather than in a footnote in the annual report.

In urging shareholders to reject the proposal, Constellation said that new U.S. accounting standards regarding options are anticipated and it's premature to make changes before then.

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