CEG chief's pay up 43%

Shattuck takes home $14 million, mostly from bonuses

April 12, 2007|By Paul Adams | Paul Adams,Sun reporter

Constellation Energy Group's chief executive saw his salary soar last year as he steered the company to heightened profits amid fiery debate over a proposed merger and rising electric rates in Maryland.

Mayo A. Shattuck III, whose compensation became political fodder during last year's fight over a 72 percent electric rate increase, saw his pay rise about 43 percent in 2006 to $14 million, a regulatory filing yesterday shows. Most of that - about 92 percent - came in the form of bonuses tied to the company's rising earnings and stock appreciation.

Shattuck was among several top executives who saw their bonuses and other incentives climb by double-digit percentages as the company emerged from a tumultuous year.

A $12 billion merger with FPL Group Inc. of Juno Beach, Fla., fell apart Oct. 25 amid regulatory delays. The deal's demise followed months of argument in Annapolis over the rate increase for customers of Baltimore Gas and Electric Co.

Since then, the company has seen its shares climb 74 percent from the low they hit during last year's troubles.

Earnings per share have consistently beaten Wall Street estimates and analysts are projecting more of the same as energy companies see their values increase along with rising demand for electricity. Constellation shares closed at $88.09 yesterday.

Shattuck's pay includes $1 million of base salary, $10.8 million in cash bonus and $2 million worth of restricted stock, the company disclosed in a Securities and Exchange Commission filing.

The cash bonus is broken down into two categories, including $3 million granted under a short-term incentive plan and $7.8 million granted under a long-term plan. Shattuck received a fourth of the long-term bonus this year, with the rest to be paid early next year, assuming the company continues to perform well.

New SEC disclosure rules require the company to also expense stock options granted to executives in previous years. Constellation recorded $7.3 million in such expenses for Shattuck in 2006, which would bring his total compensation for accounting purposes to about $20 million.

"More than 90 percent of this CEO's compensation is performance-based and `at risk,'" said Lawrence McDonnell, a spokesman for the company. "And the performance has been phenomenal in the last five years."

The SEC filing shows that Shattuck stands to make a windfall if Constellation finds itself involved with another merger.

Under certain circumstances, a "golden parachute" agreement would pay Shattuck up to about $72 million in total compensation and tax benefits if he loses his job as part of a sale or merger.

The calculation is based on the company's share price as of Dec. 31. McDonnell stressed that no such deals are being contemplated and that a payout of that size would be unlikely.

Shattuck pledged to give up virtually all of his merger-related compensation last year amid criticism that Constellation executives were getting rich at the expense of Baltimore Gas and Electric's customers.

To counter those concerns, Shattuck signed agreements forfeiting tens of millions of dollars he was due to receive if the merger was consummated, with much of it going to a charitable foundation he controlled.

paul.adams@baltsun.com

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