Shattuck earned one-and-a-half-times more on average in the past three years than the median paid to CEOs at peer companies, PROXY Governance said. The firm said the three other Constellation executives on The Sun's top 10 list - all of whom work for the division that produces, buys and sells power - have "unusually high pay levels." It noted that this was because Constellation decided to benchmark the compensation for the three executives to the lucrative packages handed out by investment banks.
"We saw a number of troubling factors," said Shirley Westcott, managing director of policy at PROXY Governance.
Constellation, which defends its comparison to investment banks, said its board believes "extraordinary" performance should be reflected in pay. "2007 was one of the best years the company has ever had," said Lawrence McDonnell, a Constellation spokesman.
Those pay packages might not be so stellar next time. Constellation's stock, already on a downward trend this year, dropped 15 percent last week amid investor concern about the company's borrowing power and accounting methods.
Shares closed at $63.14 Friday, on par with the price in November 2006.
Companies often set compensation in part by considering what their peers are paying. But there's growing suspicion that some firms are manipulating the results by comparing themselves to companies that aren't similar, said Carol Bowie, head of the Governance Institute at RiskMetrics, a Rockville-based research unit for a proxy adviser.
"It's been suggested that a lot of companies cherry-pick those peers in order to either boost pay or justify what they've already decided they're paying," she said.
Shareholders fed up with compensation levels began pushing a few years ago for an annual, advisory vote to let them offer a thumbs up or down. Stock owners filed more than 70 of these "say on pay" proposals with companies this year, including at Legg Mason, according to RiskMetrics. Last year, 52 such proposals appeared on shareholder ballots.
Of those tallied so far this year, 10 got a majority of the vote, RiskMetrics says. Legg Mason's was not one of them, although its proposal received almost as many "yes" votes as "no."
"The indications are that the support has leveled off to some degree, but it's certainly not dropping," Bowie said.
A handful of U.S. companies have agreed to let shareholders weigh in annually on pay, and Congress is considering whether to make it mandatory for all public corporations to offer that advisory vote. Illinois Sen. Barack Obama, the presumptive Democratic nominee for president, sponsored a bill to that effect. Sen. John McCain, the expected Republican nominee from Arizona, has said he supports say-on-pay reforms, too.
"Our message to companies is, 'What are you afraid of? Are you afraid of this engagement device with your investors?'" said Dan Pedrotty, director of the AFL-CIO's office of investment. "They are the ones, after all, who own the company."
jamie.smith.hopkins@baltsun.com
Sun reporters Eileen Ambrose, Tricia Bishop, Hanah Cho, Dan Thanh Dang, Jay Hancock, Lorraine Mirabella and Andrea K. Walker contributed to this article.
