Constellation Energy Group Inc. CEO Mayo A. Shattuck III and a dozen other executives stand to receive $72.9 million in cash if the company's merger with a Florida-based utility goes through, Constellation disclosed yesterday as it battles criticism that its executives will profit while consumers are hit with a 72 percent electricity rate increase.
As is common in corporate mergers, closing the deal with FPL Group Inc. would trigger the redemption of both stock options, which allow executives to buy stock at a set price in the future, and restricted stock, which executives get to keep after staying with a company for a specified period. Some of these stock awards have not vested. Executives would also get bonuses that had been set but not paid.
Special payouts to executives who could lose their jobs after a merger are not unusual in the upper echelons of corporations. But the merger proposal at Constellation, which owns BGE, has become a flash point in the debate over the Baltimore utility's plan to impose rate increases on residential customers.
Shattuck, a target for much of the criticism, earlier said he plans to donate after-tax proceeds from his portion of the cash payouts - about $20.6 million - to charity.
"Normally, companies aren't coming out and waving the flag as to what these payments will be," said Steven Hall, a compensation consultant in New York. "That said, and I hate to say this, but $73 million for 13 people doesn't strike me as `Oh my god' money."
Constellation had disclosed some of the merger-related payments in previous filings with the Securities and Exchange Commission. But the latest details, revealed in a 30-page letter to state lawmakers, are far broader and involve executives whose pay normally wouldn't be subject to public scrutiny.
"We wanted to go above and beyond with lawmakers to illustrate to them that our people are paid fairly in a competitive market," said Larry McDonnell, a Constellation spokesman. "By no means are they getting any sort of windfall because of the merger."
McDonnell said that among the new disclosures, the company is granting about $15 million in retention bonuses to 220 rank-and-file employees. He said the awards were conceived to help retain employees who might look elsewhere for employment if they feel their jobs are in jeopardy. None of that money has been awarded to executive officers, the letter states.
